^AOJiivjjo^ '^JJuaNvso^:^^ ■^/iiUAiNniwv^ ^oumi^"^ %oi[mi^'^ ^OFCAIIFOR^ 4? ^''^UWW^ "^/JaJAWO^**^^ '^"'/JiMWMfliMv^'^ '^'*3■^)^vM(ln1V^' ^UKANCn% so ■V/cjUAlUrt.lUV^ S 1 li— ' ^ ^lOSANCEier^ ^OFCAUFOI?^ ^OFCAUFOff^ .5j\EUNivnisyA yn\\i\mxvt$^ ^J^ONYSOl'^^ «l)NIVERS/A '^fTii'uw.cm'^ ^lOSANCHfju > ^.iOillVJJQ'^ '^'TUaNVSOV'^ o ^•UBRARYO^, 45^£•UBRARY^/^ ^iOJUVDJO"^ ^.tfOJIlVJJO^ ^OFCAUF0«(^ J*)»WVJIfllU\!^ <5MEUNIVEI%. ^OFCAUFOJ?^ ^OFCAllFOff^ ^losANcntr^ %a3A)NI]-3ViV ^53jtf-UNIVER%^ 5 ^•lOSANcncr^ ^^OiiivDJO'*^ ^iSOJIlVDJO'^ "^/saiAJNa-atf^^ ^lOSANCEl^^ "^/WOAJNrt-JftV^ ^.OFCAUF(%. 65 cAcOFCAUF0% .^\«•umvER% "^i^iinw-w^ ^WS|ANCF^r^ ^OFCAIIFOI?^ .^WEUNIVERS/A AvlOSANCElij^ ^OfCALIFOff^ ^.OFCAllFOff;!^ ^. ii. ^ A ^ ONVSOl^ %iUAlNll-3y^' ^OFCAUFOff^ ^OFCAllFOft^ oNvsoi"^ "^^/WMinfn^^^ "^^/j-uivaan-^^^ '^>}9Aav«an# "'^< .5J\EUNIVER% vKl -r* o / " .»' o S 1 ir-' t 5 ■^/saaMNiiaiKV^ ^«)jnvDio^ ^tf( CAUFOff^ ^OF'CAUFO%, ^^\l^uNlVEW{^ =3 o IWUINOWV - IN i ^lOSANCEUr^ ^IIIBRARYO^ ^HJBRARY(?/^ •'^/^ajAiNn iv\v^ ^.yojnvjjo^ ^ii/ojiivjjo'^ >- aa i ^lOSANCflfx^ ^ 6 > so .^OFfAllF0% aOFCAUFO%. 30 == ^m«v>«iniV^ "^/^jiMVMiimv!^ ^^ ^VUBRARY^?/ 5jt\FUH(VEIlS/A o gl § %a3AINn3V\V^ -55^-UBRARY(9/^ ^' vj I I ins Q ^ S CAllFOi?^ 4.0FCAIIF0% .^VlFUNIVER^yA >- ^lOSANCEl^^ mm-^^ ^'^omm^'^ J0'»^ .5MFUNIVER%. ^>:l' UNIVERS/A vVclOSANCflfj> .^.-OFCAllFOff^ aOF-CAIIF0%, .^WE•lIKIVERJ/A ^11 lS> c^ ^ s>b^' A TREATISE FRAUDULENT CONVEYANCES CREDITORS' BILLS, WITH A DISCUSSION OF VOID AND VOIDABLE ACTS. BY FREDERICK S. WAIT, OP THE NEW YORK BAR, Author of '^Insolvent Corporations,^'' ^^Trial of Title to Land," etc. SECOND KDITION Revised and Enlarged. NEW YORK: BAKER, VOORHIS & CO., LAW PUBLISHERS, ' 66 NASSAU STREET. 1889. E. O. JENKINS' SONS, PRINTERS, NEW YORK. Copyright, 1884, By Frederick S. Wait. Copyright, 1889, By Frederick S. Wait. PREFACE TO SECOND EDITION, The second edition of this work was called for over two years since, but other professional engagements of the writer seemed to render an earlier appearance of the vol- ume impossible. Numerous additions have been embodied in the original text, a number of new sections have been written, and the citations of authorities increased about one thousand cases over the number contained in the first edition. By enlarging the size and increasing the number of the pages it is estimated that over one hundred pages of new matter will be found embodied in this edition. Special efforts have been put forth to utilize the latest important authorities bearing upon the topics discussed. The multitude of recent cases involving fraudulent alienations and covinous schemes devised to defeat the claims of creditors, demonstrates how important and far- reaching the subject under consideration has become. Sometimes a creditor's entire fortune is dependent upon a correct exposition of the statute of Elizabeth. The writer is confirmed in his early conviction that the policy result- ing in a relaxation of remedies against the person which an enlightened civilization, seemed to demand, has created a numerous and very obnoxious class of what may be called professional fraudulent debtors. These unworthy persons usually display much skill in evading the sharp edges of the criminal law, but they nevertheless continue to depredate upon the sacred property rights of their fellow-men. Some 740804 IV PREFACE TO SECOND EDITION. new barrier should be erected for the protection of honest people. We desire to acknowledge the great kindness of profes- sional friends in various sections of our country. AsTOR Building, io Wall Street. New York, Sept., 1889. PREFACE TO FIRST EDITION. Recent innovations in civil procedure have effected important changes in the remedies of creditors in proceed- ings instituted to convert equitable assets or to reach prop- erty fraudulently alienated or held under a secret trust for the debtor. The aim of this treatise is to furnish suitors with a practical guide in this class of litigation. The earlier statutes and decisions concerning fraudulent alienations to defeat creditors have been noticed ; the debtor's rights and interests in property available to creditors have been con- sidered ; and the different forms of remedies or of procedure which may be invoked either at law or in equity ; the status essential to entitle a creditor to maintain a bill ; questions of parties, complainant and defendant ; of pleading ; the form and effect of the judgment ; and the rules regulating provisional relief, reimbursement and subrogation, have been treated, the discussion embracing both chancery prac- tice and the reformed procedure. The discussion, however, has not been limited to the de- tails of practice or procedure. Chapters have been devoted to the subjects of intention, consideration, and indicia of fraud ; to the important questions relating to change of possession, and generally to evidence and defenses as ajijier- taining to these suits. The rules applicable to frauds upon creditors springing out of the relationship of husband and wife, and relative to covinous general assignments and fraudulent chattel mortgages, have been examined, and *he doctrine of spendthrift trusts discussed. Special pains have been taken in the treatment of tlie law of notice, actual and constructive, as applied to our subject. VI PREFACE TO FIRST EDITION. One of the chief aims of a work of this kind is to hung; side by side the decisions in different States upon kindred questions and construing similar statutes. Federal authori- ties have been frequently quoted, cited, and relied upon, because more universally accredited, and in pursuance of a belief that such a policy tends to render the body of our law more symmetrical and harmonious. Still, the great mass of the decisions collated and discussed has been drawn from the courts of last resort in the various States. It is needless to repeat the criticisms advanced in the body of the work upon the tendency manifested in certain authorities to close some of the sources of relief formerly available to complainants. The creditor's power to im- prison the debtor or inflict personal punishment upon him, and coerce payment in that way, is practically destroyed ; hence, we urge, remedies against property rights and inter- ests should be strengthened and perfected. A policy under which a debtor can enjoy " a beneficial interest in property by such a title that creditors cannot touch it " is not to be encouraged or commended. The chapters devoted to Void and Voidable Acts do not entirely reflect the author's original design. The lack of available space, the pressure and anxiety incident to active practice, and other causes, necessitated the publication of that portion of the work in its present compressed form. The topic was suggested by the main discussion (see § 408), and is believed to be not wholly out of place in this volume. New York, May, 1884. CONTENTS. FRAUDULENT CONVEYANCES AND CREDITORS' BILLS. CHAPTER I. PACE Introductory Observations. — Growth of the Law con- cerning Fraudulent Conveyances. — Phases of the Subject, i CHAPTER II. Property Susceptible of Fraudulent Alienation. — Assets Available to Creditors, 44 CHAPTER III. Creditors' Remedies, ........ 78 CHAPTER IV. Status of Attacking Creditors, 113 CHAPTER V. Existing Creditors, 143 CHAPTER VI. Subsequent Creditors, 153 CHAPTER VII. Who may be Complainants, 170 Vlll CONTENTS. CHAPTER VIIL PAGE Parties Defendant, 197 CHAPTER IX. Complaint 214 CHAPTER X. Of the Plea or Answer, 237 CHAPTER XI. Of the Judgment or Decree, 247 CHAPTER XII. Provisional Relief. — Injunction. — Receiver. — Arrest, . 264 CHAPTER XIIL Reimbursement and Subrogation, 271 CHAPTER XIV. Intention, 279 CHAPTER XV. Consideration, 296 CHAPTER XVI. Indicia or Badges of Fraud, 314 CHAPTER XVII. Change of Possession. — Delivery, . . . . • . . 348 CHAPTER XVIII. Evidence, 374 CONTENTS. IX CHAPTER XIX. PAGE Defenses, 396 CHAPTER XX. Husband and Wife. — Fraudulent Marriage Settlements, 409 CHAPTER XXI. Fraudulent General Assignments, 426 CHAPTER XXII. Fraudulent Chattel Mortgages, 469 CHAPTER XXIII. Spendthrift Trusts, 483 CHAPTER XXIV. Bona Fide Purchasers. — Actual and Constructive No- tice. — Fraudulent Grantees, 500 CHAPTER XXV. Preferences, 530 CHAPTER XXVI. Conveyances Valid between the Parties. — Relief to Defrauded Grantors, 540 CHAPTER XXVII. Jurisdictional Questions. — Conclusion, .... 558 X CONTENTS, VOID AND VOIDABLE ACTS. CHAPTER I. PAGE Void and Voidable Acts Discussed, 563 CHAPTER H. Voidable Acts, 628 CHAPTER III. Ratification or Affirmance of Voidable Acts, . . 673 CHAPTER IV. Avoidance of Voidable Acts, 689 INDEX, 711 TABLE OF CASES [References are to pages.] Aaronson v. Deutsch, 435. Abbey v. Dewey, 12. V. Deyo, 76. Abbot V. Johnson, 226. Abbott V. Draper, 602. V. Goodwin, 479. V. Tenney, 33, 55, 86. V. Wood, 38. Aber v. Brant, 147. Abercrombie v. Bradford, 433. Abney v. Kingsland, 371, 389. Acer V. Westcott, 506, 508. Acker v. Leland, 236. V. White, 277. Ackerman v. Hunsicker, 309, Ackley v. Dygert, 696. Ackworth v. Kempe, 408. Adair v. Brimmer, 674, 675. ■* Adams v. Davidson, 173, 191, 338, 386, 387, 388. V. Hull, 313. Addington 7a Etheridge, 470. Addison v. Bowie, 192. Adee v. Bigler, 120, 136, 265. Adler v. Apt, 320. V. Ecker, in, 428, 432. V. Fenton, 82, 95, 116. V. Milwaukee P. B. Mfg. Co., 200. > Adsit V. Butler, 114, 119, 120, 126, 129, 140, 141. V. Sanford, 132, 215. -(Etna Life Ins. Co. v. Middleport, 627. ^tna Ins. Co. v. Johnson, 12. JE\.na. Nat. Bank v. Fourth Nat. Bank, 67. V. Manhattan Lite Ins. Co., 42, 56. 7K U. S. Lite Ins. Co., 42, 422. Ager V. Duncan, 544. V. Murray, 61. Agricultural Ins. Co. v. Barnard. 655. Albany City Bank 7>. Schermerhorn, 534- Albany & R. I. & S. Co. v. Southern Agr. Works, 467. Albert v. Back, 236. Alden 7/. Gregor)-, 222. Aldrich v. Earle, 385. Aldridge v. Muirliead, 398, 414. Alexander, I/i re, 324. V, Caldwell, 384. V. Crittenden, 410. V. Nelson, 581, 582. V. Quigley, 208. V. Todd, 339. Allan V. McTavish, 15. Allen V. Berry, 89, 108, 274. V. Berryliili, 566, 654. V. Booker, 602. V. Center Valley Co., St,. V. Cole, 240. V. Cowan, 362, 365. V. Gillette, 659. V. Halliday, 525. V. Inhabitants of Jay, 606, 607. V. Kennedy, 530. V. Kinyon, 281. V. Massey, in. V. Minor, 641. V. Montgomery, 183. V. Mower, 238. V. Poole, 638, 693. V. Rundle, 38, 295. V. Smith, 367. V. Thomas, 67. V. Vestal, 208. Allenspach ?'. Wagner, 171. Allentown Bank 7/. Beck, 369. Alley V. Conneli, 245, 271, 272. Aliis V. Billings, 571. Allison V. Hagan, 525, 541, 545. 2K Welk'r, 198, 205. Allore V. Jewell, 651, 652. Allyn V. Thurston, 124, 140, 214. Alnutt V. Leper, 1 14. Alsager t'. Rowley, 125. V. Spalding, 597. Xll References TABLE OF CASES. [ are to pages. Alston V. Rowles, 177, 344. Alsworth V. Coidtz, 690. Alton V. Harrison, 325, 326. Altringer v. Capeheart, 312. Amer. Exch. Bank v. Inloes, 447. Amer. Union Tel. Co. v. Middleton, 558. Ames, Ex parte, 537. V. Blunt, 541. V. Gilmore, 8, 251, 328, Amherst's Trusts, In re, 491. Ammon's Appeal, 167, 344. Amsden v. Manchester, 382, 393. Anderson v. Bradford, 134, 135. V. Brooks, 371. V. Dunn, 301. V. Lachs, 538. V. Radcliffe, 196. V. Reed, 269. V. Roberts, 6, 377, 527, 569, 571. 572, 5^2, 588, 619, 620. V. Wheeler, 405. Andrews v. Jones, 303, 304, 380. V. Marshall, 37. V. Rowan, 73, 94. V. Spurlin, 485. Andruss v. Doolittle, 181, 544. Angel V. McLellan, 646. Ang-ier v. Ash, 108. Anglo-Californian Bank v. Ames, 634. Annin v. Annin, 148, 161, 207, 232, Anonymous (13 Ves. 590), 648. (I Wall. Jr. 113), 154. Ansonia B. & C. Co. v. New Lamp Chimney Co., 406. Antelope (The), 212. Anthony v. Harrisoii, 313. V. Hutchins, 671. V. Stype, 463. V. Wade, 25, 75. V. Wilson, 582. V. Wood, 139. Anthracite Ins. Co. v. Sears, 47. Apperson v. Burgett, 251, 328, 369. Appleton V. Warner, 612. Arbourn v. Anderson, 613. Archer v. Lapp, 326, 392. Archibald v. Thomas, 599. Ardesco Oil Co. v. North Amer, Oil & M. Co., 467. Arendale v. Morgan, 629. Arglasse v. Muschamp, 558. Armfitld v. Armfield, 304. Armington v. Rau, 194, 540. Armitage v. Mace, 413. V, Widoe, 640. Armjry v. Delamirie, 392. Armour v. Mich. Cent. R.R. Co., 682. Armstrong v. Sanford, 269. V. Scott, 246. V. Toler, 592, 596, 608, 609. ^ Arnett v. Cloudas, 629. Arnholt v. Hartwig, 502, 504. Arnold v. Arnold, 228. V. Richmond Iron Works, 681. Arnot V. Erie Ry. Co., 313. Arnwine v. Carroll, 54. Arthur v. Commercial & R.R. Bank, 27, 378, 431, 443- Arundel v. Trevillian, 597. Arundell v. Phipps, 352. Arzbacher v. Mayer, 484. Ash V. Putnam, 630. Ashcroft V. Walworth, 6r, 62. Ashfieid V. Ashtield, 48, 63. Ashhurst v. Given, 492, 498. Ashhurst's Appeal, 522. Ashlin V. Langton, 640. Ashmead v. Hean, 288. Ashmole v. Wainwright, 670. Aspinall v. Jones, 95. Astley V. Reynolds, 669. Astor V. Wells, 283. Athey v. Knotts, 49. Atkins V. Kinnan, 656. Atlantic Nat. Bank v. Tavener, 410, 411, 530. Att'y Gen'l v. Brown, 241. V. Corporation of Poole,205. V. Cradock, 226. V. Day, 269. V. Dean of Windsor, 392. Atwood V. Impson, 150, 284, 517, 518, 519. X Auburn Exch. Bank v. Pitch, 530, 531. Aurand v. Schaffer, 420. Austin V. Barrows, 96. V. Charlestown Seminary, 639. V. Morris, 133. V. Winston, 546, 547. Avery v. Hackley, 211. V. Johann, 255, 517. V. Judd, 195. V. Street, 318, 369. Ayres v. Husted, 323. V. Scribner, 7. Babb V. Clemson, 328, 365. Babcock v. Eckler, 13, 17, 24, 148, 152,— 163, 165, 279, 293, 299, 410, 416. V. Middlesex Sav. Bank, 380. Bach V. Cook, 582. Bachman v. Sepulveda, 208, 251, 261. Backentoss v. Speicher, 630. Backhouse v. Harrison, 517. J!e/erenceij TABLE OF CASES. [are /o /ag-es. XIU Backhouse v. Jett, 13. Bacon v. Scannell, 364. Badger v. Badger, 222, 223, 224, 401. V. Phinney, 684, 703. V. Story, 182. Bagley v. Bowe, 455, 463, 464. Bailey Z'. Bailey, 145, 157, 177. V. Bamberger, 698. V. Buell, 581. V. Burton, 120, 121. V. Glover, 224, 402. V. Lane, 94. V. Mills, 434. V. Ryder, 232, 261, 559. Bailie v. McWhorter, 495. Bain 2^. Brown, 661. Bainton v. Ward, 63, 64. Baird v. Mayor, etc., of N. Y., 435. Baker v. Bartol, 174. V. Bliss, 507, 512, 515, 517. V. Connell, 312. V. Disbrow, 682. V. Oilman, 145, 168, 169, 548. V. Humphrey, 30. V. Kelly, 295. V. Lyman, 104. V. Morton, 668. v. Palmer, 406. V. Union Mut. Life Ins. Co., 313. Baldwin v. Buckland, 457. V. Burrows, 675. V. Campfield, 593. V. Cawthorne, 543, 593. V. Dunton, 650. V. Flash, 481. V. Freydendall, 343. V. Hale, 405. V. Liverpool & G. W. S. S. Co., 668. v. Martin, 224. V. Peet, 89, 429, 443. 461. V. Rogers, 75. V. Ryan, 140. V. Van Deusen, 625. Baldy v. Stratton, 599. Bales V. State, 667. Ball V. Loomis, 355. V. Slal'ten, 184, 429. v. Siafter, 182. Ballentine v. Beall, 120. 121, 172, 175. Ballou 7'. Jones, 129, 134. Balto. & O. R.R. Co., lix parte, 560. V. Hoge, 339. 391. Bancroft v. Blizzard, 283. V. Curtis, 415. Banfield v. Whipple, 531. Bangs V. Mcintosh, 655. Bank v. Cooper, 183. Bank v. Forney, 53. V. Harris, 136, 205. Bank of Batavia v. N. Y., L. E. & W. R.R. Co.. 682. Chillicolhe v. Dodge, 627. Georgia?'. Higginbottom, 325. Leavenworth v. Hunt, 470. 537- Middlebury z*. Rutland, 381. Rome V. Haselton, 172. Silver Creek v. Talcott, 7, 464. the Metropolis v. Guttschlick, 67. the U. S. V. Housman, 148, 151. 331. 369. Utica V. City of Utica, 260. Banks v. Judah, 660. Bannon v. Bowler, 470. Baptist Church v. Brooklyn Fire Ins. Co., 388. Barbarin v. Saucier, 107. Barber v. Graves, 639. Barbour ?'. Priest, 522. Barker, Matter of, 651. V. Bradley, 67. V. Davis, 487. V. Dayton, 93, 268. V. French, 335. V. Hibbard, 647. V. Smith, 184. V. Wilson, 638. Barkow v. Sanger, 321, 377. Barling v. Bishopp, 145, 164, 193. Barlow v. Arnold, 224. V. Myers, 68. Barnard v. Campbell, 630, 631, 632. Barnes v. Brown, 549. V. Gill, 192. V. Hathaway, 653. V. Morgan, 48, 61, 62, 93. Barnet v. Fergus, 470. Barnett v. Blake, 491. Barney v. Griffin, 4.31, 443, 449, 479. - Barnitz v. Rice, 15. Barnum v. Hempstead, 464. Barr v. Baker, 705. V. Cubbage, 69. V. Reitz, 349, 362, 364, 367. - Barrack v. McCulloch, 49. Barrett v. Nealon, 282. Barron v. Morris, 476. Barrow v. Bailey, 12, 1 14, 241, 32S, 336. ' z>. Barrow, 303, 304, 541. 7'. Paxlon, 354. Barry 7'. Abbot, 102, 175. V. Equitable L. A. Soc, 46. V. Kennedy, 58. Barstow v. KiLington, 33. -XIV Jie/crences'j TABLE OF CASES. [^are to />a£-es. Bartle v. Coleman, 599. Bartles v. Gibson, 327, 517. Bartlett T/. Blake, 6, 355. V. Cheesbrougli, 342. V. Cowles, 704. z'. Drake, 699, 705. ■^ V. Drew, 188, 190, 191, 212. V. McNeil, 94. Barto's Appeal, 81. \Barton v. Hosner, 125, 134, 178, 179, 182, 185. V. Moss, 660. V. Van Heythuysen, 30. Basford v. Pearson, 604. Basset v. Nosworthy, 527. Bassett v. Brown, 705. V. McKenna, 167, 169. V. St. Albans Hotel Co., 113. Batchelder v. White, 7. Bate V. Graham, 179, 206, 252. Bateman v. Fargason, 609. Bates V. Ableman, 458. V. Bradley, 182, 183. V. Campbell, 370. V. Lyons, 116. V. N. Y. Ins. Co., 670. V. Plonsky, 127, 129, 173. Battell V. Torrey, 656. Battenhausen v. Bullock, 508. Battles V. Laudenslager, 7, 391. Bauknight v. Sloan, 172, 173, 205. Baum V. Stone, 646. ^ Baxter z>. Earl of Portsmouth, 652. V. Moses, 113, 115, 117, 133, 137- Bay ^'. Cook, 125, 133. ^ Bayard v. Hoffman, 33, 42, 47, 55, 86, 103, 105. Baylis v. Dineley, 642. V. Le Gros, 621. Bayne v. State, 411. Bayspoole v. Collins, 297. Bay State Iron Co. v. Goodall, 207, 244. Baze V. Arper, 108. Beach v. Bestor, 137. V. Kezar, 598. V. Viles, no. ■u. White, 167. Beall V. Williamson, 600. Beals V. Guernsey, 354. V. See, 702. Beamish v. Hoyt, 54. Bean v. Amsinck, 597. V. Edge, 67. •-■ V. Smith, 39, 72, 90, 273, 328, 527. Beard v. Dedolph, 413. Beards v. Wheeler, 289. Beardsley v. Hotchkiss, 679, 6S9. Beardsley Scythe Co. v. Foster, 199, — 214, 215. Beatty v. Fishel, 9. Beaubien v. Beaubien, 216, 224, 405. Beaumont v. Herrick, 90, 210. Beck V. Burdett, 6, 79, 104, 119. V. Parker, 434. Becker, Matter of, 639. V. Torrance, 68, 93, 186, 236. — Beckett v. Cordley, 695. Beckwith v. Burrough, 42, 355, 367. V. Union Bank, 429. Bedell v. Chase, 293. Z'. Scruton, 405. Bedford v. Penny, 517. Bedinger v. Wharton, 704. Beebe v. Saulter, 178. Beecher ^'. Clark, 285, 298, 331. Beeckman v. Montgomery, 161, 163. Beekman v. Bonsor, 572. Beer v. Hooper, 405. Belding v. Pitkin, 592. Belford v. Crane, 23. Belknap v. Bender, 67. Bell V. Dagg, 625. V. Johnson, 170. V. Lamprey, 405. V. Leggett, 536. V. Merrifield, 231, 232, 247. Bellamy v. Bellamy, 541, 547. Beller v. Jones, 651. Bellows z'. Wells, 372. Belmont Branch Bank v. Hoge, 517. Belt 7/. Ferguson, 424. V. Raguet, 344. Benedict v. Huntington, 464, 465. Benfield v. Solomons, 455. Benford v. Schell* 362, 367, Benham v. Bishop, 685. Benner v. Porter, 574. Bennet, Ex parte, 491. Bennett v. Austin, 658, 660, 676, 6"]%, " 680. V. Buchan, 507. V. Davis, 640. V. Ellison, 432, 443, 449. V. McGuire, 93, 94. V. State, 667. V. Stout, 114. Benninghoff z>. Agricultural Ins. Co., 675. Bensell v. Chancellor, 648, 700. Benson v. Flower, 57. V. Monroe, 668, 669. Bentley v. Craven, 660. V. Whittemore, 467. Benton v. Allen, 201. V. Snyder, 356. He/erencgs'j TABLE OF CASES. \_are io/ages. XV Benton v. Thornhill, 322. Bentz V. Rockey, 15, 28. Bergen v. Bennett, 679, 688. V. Carman, 98. Bernheim v. Beer, 31. Berry v. Riley, 431. Berryman v. Sullivan, 123, Bessent v. Harris, 599. Besson v. Eveland, 416. Best V. Staple, 195. Beste V. Burger, 445. Bethel Steam Mill Co. v. Brown, 367. Belts 77. Carroll, 703. 7/. Union Bank, 312. ''Beus V. Shaughnessy, 449, 450, 451. Beverley's Case, 648, 650. Bholen v. Cleveland, 467. Bibb V. Baker, 325, 336. V. Freeman, 14, 144. Bickel V. Erskine, 639. Bickler v. Kendall, 328. Bidault V. Wales, 630. Biddinger v. Wiland, 520. Bidlach •z/. Mason, 190. Bigelowr V. Andress, 128, 137. V. Ayrault, 42, 48, 217. V. Doolittle, 324, 325. V. Heaton, 630. V. Kinney, 684. - V. Stringer, 337, 436, 437, 440, 466. Biggs V. Barry, 630. Billgerry v. Branch, 623. Billhofer 7/. Heubach, 121. Billings V. Billings, 280. V. Russell, 279, 296, 297, 298. V. Stewart, 93. Billingsley v. Bunce, 466. V. White, 361. Billson V. Crofts, 491. Billups V. Sears, 92. Bingham 7/. Barley, 693. 7J. Weidervvax, 312. Binks 7A Rokeby, 174. Binnie v. Walker, 140. Bird V. Andrews, 340. V. Bolduc, 344. Birdsall 7/. Russell, 505, 506, 507. Birely's Ex'rs 7/. Staley, 92. Birkbeck v. Ackroyd, 310. Bisbing v. Third Nat. Bank, 370. Bishop V. O'Connell, 358, 363. V. Schneider, 502. V. Stebbins, 324, 530. V. Stewart, 705. V. Warner, 470. Bissell 7'. City of Kankakee, 607. V. Hopkins, 349, 354. Bissell V. Mich. Southern & N. I. R.R. Cos., 568. Black V. Kuhlman, 297. V. Nease, 154, 161. Blackburn v. Smith, 706. Blackman v. Preston, 320, 331. V. Wheaton, 30, 31, 356. Blackstone Bank v. Davis, 485, 486, .495- Blair v. Cuming County, 607. V. Smith, 525. Blaisdell ?'. Cowell, 9. Blake v. Blake, 178, 545. V. Freeman, 558. V. Nelson, 705. V. Sawin, 184. V. White, 393. Blakeslee v. Rossman, 321, 356, 470, 478, 480, 481. Blanchard v. Goss, 588. V. Mann, 381. z>. Nestle, 650. Blanchenav v. Burt, 616. Blandin, /« r^, 410. Blaut V. Gabler, 293, 362. Bleakley's Appeal, 594. Blenkinsopp 7'. Blenkinsopp, 81. Blennerhassett t. Sherman, 297, 298, 320, 325, 330, 331.333- Blight V. Schenck, 456. Bliss V. Matteson, 535, 597. Blodgett V. Chaplin, 336. Blondheim 7', .Moore, 266. Bloodgood 7'. Clark, 94, 264. Bloom V. Burdick, 639. Blount V. Costen, 171. Blo.xam v. Elsee, 61. Blue V. Penniston, 390. Blystone v. BIystone, 594. Boardman 7a Halliday, 445, 463. Bobb V. Bobb, 230. Bockes V. Lansing, 194. Boerum v. Schenck, 659, 676, 677. Boggs V. McCoy, 208. V. Thompson, 7^. Boils V. Boils, 193. Bolt 7'. Rogers, 594. Bomberger 7'. Turner, 131. Bond V. Pacheco, 581. Bonestecl v. Sullivan, 540, 554. Bongard v. Block, 145, 193. Boobier 7/. Boobier, 637. Boody 7/. McKenney, 682, 684, 698, 703.- Booher 7'. Worrill, 325, 328, 411, Booker 7a Robbins, 599. Bool 7'. Mix, 638, 691, 693, 698. — Boone 7'. Chiles, 401, 503. V. Hall, 183. XVI Re/erencc/j TABLE OF CASES. [^are io jiag-es. Boone County v. Keck, 205. Booraem v. Wells, 660, Booth V. Barnum, 507. 7/. Bunce, 29, 89, 108, 390. TJ. Clark, 188. 7/. Patrick, 181. V. Warrington, 402. Boothby v. Brown, 358. Bordeaux ads. Treasurers, 613. Borden 7a Doughty, 272. Borland 7/. Mayo, 327. Born V. Shaw, 99, 343, 357. Borst V. Corey, 421. Boston Bank v. Chamberlin, 681. Boston Music Hall Assoc, v. Cory, 367. Bostwick V. Burnett, 289. V. Menck, 94, 185, 186, 187, 250. Botsford V. Beers, 133. Bott V. Smith, 49. Bottomley v. United States, 582. Boud 7/. Bronson, 364. Bourne v. Stevenson, 181. Bouslough 7'. Bouslough, 145, 179, 193. Bowden v. Johnson, 185, 221, 239, 340, Bowe V. Arnold, 128. V. Campbell, 102. Bowen v. Bell, 603. V. Bramidge, 461. V. Clark, 473. V. Evans, 503. V. Gent, 171. V. Hoskins, 83. Bowers v. Keesecher, 227. Bowery Bank Case, 467. Bowes 7^. Foster, 541. Bowlsby V. Tompkins, 194. Bowman v. Houdlette, 342. V. Tallman, 613. Bownes v. Weld, 115. Boyd, Ex parte, 94, 114, 221. V. Anderson, 627. V. Beck, 504. V. Boyd, 224, 225. V. De La Montagnie, 549, 550. V. Dunlap, 272, 273. V. Ellis, 327, 328. ■V. Hoyt, 198, 205, 227, 229. V. Jones, 389. V. Olvey, 183. V. Turpin, 296. Boyle V. Zacharie, 405. Boynton v. Hubbard, 597. V. Rawson, 236, 533. V. Veazie, 367. Bozeman v. Browning, 691, 693. Bozman v. Draughan, 298. Brackett v. Harvey, 182, 449, 470, 472, - 473, 478, 479, 480. V. Waite, 344. V. Watkins, 75. Bradbury 7^. Falmouth, 506. Bradford v. Bradford, 503. V. Rice, 406. V. Tappan, 541. Bradford's Appeal, 420. Bradley v. Buford, 239, 324, 358, V. Fisher, 579. V. Fuller, 96. V. Obear, 37. V. Peixoto, 486. V. Pratt, 647. V. Ragsdale, 287, 296. Bradner, Matter of, 588. Bradshaw v. Yates, 551. Bradwell v. Weeks, 67. Brady, Matter of, 406. V. Briscoe, 298. Brainerd v. Dunning, 436, 465. Braman v. Johnson, 45. V. Stiles, 496. Bramhall v. Ferris, 53, 70, 491, 495. -- Branch Bank v. Crocheron, 598. Branch Bank of Decatur v. Kinsey, 3ii- Branch Bank of Montgomery, v. Hodges, 248. Brandon v. Aston, 491. V. Robinson, 53, 486, 490, 495, 497- Brantom v. Griffits, 372. Brashear 7/. West, 439, 531. Brawn v, Keller, 351, 365. Breckenridge's Heirs v. Ormsby, 567, 578, 633, 637, 691. Breckinridge v. Taylor, 380. Bree v. Holbech, 403. Breed v. Judd, 646. V. Pratt, 666. Brenan v. Burke, 56. Brennan v. Wilson, 341. Brett V. Carter, 475, 476. Brewer v. Connell, 424. Brewster v. Power, 87. Brice v. Lide, 380. V. Myers, 30, 38, 344. Bridenbecker v. Lowell, 657. Bridge V. Eggleston, 383, 385. Bridges v. Pleasants, 572. Bridgewater v. Brooktield, 597. Briggs V. Beach, 302. V. Boyd, 668, 670. V. McCabe, 698. V. Merrill 255, 272, 544. V. Mitchell, 281, 417. He/erences'j TABLE OF CASES. ^areUpa£a. xvn Briggs V. Oliver, 113, V. Parkman, 475. Brigham v. Luddington, 189. V. Tillinghast, 6, 450, 451. Brinkerhoff v. Brown, 120, 140, 141, 172, 173, 205. Brinks v. Heise, 288, 340, Brinley v. Spring, 337. Briscoe v. Bronaugh, 16. Bristol Co. Sav, Bank v. Keavy, 381, 395- Brittin v. Wilder, 639. Britton v. Lorenz, 427, 456. ■ Broadway Nat. Bank v. Adams, 54, 71, 488, 496. Brock V. Barnes, 663. Brockenbrough v. Brockenbrough, 482. Broderick's Will, 522. Bromfield, Ex parte, 567. Bromley v. Goodrich, 565, 569, 619. V. Holland, 707. Bronson v. Wilmington N. C. Life Ins. Co., 200. Brooker v. Scott, 646. Brooks V. Caughran, 193. V. Hanford, 429. V. Hodgkinson, 616. V. Martin, 593. V. Peck, 175. V. Powers, 354. V. Schwerin, 310. V. Stone, 81, 120, 127. V. Wimer, 466. Brookville Nat. Bank v. Kimble, 410. Brotherhood's Case, 688. Broughton v. Broughton, 554. Broun v. Hull, 623, 624. Brouwer v. Harbeck, 379. B rower v. Peabody, 503, 632. Brown, Matter of, 158. V. Ashbough, 100. V. Bank of Miss., 137, 142. V. Bates, 123, 173. V. Bellows, 603. V. Bronson, 1 10, 423. V. Brown, 566, 620. V. Chase, 268. V. County of Buena Vista, 400. V. Dean, 7. V. Fitz, 25. V. Gilmore, 186. V. Guthrie, 427, 480. V. Hartford Ins. Co., 690. V. Haven, 226, 227. V. Heathcote, 184. V. Herr, 378. V. Jodrell, 648. V. Jones, 605. Brown v. Knox, 443. V. Long, 1 1 5. V. Mayor, 687. V. McCune, 696. V. Nichols, 93, 104, 105, 533. V. Piatt, 481. V. Rawlings, 307. V. Ricketts, 171 V. Snell, 89, 108. V. Spivey, 421. V. Texas C. H. Co., 327. V. Torrey, 665. V. Volkening, 348. V. Wel)b, 5X8. 7'. Williamson, 54, 492, 498. Brownell v. Curtis, 184, 240. Browning v. Bettis, 56, 94. V. Hart, 184. V. Morris, 550. Brownsword v. Edwards, 23. Bniggerman v. Hoerr, 146. Brumagim v. Tillinghast, 670. Brumfield v. Boutall, 697. Brummel v. Stockton, 358. Brundred v. Paterson Machine Co., 380. Bruns v. Stewart Mfg. Co., 270. Brunswick v. McCIay, 365. Bryan v. Baldwin, 662. V. Spruill, 217. Bryans v. Taylor, 56. Bryant v. Bryant, 179. V. Kelton, 16. V. Richardson, 647. V. Simoneau, 7, 12. V. Young, 335. Buchanan v. Marsh, 81, 122. V. Smith, 379. Buck V. Sherman, 7. V. Voreis, 92. 298, 374, 397, 525. Buckingham 7/. Walker, 172, 174. Buckley 7'. Artcher. 630. V. Wells, 415. V. Wheeler, 75. Buckner v. Calcote, 224. V. Stine, 379. Budd 7'. Atkinson, 528. Buell 7'. Cross, 582, 586. Buffington 7'. Harvey, 2co. Buffum V. Jones, 341. Buford V. Keokuk N. L. Packet Co., 171. Bugbee 7>. Sargent, 227. Bulkley 7'. BuHington, 336. Bull 7'. Griswold, 372. Bullene v. Smith. 21. Bullis 7'.Montgomcry, 385. Bullitt 7'. Taylor, 123, 540. Bullock V. Babcock, 643. XVIU Fe/ereneeij TABLE OF CASES. \_are to M£'es. Bullock V. Narrott, 12. V. Williams, 350, 470. Bulmer, Ex parte, 611. V. Hunter, 418, 419. Bumpas ?'. Dotson, 342. Bunn V. Ahl, 22, 280, 298. V. Bunn, 244. Burbank v. Wiley, 386. Burdell v. Burdell, 267. "^ Burdick v. Gill, 164, 290, 295, 326, V. Jackson, 537, V. Post, 21, Burdsall v. Waggoner, 219. ^ Burgert v. Borchert, 6, 19, 21, 281, 358. Burgett V. Burgett, 171. Burke v. Adams, 171. V. Burke, 341. V. Smith, 397, Burkey v. Self, 344. Burlen v. Shannon, 291. Burley v. Russell, 645. Burlingame v. Burlingame, 604. Burlington v. Beasley, 607. Burnes v. Cade, 56. Burnett v. Gould, 114, 124, 136. '^ Burnham v. Brennan, 19, 355, 385, 507. Burns v. Morse, 118. Burr V. Beers, 67, 69. V. Burton, 667. V. Clement, 18, 457, 530. Burras v. Looker, 246. Burrill v. Smith, 625. Burrows v. Purple, 145, 177. ^ Burt ^/. Keyes, 91, in, 175, 216, 534. V. Panjaud, 370, V. Timmons, 49. Burton v. Boyd, 343. V. Farinholt, 42, 47, 178. Burtus V, Tisdall, 3, 221. Burwell v. Fauber, 512. Bush V. Glover, 588. V. Roberts, 384, 513, 515, 519. V. Rogan, 541. Bush n ell ■ZA Bushnell, 179. V. Eastman, 98. *" Buswell V. Lincks, 140, 141, 231,261. Butcher ?7. Harrison, 182. V. Stultz, 334. Butler V. Butler, 424. V. Hildreth, 185, 545. V, Lee, 603. V. Moore, 37. V. Mulvihili, 666. V. Potter, 581. V. Spann, 172, 226. V. Watkins, 390. Buttertield v. Stanton, 412. Butterworth, In re, 161. Butts V. Peacock, 321. V. Wood, 657. Byne v. Vivian, lo"], 708. Byrne v. Becker, 283, 433. Byrod's Appeal, 171. Cable V. Cooper, 572. Cadaval v. Collins, 669. Cadbury v. Nolen, 367. Cadman v. Horner, 594. Cadogan v. Kennett, 28, 30, 31, 35, 38, 287, 360. Cadvvallader v. West, 551, Cady V. Whaling, 134. Cahill V. Bigelow, 307. Cahoon v. Marshall, 386. Caldwell v. Bartlett, 631. V. Montgomery, 56. Callan v. Statham, 328, 329. Callanan v. Shaw, 268. Callis V. Waddy, 403. Cambridge Valley Bank v. Delano, 505, 508, 521, Cameron v. Romele, 594. Camp z^. Thompson, 356. Campau v. Chene, 485. Campbell v. Chamberlain, 618. V. Colorado C. & I. Co., 531. V. Dearborn, 555. V. Fish, 54. V. Foster, 70, 71, 484, 492. - V. Genet, 51, 93. V. James, 62. V. Jones, 200, 201. V. Kuhn, 601, ^o\.\ V. Mackay, 226. V. Smith, 67. V. Walker, 587, 679. V. Woodworth, 436, 454, 465. Campion %>. Cotton, 303. Candee •y. Lord, 118, 154. Canfield v. Fairbanks, 704. V. Westcott, 621. Cannan v. Bryce, 595. Cannon v. Norton, 240. V. Young, 381. Canton v. Dorchester, 543, 593. Cantrell, In re, 470, 473. Capron v. Porter, 350, 356. Card V. Walbridge, 182. Cardin v. Boyd, 627. Carew v. Rutherford, 669. Carey v. Giles, 38. Carhart v. Harshaw, 75. Caring v. Richmond, 480. Carl V. Ayers, 619. V. Smith, 76, 344. Carlisle v. Tindall, 87, 140. Jie/erence/j TABLE OF CASES. \_are to /a^-c-s. XIX Carnahan ?'. Allderdice, 641. V. Wood, 386. Carney v. Carney, 386. Carpenter v. Buller, 466. V. Carpenter, 164, 645, 703. V. McClure, 156. V. Murcn, 322, 384. _ V. Roe, 151, 152, 157, 165, 285, 416. V. Soule, 664. V. Talro, 413. Carr 7'. Breese, 155, 158, 164, 165. V. Carr, 334. 555. v. Clough, 69S. ^v. Gale, 184. V. Hilton, 187, 224, 403. V. Van Hoesen, 127, 128, 191. Carrell v. Potter, 638. Carrier v. Sears, 653. Carroll 7a Aldrich, 172. V. Hayward, 513, 515. Carson v. Marshall, 660. Carter t/. Bennett, 118, 376. V. Carter, 491. V. Castleberry, 89. V. Flower, 625. "" V. Grimshaw, 164, 284, 285, 298. V. Gunnels, 12. V. Kerr, 226. V. Palmer, 663. V. State, 667. V. Wiliard, 354, 365. Cartwright v. Phoenix, 367. Cartwright's Case, 280. Carver v. Peck, 61. Cary v. Hotailing, 630. Casanova v. Aregno, 408. Casborne v. Barsham, 663, 672. Case 7/. Beauregard, 81, 83, 113, 114, IIS. 117. 133. 141. 30^- V. Carroll, 658. V. Gerrish, 536, 537. V. Plielps, no, 158, 161. Casey v. Janes, 453. Casey's Trust, In re, 491. Cason V. Murray, 431. Cassell V. Williams, 76. Cassidy v. Meacham, 214. Castle V. Bader, 137. V. Bullard, 316, 340, 382, 390. V. Lewis, 128, 139. V. Palmer, 25. Caswall, Ex parte, 63. Caswell V. Hill, 49. Catchings z/. Manlove, 121. Catlin V. Currier, 471, 473. V. Doughty, 93. V. Eagle IJ.uik, 467. Caulfield v. Maguire, 491. Cavender v. Smith, 327. Cecil V. Salisbury, 683. Cecil Bank v. Snively, 87. Central Branch U. P. R.R. Co. v. Smith, 607. Chace v. Chapin, 632. Chadwick v. Fonncr, 384. Chafee v. Fourth Nat. Bank, 100, 467. Chalfont v. Grant, 69. Challiss V. McCrum, 624. Chamberlain v. Stern, 362. V. Twyne, 325, 326. Chambers v. Coleman, 566, 575. V. Sallie, 76, 431. V. Spencer, 344. Chandler v. ALison, 623, 624. 7/. Powers, 397. V. Sanger, 669. V. Simmons, 587, 690, 699, 703. V. Von Roeder, 89. Chapin v. Pease, 541, 543, 545. V. Shafer, 691, 694, 698. V. Thompson, 397, 428. V. Weed, 679. Chapman v. Bankers' & T. Pub. Co., 45. 172. V. County of Douglas, 605. 606. V. Dyett, 616, 618. Charlton v. Low, 503. Charter Oak Life Ins. Co. ?'. Brant, 422. Chase v. Chase, 145, 384. V. Christianson, 581. V. Flagg, 405. V. Horton, 385. V. Ralston, 367. V. Redding, 230. V. Searles, 84, 205, 227. V. Walters, 283. Chautauque Co. Bank r. Risley. 54, 129, 211, 248, 249, 250. 251, 267. V. White, 251. Cheatham v. Hawkins, 17. 363, 466, 470. 475- Cheever v. Rutland & B. R.R. Co., 268. Chenerv v. Palmer, 335, 480. Cheshire v. Barrett, 684. Chess 7'. Cliess, 681. Chester 7'. Bower, 366. Chesterfield v. Jansscn, 22. Chew 7'. Ellingwood, 467. Chewett v. Moran, 175. 209- Chickcring v. Hatch. 334. Child V. Brace, 120, 142. Chikls V. Connor. 165. XX JHe/erences'] TABLE OF CASPIS. [are to /ag'es. Childs 7A Kendall, 47. Chittenden 7/. Brewster, 124. Chophard 7/. Bayard, 470. Chorpennins^'s Appeal, 659. Choteau 7a Jones, 178. Christy v. Clarke, 612. V, Scotc, 370. Chubb V. Upton, 188. Church V. Ayers, 621. V. Chapin, 344. 376. V. Church, 525. V. Muir, 543, 546. Churchill v. Wells, 166, 167. Church of the Advent v. Farrow, 604. Cipperly v. Rhodes, 74. City Bank v. Rome, W. & O. R.R. Co., 632. V. Westbury, 480. City Nat. Bank v. Goodrich, 470. V. Hamilton, 147, 162, 164,290, 299, 385, 416. City of Newark 7k Funk, 48, 56. Clafiin v. Frenkel, 100. V. Gordon, 236. V. Lenheim, 505. V. Lisso, 250. V. McDermott, 99, 114, 123. V. Mess, 156. V. Ostrom, 68. V. Rosenberg, 358. V. Smith, 242. Clagett V. Gibson, 192, 193. Clan Ranald v. Wyckoff, 62. Clapp V. Dittman, 458. V. Ely, 322. V. Ingraham, 62. V. Leatherbee, 193. Clark V. Anthony, 118, 376. "" V. Chamberlain, 283, 286. v. Depew, 148, 336. V. Douglass, 30, 118, 322, 376. V. Finlon, 334. V. Fisher, 651. V. Fhnt, 632. V. Foxcroft, 118, 191. V. French, 155. •. Garrett. 217. Dawes v. Cope, 357. Dawley v. Brown, 25, 112, 251. Dawson v. Coffey, 1 13. V. Nivcr, 326. -Day 7'. Bach, 588, 614,616, 617. V. Cole. 328. V. Cooley, 42, 156, 167, 182, 184. Day V. N. Y. Central R.R. Co., 601, 602, 603. V. Sharp, 575, 582. V. Washburn, 534. Dayton v. Borst, 188, 190. Dean, Matter of, 453. V. Negley, 23, 306. 7-'. Skinner, 378. De Armond v. De Armond, 423. Debenham v. Ox, 597. De Camp v. Alward, 467. De Caters v. De Chaumont, 679. Decker T", Decker, 87, 118. Deering v. Tucker, 485. V. Winchelsea, 610. De Forest v. Bacon, 446. Degnan v. Farr, 410. Degraw 7^. Clason, 71. De Groot v. Van Duzer, 596. Dehorty v. Jones, 485. Delafield v. Parish, 650. Delano v. Blake, 684. Delashmut v. Trau, 75. Delaware v. Ensign, 328, 329, 480. Delaware Bank v. Jarvis, 624. Demarest 7/. Terhune, 342, 343. Demeritt v. Miles, 382. Dempsey v. Gardner, 354, 365. Denike v. N. Y. & R. Lime & C. Co., 335- Denman v. Campbell, 380. Denn d. Inskeep 7'. Lecony, 571, 620. Dennett 7'. Dennett, 650. Dennick v. Railroad Co., 213. Dennis v. Arnold, 103. Dennis' Case, 291. Densmore v. Tomer, 10, 356. Dent v. Bennett, 672. Department of Parks, ALatter of, 25. De Peyster v. Michael, 486. Deposit Nat. Bank 7'. Wickham, 533. Dequindre 7/. Williams, 581. Derby v. Weyrich. 73. 75, 441. De Ruyter 7a St. Peter's Church, 467. Des Brisay 7'. Hogan, 117. De Silver's Estate, Matter of, 654. Des Moines & M. K. Co. v. Alley, 220. Deutsch 7'. Reilly, 128. Devoe 7/. Brandt, 629. Devol V. Mcintosh. 67, 68. Devoll V. Brownell, 244. Dewey 7'. Kelton, 69. V. Long, 87, 148. V. Moyt-r, 118, 154, 172, 174,^ 182. 183,388. Dewing v. Durant, 103. 7'. Perdicaries. 569, 570, 573,.. 574. 584. 586, 592, 599- XXIV J7e/ere>tce/j TABLE OF CASES. [are io MS'". De Witt V. Van Sickle, 512, 518, 520. "^ DeWolf 7/. Sprague Mfg. Co., 226, 229, 431, 446, 452. ■^ Dexter 7A Hall, 567, 632, 634, 640. Dick V. Hamilton, 50, 164, 238. V. Lindsay, 371. V. Pitchford, 53, 497. Dickerson v. Benham, 462. V. Tillinghast, 504. Dickinson v. Burreli, 196. Disfendorf 7/. Spraker, 171. Dietz V. Atwood, 49. Diffenderfer ?7. Fisher, 75. Dill 7'. Bowen, 704. Dimmock v. Bixby, 84, 227. Dimock v. Revere Copper Co., 406. Dimon v. Delmonico, 429. V. Hazard, 308,454. Divver z/. McLaughlin, 321. Dix V. Briggs, 121. V. Van Wyck, 195. Dixon V. Hill, 502. V. Merritt, 638, 693. V. Watkins, 582. Doak V. Brubaker, 356, 366, 367. Dobson V. Pearce, 376. V. Racey, 657, 688. Dockray v. Mason, 90, 201, 208. Dodd 7'. Adams, 5f. V. Levy, 113, 116, 134. V. McCravv, 292, 344. Dodge 7/. Freedman's Sav. & Trust Co., 553- V. Griswold, 1 28. 7/. Pyrolusite Manganese Co., 265. V. Wellman, 334. Doe(^. Grimsby) v. Bali, 182. (d. Bryan) v. Bancks, 622. (d. Nash) V. Birch, 621. (d. Lyster) 7^. Goldvvin, 675. V. Harter, 586, 613. (d. Abbott) V. Hurd, 540. (d. Mclntyre) v. Mclntyre, 485. (d. Davis) v. McKinney, 147. {d. Lloyd) V. Powell, 621. {d. Thomas) v. Roberts, 681. V. Routledge, 302. (d. Bland) v. Smith, 408. (d. Mann) v. Walters, 675. V. West, 370. Doebler's Appeal, 485. Doerder v. Schmidt, 215. Dolin 7'. Gardner, 311. Doll V. Kathman, 705. DoUard v. Taylor, 94. Dominguez 7'. Dominguez, 398. Dommick v. Michael, 690. Donaldson 7/. Farwell, 184, 630, 632. Donley v. McKiernan, 214, 375. Donnebaum 7a Tinslcy, 299. Donnelly v. West, 187. Donovan 7/. Dunning, 20, 27, 84, 205,' 482. V. Finn, 34, 56. Doolin 7/. Ward, 596. Doran v. Simpson, 125. Dorr 7/. Fisher, 706. Dorrell v. Hastings, 647. Dorsett v. Dorsett, 491. Dorsey v. Smithson, 184. Dortic V. Dugas, 81. Dougherty v. Cooper, 379, 502. Doughten v. Gray, 327. Douglass V. Huston, 534. Douthitt V. Applegate, 328. Douw 7/. Shelden, 45. Dow V. Berry, 52. V. Platner, 51. V. Sanborn, 630. Dowell V. Applegate, 310. Down V. McGourkey, 665, Downer v. Rowell, 247. Downing 7A Still, 613. Dows 7/. McMichael, 181. V. Rush, 630. Doyle V. Peckham, 184. Dozier v. Matson, 407. Drake v. Ramsay, 693, 695. V. Rice, 33, 36, 42, 48, 55, 86, 99- Drennan v. Douglas, 599. Dresher v. Corson, 325. Dreutzer v. Bell, 25, 72. Drexel v. Berney, 196. Drexler v. Tyrrell, 536. Drinkwater v. Drinkwater, 545. Drummond v. Commissioners, 107. 7>. Couse, 283. Drury v. Cross, 275. 7/. Drury, 697. 7/. Roberts, 269. Drysdale 7'. Piggott, 422. Dubois V. Cassidy, 93. Dudley 7/. Dan forth, 284, 289, 432. Duffield V. Morris, 665. Duffin V. Furness, 33. Dugan V. Massey, 425. V. Trisler, 145. V. Vattier, 185. Dummer v. Corporation of Chippen- ham, 241. Dunaway v. Robertson, 592, 593, 594. Duncan 7/. Custard, 250. 7'. Roselle, 420. V. Worrall, 707. Se/erences'j TABLE OF CASES. [are to/a^fs. XXV Duncan's Appeal, 424. Duncomb t. N. Y., H. & N. R.R. Co., 657, 660, 662. Dundas v. Bowler, 1 10. V. Dutens, 55. Dunham v. Byrnes, 185. V. Cox, 215. V. Waterman, 17, 252, 437, 446, 448, 449, 479. Dunlap'j'. Bournonville, 342. f. Hawkins, 149, 150, 165,299. T. Mitchell, 659. Dunlevy •t'. Tallmadge, 90, 1 14, 1 1 5, 1 19, 120. Dunlop V. Richards, 661. Dunn V. Chambers, 245. V. Dunn, 150, 587. z'. Record, 663. Dunnage v. White, 655. Dunning- ■?/. Mead, 470. Dunphy v. Kleinsmith, 80, 258, 260, 320. Dunton v. Brown, 636, 639, 691, 693, 69^.- Durand v. Hankerson, 207. Duress v. Horneffer, 413. Durian v. Central Verein, 46, 422. Dutcher 7a Swartvvood, 480, 481. Dutton z'. Jackson, 192. V. Willner, 662. Duvall 7'. Rollins, 75. Dwight 7'. Germania Life Ins. Co., 242. Dyer 7/. Homer, 541, 545, 587. Dygerf z'. Remerschnider, 147, 152, 153. 299. 3°'. 4'8, 421. Eadie v. Slimmon, 46, 672. Eads 7'. Mason, 257. 7'. Tlionipson, 422. Eagle Fire Co. zk Lent, 642. Earl of Chesterfield v. Janssen, 80, Earl of Mountcashell v. Barber, 675. Early v. Owens, 147. Easterly Z'. Keney, 494, 495. Eastham z'. Roundtree, 592, 593, 594. Easton v. Calendar, 581. Eastwood ZK Brown, 352. Easum 7/. Pirtle, 328. Eaton z'. Badger, 582, 586. V. Eaton, 647, 654. V. Rerry, 555. Eaves, /;/ re, 579. Ecker ?'. Lafferty. 168. Eckert 7/. Flowry, 670. Eckstein Z'. Frank, 643. Eddy 7/. Baldwin, 379. V. Capron, 596. Ede V. Knowles, 49, 154. Edelsten v. Vick, 61. Edgell V. Hart, 293. 373, 470, 472, 473. V. Haywood, 104. Edgington's Trusts, J^e, 491. Edmeston z'. Lyde, 42, 47, 48, 56, 106, 173. 198. Edmonson v. Meacham, 25. Edmonston z'. McLcud, 93, 533. Edmunds v. Mister, 104, 375. Edson V. Cummings, 1 18. V. Hayden, 420. Edwards 7/. Currier, 292, 294. V. Davenport, 568, 634. V. Entwisle, 50, 166,420,421. V. Harben, 352, 470. V. McGee, 146. V. Meyrick, 663. V. Mitchell, 430. V. Stinson, 28. Egery v. Johnson, 5, 483, 500, 502, 513. Ehrisman v. Roberts, 16, 441. Eicks 7A Copeland, 455. Eigieberger z'. Kibk-r, 148, 398. Ekin 7'. McCracken, 649. Eldridge 7/. Philiipson, 530. Elias V. Farley, 54, 441. Eliot V. Mercliants' Exchange, 58, 59. Elizabethtown Sav. Inst. v. Gerber, 116. EUett V. Newman, 264. Ellington v. Currie, 543, 593. Elliot V. Ince, 648. Elliott V. Bcntly, 413, 420. z'. Gurr, 611. V. Stoddard, 3S4. Elliott's Exrs.' Appeal, 422. Ellis V. Grooms, 627. V. Higgins, 541. V. Hornnan, 507. V. McHenrv, 406. V. Whiilock, 38. Ellsworth 7/. Cook, 54. V. Pheljis, 479. Ellwood V. Northrup, 656. Elme 7'. Da Costa, 196. Elmendorf 7'. Taylor, 401, 405. Elmer z>. Welch, 357. Elmore v. Spear, 172. Elston 7'. Jasper, 653, 654. Elwell 7/. Johnson, 214. 7'. Martin, 644. Ely 7>. Cooke, 466. V. Horine, 659. Emans v. Emans, 175. Embry 7'. Palmer, 400. Embury v. Klcmm, 343. Emerson z>. Badger, 59. v. Bemis, 19, 148, 421. XXVI Ke/ere»ces'j TABLE OF CASES. [^are ic /a^es. Emerson v. Newbury, 673. V. Senter, 445, 446. Emery v. Van Syckel, 491. V. Yount, 215. Emigrant Ind. Sav. Bank?/. Roche, 465. Emma Silver Min. Co. v. Grant, 14. Emmerich v. Hefferan, 299. Emmons 7a Bradley, 335. Emends v. Termehr, 327. Enders v. Svvayne, 321. English 7/. People, 607. Engraham v. Pate, 24, 316, 342, 343, 389- Enos V. Tuttle, 387. Erb V. Cole, 6, 7. Erben v. Lorillard, 602. Erfort v. Consalus, 211, 393. Erickson v. Quinn, loi, 102, 224, 225, 402. Estabrook v. Messersmith, 184. Estes, In re, 250. V. Rowland, 178. V. Reynolds, 705. V Wilcox, 124, 125, 132, 136, 140, I So. Estwick V. Caillaud, 18, 530. Esty V. Long, 1 18. Eureka Basin W. & M. Co., Matter of, 607. Evans v. Bickneli, 240. V. Gee, 623. V. Hamilton, 150. V. Hill, 1 14, 132, 140. V. Jones, 326. V. Lewis, 145, 193. V. Rugee, 420. V. Smallcombe, 688. V. Warner, 462. Everett v. Wilkins, 691. Everingham v. Vanderbilt, 252. Everitt v. Everitt, 64. Every v. Edgerton, 369. Evroy v. Nicholas, 695. Ewell V. Daggs. 622. Ewen V. Bannerman, 572. Ewing 7^. Handley, 179. V. Runkle, 283. Exchange Bank of St. L. v. Rice, 68. Eyre v. Potter, 232, 262. Eyston, Ex parte, 491. Fagan v. Harrison. 675. Faikney v. Revnous, 609. Fairbanks v. Antrim, 38. Fairfield v. Baldwin, 322. Fairfield Bridge Co. v. Nye, 355. Fake v. Smith, 624. Falconer 7/. Freeman, 12S, 139. Falkner v. Leith, 311. Fanshawe v. Lane, 445. Fargo V. Ladd, 545. Farley v. Carpenter, 508, 510, 512. Farmer v. Calvert. 10. V. Dean, 679. Farmers' Bank v. Douglass, 298, 482, 519. V. Vanmeter, 625. Farmers' & M. Nat. Bank v. King, 69. Farnam v. Brooks, 651. Earned v. Harris, 123. Farnham v. Campbell, 51. Farnsworth v. Bell, 193. V. Strasler. 120. V. Wood, 188. Farr v. Sumner, 698. Farrar v. Haselden, 135. Farrow v. Hayes, 15, 466. Fassit V. Phillips, 46. Faucett v. Faucett, 679. Fearn v. Ward, 144. Feigley v. Feigley, 9, 176, 192. Feise v. Randall, 536. Felch V. Bugbee, 405. Fellows V. Emperor, 306. V. Fellows. 12, 198, 205, 228. ~ V. Lewis, 24. V. School District, 667. V. Smith, 147, 148. Felton V. Wadsworth, 322. Fenelon v. Hogoboom, 413. Fenner v. Dickey, 23, 535. Feret v. Hill, 629. Ferguson v. Bell, 638. V. Bobo, 114, 214. V. Dent, III. V. Hillman, 255, 256. V. Kumler, 75. V. Spear, 530. Ferlat v. Gojon, 61 1. Ferris v. Irons, 390. Fessenden v. W^oods, 186. Fetrow v. Wiseman, 642. Fetter v. Cirode, 322. Feurt V. Rowell, 470. Fick V. MulhoUand, 10. Fiedler v. Darrin, 293, 396. Field V. Chapman, 83. V. Holland, 240. V. Sands, 186, 533. Fifield V. Gaston, 283. Filer 7/. N. Y. Central R.R. Co., 310. Filley v. Register, 344. Finch V. Houghton, 268. Fincke v. Funke, 187. Fink V. Patterson, 133. Finnin v. Malloy, 73. /ie/ercncesj TABLE OF CASES. \^.iKe /o />a£^es. XXVll Firemen's Charitable Assoc, v. Berg- haus, 681. First Mass. Turnp. Co. v. Field, 403. First Nat. Bank v. Anderson, 481. V. Bf-rtschy, 272, 287. V. Cooper, 182. 183. V. Cummins, 276, 278. V. Gage, 265. V. Holmes, 456. V. Hosmer, 104, 233. V. Hughes, 459. V. Irons, 8. V. Knowles, 339. Fischer 7/. Langbein, 588. Fish V. Clifford, 355. V. French, 575. Fishel 7K Ireland, 329. T Fisher, Il.x parte, 537. V. Andrews, 1 16. ^ V. Basselt, 196. V. Bishop, 551. V. Boody, 262. V. Dabbs, 574. V. Henderson, 27,482. V. Herron, 342. V. Lewis, 162. V. Mowbray, 642. V. Shelver, 328, 342, 411. V. Ta>lor, 493, 498. V. Willard, 673. Fisk V. Fisk, 689. V. Sarber, 659. Fiske V. Foster, 405. Fitch V. Burk, 367. V. Smith, 236. Fitts 7'. Hall, 703. Fitzburgh v. Everingliam, 264. Fitzhugh V. Wilcox, 653. Fitzsimmons v. Alien, 603. Fivaz V. Nic bolls, 592, 597, Flagg V. Mann, 239, 507. V. Willington, 393. Flanagan v. Wood, 366. Flash V. Conn, 212. V. Wilkerson, 277. Fleetwood ?'. City of New York, 670. Fleischer v. Dignon, 342. Fleming v. Buchanan. 63. V. Slocum, 8. Fletcher v. Ashley, 424. 7'. Fletcht-r, 547, 549. V. Hohiies, 1 14, 182. V. Peck, 502. V. Powers, 475. V. Stone, 578. Flewellen v. Crane, 216. Fliess V. Buckley, 98. Flinn v. Powers, 684. Flint V. Clinton County, 467. V. Warren, 572. Florance v. Adams, 661. Florence S. M. Co. v. Zeigler, 28, 290. Flower v. Cornish, 184. Flynn v. Allen, 627. Fogg 7*. Lawry, loi. Foley V. Bitter, 89, 108, 286. V. Burnell, 53. Folsom V. Clemence, 330. Fonda 7'. Gross, 371. V. \'an Home, 640. Fontain v. Ravenel, 572. Foote V. Cobb, 147. Forbes, /;/ re, 481. V. Halsey, 660. V. Howe, 537. V. Logan, 142. V. Overby, 221. V. Scannell, 341. V. Waller, 138, 294, 432, 433. — Ford V. Chambers, 368. V. Douglas, 107. V. Harrington, 550, 663, 664. V. Hennessy, 551. V. Johnston, 42, 145, 153. 328. — V. Williams, 293, 355. 478. 479. _ Forde v. Exempt Fire Co., 179. Forkner v. Stuart, 354. Fornshill v. Murray, 611. Forrest v. Collier, 618. Forrester v. Moore, 530. Forsyth v. Matthews, 342. Fort Stanwix Bank v. Leggett, 182, - 206, 207, 429. Fosdick V. Delafield, 196. Foster v. Bates, 675. V. Brown, 6. V. Foster, 79, 145, 148, 177, 275.., V. Hall, 283, 385. V. McGregor, 25, 72. V. Means, 612. V. Rockwell, 599. V. Saco Mfg. Co., 446. V. Townshend, 187. V. Wallace. 358. V. Woodfin, 18, 321. Fouche 7'. Brower, i. Fourth Nat. Bank v. Stout, 560. Fowler v. Frisbie, 145. V. Jenkins, 435. V. McCariney, 90. V. Trcbein, 89, 108. Fowler's Appeal, 91, 125, 179, 180. 266. - Fox V. Hcaih, 642. V. Hills, 31, 42, 193. V. Moyer, 104, 115, 124, 140, 141 151, 200, 209, 416. V XXViii Re/ere?ices] TABLE OF CASES. \_areioM£es Fox V. Wallace, 121. V. Wel)Ster, 630. Frakes v. Brown, 193. j Francis v. Rankin, 289. Francklyn v. Fern, 182. Franco v. Bolton, 708. Frank v. Kessier, 135. V. King-, 411. z'. Robinson, 466. Frank's Appeal, 303. Frankhouser v. Ellett, 476. Fraser v. Charleston, 209. V. Thompson, 304. Frazer v. Thatcher, 289, 530. Frazier v. Fredericks, 351. Fredericks v. Davis, 553. Freedman's Sav. & T. Co. v. Earle, 533. Freeland v. Freeland, 37, 184, 185, 545, 587. Freelove v. Cole, 549, 550. Freeman v. Bowen, 491. z'. Deming, 182. V. Elmendorf, 194. V. Freeman, 407, 605. v. Hartman, 424. V. Kenney, 581. V. Pope, 147. V. Reagan, 705. V. Sedwick, 547. V. Smith, 76. Freeman (The) v. Buckingham, 682. French v. Breidelman, 253. V. Burns, 334. V. Edwards, 439. V. French, 13, 49, 53. V. Holmes, 18, 46, 65, 148, 149, 344, 4^9- V. Motley, 307, 411, 530. V. Sliotwell, 196, 555. Freund v. Yaegerman, 458. Friedenwald v. Mullan, 243, 500. Frisbey v. Thayer, 115. Frith V. Cartland, 69. Froneberger v. Lewis, 679. Frost V. Mott, 128. z>. Warren, 321. Fullagar v. Clark, 80. Fuller V. Bean, 146. t'. Brewster, 6, 9, i 50, 328, 336, 369- 377- Fullerton v. Viall, 255, 256. Fulton V. Fulton, 485. V. Whitney, 658, 660, 676, 678, 679. 7/. Woodman, 238, 525. Furman z'. Tenny, 75. Fury V. Sirohecker, 51. Fusze V, Stern, 106. Gaffney v. Hayden, 698. Gaffney's Assignee v. Signaigo, 334. Gage V. Dauchy, yy, 415. Gainer zj. Russ, 240. Gaines v. Chew, 226. V. Relf, III, 612. Galbraith v. Galbraith, 605. Galbreath v. Cook, 311, 312. Gale V. Williamson, 148. Gallagher, I/i re, 58. Gallatian v. Cunningham, 243, 679. Gallman zj. Perrie, 81, 88, 195^ Gamber v. Gamber, 420. Games, Ex parte, 470. Gannard v. Eslava, 144, 147. Garahy v. Ba\ ley, 507. Garbutt v. Smith, 51. Garden v. Bodwing, 470. Gardenier T^. Tubbs, 371. Gardiner zk Sherrod, 96. Gardiner Bank v. Wheaton, 13. Gardinierz'. Otis, 255. Gardner v. Broussard, 340. V. Cole, 30, 502. V. Gardner, 665, 666. V. McEwen, 324, 472. V. Ogden, 558, 559, 660. V. Oliver Lee's Bank, 405. Gardner's Admr. v. Schooley, 309. Garfield v. Hatmaker, 87, 131. Garman v. Cooper, 357, 364. Garner v. Graves, 179, 385. Garnsey v. Rogers, 67. Garrahy v. Green, 385. Garretson v. Kane, 56, 555. Garrison v. Monaghan, 45, 66. Garrity v. Haynes, 415. Garrovv v. Davis, 240. Garvin v. Williams, 551. Gary v. Jacobson, 546. Gasherie v. Apple, 463. Gates V. Boomer, 172, 174. V. Mowry, 553. V. Young, 93, 102. Gathings v. Williams, 611, 612. Gay V. Bidwell, 17, 475. V. Hamilton, 334. V. Parpart, 92. Gayler v. Wilder, 60. Ga)lords v. Kelshaw, 199, Gebhard v. Sattler, 543. Gebhart v. Merfeld, 42, 176, 193, 194. Geer}- 7'. Geer}-, 47, 115, 126, 140. Geisse v. Beall, 430. Geist V. Geist, 313. Genesee County Bank v. Bank of Ba- tavia, 174. Jie/erente/j TABLE OF CASES. [are io fag^es. XXIX Genesee River Nat. Bank ?'. Mead, 1 66, 218, 299. George v. Kimball, 631. V. Milbanke, 63. V. Norris, 356. V. Williamson, 104, 105, 178, 533. 534, 541. Gere v. Murray, 437. German Bank v. Leyser, 179, 180. German Ins. Bank 7/. Nunes, 341, 440. Gerrish v. Mace, 195. Getzler v. Saroni, 25. Gibbs V. Neely, 389. V. Thayer, 184. V. Thompson, 321, 339. Gibson, Ex parte, 598, 613, 614. V. Crehore, 179. V. Jeyes, 55c. V. Love, 357. V. Seymour, 335. V. Shufeldt, 560. V. Soper, 653, 699, 700, 701, 703. 704- V. Warden, 184. V. Wilcoxen, 603. Giddings v. Sears, 378, 530, 531. Giffert v. West, 624, 625. Gifford V. Helms, 224, 402. Gilbert v. Lewis, 216. Gilbert's Appeal, 659. Gill V. Carter, 23. V. Griffith, 333. V. Henry, 593. Gilleland %>. Rhoads, 75. Gillet V. Maynard, 602. V. Moody, 188. V. Phelps, 337. V. Stanley, 638. Gillett V. Bate, "]-], 257. V. Gaffney, 370. Gillette v. Bate, 61, 62, 69. Gilliland v. Sellers' Admr., 586. Gilman v. Hunnewell, 59. Gilman, C. & S. R.R. Co. v. Kelly, 674. Gilson V. Hutciiinson, no, 230, 424. V. Spear, 645. Ginther v. Richmond, 454, 463, 464. Girarday v. Richardson, 598. Glann v. Younglove, 420. Glass V. Glass, 612. Gleason v. Fayerwcalhcr, 485. Glen 7). Hope Mut. Life Ins. Co., 67. Glendon Iron Co. v. Uhler, 435. Glenn v. F"armers' Bank, 136. V. Glenn, 324. Glenny t/. Langdon, 182, 183, 186,455. Goddard ?'. Pomeroy, 572. Godden t'. Kimmcll, 401. Godding V. Brackett, 88. Godfrey v. Germain, 328. Goff z/. Rogers, 313, 321. Goldsmith v. Russell, 49, 103. Gollober z*. Martin, 340, 518, 519. Gompertz v. Bartiett, 625. Gooch's Case, 38. Goodail V. Thurman, 599. Goodbar 71. Cary, 308. Goode V. Harrison, 691. V. Hawkins, 7. Goodell V. Fairbrother, 355. Goodheart v. Johnson, 470. Goodman v. Harvey, 517, V. Simonds, 7. V. Wineland, 344. V. Winter, 696. Goodnow V. Smith, 376. Goodrich 7'. Downs, 436, 600. Goodwin v. Hubbard, 283. V. Kelly, 365. Goodwyn v. Goodwjn, 541. Goodyear Vulcanite Co. v. Frisselle, 94. 123. Googins V. Gilmore, 355, 475, 482. Gordon v. Anthony, 61. V. Hobart, in. V. Reynolds. 143, 144, 232,233. V. Kitenour, 382, 527. V. Worthlev, 418. Gore V. Gibson, 648. Gormerly v. Chapman, 89, loS. Gormley v. Potter, 90. Gorrell v. Dickson, 61, n 1. Goshorn v. Snodgrass, 316, 317, 324, 340, 500, 525. Goss V. Neale, 530. Goudy V. Gebhart, 544. Gould V. Emerson, 46, 422. V. Steinburg, 195. V. Ward, 330. Governor v. Campbell, 2S3, 433. Gowan v. Gowan, 546, 557. Grabill v. Moyer, 410, 4n, 417. Graff 7'. Bonnett, 70, 71. V. Castleman, 658. Gragg 7'. Martin, 29S. Graham v. Chai)man, 14. V. Furber, 340. V. Meyer. 535. V. Railroad Co., 163, 190, 156, 284. 209. 541. 555. Granger 7'. George, 403. Grant, Ex parte, 57. V. Carpenler, 485. V. Green, 310. V. Libby, 393. V. Lloyd, 245. XXX Re/erencc/] TABLE OF CASES. [^re/oMS^^- Grant v. Morse, 553. V. National Bank, 8, 522. 7'. Thompson, 648. V. Ward, 7, 148, 412. Graves v. Blondell, 20, 28. V. Dolphin, 53, 495. V. Graves, 293. Gray v. Blanchard, 485. V. Bowles, 579. V. Chase, 104. 7/. Gray, 604. V. Hook, 586, 597, 611. V. McCallister, 289. V. Schenck, 204. Great Falls Ivlfg. Co. v. Worster, 558. Greaves v. Gouge, 116, 176. Greeley v. Dixon, 443. Green v. Adams, 177. V. Creighton, in, 125. V. Early, 520. V. Green, 682, 693, 699, 700. V. Greenbank, 644. V. Hicks, 198. V. Humphry, 629. V. Kemp, 566,619. V. Kimble, 96. V. Nixon, 22. V. Richardson, 67. V. Sarmiento, 405. V. Spicer, 497. 7/. Tanner, 239. V. Tantum, 55. V. Trieber, 15. V. Van Buskirk, 100. V. Walkill Nat. Bank, 207. Greene v. Breck, 175. V. Keene, 55, 61. Greenebaum v. Wheeler, 358. Greenfield's Estate. 148. Greenleaf v. Mumford, 89, 127, 139, 191. Greenleve 7'. Blum, 287. Greenway v. Thomas, 114, 134, 135. Greenwood v. Brodhead, 42, 120. 7/. Lidbetter, 597. V. Marvin, 253. Greer v. Greer, 603. Gregg V. Bigham, 376. Gregory z>. Gregory, 688. V. Whedon, 588. Grider v. Graham, 543, 593. Gridley v. Watson, 150. Griffin v. Barney, 442. 463, 466. V. Cunningham, 573. V. Doe (f. Stoddard, 171. V. Macaulay, 547. V. Marquardt, 293, 432, 433,436- V. Mitchell, 581. V. Nitcher, 90, 114, 115. Griffin 7/. Stanhope, 330. Griffith V. Godey, 651. V. Griffith, 234, 505, 506. V. Parks, 381. V. Townley, 277. Grignon v. Astor, 581. Grimstone 7/. Carter, 507. Griswold 7a Sheldon, 349, 362, 472. Grocers' Bank v. Murphy, 57. Grogan v. Cooke, 48, 55. Gronfier 7a Puymirol, 639. Gross 7'. Daly, 116, 127, 139, 191. Grotenkemper v. Harris, 344. Grover v. Grover, 238. V. Wakeman, 6,. 8, 14, 21, 288 443. 464. Grubbs v. Greer, 341. Guckenheimer 7/. Angevine, 271, 277. Guerin v. Hunt, 456, 457, 458. Guernsey v. Powers, 267. V. Wood, 405. Guest V. Barton, 542. V. City of Brooklyn, 575. Guice V. Sanders, 356. Guidry v. Grivot, 29, 192, 545. Guignard 7^. Aldrich, 371. Guillander v. Howell, 100. Guion V. Liverpool, L. & G. Ins. Co., 376. Gulick V. Bailey, 597. Gullett V. Lamberton, 691. Guthrie V. Gardner, 87, 131. V. Morris, 646. Gutzweiler v. Lackmann, 9. Gwin 7/. Selby, 83. Gwyer v. Figgins, 148. Haak's Appeal, 194, 290, 540. Haas V. Chicago Bldg. Soc, 268. Haase v. Mitchell, 705. Hackett v. Manlove, 469. V. Ottawa, 607. Hadden v. Spader, 12, 33, 42, 56, 61, 86, 105. Hadley t. Morrison, 50. Haenschen 7'. Luchtemeyer, 38?. Hafner v. Irwin, 4, 330, 331, 333, 430. Hagan 7^ Walker, 125, 133. Hager 7'. Shindler, 195, 251. V. Thomson, 7, 9. Haggarty v. Pittman, 84. Haggerty v. Nixon, 87, 114. Hagthorp v. Neale, 706. Haines 7'. Hollister, 199, 205, 206. Halbert v. Grant, 126. Hale 7/. Baldwin, 405. 7'. Metropolitan Omnibus Co, ,347. 7'. Sweet, 361. References'^ TABLE OF CASES. \_cire to /ia^es. XXXI Hale V. Taylor, 293. •». West Va. Oil & Land Co., 377. 7'. Wetmore, 178. Hall V. Arnold, 21, 283, 289. V. Callahan, 178. V. Gerrish, 685. V. Hall, 23, 64. V. Haliet, 664. V. Law, 401. V. Marston, 67. V, Moriarty, 170. V. Naylor, 630. V. Ritenour, 382. v. Russell, 404. V. Sands, 145. V. Stryker, 128. V. Tutts, 487. V. Warren, 655. V. Williams, 496. Hallam t'. Indianola Hotel Co., 657. Hallet's Estate, In re, 69. Hallett^'. Oakes, 652. V. Thompson, 53, 70, 495. Halley v. Troester, 704. Hallovvell ^'. Bayliss, 184. Halsey v. Reid, 699. Halsted v. Halsted, 98. Hambell v. Hamilton, 602. Hamburger v. Grant, 45. Harnett v. Dundass, 24, 144. Hamilton v. Ball, 593. V. Cone, 87, 103. 131, 283. V. Cummings, 708. V. Russel, 30, 356, 357. V. Schaack, 662. V. Scull, 544. Hamlen v. McGillicuddy, 90, 217. Hamhn 7'. Wright, 172, 174, 185, 187, 204. Hammond 7'. Hudson River L & M. Co., 175, 204. Hanauer v. Doane, 584, 595, 596, 599. Hanby v. Logan, 66. Hancock v. Sears, 94, 95. Hand v. Kennedy, 67. Hanes v. Tiffany, 184. Hanford v. Artcher, 310, 356, 361, 368. V. Obrecht, 371. Hangen v. Hachmeisier, 700. Hanks v. Naglee, 599. Hann v. Van Voorhis. 71. Hannan v. Oxley, 413. Hannibal & St. Jo. R.R. Co.T/.Shack- lett, 5S1. Hanover R.R. Co. v. Coyle, 383. Hanson v. Buckner, 148. V. Vernon, 606. Hapgood 7/. Fisher, 501, 502. Hardesty v. Kinvvorthy, 379. V. Richardson, 605. Hardey v. Green, 150. Harding v. Handy, 651. Hardmann v. Bowen, 434, 456. Hardy v. Mitchell, 407. V. Potter, 354. V. Simpson, 17, 19. V. Waters. 640, 641, 642. Harget v. Blackshear, 408. Harlan v. Maglaughlin, 290. Harlin v. Stevenson, 208. Harman v. Hoskins, 1 5, 16, 17, 279, 466, 470, 600. Harmon v. Harmon, 541. Harmony v. Bingham, 669, 670. Harner v. Dipple, 642. Harper v. Perry, 313, 664. Harrell v. Mitchell, 319, 340, 342,392. Harriman v. Gray, 425. Harris 7>. Alcock, 321. V. Burns, 337. V. Harris. 145, 193, 549. V. Sangston, 269. V. Sumner, 466, 529. Harrison v. Hallum, 228. V. Mayor, etc., of Southamp- ton, 23. V. Trustees of Phillips Acad- emy, 335. Hart V. Chalker, 309. V. Ten Eyck, 244. V. Wing, 358. Harter v. Chnstoph, 10. Hartley %>. White, 307. Hartman v. Diller, 389. Hartness v. Thompson, 690. Hartshorn 7/. Eames, 21, 90, 238. 28S, 324, 328. 336, 338. V. Williams, 335. Hartshorne v. Nicholson, 572. 7'. Watson, 621. Harvey v. Hunt, 597. V. Varney, 545, 553, 587. Harwood v. Railrojd Co., 401. Hassan v. Barrett, 334, 335. 556. Hastings v. Dollarhide, 641, 693. Haston v. Castner. 125, 133, 147, iSo. Haswell v. Haswell, 491, Hatch V. City of liuflaio. 576. V. Dana, 56, 107, 188, 190. V. Daniels, 269. V. Dorr. 105. V. Hatch, 6.S8. Hathaway v. Brown, 293, 294. V. Moran, 438, 439. Hatstat V. Blakeslce, 357. Hatztield v. Gulden, 597. XXXii Re/erences'j TABLE OF CASES. [are /o Ms-es. Hauselt v. Harrison, 469. 7/. Vilmar, 289, 461. Haven v. Richardson, 330. Havens v. Healy, 495. V. Sherman, 655. HsLwes V. Loader, 178. V. Oakland, 116, 176. Hawkins 7a Alston, 322. V. Davis, 501, 631. V. Gathercole, 268. 7/. Hastings Bank, 478, 479. Hawley v. Cramer, 518, 662, 663, 688. V. Fairbanks, 560. V. Hunt, 405. V. Northampton, 485. Haxtun v. Bishop, 467. Hayden v. Shed, 618. Haydock v. Coope, 427, 444, 538. Haynes v. Brooks, 445. V. Hunsicker, 367. V. Rudd, 592, 597. Heacock v. Durand, 82, 453. Hearle v. Greenbank, 642. Heath 7/. Bishop, 53,497. V. Mahoney, 645, 691. V. Page, 20, 145, 253, 390. Heaton 7/. Prather, 507. Heck V. Fisher, 49. Heckman v. Messinger, 73, 429. Hedman v. Anderson, 475. Hefner v. Metcalf, 21. Heiatt v. Barnes, 120, 121, 148. Heilman v. Jones, 196. Helps 7J. Clayton, 647. Hempstead v. Johnston, 6, Henckley v. Hendrickson, 6. Henderson v. Brooks, 121. V. Downing, 482. V. Henderson, 340. V. Hoke, 166. V. Hunton, 273. V. McGregor, 651. Hendricks v. Mount, 170. 7'. Robinson, 12, 1 20, 221. Henkel, In re, 74. Henley v. Hotaling, 334. Hennequin v. Clews, 406. V. Naylor, 630. Henning %>. Harrison, 485. Henriques v. Hone, 619. Henry v. Fine, 652, 704. V. Henry, 390. V. Hinman, 20, 28, 81, 89. V. Ritenour, 651. V. Root, 573, 684, 685, 686. V. Sargeant, 212. V. Vermilion R.R. Co., 56. Herkelrath v. Stookey, 320. Herman v. Haffenegger, 705. Herrick v. Borst, 219, 379. • Herring v. N. Y., L. E. & W. R.R. Co., 114. V. Richards, 9, 150, 153, 169, 290. V. Wickham, 6, 8, 297, 303, 414. Herrlich v. Brcnnan, 513. Herron v. Marshall, 706. Herschfeldt v. George, 164. Hershy v. Latham, 41 1. Hervey 7/. Edmunds, 572. Heslop V. Baker, 675. Hess 7/. Hess, 181. V. Voss, 664. Hesse v. Stevenson, 61, 62. Hesser v. Wilson, 358. Hesthal v. Myles, 358. Hewes v. Parkman, 673. Hewitt V. Warren, 644, 645. Heydock v. Stanhope, no. Heye v. Bolles, 128, 139. Heyneman v. Dannenberg, 128. Heywood v. City of Buffalo, 194, 576. Hickey v. Ryan, 379. Hickman v. Jones, 584. V. Trout, 315, 318. Hickox v. Elliott, 19. Hicks V. Campbell, 228. V. Marshall, 655. Hiern v. Mill, 505. Hiestand v. Kuns, 681. Higby V. Ayres, 172, 174. Higgins V. Gillesheiner, 187. High V. Wilson, 408. Hildebrand v. Bowman, 73, 441. Hildeburn v. Brown, 330, 331. Hildreth v. Fitts, 365. V. Sands, 195, 331. Hill, Ex parte, 491. V. Agnew, 454. V. Anderson, 639. V. Bowman, 319, 530. V. Lewis, 623. V. Pine River Bank, 587. V. Reed, 467. Hilliard v. Cagle, 164, 290, 332. V. Phillips, 386. Hills V. Carlton, 405. V. Eliot, 378. V. Sherwood, 125, 179, 376. Hilton V. Barrow, 707. Hinckley v. Kreitz, 177. Hinde v. Vattier, 518. Hinde's Lessee v. Longworth, 149, 153, 163. 165, 301. 312, 344, 416, 421. Hinds V. Hinds, 145. Re/erencei^ TABLE OF CASES. [arc to fages. X X X 1 1 "l Hine v. Bowe, 427. Hinkle v. Wilson, 41 1, 419. Hirsch v. Trainer, 651. Hirschfeld 7'. Williamson, 385. Hitchcock V. Cadmus, 446. V. Galveston, 606. V. Kiely, 164, 285, 298. Hitt V. Ormsbee, 48, 56. Hixon V. George, 74, 75. Hoag V. Sayre, 322. Hobart v. Frost, 581. V. Hobart, 192. Hobbs V. Davis, 28, 289, 291. Hobokeii Bank v. Beckman, 239, 242. Hockley v. Mawbey, 64. Hodges V. New England Screw Co., 220. V. Silver Hill Min. Co. ,1 17,141. V. Spicer, 386. Hodgman v. Western R.R. Co., 429. Hodgson V. Butts, 302. V. Newman, 322. V. Temple, 596. Hoey V. Pierron, 419. Hoffer V. Gladden, 340. Hoffman v. Junk, 42, 145, 193, 290. 7'. Mackall, 21. V. Noble, 37, 631. V. Pitt, 352. Hoffman's Appeal, 108. Hogan V. Burnett, 137. Hoke V. Henderson, 526. Holbird v. Anderson, 21, 288, 289, 322, 461, 530. Holbrook v. Holbrook, 385. V. New Jersey Zinc Co., 235. Holden v. Burnham, 148, 219, 299. V. Hoyt, 707. Holdship V. Patterson, 54, 492, 497, 498. Hollacher v. O'Brien, 355, 362. Holladay Case, The, 104, 141, 518. Holland v. Alcock, 572. V. Cruft, 179. V. Hoyt, 603. Hollingsworth v. Barliour, 5S9. V. Crawford, 262. V. Spnulding, 659. Hollister v. Abbott, 406. V. Bark ley, 269. V. Loud, 237. Hollivvay v. Holliway, 546, 551. Hoiman v. Johnson, 600. Holmberg 7'. Uean, 457. Holmer v. Viner, 536. Holmes 7/. Blogg, 684, 696. V. Cofihill, 63. V. Hubbard, 465. c Holmes v. Marshall, 466. V. Penney, 298. z'. Rice, 689, 690. v. Sherwood, 200. Holt V. Creamer, 281, 322, 600. V. Holt, 639. Hone V. Henriquez, 430, 533. Hooley v. Gieve, 52, 69. Hoopes V. Knell, 341. HooserT'. Hunt, 520. Hoot V. Sorrcli, 327. Hope Mut. Life Ins. Co. t/. Taylor, 189. Hopkins 7'. Langton, 283, 521. Hopkirk 7/. Randolph, 46, 66, 78. Horbach v. Hill, 143. Herd's Admr. v. Colbert, 6, 8. Horn 7'. Horn, 33, 86. V. Keteltas, 334. V. Lockhart, 585. V. Ross, 154. Horneffer 7'. Duress, 413. Homer 7/. Zimmerman, 82. Horsey v. Heath, 178. Horstman v. Kaufman, 244. Horton v. Buffinton, 600. V. Dewey, 410,412,413. 7'. Williams, 470, 600. Horwitz V. EUinger, 21, 435, 461. Houghton 7'. Nasii, 705. Houston 7/. Blackman. 311. Hovenden v. Lord Annesley, 33, 401, 402. Hovey v. Chase, 650. 7f. Hobson, 651, 654, 703. 7'. Holcomb, 232, 555. How V. Taylor, 366. Howard v. Prince, in, 354, 356. 7. Sheldon, I2i. Howard Express Co. 7-. Wile, 391. Howard Ins. Co. v. Halsey, 507. Howard Nat. Bank 7'. King, 100. Howden v. Haigh, 597. Howe 7'. Bishop, 87, 131, 283. 7/. Ward, 37. 7'. Whitney, 115. Howe Machine Co. v. Claybourn, 283, 520. V. Rosine, 705. Howell V. Baker, 663. V. Mitchell, 297. V. Wilson, 627. Howland v. Blake, 10. Howse 7/. Moody. 203, 208. Howson 7'. Hancock, 536. Hoxie V. Price, 148. 195. 4". 4'3- Hoylc V. Platisburgh & M. R.R. Co., 657. V. Stowe, 691. XXxiv JRe/erence/] TABLE OP'' CASES. [^re io ^^-es. Hoyt V. Casey, 646. V. Goclirey, 28, 45, 270. Hoyt & Bros. Mfg. Co. v. Turner, 520. Hubbard v. Allen, 297, 311, 339. V. Hubbard, 81. V. McNaughton, 443. Hubbell V. Lerch, 174. V. Meigs, 7. Hubler 7\ Waterman, 442, Hudgins v. Kemp, 242, 328, 336. Hudnal v. Wilder, 179, 505. Hudson V. Osborne, 59. V. Plets, 56, 57, 94. Huey's Appeal, 25, 76. Huff V. Earl, 587. Huggins V. Perrine, 164. Hughes, Ex parte, 661. V. Bloomer, 456. V. Cory, 29, 350, 470, 475. V. Gallans, 645. V. Littrell, 404. V. Monty, 384. V. Northern Pacific R.R. Co., 232. V. Roper, 325. Huguenin v. Baseley, 64, 103. Hugunin v. Dewey, 25, 75. Hugus V. Robinson, 359. Hull V. Hull, 192. V. Sigsworth, 357. Humbert v. Trinity Church, 25. Hume V. Beale, 401. Humes v. Scruggs, 24, 118, 169, 239, 248, 416. Humphreston's Case, 572. Hungerford v. Earle, 320, 330. Hunsinger v. Hoefer, 145, Hunt^/. Field, 114, 128. Hunter v. Anthony, 599. V. Bradford, 241, V. Corbett, 475. V. Hunter, 232. V. Nolf, 681. Hunters v. Waite, 26, 289. Huntington v. Clark,597. V. Saunders, 259. Huntzinger v. Harper, 393. Hurd V. Ascherman, 240. . V. Hall, 624, 625, 627. Hurlburd v. Bogardus, 340, 366. Hurley v. Osier, 503. Hussey v. Castle, 412. V. Sibley, 625. Hussman, In re, 247. Hutcheson v. Peshine, 467. Hutchins v. Gilchrist, 367. V. Hutchins, 97 605. Hutchinson v. Lord, 451. Hutchinson v. Murchie, 211. Hutton V. Benkard, 64. Hyde v. Chapman, 141. V. Eliery, 84, 265. V. Frey, 414. V. Watts, 621. V. Woods, 54, 57, 58, 71, 497. Hyman v. Kelly, 268. Hyslop V. Clarke, 443, 600. Idaho, The, 52, 682. Iley V. Niswanger, 166. Illinois Land Co. v. Bonner, 638, 691, 693- Imray v. Magnay, 108. Indianapolis Chair Mfg. Co. v. Wilcox, 638, 698, Ingalls V. Herrick, 354, 362. V. Lee, 623. IngersoU v. Mangam, 639. Ingliss V. Grant, 326. Ingraham v. Baldwin, 653. Inhabitants of Pelham v. Aldrich, 144. Inloes V. Amer. Exch. Bank, 15. Inloes' Lessee v. Harvey, 206. Innes v. Lansing, 175, 445. Irish V. Bradford, 309. Iron Mountain Ry. v. Knight, 682. Irons V. Manufacturers' Nat. Bank, 188. Irvine v. Irvine, 692, 693, 695. Iselin V. Peck, 381. Isham V. Schafer, 49. Ithaca G. L. Co. v. Treman, 45. Ives V. Ashley, 587, 658, 659. Jackman v. Robinson, 201, 204, 208. Jacks V. Nichols, 238. Jackson v. Andrews, 234. V. Badger, 299. V. Bull, 604. V. Burgott, 108. V. Cad well, 616. ■V. Carpenter, 683. V. Davison, 438, 439. V. Duchaire, 536. V. Edwards, 251, V. Garnsey, 540. V. Gumaer, 653. V. Hart, 242. V. King, 8, 91, 647, 648, 650. V. Lomas, 536. V. Losee, 429. V, Mather, 519. V. Middleton, 53. V. Miner, 151, 305. V. Myers, 42, 108, 144, 145, 176, 193. V. Packard, 600. Jie/erences'j TABLE OF CASES. [^are /o/a^es. XXXV Jackson v. Post, 151, 165. V. Seward, 42, 144. V. Van Dalfsen, 587, 679. V. Van Dusen, 648. V. Walsh, 587. Jacoby's Appeal, 89, 108. Jacot V. Boyle, 84. Jaeger z>. Kelley, 8, 283, 284, 326, 394, 432. Jaffers v. Aneals, 329. Jaffray 7k Frebain, 690. V. McGehee, iii, 438, 439. Jaffrey v. Brown, 331, V. McGough, 410, Jaggers ?'. Grififin, 705. James v. Bird, 547. 7'. Van Duyn, 6. James Goold Co. 7/. Maheady, 412. Jamison v. Beaubien, 108. V. King, 328, V. McNally, 297, Janes v. Janes, 612. V. Whitbread, 326, 446. Janvrin v. Fogg, 481. Jaques v. Greenwood, 462. V. Sax, 639. Jauretche f. Proctor, 485. JefTord's Admr. 2'. Ringgold, 690, 691. Jeffres 7'. Cochrane, 533. Jenkins v. Andover, 607. 7'. Clement, 148, 149, 150. V. Einstein, 341. V. Eldredge, 507. V. Fowler, 435. V. Jenkins, 612, 694. V. Lockard, 14, 144. Jenkyn v. Vaughan, 47, 167. Jenner v. Walker, 647. Jenney 7'. Andrews, 63, 64. Jennings v. Howard, 219. V. McConnel, 663. V. Prentice, 457. V. Rundall, 644. Jenny v. Jenny, 424. Jerome v. McCarter, 184. Jervis v. White, 707. Jessopp 7/. Lutwyche, 601. Jessup V. Hulse, 218. Jewell 7'. Knight, 561, 7'. Parr, 391. 7'. Porter, 171. Jewett 7'. Bowman, 7. V. Guyer, 355. V. Miller, 660. 7'. Noteware, 411, 530, 533. Jiggitts 7'. Jiggitts, 1 10, 424. Jimmerson 7'. Duncan, 87. Johnson . Thurber, 631. Kerr v. Hutchins, 250, 325, Kerr 7/. Mount, 618. Kersey Oil Co. v. Oil Creek & A. R.R. Co., 688. Kesner v. Trigg, 410, 421. Kessinger v. Kessinger, 306. Ketchum, Matter of, 57. V. Brennan, 705. Kevan v. Crawford, 322. Key V. Davis, 654. V. Holloway, 665. Keys V. Grannis, 408. Keyser t^. Angle, 501. v. Harbecic, 629, 631. Kibbe v. Wetmore, 100. Kidd V. Johnson, 59, 60. V. Rawlinson, 41, 352. Kidder v. Horrobin, 183.I V. Hunt, 602. Kidney v. Coussmaker, 167. Kilbourne v. Fay, 184. Killian v. Clark, 6, 164. Killinger v. Reidenhauer, 424. Kilner, Ex parte, 538. Kimball v. Fenner, 311, 413. V. Harman, 96. V. Noyes, 68. Kimble v. Smith, 290. Kimbray v. Draper, 574. Kimmel v. McRight, 87. Kinealy v. Macklin, 251. King 7/. Bailey, 358. V. Brown, 602, 603, 604. V. Dupine, 33, 86. V. Hubbell, 321. V. Mackellar, 675. V. Moon, 91, 317, 338. V. Phillips, 630. V. Poole, 294, 390. V. Russell, 319, 320, 343. V. Tharp, 118, 376. V. Trice, 102, 234. V. Wilcox, 272, 275, 328. King's Heirs v. Thompson, 219. King (The). See Rex. Kingman v. Perkins, 641, 690. Kingsbury v. Earle, d^. Kinsley v. Scott, 99. Kinnard v. Daniel, 419. Kip V, Bank of N. Y., 429. Kipling V. Corbin, 462. Kipp V. Hanna, 50, 167, 344. Kipper v. Glancey, 125, 135. Kirby v. Bruns, 49. V. Ingersoll, 14. V. Lake Shore & M. S. R.R. Co., 400, 402, 404. V. Masten, 386. V. Schoonmaker, 308. JZe/erencesj TABLE OF CASES. [are to pa^es. XXX vil Kirkbride, J^g, 473, 476. Kirksey v. Snedecor, 162, 169, Kirtland v. Snow, 360. Kisling V. Shaw, 663. Kissam 7/. Edmundson, 166. Kissock V. Grant, 616. Kisterbock's Appeal, 282. Kitch v. St. Louis, K. C. & N. Ry. Co., 518. Kittering- v. Parker, 237. Kittredge v. Sumner, 283. Klapp V. Shirk, 434. Klein v. Horine, 217. V. McNamara, 25. Kline v. Baker, 630. V. Beebe, 674, 683, 684. Klous V. Hennessey, 96, 97. Knapp 7'. City of Brooklyn, 216. V. Lee, 545. V. McGowan, 463, 464. V. Smith, 415. Knatchbull v. Hallet, 69. Kneedler's Appeal, 649. Knickerbacker 7/. Smith, 640. Knight V. Forward, 169, 364, 386. V. Hunt, 536. Knott, Ex parte, 503. Knowles v. Muscatine, 581. Knowlton v. Hawes, 503. V. Mish, 24, 419. Knox V. Flack, 640. V. McF'arran, 108, 384. Knye v. Moore, 226. Koenig v. Steckel, 102. Koonce v. Butler, 617. Koster v. Hiller, 148, 140. Kountz 7/. Davis, 693. Kramer v. Holster, 573. Kreuzer v. Cooney, 358. Kruse v. Prindle, 377. Kuevan v. Speaker, 25. Kuhl V. Martin, 147. Kuhlman v. Orser, 464. Kurtz V. Hibner, 605. V. Miller, 521. Kutz's Appeal, 410. Kuykendall v. McDonald, 300. Lacker v. Rhoades, 429. Lackman v. Wood, 696. Lacrosse & ^L R.R. Co. v. Seeger, 170. Ladd V. Wiggin, 335. Lagay v. Marston, 705. Laidlaw t'. Gilmore, 328. Lake v. Billers, 408. V. Morris, 339, 366. Lamar Ins. Co. v. Moore, 188 Lamb v. Stone, 95. Lambert v. Heath, 626. Lammon v. Clark, 234. Lammot v. Bowly, 675. Lamson v. Patch, 372. Lancaster Co. Nat. Ba:ik v. Moore, 652, 702. Lane v. Cowper, 572. V. Latimer, 705. V. Lutz, 469, 470. V. Nelson, 573. Lang V. Lee, 323, 470. V. Stockwell, 355, 365. V. Whidden, 648. Lange, Ex parte, 614. Langford v. Fly, 42, 193, 338. V. Thurlby, 41 1, 416, Langton v. Hughes, 595, 598. Lario v. Walker, 485. Larkin v. McAnnally, 76. V. McMullin, 157. V. Saffarans, 574, 619. La Rue v. Gilkyson, 652. Lassells v. Cornwallis, 63. Lassiter v. Davis, 286, 299. Latham v. Hicky, 705. Lathrop v. Bampton, 69. V. Clapp, 186. Latimer 7/. Batson, 352, 371. Lattin v. McCarty, 84. Laughton v. Harden, 42, 156, 2S5, 298, 344. Lavender v. Boaz, 340. Law V. Payson, 376. Lawrence v. Bank of the Republic, 89, 191, 199, 205, 228. V. Fox, 67, 69. V. McArter, 640. V. Norton, 443, 444. V. Tucker, 309, 312. Lawson v. Ala. Warehouse Co., 321. 7,'. Funk. 282. V. Lovejoy, 6S4. Lawton v. Buckingham, 313. V. Howe, 624. Lay V. Neville, 358. Lazell V. Pinnick, 655. Lea 7'. Hinton, 422. Leach 7/. Francis, 283. V. Hewitt. 625. %>. Kelsey, 184. Leadman v. Harris, 18. Leasure ?'. Coburn, 320. Leather Cloth Co. v. Amer. Cloth Co., 59- Leavitt v. Beirne, 492. V. Blatchford, 530. Leckey v. Cunningham, 666. Ledger Bldg. Assoc, v. Cook, 691. XXXViii I^e/crcHces'] TABLE OF CASES. [areioMset- Ledyard v. Butler, 394, 504. Lee T. Chase, 181. V. Cole, 411, 412. V. F\gg, 285, 286, 298. V. Kilburn, 381, 382. V. Lamprey, 388. V. Lee, 219. V. Pearce, 12. V. Portwood, 629, 631. Leeds v. Cameron, 309. Leffel V. Schermerhorn, 336. Leffingwell v. Warren, 439. Lefils V. Sugg, 646. Le Coaster v. Barthe, 107. Legro V. Lord, 25, 72. Lehigh Coal Co. v. Brown, 669. Lehman v. Kelly, 51. V. Meyer, 231. V. Rosengarten, 427. Lehmberg v. Biberstein, 169. Leicester v. Rose, 536. Leighton v. Orr, 23, 306. Leiman, Matter of, 185. Leisenring v. Black, 663. Leitch V. Hollister, 443, 466. Leland, In re, 184, Lemmon v. People, 212. Lenox v. Roberts, 467. Leonard 7a Baker, 330. V. Bryant, 376. V. Clinton, 46, 47, 422. V. Forcheimer, 245. V. Green, 200. V. Leonard, 653. Lerow v. Wilmarth, 149, 344, 540. Lesem v. Herriford, 361. Lesher v. Getman, 432. Lestapies v. Ligraham, 611. Leukener v. Freeman, 193. Lewis, Matter of, 428. V. Caperton, 337. V. Castleman, 169. V. Hillman, 660, 663. V. Jones, 666. V. Miller, 427. V. Palmer, 177. V. Rogers, 118, 376. V. St. Albans Iron & Steel Works, 228. V. Smith, 99. V. Wilcox, 364, 385. Lewis & Nelson's Appeal, 610. Lichtenberg 7'. Herdtfelder, 114, 117, 122, 124, 534. Lidderdale v. Robinson, 276. Lighttoot V. Tenant, 595, 598. Lillard v. McGee, 32, 176, 193. Lillie V. Wilson, 108, Lillis V. Gallagher, 546. Lincoln v. Buckmaster, 647, 648, 705. Lindle v. Neville, 323. Lindley v. Cross, 135. Lindsay v. Cundy, 629. Lingan v. Henderson, 240. Lingke v. Wilkinson, 676. Lininger v. Herron, 342. V. Raymond, 461. Linn v. Wright, 12. Linscott V. Mclntire, 603. Linton v. Butz, 365, 367. Lion, The, 545. Lipperd v. Edwards, 214. Lippincott v. Evens, 494. Lishy V. Perry, 25. Litchfield v. Cud worth, 679. V. White, 452. Littauer v. Goldman, 624, 625. Littleton v. Littleton, 423, 424. Livermore 7/. Boutelle, 145, 177. V. McNair, 92. V. Northrup, 434, 458, V. Rhodes, 463. Livingston v. Livingston, 178. Livingston County v. Darlington, 607. Lloyd V. Foley, 541. V. Fulton, 23, 91, III, 148, 299, 344- V. Passingham, 267. Load V. Green, 503. Loan Association 7a Topeka, 573, 607. Lobdell V. Baker, 625, 627. V. Lobdell, 604. Lobstein v. Lehn, 271. Locke V. Lewis, 81. V. Mabbett, 71. Lockhard v. Beckley, 10, 12, 24, 26, 49, 158, 289. Lockyer 7/. Savage, 491. Loder r*. Whelpley, 671. Loeschigk v. Addison, 153. V. Bridge, 336, 337. Logan V. Brick, 13. V. Logan, 90. London & N. W. Ry. Co. v. Evershed, 668. Long V. Dollarhide, 413. V. Knapp, 367. Loomis V. Ruck, 668. V. Spencer, 701. V. Tifft, 125, 178, 545. Loos V. Wilkinson, 51, 185, 383, 384, 433- Lord V. Harte, 48, 60. Lore V. Dierkes, 20, 179, 205, 273, 277, 501. 503- Lorillard v. Clyde, 599. JJc/erences] TABLE OF CASES. [aretopagrs. XXXlx Loring v. Dunning, 328. Lothrop V. Wightman, 679. Lott V. Kaiser, 192. Love V. Geyer, 262. V. Mikals, 125. Lovett V. Gillender, 485, 487. 7/. Kingsland, 485, 487. Low V. Marco, 87. V. Wortman, 342, 530. Lowell V. Boston, 607. Lower)- v. Clinton, 422. Lowry v. Beckner, 12. V. Coulter, 183. V. Pinson, 176. V. Smith, 425, 504. V. Tew, 407, Lozear v. Shields, 651. Lucas V. Brooks, 423. Luckey v. Roberts, 629. Ludlow V. McBride, 370. Ludwig V. Highley, 369. Lukins v. Aird, 18, 20, 27, 282, 334, 378, 482. Lyell V. Supervisors of St. Clair, 213. Lyford v. Thurston, 69. Lyles V. Bolles, 586, Lyman v. Fiske, 581. IK Place, 207. Lynch v. Crary, 128. V. Johnson, 93, 104, 105, 533. Lynde v. Budd, 684. V. McGregor, 50, 103, 184, 321. Lynn v. Smith, '}']. Lyon V. Bertram, 705, 706, V. Mitchell, 681. V. Robbins, 619. V. Yates, 617. Lytle V. Beveridge, 656, 657, 658. Mabry v. State, 577. Macdona v. Swiney, 352. Macgregor v. Dover & Deal R.R. Co., 438, 439- Mackason's Appeal, 63. Mackay v. Douglas, 161. Mackie v. Cairns, 466. Mackintosh v. Barber, 587. Maclae v. Sutherland, 675. Macomber v. Peck, 20, 378. Macungie Sav. Bank v. 13astian, 212. Magawley's Trust, 166. Magee v. Badger, 517. Magniac v. Thompson, 303, 414, 518. Maher v. Hibernia Ins. Co., 217. Maiders v. Culver's Assignee, 184. Main v. Lynch, 432. Malcolm v. Hodges, 15. Malony v. Horan, 425. Manahan v. Noyes, 705. Manby v. Scott, 2, 647. Manchester v. McKee, 121. Mancius v. Sergeant, 621. Mandel v. Peay, 433. Mandeville v. Reynolds, 118, 376. Mandlebaum v. ^IcDonnell, 486. Mangum v. Finucane, 412. Manhattan Co. v. Evertson, 243, 504. Manley v. Rassiga, 185, Mann v. Betterly, 651. Manning v. Albee, 629. V. Chambers, 491. V. Hay den, 404. V. Johnson, 703. V. Reilly, 281. V. San Jacinto Tin Co., 521. Mansell v. Mansell, 69. Mansfield v. Dyer, 501, 587. Manton v. Moore, 349, 362. Manufacturing Co. v. Bradley, 92, 98, 114. Mapes V. Scott, 267. Maples V. Wightman, 641. Marcy v. Kinney, 108. Marden v. Babcock, 287. Mark's Appeal, 456. Marksbury v. Taylor, 12, 80. Marlatt v. Warwick. 593. Marnn v. Marrin, 252. Marriott TA Givens, 321. Marsh, Matter of, 429. V. Bennett, 431. V. Benson, 45. V. Burroughs, 56, 69, 175, 205. V. City of Brooklyn, 576. V. Dunckel, 379. V. Falker, 8, 9. V. Fulton County, 569, 586, 673. V. Pier, 118. V. Whitmore, 599. Marshall 7/. Carson. 658. V. Croom, 50, 162, 342, 343. V. Green, 315. 340. V. Means, 227. Marston v. V'ultee, 292. ^Lartin 7'. Adams, 366. 7'. Barron, 581. V. Bolton. 179. V. Crosby, 73. V. Eitlen, 131. V. Hausman, 458. V. Margham,49l. V. Martin, 612. V. Mayo, 691. V. Michael, 114, 1 16, 127. V. Root, 66, 179. xl Jie/ere>ices'] TABLE UF CASES. [a-^foM^<^s. Martin v. Smith, 224. V. Tidvvell, 92, 98. V. Walker, 145, 177. Martindale v. Booth, 352. Marx V. McGlynn, 671. V. Tailer, 205, 206. Mason v. Lord, 195. V. Pierron, 255. Massie v. Watts, 61. Masterton v. Beers, 280. Mateer i'. Hissim, 344. Mathes v. Dobschuetz, 50, 283. Mathews v. Cowan, 644. 7A Feaver, 301, 325. 7/. Poultney, 432, 434. Matson v. Melchor, 147. Matthai v. Heather, 6, 162. Matthews v. Rice, 283. Matthewson v. Johnson, 693. Matthiessen & W. Ref'g Co. v. McMa- hon, 705. Matlingly v. Nye, 118, 163, 421. Maule V. Rider, 521. Mawman v. Tegg, 61. Maxwell v. Goetschius, 573. V. Kennedy, 400. May v. Greenhill, 265. v. Le Claire, 522. V. Walker, 443. Mayer v. Clark, 83, 354, 356. v. Hellman, 460, 530, 531. 7A Webster, 363. Maynes v. Atwater, 370. Mayor of Baltimore v. Lefferman, 670. Brooklyn z/. Meserole, 708. Norwich v. Norfolk R.R. Co., 599- Mays V. Cincinnati, 670. V. Rose, 267. Mc Alpine v. Sweetser, 555. McArtee 7/. Engart, 233. Mc Arthur v. Hoysradt, 54, 271. McAuliffe V, Farmer, 1 14. McBeth V. Trabue, 696. McBlair v. Gibbes, 611. McBurney zk Wellman, 334. McBurnie, Ex parte, 304, 418. McCabe v. Brayton, 393. McCaffrey v. Hickey, 267. McCain v. Wood, 311. McCall's Lessee v. Carpenter, 586. McCalmont v. Lawrence, 140, 141, 171, 250. McCampbell v. McCampbell, 601, 604. McCanless v. Flinchum, 299. McCardle, Ex parte, 574. McCarron v. Cassidy, 334. McCarthy v. Goold, 55. McCartin v. Pcrr>', 183. McCartney v. Bostwick, 90, 123, 131, 132, 140. McCarty v. Murray, 641, 690. McCaskle v. Amarine, 311. McCauley v. Rodes, 234. McClearyt/. £1115,485. McCleery v. Allen, 450. McClellan v. Sanford, 10. McClelland v. Whiteley, 674. McCleskey v. Leadbetter, 541. McCloskey v. Cyphert, 637. McClosky V. Stewart, 51. McClure v. Miller, 587. McClurg V. Lecky, 442. McCole V. Loehr, 219. McConnel v. Dickson, 178. McConnell?7. Scott, 178. V. Sherwood, 436, 455. McCool V. McNamara, 267. McCormick v. Atkinson, 28. V. Hyatt, 283. V. Littler, 652. McCracken v. City of San Francisco, 570. McCrasly v. Hasslock, 471. McCreight v. Aiken, 653. McCue V. Smith, 603. McCulloch V. Hutchinson, 38. McCullough V. Colby, 139, 140. V. Gilmore, 486. McDermott v. Blois, 1 14. McDermutt 7/. Strong, 106, 135, 173. McDonald v. Farrell, 345. V. Mayor, 687. McDonnell v. Eaton, 227. McDonogh v. Murdoch, 485. McDougall V. Page, 100, 406. McDowell V. Brown, 485. V. Cochran, 133. V. Goldsmith, 118. V. Rissell, 389. McElmoyle v. Cohen, 124. McElwain 7/. Willis, 116, 137, 138, 139, 215. McEvoy V. Appleby, 70. McFadden v. Mitchell, 149, 326, 328. McFarland v. Goodman, 25, 75. McFarlane 7'. Griffith, iii. McFerran v. Jones, 55. McGan v. Marshall, 636. McGay v. Keilback, 66. McGee v. McGee, 423. McGintry v. Reeves, 311. McGoldrick v. Slevin, 265. V. Willits, 632. McGraw, Matter of, 568. McGuire v. Miller, 541. Jie/^renres'j TABLE OF CASES. [arc io ^a^es. xh Mcllvaine v. Smith, 53. Mcintosh V. Ladd, 424. McKay v. Carrington, 621. McKee v. Cheney, 68 r. Vi Judd, 429. McKibbin z'. Martin, 22, 24, 318, 340, 357. 365. 367. McKim zj. Thompson, 240. McKinley v. Bowe, 114. McKinnon v. Reliance Lumber Co., 384. McKinster v. Babcock, 312, 321. McKnight 7'. City otPiltsburgh.eS;. V. Morgan, 179. McKown 7'. Fiirgason, 379. 7/. Whitmore, 224. McLachlan v. Wright, 470. McLain 7/. Ferrell, 224. McLane v. Johnson, 155, 179, 384. 7'. Spence, 659. McLaughlin 7/. McLaughlin, 178. McLean v. Cary, 248, 258. 7A Lafayette Bank, 226, 473. V. Letchford, 245, 274. 77. Weeks, 37. McLendon 7/. Commrs. of Anson, 136. McLeod V. First Nat. Bank, 69. McMahan v. Bowe, 25. McMahon v. Allen, 184, 196. McMaster 7/. Campbell, 183, 542, 587. V. Morrison, 485. McMillan v. McNeill, 405, 406. McMinn v. Whelan, 114, 127. McMurray v. McMurray, 639. McMurtry v. Ramsey, 599. McNulty 7'. Batty, 574. McPherson v. Cox, 667, 668. V. Kingsbaker, 154, 162. McRea 7'. Branch Bank of Ala., 336. McReynolds 7^ Dedman, 440. McVeigh 7'. Ritenour, 145. McVicker v. May, 342. McWilliams 7'. Rodgers, 331. Meacham v. Sternes, 431. Mead v. Byington, 658, 659. V. Combs, 281, 600. V. Gardiner, 355. V. Noyes, 338, 362. V. Phillips, 431. Meade v. Smith, 357, 363. Meader v. Norton, 397. Means 7/. Dowd, 21, 27, 28, 440, 471, 475- 7/. Hicks, 375. 7'. Robinson, 577. I\Iears v. Waples, 630, 631. Mebane 7'. La\ton, 173. V. Mebane, 53, 497. Mechanics' & T. Bank 7-. Dakin, 89, 138. Meddowcroft v. Huguenin, 23. Medsker 7^. Bonebrake, 411. Meeker z/. Harris, 118, 121, 216, 376. 7\ Saunders, 341. v. Wilson, 351. V. Winthrop Iron Co., 657. Megehe v. Draper, 75. Meguire v. Corwine, 597, 600. Mehlhop v. Pettibone, 283, 377, Melville 7'. Brown, 127. Menagh 7/. Whitwell, 270, 30S. Menton v. Adams, 532. Menzies T/. Pulbrook, 196. Mercer 7/. Mercer, 540. V. Newsom, 658, 659 . 7'. Peterson, 538. Merchant 7/. Bunnell, 415. Merchants' Bank v. Thomson, 99, 425. Merchants' E.xch. Nat. Bank v. Comml. Warehouse Co , 397. Merchants' Nat. Bank 7'. Paine, 117, 124, 134, 135. Meredith 7^ Johns, 97. Merithew v. Andrews, 605. Merrell 7a Johnson, 149, 214. 219, 277. Merriam v. Cunningham, 645, 646. V. Sewall. 128. Merrick 7'. Butler, 544. Merrill v. Englesby, 430. 619. V. Grinnell, 429. V. Locke, 328, 336, 369. 7'. Melchior, 599. Merritt 7>. Millard, 593, 608, 610. Merry v. Fremon, 125, 133, 17S. 201. 208, 545. Merwin t. Richardson, 176. Messersmith 7'. Sharon Sav. Bank. 107. Metcalf 7'. Munson, 38 1, 382. Metropolitan Bank 7/. Durant, 252.328, 396- 7'. Godfrey, 504. Metropolitan Life Ins. Co. 7-. Meeker, 667. Meux 7'. Anihony, 113, 135. 142. 7'. Howell, 326. Meyer ?'. Lowell, 68. 7'. Virginia & T. R.R. Co., 3S5. Michael 7'. Ga\. 244. Michigan 7'. Pha-nix Bank. 392. Michoud 7'. (iirod, 405, 660, 679. Micou 7'. Moses, 264. 268. 7'. National Hank, 532. Middlebury College ?-. Chandler, 647. Middleton 7-. Mullica, 607. Middletown Sav. Bank 7'. Bacharach, 226. xlii lie/erences'^ TABLE OF CASES, [areio/a£ts. Miers v. Zanesville & M. Turnp. Co., ^ 56, 534- Miles V. Barry, 403, z'. Chilton, 612. V. Edelen, 390. V. Ervin, 664. V. Miles, 240. V. Wheeler, 659. Miller v. Adams, 619. V. Ball, 605, V. Brj'an, 283. V. Craig-, 651. V. Davidson, 107, 135. V. Daj'ton, 104, 145. V. Earle, 252. V. Florer, 67. V. Fraley, 243. V. Carman, 364. V. Hall, 198, 199, 200, 202, 209. V. Jamison, 197, 232. V. Jones, 476, 482. V. Lockwood, 321, 355, 478. V. Long Island R.R. Co., 362, V. Mackenzie, 187. V. Marckle, 594. V. McCoy, 312. v. Mclntyre, 405. V. McKenzie, 313. V. Miller, 37, 114, 168. ads. Pancoast, 351, 356, 362, 475. V. Post, 438, 439. V. Potter, 653. V. Sauerbier, 309. V. Sherry, 104, 233, 234, 559. TA Smith, 639, 691, 703. V. Wilson, 344, 424, Millholland v. Tiffany, 518, 520. Milling-ton zk Hill, 271, 272, 503. Mills v. Argall, 541. V. Block, loi, 114, 127, 135, V. Gore, 240. V. Howeth, 519. V, Thompson, 386. V. Van Voorhies, no. Milne v. Van Buskirk, 581. Milwaukee & M. R.R. Co. v. Milwau- kee & W. R.R. Co., 196. Miner v. Phillips, 294. 7'. Warner, 145. Minor v. .Mead, 181. Mitchell z'. Barnes, 267. V. Bunch, 559. V. Kinsman, 648. V. Stetson, 28. z/. Stiles, 253. V. Thompson, 403. V. Van Buren, 252. V. West, 356, 368. Mitchell V. Winslow, 184, 475. V. Worden, 630. Mittelholzer v. Fullarton, 599. Mittnacht v. Kelly, 472. Mobley v. Letts, 470. Mohawk Bank v. At water, 14, 140, 285, 298. Mohney v. Evans, 647. Mohr V. Tulip, 653. Molitor z/. Robinson, 356, 390. Molton V, Camroux, 649, 702. Moncure v. Hanson, 184. Monell V. Scherrick, 324. Monroe v. Douglass, loi. V. Hussey, 351, 357. V. Smith, 169, 290. Montefiore v, Behrens, 491. Montefiori v. Montefiori, 542. Monteith v. Bax, 16, 280, 291, 414. Montgomery v. Carlton, 639. V. Gordon, 696. V. Kirksey, 457. Monumental Bldg. Assoc, v. Herman, 698. Moody V. Blake, 631. V. Burton, 96. Moog V. Benedicks, 323, 356. V. Farley, 342. Mooney v. Olsen, 348, 370. Moore v. Blondheim, 162. V. Cord, 194. V. Eastman, 644. V. Greene, 22,:i, 402. V. Griffin, 465, V. Hershey, 649, V. Hinnant, 2S1, V. Kidder, 83. V. Meacham, 383. V. Moore, 657, 660, 661. V. Page, 409, 416, 419. V. Roe, 335, 345. V, Schoppert, 116. V. Williamson, 513. V. Wood, 14, 19, 378, Moores v. White, 56. Moorman z'. Shockney, 216. Moran v. Dawes, 81, 116. Moreland v. Atchison, 301. Morford v. Dieffenbacker, 340. Morgan v. Bogue, 137, 220, 442. v. Elam, 23. V. Harris, 241. V. Hecker, 291. Morgan County v. Allen, 107, Moritz V. Hoffman, 149, 166, 168. Morland v. Isaac, 422. Morning zf. Knop, 685. Morrill V. Aden, 644. Iie/. Dodd, 42, 47. Norris 7/. Wait, 695, 697. North V. Bradway, 84, 172, 198, 229. North Amer. Fire Ins. Co. ?/. Graham, 124, 126, 139, 140. Northern Liberties v. St. John's Church, 606. Northern Pacific R.R. Co. v. Kindred, 660. Northington, Ex parte, 652. Northwestern Ins. Co. v. Elliott, 608. Norton v. Doolittle, 357, 364. V. Norton, 166, 167, 179. Noyes v. Morrill, 386. Nuckolls V. Pinkston, 380. Nudd V. Hamblin, 224. Nunn V. Wilsmore, 326. Nussear v. Arnold, 665. Oakes v. Turquand, 588. Gates V. Hudson, 669. Oatis zi. Brown, 386, 387. Oberholser v. Greenfield, 81. O'Brien v. Chamberlain, 371. V. Coulter, 125, 134, 135. Ocean Nat. Bank v. Olcott, 87, 128, 130. 132, 140. Ockerman v. Cross, 100, 467. O'Conner 7/. Ward, 28, 72, 75, 550. ' )'Daniel v. Crawford, 167. • dell V. Flood, 416. V. Montross, 334. O'Donnell v. Segar, 12, 74. Oelrichs v. Spain, 92, 98, 142. Offutt V. King, 125, 180. Ogden V. Arnot, 187. V. Peters, 446, 459. V. Prentice, 144. V. Saunders, 405. V. Wood, 69. Ogilvie V. Jeaffreson, 589. 7'. Knox Ins. Co., 56, 190. Olcott V. Tioga R.R. Co., 587. Old Dominion S. S. Co. v. Burckhardt, 631. Old Folks' Society v. Millard, 248. Oldham v. Oldham, 491. Oliver v. Houdlet, 572, 689, 690. V. Moore, 272, 313. v. Piatt, 69, 226, 525. Oliver Lee & Co.'s Bank v. Talcott, 18, 27. Olney T'. Tanner, 185, 1S6, 189, 455. O'Mahoney z>. Belmont, 270. Onions v. Cohen, 575. Ontario Bank v. Root, 217. Ordendorf 7'. Budlong, 78, 88, 195. Oriental Bank v. Haskins, 334, 545. Orleans v. Piatt, 626. Orr ZK Gihnore, 250. Orton 7'. Orton, 470. Osborne 7'. County of Adams, 607. V. TuUer, 357. He/ere/ice^ TABLE OF CASES. [are to ^ag^es. x\v Osborne v. Williams, 548, 550. Osen V. Sherman, 356, 361. Osgood V. Lay tin, 185, 188. V. Ogden, 187, 188. V. Thome, 530. Osmond v. Fitzroy, 649. Otis V. Cullum, 626. V. Sill, 361. Otley V. Manning, 23. Ottawa V. Carey, 607. V. National Bank, 607. Oulds v. Sansom, 639. Overman v. Quick, 479. Overman's Appeal, 498. Overton v. Banister, 697. V. Holinshade, 324. Owen V. Arvis, 340, 434. V. Body, 447. V. Long, 642. Owens V. Missionary Society, 572. Ovving's Case, 567. Owings V. Hull, 674. Oxley V. Tryon, 639. Pace V. Pace, 495. Pacific Bank v. Robinson, 61. Pack V. Bathurst, 63, 64. Packard v. Wood, 352, 354. Paddon v. Taylor, 501, 503, 630, 631. Page V. Waring, 183, 506. Paget V. Perchard, 470. Paliquioque Bank 7/. Bethel Bank, 208. Paige V. Cagvvin, 384. V. O'Neal, 631. Painter v. Drum, 390. z'. Henderson, 678. Palen v. Bushnell, 85. Palmer z*. Foley, 619. V. Goodwin, 405. V. Miller, 642. V. Whitmore, 63. Pancoast v. Gowen, 58. Parduc v. Givens, 4S5. Parish v. Murphree, 149, 151. Parker v. Baker, 690. V. Browning, 187. V. Byrnes, 630. V. Conner, 501, 506, 508, 509, 513. 5'5. 517, 519. 520. 524. V. Flagg, 179, 229. V. Phettcplace, in, 394. Parkersburg 7^. Brown, 573, 601, 606, 607, 608. Parkhurst 7/. Hosford, 634. V. McGraw. 6, 232, 238, 395. Parkinson v. Trousdale, 269. Parkman v. Welch, 155, 156, 239, 242. Parks V. Evansville, etc., R.R. Co., 688. V. Parks, 466. Parshall v. Eggert, 480. Parsons v. Bowne, 235. V. Dickinson, 352. 7'. Hill, 691. V. Keys, 646. 7/. Lloyd, 618. V. Loyd, 615. V. Thompson, 596. Partee v. Mathews, 81, 88, 140. Partelo v. Harris, 283. Parton v. Hervey, 438, 439. Partridge v. Gopp, 33, 66, 86, 302. V. Messer, 597. 7'. Stokes, 158, 290. Pan^in v. Capewell, 420. Paschal v. Acklin, 558. PashbyT/. Mandigo, 178. Passavant v. Cantor, 243, 427. Patrick v. Grant, 599. Patten v. Casey, 281, 344. 7'. Smith, 75. Patterson, Matter of, 666. V. Bodenhamer, 323. V. Brown, 534. 7/. Gaines, 61 1, 612. V. Lynde, 200. V. McKinney, 149. 258, 344. V. Todd, 624. Patten V. Conn, 410. V. Taylor, 216. Paul 7f. Crooker, 378. Paulk V. Cooke, 166. Paulling V. Slurgus, 369. Paulsen 7>. Van Steenbergh, 115. Pawle V. Gunn, 601 , 603. Pawley 7/. Vogel, 164. Paxton V. Boyce, 9. Payne v. Becker, 54. 95. 7'. Drewe, 1 1 1. V. Eden, 536, v. Graham, 107. 7/. Hook, 189. V. Miller, 422. 7'. Sheldon, 133. 140, 215. V. Stanton, 159, 166. Payson 7'. Hadduck. 209. Pcakc 7'. Stout, 294. Pearce 7'. Creswick, 92. Pearl v. McDowell, 653. Ptarse 7'. Morrice, 566. Pearsoll 7'. Chai)in, 566, 572. 575, 578. 5S6, 589.619. Pearson v. Carter, 357. 7. Howe, 515. Pease 7'. Crcque, 675. V. Walsh, 592. xlvi Ke/erencesj TABLE OF CASES. \_afeiojiiiges. Peaslee v. Barney, 178. Peay 7/. Morrison's Ex'rs, 135. Peck V. Burr, 438, 439, 592. V. Gary, 665, 666. V. Grouse, 291, 432. V. Hibbarcl, 405. Peckham v. Haddock, 599. Peebles v. Horton, 318, 321, 340. Peet V. Morgan, 107. Peirce v. Partridge, 322. Peirsoll v. Elliott, 708. Peiser v. Peticolas, 16, 292, 470, Pelham v. Aldrich, 144, Pence 7/. Croan, 148, 150. Pendleton 7^. Hughes, 145, 193. V. Perkins, 48, 55, 113, 134, 135- Penn v. Lord Baltimore, 558. Pennell v. Deffell, 69. Pennington v. Cardale, 621. V. Clifton, 87. . V. Seal, 38, 42, 144, 178, Pennock o. Freeman, 403. Penrod v. Morrison, 97. People V. Albany & Vt. R.R. Co., 205. V. Baker, 294. V. Bristol, 475. V. Cavanagh, 614. v. Cook, 280. {ex rel. Hoyt) v. Comrs. of Taxes, 100. V. Kelly, 270. V. Kendall, 644. V. Liscomb, 614. V. McLeod, 614. V. Mead, 93. V. Open Board of Brokers, 660, 688. V. Rogers, 667. V. Supervisors, 581. V. Tioga Common Pleas, 429. V. Young Men's, etc., Society, 672. People's Sav. I3ank v. Bates, 114, 133. Pepper z/. Carter, 159, 166. Perkins ■y. Center, 218. V. Hays, 496. V. Kendall, 121. V. Perkins, 344, 421. V. Sanders, 200. V. White, 624. Perrett's Case, 688. Perrin v. Wilson, 646. Perry v. Corby, 458. V. Ensley, 263. V. Meddowcroft, 23. Person v. Chase, 639, 691. V. Warren, 651. Persse, In re, 652. Peters 7/. Goodrich, 507. V. Light, 51. Peterson v. Brown, 541, 553, 554. V. Mayor, etc., 687. Petrie v. Han nay, 609. V. Shoemaker, 651. Pettee v. Dustin, 481. Pettibone v. Stevens, 23. Pettit V. Shepherd, 575. Petty V. Petty, no, 423. Peyton v. Lamar, 81, V. Rose, 84. Pfohl V. Simpson, 175. Phalen v. Clark, 224, 608. Pharis v. Leachman, 208. Phelan v. Boylan, 195, V. Kelly, 370. Phelps V. Borland, 405, V. Curts, 19, 182. V. Foster, 81, 82. V. McDonald, 182, 183, 559, V. Piatt, 125, 179. V. Worcester, 647. Phettiplace v. Sayles, 1 50, 368. Philbrook v. Belknap, 604, V. Eaton, 352. Philips V. Green, 693, 697. Phillips V. Frye, 410. V. Mullings, 64. V. Negley, 400. V. Reitz, 356. V. Wooster, 151, 163, 165, 553. Philpot V. Bingham, 636, 640. Phinizy v. Clark, 318, 334. Phipps V. Sedgwick, 69, 259, 418. Phoenix Bank v. Stafford, 164. Phoenix Ins. Co., Ex parte, 560. Pickett z'. Pipkin, 216, 323. Pickler v. State, 641, Pickstock V. Lyster, 288, 460. Piddock V. Brown, 378, Pier V. Dufif, 385. Pierce x/. Brew, 313. z/. Hill, 51. V. Hoffman, 393. V. Milwaukee Constr. Co., 56, 174. 190- V. Pierce, 665, 666. Piercy v. Roberts, 53. Pike V. Bacon, 21, 461. V. Miles, 25, 72. Pilling V. Armitage, 240. ■V. Otis, 21, 318,339. Pillsbury v. Kingon, 184. Pimental v. City of San Francisco, 606. Pinckard v. Woods, 512. Pinckney v. Pinckney, 682. J^e/erence/^ TABLE OF CASES. [are io /ajsrs. xlvii Pinckston v. Brown, 547, 550. Pine V. Rikert, 464. Pinnock v. Clough, 661. Piper z/. Johnston, 75, 76. Pitney v. Leonard, 507. Pitts V. Wilder, 553. Pittsburgh & S. R.R. Co. v. Gazzam, 674. Pixley V. Huggins, 576. Place V. Langworthy, 470. V. Minster, 389. Planck V. Schermerhorn, 431. Planters' Bank 7/. Union Bank, 584,611. V. Willea Mills, 21. Planters' & M. Bankt/. Borland, 297. V. Walker, 32, 90. Platte-. Hudson River R.R. Co., 602. V. Hunter, 466. V. Lott, 465. V. Matthews, 134. V. Mead, 125, 133, 182, 218, 219. v. Preston, 229. V. Routh,63. Plattsmouth z'. Fitzgerald, 627. Plumb 7'. Fluitt, 506. Poillon V. Lawrence, 406. Pollard V. Vinton, 682. Pomeroy v. Bailey, 148, 312, 344, 393. v. Pomeroy, 423. Ponce V. Underwood, 582, 586. Pond V. Doneghy, 639. Ponsford v. Hartley, 175, 209. Poole v. Mitchell, 371. Pope V. Allen, 348. V. Cole, 93. V. Wilson, 15, 156. Pope's Ex'rs v. Elliott, 492, 497. Porter v. Green, 504. V. Lazear, 425. V. Pittsburg Bessemer Steel Co., 163. V. Williams, 94, 185, 187, 188. Portland BIdg. Assoc, v. Creamer, 266. Post V. Dart, 195. V. Stiger, 42, 145, 193, 259,412. Posten V. Posten, 344. Postlewait 7'. Howes, 133, 208. Potter?'. Gracie, 26, 276, 305, 311. V. Holland, 62. V. McDowell, 13, 15, 219, 280, 281, 344. 383- V. Payne, 292, 362. V. Phillips, 201. Potts V. Blackwell, 83. V. Hart, 470, 473. Powell V. Bradlee, 630. V. Howell, 48, 55, 115. V. Ivey, 528, 542. Powell V. Spaulding, 172. V. Waldron, 58. Power V. Alston, 19. V. Cassidy, 572. Powers 7/. Graydon, 146, 171, 192. Powles V. Dilley, 240. Prather v. Parker, 358. Pratt V. Adams, 598. V. Burr, 76. V. Chase, 405, V. Curtis, 150. V. Pratt, 7, 394. V. Putnam, 673. Premo v. Hewitt, 72. Prentice v. Harrison, 615, 619. Presas v. Lanata, 107. Prescott V. Hayes, 335. V. Norris, 644. Prestidge v. Cooper, 290, 505. Preston v. Boston, 669. V. Crofut, 526. V. Dunn, 639. V. Turner, 283. Preusser v. Henshaw, 530, Prevost V. Gratz, 222, 659. PrewJt V. Wilson, 158, 284, 297, 303, 304,414. 519. 520. Price V. Berrington, 649. V. Furman, 699, 703. V. Haynes, 441, 465. V. Le)burn, 603. V. Mazange, 475. V. Pitzer, 28, 358. . V. Sanders, 219, 647. Prichard v. Thompson, 572. Prickett v. Prickett, 309. Prime v. Brandon Mfg. Co., 62. V. Koehler, 67. Primrose 7'. Browning, 414. Pringle v. Phillips, 507, 517. v. Pringle, 181. Pritchard 7'. Norton. 100. Probst 7'. Wcldon, 434, 466. Produce Bank t. Morton, 121, 341. Prosser 7'. Edmonds, 196, 555. 7'. Henderson, 327. Prout 7'. Vaughn, 72. 7'. Wiley, 695, 696. Pryor 7'. Downey. 573. Public Works v. Columbia College, 1 14. 115, 234. Pulliam V. Taylor, 140. Pullis V. Robinson, 167. Pulver 7/. Harris, 429. Purcell 7'. McNamara, 688. Purkitt 7'. Polack, 204, 336, 344. Pusey 7'. Gardner, 6, 342, 377, 401. 543. Putnam 7'. Bicknell, 413. xlviii KrA-re>icc-s] TaBLE OF CASES. \_areiojia^es. Putnam v. Hubbell, 432. V. Os<;ood, 349, 482. Pyle V. Cravens, 640. Quackenbos v. Sayer, 396. Quarles v. Kerr, 482. Queen (The). See Reg. Queensbury v. Culver, 607. Quimby v. Dill, 168. Quinby v. Strauss, 97, 257. Quincy ■y. Hall, 191. Quiriaque v. Dennis, 372. Quirk V. Thomas, 547. Radich ?'. Hutchins, 670. Railroad Co. v. Grant, 574. V. Howard, 190. V. Soutter, 277. v. Trimble, 61. Raleigh v. Griffith, 439. Ralston v. Turpin, 651. Randall v. Buffington, 74. V. Phillips, 587. v. Sweet, 691. V. Turner, 603. v. Vroom, 29. Randegger v. Ehrhardt, 384, 385. Randolph ?'. Daly, 202, 215, 228. Ranken v. Patton, 551. Ranlett v. Blodgett, 474. Rapalee v. Stewart, 450, 463, 464. Rappleye v. International Bank, 619. Ratcliff V. Trimble, 9, 327. Rathbun v. Platner, 433. Raventas v. Green, 372. Ravisies v. Alston, 446. Rawdon v. Rawdon, 611. Rawley v. Brown, 348, 370. Rawson v. Fox, 250. Ray V. Roe ex dcvi. Brown, 329. V. Teabout, 238. • Raymond, Matter of, 429. V. Loyl, 647. V. iMorrison, 7. 7'. Richmond, 247. Raynor v. Mintzer, 197. Rea V. McEachron, 656. V. Missouri, 10, 283, 295, 390, 391, 392- Read v. Worthington, 19, 463. Reade v. Livingston, 147, 148, 152, 154, 156, 163, 167, 421. Reber v. Gundy, 522. Rede v. Farr, 622. Redfield v. Buck, 324, 385. Redtield & Rice Mfg. Co. v. Pysart, 328. Redington v. Roberts, 630. Reed v. Batchelder, 685. V. Emery, 456. V. Gannon, 508, 515. V. Mclntyre, 460, 531. V. Noxon, 12. V. Pelletier, 466. V. Stryker, 84, 172, 228. V. Wheaton, 142. V. Woodman, 168, 334. Reader 7'. Speake, 125. Reehling 7>. Byers, 342. Reese River Min. Co. v. Smith, 586, 588. Reeves v. Ayers, 83. V. Dougherty, 9. V. Reeves, 612. Reg. V. Saddlers' Co., 629. V. Smith, 244. Regli V. McClure, 365. Reichart v. Castator, 541. Reifsnyder v. Hunter, 485. Reiger v. Davis, 343, 345. Remington v. Linthicum, 108. Remington Paper Co. v. O'Dougherty, 195. Renfrew v. McDonald, 552. Renney v. Williams, 342. Rennie v. Bean, 456. Retzer v. Wood, 404. Reubens v. Joel, 114. Rex V. Duchess of Kingston, 23. V. Earl of Nottingham, 481. Reynell v. Sprye, 22. Reynolds v. Crook, 337. V. Harris, 616. V. Park, 211. V. Robinson, 310. V. Welch, 114. Rhawn v. Pearce, 405. Rhea v. Jordan, 605. Rhead v. Hounson, 88, 216. Rheinstein v. Bixby, 265, 267. Rhem v. Tull, 178. Rhine v. Ellen, 312. Rhoads v. Blatt, 327. Rhode Island v. Massachx'.setts, 581. Ricard v. Sanderson, 67. Rice V. Cunningham, 378. V. Cutler, 630, 631. V. Peet, 648. V. Perr}', 280. V. Savery, 67. Rich V. Levy, 81. Richards v. Allen, 602. V. Kountze, 9. V. Levin, 442. V. Pierce, 227. Richardson v. Boright, 703. J7^/eyenC£sj TABLE OF CASES. [are (a M^es. xlix Richardson v. Duncan, 668, 669. V. iVIarqueze, 73, 441, 530. V. Mounce, 402. V. Rardin, 358. V. Rhodus, 148. V. Root, 178. V. SmalKvood, 166, V. Strong, 652. V. Thurber, 535. V. Trimble, 1 19. ■z/.^Wyman, 425, Riches v. Evans, 289. Richmond v. Irons, 230. Richtmeyer ?', Remsen, 429. Rickards v. Attorney-General, 30, Riddel v. Pakeman, 616. Riddle v. Lewis, 528. V. Mandeville, 209. Rider 7/. Kidder, 55, 144, 178. V. Mason, 70. Ridgely v. Bond, 92, 221. Ridgway v. English, 309. Ridout V. Burton, 355. Rife V. Geyer, 54, 497. Riggins V. Brown, 380. Riggs V. American Tract Soc, 704. V. Murray, 27, 472, 481, 529. Righter v. Roller, 705. Riley v. Mallory, 698. V. Mayor, etc., of N. Y., 294. Rinchey v. Stryker, 89, 127, 128, 191. Rinehart v. Long, 227. Ringgold 7/. Waggoner, 336. Ringo V. Binns, 661. Riper v. Poppenhausen, 379. Rippon 7/. Norton, 497. Ritch V. Smith, 674. Ritter's Appeal, 666. Ritterband v. Baggett, 57. , Roach 7/. Bennett, 412. 7/. Brannon, 308. 7v. Duckworth, 662. Robb V. Brewer, 72. V. Irwin's Lessee, 639. Robbins v. Butcher, 448. 7/. Eaton, 685. V. Oldham, 358. 7,'. Parker, 482. 7'. Sand Creek Turap. Co., 172. Robert 7/. Hodges, 112. Roberts v. Albany & \V. S. R.R. Co.. 104, 105, 533. V. Anderson, 39, 269, 526, 527. 7/. Davey, 621. V. Gibson, 232. V. Guernsey, 9. V. Medbery, 385. V. Shepard, 337. Roberts v. Tennell, 604. V. Wiggin, 693. V. Wyatt, 621. Robertson v. Western, etc., Ins. Co., 661. Robinson v. Bates, 425. V. Clark, 411. V. Elliott, 21, 372, 470, 471, 475, 476. 481. V. Gltadow, 675. V. Hoskins, 684. If. Huffman, 49. 7'. International L. A. Soc, 584. 593. 7K Kalbtleisch. 586. 682. v. Memphis & C. R.R. Co., 682. 7/. Stewart, 50, 51, 93, 114, 166, 242, 278, 416, 533. V. Wallace, 420. V. Weeks, 636, 639, 703. ' 7'. Williams, 309. Rocheblave v. Potter, 358. Rochford v. Hackman, 53, 491, 497. Rockwell V. McGovern, 466. Rodgers 7'. Dibrell, 173. Rodman 7/. Henry, 94, 185, Roe V. Mitton, 297. V. Moore, 284. Roeber v. Bowe, 284, 507. Roffey V. Bent, 491. Rogers v. Brent, 108. 7K Brown, 404. V. Burlington, 607. 7'. Gosnell, 67. V. Hall, 389. V. Hurd, 685. V. Jones, 48, 55, 505. V, Rogers, 118, 211. V. Walsh, 626. Rollins 7/. Mooers, 501. Romaine v. Hendrickson, 660. Roman 7'. Mali, 546, 547, 664. Rome Exchange Bank 7'. Eame?, 484. Romine t-. Romine, 262. Rood 7'. Welch, 184. Roof 7'. Stafford, 693. Rooker 7'. Rooker, 297, Root v. Reynolds, 298. 7>. Stevenson, 643. Roper 7/. McCook, 137. Rose 7'. Bates, 604. 7'. Brown, 49, 157, 290. 7'. Colter, 150, 311, 356. 407. 7'. Mynatt. 663. 7'. Sharjiless, 75. Rosenberg v. Moore. 84, 266. Rosenthal v. Walker, 223, 224. J^e/ereuces'J TABLE OF CASES. [are io MS^"- Rosewarne ?'. Billing, 6oi. Ross V. Bridge, 270. V. Crutsinger, 330. V. Duggan, 335. V. Hardin, 77. V. McLung, 1 10. V. Terry, 624, 625. V. Wood, 119. Rothchild v. Rovve, 355. Rothgerber v. Gough, 340. Rourke v. Bullens, 354. Rouse V. Southard, 224. Rowland v. Coleman, 216. Rowley v. Bigelow, 630, 631. Roy V. Bishop of Norwich, 38, Royal Baking Powder Co. v. Sherrell, 60. Royall V. McKenzie, 380. Royce v. Gazan, 293, 377. Royer Wheel Co. v. Fielding, 140, 205, 308, 458. Rozier v. Williams, 358. Ruchizky v. De Haven, 638, 691, 703. Rucker v. Abell, 272. Ruckman v. Conover, 542. V. Ruckman, 593. Ruddell V. Landers, 599. Ruffing V. Tilton, 174. Ruggles V. Brock, 1&8. Ruhl V. Phillips, 283, 336, 337, 432. Rumery v. McCulloch, 541. Runals v. Harding, 264. Rupe V. Alkire, 19, 281, Rush V. Barr, 403, V. Vought, 92. Russell, Ar/^«r/^, 161. V. Clark, 133, 134, 135. V. Dyer, 89, 108. V. Grinnell, 496. V. Lasher, 211. V. O'Brien, 365. V. Winne, 108, 276, 281, 322, 472. 473, 478, 600. Rutherford v. Chapman, 41 5. Ryall V. RoUe, 30, 33, 86. Ryan v. Dox, 604. V. Jones, 56. V. Mackmath, 707. V. Ryan, 593. Ryder v. Hulse, 420. V. Wombwell, 391, 647. Ryhiner v. Ruegger, 426. Ryland v. Callison, 108, 195. Ryle V. Falk, 102. Safford v. Douglas, 533. Sage V. Mosher, 172, 204. St. John V. Benedict, 543. St. John V. Pierce, 174. Salisbury v. Morss, 206. Salmon v. Bennett, 148, 343. V. Smith, 148, 240. Salter v. Hilgen, 571, 613. Salt Lake City v. Hollister, 605. Saltus V. Everett, 632. Sampeyreac v. United States, 574. Sams V. Stockton, 647. Sanborn v. Batchelder, 705. V. Kittredge, 92. Sanders v. Clason, 68. Sands v. Codwise, 31, 182, 183, 273, 340. V. Hildreth, 237. Sanford v. Lackland, 53. V. Sanford, 312, Sanger z/. Upton, 107. Sangston v. Gaither, 15. Sankey v. O'Maley, 268. Sargent v. Salmond, 33, 55, 86. Sarle v. Arnold, 315, 324, 355, 390. Sartwell v. Horton, 669. Satterlee v. Matthewson, 574. Saunders v. Reilly, 308. Saunderson v. Marr, 640. Savage v. Dowd, 530. V, Foster, 695. V. Hazard, 501. V. Knight, 39. 7/. Murphy, no, 153, 154, 166, 285, 286, 416. V. O'Neil, 100, loi, 410. V. Smith, 408. Saver}' v. King, 663. Savings Bank of New Haven v. Bates, 467. Savoye v. Marsh, 405. Sawin v. Guild, 61. Sawyers-. Hoag, 107, 188, 190, 212. V. Lufkin, 652. v. Noble, 175. Sayre v. Flournoy, 56. V. Fredericks, 29, 242, 244, 297, 324- V. Hewes, 322. Scales V. Scott, 128. Schafer v. Reilly, 98. Schaferman v. O'Brien, 204, 328. Schaffer v. Lavretta, 638. Schatz V. Kirker, 327. Scheble 7'. Jordan, 385. Scheitlin v. Stone, 238, 341. Schermerhorn v. Merrill, 51. V. Negus, 485. Schiele v. Healy, 466. Schleisinger v. Sherman, 89. Schmidlapp v. Currie, 83, 307. J^e/erence/j TABLE OF CASES. ^are/opa^es. li Schmidt v. Opie, 297. Schnicker v. People, 3S3. Schoeffler v. Schwartinj;-, 269. Scholey 7/. Muniford, 668. Scholle V. Scholle, 678. Schooner Freeman 7j. Buckingham, 682. Schrenkeisen 7'. jNIiller, 253. Schribar v. Piatt, 75. Schroeder v. Walsh, 283. Schuff 7/. Ransom, 701. Schuman 7a Peddicord, 593. Schuster v. Stout, 145. Schwed 7A Smith, 560. Schwinger v. Hickok, 94. Scoggin V. Schloatii, 312, 313. Scott V. Alford, 470, 471. V. Buchanan, 693. V. Depeyster, 220. 7/. Gill, 67. V. Hartman, 145, 193. V. Indianapolis Wagon Works, 42, 81. 7/. McFarland, 214. V. McMillen, 134, 135. V. Nevins, jo, 71. V. Onderdonk, 576. V. Wallace, 137. V. Winship, 328, 362. Scottish Amer. Mortgage Co. v. Fol- lansbee, 175. Scouton V. Bender, 235. Scovill V. Thayer, 570, 573. Scoville 7/. Canfield, 212. Scranton v. Stewart, 638, 693. Scribblehill v. Brett, 597. Scribner v. Fisher, 405. Scrivenor zk Scrivenor, 331. Sea Ins. Co. 7/. Stebbins, 268. Seale v. Vaiden, 444. Seaman 7/. Stoughton, 182. Sears v. Hanks, 25. V. Shafer, 340, 672. Seaver 7/. Bigelows, 172, 560. Sebrauth 7k Dry Dock Sav. Bank, 94. Second Nat. Bank 7'. Brady, 545. 7/. Burt, 676. Secor 7'. Lord, 67. Sedgwick 7'. Stanton, 25. 7'. Tucker, 293. Seeley 7/. Price, 651. Seitz V. Mitchell, 239, 342, 411,419, 420. Seivers 7/. Dickover, 273. Selby V. Jackson, 653. Self 7/. Taylor, 697. Selleck v. Phelps, 277. Selover 7'. Coe, 209. Semmens v. Walters, 6, 420. Semmes 7'. Hartford Ins. Co., 133. Sample v. Morrison, 640. Sentance v. Poole, 655. Senter 7>. Mitchell, 94. Sere 7'. Pitot, 184. Settlemier 7'. Sullivan, 616. Seward 7'. Jackson, 145, 147, 149, 152, 163, 298. Sexey 7'. Adkinson, 114. Sexton 7'. Wheaton, 49, 78, 81, 86, 149, 153, 162, 163, 166, 176, 178, 326, 416. Seymour 7'. O'Keefe, 357, 363. 7'. Wilson, 26, 293, 294, 313, 483, 500. Shackelford t. Shackelford. 83. Shackleford 7'. Collier, 182. Shaeffer 7'. Fithian, 274. Shainwald 7'. Lewis, 94, 234, 264. Shand 7'. Hanley, 158, 175, 211, 236, 249, 272, 275, 290. Shankland's Appeal, 492, 497, 498. Shanks 7'. Klein, 308. Shannon v. Commonwealth, 481. Sharp 7'. Caldwell, 610. 7'. Cosserat, 491. 7'. Curds, 622. V. Jones, 631. 7'. Sharp, 234. 7'. Speir, 656. 7/. Teese, 536. Sharpe 7'. Davis, 541. V. Freeman, 179. Shattuck 7'. Freeman, 455. Shaver 7'. Brainard, 198. Shaw, Ex parte, 614. V. Boyd, 703. 7/. Dwight, 118, 124, 140, 141. 196, 376. 7>. Levy, 357. V. Millsaps, 201, 208, 541. 7'. Nudd, 673. 7'. Spencer, 507. 71. Thompson, 355. V. Wilshire, 355. 7>. Woodcock. 668. Shea 7'. Knoxvillc & Ky. R.R. Co., 126. Sheafe 7'. Sheafe, 81, 90, 127, 12S. Shealy v. Edwards, 318, 3S9, 530. Shean 7'. Shay, 145, 193, 329. Shcaron 7\ Henderson, 342. Shee 7'. Hale. 491. Sheldon v. Harding, 651. 7'. Rice. 659. 7'. Weeks, 72. Sheldon H. B. Co. 7'. Eickemever. H B. M.Co., 176,673,686,688. Shelley v. Boothe, 530. lii J^e/erences'j TABLE OF CASES. [are io/a£:es. Shellington 7a Howland, 132, 133. Shelton v. Church, 327. Shepard v. Walker, 45. Shepherd v. Trigg, 358. 7'. Woodfolk, 271, 272. Sheppard v. Thomas, 162, 169. Sherk v. Endress, 587, 593. Sherman v. Barrett, 26. V. Blodgett, 380. V. Elder, 415, 429. V. Hogland, 150, 219, 318, 326, 342, 388, 394. V. Wright, 697. Sherrill Roper Air Engine Co. v. Har- wood, 270. Sherron v. Humphreys, 356. Sherwood v. Sutton, 402. Shiffner v. Gordon, 593. Shine 7/. Gough, 503. Shipman v. ^tna Ins. Co., 184. V. Furniss, 23, 306. V. Horton, 698. Shirley v. Long, 184. v. Teal, 458. Shirras 7/. Caig, 321. Shoemaker v. Cake, 22. Shone v. Lucas, 219. Shontz V. Brown, 144, 145, 176. Short V. Tinsley, 271. Shorten v. Woodrow, 131. Short Staple (The), 9. Shrock V. Crowl, 691. Shryock v. Waggoner, 457. Shufeldt V. Boehm, 81, 82, 107, 134. Shultz V. Hoagland, 8, 342, 434, 435, 436, 456, 457. 466. Shumway v. Rutter, 354. 'V. Shumway, 263. ShurtlefifT^. Willard, 354, 482. Shurts 7'. Howell, 125, 180. Shute V. Dorr, 602. Sibly V. Hood, 358. Sibthorp v. Moxom, 66. Sickles V. Sharp, 39. Sidensparker v. Sidensparker, 118, 376, 502. Sides 7^. McCullough, 170. Siebold, Ex parte, 614. Sigler V. Knox County Bank, 83. Sillick V. Mason, 70. Sillyman v. King, 413. Silvers v. Hedges, 9. Silverthorn v. McKinster, 677. Si mar 7/. Canaday, no, 172, 423. Simmons %•. Ingram, ^T, 208, 290. 7'. Jenkins, 470. V. McKay, 639. Simms V. Morse, 8, 342, 394, 419. Simpson v. Del Hoyo, 501. V. Eggington, 675. V. Hornbeck, 618. V. Lamb, 664. V. Lord Howden, 708. 7A Warren, 184. Sims V. Everhardt, 693, 694, 695, 696, 698, 703. V. Gaines, 15, 42, 54, 335, 378. V. Thomas, 49, 64. Simson v. Brown, 67. Singer v. Goldenburg, 335. V. Jacobs, 513, 518. V. Wheeler, 95. Singree v. Welch, 297. Sinking Fund Cases, 574. Sipe V. Eamian, 328, 433. Skarf 7/. Soulby, 42. Skeele v. Stanwood, 113. Skidmore v. Romaine, 653. Skinner v. Maxwell, 691, 703. Skipwith V. Cunningham, 328. Skowhegan Bank v. Cutler, 30. Slade V. Van Vechten, 632. Slater v. Sherman, 42. Slaughter v. Cunningham, 639, 642. V. Froman, 706. Sledge 7/. Obenchain, 169. Sleeper v. Chapman, 316, 475. Slocum V. Hooker, 689, 690. Small V. Boudinot, 217. V. Owings, 92. Smallcombe's Case, 687. Smart v. Bement, 503, 504. Smets V. Williams, 45. Smillie v. Ouinn, 46, 72. Smith V. Acker, 469. V. Allen, 72, 304. V. Babcock, 233. ■V. Barclay, 57. V. Blake, 96. V. Bowen, 69. V. Bromley, 550, 597, 598. V. Bryan, 560. V. Buchanan, 406. V. Champney, 372. V. City of Newburgh, 687. V. Clark, 485. V. Conk Wright, 20, 481. V. Cratt, 176, 456, 529, 530, 531, 537, 538. V. Crisman, 370. 7'. Cuff, 597. V. Davis, 466. 7'. Ely, 470, 473, 480. V. Emerson, 75. V. Ferguson, 639. V. Garey, 63. He/erences'j TABLE OF CASES. [are io /ages. Illl Smith V. Greer, 156. V. Grim, 201, 208. V. Henkel, 9. V. Henry, 519. V. Howard, 442, 541. V. Hul)bs, 592, 593, 594.? V. Hurst, 481. V. Johnson, 435. V. Kay, 217, 550. V. Kearney, 47. V. Kehr, 25. V. Kelley, 268. V. Lansing, 657. V. Longmire, 128, 139. V. Lowell, 344, 378. V. Mayo, 638, 685, 690. V. Meaghan, 192. V. Millett, 114. V. Mitchell, 73, 429. V. Moore, 53. v. Muirheid, 123. V. Onion, 334. V. Quartz Min. Co., 557. V. Railroad Co., 1 13. V. Rumsey, 25, 75, 127. V. Sanborn, 52. V. Schulting, 174. ?A Schwed, 393, 532. V. Shaw, 618. V. Skeary, 530. v. Smith, 280, 405, 423, 630, 637, 706. V. Stone, 597. V. Vodges, 148, 162, 344. V. Vreeland, 147. V. Weeks, 93, 138. V. Welch, 362. ZK Williams, 45. V. Yell, 344. Smith's Will, Matter of, 664, 671. Snedecor v. Watkins, 404. Snelling v. Mclntyre, 278. Snodgrass v. Andrews, 84, 125, 138, 172, 178. ?'. Branch Bank of Deca- tur, 402. Snow V. Lang, 545. V. Paine. 293. Snowdon v. Dales, 53, 497. Snyder 7^ Christ, 164, 290. Sockman 7/. Sockman, 90. Soden t. Soden, 328. Sohier 2'. Johnson, 59. Solinger t. Earle, 536. Solinsky v. Lincoln Sav. Bank, 257. Somerville t. Donaldson, 263. Somes 7'. Brewer, 566, 570, 571, 582, 583. 587, 631. Somes V. Skinner, 393. Sommerville 7'. Horton, 482, 600. Songer 7*. Partridge, 541. Souder's Appeal, 92, 98. Soule V. Chase, 405. Southard 7'. Benner, 47, 113, 115, 134, 179, 182, 184,429.470,473- South Carolina v. Gaillard, 574. South Sea Co. v. Wymondsell, 402. Southworth v. Adams, in. Spackman v. Evans, 13. Spader 7^. Davis, 104, 120. Sparhawk 7/. Cioon, 43, 54, 496. Sparks 7/. Dawson, 12. V. De La Guerra, 47. V. Mack, 378, 470. Sparman z>. Keim, 682, 691. Spaulding 7/. Blythe, 219, 286, 407. 7'. Fisher, 131. V. Strang, 443, 444, 462, 530, 538. Speer v. Sample, 588. Speers v. Sewell, 651. Speiglemyer 7A Crawford, 126, 177. Spence v. Bagwell, 431. Spencer 7/. Armstrong, 125, iSo. V. Ayrault, 307. 7/. Carr, 694. V. Cuyler, 93. V. Godwin, 147, 148. 7'. Jackson. 461. V. St. Clair, 705. V. Spencer, 424. Spicer V. Ayers, 125. 7/. Hunter, 254. 7'. Spicer, 8. Spindle v. Shreve, 48, 54, 70, 71, iii, 494. Spirett V. Willows. 49. Splawn V. Martin, 283. Sprague 7/. Duel, 701. Spraights ?'. Hawley, 350. 470. Spring 7'. Short. 47, 184. 185, 429. Sprott 7'. United States, 585. Staats 7/. Bergen, 660. Stacy 7/. Deshaw, 45. 395. Stafford V. Roof. 691. 698. Stall V. Fulton. 413. Slanbro 7'. Hopkins, 375. Stanford 7'. Lockwood. 429. Stanley 7'. Bunce, 466. 7>. Robbins. 302. 7'. Stanton, 225. Stanton 7'. Green. 243. 7'. Kirsch. 413. 7'. Shaw. 546. Staples V. Bradley. 89. loS. V, Smith, 393. liv AV/c'r.v/,,«] TABLE OF CASES. [areiopagvs. Staples V. Staples, 658, 659. Starin v. Kelly, 31, 284, 293, 377, 433, 434. 501. Starke v. Littlepage, 547, 554. Starr v. Peck, 8, 9. V. Starr, 313. State V. Bevers, 584, 5S5. 7/. Civil District Court, 575. 7A Estel, 15. TJ. Evans, 311. V. Keeler, 341, 433. V. King, 363. {ex rel. Peirce) v. Merritt, 336, 340. V. Miller, loi. V. Mueller, 20. V. Phcenix Bank, 392. 7/. Plaisted, 642, 691, 694, 698, 699. V. Richmond, 578, 590, 591, 620. V. Rosenfeld, 363. V. Shacklett, 581. V. Thomas, 83. V. Williams, 406. State Board of Agriculture v. Citizens' Street Ry. Co., 606. Staton V. Pittman, 184. Steadman v. Wilbur, 410, 411. Stearns v. Gage, 285, 508, 509, 510, 511, 515. 5-0. V. Page, 223, 402. Stebbins v. Miller, 382. Steele v. Benham, 361, 362. V. Curie, 598. V. Ward, 283. Steelwagon v. Jeffries, 365. Steere v. Hoagland, 69, 123, 133, 134, 257, 328. Stein V. Hermann, 255. V. Munch, 480. Stephens v. Cady, 60, 61. v: Whitehead, 115. Stephenson v. Donahue, 419. Stern Auction & C. Co. v. Mason, 327. Sterry v. Arden, 303, 506. Stetson V. Miller, 458. Stevens v. Dillman, 328, 340, 382. V. Gladding, 61. V. Hauser, 582. V. Hinckley, 334, 335. V, Hyde, 572, 631. V. Merrill, 2. 7/. Myers, 269. V. Robinson, 18, 344. 7'. Works, 144. Stevenson v. Stevenson, 42. V. White, 76. Steward v. Thomas, 369. Stewart v. Beale, 132. Stewart %'. Dunham, in, 560. V, Emerson, 630. V. English, 48, 55. V. Fagan, 114. V. Fenner, 383, 390. V. Hopkins, 331. V. Johnson, 388. V. Lispenard, 567, 650. 7/. McMartin, 95, 96. 7'. Piatt, 183, 300, 469, 470, 541, 632. V. Rogers, 150. 7'. Stewart, 424. V. Thomas, 385. 7'. Wilson, 328. Stileman v. Ashdown, 149, 162, 325. Still V. Spear, 492, 498. Stilwell V. Swarthout, 655, 656. V. Van Epps, 102. Stimson v. White, 413. 7/. Wrigley, 144, 353, 371,481. Stinson v. Hawkins, 287, 288, 321. V. Williams, 48, 55. Stockwell V. Blamey, 386. 7'. Silloway, 291. Stoddard v. Butler, 30, 328. 7'. United States, 675. Stokoe V. Cowan, 42, 47. Stone V. Anderson, 128. V. Chisolm, 107, 7'. Damon, 666. 7'. Grubham, 325. V. Locke, 37. 7'. Myers, 145. 7'. Peacock, 372. 7'. Spencer, 288, 289. 7'. Stone, 423. 7'. Wythipol, 685. Storey v. Agnew, 289. Storm 7'. Davenport, 184, 430. V. United States, 404. 7/. Waddell, 61, 93, 104. 533, 534. Stout V. Stout, 204, 674. Stovall V. Farmers' & M. Bank, 273. Stover 7/. Herrington, 321, 335. Stowe V. Taft, 355. Stowell V. Hazelett, 384. Strader v. Mullane, 390. Strang v. Bradner, 406. Strange v. Graham, 587. Stratford v. Ritson, 209. Strauss v. Kranert, 10. Strike v. McDonald, 175. Striker v. Kelly, 656. V. Mott, 466. Stronach v. Stronach, 706. Strong V. Clem, 95. 7'. Foote, 647. J?e/erences'j TABLE OF CASES. \^are io /^a^cs Iv Strong 7'. Skinner, 51. V. Strong, 42. V. Taylor School Township, 172, 231. Stroud 7/. Marshall, 648, Strouse v. Becker, 75. Stuart z'. Palmer, 575, 576. V. Stuart, 145. Stucky V. Masonic Sav. Bank, 522. Studwell 7'. Shapter, 644, 645. Stump 7'. Rogers, 178. Sturges 7'. Vanderhilt, 1 14. Sturtevant 7/. Ballard, 23, 351. Suffern 7'. Butler, 269. Sugg 7'. Tillman, 73. Suiter 7'. Turner, 369. Sullice 7'. Gradenigo, 179. Sullivan 7/. Iron & Silver Min. Co., 218. V. Portland&K.R.R.Co.,40i. V. Sullivan, 348. Summers 7/. Babb, 425. Sumner 7'. Brady, 536. V. Cook, 385. 7/. Dalton, 355, 365. 7'. Hicks, no, in, 439, 451. Surles 7'. Pipkin, 652. Susong 7'. Williams, 527. Susquehanna Valley Bank 7>. Loomis, 626. Sutherland, /« re, 58. Sutphen 7.'. Fowler, 558. Sutton 7'. Ballou, 358, 367. 7-'. Han ford, 21. Suydain 7'. Northwestern Ins. Co., 214. Swafford 7/. Ferguson, 642. Swaine 7'. Perine, 423. Swan V. Robinson, 522. V. Smith, 127. 177, 272. Swayze v. Hull, 596. Sweet V. Tinslar, 543, 593. Sweetser v. Bates, 3S2. Swift V. Agnes, 348. V. Hart. 530. V. Mass. Mut. Life Ins. Co., 383. Switzer v. Skiles, 661. Sydnor v. Gee, 360. Syracuse Chilled Plow Co. v. Wing, 291, 297, 417. Taaffe, Ex parte, 491. Tabor v. Van Tassell, 385, 432. Taff z/. Hosmer, 196. Taggart v. Stanbery, 313. Talcott V. Hess, 294, 466. Tallmadge v. Sill, 63. Tallman v. McCarty, 614. Tallon 7'. Ellison, 471. TamsT/. Bullitt, 184. Tantum v. Green, 48, 56, 519, 520. V. Miller, 540, 549, 593. Tappan v. Evans, 102, 142. Tarback v. Marbury, 333. Tarbell v. Griggs, 123. Tasker v. Moss, 1 1 5. Tate V. Liggat, 1 14. Tatum V. Kelley, 598, 599. Taylor v. Atwood, 272. V. Baker, 507. 7/. Bowker, 113, n4, n^, wj, 133- V. Chichester & M. Ry. Co., 568. V. Cloud, 559. V. Dansby, 690. V. Dickinson, 269. V. Holmes, 1 16, 176. V. Jones, 33, 86, 302. V. Mason, 485. V. Patrick, 651. V. Robinson, 385. V. United States, 38. V. Webb, 199, 201, 208, 385. V. Weld, 557. V. Ypsilanti, 607. Teabout v. Daniels, 370. Tedrowe v. Esher. 386. 3S8. Teed v. Valentine, n8, 153, 154, 290, 376. Teese 7>. Huntingdon, 392. Teller 7^ Randall. 186. Tenant v. Elliott, 610. Ten Broeck v. Sloo, 56, 57. Tennent v. Battey, 127. Tennessee Nat. liank 7'. Ebbert, 470, 475- Tenney 7>. Evans, 50, 283. Terrell v. Green, 318. Terrill v. Auchaucr, 566. Terry v. Anderson, 1 17. V. Bissell, 627. V. Cainan, 175. V. Hopkins, 424. 7'. Tubman, 141. 7>. Wheeler, 367. Tessier 7'. Wyse, 266. Tevis V. Doe, 87. Texas v. Chiles, 375. V. White, 584. Thacher 7A Phinney, 156, 293. Thames?'. Rembert, 238, 315, 500, 501, 526. Thayer 7'. Thayer, 423. 7'. Turner, 705. Thomas v. Brownville. F. K. & P. R.R. Co., 658. 7'. City of Richmond, 5S4, 5S5, 59-. 597. 5yS. 605. ivi Re/i'roiccs TABLE OF CASES. a re to pages. Thomas v. Dickinson, 603. V. Hubbell, 376. V. Markey, 215, 217, 219. V. McEwen, 45. V. Pyne, 328. V. Sullivan, 316. V. Talmadge, 433. Thomason v. Neeley, 89, 245. Thompson v. Adams, 58. V. Bickford, 50. V. Blanchard, 355, 362. V. Brown, 180. V. Cundiff, 422. V, Diffenderfer, 83. V. Drake, 321. V. Duff, 520. V. Feagin, 411. V. Furr, 28. V. Hall, 381. V. Kyner, 666. 7'. Lay, 685. 7'. Leach, 633, 640, 654. V. Moore, 37, 171. V. Nixon, 56. V. Paret, 357. V. Pennell, 334. V. Rose, 630. V. Sanders, 240. V. Sherrard, 267. V. Towne, 62. V. Van Vechten, 133, 195. 7/, Wilhite, 372. 7/. Yeck, 358. Thompson's Appeal, 118. Thomson v. Dougherty, 158, 161, 166, 167. Thorington v. Smith, 584, 585. Thornberry v. Baxter, 204. Thornburgh v. Hand, 408. Thorne v. Bank, 356. Thornton v. Hook, 6. V. Tandy, 385. Thorp V. Keokuk Coal Co., 67. Thouron v. Pearson. 330, 331. Thrall v. Newell, 623, 625, 627. Throckmorton v. Rider, 377. Thrupp V. Fielder, 685. Thurber v. Blanck, 89, 128, 138, 139, 191. Thurlow 7/. Gilmore, 684. Thurston v. Blanchard, 631, 705. Tibbals v. Jacobs, 369. Tichenor v. Alien, 204. Ticknor v. McClelland, 358, 372. Ticonic Bank v. Harvey, 133. Tiernan v. Poor, 221. Tiernay v. Claflin, 503. Tiffany v. Clark, 658. Tildcslcy v. Lodge, 503. Tilford V. Burnham, 104. Tillinghast v. Bradford, 53, 484, 494, 495. 497- Tillotson V. Wolcott, 73, 94. Tillou V. Britton, 531. Tilson V. Terwilliger, 362, 364, 385, 387. Tilton 7', Beecher, 242. V. Cofiekl, 206, 235, 525. V. Russell, 646. Titcomb v. Vantyle, 649. V. Wood, 629, 631. Tobie & Clark Mfg. Co. v. Waldron, 145- Todd V. Lorah, 307. V. Monell, 28, 54. V. Nelsoh, 153, 154, 155. Tognini v. Kyle, 6, 16, 315, 367. Toker v. Toker, 64. Tolbert v. Horton, 114. ToUes 7'. Wood, 70, 492. Tolman v. Marlborough, 66. Tolputt V. Wells, 322. Tolson V. Garner, 704. Tomlinson v. Matthews, 411. Tompkins 7/. Fonda, 54, 56, 95,425. V. Nichols, 239, 369, 377. V. Purcell, 94, 123. V. Sprout, 26, 275, 277. Toney v. McGehee, 6, 7, 9, 1 56. Tool Co. V. Norris, 597. Topping V. Lynch, 361. Torrey v. Bank of Orleans, 657, 662, 679. Totten V. Brady, 530. V. United States, 592. Towers v. Hagner, 410. Towle 7'. Dresser, 641, 698. V. Hoit, 27, 378. Town of Oueensbury 7'. Culver, 607. Venice 7'. Woodruff, 208, 706. Towne v. Fiske, 387. V. Smith, 405. Townsend v. Early, 491. 7'. Little, 365, 503, 506. V. Mayor of New York, 194, 575- V. Steams, ■};]■], 436, 463, 464, 465- 11. Townsend, 574. V. Tutlle, 146. 7'. Whitney, 177. Townshend 7'. Windham, 63, 64, 167. Township of Burlington 7'. Beasley, 607. Tracy v. Cover, 75. 7'. Tracy, 605. Trade-Mark Cases, 59, 60. Traer v. Clews, 452. References'^ iAbl.L ^jl^ CASES. ^are to pages. Ivii Train v. Kendall, 467. Traip z'. Gould, 90. Trapnall 7'. State Bank, 639. Trappes v. Meredith, 497. Trask 7'. Bowers, 365. Trefts V. King, 506. Trego V. Skinner, 84, 205, 211. Tremper v. Barton, 588. Trenton Banking Co. 71. Duncan, 397, 399- Tresch 7'. Wirtz, 414. Trimble v. Turner, 167. V. Woodhead, 182, 183, 186. Tripp 7'. Vincent, 232. Trippe v. P'razier, 572. Trist V. Child, 597, 600. Troll V. Carter, 543. Trotter v. Watson, 387. Trough, Estate of, 422. Troughlon 7-. Troughton, 63. Troup 7'. Smith, 403. Trovinger 7'. McBurney, 599. Troxall 7'. Applegarth, 6. Truax v. Slater, 384, 385. Trueblood v. Trueblood, 640, 681. Truesdell 7'. Sarles, 232. Trullenger 7'. Todd, 616. Truscott V. King, 309, 312, Trust Co. V. Sedgwick, 259. Trustee Relief Act, Itt re, 42. Tryon 7-. Whitmarsh, 515. Tucker v. Andrews, 285. ■ V. Drake, 75. V. Moreland, 683, 692, 693, 698, 699, 700, 703. V. Tucker, 84, 423. V. Zimmerman, 210. Tumlin v. Crawford, 24. Tupper V. Cadwell, 647. 7/. Thompson, 81, 89. 7'. Wise, 560. Turbeville v. Gibson, 321. Turnbull 7'. Bowyer, 623, 625. Turner 7'. Adams, 113, 117, 133, 134, 135. V. Cheesman, 666. V. Fe'gite, 615. V. First Nat. Bank, 208. V. Fowler, 485. V. Jaycox, 464, 465. 7'. Nye, 410. V. Robinson, 205. V. Turner, 145, 193. V. Tutile, 627. 7'. V'aughan, 72. Turnley v. Hooper, 49. Turpin's Admr. 7'. Turpin, 691. Tuxbury v. Miller, 536. Tuxworth 7'. Moore, 365. Twin Lick Oil Co. v. Marbury, 657, 659. Twyne's Case. 30, 31, 38, 39, 41, 298, 302, 317, 325, 328, 349. 352. Tyberandt 7'. Raucke, 342. Tyler v. Angevine, 295, 388, 402. 7'. Defrees, 581. V. Peatt, 114. V. Tyler, 541, 543. Uhl 7'. Dillon, 81, 82, 265. V. Robison, 356. Uhlfelder7'. Levy, 85, 118. Uhre V. Melum, 214. Underwood z\ Sutclifie, 185, 186. Union Bank of Tenn. t'. EUicott, 467. Union Nat. Bank 1'. Warner, 249, 255, 256, 272, 532. United States 7'. Amistad, 23, 91. 7'. Arrcdondo, 581. V. Bainbridge, 636, 689. 7/. Beebee, 399. 7'. Bell Telephone Co., 226. V. Drew, 667. V. Forbes, 667. 7'. Griswold, 162, 272, 321, 386. V. Grossmayer, 569, 586, 598. V. Hooe, 28, 309. V. Lotridge, 328. 7'. McGlue, 666. V. Stiner, 1 54. V. Thirty-six Barrels of High Wines, 392. V. Throckmorton. 119. Updike V. Ten Broeck, 309. V. Titus, 309. LTpshaw 71. Gibson, 696. Urquhart v. Macpherson, 705. Upton V. Englehart, 188. 7A McLaughlin, 224, 402, 404. V. Tribilcock, 188. 190, 212. Usher v. Hazelline, k68, 501. Utterson v. Vernon, 30. Valentine, Matter of, 656. Van Alstvne 7'. Cook, 236. Van Bibber 7-. Mathis, 16, 292, 421. Van Bramer ?'. Cooper, 689. Van Buskirk 7>. Warren, 100. Vance 7'. Phillips, 291, 292. V. Schroyer, 191, 705. Vandcrpoel 7'. Ke.irns, 661. 7'. Wan V'alkenburgh, 199, 205. Van Deuscn 7-. Sweet, 268, 583, 654, 704. Van Doren v. Mayor, etc., 194, 708. Iviii 7;!c/c;e>!cci] TABLE OF CASES. [areioM^es. Van Dyck v. McQuade, 219. Van Epps v. Van Epps, 658, 660, 676. Van Etten v. Ilurst, 127. Van Heusen ?'. Radcliff, 116, 184. Van Horn v. Hann, 652. Van Kleeck v. Miller, 118, 205, 229, 416,417. Van Liew v. Johnson, 705. Van Nest v. Yoe, 431, 440. Van Patten v. Beals, 655. Van Rensselaer v. Dennison, 485. Van Schaick v. Third Ave. R.R. Co., 67. Van Shaack v. Robbins, 566, 571, 573, 620. Van Trott v. Wiese, 705. Van Valkenburgh v. Torrey, 39. Van Wee! v. Winston, 216. Van Wickle 7>. Calvin, 178. Van Winkle v. McKee, 541. Van Wy v. Clark, 541. Van Wyck v. Baker, 218, 250, 251, 271. zf. Brasher, 665. V. Seward, 144, 151, 165. Vasse V. Smith, 644. Vasser v. Henderson, 104, 114, 137, 140. Vattier v. Hinde, 503. Vaughan 7'. Thompson, 25. Vause V. Woods, 267. Veazie v. Somerby, 354. Veeder v. Mudgett, 570, 573, 687. Venable v. Bank of the U. S., 211, 321. Venice 7/, Woodruff, 208, 706. Verner v. Downs, 141. Vernon v. Morton, 431, 440. Vcrplank v. Sterry, 149, 303. Verselius 7'. VerseHus, 221. Vertner v. Humphreys, 412. Very v. McHenry, 405. Vicif V. Lane, 200. Violett V. Violett, 283. Virginia, Ex parte, 614. Vogler V. Montgomery, 25, 75. Vogt V. Ticknor, 376. Von Sachs 7'. Kretz, 384. Voorhees v. Bank of the U. S., 586, 587. V. Boaesteel, 216, 414, 415. 7'. Howard, 90, 113, 142. V. Seymour, 118, 376, 533. Voorhis 7'. Gamble, 199. Voshell 7'. Hynson, 269. Vredenbergh 7'. White, 354. Vreeland 71. N. J. Stone Co., i, 396. Vrooman v. Turner, 67. W\ V. B. (32 Beav. 574), 550, 575. Wabash, St. L. & P. Ry. Co. v. Ham, 163. Waddams 7'. Humphrey, 379. Waddell 7'. Lanier, 90, 181. Waddingham v. Loker, 6. Wade 71. Rusher, 85. Wadhams 7>. Gay, 92. Wadsworth v. Sherman, 653. 7'. Schisselbauer, 104. V. Williams, 156, 182, 288, 385. Waggoner v. Speck, 47. Wagner v. Smith, 28. Wait V. Bull's Head Bank, 317. V. Day, 26, 87, 305. v. Maxwell, 654, 681. Waite, Matter of, 190, 467, 558. 71. Harper, 536. Wake V. Griffin, 416. Wakeman v. Dalley, 7, 9, 436, 437. 7'. Grover, 106,456. Waldele v. N. Y. Central & H. R. R.R. Co., 383. Walden 7'. Murdock, 367, 530. Waldman v. O'Donnell, 95. Walkenhorst 71. Lewis, 639. Walkenshaw 7'. Perzel, 379. Walker v. Adair, 538. 7J. Denne, 267. 7'. Lovell, 146. 7'. Powers, 175, 209, 226. 7'. Reamy, 420. V. Sleight, 581. 7'. Vincent, 485, 487. Wall V. Fairley, 172, 173, 208. v. Provident Inst., 181. Wallace 7'. Eaton, 198. V. Latham, 693, 696. 7'. Lawyer, 48, 55. 7'. Lewis, 703. 7>. Morss, 643. 7'. Penfield, 158, 160, 163, 166, 235- Waller 7'. Shannon, 205. 7'. Todd, 127. Wallis 7'. Bardwell, 647. Walradt 7'. Brown, 42, 193. Walsh 7'. Ketchum, 344. v. Powers, 680, 683, 684. 7>. Young, 699, 703, 704. Walter 7'. Gernant, 371. 7). Lane, 12, 149, 154, 162. 71. Riehl, 204, 211. Walthall V. Rives, 214. Waltham 7'. Broughton, 5. Walton 7'. Bonham, 547. V. Tusten, 543, 554, 587, 593. Wamsley v. Robinson, 586. He/erefices'j TABLE OF CASES. [«>"<■/<; /»a^<^j. llX Waples V. Hastings, 640. Ward V. Dewey, 576, 577, 707. V. Northumberland, 174. V. Roy, 95. V. Saunders, 386. V. Trotter, 440. Warden v. Railroad Co., 657. Warden v. Jones, 49. v. Marshall, 366. Wardour v. Berisford, 392. Ware v. Galveston City Co., 192. V. Gardner, 325. Waring v. Mackreth, 241. Warner v. Blakeman, 24, 90, 92, 217, 221, 257. V. Callendar, 85. V. Daniels, 80. V. Dove, 148, 219. V. Hopkins, 397. 2/. Jaffray, 429, 430, 467. V. Mower, 467. V. Norton, 330, 356, 357, 362. V. Percy, 295. V. Warren, 282. Warnock v. Campbell, 666. Warren v. Jones, 530. V. Lee, 458. V. Moody, 182. V. Warren, 227. ■z/. Warren Thread Co., 59, 60. 2f. Williams, 146, 385, 393, Warren County v. Marcy, 235. Wartman v. Wartman, 280. Warwick v. Petty, 322. Washband v. W^ashband, 284, 298. Washburn v. Goodheart, 75. V. Sproat, 50. Washer z/. Brown, 269. Washington Central Bank v. Hume, 47. 422. Washington Union Ins. Co. v. Wilson, 12. Waterbury z'. Sturtevant, 317. Waterman v. Sprague Mfg. Co., 397. Waters v. Cullen, 665. V. Dashiell, 184. V. Taylor, 5. Watkins, Ex parte, 581, 614. 7A Abrahams, 639. V. Baird. 668, 669. V. Dorsett, 55. V. Worlhington, 381. V. Wortman, 123. Watrous v. Lathrop, 142. Watson i>. Bourne, 405. V. Dodd, 53. V. Riskamire, 14, 2S5. Watt V. Grove, 339. Watts V. Creswell, 695. Waverly Nat. Bank v. Halsey, 461, 466. Way V. Bragaw, 205, 228. Waymire v. Jetmore, 612. Weaver v. Barden, 632. V. Carpenter, 640. V. Owens. 291, 315, 319. Webb V. Helion, 85. V. Ingham, 340, 411. V. Odell, 624. V. Read, 234. Weber v. Armstrong, 471. V. Rothchild, 243. Webster v. Clark, 113, 115. V. Folsom, 87, 131. V. Hildreth, 49. V. Lawrence, 114, 127. V. Peck, 364. V. Upton, 188. V. Withey, 501. V. Woodlord, 648. Weed V. Davis, 344. V. Pierce, 42, 47, 86. Weeden v. Hawes, 321, 600. Weeks v. Hill. 307. V. Prescott, 355. Wehle V. Butler, 617. V. Haviland, 618. Weigtman v. Hatch. 107, i2o, 137, 140. Weil V. Lankin5. 127. Weir V. Day, 42, 145, 193. Weis V. Goetter, 264. Weise v. Wardle, 201. Weismer v.. Village of Douglas, 607. Welch V. .McGrath, 676, 677. Welcker z*. Price, 241. Welde V. Scotten, 177, 193. Welles V. Fish, 403. Wellington 7/. Small, 96. Wells V. Langbein, 480, 481. V. Morrow, 504. V. O'Connor, i iS, 376. Welsh V. Britton, 444. V. Welsh. 179. 230. Wendell v. Van Rensselaer, 398. Wentworth v. Tubb, 652. Werts V. Spearman, 383. Wescott ?'. Gunn. 469. West V. Moore. 644. V. Penny, 639. V. Raymond, 664. V. Snodgrass, 27, 48 1. Weslerman v. Westennan, 192. Western Transp. Co. v. Kilderhouse. 212 Westmoreland v. Powell. 193. Weston V. Blake, 227. West Side Bank v. Pugslcy, 93, 94. Ix /^e/erence/j TABLE OF CASES. ^are/o pages. Wetherbee v. Baker, 20c. Wetmore v. Truslow, 71. Weyand 7'. Tipton, 408. Weymouth 7'. Chicago & N. W. Ry. Co., 413. Whaley ?'. Dawson, 174. Wharton 7>. Mackenzie, 646. 7A May, 378. Wheatcroft ?'. Hickman, 447. Wheaton 7'. East, 638. Whedbee 7'. Stewart, 15. Wheelden 7'. Wilson, 13, 294, 316, 325, 339. 342. Wheeler v. Billings, 313. V. Konst, 356. V. Russell, 592. 7/. Wallace, 257. 7/. Wheedon, 211. Whelpdale's Case, 589. Whichcote 7'. Lawrence, 587. Whipple 7'. Pope, 464. Whitaker 7'. Whitaker, 310. Whitbread v. Jordan, 507, 508. Whitcomb v. Denio, 705. ZK Fowle, 445. V. Joslyn, 703, White 7'. Albertson, 639. 7'. Banks, 430. v. Branch, 703. 7'. Cotzhausen, 458, 465, 529, 532. V. Fagan, 441. V. Fisk, 572. V. Franklin Bank, 608. 7^ Garden, 629. V. Geraerdt, 126. V. Givens, 75. 7'. McPheeters, 280. V. Perry, 6, 7, 8, 24, 390. 7'. White, 54, 497. White's Bank of Buffalo v. Farthing, 172, 173, 248, 249, 267. Whitehead t'. Kennedy, 663. Whitesel v. Hiney, 219. Whiting V. Barrett, 72. 7'. Sheboygan, etc., R.R. Co., 606, 607. Whitney v. Dutch, 63S, 640, 641, 680, 685. 7/. Martine, 660, 664, 675. V. National Bank of P., 625. Whitney Arms Co. 7a Barlow, 568. Whiton V. Snyder, 409, 410, 413. Whitridge 7'. Parkhurst, 604. Whittaker 7'. Merrill, 429. Whittington 7'. Jennings, 63. Whittlesey v. Delaney, 118, 217, 376. Wich 7'. Parker, 244. Wiggin V. Bush, 536. V. Day, 630. Wiggins V. Armstrong, 82, 116, 120, 7/. McDonald, 67. Wilber V. Paine, 604. Wilcox 7'. Fitch, 42. 7'. Kellogg, 83. 7'. Roath, 685. Wilcoxen v. Morgan. 345, 525. Wildes 7'. Vanvoorhis, 620. Wiles 7/. Suydam, 212. Wiley 7/. Gray, 412. V. Knight, 15. Wilkes 7/. Ferris, 465. Wilkinson v. Babbitt, 277. V. Scott, 603. 7'. Yale, 123. Willetts V. Vandenburgh, 120. Williams 7'. Albany City Ins. Co., 619, 620. V. Ayrault, 559. 7/. Banks, 162, 169, 178, 344. V. Benedict, iii, 7'. Brown, 638. ?'. Bruffy, 585. 7'. Carle, 424. 7/. Davis, 23, 164. 7/. East India Co., 599. 7/. Evans, 16. 7'. Ewing, 235. 7'. Given, 629, 631. 7'. Harrison, 642. 7'. Hart, 387. 7'. Higgins, 541, 542. 7'. Hubbard, 79. 7'. Jackson, 503. 7/. Kirtland, no. 7K Leech, 485. 7A Lomas, 64. 7'. Lord, 9. V. Marshall, 587. 7'. Merritt, 182. 7'. Michenor, 128. 7'. Neel, 228. 7'. Rawlins, 25. 7'. Sexton, 93. 7'. Smith, 615, 616, 619. 7'. Thorn, 70, 71, 93, 484, 492. 7'. Whedon, 445. 7'. Williams, 593. 7'. Winsor, 184, 476. Williamson 7/. Brown, 505, 507, 517. 7'. Goodwyn, 328. 7'. Parisien, 612. 7A Russell, 631. 7'. Williams, 6, 239, 257, 387. Willis V. Twambly, 698. References']^ TABLE OF CASES. \are to pages. Ixi Willison V. Desenberg, 32 r. Willoughby -u. Moulton, 631. 7J. Willoughby, 503, 504. Wilson V. Anthony, 401. V. Berg, 435. V. Forsyth, 171, 432, 434. V. Fuller, 631. V. Hill, 367. V. Horr, 232, 529. V. Hunter, 521. v. Jordan, 327, 657. V. Kohlheim, 148. V. Lazier, 9. V. Lott, 320, 342. V. Pearson, 289. V. Prewett, 283, 518. V. Robertson, 270, 308, 466. V. Sullivan, 479. V. Troup, 587. v. Watts, 23. V. White, 630. W^ilson Bros. W. & T. Co. v. Daggett, 426. Wilt V. Franklin, 15. V. Welsh, 644. Wimbish v. Tailbois, 38. Winch's Appeal, 194. Winchester v. Charter, 150, 156, 161, 281, 292, 295, 321, 344, 385. 390- V. Gacldy, 72. V. Thayer, 690. Winchester & P. Mfg. Co. v. Creary, 385. 389- Wingler 7>. Sibley, 475. Winkley v. Hill. 478. Winslow V. Dousman, 204. Winsor 7/. McLellan, 184. Wirebach v. First Nat. Bank, 649. Wise V. Tripp, 66. V. Wheeler, 386. V. Wimer, 433. Wisner v. Barnet, 405. Wiswall V. Sampson, in. Wiswell V. Jarvis, 419. Witherwax v. Riddle, 326. Withrovv v. Biggerstaff, 393. Witmer's Appeal, 265. Wolf 7/. Dietzsch, 705. Wolfe V. Davis, 617. Wollaston v. Tribe, 64. WoUensak t. Reiher. 223. Wood v. Amory, 216. V. Carprnter, 223, 225, 521, 522 524. 7/. Chambers, 25, 72. V. Chajiin, 195. V. Clark, 7. Wood V. Dixie, 289, 531. V. Downe, 663. V. Dumnier, 188. V. Goff's Curator, 271. V. Hunt. 272. V. McCain, 675. V. Robinson, 211, 504. V. Stark, 297. V. United Slates, 392. V. Yeatman, 630. Woodbridge 7'. Allen, 405. Woodburn 7>. Mosher, 452. Woodcock V. Bennet, 613. Woods V. Bugbey, 358, 367. V. Dilie, 604. V. Morrell, 241. Woodward 7>. Marshall, 446. V. Wyman, 302. Woodworth t/. Bennett, 592, 608, 610, 611. V. Paige, 425. V. Sweet, 414, 417. Wooldridge v. Gage, 145. Wooster v. Sherwood. 632. Wooten V. Clark, 27, 378. Wordall v. Smith, 352, 365. Worman v. Kramer, 357, 365. Wormley 7' Wormle) , 504, 660. Worseley v. Dematlos, 23. 315. 330. 333. 470- Worthinglon v. Bullitt, 275, 344. V. Shipley, 344. Worthy v. Brady, 281. Wray v. Davenport, 28. Wright V. Campbell 121, 125, 133. V. Delalifld, 232. V. Hale, 574. V. Hencock, 323. V. Linn, 390. V. McCormick, 340, 349. 358. V. Nostnind, 80, 93. V. Oroville M. Co., 92. V. Wheeler. 238. V. Wright. 303. V. Zeigler, 426. Wyatt 7'. Brooks, 236. Wyckoff 7'. Carr, 384. Wyman 7'. Adams, 625. 7'. Brown, 157, 505. Xenia Bank v. Stewart, 81. Yates V. Lyon, 642, 643. 689. V. Yates. 370. 386. Yauger v. Skitiner, 648. Yeamans 7'. James, 664. Yeatman 7'. Savings Iiisl., 183.632. ' Yeaton 7-. Lenox, 172. 1X11 Re/ere>ices'^ TABLE OF CASES. l_are iff Mses. Yellow Jacket S. M. Co. v. Stevenson, 674. Yocum 7/. BuUit, 107. York V. Bright, 403. V. Merritt, 536. Yost V. Hudiburg, 344. Youmans v. Boomhower, 45, 72. Young V. Cole, 625, 627. v. Edwards, 12. V. Frier, 1 20. V. Glendenning, 605. V. Heermans, 17, 20, 28, 38, 54, 144, 219, 378. V. Kimball, 706. V. Lathrop, 527. V. McClure, 357, 364. Young V. McKee, 684. V. Ward, 272. V. Willis, 28. Youngs V. Carter, 1 10, 423. Youse V. Norcoms, 638. Zabriskie v. Smith, 429. Zane v. Fink, 543. Zimmerman v. Heinrichs, 517. V. Willard, 218. Zoeller v. Riley, 248, 501, 504. ZoU v. Soper, 178, 208. Zouch v. Parsons, 640, 680. Zule V. Zule, 612. Zuver V. Clark, 194. FRAUDULENT CONVEYANCES CREDITORS' BILLS. FRAUDULENT CONVEYANCES AND CREDITORS' BILLS. CHAPTER I. INTRODUCTORY OBSERVATIONS. GROWTH OF THE LAW CON- CERNING FRAUDULENT CONVEYANCES. PHASES OF THE SUBJECT. § I. Severity of the Roman law — Modern changes. 2. Prevalence of fraudulent trans- fers — The cause. 3. Scope of the inquiry. 4. Forms of relief. 5. ) Onus as to fraud — Suspicions > insufficient — Absence of pre- 6. ) sumptions. 7. Judge Black's views. 8. Proof of moral turpitude. 9. Fraud in fact and fraud in law. 10. The cases considered. 11. Words "hinder, delay, or de- fraud." 12. Word " disposed " construed. § 13. No definition of fraud. 14. Restraints upon alienation. 15. Fraudulent conveyances — Char- acteristics and classes. 16. Fraudulent conveyances at com- mon law — Statutes declara- tory. 17. Covinous transfers of choses in action. 18. Early statutes avoiding fraudu- lent conveyances. 19. Statute, 13 Eliz. c. 5, and its ob- ject. 20. Its interpretation and construc- tion. 21. Statute, 27 Eliz. c. 4. 22. Twyne's Case. " The rule is universal, whatever fraud creates, justice will destroy." — Vice-Chancellor Van Fleet in Vreeland v. New Jersey Stone Ct;., 29 N. J. Eq. 190. § I. Severity of the Roman law— Modern changes.— It has been truly observed that the protection and preservation of the rights of creditors must be a fundamental policy of all enlightened nations.^ The method by which this pro- 1 I Story's Eq. Jur. § 350 ; Creditors are " a favored class," Fouche v. Brower, 74 Ga. 251. INTRODUCTORY OBSERVATIONS. §' tection may be extended and rendered practically effectual is, however, a problem very difficult of solution. The bar- barous practice which prevailed among the ancient Romans of putting an insolvent to death, or selling him into slavery, pictures to our imaginations the strong legal and moral foundation which a pecuniary obligation had in the minds of the people in early times. The penalty for the failure to pay a debt was as severe as that which is now ordinarily imposed upon criminals for the commission of the most heinous of crimes.^ The chains which held a debtor in the power of his creditor have one by one been broken,^ but the sacredness of a promise to pay a debt, notwithstanding the abrogation of the ancient penalties, is still voluntarily cherished by the mass of mankind. Yet, unfortunately, the protection and preservation of the rights of creditors is often the last con- sideration with a numerous class of careless or dishonest ' " After the judicial proof or confes- sion of the debt, thirty days of grace were allowed before a Roman was de- livered into the power of his fellow- citizens. In this private prison, twelve ounces of rice were his daily food ; he might be bound with a chain of fifteen pounds' weight ; and his misery was thrice exposed in the market-place, to solicit the compassion of his friends and countrymen. At the expiration of sixty days, the debt was discharged by the loss of liberty or life ; the insolvent debtor was either put to death, or sold in foreign slaver)' beyond the Tiber ; but, if several creditors were alike ob- stinate and unrelenting, they might legally dismember his body, and sati- ate their revenge by this horrid parti- tion. The advocates for this savage law have insisted, that it must strongly operate in deterring idleness and fraud from contracting debts which they were unable to discharge." Gibbon's History of the Decline and Fall of the Roman Empire, vol. iv., pp. 372-373. It seems incredible that the following extract could ever have found its way into an English report : " If a man be taken in execution, and lie in prison for debt, neither the plaintiff at whose suit he is arrested, nor the sheriff who took him, is bound to find him meat, drink, or clothes ; but he must live on his own, or on the charity of others : and if no man will relieve him, let him die in the name of God, says the law ; and so say I." Hyde, Justice, in Manby V. Scott, I Mod. 132 (A.D. 1663). * " The tendency of legislation for the last century has almost uniformly been in favor of the poor but honest debtor, and the object of nearly every law upon the subject has been to discourage and discountenance, or entirely prevent, the efforts of unfeeling creditors to oppress and punish him for his poverty." Ste- vens v. Merrill, 41 N. H. 315.; § 2 INTRODUCTORY OBSERVATIONS. 3 insolvents. Satisfied of utter inability to pay maturing debts, their remaining property is frequently diverted to inequitable purposes or squandered with reckless profusion. The confiding creditor, when driven to the necessity of seeking a discovery of equitable assets, often finds at the end of the litigation nothing but a mass of worthless secu- rities or " a beggarly account of empty boxes." ^ The un- derlying reasons for this deplorable condition of affairs will be briefly considered. § 2. Prevalence of fraudulent transfers— The cause. — Since the general abolition of imprisonment for contract debts, dishonest people have grown bolder and more reckless, and the power of creditors to enforce payment of just obliga- tions has been correspondingly diminished. This humane reform in our law, which was inspired by the desire to re- lieve honest but unfortunate debtors from the painful con- sequences formerly incident to insolvency, is now eagerly availed of by unscrupulous people who contract obligations with little expectation and no probability of fuHilling them. Abolition of imprisonment for debt removed the chief bar- rier and preventive of fraudulent conveyances, viz. : the terror of the debtor's prison. The personal liberty of the debtor being no longer at stake, the natural tendency has been to promote reckless and extravagant expenditures, and to encourage and foster wild business speculations. The cost of every reform must be borne by some person or class of persons, and creditors are at the jiresent time paying the great price exacted by this radical change in remedies. The collection of a debt by ortlinary process of execution against property on a judgment is now com- paratively a rare occurrence. Hence we have in our modern jurisprudence a perplexing problem with which our fore- fathers were little vexed, — /. e., the ()uesii()n iiow to neu- tralize or avoid, in favor of creditors, colorable or cov- ' Burtus V. Tisdall, 4 Barb. (N. Y.) 590. 4 INTRODUCTORY OBSERVATIONS. § 2 incus transfers of property which this violent change in remedies has rendered it difficult, if not impossible, to pre- vent or suppress. Collusive voluntary conveyances and secret fraudulent trusts and reservations of a thousand dyes, calculated to hinder and defraud creditors, are the constant and daily subject of investigation in our courts. The temp- tation of debtors who have not the skill to acquire property honestly, or who have been overwhelmed by some unavoid- able disaster, to enrich themselves at the expense of their creditors, by some transaction " wearing a deep complexion of fraud," seems to be irresistible. This is especially the case in a country such as ours, where the comforts and de- lights which accumulated property brings are so accessible and well guarded, and in which the acquisition of wealth may be regarded as a profound passion. It may be possible to pity the infirmity of the human mind, sinking under an approaching pressure of distress, and resorting to fraudulent means of protection and provision for a family, but the law cannot approve or sanction such transactions.^ Probably the most severe trial to which an honest man can be sub- jected is the inability to pay his debts, even by the applica- tion of all his means. He is assailed by temptations of in- terest, of pride, of shame, of affection, to wander from the straight line of duty and integrity, while at the same time he is intrusted by the law with dominion over property which equitably and justly should be devoted to his creditors,^ The quantity of litigation engendered by fraudulent con- veyances is appalling, and the cunning devices and intri- cate schemes resorted to by debtors to elude the vigilance of creditors would, if no moral turpitude was involved, chal- lenge admiration. The condition of the body of our law upon this subject is far from satisfactory, and may be said to still be in a formative and unsettled state. 1 See Croft v. Townsend, 3 Desaus. - Hafner v. Irwin, i Ired. (N. C.) (S. C.) 229. Law, 499. §§ 3> 4 FORMS OF RELIEF. 5 § 3. Scope of the inquiry. — It will be the purpose of the first portion of this treatise to elucidate the principles of law affecting conveyances made in fraud of creditors, both in this country and in England, and to point out, somewhat at length, the practical methods by which such collusive trusts can be successfully unraveled, the property regained for creditors, and the prevalent modern tendency of debtors to hinder, delay, and defraud their creditors correspondingly repressed. Bills filed to reach equitable assets, not subject to execution, will necessarily receive incidental considera- tion. The power of a creditor to inflict anything in the nature of a punishment upon his debtor being practically abro- gated in civil procedure,^ his right to a thorough and search- ing investigation as to transfers of the debtor's property, in the disposition of which the creditor may justly claim to have an equitable interest,^ at least to the extent of his de- mand, should manifestly be facilitated. Such, we are happy to notice, is the general modern tendency of the law, and one of the aims of this treatise will be to show the need of a still further enlargement of these facilities. The practical details of procedure in this class of litigation will receive particular attention. The rights of bona fide purchasers and grantees of debtors for valuable consideration will nec- essarily be embraced in the discussion. § 4. Forms of relief. — It may be observed that the general purpose of creditors' actions is two-fold ; fust, to reach assets, such as choses in action, which by their intrinsic nature cannot be taken, on execution at law ; and second, to recover property, whether tangible or intangible, which ' It is not the function of a court of See Waters v. Taylor, 2 Vcs. & B. 299. equity to consider fraud in the light of Chancery jurisdiction in cases of fraud a crime, nor to punish the guilty party may be invoked in a civil but not in a by imposing exemplary costs. See criminal point of view. Waltham v. Broughton. 2 Atk. 43. Nor " See Egery v. Johnson, 70 Me. 261. to exercise any censorial authority. See § 14. 6 ONUS AS TO FRAUD. § 5 has been fraudulently alienated by the debtor.^ In the one case the creditor comes into court " to obtain satisfaction of his debt out of the property of the defendant, which can- not be reached by execution at law"; in the other case he proceeds "for the purpose of removing some obstructions fraudulently or inequitably interposed to prevent a sale on execution." ^ It is believed that as to the first class of cases the jurisdiction of equity in favor of creditors was created to supplement the imperfect relief given by execution. § 5. Onus as to fraud — Suspicions insufficient — Absence of presumptions. — The great obstacles to the effective develop- ment of the branch of our law under consideration are the natural tendency of the courts not to presume fraud ^ in the absence of substantial proof of it, and the extreme diffi- culty attendant upon showing that a transaction, fair and perfect on its face, and having every semblance of validity, the guilty participants in which are often the chief witnesses ' See Chapter III. Hook, 36 Cal. 223 ; Foster v. Brown, 2 Cornell v. Radway, 22 Wis. 264 ; 65 Ind. 234 ; Parkhurst v. McGraw, 24 Beck V. Burdett, i Paige (N. Y.) 305. Miss. 134; Henckley v. Hendrickson, In Jones v. Green, i Wall. 331, Field, 5 McLean 170; Bartlett v. Blake, 37 J., said: "A court of equity exercises Me. 124; Waddingham v. Loker, 44 •its jurisdiction in favor of a judgment- Mo. 132; Kellogg v. Slavvson, 15 Barb. creditor only when the remedy afforded (N. Y.) 58; Brigham v. Tillinghast, 15 him at law is ineftectual to reach the Barb. (N. Y.) 618; Ex parte Conway, property of the debtor, or the enforce- 4 Ark. 356 ; Burgert v. Borchert, 59 ment of the legal remedy is obstructed Mo. 80; Herring v. Wickham, 29Gratt. by some incumbrance upon the debt- (Va.) 628; Semmens v. Walters, 55 or's property, or some fraudulent trans- Wis. 684 ; James v. Van Duyn, 45 Wis. ferof it." 512; Fuller v. Brewster, 53 Md. 359; ^ See Crawford v. Kirksey, 50 Ala. Grover v. Wakeman, 1 1 Wend. (N. Y.) 591; Kempner v. Churchill, 8 Wall. 192; Troxall v. Applegarth, 24 Md. 369; Erb V. Cole, 31 Ark. 556; Pusey 163; Anderson v. Roberts, 18 Johns. V. Gardner, 21 W. Va. 469 ; Toney v. (N. Y.) 515; Cunningham v. Dwyer, McGehee, 38 Ark. 427; Matthai v. 23 Md. 219; Juzan v. Toulmin, 9 Ala. Heather, 57 Md. 484 ; White v. Perry, 662; Nichols v. Patten, iS Me. 231; 14 W. Va. 86; Hord's Adm'r v. Col- Cowee v. Cornell, 75 N. Y. 99; Killian bert, 28 Gratt. (Va.) 49 ; Williamson v. v. Clark, 3 MacAr. (D. C.) 379, affi'd Williams, 11 Lea (Tenn.) 356; Tog- as Clark v. KiUian, 103 U. S. 766; nini v. Kyle, 15 Nev. 464; Hempstead Jones v. Simpson, 116 U. S. 615. V. Johnston, 18 Ark. 123; Thornton v. § 5 ONUS AS TO FRAUD. 7 in subsequent judicial inquiries, is in fact vicious and color- able. Then there exists in some quarters an unconscious sympathy with or for debtors whose fraudulent acts and transactions bear the imprints of intellectual acuteness. The clever or brilliant scoundrel too often escapes with his ill-gotten gains in the maze of admiration excited by his audacity. Fraud, it is also argued, will not be lightly im- puted,^ and cannot be established by circumstances of mere suspicion.^ Irregularities and carelessness sufficient to arouse a suspicion do not supply the place of proof of fraud. '^ It will not be presumed where an instrument admits of an opposite construction.^ The common law, it is said, is tender of presuming fraud from circumstances, and expects that it be manifest or plainly inferable.^ Courts will attrib- ute errors to mistake rather than to fraud, ^ and will not base conclusions of fraud upon mistaken expressions of opinion.''' A dishonest purpose should not be presumed.^ Again, it is vaguely asserted that fraud is a fact which must be proved. Courts will not strive to force conclusions of fraud.^ There must be something more than mere specu- lative inference.^'' And if the party charging fraud does no more than create an equilibrium he fails to make out his case." As we shall presently see, it is not enough to create a suspicion of wrong.^^ The creditor must prove tangible ' Jones V. Simpson, 1 16 U. S. 6i 5. 'See Hubbell v. Meigs, 50 N. Y. 480 ; "^ Erb V. Cole, 31 Ark. 556; Pratt v. Wakeman v. Dalley, 51 N. Y. 27. Pratt, 96 111. 184; Myers V. Sheriff, 21 "Raymond v. Morrison, 59 Iowa La. Ann. 172; White v. Perry, 14 W. 374; Hager v. Thomson, i Black 80; Va. 86; Bryant v. Simoneau, 51 111. Grant v. Ward, 64 Me. 239; Jones v. 327; Buckv. Sherman, 2 Doug. (Mich.) Simpson, 116 U. S. 615; Brown v. 176; Jewett V. Bowman, 29 N.J. Eq. Dean, 52 Mich. 267; Wood v. Clark. 174; Batchelder v. White, 80 Va. 103; 121 111. 359. Daniel v.Vaccaro, 41 Ark. 325. " Crawford v. Kirkscy, 50 Ala. 591. 3 Jewett V. Bowman, 29 N.J. Eq. 174. '° Battles v. Laudenslager. 84 Pa. St. * Bank of Silver Creek v. Talcott, 22 451 ; ^-^ ArrA- Conway, 4 Ark. 356; Barb. (N. Y.) 560. Toney v. McGehee. 38 Ark. 427 ; Good- * Roberts on Fraud. Conv., p. 12. man v. Simonds, 20 How. 360. « Ayres v. Scribner, 17 Wend. (N. Y.) " Kainc v. Weiglcy. 22 Pa. St. 179. 407 ; Goode v. Hawkins, 2 Dev. Eq. '■ Crow v. Andrews, 24 Mo. App. (N. C.)393. 159- 8 ONUS AS TO FRAUD. § 6 facts from which a legitimate inference of a fraudulent in- tent can be drawn.^ The evidence must convince the under- standing that the transaction was entered into for a purpose prohibited by law.^ Hence " a court will not presume fraud and undue influence merely from the fact that the convey- ance is made by a sister to a brother";^ nor from circum- stances which merely indicate unusual generosity.* pinch, J., in delivering the opinion of the New York Court of Appeals, said : " Fraud is to be proved and not presumed.® It is seldom, however, that it can be directly proved, and usually is a deduction from other facts which naturally and logically indicate its existence. Such facts, nevertheless, must be of a character to warrant the inference. It is not enough that they are ambiguous, and just as consistent with innocence as with guilt. They must not be, when taken together and aggregated, when interlinked and put in proper relation to each other, consistent with an honest in- tent. If they are, the proof of fraud is wanting." ^ Dan- iels, J., said, in Marsh v. Falker :^ " In all actions for deceit the presumption is in favor of innocence; and on that account the intent or design to deceive the plaintiff must be affirmatively made out by evidence."^ § 6. — The badges and evidences of fraud will be dis- cussed presently.^ We may here observe that mere inad- equacy of consideration, unless extremely gross, does not ' Jaeger v. Kelley, 52 N. Y. 276 ; * First National Bank v. Irons, 28 White V. Perry, 14 W. Va. 86 ; Hord's N. J. Eq. 43. Adm'r v. Colbert, 28 Gratt. (Va.) 49; » Siting Grover v. Wakeman, 11 Herring v. Wickham, 29 Gratt. (Va.) Wend. (N. Y.) 188. 628. Circumstances amounting to mere ^ Shultz v. Hoagland, 85 N. Y. 467. suspicion of fraud are not to be deemed See Ames v. Gilmore, 59 Mo. 537. notice of it. Simms v. Morse, 4 Hughes ' 40 N. Y. 566. 582. See Grant v. National Bank, 97 » See Fleming v. Slocum, 18 Johns. U. S. 80. (N. Y.) 403 ; Jackson v. King, 4 Cowen ' Pratt V. Pratt, 96 111. 184. (N. Y.) 220; Starr v. Peck, i Hill (N. » Spicer v. Spicer, 22 J. & S. (N. Y.) Y.) 270. 281. 9 See Chap. XVI. § 6 ONUS AS TO FRAUD. 9 per se prove fraud.^ The disparity as to consideration must be so glaring as to satisfy the court that the con- veyance was not made in good faith.^ Neither can fraud be presumed unless the circumstances on which such pre- sumption is founded are so strong and pregnant that no other reasonable conclusion can be drawn from them,'^ and it seems that even strong presumptive circumstances of fraud will not always outweigh positive testimony against it ; * nor will fraud be inferred from an act which does not necessarily import it.^ If an honest motive can be imputed equally as well as a corrupt one, the former should be pre- ferred.^ Good faith in business transactions is a settled presump- tion of law,''' and the burden of proof is on the party who assails good faith and legality.^ Many an important case has been wrecked at the trial, or abandoned by the cred- itor, on account of the great embarrassments which this for- midable onus imposed. This presumption is the creditor's stumbling-block on the one hand and the shield of unscru- pulous debtors on the other. The creditor is constantly forced to carry the war into the enemy's country, and to take by storm the fortifications which the fraudulent debtor or his allies have carefully constructed to impede or repel the attack. It is said in Nicol v. Crittenden,^ that it is ' Kempner v. Churchill, 8 Wall. 369 ; weiler v. Lackmann, 39 Mo. 91 ; Rob- Smith V. Henkel, 81 Va. 529. erts v. Guernsey, 3 Grant (Pa.) 237 ; '^ Fuller V. Brewster, 53 Md. 361. Reeves v. Dougherty, 7 Yerg. (Tenn.) Compare Feigley v. Feigley, 7 Md. 537 ; 222 ; Richards v. Kountze, 4 Neb. 200 ; Copis V. Middleton, 2 Madd. 410 ; Rat- Best on the Right to Begin and Reply. cliffy. Trimble, 12 B. Mon. (Ky.) 32. p. 57 ; Williams v. Lord, 75 Va. 390; 2 Paxton V. Boyce, i Tex. 317. See Wakeman v. Dalley. 51 N. Y. 31 ; Clemens v. Brillhart, 17 Neb. 337. Marsh v. Falker. 40 N. Y. 566 ; Starr •* The Short Staple, i Gail. 104. v. Peck, i Hill (N. Y.) 270 ; Bcatty v. ^ Toney v. McGehee. 38 Ark. 427. Fishel, ico Mass. 448. « Herring v. Richards, i McCrary " Gutzwciler v. Lackmann. 39 Mo. 574. 91 ; Silvers v. Hedges, 3 Uana (Ky.) •> Hager v. Thomson, i Black 80; 439; Wilson v. Lazier, ii Gratt. (Va.) Cooper V. Galbraith, 3 Wash. 546 ; 477. Blaisdell v. Cowell, 14 Me. 370 ; Gutz- " 55 Ga. 497. lO JUDGE black's views. § 7 impossible for a transfer to be in fraud of creditors unless it is made with a fraudulent intent, and that the nature of the intent will not be presumed as matter of law, but is to be inferred by the jury from the facts in evidence. This broad statement of the principle is at least debatable and will be considered presently.^ Then in Cummins v. Hurl- butt,*^ it was asserted that to set aside a written instrument on the orround of fraud, the evidence of the fraud must be clear, precise, and indisputable. A jury should not be per- mitted to find fraud to impeach a settlement in writing on any fancied equity, or on vague, slight, or uncertain evi- dence, even though they might think it fairly and fully sat- isfied them. As a general rule the transaction which is the subject of attack has been evidenced in writing, and the cases show that a deliberate deed or writing, or a judgment of a court, is of too much solemnity to be brushed away by loose and inconclusive evidence.^ Fraud, on the other hand, is rarely perpetrated openly and in broad daylight. It is committed in secret and pri- vately, and is usually shrouded in mystery and hedged in and surrounded by all the guards which can be invoked to prevent discovery and exposure. Its operations are invari- ably circuitous and difficult of detection.^ The proof of it is very seldom positive and direct,^ but, as we shall pres- ently see, is dependent upon very many little circumstances and conclusions to be drawn from the general aspects of the case.'' § 7. Judge Black's views. — The learned Chief -Justice ' See Coleman v. Burr, 93 N. Y. 31, * Strauss v. Kranert, 56 111. 254; and cases cited. See §§ 9, 10. Rea v. Missouri, 17 Wall. 532 ; Dens- - 92 Pa. St. 165. more v. Tomer, ir Neb. 118; Lock- ^ See Rowland v. Blake, 97 U. S. hard v. Beckley, loW. Va. 87 ; Farmer 624 ; Fick V. Mulholland, 48 Wis. 413 ; v. Calvert, 44 Ind. 209. Kent V. Lasley, 24 Wis. 654 ; Harter ^ Newman v. Cordell, 43 Barb. (N. V. Christoph, 32 Wis. 246 ; McClellan Y.) 448-461. See z«/ra. Chapter XVI. V. Sanford, 26 Wis. 595. on Indicia or Badges of Fraud. * Kaine v. Weigley, 22 Pa. St. 182. § 7 JUDGE black's views. II Black urged that the proposition that fraud could never be presumed, but must be proved, could be admitted only in a qualified and very limited sense. The idea that it was a fundamental maxim of the law, incapable of modification, and open to no exception, was denied, and the principle was said to have scarcely extent enough to give it the dig- nity of a general rule. This vigorous writer observes : "It amounts but to this : that a contract, honest and lawful on its face, must be treated as such until it is shown to be otherwise by evidence of some kind, either positive or cir- cumstantial. It is not true that fraud can never be pre- sumed. Presumptions are of two kinds, legal and natural. Allegations of fraud are sometimes supported by one and sometimes by the other, and are seldom, almost never, sus- tained by that direct and plenary proof which excludes all presumption. A sale of chattels without delivery, or a con- veyance of land without consideration, is conclusively pre- sumed to be fraudulent as against creditors, not only with- out proof of any dishonest intent, but in opposition to the most convincing evidence that the motives and objects of the parties were fair. This is an example of fraud estab- lished by mere presumption of law. A natural presumption is the deduction of one fact from another. For instance : a person deeply indebted, and on the eve of bankruptcy, makes over his property to a near relative, who is known not to have the means of paying for it. From these facts a jury may infer the fact of a fraudulent intent to hinder and delay creditors. A presumption of fraud is thus created, which the party who denies it must repel by clear evidence, or else stand convicted. When creditors are about to be cheated, it is very uncommon for the perpetrators to pro- claim their purpose, and call in witnesses to see it done. A resort to presumptive evidence, therefore, becomes abso- lutely necessary to protect the rights of honest men from this, as from other invasions." ^ The statement that " fraud ' Kaine v. Weigley, 22 Pa. St. 183. ^ 12 MORAL TURPITUDE. § 8 will not be presumed " must be accepted understandingly, for it certainly can be inferred from facts and circumstances,^ and it is considered to be error to charge a jury that they cannot predicate fraud upon inference or implication,^ or that the proof must be " irresistible," '^or "clear and undoubt- ed,'"* or that it must be established beyond a reasonable doubt, ^ for evidence that satisfies the mind will support a conclusion of fraud although it may not lead to a convic- tion of absolute certainty.*^ § 8. Proof of moral turpitude. — The authorities have been multiplying, in certain quarters at least, to strengthen the efforts of creditors to overcome this difficulty arising from the presumption of validity and good faith. Many of the cases attach but little importance to the sworn assertion of perfect good faith and entire honesty on the part of the purchaser,'^ or of the seller, and the courts are trying to unravel these transfers without exacting explicit proof of moral turpitude.^ The intent or intention is regarded as ^Lovvryv. Beckner,5B.Mon.(Ky,)43. v. Bailey, 5 Fla. 20; Walter v. Lane, i '■* Bullock V. Narrott, 49 111. 62 ; MacAr. (D. C.) 275. O'Donnell v. Segar, 25 Mich. 367; ^ Mr. May says: "The statute is di- Reed v. Noxon, 48 III. 323. rected not only against such transfers ^ Carter v. Gunnels, 67 111. 270. of property as are made with the ex- ■* Abbey v. Dewey, 25 Pa. St. 413. press intention of defrauding creditors, ' Kane v. Hibernia Ins. Co., 39 N. but .... extends as well to such as J. L. 697 ; Lee v. Pearce, 68 N. C. 76 ; virtually and indirectly operate the Sparks V. Dawson, 47 Tex. 138; Wash- same mischief, by abusing their con- ington Union Ins. Co. v. Wilson, 7 Wis. fidence, misleading their judgment, or 169; ^tna Insurance Co. v. Johnson, secretly undermining their interests; 1 1 Bush (Ky.) 587. to obviate which it has gradually grown ^ Marksbury v. Taylor, 10 Bush (Ky.) into a practice to regard certain acts or 519; O'Donnell V. Segar, 25 Mich. 367; circumstances as indicative of a so- Lee V. Pearce, 68 N. C. 76 ; Linn v. called fraudulent intention in the con- Wright, 18 Texas 317 ; Lockhard v. struction of the statutes, although per- Beckley, 10 W. Va. 87 ; Young v. haps there was, in fact, no actual fraud Edwards, 72 Pa. St. 257 ; Bryant v. or moral turpitude. It is difficult in Simoneau, 51 111. 324. many cases of this sort to separate the ' See Hadden v. Spader, 20 Johns, ingredients which belong to positive (N. Y.) 572, 573; Hendricks v. Robin- and intentional fraud from those of a son, 2 Johns. Ch. (N. Y.) 300 ; Fellows mere constructive nature, which the V. Fellows, 4 Cow. (N. Y.) 709; Barrow law thus pronounces fraudulent upon § 8 MORAL TURPITUDE. I 3 an emotion of the mind, shown by acts and declarations, and, as acts speak louder than words, if a party is guilty of an act which defrauds another, his declaration that he did not by the act intend to defraud, is weighed down by the evidence of his own act.^ A person would not be likely to accomplish an act and afterward say that it was prompted by corrupt motives. The moral sense is much weaker in some men than in others, and it would be a strange rule which made one man's rights dependent upon another's moral sense. There are certain rules founded in experience and established by law for determining the validity of trans- fers under the statutes concerning fraudulent conveyances ; and a transgression of these rules will justify courts and juries in avoiding the transaction without regard to the opinions of the parties to it, and their evidence should have little weight.^ In French v. French,^ Lord Chancellor Cranworth re- marked : " I shall not say that the transfer was voluntary ox fraMclulent, but simply void as against the creditors of William French." Again he observed in Spackman v. Evans :"* "I do not attribute moral fraud to the appellant, but the whole transaction was fictitious." So in Backhouse V. Jett,^ Chief-Justice Marshall said: "The policy of the law very properly declares this gift void as to creditors, but looking at the probable views of the parties at the time, there appears to be no moral turpitude in it."*^ This prin- ciple may be further illustrated from Gardiner Bank v. VVheaton,'^ where the court say : " When we pronounce the transaction between the defendants, in respect to the con- veyance from Gleason to Cole, as fraudulent, wc do not principles of public policy." May on ' 6 De G., M. & G. 103. Fraudulent Conveyances, p. 4. ■* L. R. 3 Kng- «-''^' •''• ^pp. 1S9. 1 Babcock v. Eckler, 24 N. Y. 623; ' 1 Brock. 511. Newman v. Cordell, 43 Barb. (N. Y.) ' See Logan v. Brick, 2 Del. Ch. 206. 456. See /«/rrt, chapter on Intention. " 8 Me. 3S1. See Whccldcn v. Wil- "^ Potter V. McDowell, 31 Mo. 73. son, 44 Me. 11. 14 MORAL TURPITUDE. § 8 mean to insinuate that there was any moral turpitude on the part of Prince ; nor do we believe there was any ; but though the motives of a party may be good in such a trans- action, still, where the design, if sanctioned, would defeat or delay creditors .... neither law nor equity can sanction the proceeding ; and on that account it is termed a legal fraud, or a fraud upon the law." ' " It was not necessary," said Dwight, C, in Cole v. Tyler,^ "that there should be any actual fraudulent intent.^ The requisite intent may be inferred from the circumstances of the case." ^ The act may be adjudged covinous although the parties deny all inten- tion of committing a fraud,^ and it is not necessary to im- pute to the parties "a premeditated or wicked intention to destroy or injure" the interests of others.^ A man may commit a fraud without believing it to be a fraud.^ The statute, 13 Eliz., refers to a legal, and not a moral intent; that is, not a moral intent as contradistinguished from a legal intent. It supposes that every one is capable of per- ceiving what is wrong, and, therefore, if he does that which is forbidden, intending to do it, he will not be allowed to say that he did not intend to do a prohibited act. A man's moral perceptions may be so perverted as to imagine an act to be fair and honest which the law justly pronounces fraudulent and corrupt.^ " It is not important what motives may have animated the parties," if the necessary effect of the disposition is to hinder and delay creditors.^ It results that the mental operation or emotion of the debtor, and the legal conclusion from the acts and circumstances may be diametrically opposed. ' See Jenkins v. Lockard, 66 Ala. ^ Kirby v. Ingersoll, i Harr. Ch. 381 ; Bibb v. Freeman, 59 Ala. 6i2.- (Mich.) 191. * 65 N. Y. T]. » Kirby v. Ingersoll, i Doug. (Mich.) * Citing Mohawk Bank v. Atwater, 477, 493. 2 Paige (N. Y.) 54. "^ Emma Silver Mining Co. v. Grant, ■• Compare Watson v. Riskamire, 45 L. R. 17 Ch. D. 122. Iowa 233; Coleman v. Burr, 93 N. Y. " Grover v. Wakeman, 11 Wend. (N. 31 ; Graham v. Chapman, 12 C. B. Y.) 225. 85. * Moore v. Wood, 100 111. 451. § 9 FRAUD IN FACT. I 5 § 9. Fraud in fact and fraud in law. — Some of the cases maintain that there is not, for any practical purpose, so far as the validity of the particular transaction may be con- cerned, any difference between fraud in fact and fraud in law ; ^ between a fraud proved by direct evidence, and a fraud inferred by law from facts which are consistent with the absence of an actual intent to defraud. Whenever the effect of a particular transaction with a debtor is to hinder, delay, or defraud creditors, the law infers the intent, though there may be no direct evidence of a corrupt or dishonorable motive, but on the contrary, an actual honest motive existed. The law interposes, and declares that every man is presumed to intend the natural and necessary con- sequences of his acts ; and the courts must presume the intention to exist, when the prohibited consequences must necessarily follow from the act, and will not listen to an argument against it.^ Hence it has been remarked that where a conveyance by its terms operates to hinder, delay, or defraud creditors, the intent to do so is imputed to the parties, and no evidence of intention can change that pre- sumption. A different intent cannot be shown and made out by the reception of parol testimony, nor deduced from surrounding circumstances.'^ What is meant by these cases is that whether the fraudulent intent is reasoned out and declared by the court by the proper application of the rules ' See § 51. supposition of an immoral intention, - Sims V. Gaines, 64 Ala. 396 ; Pope yet it has been judged necessary to V. Wilson, 7 Ala. 694 ; Wiley v. Knight, determine, that certain circumstances, 27 Ala. 336; Potter v. McDowell, 31 which, in their nature, tend to deceive Mo. 69. See Bentz v. Rockey, 69 Pa. and injure creditors, shall be considered St. 77 ; Harman v. Hoskins, 56 Miss, as sufficient evidence of fraud." 142; Allan V. McTavish, 8 Ont. App. ^Farrow v. Hayes, 51 Md. 505; Rep. 440, and cases cited ; Coleman v. Green v. Trieber, 3 Md. 1 1. See Sang- Burr, 93 N. Y. 31, and cases cited, ston v. Gaither, 3 Md. 40; Malcolm Compare State v. Estel, 6 Mo. App. 6. v. Hodges, 8 .Md. 418; Inlocs v. Amer. In Wilt v. Franklin, i Binn. (Pa.) 517, Ex. Bank, 11 Md. 173 ; Bamitz v. Rice, the court observed : " Although the 14 Md. 24 ; Whedbee v. Stewart. 40 statute, 13 Eliz., is bottomed on the Md. 414. 1 6 FRAUD IN LAW. § lO of legal construction and interpretation to the particular transaction or instrument under consideration, or whether it is found by a jury to exist as matter of fact/ in either case the transfer is made with the intent to defraud credit- ors, and may be avoided. Hence it is said that where the fraudulent intent is not apparent on the face of the deed, it is a question of fact for the jury,^ and the court has not the power to infer the intent.^ § 10. The cases considered.— This subject may perhaps be illustrated from the case of Harman v. Hoskins,'' where it is laid down that the intent may be vicious, though the deed is fair and regular upon its face, and a full price was paid. The intent must then be proved aliunde. In cases where the transaction on its face is fair, if it sprung from the motive to " hinder, delay, or defraud " creditors, then the intent is purely a question of fact to be established by the testimony. But a party will be held as intending the natural and inevitable legal effects of his acts. Hence if his deed by its recitals necessarily operates to interpose un- reasonable hindrance and delay to creditors, or to entirely defeat their claims, the question of intent will be practically a conclusion of law. A deliberate act which naturally and inevitably produces a certain result, must in law be held to have been contrived and performed to carry out and con- summate that result. The court in such a case arrives at the conclusion, by a proper construction of the instrument, that such is its direct and inevitable effect, and its result, as matter of law, that the statute is satisfied. In other words, the transaction itself so palpably and conclusively establishes the intent that testimony upon that point would ' Nicol V. Crittenden, 55 Ga. 497 ; ^ Ehrisman v. Roberts, 68 Pa. St. Williams v. Evans, 6 Neb. 216. 308 ; Kelly v. Lenihan, 56 Ind. 450 ; 2 Van Bibber v. Mathis, 52 Tex. 409. Tognini v. Kyle, 15 Nev. 468 ; Mon- See Briscoe v. Bronaugh, i Tex. 327 ; teith v. Bax, 4 Neb. 166. Bryant v. Kelton, i Tex. 415 ; Peiser •* 56 Miss. 142. V. Peticolas, 50 Tex. 638. § lO THE CASES CONSIDERED. I 7 be superfluous, and a finding of a jury of an intent different from that which the legitimate construction of the instru- ment furnishes, would be erroneous.^ Thus in Voung v. Heermans,^ a conveyance by a debtor of all his property, real and personal, without consideration, and in trust for the grantor's benefit during his life, and after his death for the payment of his debts, was declared to be fraudulent per sc ; no evidence aliu7ide being deemed necessary to establish the fraudulent intent. Proof of the intention to enter into the prohibited transaction is all that is requisite. When the courts declare an instrument fraudulent on its face, it does not necessarily mean that it was the offspring of a corrupt intent considered as a mental operation, but that " it is an instrument the law will not sanction or give effect to, as to third persons, on account of its susceptibility of abuse, and the great danger of such contracts being used for dishonest purposes." ^ It may scarcely be proper to say in these cases that there is a presumption or conclusion of law that the transaction is fraudulent, but rather that the circumstances of the trans- action, or the transaction itself, furnish conclusive evidence of fraud ; and if, against such evidence, a jury, a judge, or referee should find that there was no fraud, a new trial would be granted, not because any legal presumption or conclusion had been violated, but because the finding was against the weight of evidence ; against conclusive evi- dence.* The intent is gathered from the instrument, and no external aid is necessary to develop it.^ The fraud is self-evident.*' But to find fraud as matter of law it must so expressly and plainly appear in the instrument as to be in- capable of explanation by evidence dehors? ' See Dunham v. Waterman, 17 N. '' Harman v. Hoskins, 56 ^Tiss. 145. Y. 21. '' Hardy v. Simpson, 13 Irid. (N. C.) '■^ 66 N. Y. 374. Law, 132, 139; Bigelow on Fraud, p. ^ Gay V. Bidwell, 7 Mich. 531, dis- 468. senting opinion of Manning, J. ' Cheatham v. Hawkins, 76 N. C. ^ Babcock v. Eckler, 24 N. Y. 632. 335. 2 1 8 THE CASES CONSIDERED. § lO Grover, J., an able judicial officer, and vigorous writer, ignored the distinction between fraud in law and fraud in fact, in these words : "A distinction is attempted, in some of the cases, between fraud in law and fraud in fact. I think there is no solid foundation for it. When upon the face of the assignment any illegal provision is found, the presump- tion at once conclusively arises that such illegal object fur- nished one of the motives for making the assignment ; and it is upon this ground adjudged fraudulent and void. The result is the same w^hen the illegal design is established by other evidence. The inquiry is as to the intention of the assignor."^ Coleman v. Burr^ is an extreme illustration. The referee found that the conveyance was honest, but the transaction was set aside because from the facts found the inference of fraud was inevitable. " Fraud," said Mr. Justice Duller, in Estwick v. Caillaud,^ " is sometimes a question of law, sometimes a question of fact, and sometimes a mixed question of law and of fact." Perhaps it would be more accurate to say that fraud is never purely a question of law, nor exclusively a question of fact,* though it frequently partakes more largely of the one quality than of the other. Fraud is not to be considered as turn- ing solely on intent as an emotion, but as a legal deduction. " What intent," said Ruffin, J., " is in law fraudulent, the court must inform the jury, else the law can have no rule upon the doctrine of fraud ; and every case must create its own law."^ Perhaps the clearest division of fraud is into three classes ; first, fraud that is self-evident, with which the jury have nothing to do ; second, fraud which depends upon a variety of circumstances usually connected with motive 1 Oliver Lee & Co.'s Bank v. Talcott, '' 93 N. Y. 31. 19 N. Y. 148. See, in this connection, ^ 5 T. R. 420. Lukins v. Aird, 6 Wall. 79, per Davis, * Foster v, Woodfin, 11 Ired. (N. C.) J. ; Burr v. Clement, 9 Col. i ; Stevens Law, 339. V. Robinson, 72 Me. 381 ; French v. ^ Leadman v. Harris, 3 Dev. (N. C.) Holmes, 67 Me. 189; Cunningham v. Law, 146. Freeborn, 1 1 Wend. (N. Y.) 252. ^ 1 1 WORDS " HINDER, DELAY, OR DEFRAUD. 19 and intent, which is an open question of fact for the jury, with instructions as to what constitutes fraud ; third, pre- sumptive fraud where the presumption may be rebutted.^ § II. Words " hinder, delay, or defraud." — To hinder and delay creditors is to do something which is an attempt to defraud, rather than the successful accomplishment of a fraud ; to put some obstacle in the path, or interpose un- justifiably some period of time before the creditor can reach his debtor's property and apply it toward the liquidation of the debt.^ The words " hinder," " delay," '^ and " defraud " are not synonymous.'* A conveyance may be made with intent to hinder or delay without an intent to absolutely defraud. Either intent is sufficient.^ The statute is in the disjunctive and attempts to attach a separate and specific meaning to each of the words which it employs.*^ An in- stance of hindrance and delay within the statute is given in ' Hardy v. Simpson, 13 Ired. (N. C.) Law, 139. In Coburn v. Pickering", 3 N. H. 41 5, Richardson, C. J., lays down the rule that whether there was any trust is a question of fact, but the trust being proved or admitted, the fraud is an inference of law which the court must pronounce. His exact language, after a discussion of the authorities, is as follows : " It thus seems to us, to be settled, as firmly as any legal principle can be settled, that the fraud which renders void the contract, in these cases, is a secret trust, accompanying the sale It is, therefore, very clear, that fraud is sometimes a ques- tion of fact, and sometimes a question of law. When the question is, was there a secret trust, it is a question of fact. But when the fact of a secret trust is admitted, or in any way estab- lished, the fraud is an inference of law, which a court is bound to pronounce." So, upon like principle, it was held in Phelps V. Curts, 80 111. 112, not to be important what motives may have ani- mated the parties, if they have so dis- posed of the property that the neces- sary effect is to hinder and delay credit- ors. Such a disposition is, in judgment of law, a legal fraud. To the same effect, also, is Power v. Alston, 93 111. 587 ; Emerson v. Bemis, 69 111. 537 ; Moore v. Wood, 100 III. 454. " Burnham v. Brennan, 42 N. Y. Superior Ct. 63. ^ In Read v. Worthington, 9 Bosw. (N. Y.) 628, Robertson, J., said: "To hinder any one in his course is, neces- sarily, to delay him. Not being able to perceive the distinction, I must hold that none exists. Many such pleonasms are to be found in old English statutes, where they are introduced for caution's sake, more than with any precise idea as to what they were intended to effect." •• Hickox v. Elliott, 22 Fed. Rep. 21. ' Crow v. Beardsley, 68 Mo. 439 ; Rupe v. Alkire, 77 Mo. 641. '' Burgcrt v. Borchert, 59 Mo. 83. 20 WORDS " HINDER, DELAY, OR DEFRAUD." § I I a case in Pennsylvania, where a debtor departed from the State leaving no property subject to the process of his creditor, and making no provision for the payment of his debts.^ A better illustration is to be found in a case in the New York Court of Appeals, where the debtor conveyed his property in trust for his own benefit during his life, and after his death for the payment of his debts.^ The authori- ties avoiding assignments by the terms of which the assignee is empowered to sell upon credit are, perhaps, more in point than either of the illustrations given. A conveyance of real estate by a debtor upon the understanding that the grantee should hold it in trust for the grantor, and as fast as money could be realized therefrom, should apply it to the payment of his debts, necessarily operates to hinder and delay credit- ors. A debtor's property is in theory of law subject to im- mediate process issued at the instance of his creditors, and the debtor will not be permitted to hinder or delay them by any device which leaves it, or the avails of it, subject to his control and disposition ; and it makes no difference that the debtor intends to apply the avails of it to the payment of his debts.^ So a deed of trust creating a lien upon per- sonalty for an indefinite period, the natural operation of which is to benefit the grantor, is fraudulent as to creditors. '' The statute seems to be aimed at three things which it is supposed insolvents would possibly be tempted to do for the purpose of avoiding or deferring the payment of their debts. First, they might dispose of their property in such manner as to interpose obstacles to legal process, with in- tent to hinder creditors in the collection of their demands ; or, second, to delay payment to some future period ; or, third, to defraud their creditors by absolutely defeating all * Heath v. Page, 63 Pa. St. 108. kins v. Aird, 6 Wall. 78 ; Donovan v. '^ Young V. Heermans, 66 N. Y. 374. Dunning, 69 Mo. 436 ; Lore v. Dierkes. See S. P. Graves v. Blondell, 70 Me. 19 J. & S. (N. Y.) 144. 194; Henry v. Hinman, 25 Minn. 199; ^ Smith v. Conkwright, 28 Minn. 23. Macomber v. Peck, 39 Iowa 351 ; Lu- ^ State v. Mueller, 10 Mo. App. 87. § 12 WORD "disposed" CONSTRUED. 2 1 attempts to enforce their claims. Any one of these pur- poses is sufficient to avoid the transaction.^ If the design of a transfer is a lawful one it matters not that a creditor is thereby deprived of property which might otherwise have been reached and applied to the payment of his debt. Hence it is that a general assignment,^ or a preference,^ is upheld, though each is often made or given to thwart some belligerent creditor.^ The secret motives that prompt the act in such cases are unimportant,'"' Speaking of devices to aid the debtor, Davis, J., said, in Robinson v. Elliott:^ " The creditor must take care in making his contract that it does not contain provisions of no advantage to him, but which benefit the debtor, and were designed to do so, and are injurious to other creditors. The law will not sanction a proceeding of this kind. It will not allow the creditor to make use of his debt for any other purpose than his own indemnity. If he goes beyond this, and puts into the con- tract stipulations which have the effect to shield the property of his debtor, so that creditors are delayed in the collection of their debts, a court of equity will not lend its aid to en- force the contract." A debtor cannot take the law into his own hands and attempt to secure the delay which can only be obtained by the consent of creditors.'' § 12. Word "disposed" construed. — In Bullenev. Smith,^ it appeared that section 398 of the Revised Statutes of 1 Burdick v. Post, 12 Barb. (N. Y.) Grover v. Wakeman, 11 Wend. (N. Y.) 172, affi'd 6 N. Y. 522. See Pilling v. 194. Otis, 13 Wis. 495; Burgert V. Borchert, =* Hall v. Arnold, 15 Barb. (N. Y.) 59 Mo. 80; Crow V. Beardsley, 68 Mo. 599; Hartshorn v. Eames, 31 Me. 435 ; Planters' Bank v. The Willea 98. Mills, 60 Ga. 168; Sutton v. Hanford, •'Hartshorn v. Eames, 31 Me. 98; 1 1 Mich. 513 ; Davenport v. Cummings, Holbird v. Anderson, 5 T, R, 235. 15 Iowa 219; Means v. Dowd, 128 U, ^ Horwitz v. Ellinger, 31 Md. 504; S. 281. See, especially, the case of Pike v. Bacon, 21 Me. 280; Covan- Nicholson v, Leavitt, 6 N. Y. 510 ; S. C. hovan v. Hart, 2i Pa. St. 500. loN. Y. 591. " 22 Wall. 523. 2 Hoffman V. Mackall, 5 Ohio St. 124; " Means v. Dowd, 128 U. S. 281, Hefner v. Metcalf, i Head (Tenn.) 577 ; " 73 Mo, 151. 2 2 NO DEFINITION OF FRAUD. § 1 3 Missouri, authorized an attachment to issue in the follow- incr amono; other cases : Where the defendant had fraud- ulently conveyed or assigned his property so as to hinder or delay his creditors ; where the defendant had fraudulently concealed, removed, or disposed qI his property or effects, so as to hinder his creditors. .The court held that the word dis- posed, as here used, covered all such alienations of property as might be made in ways not otherwise pointed out in the statute : for example, pledges, gifts, pawns, bailments, and other transfers and alienations which might be effected by mere delivery and without the use of any writing, assign- ment, or conveyance. Other species of conveyances were excluded. Hence it was held that a charge to a jury to the effect that the defendant had fraudulently disposed of his property was not supported by proof that he had executed a fraudulent mortgage. . § 13. No definition of fraud. — Fraud is as difficult to de- *^ -? ^' fine ^ as it is easy to perceive. Courts of equity have skil- S levy '^7^"^' fully avoided giving a precise and satisfactory definition of ^_ A if'^ i|- 2 gQ various is its form and color. It is sometimes said ^1 ^'/y to consist of "any kind of artifice employed by one person "^] to deceive another," conduct that operates prejudicially on the rights of others,^ or withdraws the property of a debtor from the reach of creditors.'* But the term is one that ad- mits of no positive definition, and cannot be controlled in its application by fixed and rigid rules. Fraud is "so sub- tle in its nature, and so protean in its disguises, as to render it almost impossible to give a definition which fraud would not find means to evade." ^ It is to be inferred or not, ac- cording to the special circumstances of every case. When- ever it occurs it usually vitiates the transaction tainted by ' See Green v. Nixon, 23 Beav. 530 ; i Atk. 352 ; Shoemaker v. Cake, 83 Reynell v. Sprye, i De G., M. & G. Va. 5. 691. 2 Bunn V. Ahl, 29 Pa. St. 390. * See Beach on Contributory Neg., •» McKibbin v, Martin, 64 Pa. St. 356. § 2. Compare Chesterfield v. Janssen, ^ Shoemaker v. Cake, 83 Va. 5. ^ I. NO DEFINITION OF FRAUD. it.^ " Fraud cuts down everything." " Fraud," said De < Grey, C. J., "is an extrinsic, collateral act, which vitiates j the most solemn proceedings of courts of justice. Lord | Coke says it avoids all judicial acts, ecclesiastical or tem- / poral."^ It is the judgment of law on facts and intents.^ Its existence is often a presumption of law from admitted or established facts, irrespective of motive, and too strong to be rebutted.^ " Fraud," said Story, J., " will vitiate any, even the most solemn transactions ; and an asserted title to property, founded upon it, is utterly void." ^ " Fraud is always a question of fact with reference to the intention of the grantor. Where there is no fraud there is no infirmity in the deed. Every case depends upon its circumstances, and is to be carefully scrutinized. But the vital question is always the good faith of the transaction. There is no other test."*^ Fraud does not consist in mere intention, but in intention carried out by hurtful acts.''' " Fraud or no ' Fenner v. Dickey, i Flippin 36. Undue infiiieiice. — So what consti- tutes undue influence is a question de- pending upon the circumstances of each particular case. It is a species of constructive fraud which the courts will not undertake to define by any fixed principles, lest the very definition itself furnish a finger-board pointing out the path by which it may be evaded. The following principle, we think, is sound, both in law and morals, and though a departure from the former rule, is sustained by the more modern authorities. When one, living in illicit sexual relations with another, makes a large gift of his property to the latter, especially in cases where the donor ex- cludes the natural objects of his bounty, the transaction will be viewed with such suspicion by a court of equity as to cast on the donee the burden of prov- ing that the donation was the result of free volition, and was not superinduced by fraud or undue influence. See Ship- man V. Furniss, 69 Ala. 555, and cases cited ; S. C. 44 Am. Rep. 528, and note ; Leighton v. Orr, 44 Iowa 679 ; Dean v. Negley, 41 Pa. St. 312. * Rex V. Duchess of Kingston, 20 How. St. Tr. 544; 2 Smith's L. C.687. See Brownsword v. Edwards, 2 Ves. Sen. 246 ; Meddowcroft v. Huguenin, 4 Moo. P. C. 386 ; Perry v. Meddow- croft, 10 Beav. 122 ; Harrison v. Mayor, etc. of Southampton, 4 De G., M.& G. 137 ; Gillv. Carter, 6 J. J. Marsh (.Ky.) 484; Hall V. Hall, i Gill (Md.) 391; Wilson V. Watts, 9 Md. 356. "" Pettibonc v. Stevens, 15 Conn. 26 ; Sturtevant v. Ballard, 9 Johns. (N. Y.) 342 ; Otley v. Manning, 9 East 64 ; Morgan v. Elam, 4 Verg. (Tenn.) 438 ; Worseley v. Demattos, i Burr. 467. " Belford v. Crane, 16 N. J. Eq. 265. ^ United States v. Amistad, 15 Peters 594- ° Per Swayne, J.. Lloyd v. Fulton, 91 U. S. 485. " Williams v. Davis, 69 Pa. St. 28 24 NO DEFINITION OF FRAUD. ^14 fraud is generally a question of fact to be determined by all the circumstances of the case."^ Direct proof of positive fraud in the various kinds of covinous alienations which we are to discuss, is not, as we shall presently see, generally attainable, nor is it vitally essential. The fraudulent con- spirators will not be prompted to proclaim their unlawful intentions from the housetops, or to summon disinterested parties as witnesses to their nefarious schemes. The trans- action, like a crime, is generally consummated under cover of darkness, with the safeguards of secrecy thrown about it Hence it must be scrutinized and judged by all the sur- rounding circumstances of the case. The evidence is "al- most always circumstantial. Nevertheless, though circum- stantial, it produces conviction in the mind often of more force than direct testimony." ^ In such cases, where fraud is in issue, "the field of circumstances ought to be very wide." ^ From the very nature of the case it can rarely ever be proved otherwise than by circumstantial evidence. And if the facts and circumstances surrounding the case, and distinctly proven, are such as would lead a reasonable man to the conclusion that fraud in fact existed, this is all the proof which the law requires.'* It may be observed that there can be no fraud unless there exist claims and rights which can be delayed and hindered, and which, but for the fraudulent conveyance, could be asserted. The law takes no cognizance of fraudulent practices that injure no one. Fraud without injury will not furnish a cause of action. Unless these elements co-exist, the courts are powerless to render any relief.^ § 14. Restraints upon alienation. — A conveyance as regards 1 Per Hunt, J., Humes v. Scruggs, 181; Wamerv. Blakeman, 4 Abb. App. 94 U. S. 22-28. See McKibbin v. Mar- Dec. (N. Y.) 535 ; Tumlin v. Crawford, tin, 64 Pa. St. 356 ; Knowlton v. Mish, 61 Ga. 128 ; Engraham v. Pate, 51 Ga. 8 Sawyer 627. 537. - See Kempner v. Churchill, 8 Wall. ^ Engraham v. Pate. 51 Ga. 537. 369; Newman v. Cordell, 43 Barb. * Lockhard v. Beckley, 10 W. Va. (N. Y.) 456 ; Babcock v. Eckler, 24 N. 87 ; White v. Perry, 14 W. Va. 86. Y. 623 ; Harnett v. Dundass, 4 Pa. St. ^ Fellows v. Lewis, 65 Ala. 354 ; § H RESTRAINTS UPON ALIENATION. 25 real property may be defined to be " the transfer of the title of land from one person, or class of persons, to another," ^ or as " a deed which passes and conveys land from one man to another."^ The usual incident of property of every kind owned or possessed by persons sui juris is the power of alienation ; generally speaking, every man may in theory of law do what he pleases with that which is his own."^ Almost the sole remaining restraint upon the power of alienation of land is that which adjudges void conveyances of real property held adversely by a third party at the date of the conveyance. Statutes adjudging such conveyances void "were originally introduced partly upon the theory that it would be dangerous to permit the transfer of disputed or ' fighting' titles, lest powerful and influential persons might purchase and use such titles as a means of oppressing poor people."'* But these statutes are being rapidly abolished, circumvented, or ignored as impracticable and unnecessary in this country, and even this restraint upon alienation will soon be wholly superseded.'' The restriction which we are Castle V. Palmer, 6 Allen (Mass.) 401 ; Legro V. Lord, 10 Me. 161 ; Foster V. McGregor, 11 Vt. 595; Danforth v. Beattie, 43 Vt. 138 ; Crummen v. Ben- net, 68 N. C. 494 ; Sears v. Hanks, 14 Ohio St. 298 ; Vaughan v. Thompson, 17 111. 78; Mullerv. Inderreiden, 79 111. 382 ; Anthony v. Wade, i Bush (Ky.) no; Morton v. Ragan, 5 Bush (Ky.) 334 ; Lishy v. Perry, 6 Bush (Ky.) 515; Kuevan v. Specker, 1 1 Bush (Ky.) i ; Vogler V. Montgomery, 54 Mo. 577 ; .Smith V. Rumsey, 33 Mich. 183 ; Hugu- nin V. Dewey, 20 Iowa 368 ; Edmonson V. Meacham, 50 Miss. 34 ; Wood v. Chambers, 20 Tex. 247 ; McFarland v. Goodman, 6 Biss. 11 1 ; Cox v. Wilder, 2 Dill. 45 ; Smith v. Kehr, 2 Dill. 50 ; Dreutzer v. Bell, 11 Wis. 114; Pike v. Miles, 23 Wis. 164; Murphy v. Crouch, 24 Wis. 365 ; Succession of Cotting- ham, 29 La. Ann. 669. Compare Getz- ler V. Saroni, 18 111. 511; Currier v. Sutherland, 54 N. H. 475 ; Huey's Ap- peal, 29 Pa. St. 219. See §§46-48. ' Klein v. McNamara, 54 Miss. 105. ' Brown v. Fitz, 13 N. H. 28 5. " There is no magical meaning in the word 'conveyance'; it denotes an in- strument which carries from one per- son to another an interest in land." Lord Cairns, L. C, in Credland v. Pot- ter, L. R. 10 Ch. App. 12. 3 See § 52. •• Sedgwick & Wait on Trial of Title to Land (2d ed.), § 190. See Sedgwick V. Stanton, 14 N. Y. 295 ; Crary v. Goodman, 22 N. Y. 177 ; McMahan v. Bowe, 114 Mass. 145; Humbert v. Trinity Church. 24 Wend. (N. Y.) 611 ; Matter of Department of Parks, 73 N. Y. 560; Dawley v. Brown, 79 N. Y. 390; Williams v. Rawlins, 33 Ga. 117. '■ Ibid. 26 RESTRAINTS UPON ALIENATION. § 1 4 about to consider upon a debtor's power of alienation of property at the expense of his creditor, is one that has ex- isted from time immemorial, and which will not outlive its usefulness so long as people are dishonest or inclined to be generous before they are just. The claims of creditors, it may be observed, rest upon legal obligations higher than the demands of affection or generosity, commendable as a response to these may be when no duties which the law de- clares paramount intervene.-^ Creditors, as we have said, have an equitable interest for the payment of their claims in their debtor's property, or in " the means he has of satis- fying their demands,"^ and there is in our jurisprudence a clear restraint upon the debtor's right of alienation, where it is attempted to be exercised for the purpose of hindering, delaying, or defrauding his creditors, or defeating their law- ful right to subject his property by legal process to the satisfaction of their lawful demands. The cardinal princi- ple running through all such cases is, that the property of the debtor shall not be diverted from the payment of his debts, to the injury of his creditors by means of the fraud.^ The law does not restrain a man's dominion over his own property so long as he acts with fairness and good faith ; but it avoids all fraudulent alienations devised to secure property from the pursuit of his creditors ; it is fraudulent to defeat them by a reservation of benefit to himself ; it is equally fraudulent to defeat them by benefactions conferred upon others.'* " The current of law," says Professor Gray,^ " has for cen- turies been in favor of the removal of old restraints on alienation ; in favor of the disallowance of new ones ; and ' See Potter v. Gracie, 58 Ala. 303 ; '' Lockhard v. Beckley, 10 W. Va. 96 ; Wait V. Day, 4 Denio (N. Y.) 439 ; Hunters v. Waite, 3 Gratt. (Va.) 26. Sherman v. Barrett, I McMull. (S. C.) ^ Restraints on the Alienation of Law 147. Property, by John Chipman Gray, Esq., - Seymour V. Wilson, 19 N. Y. 418. Story Professor of Law in Harvard •■* Clements v. Moore, 6 Wall. 312; University. Boston: Soule & Bugbee, Tompkins v. Sprout, 55 Cal. 36. 1883, p. 2. § 15 RESTRAINTS UPON ALIENATION. 2/ especially in favor of compelling a debtor to apply to his debts all property which he could use for himself or give at his pleasure to others. The legislatures and the courts have co-operated to this end. Family and ecclesiastical pride, natural dishonesty, and narrow precedents have been for- midable obstacles to this movement, but its general success has been unmistakable." The debtor must devote all his property absolutely to the payment of his debts ; reserve no control for himself ; ^ provide for no benefit to himself,' other than what may result from the payment of his debts ; im})ose no condition upon the right of the creditors to par- ticipate in the fund ; authorize no delay on the part of the trustee.-^ A debtor may be said to sustain two distinct re- lations to his property : that of owner and quasi trustee for his creditors. As owner he may contract debts to be satis- fied out of his property, create liens upon it, and sell or give it to others at pleasure, and, as we shall presently see, so far as he is personally concerned, he will be bound by his own acts. The law, however, lays upon him an obliga- tion to pay his debts, and in behalf of his creditors holds him to the exercise of good faith in all transactions relating to the fund upon which they necessarily depend for pay- ment. The debtor, therefore, cannot be permitted to cre- ate fictitious debts, or to do any of the acts specified 7nala fide to the prejudice of his creditors. § 15. Fraudulent conveyances — Characteristics and classes. — A fraudulent conveyance may be defined to be a convey- ance the object, tendency, or effect of which is to defraud another, or the intent of which is to avoid some duty or debt due by or incumbent upon the party making it.^ As 'West V. Snodgrass, 17 Ala. 554; v. Com. & R. Bank, 17 Miss. 394; Riggs V. Murray, 2 Johns. Ch. (N. Y.) Tovvle v. Hoit, 14 N. H. 61. 565 ; Donovan v. Dunning, 69 Mo. 436 ; ^ Oliver Lee «S: Co.s Bank v. Talcott. Fisher v. Henderson, 8 N. B. R. 175; 19 N. Y. 148. Means v. Dovvd, 128 U. S. 281. ^ See 2 Kent's Com. 440 ; 4 Id. 462. 'See Lukins v. Aird, 6 Wall. 79; " One of the surest tests of a fraudulent Wooten V. Clark, 23 Miss. 75 ; Arthur conveyance is that it reserves to the 4 28 FRAUDULENT CONVEYANCES. § 1 5 was said by Lord Mansfield in Cadogan v. Kennett:^ " The question in every case is, whether the act done is a bona fide transaction, or whether it is a trick and contriv- ance to defeat creditors." The same test has been referred to as decisive by Mr. Justice Story ^ and Chief-Justice Marshall."^ As we shall presently see, to constitute such a disposition of property, three elements must concur — first, the thing disposed of must be of value, out of which the creditor could have realized all or a portion of his claim ; second, it must be transferred or disposed of by the debtor ; and third, this must be done with intent to de- fraud.^ Stated in another form : in order to bring a case within the terms of the statute, there must exist a creditor to be defrauded, a debtor intending to defraud, and a con- veyance of property which is appropriable by law to the payment of the debt due.^ Usually, to avoid the transac- tion there must be some interest in the property left in the debtor ; ^ some reservation inconsistent with a true sale ; or some hiding or cloaking of the surplus so as to cover it up for the benefit of the debtor or his family.'^ Whether a conveyance be fraudulent or not, as against creditors, de- pends on whether it was made on good consideration and grantor an advantage inconsistent with of a right which would be legally ef- its avowed purpose, or an unusual fective if the conveyance or device had indulgence." Thompson v. Furr, 57 not been resorted to ? " Wagner v. Miss. 484. See Bentz v. Rockey, 69 Smith, 13 B. J. Lea (Tenn.) 569. Pa. St. 71 ; Edwards v. Stinson, 59 ■* Hoyt v. Godfrey, 88 N. Y. 669. Ga. 443 ; Mitchell v. Stetson, 64 Ga. See Florence Sewing Machine Co. v. 442. Such, for instance, as a support. Zeigler, 58 Ala. 224. See § 23. Graves V. Blondell, 70 Me. 194 ; Henry ^ O'Conner v. Ward, 60 Miss. V. Hinman, 25 Minn. 199 ; Young v. 1036. Heermans, 66 N. Y. 374. "Means v. Dowd, 128 U. S. 281; ' 2 Cowp. 434. Young V. Willis, 82 Va. 296 ; McCor- ° 2 Story's Eq. Jur. § 353. mick v. Atkinson, 78 Va. 8 ; Wray v. ^ United States v. Hooe, 3 Cranch Davenport, 79 Va. 19. 73. "The test as to whether a con- ' See Hobbs v. Davis, 50 Ga. 214; veyance is fraudulent or void as to a Price v. Pitzer, 44 Md. 527 ; Todd v. creditor is, does it hinder him in en- Monell, 19 Hun (N. Y.) 362 ; Young forcing his debt ? Does it deprive him v. Willis, 82 Va. 296. § 15 CHARACTERISTICS AND CLASSES. 29 bona fide. Il is not enough that it be on good considera- tion or bona fide ; it must be both. If it be defective in either particular, though good between the parties and their representatives, it is voidable as to creditors.^ It has been observed that to avoid a fraudulent transfer three thincrs are necessary : Fraud on the part of the vendor ; fraud on the part of the vendee ; and an injury to the party com- plaining.^ This, as we shall see, is too general a statement, for in certain cases of voluntary alienations proof of actual participation in the fraud by the vendee is not essential to annul the transaction. Again, these covinous alienations with respect to the rights of the creditors, existing and subsequent, and the character of the debtor's interest, are divisible into three classes, (i). Where a debtor conveys a title in fraud of creditors. (2). Where a person not in- debted alienates property with the intention to defraud future creditors. (3). Where the property is paid for by the debtor, but the conveyance is taken in the name of a third party. Dillon, J., observed : " Any instrument is fraudulent which is a mere trick or sham contrivance, or which originates in bad motives or intentions, that is made and received for the purpose of warding off other credit- ors."^ In another case^ this language is quoted : " Whether the contract be oral or in writing ; whether executed by the parties with all the solemnities of deeds by seal and acknowl- edgment ; whether in form of the judgment of a court, stamped with judicial sanction, or carried out by the device of a corporation organized with all the forms and require- ments demanded by the statute in that regard, if it be con- taminated with the vice of fraud the law declares it to be a nullity. Deeds, obligations, contracts, judgments, and even corporate bodies may be the instruments through which ' Randall v. Vroom, 30 N. J. Eq. - Guidry v. Grivot. 2 Martin N. S. 358 ; I Story's Eq. Jur. § 353 ; Sayre v. (La.) 13. Fredericks, 16 N. J. Eq. 205. ' Hufjhes v. Cory, 20 Iowa 405. ^ Booth V. Bunce, 33 N. Y. 156. 30 STATUTES DECLARATORY OF THE COMMON LAW. § l6 parties may obtain the most unrighteous advantages. All such devices and instruments have been resorted to to cover up fraud, but whenever the law is invoked all such instru- ments are declared nullities ; they are a perfect dead letter ; the law looks upon them as if they had never been executed. They can never be justified or sanctified by any new shape or cover, by forms or recitals, by covenants or sanctions which the ingenuity, or skill, or genius of the rogue may devise." In a case before the Supreme Court of Maine it is said that " a fraudulent transfer, however perfect in form, is void " as to creditors.^ § i6. Fraudulent conveyances at common law — Statutes declaratory. — By the rules of the common law all convey- ances made in fraud of creditors were regarded as voidable at the instance and suit of such creditors.^ The famous statutes of Elizabeth, to be presently considered, avoiding fraudulent conveyances, were merely declaratory of the common law ;^ the same result would have been worked out without the aid of the statutes.^ The statutes were not necessary to this result ; ^ but are to be received when such transfers are brought in question only as a true and accurate declaration of the common law.^ Lord 1 Skowhegan Bank v. Cutler, 49 Me. Davis v. Turner, 4 Gratt. (Va.) 429. 318. See §§ 18-21. * See notes to Twyne's Case (3 Rep. ^ Caclogan v. Kennett, 2 Cowp. 432. 80), I Smith's Leading Cases i, con- ^ Baker v. Humphrey, loi U.S. 499; tinued from 1866 to 1879, in 18 Amer- Clements v. Moore, 6 Wall. 299. lean Law Register, N. S. 137 ; Cado- *^ Clark v. Douglass, 62 Pa. St. 416 ; gan V. Kennett, 2 Cowper 432 ; Curtis Rickards v. Attorney Genl., 12 CI. & F. V. Leavitt, 15 N. Y. 124; Clements v. 44. See Barton v. Vanheythuysen, 11 Moore, 6 Wall. 299, 312; Nellis v. Hare 126-132; Ryall v. Rolle, i Atk. Clark, 20 Wend. (N. Y.) 27 ; Black- 178 ; Utterson v. Vernon, 3 T. R. 546. man v. Wheaton, 13 Minn. 326; Stod- In Gardner v. Cole, 21 Iowa 209, Dil- dard v. Butler, 20 Wend. (N. Y.) 516; Ion. J., after remarking that the stat- Clark V. Douglass, 62 Pa. St. 416; utes 13 Eliz. and 27 Eliz. had never Brice v. Myers, 5 Ohio 121 ; Baker v. been legislatively re-enacted in Iowa, Humphrey, loi U. S. 499 ; Hamilton said : " But antedating as these stat- v. Russel, I Cranch 310. utes do the settlement of this country, ^Clements v. Moore, 6 Wall. 312; and being mainly, if not wholly, de- § l6 STATUTES DECLARATORY OF THE COMMON LAW. 3 1 Coke^ comments on the word " declare" in the statute as showing that this was the case, and Lord Mansfield, in Cad- ogan V. Kennett,^ said that "the principles and rules of the common law, as now universally known and understood, are so strong against fraud in every shape, that the common law would have attained every end proposed by the statutes 13 Eliz. c. 5 and 2 7 Eliz. c. 4." ^ And Chancellor Kent asserted that the " statute of Elizabeth " was " only in affirmance of the principles of the common law.""* This feature of our jurisprudence is of the highest importance, and creditors are justified in invoking it in cases where it is sought to defeat their claims as not coming exactly within the precise wording of the statute avoiding a particular kind of trans- fer. The flexible principles of the common law supplement and support the technical framework of the statute, and constitute the deep and broad foundation upon which the creditor's rio^hts are founded. The mere omission of a provision embracing "goods, chattels, and things in action," from a section of the statute declaring void conveyances and assignments of estates or interests in land, made with intent to hinder, delay, or defraud creditors, will not be construed to be a repeal of the common-law rule which renders a conveyance of goods and chattels, made with such intent, fraudulent and void as to creditors.^ In Fox V. Hills,*' the statute concerning fraudulent conveyances was construed not to comprehend claims founded on tort. claratory of the common law, which * Sands v. Codwise, 4 Johns. (N. Y.) sets a face of flint against frauds in 596; S. C. 4 Am. Dec. 313. every shape, they constitute the basis * gjackman v. Whcaton, 13 Minn. of American jurisprudence on these 331. "The principle of the court of subjects, and are, in this State, part of equity is that a provision for the wife, the tinun-ittoi iaw." contrived to conceal the means of the ' Co. Litt. 76a, 290b ; Twyne's Case, husband from his creditors by placing 3 Rep. 82b (2 Coke, 219). the ostensible title in her, tiiough not "^ 2 Cowp. 434. within the statute of frauds, is void as 2 See Clements v. Moore, 6 V/all. to creditors, by the unwritten law." 299; Starin v. Kelly, 88 N. Y. 421. Bernheim v. Beer, 56 Miss. 151. ' I Conn. 298. 32 STATUTES DECLARATORY OF THE COMMON LAW. § 1 6 but it appearing that a voluntary deed had been given to avoid such a claim, the instrument was promptly adjudged void at common law as to the creditor. In Lillard v. McGee,^ which was a suit to set aside a conveyance at the instance of a creditor whose claim was a judgment for damages in an action of slander, the court said : " Fraud is one of the main pillars of the jurisdiction of a court of equity, and there is no question of its competency, prior to the statute, to give relief in a case of this sort. Now as the statute is made in affirmance, not in derogation of the common law, it cannot have the effect of taking from a court of equity its jurisdiction ; for it is a settled rule that an affirmative statute does not repeal the common law." " The common law of England,"^ says Roberts, "abhors every species of covin and collusion ; but being tender of presuming fraud from circumstances, statutes have been specially framed to suit the exigencies of the times,^ which are as fertile in the artifices of concealment as in the oppor- tunities of deceit. It was the prevention and not the pun- ishment of fraud in which the common law was defective, for there is no instrument or act which is not liable by the law of this country to be rendered absolutely void by clear and explicit evidence of fraudulent intention. So general, indeed, is the condemnation of all fraudulent acts by the law of England, that a fraudulent estate is said, in the mas- culine language of the books, to be no estate in the judg- ment of the law." These words are employed in Alabama : " The right of the creditor to subject property of his debtor, fraudulently conveyed, is founded in that principle of the common law which enjoins integrity as a virtue paramount to gener- osity.'"^ ' 1 4 Bibb (Ky.) i66. tonporibns sunt inhotiesta, Cic. de Off. " Roberts on Fraudulent Conveyances lib. 3. (ed. 1807), p. 120. ^ Planters' & Merchants' Bank v. " QucB natura videntur honesta esse, Walker, 7 Ala. 946. § 17 COVINOUS TRANSFERS OF CHOSES IN ACTION. 7,7, § 17. Covinous transfers of choses in action. — By the law of England, before the American revolution, as established by decisions of Fortescue, M.R., Lord Hardwicke, and Lord Northington, fraudulent conveyances of choses in action, though not specified in the statute, were voidable equally with transfers of tangible assets, but from the nature of the subject-matter the remedy of the creditors must be sought in equity.^ Gray, C. J., in the opinion in Drake v. Rice,^ says: "Of the only case before our Revolution cited in the learned argument for the claimant, we have but this brief note : ' A man, being much in debt, six hours before his decease gives ^600 for the benefit of his younger children ; this is not fraudulent as against creditors ; though it would have been so of a real estate, or chattel real.''^ The report, having been published in 1740, cannot have been unknown to the eminent English judges who made the decisions already cited ; and, as observed by Lord Redesdale, the book is anonymous and of not much authority.'* The opinions of the English and Irish courts of chancery since our Revolu- tion, cited for the claimant, cannot outweigh the cases above referred to, as evidence of the law of England at the time of the separation of the colonies from the mother country. In the case at bar, it is agreed that the law of New York respecting fraudulent conveyances is the same as the com- mon law and the law of Massachusetts ; and that by the law of New York choses in action, although they cannot be attached or levied upon, yet may, after execution issued ' Drake v. Rice, 130 Mass. 410; v. Tenney, 18 N. H. 109; Sargent v. Taylor v. Jones, 2 Atk. 600 ; King v. Salmond, 27 Me. 539. See § 33, and Dupine, 2 Atk. 603, note ; Horn v. cases cited. Horn, Ambler, 79; Ryall v. Rolle, i ■ 130 Mass. 413. Atk. 165 ; S. C. I Yes. Sen. 348 ; Par- ' Duffin v. Furness, Sei. Cas. Ch. tridge v. Gopp, i Eden 163; S. C. 216. Ambl. 596 ; Bayard v. Hoffman, 4 * Barstow v. Kilvington. 5 Ves. 593. Johns. Ch. (N. Y.) 450 ; Hadden v. 598 ; Hovenden v. ATmesicy. 2 5ch. tt Spader, 20 Johns. (N. Y.) 554; Abbott Lef. 607, 634. 3 34 EARLY STATUTES. § 1 8 on a judgment at law, be reached by proceedings before a magistrate in the nature of proceedings under the poor debtor acts of this commonwealth, and by the appointment of a receiver to take and dispose of the debtor's property." * § i8. Early statutes avoiding fraudulent conveyances. — The widely known statute, 13 Eliz. c. 5 (1570), perpetu- ated by 29 Eliz. c. 5 (1587), was not by any means, as many suppose, the first legislative attempt to formulate and declare the principles of the common law on this subject, or to repress covinous transfers by statutory enactment. By 3 Hen. VIL c. 4 (1487), "all deeds of gift of goods and chattels made or to be made of trust to the use of the person or persons that made the same deed of gift," are de- clared " void and of none effect." And the prior act of 50 Edw. III. c. 6 (1376), reads as follows: "Divers people .... do give their tenements and chattels to their friends, by collusion to have the profits at their will, and after do flee to the franchise of Westminster, of St. Martin-le-Grand of London, or other such privileged places, and there do live a great time with an high countenance of another man's goods and profits of the said tenements and chattels, till the said creditors shall be bound to take a small parcel of their debt, and release the remnant, it is ordained and as- sented, that if it be found that such gifts be so made by collusion, that the said creditors shall have execution of the said tenements and chattels as if no such gift had been made." The statute, 2 Rich. II., stat. 2, c. 3 (1379), con- tained provisions on the same subject, and from its recitals was evidently framed to repress the hypocritical religious zeal of fraudulent debtors,''^ and to furnish a method of sub- ' See Donovan v. Finn, i Hopkins' ments of their goods and lands to their Ch. (N. Y.) 59; S. C. 14 Am. Dec. 531, friends and others, and after withdraw especially the learned note at page 542. themselves, and flee into places of See § 33. holy church privileged, and there hold ^ " Item, in case of debt, where the them a long time, and take the profit debtors make feigned gifts and feoff- of their said lands and goods so given § 1 8 EARLY STATUTES. 3:) stituted service of process.^ The quaint provisions of these early statutes show conclusively that fraudulent conveyances are not entirely the offspring of our modern civilization. Fraud, which the common law so greatly abhorred, was so much practiced by debtors upon creditors in early times as to attract the attention of Parliament, and to constitute a subject of frequent legislation. " These statutes," said Lord Mansfield, " cannot receive too liberal a construction, or be too much extended in suppression of fraud." '^ It mav be observed in explanation of this early legislation against fraudulent transfers that these statutes were enacted to more clearly formulate the common law with a view to suppress voluntary conveyances and secret trusts made by debtors who had escaped arrest for debt, or avoided service of process by fleeing to sanctuaries or holy ground. The number of these conveyances, however, was comparatively small, and their appearance is said to have been spasmodic and premature, and " far in advance of the time for their normal natural development." Sanctuaries, or cities of refuge for fraudulent and absconded debtors, do not seem by fraud and collusion, whereby their come not .... judgment shall be given creditors have been long and yet be against them upon the principal for delayed of their debts and recovery, their default Execution shall be wrongfully and against good faith and made of their goods and lands, being reason ; it is ordained and established, out of the place privileged, as well, that That after that the said creditors have is to say, of those lands and goods so thereof brought their writs of debt, and given by collusion, as of any other out thereupon a capias awarded, and the of the same franchise, after that such sheriff shall make his return that he collusion or fraud be duly found in the hath not taken the said persons because same manner as that ought to have of such places privileged in which they been.ifno devise had been thereof made, be or shall be entered, then .... notwithstanding the same devise." another writ shall be granted .... ' By a Manx statute "all fraudulent that proclamation be made openly at assignments, or transfers of the debt- the gate of the place so privileged, or's goods or effects, shall be void, and where such persons be entered, by five of no effect against his just creditors." weeks continually, every week once, Mills' Statute Law of Isle of Manx, p. that the same person be at a certain 238. Corlett v. Radcliffe, 14 Moore's day before the King's justices, C. P. 1 21-132. and .... if the said persons called "■ Cadogan v. Kennett, Cowp. 434, 36 STATUTE 13 ELIZABETH. § 1 9 to have been wholly abolished until during the reign of James I., and one such sanctuary, the noted White-friars, which flourished in the reign of that monarch, has been immortalized by Sir Walter Scott in his " Fortunes of Nigel." ^ § 19. Statute 13 Eliz. c. 5, and its object. — This statute was passed for the protection of creditors, and is the great model which has been re-enacted in substance, or copied wherever Anglican law prevails. The leading object of the statute was to prevent those collusive transfers of the legal ownership which place the property of a man in- debted out of the reach of his bona fide creditors, and leave to him the beneficial enjoyment of that which ought in conscience to be open to their legal remedies.^ By its provisions all conveyances and dispositions of property, real or personal, made with the intention of defrauding creditors, are declared to be null and void as against the creditors.^ Mr. Reeves says that several acts had been formerly passed on the subject of fraudulent conveyances, "but none of them had gone so far" as the statutes 13 Eliz. and 27 Eliz. "to restrain these feigned gifts."** Mr. Justice Story observes that this statute (13 Eliz.) "has been universally adopted in America as the basis of our jurisprudence" upon the subject.^ It may be found en- acted almost intact in many of our statute-books, and is still popularly called "the statute of Elizabeth," just as statutory remedies for the trial of title to real property are known by the familiar title of ejectment. Professor Pome- rpysays:^ "The operative statute in England, which is also the basis of all legislation and judicial decision in the ' Essay by John Reynolds, Esq., on ^ See Drake v. Rice, 130 Mass. 410. Fraudulent Conveyances, etc., read be- ^ 5 Reeves' Hist. Eng. Law, pp. 244, fore New York State Bar Association, 245. Nov. i8, 1879. ^ Story's Eq. Jur. § 353. ^Roberts on Fraudulent Convey- 2 Pom. Eq. § 968. ances, p. 554. § 20 STATUTE 1 3 ELIZABETH. 2)7 United States, is the celebrated act 13 Eliz. c. 5." The general interpretation placed upon the statute of Elizabeth is well illustrated in a recent case in Maine,^ in which the court say : " We derived our law in relation to conveyances fraudulent as to creditors, from the stat. 13 Eliz. c. 5, which has been adopted here as common law.^ This statute, de- claring that conveyances made with intent to ' delay, hinder, or defraud creditors,' shall be ' deemed and taken (only as against creditors, etc.) to be clearly and utterly void, frus- trate, and of none effect,' has been invariably construed as plainly implying that they are valid as between the parties and their representatives ; ^ and can be avoided only by creditors on due proceedings;^ or their representatives, such as assignees in bankruptcy or insolvency of the grantor,^ and the executors or administrators of grantors since de- ceased whose estates have been declared insolvent.^ And notwithstanding the words ' utterly void,' etc., applied to such conveyances, they are not, even as to creditors, void but voidable;^ and all the courts concur in holding that if the fraudulent grantee convey the premises to a bo7ia fide purchaser for a valuable consideration before the creditor moves to impeach the original conveyance, the purchaser's title cannot be disturbed." ^ § 20. Its interpretation and construction. — " Notwithstand- ing," says Mr. Roberts, "these laws are greatly penal, the rule still holds of giving them an extended and liberal ex- position." ^ Statutes in suppression of deceit and covin ' Butler V. Moore, 73 Maine 154. « McLean v. Weeks, 65 Mc. 411. •^ Howe V. Ward, 4 Me. 196, 199. 418. ' Nichols V. Patten, 18 Me. 231 ; ' Andrews v. Marshall, 43 Me. 272. Andrews v. Marshall, 43 Me. 274; " Neal v. Williams. 18 Me. 391 ; Benjamin on Sales, 3d Am. ed., p. 476, HofTman v. Noble, 6 Met. (Mass.) 68 ; and note. Bradley v. Obear, 10 N. H. 477. ■* Miller v. Miller, 23 Me. 22 , Thomp- " Roberts on Fraudulent Convey- son V. Moore, 36 Me. 47 ; Stone v. ances, p. 542. In hits e-nim quae sunt Locke, 46 Me. 445. favor abilia anima, quamvis sunt * Freeland v. Freeland, 102 Mass. damnosa rebus, fiat aliquando extensio 47 5» 477- statuti. 38 STATUTE 13 ELIZABETH. § 20 should be equitably expounded, although they are highly penal.* In McCulloch v. Hutchinson,^ Sergeant, J., said : " The statutes on this subject are liberally expounded for the protection of creditors, and to meet the schemes and devices by which a fair exterior may be given to that which is in reality collusive."^ "The statute," says Allen, J., " has always had a liberal interpretation, for the prevention of frauds." ^ The law " loves honesty and fair dealing," and "so construes liberally statutes to suppress frauds,^ as far as they annul the fraudulent transaction."^ As early as Twyne's Case,' it was resolved that " because fraud and de- ceit abound in these days more than in former times, .... all statutes made against fraud should be liberally and bene- ficially expounded to suppress the fraud." It may be sug- gested that in construing statutes to prevent frauds, sup- press public wrongs, or effect a public good, — objects which the law favors, — there is a pressure toward a liberal inter- pretation ; but if they also provide a penalty, which is a thing odious to the law, there is another pressure toward the strict rule ; so the balance may be in equipoise, or the one scale or the other may preponderate, according to the special circumstances of the case, or the views of the par- ticular judge.^ ' Wimbish v. Tailbois, Plowd. Com. be construed strictly] ; most statutes 59. See Roy v. Bishop of Norwich, against frauds being in their conse- Hob. 75 ; Brice v. Myers, 5 Ohio 123. quences penal. But this difference is - 7 Watts (Pa.) 435. here to be taken : where the statute ^ See Cadogan v. Kennett, 2 Cowp. acts upon the offender and inflicts a 432 ; Gooch's Case, 5 Rep. 60 (3 Coke, penalty, as a pillory or a fine, it is then 121); Allen V. Rundle, 50 Conn. 31. to be taken strictly; dt(^ wheti the * Young V. Heermans, 66 N. Y. 383. statute acts upon the offense, by setting See Pennington v. Seal, 49 Miss. 525. aside the fraudulent transaction, here it ^ Citing Twyne's Case, 3 Rep. Sob ,is to be construed liberally." i Bl. (2 Coke, 212) ; Cadogan v. Kennett, Com. 88. See Carey v. Giles, 9 Ga. 2 Cowp. 432-434. 253 ; Gumming v. Fryer, Dudley (Ga.) • Bishop on the Written Laws, § 192. 182 ; Ellis v. Whitlock, 10 Mo. 781. "Statutes against frauds are to be " 3 Rep. 82a (2 Coke, 219). liberally and beneficially expounded. ^ Compare Taylor v. United States, This may seem a contradiction to the 3 How. 197 ; Fairbanks v. Antrim, 2 last rule [that penal statutes are to N. H. 105 ; Abbott v. Wood, 22 Me. §§21,22 STATUTE 27 ELIZABETH. TWYNE's CASE. 39 The provisions of the statute arc considered to be so plain that "he that runs may read."^ § 21. Statute 27 Eliz. c. 4. — This statute was enacted in favor of purchasers, and renders void as against subsequent purchasers of the same land all conveyances, etc., made with the intention of defeating them, or containing a power of revocation. Mr. May observes'^ that "in one respect, how- ever, both these statutes were moulded in strict conformity with the rules of the common law ; for if ' simplicity was the striking feature of the common law,'^ it was in an almost equal degree the chief feature of the statutes of Elizabeth, which are couched in very general terms, so as to include, and allow their application by the courts to any fraudulent contrivances to which the fertility of man's imagination might have resorted, as a means of eluding a more precise and inflexible law."* § 22. Twyne's Case.^ — This celebrated case is the credit- or's beacon-light in suits to annul covinous transfers. The decision was promulgated in 1601, thirty years after the en- actment of the statute 13 Eliz. c. 5. Evidently covinous 541; Sickles V. Sharp, 13 Johns. (N. bargain, and conveyance of lands, tene- Y.) 497 ; Van Valkenburgh v. Torrey, ments, goods, and chattels, or any of 7 Cow. (N. Y.) 252. In construction them, devised and contrived to delay, the courts will strive "to make atone- hinder, or defraud creditors, as against ment and peace among the words." such creditors, any pretence, color, ' See Savage v. Knight, 92 N. C. 497. feigned consideration, expressing of ^ May on Fraudulent Conveyances use, or any other matter or thing to the (London, 1871), p. 3. contrary. By the 27 Eliz.c 4, convey- ^ Citing Sugden on Powers, Intro- ances made to defraud subsequent pur- duction, p. I. chasers are declared void as to persons * As to the interpretation of these defrauded. In both statutes a penalty statutes as applied to /?0Ha fide pur- is provided for, which parlies to such chasers, see Bean v. Smith, 2 Mason conveyances, or such as are privy to or 272, per Story, J., reviewing Roberts knowing of such fraud, incur, who shall V. Anderson, 3 Johns. Ch. (N. Y.) 371, put in use or maintain, justify, or de- per Chancellor Kent. In Mulford v. fend, such conveyances as made bona Peterson, 35 N. J. Law 133, the court fide or upon good consideration." said : "The statute, 13 Eliz. c. 5, makes ' 3 Rep. 80 (2 Coke, 212) ; i Smith's utterly void, frustrate, and of no effect. Lea. Cas. 1 ; 18 Am. Law Reg. N. S. every feoffment, gift, grant, alienation, 137. 40 TWVNe's case. § 22 dispositions of property were at that time beginning to at- tract attention and become troublesome, for, as already shown, it was resolved that " because fraud and deceit abound in these days more than in former times, all statutes made against fraud should be liberally and beneficially ex- pounded to suppress the fraud," It appeared, in this case, that P. was indebted to T. in ^400, and was indebted also to C. in ^200. C. brought an action of debt against P., and pending the writ P., being possessed of goods and chat- tels of the value of ^300, secretly made a general deed of gift of all his goods and chattels, real and personal whatso- ever, to T., in satisfaction of his debt ; notwithstanding which P. continued in possession of the goods, some of which he sold again, sheared the sheep, and marked them with his own mark. Afterwards C. had judgment against P. and took out a fieri facias directed to the sheriff of Southampton, who, by force of the writ, came to levy upon the goods. Divers persons, by the command of T., resisted the sheriff by force, claiming the goods as the goods of T. by virtue of the gift ; and whether the gift, on the whole matter, was a good gift, or fraudulent and void within the 13 Eliz. c. 5, was the question. It was determined by the Lord Keeper of the Great Seal, by the Chief-Justices, and by the whole Court of Star Chamber that the gift was fraudulent within the statute. And as the signs and marks of fraud, it was said by the court : (i). That the gift was general, without exception of the donor's apparel, or of any- thing of necessity. (2). The donor continued in possession, and used the goods as his own ; and by means thereof traded with others, and defrauded and deceived them. (3). It was made in secret. (4). It was made pending the writ. (5). There was a trust between the parties ; for the donor possessed all, and used them as his proper goods ; and fraud is always apparelled and clad with a trust, and a trust is the cover of fraud. (6). The deed expressed that the gift was §22 twyne's case. 4 1 made honestly, truly and bona fide ; et claiistilcs iticoiisiieta semper inducunt suspicionem} This case is popularly re- garded as the fountain from which our modern law as to fraudulent conveyances flows, and the profession frequently refer to and draw from it in preference to selecting from the "myriad of precedents" and "single instances" which financial crises and the greed of dishonest debtors have since called into beino^. The leadino: doctrine taua^ht bv this case has been practically superseded in England, but it still holds a prominent place in our jurisprudence. This may be likened to the use of statutory real writs in parts of the United States after their complete abandonment in the mother country.^ The exact point decided in Twyne's Case is that a convey- ance by a debtor of tangible property, if actually fraudulent, is void as to existing creditors. The impression that the principles of this case are sufficient to meet the exigencies of our modern jurisprudence is clearly erroneous. Though Twyne's Case has been characterized as a " wonderful de- cision," and amazement has been expressed that the ques- tion involved should have come up for adjudication at such an early period, yet it must be conceded that the facts of the case were too restricted to enable the court to furnish rules sufficient to answer all the varying imperative de- mands of creditors at the present day. Since this great ' See Roberts on Fraudulent Con- gift is general ; (2) the donor continued veyances (ed. 1845), pp. 544, 545. Lord in possession and used them as his Eidon, in Kidd v. Rawlinson, 2 Bos. & own ; (3) it was made pending the P. 59, cited with approval from Bui- writ, and it is not within the proviso, ler's Nisi Prius, where the following for though it is made on a good con- synopsis of Twyne's Case may be sideration, yet it is not bona fide. But found: "A., being indebted to B. in yet the donor continuing in possession. ;£400, and to C. in ;^20o, C. brings is not in all cases a mark of fraud ; as debt, and hanging the w-rit, A. makes where a donee lends his donor money a secret conveyance of all his goods to buy goods, and at the same time and chattels to B. in satisfaction of his takes a bill of sale of them for securing debt, but continues in possession, and the money." Bull. Nisi Prius, p. sells some, and sets his mark on other 258. sheep ; and it was holden to be fraudu- ^ Sec Sedg. & Wait on Trial of Title lent within this act : (i) because the to Land, 2d ed., §§ 72-76, c. IL 42 TWYNE S CASE. § 22 decision was rendered its principles have been extended, as we shall presently see, to avoid covinous conveyances not only as to existing creditors, but in certain cases as to sub- sequent creditors/ and even as to contingent subsequent creditors;^ so it has been held to embrace creditors who were suing the debtor for tort,^ as for slander,^ or assault and battery,^ or the misapplication of trust moneys more than fifteen years before the conveyance.^ The statutes " are not limited in their operation by any Procrustean formula." '^ So the doctrine of the case has been enlarged to cover transfers of intangible rights and choses in action, such as stocks,^ transfer of an annuity,^ of a policy of life insurance,^" of an equity of redemption, ^-^ of certificates of stock,'^ of a legacy,^'^ insurance premiums,-^* and all mere choses in action. ^^ Even an allowance for support to a wife under a judgment for divorce may be reached by her cred- itors.^^ Still Twyne's Case has taken deep hold in our law. 1 See Laughton v. Harden,- 68 Me. 212 ; Day v. Cooley, Ii8 Mass. 527. "^ See Jackson v. Seward, 5 Cow. (N. Y.) 71 ; Pennington v. Seal, 49 Miss. 525; Hoffman v. Junk, 51 Wis. 614. See Chap. VI. ^ See Post V. Stiger, 29 N. J. Eq. 558; Weir V. Day, 57 Iowa 87 ; Lang- ford V. Fly, 7 Hum. (Tenn.) 585 ; Walradt v. Brown, 6 111. 397 ; Gebhart V. Merfeld, 51 Md. 325 ; Cooke v. Cooke, 43 Md. 522 ; Fox v. Hills, i Conn. 295. * Jackson v. Myers, 18 Johns. (N. Y.) 425 ; Cooke v. Cooke, 43 Md. 531 ; Wilcox V. Fitch, 20 Johns. (N. Y.) 472. ^ Ford V. Johnston, 7 Hun (N. Y.) 567 ; Slater v. Sherman, 5 Bush (Ky.) 206. * Strong V. Strong, 18 Beav. 408. ' Beckwith v. Burrough, 14 R. I. 368. * Bayard v. Hoffman, 4 Johns. Ch, (N. Y.) 450, per Chancellor Kent ; Hadden v. Spader, 20 Johns. (N. Y.) 554; Weed V. Pierce, 9 Cow. (N. Y.) 723, per Chancellor Walworth ; Ed- meston v. Lyde, i Paige (N. Y.) 641 ; Beckwith v. Burrough, 14 R. I. 366. " Norcutt V. Dodd, i Cr. & Ph. 100. '" Stokoe V. Cowan, 29 Beav. 637 ; Skarf V. Soulby, i Macn. & G. 364 ; /;/ re Trustee Relief Act, 5 De G. & S. I ; Burton v. Farinholt, 86 N. C. 260 ; ^tna Nat. Bank v. Manhattan Life Ins. Co., 24 Fed. Rep. 769. '' Sims V. Gaines, 64 Ala. 397. '^ Scott V. Indianapolis Wagon Works, 48 Ind. 78. '3 Bigelow V. Ayrault, 46 Barb. (N. Y.) 143. '•» ^tna Nat. Bank v. Uhited States Life Ins. Co., 24 Fed. Rep. 770. '^ Greenwood v. Brodhead, 8 Barb. (N. Y.) 597 ; Drake v. Rice, 130 Mass. 410. '* Stevenson v. Stevenson, 34 Hun (N.Y.) 157. §22 twyne's case. 43 and the main principles that control the determination of the different phases of fraudulent conveyances can gener- ally be traced to this parent root. That the case should at this late day be so widely cited and relied upon is conclu- sive proof that it embodies a forcible exposition of sound and necessary rules affecting covinous transfers, which neither lapse of time nor change in circumstances can supersede. The case attains the same relative prominence as a precedent in the authorities that is accorded to the statute 13 Eliz. c. 5, as a model for modern legislative enactments. It seems indeed strange that so many evi- dences and badges of fraud, common with us now, should have concentrated in such an early case, and should have been so swiftly and skilfully detected and labelled. If the facts of this case are not partially fictitious, and there is little reason to credit the intimation that they are, then it follows that the methods and devices of the fraudulent debtar have undergone few alterations since this remarka- ble decision was promulgated. CHAPTER 11. PROPERTY SUSCEPTIBLE OF FRAUDULENT ALIENATION. ASSETS AVAILABLE TO CREDITORS. § 23. What interests may be reached. 24. Tangible property and intangible interests. 25. English statutes and authorities. 26. Recovering improvements— Rents and profits. 27. Rule as to crops. 28. Property substituted or mingled. 29. Estates in remainder and rever- sion. 30. Equitable interests. 31. Equity of redemption. 32. Reservations. 33. Choses in action. 34. Claims for pure torts — Damages. 35. Seats in stock exchanges. 36. Trade-marks. 37. Reaching book royalties. ,38. 39- 40. 41. 42. 43- 44. 45- 46. 47. 49. 50. $oa Patent rights. Powers, when assets for creditors. Statutory change as to powers in New York. Gifts of small value. Debts forgiven or cancelled. Enforcing promises of third par- ties. Tracing the fund. Income of trust estate. Rule as to exempt property. Fraudulent purchases of exempt property. Covinous alienations of exemp- tions. Conflicting cases. Abandoned exemptions. . What cannot be reached. § 23. What interests may be reached. — Having considered the early statutes and authorities relating to covinous alien- ations/ and taken a general view of the subject, it becomes necessary next to discuss the various classes of property, and the rights and equitable interests of debtors, which may constitute the subject-matter of fraudulent alienations, or which can be reached by creditors' bills or other appro- priate remedies, or through the instrumentality of a re- ceiver, liquidator, or assignee. We have already seen that in general one of the requisites of a fraudulent transfer is that the property or thing disposed of by the debtor must be of some value, out of which the creditor might have realized the whole or a portion of his claim. ^ Hence, where a debtor cancelled upon his books, without consider- See §§ 19-22. - See §15. §23 WHAT INTERESTS MAY BE REACHED, 45 ation, an old account against one who was insolvent, it was said that the transaction did not amount to a disposition of property with intent to defraud creditors.^ The foundation of this ruling is self-evident. The court will not interest itself in any attempt to extend relief to a creditor unless its process and judgment can be rendered practically ef- fectual, and as a result of its action a substantial benefit can be conferred upon the creditor. If the property trans- ferred and sought to be reached and subjected to the pro- cess of the court is not liable to execution, ~ or if the debtor has no beneficial interest in it, the court will not inquire into the modes or motives of its disposition. Such an in- quiry w^ould be futile. In Hamburger v. Grant, '^ it appeared that the amount of the indebtedness to the complainant was three dollars and fifty cents. In an action to cancel a fraudulent conveyance, Kelly, J., observed : " The interposi- tion of a court of equity ought not to be asked to set aside a deed on the ground of fraud for such a small sum of money.""* The value of the assigned property is always important as bearing upon the question of fraud. '' It is difficult to understand how a transfer of property which is of no value,*' or in which the creditor has no substantial in- terest,''^ can be considered as in fraud of creditors.*^ In New ' Hoyt V. Godfrey, 88 N. Y. 669. Walker. 7 How. Pr. (N. Y.) 46; Douw ^ See § 46. V. Shelden, 2 Paige (N. Y.) 323 ; Sinets » 8 Oregon 182. v. Williams, 4 Paige (N. Y.) 364; " Compare Ithaca Gas Light Co. v. Thomas v. McEwen, 11 Paige (N. Y.) Treman, 93 N. Y. 660; Chapman v. 131), but the statute and practice have Banker & Tradesman Pub. Co., 128 since been changed and equitable ac- Mass. 478; Smith v. Williams, 116 tions involving less than $100 will now- Mass. 510, 513. be entertained in that State. Marsh v. '" By the former chancery practice in Benson, 34 N. Y. 358 ; Braman v. John- New York if the amount or value in son, 26 How. Pr. (N. Y.) 27. dispute did not exceed $100 the de- '' Stacy v. Deshaw, 7 Hun (N. Y.) fendant could, under the statute and 451. See §41. rule, raise the objection that the sum ' Youmans v. Boomhower, 3 T. & C. in controversy was beneath the dignity (N. Y.) 21. of the court, and thus secure a dis- " In Garrison v. Monaghan. 33 Pa. missal of the bill (see Shepard v. St. 234. the court said : " The deeds by 46 WHAT INTERESTS MAY BE REACHED. § 23 York it is provided by statute that insurance may be placed upon a husband's life for the sole benefit of his wife free from creditors.^ Policies of this kind are held, in a general sense, not to be assignable by the wife.^ In a case, how- ever, where a wife assigned such a policy to her children, and her creditors sought to avoid the transfer, it was held that they were not in a position to do so, but the transfer was to be regarded in the light of a disposition of property exempt from execution, concerning which the creditor had no right to complain.^ A married man, we may here ob- which these premises passed to the de- fendant were clearly fraudulent and void, and the sheriff's sale, therefore, vested the real title to them in the pur- chaser and his assigns. It is, therefore, his land, and as he takes it freed from all judgments and liens, except the re- duced ground-rent of $50, no one claim- ing under the defendant in the execu- tion can pretend to hold it against him upon the ground that it has or had no value. If I have a title to real or personal property, no person can withhold it from me upon the simple allegation that it is of no value, and then ask to have that question submitted to a jury. The case of Fassit v. Phillips, 4 Whart. (Pa.) 399, which proceeded on this erroneous principle, has been repeatedly overruled, after giving rise to numberless lawsuits." It is appar- ently regarded as a most dangerous in- novation upon the well-settled principle that the owner of real or personal estate, who is entitled to its posses- sion, shall enjoy it himself, and that a stranger will not be heard to assert that the property is worth nothing when called upon to restore it to the true owner. This may seem to conflict with the text. While the argument of the learned court as to the right of an owner to recover his property, even though it is without pecuniary value, is sound, yet, technically speaking, a cred- itor cannot be regarded as the owner of his debtor's property. Especially in cases where the creditor appeals to the equity side of the court, and seeks a discovery of assets, the machinery of justice ought not to be set in motion to reach property of trivial or nominal value. It is not easy to see how prop- erty of this character can be the subject of a fraudulent design. See French v. Holmes, 67 Me. 190. Hopkirk v. Ran- dolph, 2 Brock. 140. ' Laws of New York, 1840, c. 80. * Eadie v. Slimmon, 26 N. Y. 9 ; Barry v. Equitable Life Assurance So- ciety, 59 N. Y. 587. ' Smillie v. Quinn, 25 Hun (N. Y.) 332. See § 46. Insurance placed upon his life by an insolvent for the benefit of his wife, is not necessarily in fraud of creditors. Thompson v. Cundiff, 1 1 Bush (Ky.) 567. Compare Nippes' Appeal, 75 Pa. St. 478 ; Gould v. Emer- son, 99 Mass. 154; Durian v. Central Verein, 7 Daly (N. Y.) 171 ; Leonard v. Clinton, 26 Hun (N. Y.) 290. And in order to maintain an action in behalf of creditors of a deceased person against a life insurance company to recover premiums alleged to have been fraudu- lently paid by the decedent while in- solvent, for the benefit of his family, it must be alleged and proved that the § 24 TANGIBLE PROPERTY. 47 serve, has a right to devote a reasonable portion of his earnings to Hfe insurance for the benefit of his family.^ It has been said to be a well-settled rule that a creditor's bill, filed for the purpose of removing a fraudulent obstruction, must show that such removal will enable the judgment to attach upon the property ; ^ hence a valid general assign- ment will supplant a creditor's proceedings to cancel an in- strument^ such as a mortgage'* if the assignee and not the creditor would be the party benefited by a successful issue in the suit. § 24. Tangible property and intangible interests. — What interests then can be reached by creditors ? Manifestly all tangible property, whether real or personal, which would have been subject to levy and sale under execution, is sus- ceptible of fraudulent alienation, and may be reclaimed and recovered by the creditor where it has been transferred by the debtor with a fraudulent mtention. The line is not drawn here, however. The manifest tendency of the authorities is to reclaim every species of the debtor's prop- erty, prospective or contingent, for the creditor. As has been shown, transfers of intangrible interests^ and riirhts in action, stocks,^ annuities,'' life insurance policies,^ book company participated in the fraud, v. Kearney, 2 Barb. Ch. (N. Y.) 533 ; Washington Central Bank v. Hume, Waggoner v. Speck, 3 Ohio 293 ; nor 128 U. S. 195. can they enforce a moral claim which ' Washington Central Bank v. Hume, a debtor may have upon the conscience 128 U.S. 195. of an executor. Sparks v. De La '^ Spring V. Short, 90 N. Y. 545. See Guerra, 18 Gal. 676. Geery v. Geery, 63 N. Y. 252 ; South- " Bayard v. HofTman, 4 Johns. Ch. ard V. Benner, 72 N. Y. 424. (N. Y.) 450; Weed v. Pierce. 9 Cow. ^ Childs V. Kendall, 17 Weekly Dig. (N. Y.) 723; Edmeston v. Lyde, i (N. Y.) 546. Paige (N. Y.) 641. ^ Spring V. Short, 12 Weekly Dig. ' Norcutt v. Dodd, i Craig & Ph. (N. Y.) 360 ; affi'd 90 N. Y. 545. But 100. see Leonard v. Clinton, 26 Hun (N. Y.) ' Burton v. Farinholt, 86 N. C. 260 ; 288. Stokoe V. Cowan, 29 Beav. 637 ; Jcnkyn 'A bare possession or possibility v. Vaughan, 3 Drew. 419; Anthracite cannot be reached by creditors : Smith Ins. Co. v. Sears, 109 Mass. 3S3. 48 ENGLISH STATUTES AND AUTHORITIES. § 25 royalties/ patent rights,^ property of imprisoned felons,'^ legacies,"* and choses in action generally,^ may be reached. It has been observed^ that the principle toward which the hiohest courts in England and in all the States are more or less rapidly working is : " That the entire property of which a debtor is the real or beneficial owner, constitutes a fund which is primarily applicable, to the fullest extent of its en- tire value, to the payment of its owner's debts. And the courts will not allow any of that value to be withdrawn from such primary application, if they can find any legal or equitable ground on which to prevent such withdrawal." Creditors should remember that whether an equitable in- terest in real estate is liable to be appropriated by legal pro- cess to the payment of the debts of the beneficiary is to be determined by the local law where the property has its situs? § 25. English statutes and authorities. — Mr. May, an Eng- lish writer upon this general subject of fraudulent aliena- tions, speaking of the kinds of property or interests which may be reached by creditors, says :^ "The preamble of the 13 Eliz. c, 5, declares it to be made 'for the avoiding and abolishing of feigned, covinous, and fraudulent feoffments, gifts,' etc., 'as well of lands and tenements as of goods and chattels,' madeto delay or defraud creditors; and it seems that under this description are included all kinds of prop- erty, real and personal, legal and equitable,^ vested, rever- 1 Lord V. Harte, 118 Mass. 271. 21 N. J. Eq. 364. But compare Stew- ^ Barnes v. Morgan, 3 Hun (N, Y.) art v. English, 6 Ind. 176; Wallace v. 704. Lawyer, 54 Ind. 501 ; Grogan v. Cooke, ''■ Matter of Nerac, 35 Cal. 392. 2 Ball & B. 233 ; Nantes v. Corrock, 9 •* Bigelow V. Ayrault, 46 Barb. (N. Y.) Ves. 1 88. 143. * Essay by John Reynolds, Esq., ^ Drake v. Rice, 130 Mass. 410; z\\t^ supra. Pendleton v. Perkins, 49 Mo. 565; 'Spindle v. Shreve, iii U. S. 542; Powell V. Howell, 63 N. C. 283 ; Ed- Nichols v. Levy, 5 Wall. 433. See meston v. Lyde, i Paige (N. Y.) 637 ; Nichols v. Eaton, 91 U. S. 716-729, Stinson v. Williams, 35 Ga. 170; Rog- " May on Fraudulent Conveyances, ers V. Jones, i Neb. 417 ; City of New- p. 17. ark V. Funk, 15 O. S. 462; Hitt v. " Ashfield v. Ashfield, 2 Vern. Ormsbee, 14 111. 233; Tantum v. Green, 287. §26 IMPROVEMENTS RENTS AND PROFITS. 49 sionaiy,^ or contingent,^ which are subject to the payment of debts, or liable to be taken in execution at the time of the fraudulent conveyance."^ Generally speaking, the same general principle and rule of interpretation may be deduced from the American authorities.'* § 26. Recovering improvements — Rents and profits.— An extreme illustration of the disposition of the courts to favor creditors is the familiar and salutary rule that improvements placed by a debtor upon real property of another, acting in concert with him to defraud creditors, can be followed, and the realty charged in favor of creditors of the debtor with the value of such improvements.^ In I sham v. Schafer,® Johnson, J., said : " Where no debt has been created be- tween the parties to the fraudulent transaction, and the personal property of the judgment-debtor has merged in, and become part of the real estate of another in this way, the appropriate, if not the only remedy is to fasten the judgment upon the real estate to the extent of the judg- ment-debtor's property thus made part of the realty." In ' Edev. Knowles, 2 Y. &C. N. R. 172. shares in public funds and public com-' - French v. French, 6 De G., M. & G. panies [i and 2 Vict. c. 1 10, §§ 14 and 95. 15 ; Warden v, Jones, 2 De G. & J. 76 ; ^ Sims V. Thomas, 12 Adol. &. El. Goldsmith v. Russell, 5 De G., M. & G. 536; Turnley v. Hooper, 2 Jur. (N. S.) 547], are to be considered as 'goods 1081. and chattels' within the meaning of '' Mr. May further observes: "By i this section [13 Eliz. c. 5, § i]." May and 2 Vict. c. no, many kinds of proper- on Fraudulent Conveyances, p. 21. ty have been made available to creditors " See Rose v. Brown, 1 1 W. Va. 137 ; for the payment of debts. So that now Heck v. Fisher, 78 Ky. 644 ; Robinson copyhold land [i and 2 Vict. c. no, s. v. Huffman, 15 B. Mon. (Ky.) 82; II, and see Bott v. Smith, 21 Beav. Athey v. Knotts, 6 B. Mon. (Ky.) 29; 511], money and banknotes [ibid. § 12, Sexton v. Wheaton, 8 Wheat. 229; Barrack v. McCulloch, 3 K. & J. iio; Kirby v. Bruns, 45 Mo. 234; Lockhard Collingridge v. Paxton, 11 C. B. 683] v. Bcckley, 10 W. Va. 87; Burt v. (whether of the Bank of England or of Timmons, 29 W. Va. 453; Dietz v. any other bank or bankers), and any Atwood, 19 Brad. (111.) 99; Isham v. cheques, bills of exchange, promissory Schafer, 60 Barb. (N. Y.) 317 ; but notes, bonds, specialties, or other se- compare Webster v. Hildreth, 33 Vi. curities for money [Spirett v. Willows, 457 ; Caswell v. Hill, 47 N. H. 407. II Jur. (N. S.) 70], and stock and "^ 60 Barb. (N. Y.j 330. 4 50 IMPROVEMENTS — RENTS AND PROFITS. § 26 a New Hampshire case it was held that a guardian could not purchase property and place it on the land of his ward to the injury of his creditors ; ^ but the property was not attached to the freehold, and the doctrine may well be doubted whether an infant's land can be subjected to the claims of creditors against a debtor who has placed improve- ments on it.^ In Lynde v. McGregor,^ where it appeared that an insolvent husband had made extensive expenditures upon lands belonging to his wife, and had increased the value of the estate. Gray, J., observed : " The amount of such increase in value, for which no consideration has been paid by the wife, and which has been added to her estate by the husband in fraud of his creditors, in equity belongs to them, and may be made a charge upon the land for their benefit." Temporary or perishable improvements,* which do not add to the permanent value of the land, cannot ordi- narily be reached. It is certainly reasonable, and it seems to be clear, that rents and profits can be recovered from a fraudulent grantee who holds the property under a secret trust for the debtor.^ A creditor, by filing a bill after the return of an execution unsatisfied, may also obtain a lien upon the rents and prof- its of the real estate of his judgment-debtor, which accrue during the fifteen months allowed by law to redeem the premises from a sale by the sheriff on execution, and satis- faction of the judgment may be decreed out of such rents and profits. The chancellor said : " Upon what principles of justice or equity can the debtor claim to retain the whole ' Tenney v. Evans, 14 N. H. 343; S. ^ Marshall v. Croom, 60 Ala. 121. C. 40 Am. Dec. 194. See Kipp v. Hanna, 2 Bland's Ch. - Mathes v. Dobschuetz, 72 111. 438. (Mel.) 26; Robinson v. Stewart, 10 N. Compare Washburn V. Sproat, 16 Mass. Y. 190. Compare Edwards v. Ent- 449. wisle, 2 Mackey (D. C.) 43 ; Hadley * 13 Allen (Mass.) 182. v. Morrison, 39 111. 392 ; Thompson v. ^ See Sedgwick & Wait on Trial of Bickford, 19 Minn. 17. Title to Land, 2d ed., § 702 ; Dick v. Hamilton, i Deady 322. §§ 27, 28 RULE AS TO CROPS. 5 1 rents and profits of a large real estate, for the period of fif- teen months, when such rents and profits are necessary to pay the debts whicli he honestly owes to his creditors?"^ In Loos V. Wilkinson,^ Earl, J., used these words : " These debtors could no more giv^e away the rents and })rofits of their real estate than they could give away the real estate itself."^ § 27. Rule as to crops. — The same general principle per- vades the cases as to growing crops. Thus, in Fury v. Strohecker,* it was decided that a judgment-creditor was entitled to resort to crops grown upon the land of his debtor after it had been transferred in fraud of his rights, so far at least as the fraudulent grantor retained an interest in them by an understanding with the grantee ; and where there was reason to suppose such collusion existed all doubts should be solved in the creditor's favor.^ And in Massa- chusetts it was decided that if a debtor conveyed land tu his wife, with a design to defraud his creditors, and the wife participated in the intent, hay cut on the land was liable to be taken on execution to satisfy the claim of a creditor of the husband, upon a debt contracted subsequent to the conveyance.^ § 28. Property substituted or mingled. — Property cannot be placed beyond the reach of creditors by a chano;e in its form or character. It may be traced and identitied. In McClosky v. Stewart,'' the creditor sought to reach cer- tain machinery, tools, etc., constituting the "plant" of a 1 Famham v. Campbell, 10 Paige (N. ■• 44 Mich, 337. Y.) 598-601. See Campbell v. Genet, ' Compare Pierce v. Hill, 35 Mich. 2 Hilt. (N. Y.) 296 ; Dow v. Platner, 201 ; Peters v. Light, 76 Pa. St. 289 ;. l6 N. Y. 565; Schermerhorn v. Mer- Jones v. Bryant, 13 N. H. 53; Garbutt rill, I Barb. (N. Y.) 517; Strong v. v. Smith, 40 Barb. (N. Y.) 22. Skinner, 4 Barb. (N. Y.) 558. >= Dodd v. Adams, 125 Miss. ■^ no N. Y. 214. 398. " But compare Robinson v. Stewart, ' 63 How. Pr. (N. Y.) 142. Sec Leh- 10 N. Y. 189; Collumb v. Read, 24 N. man v. Kellv, 68 ,\la. 192. Y. 505. 0^ ESTATES IN REMAINDER AND REVERSION. § 29 business fraudulently transferred, and the defendant at- tempted to limit the recovery to such property as was in existence at the time of the transfer. The court declined to apply this rule to the new tools and machinery which had been purchased for the purpose of supplying the waste incident to ordinary wear and tear. The parties in posses- sion having had the benefit of the machinery and tools, and having partially worn them out in the business, might be said to have had the benefit of the waste, and there was no reason in law or in equity why the repairs and new tools, which were rendered necessary to supply such waste, should not follow the property itself.-' § 29. Estates in remainder and reversion. — A vested re- mainder in fee is liable for debts in the same way as an estate vested in possession. Though the time of possession is dependent upon the termination of a life estate, this only lessens its value for the time being. The liability of the estate to creditors is not in the least affected. In Nichols v. Levy,^ Swayne, J., delivering the opinion of the United States Supreme Court, said : " It is a settled rule of law that the beneficial interests of the cestui que trust, whatever it may be, is liable for the payment of his debts. It cannot be so fenced about by inhibitions and restrictions as to secure to it the inconsistent characteristics of right and en- joyment to the beneficiary and immunity from his creditors. A condition precedent, that the provision shall not vest until his debts are paid, and a condition subsequent, that it ' It was further decided in this same identified and separated it is difficult case that where a fraudulent transferee to see why this harsh rule should be mingled his own property with that applied. Compare Hooley v. Gieve, which he had fraudulently received, he affirmed 82 N. Y, 625, on opinions in would not be allowed to claim that the New York Common Pleas ; S. C. 9 property so mingled should subse- Abb. N. C. (N. Y.) 8, 41, and note of quently be assorted and set aside for the editor; Dow v. Berry, 17 Fed. Rep. the payment of the creditors. The in- 121 ; Smith v. Sanborn, 6 Gray (Mass.) ference seems to be that he would lose 134; The " Idaho," 93 U. S. 575. it all. If the property could be readily "^ 5 Wall. 433. § 2,0 EQUITABLE INTERESTS. 53 shall be divested and forfeited by his insolvency, wilh a limitation over to another person, are valid, and the law will give them full effect. Beyond this, protection from the claims of creditors is not allowed to go."^ In French v. French,^ it was held that a contingent reversionary inter- est is within the statute,^ § 30. Equitable interests. — Equitable interests constitute a frequent subject-matter of creditors' suits. In Sanford v. Lackland,^ the learned Dillon, J., held that if property was given to trustees to hold for A. until he reached the age of twenty-six years, when it was to be paid over to him, and A. became bankrupt before he arrived at twenty-six, his assignee in bankruptcy was entitled to the property. Chief- Justice Gray, in Sparhawk v. Cloon,^ says, that " the equit- able estate for life is alienable by, and liable in equity to the debts of the cestui que trust, and that this quality is so inseparable from the estate, that no provision, however ex- press, which does not operate as a cesser, or limitation of the estate itself, can protect it from his debts." "^ We shall presently consider the cases, which must be distinguished from the ones just cited, in which it is held that the founder of a trust may secure the enjoyment of it to other persons, the objects of his bounty, by providing that it shall not be ' Citing- Graves v. Dolphin, i Simon ' 125 Mass. 266. 66; Mebane v. Mebane, 4 Ired. Eq. * See Brandon v. Robinson, 18 Ves. (N. C.) 131; Bank v. Forney, 2 Ired. 429; S. C. i Rose 197; Rochford v. Eq. (N.C.) i8i-i84;Snowdonv. Dales, Hackman, 9 Hare 475 ; 2 Spence's Eq. 6 Simon 524; Foley v. Burnell, i Bro. Jur. 89, and cases cited; Tillinghast v. C. C. 274; Brandon v. Robinson, 18 Bradford, 5 R. I. 205; Mebane v. Me- Ves. 429; Piercy v. Roberts, i Mylne bane, 4 Ired. Eq. (N, C.) 131 ; Heath & K. 4 ; Dick v. Pitchford, i Dev. & v. Bishop, 4 Rich. Eq. (S. C.) 46 ; Bat. (N. C.) Eq. 484. Smith v. Moore, 37 Ala. 327 ; Mcllvaine = 6 De G., M. & G. 95. See Neale v. Smith, 42 Mo. 45 ; Sanford v. Lack- V. Day, 28 L. J. Ch. 45. land, 2 Dillon 6 ; Walworth, C, in * A contingent remainder is not sub- Hallett v. Thompson, 5 Paige (N. Y.) ject to execution. Jackson v. Middle- 583, 585 ; Comstock, J., in Bramhall ton, 52 Barb. (N. Y.) 9; Watson v. v. Ferris, 14 N. Y. 41, 44; Swayne. Dodd, 68 N. C. 528. J., in Nichols v. Levy. 5 Wall. 433. •* 2 Dillon 6. 441- 54 EQUITY OF REDEMPTION. RESERVATIONS. §§ 3 1, 32 alienable by them, or be subject to be taken by their credit- ors, and that his intentions in this regard will, in certain cases, be respected by the courts.^ A creditor's bill, through the instrumentality of a re- ceiver, will reach the interest of the debtor in his deceased father's estate ; ^ so an inchoate interest such as a tenancy by the courtesy,^ and a widow's dower,^ may be reached by the aid of a court of equity. § 31. Equity of redemption. — In a controversy which arose in Alabama,^ it was said that, aside from constitu- tional and statutory exemptions, a debtor could not own any property or interest in property which could not be reached and subjected to the payment of his debts, and that an equity of redemption was property, and was a valu- able right, capable of being subjected to the payment of debts, in courts of law and in equity ; and hence a transac- tion by which an embarrassed debtor concealed the exist- ence of such an interest from his creditors must necessarily hinder and delay them.^ § 32. Reservations. — Debtors often make reservations in conveyances for their own benefit, but such subterfuges are idle so far as subserving the debtors' personal interest is concerned.''' In Grouse v. Frothingham,^ the debtor re- served the right to use and occupy a part of the premises ' See Sparhawk v. Cloon, 125 Mass. 643 ; Beamish v. Hoyt, 2 Robt. (N. Y.) 266 ; White v. White, 30 Vt. 338, 344 ; 307. Arnwine v. Carroll, 8 N. J. Eq. 620, * Tompkins v. Fonda, 4 Paige (N. Y.) 625; Holdship V. Patterson, 7 Watts 447; Payne v. Becker, 87 N. Y. 157. (Pa.) 547 ; Brown v. Williamson, 36 ^ Sims v. Gaines, 64 Ala. 393. Pa. St. 338 ; Rife v. Geyer, 95 Pa. St. ^ See Chautauque County Bank v. 393; Nichols V. Eaton, 91 U. S. 716, Risley, 19 N. Y. 369; Campbell v. 727-729 ; Hyde v. Woods, 94 U. S. 523, Fish, 8 Daly (N. Y.) 1&2. 526; Broadway Bank v. Adams, 133 ' Young v. Heermans, 66 N. Y. 382, Mass. 171 ; Spindle v. Shreve, 9 Biss. and cases cited; Todd v. Monell, 19 199; s. C. 4 Fed. Rep. 136. See §§ 39, 40. Hun (N. Y.) 362. ■^ McArthur v. Hoysradt, 11 Paige "27 Hun (N. Y.) 125; reversed, (N. Y.) 495. 97 N. Y. 105. See Elias v. Farley, 2 3 Ellsworth V. Cook, 8 Paige (N. Y.) Abb. Ct. App. Dec. (N. Y.) 11. § 33 CIIOSES IN ACTION. 55 conveyed for three years without rent, and it was shown that such use and occupation were worth $750. The court held that if the reservation was effectual to vest in the debtor a legal interest in the premises to the extent stated, his judgment-creditors could reach it. And if the debtor merely had a parol lease for three years, which was void by the statute of frauds, the consideration being fully paid, equity would decree a specific performance of it, and thus the debtor would have an equitable interest of some value which the creditors might reach. The court of last resort, however, reversed the decision on the insufficiency of the evidence.* § 33. Choses in action, — While the books and cases are full of general expressions to the effect that intangible in- terests fraudulently alienated by the debtor may be re- claimed by the creditor, yet the rule that choses in action can be reached by creditors and subjected to the payment of debts, has not been established without a struggle, and is not even now universal in its operation.'^ When we con- sider that vast fortunes may be concentrated in this species of property, it manifestly becomes of paramount import- ance to a creditor to know whether his process will cover it. Cases can be found holding that even equity is ordi- narily powerless to require the debtor to apply choses in action in liquidation of debts,^ but it seems to us that the better authority by far is to the effect that such interests can be reached by creditors,'* and many cases, more or less ' Crouse v. Frothingham, 97 N. Y. Lawyer, 54 Ind. 501 ; Stewart v. Eng- 105. lish, 6 Ind. 176 ; Watkins v. Dorsett, i •' See § 17; Greene v. Keene, 14 R. Bland's Ch. (Md.) 533. See (irecne I. 388. V. Keene. 14 R. I. 388. ^ Grogan v. Cooke, 2 Ball & B. '•Drake v. Rice, 130 Mass. 410; 233; Nantes v. Corrock, 9 Ves. 188; Bayard v. Hoffman, 4 Johns. Ch. (N. Rider v. Kidder, 10 Ves. 368 ; McCar- Y.j 450 ; Powell v. Howell. 63 N. C. thy V. Goold, i Ball & B. 387 ; Dundas 283 ; Abbott v. Tenney, 18 N. H. 109 ; V. Dutens, i Ves. Jr. 196 ; McFerran Sargent v. Salmond. 27 Me. 539 ; Stin- V. Jones, 2 Litt. (Ky.) 219; Green v. son v. Williams, 35 Ga. 170; Rogers Tantum, 19 N. J. Eq. 105 ; Wallace v, v. Jones, i Neb. 417; Pendleton v. 56 CLAIMS FOR PURE TORTS. § 34 founded upon statutory provisions, upholding the creditors' right to reach this class of assets might be cited.^ Thus creditors may reach the proceeds of a fraudulently trans- ferred insurance policy.^ The principle running through these cases is highly important, for under it the creditor may impound money of the debtor in the hands of a sher- iff,^ money earned but not yet due,'' money due to heirs or distributees in the hands of personal representatives,^ and dower before admeasurement.^ And creditors of a corpo- ration may sustain a bill to compel stockholders to pay their subscriptions.^ § 34. Claims for pure torts— Damages. — The mere right of action of a judgment-debtor for a personal tort, as for assault and battery, slander, or malicious prosecution, can- not, in the nature of things, be reached by a complainant in a judgment-creditor's action.^ Nor will a claim of this kind pass to a receiver under the usual assignment by the Perkins, 49 Mo. 565 ; Ednieston v. Lyde, i Paige (N. Y.) 637 ; Hadden v. Spader, 20 Johns. (N. Y.) 554 ; ^tna Nat. Bank v. Manhattan Life Ins. Co., 24 Fed. Rep. 769. ^ City of Newark v. Funk, 15 Ohio St. 462 ; Bryans v. Taylor, Wright (Ohio) 245; Davis v. Sharron, 15 B. Mon. (Ky.) 64 ; Hitt v. Ormsbee, 14 111. 233 ; Burnes v. Cade, 10 Bush (Ky.) 251 ; Tantum v. Green, 21 N, J. Eq. 364. " The words ' chose in ac- tion ' might be broad enough to include even actions for damages in torts, were it not that they probably have never been regarded strictly as property ; nor as assignable." Ten Broeck v. Sloo, 13 How. Pr. (N. Y.) 30. See Hudson V. Plets, II Paige (N. Y.) 180. See §34. * JEtna Nat. Bank v. Manhattan Life Ins. Co., 24 Fed. Rep. 769. * Brenan v. Burke, 6 Rich. Eq. (S. C.) 200. * Thompson v. Nixon, 3 Edw. Ch. (N. Y.) 457. See Browning v. Bettis, 8 Paige (N. Y.) 568. 5 Moores v. White, 3 Gratt. (Va.) 139; Caldwell v. Montgomery, 8 Ga. 106; Ryan v. Jones, 15 111. i ; Sayre v. Flournoy, 3 Ga. 541. « Stewart v. McMartin, 5 Barb. (N. Y.) 438 ; Tompkins v. Fonda, 4 Paige (N. Y.) 448. See note to Donovan v. Finn, 14 Am. Dec. 542. ' Miers v. Zanesville Co., 11 Ohio 273 ; S. C. 13 Ohio 197 ; Henry v. Ver- milion R.R. Co., 17 Ohio 187; Hatch v. Dana, loi U. S. 205 ; Ogilvie v. Knox Ins. Co., 22 How. 380 ; Pierce v. Milwaukee Construction Co., 38 Wis. 253. See Marsh v. Burroughs, i Woods 467. * Hudson V. Plets, 1 1 Paige (N. Y.) 183; Ten Broeck V. Sloo, 13 How. Pr. (N. Y.) 30. See Garretson v. Kane, 27 N. J. Law 211. §35 SEATS IN STOCK EXCHANGES. D/ defendant in such a suit.^ This rule proceeds upon the theory that such claims or rights of action" are non-assign- able. It must be remembered in this connection, however, that, in the case of a tort, causing an injury to the propei-ty of the judgment-debtor, accruing before the filing of the creditor's bill, by means of which injury certain property to which the creditor was entitled to resort for the payment of his debts has been diminished in value or destroyed, the right of action appears to be such an interest as may be properly reached and applied to the payment of the com- plainant's claim.* § 35. Seats in stock exchanges. — Counsel have contended in many cases that a membership of a stock exchange was a mere personal privilege or license, and was not property or a right to property w^hich the creditors of the member could reach. Probably the enormous pecuniary value which not infrequently attaches to such a membership has inspired the courts to consider this so-called privilege as a species of property, the value of which the debtor should not be al- lowed to withhold from his creditors. It may be said to differ from the membership of a social club in that the lat- ter has no general value or marketable quality, there being usually no provision for its transfer, and nothing remaining after the member's death. Stock exchange memberships, on the other hand, being held for purposes of pecuniary gain, may, ordinarily, be bought and sold subject to tiie regulations of the association, and, after the owner's death, may be disposed of and the proceeds distributed. For these reasons such interests are held to be assets.'^ In Hyde v. 'Benson v. Flower, Sir W. Jones' How. Pr. (N. Y.) 426; Matter of Rep. 215; Hudson v. Plets, 11 Paige Ketchum, i Fed. Rep. 840 ; Ritlerb.ind (N. Y.) 183. V. Baggett, 42 Superior Ct. (N. Y.) 556; "^ Hudson V. Plets, 1 1 Paige (N. Y.) Colby v. Peabody, 52 N. Y. Superior 184. SeeTen Broeck V. Sloo, 13H0W. 394; Smith v. Barclay, 14 Chicago Pr. (N. Y.) 30. Leg. News 222 ; and compare Ex ^ See Grocers' Bank v. Murphy, 60 /ar/^- Grant, 42 L. T. [N. S.] 387 ; s. C. 58 SEATS IN STOCK EXCHANGES. § 35 Woods/ such a membership is characterized as an incor- poreal right vVhich, upon the bankruptcy of the member, passed, subject to the rules of the stock board, to an as- signee. It is said, however, not to be a matter of absolute purchase or sale, but is to be taken with the incumbrances and conditions which its creators imposed upon it. Hence, a provision that debts due other members shall be first paid is valid and must be carried out. In Powell v. VValdron,^ Finch, J., one of the most facile writers now on the bench, said : " Although of a character somewhat peculiar, its use restricted, its range of purchasers narrow, and its ownership clogged with conditions, it was nevertheless a valuable right, capable of transfer and correctly decided to be property. It was something more than a mere personal license or privi- lege, for it could pass from one to another of a certain class of persons and belong as fully to the assignee as it did to the assignor. That characteristic gave it not only value which might attach to a bare personal privilege, but market value which usually belongs only to things which are the subjects of sale. However it differed from the incorporeal rights earlier recognized and described, it possessed the same essential characteristics. It could be transferred from 22 Alb. L. J. 70. In re Gallagher, 19 Justice Sharswood participated, it is N. B. R. 224, it was decided that a said : " The seat is not property in the license or permit to occupy certain stalls eye of the law, it could not be seized in in Washington Market, New York City, execution for the debts of the members." was property that passed to an assignee. Again, it is observed in Pancoast v. But In re Sutherland, 6 Bissell 526, on Gowen, 93 Pa. St. 71 : "A seat in the the contrary maintains that a right of board of brokers is not property subject membership of a board of trade does to execution in any form. It is a mere notbecome vested in an assignee. Com- personal privilege, perhaps more ac- pare Barry v. Kennedy, 1 1 Abb. Pr. N. curately a license to buy and sell at the S. (N. Y.) 421. It seems clear that meetings of the board. It certainly the seat or license is not liable to legal could not be levied on and sold under proceedings ow fieri facias or execu- Sifi.fa." There is a tendency in these tion ; Eliot v. Merchants' Exchange of cases that is to be regretted. St. Louis, 28 Alb. L.J. 512. In Thomp- ' 94 U. S. 524. son v. Adams, 93 Pa. St. 55, 66, in a - 89 N. Y. 331. per curiam opinion in which the learned § 3^ TRADE-MARKS. 59 hand to hand and all the time keep its inherent value, and be as freely and fully enjoyed by the permitted purchaser as by the original owner. We should make of it an anomaly, difficult to deal with and to understand, if we failed to treat it as property. The authorities which determine it to be such, seem to us better reasoned and more wisely consid- ered than those which deny to it that character, although the subject of ownership, of use, and of sale." The cases upon this subject are fully reviewed by the St. Louis Court of Appeals, in Eliot v. Merchants' Exchange of St. Louis,^ and the court in conclusion say : " There can be no doubt that the weight of authority is, that the seat of a member in a stock board or merchants' exchange is a species of prop- erty not subject to ordinary execution, but which may be reached by equity processes in such a way as to respect the rules of the exchange and the rights of all parties interested, and at the same time, by proceedings in aid of the execu- tion, to compel an insolvent member to transfer his seat under the rules of the board, and apply the proceeds to the satisfaction of the debts of his judgment-creditor." § 36. Trade-marks. — It seems to be regarded as settled law that the right to use a trade-mark, in connection with the business in which it has been used, is property which will be protected by the courts, and which may be sold and transferred.^ In Sohier v. Johnson,^ the right to use a trade-mark was recognized as property which would pass to an assignee, as an incident under a transfer of the business and good-will.^ The same principle may be found in the English law, and it has been held that under the bankrupt law a trade-mark passes to the assignee of the owner.^ It I 28 Alb. L. J. 512. Trade-Mark Cases, 100 U. S. 82 ; War- " Warren v. Warren Thread Co., 28 ren v. Warren Thread Co., 28 Alb. L. Alb. L. J. 278; S. C. 134 Mass. 247; J. 278. Emerson v. Badger, loi Mass. 82 ; ' Leather Cloth Co. v. American Oilman v. Hunnewell, 122 Mass. 139. Cloth Co., 11 H. L. Cas. 523; ^Totley ^ III Mass. 238. V. Downman, 3 Myl. tSc Cr. i ; Hudson ■• Kidd V. Johnson, 100 U. S. 617 ; v. Osborne, 39 L. J. Ch. 79. 60 BOOK ROYALTIES. — PATENT RIGHTS. §§ 37, 38 may be doubted whether mere personal trade-marks, the use of whieh, by any person other than the originator, would operate as a fraud upon the public, are subject to this rule. Where, however, the trade-marks are mere signs or symbols designating the place or the establishment at which the goods are manufactured, and not implying any peculiar skill in the originator as the manufacturer, or im- porting necessarily that the goods are manufactured by him, they constitute property and pass to an insolvent assignee.^ § zi- Reaching book royalties. — An instructive case, illus- trative of the nature of creditors' remedies, is Lord v. Harte.^ The plaintiff was a judgment-creditor of Bret Harte, the well-known writer of prose and poetry, and the bill in question was filed, under the General Statutes of Massachusetts,^ against Harte and his publishers, to reach moneys due or that might thereafter accrue to him for royalties upon books sold by the publishers. Devens, J., after observing that the defendant Harte had a valuable interest under an existing contract which could not be attached, said : " Any remedy which the plaintiffs may have by the trustee process, and no other is suggested, is uncer- tain, doubtful, and inadequate, and there is therefore pre- sented a case for relief by this bill." ^ § 38. Patent rights. — The monopoly which a patent con- fers is considered as property ; ^ the interest of the patentee ' Warren v. Warren Thread Co., 134 is transferred is considered as only in- Mass. 247. In Kidd v. Johnson, 100 dicating that the goods to which it is U. S. 617, the court said: "When the affixed are manufactured at the same trade-mark is affixed to articles manu- place and are of the same character as factured at a particular establishment those to which the mark was attached and acquires a special reputation in by its original designer." See Trade- connection with the place of manufac- Mark Cases, 100 U. S. 82 ; Royal Bak- ture, and that establishment is trans- ing Powder Co. v. Sherrell, 93 N. Y. ferred either by contract or operation 334. of law to others, the right to the use of -118 Mass. 271. the trade-mark may be lawfully trans- ^ Gen. Sts. c. 113, §2. ferred with it. Its subsequent use by •* See Stephens v. Cady, 14 How. 531. the person to whom the establishment ^ Gayler v. Wilder, 10 How. 477, per § 3^ PATENT RIGHTS. 6 1 may be assigned by operation of law in case of bankruptcy of the patentee/ and it may be subjected by a bill in equity to the payment of his judgment-debts. '^ Lord Alvanley, re- ferring to the proposition that an invention was an idea or scheme in a man's head, which could not be reached by pro- cess of law, said: " But if an inventor avail himself of his knowledge and skill, and thereby acquire a beneficial inter- est, which may be the subject of assignment, I cannot frame to myself an argument why that interest should not pass in the same manner as any other property acquired by his per- sonal industry."^ And in Stephens v. Cady,* Justice Nel- son said in relation to the incorporeal right secured by the statute to an author to multiply copies of a map by the use of a plate, that, though from its intangible character it was not the subject of seizure or sale at common law, it could be reached by a creditor's bill, and applied to the payment of the author's debts.^ If the courts should declare patent rights exempt from appropriation it would, as suggested in Sawin v. Guild, ^ be practicable for a debtor to lock up his whole property, however ample, from the grasp of his creditors, by investing it in profitable patent rights, and thus to defeat the administration of justice.'^ We find the statement, however, that it is the patent only which gives the exclusive property, and while the right is inchoate it is Taney, Chief-Justice; Ager v. Murray, Gillette v. Bate, lo Abb. N. C. (N. Y.) 105 U. S. 126; Barnes v, Morgan, 3 88; Gorrell v. Dickson, 26 Fed. Rep. Hun (N. Y.) 704. See Railroad Co. v. 454. But see Greene v. Keene, 14 R. Trimble, 10 Wall. 367. I. 388. ' Hesse v. Stevenson, 3 Bos. & P. ^ Hesse v. Stevenson, 3 Bos. & P. 565. 565 ; Bloxam v. Elsee, i Car. & P. 558 ; •• 14 How. 531. S. C. 6 Barn. & C. 169; Mavvman v. "See Hadden v. Spader. 20 Johns. Tegg, 2 Russ. 385; Edelsten v. Vick, (N. Y.) 554; Gillette v. Bate, 86 N. Y. II Hare 78. But compare Ashcroft v. 87 ; Pacific Bank v. Robinson, 57 Cal. Walworth, i Holmes 152; Gordon v. 520; Stevens v. Ciladding, 17 How. 447 ; Anthony, 16 Blatchf. 234; Carver v. Massie v. Watts. 6 Cranch 148; Storm Peck, 131 Mass. 291 ; Cooper v. Gunn, v. Waddeil, 2 Sandl". Ch. (N. Y.) 494. 4 B. Mon. (Ky.) 594. See Ager v. * I Gall. 485. Murray, 105 U. S. 126. ' See Barnes v. Morgan. 3 Hun (N. -Ager V. Murray, 105 U. S. 126; Y.) 704. 62 POWERS. § 39 at least doubtful whether it has the characteristics of prop- erty, such as to justify a compulsory transfer by the debtor.^ § 39. Powers, when assets for creditors. — Chief- Justice Gray, in delivering the opinion of the Supreme Judicial Court of Massachusetts,^ said : " It was settled in the Eng- lish Court of Chancery, before the middle of the last cen- tury, that where a person has a general power of appoint- ment, either by deed or by will, and executes this power, the property appointed is deemed in equity part of his assets, and subject to the demands of his creditors in pref- erence to the claims of his voluntary appointees or legatees. The rule perhaps had its origin in a decree of Lord Somers, affirmed by the House of Lords, in a case in which the person executing the power had in effect reserved the power to himself in granting away the estate.^ But Lord Hardwicke repeatedly applied it to cases of the execution of a general power of appointment by will of property of which the donee had never had any ownership or control during his life ; and, while recognizing the logical difficulty that the power, when executed, took effect as an appoint- ment, not of the testator's own assets, but of the estate of the donor of the power, said that the previous cases before Lord Talbot and himself (of which very meagre and im- perfect reports have come down to us) had established the doctrine, that when there was a general power of appoint- ment, which it was absolutely in the donee's pleasure to execute or not, he might do it for any purpose whatever, and might appoint the money to be paid to his executors if he pleased, and, if he executed it voluntarily and without consideration, for the benefit of third persons, the money ' Gillette v. Bate, 86 N. Y. 94; Hesse 41 N. Y. Superior 530 ; Potter v. Hol- V. Stevenson, 3 Bos. & P. 565. Com- land, 4 Blatchf. 206 ; Barnes v. Mor- pare Ashcroft v. Walworth, i Holmes gan, 3 Hun (N. Y.) 703. 152; Campbell v. James, 18 Blatchf. - Clapp v. Ingraham, 126 Mass. 200. 92; Prime v. Brandon Mfg. Co., 16 ^ Thompson v. Towne, Prec. Ch. 52 ; Blatch. 453; Clan Ranald v. Wyckoff, S. c. 2 Vem. 319. § 39 POWERS. 63 should be considered part of his assets, and his creditors should have the benefit of it.^ The doctrine has been up- held to the full extent in Encrland ever since.^ Althouirh the soundness of the reasons on which the doctrine rests has been impugned by Chief-Justice Gibson, argiiciido, and doubted by Mr. Justice Story in his Commentaries, the doctrine is stated both by Judge Story and Chancellor Kent as well settled ; and it has been affirmed by the high- est court of New Hampshire, in a very able judgment, de- livered by Chief-Justice Parker, and applied to a case in which a testator devised property in trust to pay such part of the income as the trustees should think proper to his son for life ; and after the son's death, to make over the principal, with any accumulated income, to such persons as the son should by will direct.^ A doctrine so just and equitable in its operation, clearly established by the laws of England before our Revolution, and supported by such a weight of authority, cannot be set aside by a court of chancery because of doubts of the technical soundness of the reasons on which it was originally established." Cases establishing this general rule are numerous.* T\\q jus dis- ponendi is to be considered as the property itself,'^ and the * Townshend v. Windham, 2 Ves. v. Cutting, 86 N. Y. 522) ; 2 Chance Sen. r, 9, 10; jG'jt /ar/t' Caswall, i Atk. on Powers, §1817; Whittington v. 559,560; Bainton V. Ward, 7 Ves. 503, Jennings, 6 Simons 493; Lassells v. note; S. C. cited 2 Ves. Sen. 2, and Cornwallis, 2 Vern. 465; Bainton v. Belt's Suppl't 243 ; 2 Atk. 172 ; Pack Ward, 2 Atk. 172 ; Pack v. Bathurst, 3 V. Bathurst, 3 Atk. 269. Atk. 269; Troughton v. Troughton, 3 ■■' Chance on Powers, c. 15, § 2 ; 2 Atk. 656 ; Townshend v. Windham, 2 Sugden on Powers (7th ed.) 27 ; Flem- Ves. Sen. i ; Jenney v. Andrews, 6 ing V. Buchanan, 3 De G., M. & G. 976. Madd. 264 ; Ashficld v. Ashfield, 2 3 Commonwealth v. Duffield, 1 2 Penn. Vern. 287 ; Cutting v. Cutting. 20 Hun St. 277, 279-281; Story's Eq. Jur. (N. Y.) 366 ; revised, in part, in 86 N. § 176, and note; 4 Kent's Coin. 339, Y. 522; George v. Milhanke, 9 Ves. Jr. 340; Johnson v. Gushing, 15 N. H. 196; Fleming v. Buchanan. 3 Dc G, 298. M. tS: G. 976 ; Palmer v. Whitmorc, 2 '^ Smith V. Garey, 2 Dev. & Bat. Eq. Cr. & M. [in note] 131 ; Nail v. Punter. (N. C.) 49; Mackason's Appeal, 42 5 Sim. 555. Pa. St. 338; Tallmadge v. Sill, 21 'Holmes v. Coghill, 12 Ves. 206. Barb. (N. Y.) 51 (but compare Cutting See Piatt v. Routh, 3 Beav. 257. 64 POWERS IN NEW YORK. § 40 general power of disposition is in effect property.^ In Williams v. Lomas,^ the court said : " Jenney v. Andrews,^ which has been followed by other authorities,^ decides this : that where a person having a general power of appointment by will makes an appointment, the appointee is a trustee for the creditors, and the appointed fund is applicable to the payment of the debts of the donee of the power." And it has been observed that there is no reason in the nature of things why a gift or bequest of personal property, with a power of disposition, should not be measured by the same rule as a grant or devise of real estate with the same power.^ § 40. Statutory change as to powers in New York. — The principle which we have been considering did not meet the entire favor of the revisers of the Statutes of New York, and the rule just laid down seems to have been practically 1 Bainton v. Ward, 2 Atk. 172. See Adams on Equity, 99, note i. Mr. May says : " The exercise of a general power of appointment, either of land (Townshend v. Windham, 2 Ves. Sr. i), or a sum of money (Pack v. Bathurst, 3 Atk. 269), may be fraudulent and void under the statute, but where a man has only a limited or exclusive power of appointment of course it is different. He never had any interest in the property himself which could have been available to a creditor, or by which he could have obtained cred- it." May on Fraud. Conv., p. 29. See Sims V. Thomas, 12 Ad. & E. 536; Hockley v. Mawbey, i Ves. Jr. 143, 150. '•* 16 Beav. 3. 8 6 Madd. 264. * 2 Sugden on Powers (6th ed.), 29; I Sugden on Powers (6th ed.), 123. ' Cutting V. Cutting, 86 N. Y. 547 ; S. p. Hutton V. Benkard, 92 N. Y. 295. The reservation of a power of revoca- tion or appointment to other uses does not affect the validity of a conveyance until the power is exercised, nor does it tend to create an imputation of bad faith in the transaction. See Huguenin v. Baseley, 14 Ves, 273 ; Coutts v. Ac- worth, L. R. 8 Eq. 558 ; Wollaston v. Tribe, L, R. 9 Eq. 44; Everitt v. Everitt, L. R. 10 Eq. 405 ; Hall v. Hall, L. R. 14 Eq. 365; Phillips v. Mullings, L. R. 7 Ch. App. 244; Hall V. Hall, L. R. 8 Ch. App. 430; Toker v. Toker, 3 De G., J. & S. 487. The power is not an interest in the property which can be transferred to another, or sold on execution, or de- vised by will. The grantor could exer- cise the power either by deed or will, but he could not vest the power in any other person to be thus executed. Nor is the power a chose in action ; nor does it constitute assets of a bank- rupt which will vest in an assignee. Jones v. Clifton, loi U. S. 225, per Field, J. § 41 GIFTS. 65 overturned by statute in that State.' The facts in Cutting V. Cutting, a case in which the statutes relating to the abo- lition of powers in New York were construed, was as fol- lows : C. gave real and personal estate to her executor to collect the income during the life of her son and apply it to his use, and after his death to transfer the estate to the person the son might designate by will. The son having made the appointment, it was held that the estate was not chargeable after the son's death with a judgment obtained against him in his lifetime. It will be apparent at a glance that the result of the legislation in New York as inter- preted in this case, constitutes an important innovation upon what was a settled principle of equity, and places be- yond the reach of creditors property which equity con- sidered should be subject to their remedies.^ A policv which enables debtors to contract obligations, and defeat their payment by exercising a power of appointment in favor of a gratuitous appointee, deprives creditors of an im- portant source of relief, and tends to establish in the debtor rights over property which the creditor cannot reach, a re- sult to be universally deplored. § 41. Gifts of small value. — The Supreme Court of Maine ' recognize the rule already adverted to that gifts cannot be regarded as fraudulent if, from their almost infinitesimal value, the rights of creditors would not be impaired. In French v. Holmes,* it appeared that the father made a gift to his child of a lamb which the ewe refused to recognize. The court observed that if the lamb had been attached it would not have sold for a sum sufficient to pay the fees of the officer making the sale, much less the costs of obtaining the judgment. If the property was exempt the gift was clearly no interference with the rights of creditors. The 1 Cutting V. Cutting, 20 Hun (N. Y.) ^ French v. Holmes, 67 Me. 193. 367 ; s. c. on appeal, 86 N. Y. 537. ^ 67 Me. 193. '■' See § 39, and cases cited. 5 66 DEBTS FORGIVEN OR CANCELLED. § 42 court further argued : " Now could such a gift hinder, de- lay, or defraud creditors ? The fraudulent intent is to be collected from the comparative value and magnitude of the gift. Can any one believe the existence of a fraudulent in- tent?" The opinion cited with approval Hopkirk v. Ran- dolph,^ where the gift consisted of two negro girls and a riding horse. The learned Chief-Justice Marshall in that case seemed to consider that trivial gifts, made without any view to harm creditors, and with intentions obviously fair and proper, ought to be exempted from the general rule in favor of creditors. " They do not," continued the Chief- Justice, " much differ from wedding clothes, if rather more expensive than usual, from jewels, or an instrument of music, given by a man whose circumstances justified the gift. I have never known a case in which such gifts so made have been called into question."^ § 42. Debts forgiven or cancelled. — In Sibthorp v. Moxom,'^ it was said that where a testator gave or forgave a debt this was a testamentary act, and would not be good as against creditors.^ And a cancellation by an insolvent of a live and subsisting asset, is a fraud upon creditors. Hence, where a debtor gave up and cancelled without payment, a note held by him against a third party, the court very promptly de- cided that after the debtor's decease his administrator might ignore the cancellation, and sue upon the note for the bene- fit of creditors.^ Martin v. Root^ is a pointed illustration of a different phase of this doctrine. One Larned conveyed a farm to Root and others, and furnished the grantees the means with which to remove the incumbrances upon it, the ' 2 Brock, 140. of cancellation Martin v. Root, 17 Mass. ^ See Patridge v. Gopp, Amb. 596. 222, per Chief-Justice Parker ; McGay Compare Hanby V. Logan, i Duv. (Ky.) v. Keiiback, 14 Abb. Pr. (N. Y.) 142 ; 242 ; Garrison v. Monaghan, 33 Pa. St. Wise v. Tripp, 13 Me. 12. 232. See §§ 15, 23, and note. ^ Tolman v. Marlborough, 3 N. H. =* 3 Atkyns 581, 57. * Compare, generally as to the effect ^ 17 Mass. 222. § 43 PROMISES OF THIRD PARTIES. 67 conceded object of the transaction being to keep the farm out of the reach of Larned's creditors. Root iravc Larned a note for $5,072.43, and at the same time took back a writ- ten promise from Larned that the note should never be collected. Larned having died insolvent, his administrator was allowed to recover on the note, and the agreement that the note should not be collected was held void in respect to creditors. § 43. Enforcing promises of third parties. — The doctrine of Lawrence v. P'ox,^ and cases embodying the general principle that where one person for a valuable considera- tion engages with another, by a simple contract, to do some act for the benefit of a third person, the latter, who would enjoy the benefit of the act if performed, may maintain an action for breach of the engagement,^ has been successfully invoked in aid of creditors. Thus in Kingsbury v. Earle,^ it appeared that a father had conveyed lands to his sons upon their orally agreeing, in consideration of the convey- ance, to pay all his debts. The court held that the credit- ors might avail themselves of the agreement, and bring ac- tions on the promise against the sons to recover debts, even though the amount exceeded the value of the land, and that the consideration named in the deed would not determine ' 20 N. Y. 268. See Prime V. Koeh- Scott v. Gill, 19 Iowa 187; Rice v. ler, yy N. Y. 91. Savery, 22 Iowa 470; Devol v. Mc- - Hand v. Kennedy, 83 N. Y. 154; Intosh, 23 Ind. 529; Allen v. Thomas. Burr V. Beers, 24 N. Y. 178 ; Glen v. 3 Met. (Ky.) 198 ; Jordan v. White, 20 Hope Mutual Life Ins. Co., 56 N. Y. Minn. 91 ; Rogers v. Gosnell, 58 Mo. 381; Ricard v. Sanderson, 41 N. Y. 590; Wiggins v. McDonald, iS Cal. 179; Secor V. Lord, 3 Keyes (N. Y.) 126; Miller v. Florer, 15 Ohio St. 151 ; 525 ; Thorp v. Keokuk Coal Co., 48 N. Green v. Richardson, 4 Col. 5M4 ; Bank Y. 253 ; Campbell v. Smith, 71 N. Y. of the Metropolis v. Guttscldick, 14 26; Van Schaick v. Third Ave. R.R. Peters 31 ; Bradwell v. Weeks, J Johns. Co., 38 N. Y. 346; Coster v. Mayor, Ch. (N. Y.) 206. Compare /Etna Nat. etc., 43 N. Y. 41 1 ; Barker v. Bradley, Bank v. Fourth Nat. Bank, 46 N. Y. 82 ; 42 N. Y. 319; Vrooman v. Turner, 69 Bean v. Edge. 84 N. Y. 514; Simson N. Y. 284; Garnsey v. Rogers, 47 N. v. Brown, 68 N. Y. 355 ; Belknap v. Y. 236; Hall V. Marston, 17 Mass. Bender, 75 N. Y. 449. 575; Cross V. Truesdaie, 28 Ind. 44; • 27 Hun (N. Y.) 141. 68 PROMISES OF THIRD PARTIES. § 43 its actual value. An agreement of this character is not a promise to pay the debt of another within the statute of frauds. And where partnership assets are assigned, and as part of the consideration the purchaser agreed to pay the firm debts, any creditor may avail himself of the promise and sue the purchaser for the amount of his claim ; ^ and if, under such circumstances, a bond is taken, the creditors may get the benefit of it.^ But the principle running through these cases is not universally recognized. It does not fully obtain in the English cases or in Massachusetts. In the latter Commonwealth, Gray, J., in the course of an opinion, said : "The general rule of law is, that a person who is not a party to a simple contract, and from whom no consideration moves, cannot sue on the contract, and con- sequently that a promise made by one person to another, for the benefit of a third person who is a stranger to the consideration, will not support an action by the latter."^ It is foreign to the scope of this treatise to fully discuss in all its bearings the rule allowing third parties to enforce these promises made for their benefit. It certainly has obtained a deep foundation in our law ; its operation avoids circuity of action, reduces the expense and volume of litigation, and brings the real claimant and party beneficially interested in the controversy before the court. The arguments against its adoption, based upon common-law rules,. are inequitable and technical, and lead to a harsh result* ' Sanders v. Clason, 13 Minn. 379 ; appointed at the instance of another Barlow v. Myers, 6 T. & C. (N. Y.) creditor. The sheriff released the levy 183 ; Meyer v. Lowell, 44 Mo. 328. upon receiving a promise from the re- - Kimball v. Noyes, 17 Wis. 695; ceiver that the latter would sell the Devol V. Mcintosh, 23 Ind. 529. Espe- property and apply the proceeds upon cially Claflin v. Ostrom, 54 N. Y. 581. the plaintiff's execution. The receiver ^Exchange Bank of St. Louis v. realized on the sale. The plaintiff in the Rice, 107 Mass. 41. execution brought this action against "■In Becker v. Torrance, 31 N. Y. the receiver on the parol promise made 631-643, it appeared that the plaintiff to the sheriff for plaintiff 's benefit. The had levied upon certain property of the court decided that although the promise defendant ; subsequently a receiver was was not made to the plaintiff directly, it § 44 TRACING THE FUND. 69 § 44. Tracing the fund. — It is a clearly established prin- ciple in equity jurisprudence that whenever a trustee has been guilty of a breach of trust, and has transferred the property by sale or otherwise to any third person, the cestui que trust has a full right to follow such property into the hands of the third person, unless the latter stands in the position of a ho7ia fide purchaser for valuable consideration without notice ; and if the trustee has invested the trust property or its proceeds in any other property into which it can be distinctly traced, the cesttii que trtcst may follow it into the new investment.^ This doctrine has been ap- propriated and applied to cases of property alienated in fraud of creditors ; and it has been expressly held that a complaining creditor has a right to follow the fund result- ing from the covinous alienation, into any property in which it was invested, so far as it can be traced.' But in creditors' suits the subject-matter of pursuit should be something so specific that, as to it," either in law or in equity, the plaintiff's judgment or execution, or the filing of the bill, or the ap- pointment of a receiver, will create a lien or make a title.' In Gillette v. Bate,* the fraudulent grantee had taken stock in a corporation in exchange for the property frautUilcnth- transferred, and it was held that creditors could reach the stock, although it had increased in value.^ was available to him on the principle 696; Farmers' & Mechanics' Nat. Bk. of Lawrence v. Fox, 20 N. Y. 268, and v. King, 57 Pa. St. 202. Compare Smith Burr V. Beers, 24 N. Y. 178, and that v. Bowen, 35 N. Y. 83; Lyford v. he had the right to adopt and enforce Thurston, 16 N. H. 399 ; Barr v. Cub- the promise instead of proceeding di- bage, 52 Mo. 404 ; Hooley v. Gieve. 9 rectly against the sheriff. Abb. N. C. (N. Y.) 8. See § 28. Ex- ' Oliver v. Piatt, 3 How. 401 ; Mc- amine especially National Bank v. In- Leod v. First Nat. Bk., 42 Miss. 99 ; surance Co., 104 U. S. 54. Jones v. Shaddock, 41 Ala. 262; La- " Clements v. Moore, 6 Wall. 315.316. throp v. Bampton, 31 Cal. 17; Story's See Chalfont v. Grant, i Am. Insolv. R. Eq. Jur. § 1258 ; Mansell v. Mansell, 2 251; Marsh v. Burroughs, i Woods 463. P. Wms. 679 ; Dewey v. Kelton, 18 N. ^ Ogden v. Wood, 51 How. Pr. (N. B. R. 218 ; Pennell v. Ueffell, 4 De G., Y.) 375. See § 28. M. & G. 372 ; Frith v. Cartland. 2 Hem. ^ 10 Abb. N. C. (N. Y.) 92. & M. 417, 420; In re Hallet's Estate, •• See Steere v. Hoagland, 50 III. 377. Knatchbull v. Hallet, L. R. 13 Ch. D. Compare Phipps v.Sedgwick,95 U. S.3. 70 INCOME OF TRUST ESTATE. § 45 § 45. Income of trust estate. — Williams v. Thorn ^ firmly establishes the doctrine, in New York State at least, that the income of a trust fund enjoyed by the debtor beyond a sum considered necessary for his actual support, may be reached by judgment-creditors, and, like the rest of the debtor's estate, such surplus income goes to make up the trust fund for the payment of creditors. This doctrine was not established without a struggle, and debtors are con- stantly seeking to circumvent it.^ The Chancellor observed in Hallett v. Thompson,^ that it was contrary to sound policy to permit a person to have the ownership of prop- erty for his own purposes, and be able at the same time to keep it from his creditors. In Williams v. Thorn '^ the late lamented Rapallo, J., said: " By the analogy which courts of justice have always endeavored to preserve between estates or interests in land, or the income thereof, and simi- lar interests in personal property, the right of a judgment- creditor to reach the surplus rents and profits of land, be- yond what is necessary for the support and maintenance of the debtor and his family, entitles him to maintain a credit- or's bill which will reach a similar interest of the debtor in the surplus income of personal property held by another for his use and benefit ; but not that part of the income which may be necessary for the support of the judgment-debtor." The doctrine of Williams v. Thorn, with reference to reach- ing surplus trust income seems to have been acknowledged in the earlier New York cases, both as to the income of realty and personalty ^ though there is a dictum by Wright, J., in Campbell v. Foster,^ denying that the income of the ' 70 N. Y. 270. See McEvoy v. Ap- = 5 Paige (N. Y.) 5S6. pleby, 27 Hun (N. Y.) 44; Tolles v. ■* 70 N. Y. 273. Wood, 99 N. Y. 616. Compare Spindle ^ See Rider v. Mason, 4 Sandf. Ch. V. Siireve, in U. S. 546 ; Nichols v. (N. Y.) 351; Sillick v. Mason, 2 Barb. Eaton, 91 U. S. 716; Cutting v. Cut- Ch, (N. Y.) 79; Bramhall v. Ferris, 14 ting, 86 JnT. Y. 546. N. Y. 41 ; Scott v. Nevius, 6 Duer (N. ''■ See Nichols v. Eaton, 91 U. S. 716 ; Y.) 672 ; Graff v. Bonnett, 31 N. Y. 9. also Chap. XXIII. •* 35 N. Y. 361. § 46 RULE AS TO EXEMPT PROPERTY. 7 1 cestui que trust can be diverted to creditors.^ The confu- sion introduced into this branch of the law which led to the general but erroneous belief that a debtor's trust income, though fabulous in amount, was not in any form available to creditors, was partially attributable to the fact that the unsuccessful actions had been instituted by receivers in supplementary proceedings, as to whom the courts held the right to reach income did not pass until it had actually accumulated.' But where the judgment-creditor sues, not only the income accumulated in the trustees' hands, which may also be reached by supplementary proceedings, but the future income, above the sum found necessary for the sup- port and use of the cestui que trust, may be impounded. Hann v. Van Voorhis,'^ holding that only actual accumula- tions in the hands of the trustees could be reached, must be regarded as overruled by Williams v. Thorn.* A creditor, it may be noted, may also get the benefit of an annuity given by a will in lieu of dower.^ § 46. Rule as to exempt property. — It being a test of a fraudulent transfer that the property alienated must be of some value out of which the creditor could have realized the whole or a portion of his claim, '^ it would seem to follow logically that exempt property is not susceptible of fraudu- lent alienation. As the creditor possesses no right to have that class of property applied in satisfaction of his claim while the debtor owns it, and would be powerless to seize or appropriate it for that purpose were it restored to ' See Locke v. Mabbett, 2 Keyes (N. S. 716; Broadway IJank v. Adams. 133 Y.) 457;S. C.3 Abb. App. Dec.(N.Y.)68. Mass. 170; Spindle v, Shreve, 9 Biss. •^ See Graff v. Bonnett, 31 N. Y. 9 ; 199 ; Hyde v. Woods, 94 U. S. 523. 526. Scott V. Nevius, 6 Duer (N. Y.) 672 ; Wetmore v. Tnislow, 51 N. Y. 338. was Locke V. Mabbett, 2 Keyes (N. Y.) 457 ; not a suit to reach surplus, but the whole Campbell v. Foster, 35 N. Y. 361. income, on the ground that the bene- ^ 15 Abb. Pr. N. S. (N. Y.) 79. ficiary was also a trustee. ^ 70 N. Y. 279. See, also, infra, '' Degraw v. Clason, 1 1 Paige (N. Y.) Chap. XXIIL on Spendthrift Trusts; 136. and compare Nichols v. Eaton, 91 U. " Sec § 23. 72 RULE AS TO EXEMPT PROPERTY. §46 the debtor's possession, the legitimate deduction would seem to be that the creditor's process could not be fastened upon it in the hands of the debtor's alleged fraudulent vendee.^ As to alienations of exempt property there may be a bad motive but no illegal act.^ When a fraudulent transfer has been avoided, it leaves the creditor to enforce his remedy against the property in the same manner as if the fraudulent transfer had never been executed. The creditor cannot ask to be placed in a better position in re- spect to the property than he would have occupied if no fraudulent bill of sale had ever been made.^ And it seems from the current of adjudications that a conveyance of lands set aside for fraud at the suit of creditors, does not estop the grantor from claiming a homestead in the prem- ises thus conveyed. Such a conveyance does not constitute an abandonment of the homestead so as to open it to cred- itors.'* Upon the same theory a general assignment is not ^ See Wood v. Chambers, 20 Texas 247 ; Foster v. McGregor, 1 1 Vt. 595 ; Whiting V. Barrett, 7 Lans. (N. Y.) 106; Bean v. Smith, 2 Mason 252; Winchester v. Gaddy, 72 N. C. 115; Legro V. Lord, 10 Me. 161 ; Smith v. Allen, 39 Miss. 469 ; Youmans v. Boom- hower, 3 T. & C. (N. Y.) 21 ; Pike v. Miles, 23 Wis. 164 ; Dreutzer v. Bell, II Wis. 114; Smillie v. Quinn, 90 N. Y. 493 ; Robb v. Brewer, 1 5 Reporter 648 ; Premo v. Hewitt, 55 Vt. 363. - O'Conner v. Ward, 60 Miss. 1037. " To property so exempted the cred- itor has no right to look, and does not look, as a means of payment when his debt is created ; and while this court has steadily held, under the constitu- tional provision against impairing the obligations of contracts by State laws, that such exemption laws, when first enacted, were invalid as to debts then in existence, it has always held, that, as to contracts made thereafter, the exemptions were valid." Nichols v. Eaton, 91 U. S. 726. ^ Sheldon v. Weeks, 7 N. Y. Leg. Obs. 60. * Turner v. Vaughan, 33 Ark. 460 ; Thompson on Homesteads, § 408, etc., and cases cited. " It is evident," says Mr. Freeman, " that creditors cannot be defrauded, hindered, or delayed by the transfer of property which, neither at law nor in equity, can be made to contribute to the satisfaction of their debts. Hence it is almost universally conceded that property which is, by ' statute, exempt from execution, cannot be reached by creditors on the ground that it has been fraudulently trans- ferred." Freeman on Executions, § 138. " Fraud against creditors is not predicable of the conveyance of property thus exempt ; and so the title to it is not impeachable by creditors of the debtor making such conveyance." Prout V. Vaughn, 52 Vt. 459. §47 PURCHASERS OF EXEMPT PROPERTY. invalidated by a clause which reserves all exempt property ;^ nothing is withheld which the creditors are entitled to have included in the trust ; and in New York a receiver of a judgment-debtor gets no title to exemptions."^ The ex- emption is said, however, to endure only during the lifetime of the party, and consequently a gift of exempt personalty, intended to take effect upon the death of the donor, and made with the object of defrauding creditors, cannot be sustained.'^ §47. Fraudulent purchasers of exempt property. — In con- formity with the general rule that exempt property is not usually susceptible of fraudulent alienation as regards credit- ors,'* the courts have decided that there is no intelligible ground upon which it can be held to be fraudulent for a ' Richardson v. Marqueze, 59 Miss. 80; s. C. 42 Am. Rep. 353; Hilde- brand v. Bowman, 100 Pa. St. 580. See Smith v. Mitchell, 12 Mich. 180; Mulford V. Shirk, 26 Pa. St. 473; Heckman v. Messinger, 49 Pa. St. 465. Co7itra, Sugg v. Tillman, 2 Swan (Tenn.) 208. '^ Finnin v. Malloy, 33 N. Y. Super. Ct. 382 ; Cooney v. Cooney, 65 Barb. (N. Y.) 524. ^ MartiTi v. Crosby, 11 Lea (Tenn.) 198. In Tollotson v. Wolcott, 48 N. Y. 190, it appeared that the debtor had recovered a judgment against a cred- itor for an unlawful lev)' upon and sale of the debtor's exempt property. A creditor sought to get the benefit of this judgment on the ground that the character of the property had been changed. The court said : " It would be useless to grant the privilege con- tained in the statute if it could be ren- dered of no effect by refusing an ade- quate remedy for the invasion of the exemption; or by permitting a recov- ery, when obtained for such invasion, to be wrested from the debtor by pro- ceedings on behalf of his creditors. The judgment, when recovered by the debtor for the wrongful invasion of his privilege of the exemption of his prop- erty from levy and sale, represents the property for the value of which it was recovered. He may make another in- vestment of the money to be recovered in the same description of property, in the possession of which, as a house- holder, or person providing for the support of his family, the statute will again protect him The proceeds of the judgment should be held to be protected under the statute, as exempt property, until sufficient time has elapsed to afford the debtor a reason- able opportunity to again purchase the description of property necessary to enable him to support his family, and in the possession of which the law will protect him as against the claims of creditors." See Andrews v. Rowan, 28 How. Pr. (N. Y.) 126. ^ Boggs V. Thompson, 13 Neb. 403; Derby v. Weyrich, 8 Neb. 174; Crum- men v. Bennet, 68 N. C. 494. Sec §46. 74 PURCHASERS OF EXEMPT PROPERTY. § 47 person whose property does not, in the aggregate, exceed the value of all the exemptions, but a portion of which property is in a form not exempt, to convert or exchange it into the particular kinds of property which are exempt. Thus in O'Donnell v. Segar,^ the court argued : " The only fraud claimed to have existed in reference to the oxen, was that he might fraudulently have acquired them from the proceeds or exchange of other property which was not exempt, and this with the intent to defeat the claims of creditors. This, in my opinion, if true, does not constitute legal fraud, so long as he was, in fact, engaged in one of the occupations mentioned, .... in which the use of the cattle was needed." In Randall v. Bufhngton,^ the court decided that a general creditor of an insolvent debtor could not subject a homestead to liability for his debts notwith- standing the insolvent had applied property in his hands to the payment of a debt which was a lien on the homestead."^ " It must be remembered," said Chief-Justice Breese, " that it is not a fraud on creditors to buy a homestead which would be beyond their reach." ^ This would seem to afford a debtor an opportunity to practice a species of petty fraud upon his creditors, but, as exemptions of property from execution are usually very limited in amount,^ and the policy of the law is to prevent the creditor from absolutely stripping the debtor of every vestige of property, and of all the necessary conveniences of living, or means of gaining a subsistence, the result is not to be deprecated. Mani- festly the creditor should not be favored to the extent of absolutely crippling and pauperizing the debtor,^ or render- ing him a public charge. ' 25 Mich. 377. stead for himself and family, whether * lo Cal. 493. by an arrangement with creditors who ' See In re Henkel, 2 Sawder 308. might levy on it, or by the purchase of * Cipperly v. Rhodes, 53 111. 350. a house, or by moving into a house ^ See Nichols v. Eaton, 91 U. S. 726. which he already owns, takes nothing * See Hixon v. George, 18 Kansas from his creditors which the law has 253. " The debtor, by securing a home- secured to them, or in which they have §§ 4^* 49 CONFLICTING CASES. 75 >J 48. Covinous alienations of exemptions, — A conveyance of liomestead by an embarrassed debtor and his wife to a third party, and by the third party to the wife, cannot be set aside as fraudulent and void as to creditors, for the homestead is out of their reach, ^ and in general a voluntary conveyance of property exempt from execution vests a good title in the donee, as against the creditors of the do- nor.^ The creditor, as we have said, cannot be injured or defrauded by the transfer of property which is, by positive law, expressly exempt from seizure to satisfy their debts."^ §49. Conflicting cases. — The cases are not, however, uniform in this regard, and are in some instances disin- clined to allow a debtor to turn what was intended as a shield of poverty into an instrument of fraud ; "* and there are decisions of at least local authority which deny the benefit of the exemption laws to a dishonest debtor who shuffles and conceals his property,^ or executes a homestead deed in furtherance of a design to hinder, delay, and de- fraud creditors in the recovery of their just debts.'' And it any vested right. He conceals no prop- v. Wade, i Bush (Ky.) no; Patten v. erty. He merely puts his property into Smith, 4 Conn. 450 ; Tracy v. Cover, a shape in which it will be the subject 28 Ohio St. 61. See § 46. of a beneficial provision for himself •'• Morrison v. Abbott, 27 Minn. 116; which the law recognizes and allows." Carhart v. Harshaw, 45 Wis. 340; S. Hoar, J., in Tucker v. Drake, 11 Allen C. 30 Am. Rep. 752, and notes; De- (Mass.) 146. lashmut v. Trau, 44 Iowa 613; Smith v. ' Morrison v. Abbott, 27 Minn. 116. Rumsey, 33 Mich. 183; Derby v. Wey- See Ferguson V. Kumier, 27 Minn. 156 ; rich, 8 Neb. 174; Megehe v. Draper. Baldwin v. Rogers, 28 Minn. 544; 21 Mo. 510; Washburn v. Goodheart, McFarland v. Goodman, 6 Biss. 11 1 ; 88 111. 229; Hixon v. George, 18 Kans. Vogler V. Montgomery, 54 Mo. 578; 253; O'Conner v. Ward. 60 Miss. 1036. Cox V. Wilder, 2 Dillon 46; White v. ^ Brackett v. Watkins, 21 Wendell Givens, 29 La. Ann. 571 ; Muller v. (N. Y.) 68. Inderreiden, 79 111. 382 ; Hugunin v. ' Strouse's Ex'r v. Becker, 38 Pa. St. Dewey, 20 Iowa 368 ; Buckley v. 192. Wheeler, 52 Mich. I ; Schribar v. Piatt, "^ See Rose v. Sharpless, 33 Gratt. 19 Neb. 631, (Va.) 156. See generally Smith v. - Furman v. Tenny, 28 Minn. T] ; Emerson, 43 Pa. St. 456 ; Gilleland v. Duvall V. Rollins, 68 N. C. 220 ; Mose- Rhoads, 34 Pa. St. 187 ; Dififenderfer v. ley V. Anderson, 40 Miss. 49 ; Anthony Fisher, 3 Grant's Cases (Pa.) 30 ; Piper "^G ABANDONED EXEMPTIONS. §§ 50, ^Oa has been held that the privileges of the homestead act may be forfeited by fraud ; ^ and the right to claim exemption also forfeited and lost,^ This does not, it seems to us, vary the general principle already stated, for in these latter cases the property is not considered to be under the cover or pro- tection of the exemption statutes, and by the rule of con- struction just stated, is liable to the claims of creditors much the same as though it had never been even colorably embraced within the exemptions. § 50. Abandoned exemptions. — It is asserted in Crosby v. Baker,^ that if the debtor changes his purpose to use the exempt articles in his business, and determines to and does in fact sell them to a third person, such bargain being made to defraud creditors, and this purpose being participated in by the vendee, the conveyance gives no title to the pur- chaser, and the property may be reclaimed and held by the assignee of the insolvent debtor in an action against the purchaser.* The change of intention, it is argued, takes away one of the requisites for the exemption of the prop- erty. The same principle applies to abandoned home- steads.^ § 50«. What cannot be reached. — While the property or accumulations of a debtor belong to his creditors, this is not true of his talents or industry. Said Hunt, C. \^ " The application of the debtor's property is rigidly directed to the payment of his debts. He cannot transport it to an- other country, transfer it to his friend, or conceal it from his creditor. Any or all of these things he may do with V. Johnston, 12 Minn. 67; Chambers Smith, 30 Pa. St. 264; Larkin v. Mc- V. Sallie, 29 Ark. 407 ; Huey's Appeal, Annally, 5 Phila. (Pa.) 17; Carl v. 29 Pa. St. 219; Currier v. Sutherland, Smith, 8 Phila. (Pa.) 569. 54 N. H. 475 ; s. C. 20 Am. Rep. 143, ^ 6 Allen (Mass.) 295. and note. •* See Stevenson v. White, 5 Allen ' Pratt V. Burr, 5 Biss. 36. (Mass.) 148. ^ Cook V. Scott, 6 111. 335 ; Cassell ° Cox v, Shropshire, 25 Texas 113. V. Williams, 12 111. 387; Freeman v. « Abbey v. Deyo, 44 N. Y. 347. § ^Oa WHAT CANNOT BE REACHED. "/y his industry. He is at liberty to transfer his person to a foreign land. He may bury his talent in the earth, or he may give it to his wife or friend. No law, ancient or mod- ern, of which I am aware, has ever held to the contrary." ^ ' Compare Lynn v. Smith, 35 Hun 90, 91 ; Gage v. Dauchy, 34 N. Y. 293 ; (N. Y.) 275 ; Ross v. Hardin, 79 N. Y. Gillett v. Bate, 86 N. Y. 94. CHAPTER III. CREDITORS REMEDIES. § 51. Concurrent remedies — Legal and equitable. 52. No injunction against debtor be- fore judgment. 53. Certain exceptional cases. 54. Joinder of claims. 55. Uniting causes of action. 56. Exclusive jurisdiction in equity. 57. Land purchased in name of third party. 58. Relief before and after sale. 59. The remedy at law. 60. By suit in equity. 61. Supplementary proceedings. 62. Assumpsit — Case — Conspiracy. § 62a. Reference not ordered. 63. Relief collateral to main action. 64. Remedy governed by lex fori. 65. Cumulative remedies — Allowed and disallowed. 66. Effect of imprisonment of debtor. 67. Election of remedies. 68. Creditors' bills. 69. Direct and collateral attack — Ex- ceptional doctrine in Louisiana. 70. Forms of relief in cases of fraud on wife. 71. Procedure in Federal tribunals. 72. Recapitulation. § 51. Concurrent remedies— Legal and equitable. — Equity has concurrent jurisdiction with law over frauds under the statute 13 Eliz. c. 5, or similar enactments/ and the same general rules of construction govern in both courts.^ Thus it was remarked by the Supreme Court of New Jersey : " Courts of law and courts of equity have concurrent juris- diction over frauds, under the statute concerning fraudulent conveyances. In cases where the legal title to the property is such that it cannot be seized under execution, resort to equity is necessary — as where the legal title has never been in the debtor, having been conveyed by a third person directly to another, in secret trust for the benefit of the debtor, with a design fraudulently to screen it from his creditors.^ But where the leo-al title has been in the debtor, ' Orendorf v. Budlong, 12 Fed. Rep. Cas. (5th ed.) 58, 59, note; Hopkirk v. 24. Randolph, 2 Brock. 133. See §4. ■^ Sexton V. Wheaton, i Am. Lea. "" See § 57. -^omI - l^^ ^ § 51 CONCURRENT REMEDIES. 79 SO as to be subject to execution at law, and might be made available for the satisfaction of the debt, if the fraudulent conveyance had not been interposed, the creditor, or a third person having taken title under a sheriff's sale, may bring ejectment, and avoid the fraudulent conveyance by proof of the illegal purpose for which it was made."^ It will be presently seen that this latter illustration is not of universal application.^ The forms of relief available to creditors are outlined in our opening chapter,"^ where it is shown that creditors may invoke the aid of equity in two cases, after proceeding to judgment and execution at law without ob- taining satisfaction of the debt.^ In the first class of cases the complainant proceeds simply upon the ground of fraud, and in support or furtherance of the remedy at law, while in the other class of cases- relief is sought upon the theory that the remedy at law has been exhausted, and that it is inequitable and unjust on the part of the debtor to refuse to apply any intangible property or choses in action toward the payment of the judgment.^ Resort by creditors to courts of equity is of very frequent occurrence because the common law is not sufficiently flexible. Of necessity, in a common-law action a purchase is treated as either valid or void.^ There is no middle ground."^ Proof of absolute fraud, which is usually difficult, is for that reason generally required at law, while in equity it is said that an unfair or inequitable transaction — one not of necessity absolutely fraudulent in the full sense of that term — may be unrav- elled in the interest of creditors. In such cases the rights of an innocent vendee can be preserved and protected by ' Mulford V. Peterson, 35 N. J. Law (N. Y.) 305 ; Jones v. (".reen, i Wall I33- 33'- - See § 69. 'Williams v. llubbaril, Walker's *See§4. Ch. (Mich.) 29. •* Williams v. Hubbard, Walker's '' See I'/i/ra. Void and Voidable Acts. Ch. (Mich.) 28; Cornell v. Radway, 22 Also Chap. XIII. Wis. 264; Beck v. Burdett, i Paige ' See § 193, P'oster v. Foster. 56 Vl. 540. 80 CONCURRENT REMEDIES. § 5 I the plastic hand of equity. In other words, certain cases v^ seem to imply that proof of fraud need not be so complete in equity as at law ; ^ but it is not so easy to illustrate the distinction or to state a substantial justification for its ex- istence.^ Mr. Abbott observes in an editorial in the New York Daily Register :^ " In the quaint language of West- minster Hall, ' legal fraud ' means illegal fraud, that is to say, fraud for which an action at law lay to recover dam- ages. So 'equitable fraud' means inequitable conduct not illegal in the sense of sustaining an action for damages, but yet so like it in effect that the Chancellor would give a remedy." Though in some States legal and equitable jurisdictions have been united in the same tribunals, yet the distinctions which formerly appertained in the forms of action, of plead- ing, and of relief, are by no means superseded or obliter- ated. In territory where the system of common law and chancery both prevail, and the only adequate relief is in equity, and the pleadings are framed in accordance with this view, the suit must be tried as a chancery case by the modes of procedure known to courts of equity. The judge or chancellor is responsible for the decision, and, though he may, by means of feigned issues, refer any questions of fact to a jury,^ still his own conscience must be satisfied that the finding is correct, and the decree must be rendered as the result of his individual judgment, aided, it may be true, by the finding of the jury. Hence, where the trial in such a case is conducted as though it were a controversy in a com- mon-law action, and a judgment is rendered upon a verdict as at common law, it will be reversed for error.^ And in ' Warner v. Daniels, i Woodb. & M. ^ Nov. 15, 1888. 103 ; Fullagar v. Clark, 18 Ves. 483; ^ See Wright v. Nostrand, 94 N. Y. Earl of Chesterfield v. Janssen, 2 Ves. 31 ; Colman v. Dixon, 50 N. Y. 572. Sen. 143. ^ Dunphy v. Kleinsmith, 11 Wall. ^ See Marksbury v. Taylor, 10 Bush 615. (Ky.) 519. § 52 NO INJUNCTION BEFORE JUDGMENT. 8 1 an equitable proceeding of this character, as will presently be shown, a decree in the nature of a judgment for dam- ages cannot be rendered against the defendant who is alleged to have fraudulently taken an assignment of the in- solvent's property. The decree must be for an accounting as to the property which has come into the hands of the fraudulent vendee.^ Where property which is legally liable to be taken in execution has been fraudulently conveyed or encumbered, the jurisdiction is usually concurrent, as the creditor may either issue an execution at law and sell the property, or file a bill in equity to have the conveyance set aside.^ The remedy in equity, as will presently appear,^ is necessarily exclusive in cases where the subject-matter of contention is not subject to execution. § 52. No injunction against debtor before judgment. — ^Vs a general rule, a simple contract creditor who has no lien on the property, cannot enjoin his debtor from selling it, nor will he be allowed to come into equity to invoke its inter- ference to preserve the property until a judgment can be obtained."* If the property of an honest struggling debtor could be tied up by injunction upon mere unadjusted legal demands, he might be constantly exposed to the greatest hardships and grossest frauds, for which the law would ' See §§ 176-179. feldt v. Boehm, 96 111. 56o;'Moran v. - See note to Sexton v. Wheaton, 1 Dawes, i Hopk. Ch. (N. Y.) 365 ; Uor- Am. Lea. Cas. {5th ed.) 58, 59; Bisp- tic v. Dugas, 52 Ga. 231 ; Buchanan v. ham's Equity, §242; Blenkinsopp v. Marsh, 17 Iowa 494; Rich v. Levy, 16 Blenkinsopp, i De G., M. & G. 500; Md. 74; Phelps v. Foster, 18 III. 309; Partee V. Mathews, 53 Miss. 146; Sheafe Brooks v. Stone, 19 How. Pr. (N. Y.) V. Sheafe, 40 N. H. 516; Scott v. In- 395; Uhl v. Dillon, 10 Md. 500; Hub- dianapolis Wagon Works, 48 Ind. 75 ; . bard v. Hubbard, 14 Md. 356. Com- Gallman v. Perrie, 47 Miss. 131, 140; pare Case v. Beauregard, 99 U. S. 125; Barto's Appeal, 55 Pa. St. 386 ; Tupper Locke v. Lewis, 124 Mass. i. See §73. V, Thompson, 26 Minn. 386 ; Henry v. Nor can a creditor having possession of Hinman, 25 Minn. 199. the debtor's property, without judicial "* See § 56. process and against the debtors will, '' Peyton v. Lamar, 42 Ga. 134; sell the property and apply its proceeds Cubbedgev. Adams, 42 Ga. 124; Ober- to the payment of the debt. Xenia holser v. Greenfield, 47 Ga. 530; Shu- Bank v. Stewart, 114 U. S. 224. 6 82 NO INJUNCTION BEFORE JUDGMENT. § 52 afford no adequate remedy. It would deprive him of the means of payment, or of defending himself against vexa- tious litigation, and force him into unconscionable compro- mises to prevent the ruin of his business pending the con- troversy.^ An injunction ought not to issue to compel parties to hold goods pending a trial at law with the ex- pectation that they may be wanted to answer an execution upon a judgment which the creditor hopes to obtain.^ " The authorities are clear," says the learned and lamented Mr. Justice Campbell,^ "that chancery will not interfere to pre- vent an insolvent from alienating his property to avoid an existing or prospective debt, even when there is a suit pend- ing to establish it." "The reason of the rule," says Chan- cellor Kent, "seems to be that until the creditor has estab- lished his title he has no right to interfere, and it would lead to an unnecessary and, perhaps, a fruitless and oppres- sive interruption of the exercise of the debtor's rights. Unless he has a certain claim upon the property of the debtor, he has no concern with his frauds."^ So the sim- ' Shufeldt V. Boehm, 96 111. 560. lief prayed. No authority has been '^ Phelps V. Foster, 18 111. 309; Hea- shown to this court, nor can any be pro- cock V. Durand, 42 111. 230 ; Homer v. duced entitled to consideration, which Zimmerman, 45 111. 14. sanctions the exercise of the high and ^ Adler v. Fenton, 24 How. 411. extraordinary power of a court of chan- ■* Wiggins V. Armstrong, 2 Johns, eery, to interpose, by writ of injunction, Ch. (N. Y.) 145, and the able opinion of in a case like the one before us, re- Chancellor Kent. Uhl v. Dillon, 10 straining a debtor in the enjoyment and Md. 500, was a bill for an injunction power of disposition of his property, and receiver filed by a simple contract The appellees (the complainants below) creditor, charging that the defendant are merely general creditors of the ap- was deeply in debt ; that he was dispos- pellant, who have not prosecuted their ing of his stock ; had already parted claim to judgment and execution, nor with his real estate ; and was collecting " in any other manner acquired a lien debts due to him, with the intention to upon the debtor's property, and were defraud creditors and abscond. An in- not entitled to the writ of injunction junction was allowed and a receiver nor to the appointment of a receiver, appointed. The appellate court in re- Whatever may be the supposed defects versing the decree and dismissing the of the existing laws of the State, in bill, said (p. 503) : " The bill filed by leavmg to the debtor the absolute the appellees in this cause, states no power of disposing of his property, and sufficient case entitling them to the re- leaving the creditor to the slow and § 53 CERTAIN EXCEPTIONAL CASES. S^ pie contract creditors of a firm ordinarily have no specific lien upon the firm property which will enable them to in- terfere with any disposition which the firm may make of it.' § 53. Certain exceptional cases. — Occasional exceptions may be found in some States to the rule that equity will not interfere at the instance of a simple contract creditor. But the exceptions prove the force of the rule. In Moore V. Kidder,'^ the bill distinctly charged a fraudulent intention on the part of a debtor summoned as trustee, and an at- tempt to dispose of his property, and put it beyond the reach of creditors, for the purpose of defeating the plain- tiffs in the collection of any judgment that might be ob- tained in a suit at law, and asked for an injunction to pre- vent that mischief and wrong. The court said that the bill very clearly showed a case for equitable interference, in aid of the remedy at law, and that without such relief the suit at law would be rendered fruitless by the active fraud of the defendant.^ Clearly this was a proper case for the issu- ance of an attachment or other suitable provisional relief in the action at law. In another case where a bill charged insolvency in the debtor, and averred that he had fraudu- lently transferred his goods to a third person, who was im- plicated in the fraud, and that the debtor had purchased the goods with intent to defraud the plaintiffs, a receivership very inadequate legal remedies now pro- Knox County Bank, 8 Ohio St. 511; vided, if such defects exist, it is solely Potts v. Blackwell, 4 Jones' Eq. (N. C.) in the power of the legislature to cor- 58 ; Field v. Chapman, 15 Abb. Pr. (N. rect them. It is not within the prov- Y.) 434 ; State v. Thomas, 7 Mo. App. ince of the chancery courts to stretch 205 ; Shackelford v. Shackelford, 32 their power beyond the limits of the au- Gratt. (Va.) 481 ; Allen v. Center Val- thorities of the law, for the purpose of ley Co., 21 Conn. 130; Schmidlapp v. remedying such defects. Such a course Currie, 55 Miss. 597 ; Reeves v. Ayers, would be productive of great mischief, 38 111. 418 ; Mayer v. Clark, 40 Ala. 259. and make the rights of the citizen de- See Case v. Beauregard, 99 U. S. 125. pend upon the vague and uncertain dis- " 55 N. H. 491. crelion of the judges, instead of the safe "Compare Bowcn v. Hoskins, 45 and well-defined rules of law." Miss. 183; Cottrcll v. Moody, 12 B. ' Wilcox v. Kellogg, 11 Ohio 394; Mon. (Ky. ) 502; Thompson v. Diffen- Gwin v. Selby, 5 Ohio St, 97 ; Sigler v. derfer, i Md. Ch. 489. 84 JOINDER OF CLAIMS. § 54 was allowed before judgment.^ Here the relief was ex- tended upon the theory that the goods for which the indebt- edness was created were fraudulently obtained, and that the debtor never acquired title to them. This would seem to be substantially substituting a bill in equity for the relief usually incident to replevin. These cases can scarcely be commended as safe precedents. § 54. Joinder of claims. — The assets of the fraudulent debtor are, as a rule, scattered among different friends, in different forms, and by transactions had at different times. This requires us to notice the authorities as to uniting or joining claims. In cases where the sole object of the bill is to secure satisfaction of a judgment out of property fraudulently alienated, the suit may be framed to avoid several distinct conveyances made to as many grantees. Such a bill is said to embody a single cause of action.^ This principle applies although the defendants may have separate and distinct defenses.^ In Lattin v. McCarty,* it was decided that an equitable cause of action to cancel and remove, as a cloud upon plaintiff's title, a deed given by mistake by a third party to the defendant, under which the latter had fraudulently obtained possession, could be united with a claim to recover possession of the premises, and as- serted in the same complaint. The principle of this case was expressly repudiated in Missouri in an action involving substantially the same state of facts, on the theory that a bill in equity was not a proper form of action for the recov- ery of the possession of real estate, there being an adequate remedy at law.^ But this latter reason does not commend ' Cohen V, Meyers, 42 Ga. 46. Com- er v. Tucker, 29 Mo. 350; Snodgrass pare Hyde v. Ellery, 18 Md, 500; Ro- v. Andrews, 30 Miss. 472 ; Reed v. senberg v. Moore, 1 1 Md. 376 ; Hag- Stryker, 4 Abb. App. Dec. (N. Y.) 26 ; garty v. Pittman, i Paige (N. Y.) 298. Dimmock v. Bixby, 20 Pick. (Mass.)368. - Trego V. Skinner, 42 Md. 432 ; * Donovan v. Dunning, 69 Mo. 436. North V. Bradway, 9 Minn. 183 ; Chase •* 41 N. Y. 107. V. Searles, 45 N. H. 511; Jacot v. * Peyton v. Rose, 41 Mo. 257; Curd Boyle, 18 How. Pr. (N. Y.) 106 ; Tuck- v. Lackland, 43 Mo. 140. § 55 UNITING CAUSES OF ACTION. 85 itself as conclusive. Fraudulent confessions of judgments entered in different courts may be attacked in one suit.^ So a partner may sue his copartners for an accounting, and may join in the same action alienees of his copartners, to whom the latter have collusively transferred partnership assets in fraud of the partnership, and seek a cancellation of the transfer as well as an accounting. " Why," it has been said, " should not all this be embraced in one action ? The object is single, viz. : To bring about a complete and final settlement of the partnership."- § 55. Uniting causes of action. — Questions relating to the joinder of causes of action of necessity frequently arise for adjudication in contests of the class under consideration, where debtors have sought to conceal property by different subterfuges. In Palen v. Bushnell,-^ the plaintiff, as re- ceiver in supplementary proceedings, instituted an action against the debtor and a third party, (i). To recover moneys usuriously exacted by the third party from the debtor ; (2). To compel the third party to account for securities belong- ing to the debtor ; and (3). To set aside as fraudulent cer- tain transfers of real and personal property alleged to have been made by the debtor to the third party. The court ob- served : " What is the subject of the action in this case ? It is the restitution of the property of the judgment-debtor whom the plaintiff represents. To entitle iiimsclf to this relief, the plaintiff avers in his complaint different transac- tions out of which his right to restitution flows." This statement is criticised by Mr. Pomeroy,^ as follows : " There is here a plain confusion of ideas. The restitution of the ' Uhlfelder v. Levy, 9 Cal. 607. pel payment of unpaid subscriptions ' Compare, upon this general sub- and a claim to enforce the individual ject, Webb v. Helion, 3 Rob. (N. Y.) liability of stockholders. Warner v. 625 ; Wade v. Rusher, 4 Bosw. (N. Y.) Callender, 20 Ohio St. 190. 537. A judgment-creditor of an insol- ^ 46 Barb. (N. Y.) 25. vent railroad corporation may in Ohio •* Remedies and Remedial Rights. join in the same action a claim to com- § 470. 86 EXCLUSIVE JURISDICTION IN EQUITY. §56,57 debtor's property, which is the rehef demanded, is the object of the action. If there is anything connected with this matter clear, it is that the authors of the code used the terms ' subject of action ' and ' object of the action ' to de- scribe different and distinct facts." The criticism upon the particular language employed in this case is probably just, but we cannot suppress the conviction that a system of pro- cedure which prohibited the joinder of such claims in a single action would furnish most unsatisfactory and inad- equate redress to creditors. § 56. Exclusive jurisdiction in equity. — Manifestly in cases where property is of such nature that it never was subject to execution at law, the remedy of creditors desiring to reach it, as we have observed, is exclusively in chancery.^ Thus, as has already been shown,^ it was observed by Chief- Justice Gray, in delivering the opinion of the Supreme Court of Massachusetts, in Drake v. Rice,^ that, " by the law of England before the American Revolution, .... fraudulent conveyances of choses in action, though not specified in the statute, were equally void, but from the nature of the subject, the remedy of the creditor must be sought in equity." * § 57. Land purchased in name of third party. — The creditor may encounter a practical difficulty in reaching realty paid for by the debtor the title to which is fraudulently taken in the name of a third party. This is a very common device. The courts are somewhat at variance upon the question as to whether or not real estate so held can be sold on execu- ' See Weed V. Pierce, 9 Cow. (N. Y.) Atk. 603, note; Horn v. Horn (1749), 722; Sexton V. Wheaton, i Am. Lea. Ambl. 79; Ryall v. Rolle (1749), ^ Cas. (5th ed.) 59; Drake v. Rice, 130 Atk. 165; S. C. i Ves. Sr. 348; Part- Mass. 412; Abbott V. Tenney, 18 N. ridge v. Gopp (1758), i Eden 163; s. H. 109; Sargent v. Salmond, 27 Me.539. C. Ambl. 596 ; Bayard v. Hoffman, 4 « See §17. Johns. Ch. (N. Y.) 450; Hadden v. ' 130 Mass. 412. Spader, 20 Johns. (N. Y.) 554 ; Abbott * Citing Taylor v. Jones (1743), 2 v. Tenney, 18 N. H. 109; Sargent v. Atk. 600; King v. Dupine (1744), 2 Salmond, 27 Me. 539. See §§ 17, 33. § 57 PURCHASES IN NAME OF THIRD PARTY, 87 tion against the debtor, and recovered by the purchaser in ejectment, or in fact, whether it can be reached by any pro- ceedings at law. Authorities can be cited to the effect that an execution sale of land, the title to which is held in this manner, passes nothing to the purchaser ; ^ the creditor's proper remedy to reach it is declared to be by bill in equity;^ the grantee is considered to hold the title im- pressed with a trust in favor of creditors,^ and may be com- pelled to quitclaim his interest/ The principle embodied in these authorities seems to commend itself as logical, but it is not universally recognized. There are cases holding that an execution purchaser on a judgment against the debtor may recover the lands in ejectment, even though the title was never in the debtor, if it is shown that the fraudulent grantee held it for the debtor's benefit,^ and that such an interest may be attached." It may be observed that a purchase of personal property by a debtor in the name of ' Mulford V. Peterson, 35 N. J. Law 133; Haggerty v. Nixon, 26 N. J. Eq. 42; Garfield v. Hatmaker, 15 N. Y. 475; Dewey v. Long, 25 Vt. 564; Davis V. McKinney, 5 Ala. 719; Web- ster V. Folsom, 58 Me. 230 ; Low v. Marco, 53 Me. 45 ; Jimmerson v. Dun- can, 3 Jones (N. C.) Law 537 ; Carlisle V. Tindall, 49 Miss. 229; Howe v. Bishop, 3 Met. (Mass.) 26. See Hamil- ton V. Cone, 99 Mass. 478. In Niver V. Crane, 98 N. Y. 40, it was decided that the fact that a debtor paid the consideration for property conveyed to another did not alone authorize a judg- ment taking the property to satisfy the debt. Under the provision of the stat- ute of uses and trusts (i R. S. 728, §§ 51, 52), which declares that a grant made to one person, the consideration for which is paid by another, shall be pre- sumed fraudulent as against the credit- ors at that time of the person paying the consideration, and where fraudu- lent intent is not disproved, a trust shall result in favor of such creditors, to make out such a trust the considera- tion must be paid at or before the exe- cution of the conveyance. See Decker V. Decker, 108 N. Y. 128. -' Mulford V. Peterson, 35 N. J. Law 133- 3 Garfield v. Hatmaker, 1 5 N. Y. 475 ; Corey v. Greene, 51 Me. 114; Sim- mons V. Ingram, 60 Miss. 900. •• Cutter V. Griswold, Walker's Ch. (Mich.) 437. Must the creditor first recover judgment in such a case ? See Ocean Nat. Bank v. Olcott. 46 N. Y. 22. See infra. Chap. IV. ' Kimmel v. McRight. 2 Pa. St. 38; Tevis V. Doe, 3 Ind. 129; Pennington v. Clifton, II Ind. 162; Guthrie v. Gardner, 19 Wend. (N. Y.) 414. Com- pare Wait V. Day, 4 Den. (N. Y.) 439 ; Brewster v. Power, 10 Paige (N. Y.) 569; Garfield v. Hatmaker, 15 N. Y. 477- ' Cecil Bank v. Snively, 23 Md. 253- 88 RELIEF BEFORE AND AFTER SALE. §§ 58, 59 a third party does not exempt it from direct seizure by creditors.^ § 58. Relief before and after sale. — The jurisdiction of a court of equity is ample either before or after sale under a judgment, to set aside a deed made in fraud of creditors — before sale to enable the creditor to present and sell an un- embarrassed title ; after sale to remov'e clouds from the title.^ It will thus be seen how important the jurisdiction of equity becomes in connection with fraudulent transfers. It would often be impossible, especially in cases affectinor realty, to render the title marketable until the flexible hand of a court of equity had removed the simulated transfers and incumbrances in which the debtor has involved it. Equity alone can disentangle the title from the doubts and embarrassments which interfere with a realization of a fair price ; and to that extent and for that purpose its invaluable assistance is usually asked.^ In Rhead v. Hounson,* the court said : " The bill must be construed in reference to its nature. It is not filed to reach property incapable of seiz- ure on execution, and therefore based on the theory that the legal remedy has been exhausted. Very far from it. The principle on which it proceeds is that a legal remedy is in fact progressing, and which, being fraudulently ob- structed, the aid of the court is needed to remove that obstruction. The claim made is that the deed from the judgment-debtor to his son is fraudulent as against the creditor, and that the farm is therefore subject to levy and the deed exposed to be removed out of the way of it by the assistant jurisdiction of equity." §59. The remedy at law. — A judgment -creditor may proceed at law to sell under execution lands or property ' Godding v. Brackett, 34 Me. 27. See Orendorf v. Budlong, 12 Fed. Rep. See §82. 25. ' Gall man v. Perrie, 47 Miss. 131. ^ Partee v. Mathews, 53 Miss. 146. ^ 46 Mich. 246. § 6o BY SUIT AT LAW AND IN EQUITY. 89 which his debtor has fraudulently alienated,^ which are sub- ject to execution. The attempted transfer may be treated as a nullity, and the property subjected to seizure and sale upon execution the same as though no such covinous trans- fer had ever been made.^ The creditor in such cases may consider the debtor as still the owner of the property, and may pursue it to secure satisfaction of the claim the same as though the title were unembarrassed by the fraudulent deed or transfer.^ This general principle was involved in Rinchey v. Stryker,'* in which case it was decided that where an attachment was issued to asheriff he was entitled to seize under it any property which the debtor might have disposed of with intent to defraud his creditors ; that by such seizure a specific lien was acquired upon the property attached, and the sheriff, when sued for wrongfully taking the property, had a right to show, even before judgment in the attach- ment suit, that the title of the purchaser from the debtor was fraudulent and voidable as against the attaching creditor.^ § 60. By suit in equity. — Fraud is one of the recognized subjects of equity jurisdiction, and is the most ancient ' Carter v. Castleberry, 5 Ala. 277 ; to creditors ; and even when the parlies Booth V. Bunce, 33 N. Y. 139; Henry intend an irrevocable disposition of the V. Hinman, 25 Minn. 199; Brown v. property, but the conveyance has been Snell, 46 Me. 490 ; Thomason v. Neeley, made with the intent to defraud cred- 50 Miss. 313; Jacoby's Appeal, 67 Pa. itors," it maybe avoided. Chandler v. St. 434 ; Allen v. Berry, 50 Mo. 90 ; Von Roeder, 24 How. 227 ; Baldwin Fowler v. Trebein, 16 Ohio St. 493; v. Peet, 22 Tex. 70S, note. In Mas- Staples v. Bradley, 23 Conn. 167 ; Foley sachusetts, jurisdiction in equity is v. Bitter, 34 Md. 646 ; Gormerly v. limited to property or rijT;hts which Chapman, 51 Ga. 421 ; Russell v. Dyer, cannot be attached or taken on execu- 33 N. H. 186. But see §69. tion. Schleisinger v. Sherman, 127 •* Tupper V. Thompson, 26 Minn. 386 ; Mass. 209. Henry v. Hinman, 25 Minn. 199 ; S. P. ■* 26 How. Pr. (N. Y.) 75 ; S. C. 31 National Park Bank v. Lanahan, 60 N. Y. 140. Md. 513. ' See Greenleaf v. Mumford, 30 How. ' Thomason V. Neeley, 50 Miss. 313. Pr. (N. Y.) 30. 31. But compare It has been observed that where the Thurber v. Blanck, 50 N. V. 83. with "deed is a mere pretence, collusively Mechanics' & Traders' Hank v. Dakin, devised, and the parties do not intend 51 N. Y. 519. See Lawrence v. Bank other than an ostensible change of the of the Rcjjublic. 35 N. Y. 320 ; infra, property, the property does not pass as § 81. 90 BY SUIT IN EQUITY. § 6o foundation of its power.' The existence of a remedy at law does not interfere with the right of a creditor to resort to a court of equity ^ to secure a cancellation of a fraudu- lent conveyance as an obstacle in the way of the full en- forcement of a judgment, and a cloud on the title to the property sought to be i cached.^ The suit in equity is some- times said to be an ancillary relief in aid of the legal remedy,* since a court of equity does not intervene to enforce the payment of debts.^ It may be asked why resort is so fre- quently had to a creditor's bill seeking a decree to avoid or cancel the covinous transfer when the property may be more expeditiously seized under attachment or execution. The creditor's bill, or a suit to clear the fraudulent transfer, is, for many reasons, entitled to preference as a means of re- lief. Should the creditor attempt to sell the disputed prop- erty arbitrarily under execution bidders would be deterred from purchasing lest they should buy a lawsuit, hence the market value of the land embraced in the covinous transfer is practically destroyed. Then the seizure of the property subjects the creditor to the peril incident to proving that ' Hartshorn v. Eames, 31 Me. 97 ; its object the removal of the cloud cast Story's Equity, § 68. See Warner v. upon the title by the fraudulent con- Blakeman, 4 Keyes (N. Y.) 507 ; Logan veyance. The removal of this cloud V. Logan, 22 Fla. 564. was in the interest of both the debtor - See § 51. and the creditors by enabling the prop- ^ Planters' & M. Bank v. Walker, 7 erty to be sold at a better price." Ala. 926 ; Sheafe v. Sheafe, 40 N. H. Again, it has been observed that " The 516: Dargan v. Waring, 11 Ala. 988 ; creditor has not only a right to have Cook V. Johnson, 12 N. J. Eq. 52; the property subjected to the payment Bean v. Smith, 2 Mason 253 ; Hamlen ofhis judgment, but to have it subjected V. McGillicuddy, 62 Me. 269 ; Waddell in such manner that it will bring its fair V. Lanier, 62 Ala. 347 ; Traip v. Gould, market value." Fowler v. McCartney, 15 Me. 83; Beaumont v. Herrick, 24 27 Miss. 510. Ohio St. 456 ; Sockman v. Sockman, 18 "* See McCartney v. Bostwick, 32 N. Ohio 368 ; Musselman v. Kent, 33 Ind. Y. 57. 452 ; Dockray v. Mason, 48 Me. 178. " Dunlevy v. Tallmadge, 32 N. Y. In Gormley v. Potter, 29 Ohio St. 599, 459 ; Voorhees v. Howard, 4 Keyes the court said : " The petition was (N. Y.) 383 ; Griffin v. Nitcher, 57 Me. founded upon the fact that the land had 272 ; Logan v, Logan, 22 Fla. 564. See been taken in execution, and had for § 73. § 60 BY SUIT IN EQUITY. 9 1 the transfer was fraudulent, and in the event of failure to establish fraud, of paying damages for the unwarrantable interference, seizure, and sale. By filing a creditor's bill practically the only risk incurred is the costs and expense of the suit, for generally no seizure is effected unless the suit is successful, in which event the covinous transfer and cloud on the title is cleared away. Then, as already stated, equity procedure is more flexible than the procedure at law,^ and in equity an inequitable transaction not absolutely fraud- ulent in the full sense of that term may be avoided at the suit of a creditor. Fraud it is said may be presumed in equity but must be proved at law ;^ but this is a loose and unreliable statement, for it must be proved in either forum. Courts of equity it is true will act upon circumstances in- dicating fraud which courts of law might scarcely deem satisfactory proofs ; and will grant relief upon the ground of fraud established by presumptive evidence of such char- acter as courts of law would not always deem sufficient to justify a verdict.^ The Supreme Court of Pennsylvania,^ in commenting upon the applicability of equity to suits in- volving fraudulent alienations, remark : " It is especially adapted to this class of cases. Its process is plastic and may be readily moulded to suit the exigencies of the par- ticular case. A court of equity proceeds with but little re- gard to mere form. It moves with celerity, and seizes the fruits of a fraud in the hands of the wrong-doer." Having " See § 51. give reVief ag&inst prcsump/iw/mut/s, ■^ King V. Moon, 42 Mo. 555. and therein will go further than courts 'See Jackson v. King, 4 Cow. (N. of law, where fraud must be proved and Y.) 207; 3 Greenl. Ev. §254; i Story's not presumed There are many Eq. Jur. §§ 190-193. "Fraud is not instances of fraud that would in equity to be considered as a simple fact, but affect instruments in wiiting concern- a conclusion to be drawn from all the ing lands, of which the law could not circumstances of the case. It may be take notice." Burt v. Keyes, i Flipp. inferred from the nature of the contract 63. Compare United States v. Am- itself, or from the condition or circum- istad, 15 Pet. 594; Lloyd v. Fulton, 91 stances of the parties. The general U. S. 483. See §15. principle is well settled, that equity will ^ Fowler's Appeal, 87 Pa. St. 454. 92 SUPPLEMENTARY PROCEEDINGS. § 6 1 jurisdiction for one purpose equity will make a complete disposition of the cause.^ Equity endeavors to deal with the substance of affairs ; to look beyond the observance of mere forms ; ^ to regulate its judgment according to the real purposes which controlled parties in the various matters brought before it for relief or correction ; ^ to tear aside the covering beneath which the perpetrators of the fraud seek concealment ; to deal with actual facts, not with pretexts and disguises. The Supreme Court of Illinois say : "Equity will penetrate beyond the covering of form, and look at the substance of a transaction, and treat it as it really and in essence is, however it may seem." ^ Rules of pleading in equity are not so strict in matters of form as at law.^ § 6i. Supplementary proceedings. — Supplementary pro- ceedings have, in New York and in some of the other States which have appropriated its reformed system of pro- cedure, taken, in some measure, the place of creditors' actions or suits in equity to reach equitable assets. This remedy is 1 Manufacturing Co. v. Bradley, 105 ^ Livermore v. McNair, 34 N. J. Eq. U. S. 182; Oelrichs v. Spain, 15 Wall. 482 ; Buck v. Voreis, 89 Ind. 117. 211; Crane v. Bunnell, 10 Paige (N. ■* Wadhams v. Gay, 73 111. 415, Y.)333; Billups V. Sears, 5 Gratt. (Va.) 435. See Gay v. Parpart, 106 U. S. 31 ; Pearce v. Creswick, 2 Hare 296; 699. Martin v. Tidwell, 36 Ga. 345 ; San- ^ Birely's Ex'rs v. Staley, 5 Gill & J. born V. Kittredge, 20 Vt. 632 ; Souder's (Md.) 432; Ridgely v. Bond, 18 Md. Appeal, 57 Pa. St. 498, 502 ; Corby v. 450 ; Small v. Owings, i Md. Ch. 367. Bean, 44 Mo. 379. In Warner v. Blakeman, 4 Keyes (N. 2 V/ right V. Oroville M. Co., 40 Cal. Y.) 507, Woodruff, J., said: " It is the 20. In Buck V. Voreis, 89 Ind. 117, just and proper pride of our matured Elliott, J., said : " Forms are of little system of equity jurisprudence that moment, for where fraud appears courts fraud vitiates everj^ transaction; and, will drive through all matters of form however men may surround it with and expose and punish the corrupt forms, solemn instruments, proceed- act." Of course equity " cannot create a ings conforming to all the details re- title where none exists." .... " Cred- quired in the laws, or even by the itors can work out equities only through formal judgment of courts, a court of the rights of the parties where there is equity will disregard them all, if neces- no fraud." Rush v. Vought, 55 Pa. St. sarj-, that justice and equity may pre- 438, 444, quoted in Curry v. Lloyd, 22 vail." Fed. Rep. 265. § 6l SUPPLEMENTARY PROCEEDINGS. 93 now a special proceeding in New York,^ and not a pro- ceeding in the original action. These proceedings furnish, to a certain extent, a substitute for a creditor's bill,'^ for the discovery and sequestration of property,'^ and by their com- mencement a lien is said to be acquired upon the debtor's equitable assets,"* though another creditor may gain prece- dence if, after the service of the order for the examination of the debtor, and before the appointment of a receiver, he discovers property liable to execution and levies upon it.^ Generally speaking these proceedings will reach whatever property is available on a creditor's bill,'^ and have, as we have seen, been held to be a simple substitute for it,~ and are entitled to all the presumptions of regularity which appertain to proceedings in courts of general jurisdiction."* Supplementary proceedings are not exclusive.' The judg- ment-creditor may abandon them and institute a suit in his own name to annul a fraudulent alienation,^" if indeed he may not invoke both remedies at the same time." If a third party makes claim to any property which the examination ' N. Y. Code Civ. Pro., § 2433. Com- is not divested by the death of the pare West Side Bank v. Pugsley, 47 N. debtor it cannot be enforced in a Sur- Y. 368. rogate's Court unless prior to the death ^ Spencer v. Cuyler, 9 Abb. Pr. (N. a receiver was appointed or an order Y.) 382 ; People v. Mead, 29 How. Pr. was made directing the application of (N. Y.) 360 ; Pope v. Cole, 64 Barb. (N. the debtor's property to the satisfaction Y.) 409; affi'd, 55 N. Y. 124. Com- of the judgment. Billings v. Stewart, pare Catlin v. Doughty, 12 How. Pr. 4 Dem. (N. Y.) 265. (N. Y.) 459. ' Becker v. Torrance, 31 N. Y. 631. ^ Becker v. Torrance, 31 N. Y. 631 ; See Davenport v. Kelly, 42 N. Y. 193. Billings V. Stewart, 4 Dem. (N. Y.) "* Banies v. Morgan, 3 Hun (N. Y.) 269. 703; Barker v. Dayton, 28 Wis. 367. * Lynch v. Johnson, 48 N. Y. 33 ; ■" Lynch v. Johnson, 48 N. Y. 33 ; Storm v. Waddell, 2 Sandf. Ch. (N. Y.) Smith v. Weeks, 60 Wis. 100. Com- 494; Brown v. Nichols, 42 N. Y. 26; pare Williams v. Thorn, 70 N. Y. 270. Edmonston v. McLoud, 16 N. Y. 544; See §45. Billings v. Stewart, 4 Dem. (N. Y.) 268. ' Wright v. Nostrand. 94 N. Y. 31. Compare Dubois v. Cassidy, 75 N. Y. * N^'illiams v. Sexton, 19 Wis. 42. 300; Campbell V. Genet, 2 Hilt. (N. Y.) "'Bennett v. McGuire, 58 Barb. (N. 290; Robinson v. Stewart, 10 N. Y. Y) 625. 196. Although the lien acquired by the "Gates v. Young, 17 Weekly Dig. judgment-creditor in these proceedings (N. Y.) 551. See §§51, 65. 94 SUPPLEMENTARY PROCEEDINGS. §6i discloses, the rights of the claimants cannot be determined in this proceeding, but resort must be had to a suit.^ The procedure is usually by order, made upon proof of the re- turn of an execution unsatisfied, requiring the debtor to appear in person in court, to be examined concerning his property.^ The judgment upon which the order is pro- cured must be in pc7^sona77i? Property or equitable assets being thus disclosed, a receiver is appointed, who, upon qualifying, becomes vested with the debtor's assets and equitable interests, without conveyance or assignment,'* though he does not get title to exempt property.^ The receiver represents creditors, and thus may impeach the debtor's fraudulent sales ^ in the right of creditors. It seems to be no objection to the exercise of the jurisdiction ap- pointing a receiver that the debtor has no assets,'^ or that such property as he is possessed of is subject to execution.^ 1 West Side Bank v. Pugsley, 47 N. Y. 372 ; Bennett v. McGuire, 58 Barb. (N. Y.) 634; Rodman v. Henry, 17 N. Y. 484 ; Sebrauth v. Dry Dock Savings Bank, 20 Alb. L. J. 197. Supplement- ary proceedings may be instituted be- fore a judge of a Federal court, on a judgment at law recovered in the United States Courts. Ex parte '^o\d., 105 U. S. 647. Compare Senter v. Mitchell, 5 McCra. 147. But the ex- amination cannot be held in a State court upon a Federal judgment. Tomp- kins v. Purcell, 12 Hun (N. Y.) 662. Compare Goodyear Vulcanite Co. v. Frisselle, 22 Hun (N. Y.) 175. - Bartlett v. McNeil, 49 How. Pr. (N. Y.) 55 ; affi'd, 60 N. Y. 53. » Bartlett v. McNeil, 3 Hun (N. Y.) 221. Compare Schwinger v. Hickok, 53 N. Y. 280. * Porter v. Williams, 9 N. Y. 142 ; Cooney v. Cooney, 65 Barb. (N. Y.) 524 ; Bostwick v. Menck, 40 N. Y. 383. * Cooney v. Cooney, 65 Barb. (N. Y.) 525; Hudson V. Plets, 11 Paige (N. Y.) 180; Andrews v. Rowan, 28 How. Pr. (N. Y.) 126. See Tillotson v. Wolcott, 48 N. Y. 190; Hancock v. Sears, 93 N. Y. 79. ^ Dollard v. Taylor, 33 N. Y, Super. 498 ; Bostwick v. Menck, 40 N. Y. 384 ; Porter v. Williams, 9 N. Y. 142. '' See Browning v. Bettis, 8 Paige (N. Y.) 568 ; Bloodgood v. Clark, 4 Paige (N. Y.) 574 ; Shainwald v. Lewis, 6 Fed. Rep. 776. Monell, J., held, in Dollard v. Taylor, 33 N. Y. Superior Ct. 496, that where the only purpose of appointing a receiver in supplementary proceedings was to attack a fraudulent assignment, the application was prop- erly denied, as the judgment-creditor could himself file a bill for that purpose, and in a proper case secure a receiver pending the suit. « Bailey v. Lane, 15 Abb. Pr. (N. Y.) 373, in note. The order in supplementary proceedings usually forbids the debtor from making a transfer of his property until further directions; but in New York his earnings within sixty days of §62 ASSUMPSIT CASE CONSPIRACY. 95 As an illustration of the utility of this remedy it may be stated that a widow's unassigned right of dower can be reached by her creditors in supplementary proceedings,^ for it is liable to their claims,^ and a receiver appointed in these proceedings may bring an action for its admeasurement.^ § 62. Assumpsit — Case — Conspiracy. — A fraudulent assign- ment will not ordinarily authorize a judgment against the purchaser for the original debt;'' nor is an action on the case considered to be an appropriate form of procedure against the debtor and his fraudulent alienee. The latter form of action is discussed at much length in Lamb v. Stone,^ and the language of the court is quoted with ap- proval by the learned and lamented Mr. Justice Campbell in Adler v. Fenton,^ as follows: "The plaintiff complained of the fraud of the defendant in purchasing the property of his absconding debtor, in order to aid and abet him in the fraudulent purpose of evading the payment of his dcl)t. The court ask, what damage has the plaintiff sustained by the transfer of his debtor's property ? He has lost no lien, for he had none. No attachment has been defeated, for none had been made. He has not lost the custody of iiis debtor's body, for he had not arrested him. He has not been prevented from attaching the property, or arresting the body of his debtor, for he had never procured any writ the commencement of the proceedings ^ Payne v. Becker, 87 N. Y. 153. are exempt, and it is not considered a See Stewart v. McMartin, 5 Barb. (N. contempt of the court's order for him Y.) 438. It may be noted in conclud- to apply them to the support of his ing this section that an attorney em- family. Hancock v. Sears, 93 N. Y. 79 ; ployed to collect a claim has authority Newell V. Cutler, 19 Hun (N. Y.) 74, is to institute supplementary proceedings, overruled. The salary of a municipal but is not authorized under the original officer cannot be reached in these pro- retainer to direct the receiver to insti- ceedings. Waldman v. OT3onneli, 57 tute an action to annul a fraudulent How. Pr. (N. Y.) 215. But examine transfer. Ward v. Roy, 69 N. Y. 96. Singer V. Wheeler, 6 111. App. 225. * Aspinall v. Jones, 17 Mo. 212. See ' Strong V. Clem, 12 Ind. 37; Payne Chap. XL V. Becker, 87 N. Y. 153. '11 Pick. (Mass.) 527. 2 Tompkins v. Fonda, 4 Paige (N. Y.) *■■ 24 Howard 412. 448. 96 ASSUMPSIT CASE — CONSPIRACY. § 62 of attachment against him. He has lost no claim upon, or interest in the property, for he never acquired either. The most that can be said is, that he intended to attach the property, and the wrongful act of the defendant has pre- vented him from executing this intention On the whole, it does not appear that the tort of the defendant caused any damage to the plaintiff. But even if so, yet it is too remote, indefinite, and contingent, to be the ground of an action." Many cases might be cited to the same general effect.^ In an action on the case for conspiracy which arose in Rhode Island,^ the plaintiffs, who were sim- ple contract creditors, claimed that the defendants and the debtor had combined together to prevent plaintiffs and other creditors from obtaining payment of their debts ; that the debtor, among other things, had made fictitious mortofaofes to the defendants under cover of which the lat- ter had secreted the property and removed it out of the debtor's possession, so that plaintiffs were prevented from attaching it, and had thus lost their claims. The court ruled that the action could not be maintained.^ "A simple ' Smith V. Blake, i Day (Conn.) 258 ; inasmuch as the creditor has, not an Moody V. Burton, 27 Me. 427 ; Gardi- assured right, but simply a chance of ner v. Sherrod, 2 Hawks (N. C.) 173 ; securing his claim by attachment or Kimball v. Harman, 34 Md. 407 ; Aus- levy, which he may or may not succeed tin V. Barrows, 41 Conn. 287 ; Green in improving. It is impossible to find V. Kimble, 6 Blackf. (Ind.) 552 ; Well- any measure of damages for the loss ington V, Small, 3 Gush. (Mass.) 146 ; of such a mere chance or possibility. Bradley v. Fuller, 118 Mass. 239; Another ground, added in some of the Mowry v. Schroder, 4 Strob. (S. C.) cases, is that no action would lie in Law 69. favor of 'such a creditor against the ^ Klous V. Hennessey, 13 R. I. 335. debtor for putting his property beyond ' Chief- Justice Durfee said : " There the reach of legal process, if the debtor is some conflict of authority on the were to do it by himself alone, and question thus raised, but the more nu- that what would not be actionable if merous, and, we think, the better rea- done by himself alone, cannot be ac- soned and stronger cases are against tionable any the more when done by the action. The principal ground of him with the assistance of others. The decision in these cases is that the dam- first of these grounds, which is the age, which is the gist of the action, is fundamental one, and has been chiefly too remote, uncertain, and contingent, relied on, has been so exhaustively § 62 ASSUMPSIT — CASE — CONSPIRACY. 97 conspiracy," says Nelson, 'J., in Hutchins v. Hutchins,^ " however atrocious, unless it resulted in actual damage to the party, never was the subject of a civil action, not even when the old form of a writ of conspiracy, in its limited and most technical character, was in use." Yet authority can be cited tending to uphold a recovery in such cases. In Meredith v. Johns,^ it appeared that an action of tort had been brought, and a verdict for ;^500 rendered, against a third party, for secretly and maliciously taking, carrying away, and concealing the slaves and property of one Peter May (against whom the plaintiff had a cause of action), and also for aiding, assisting, and 'counselling May to ab- sent himself, to the end that the creditor might be pre- vented from recovering against him. The Supreme Court of Appeals of Virginia declined to interfere in equity to restrain the enforcement of the judgment, and took the position that the defense was a legal one, and that the party aggrieved must seek redress in a law court. It seems, however, to have approved the procedure.^ The case of Quinby v. Strauss,^ of which the reports are meagre and unsatisfactory, is another illustration. The action was in- stituted by judgment-creditors of one of the defendants against such defendant and his attorney, charging them with having fraudulently conspired together to keep the debtor's personal property out of the reach of his creditors by the execution of chattel mortgages thereon to secure fictitious debts, one of them to the attorney, under which the property had been sold and bid off in the attorney's in- terest. The property so sold exceeded in value the amount of the creditor's judgment. The jury found that there was analyzed and discussed in the cases ■•• i H. & M. (Va.) 595. that it is impossible for us to add any- ^ Compare Mott v. Danforth,6Watts thing to the reasons adduced in sup- (Pa.) 307 ; Penrod v. Morrison, 2 P. & port of it." Klous v. Hennessey, 13 W. (Pa.) 126. R. I. 335. ^ 90 N. Y. 664. ' 7 Hill (N. Y.) 107. 7 98 RELIEF COLLATERAL TO MAIN ACTION. §§ 62a, 63 a conspiracy and the judgment was upheld, the appellate court saying that as the property appropriated by the attor- ney to his own use exceeded in value the amount of the creditor's claim, it was but just that he should pay the creditor whose demand he had sought to defeat. The point that nominal damages only could be awarded was expressly overruled. The recovery in this case must, how- ever, be rested upon the ground that the attorney had a sufficient amount of the debtor's property in his hands to satisfy the complaining creditor's claim. In such a case the rule that only nominal damages are recoverable is not con- trolling. § 62a. Reference not ordered. — In New York State an action to set aside a fraudulent conveyance will not be re- ferred. Gilbert, J., said : " References are proper only as aids to facilitate the transaction of business. The grrowino: multiplication of them within the last fifteen years has been an evil prolific of individual injustice and public alarm." ^ § 63. Relief collateral to main action. — The rule is estab- lished in New York that in surplus-money proceedings in a foreclosure suit, the referee has the authority to inquire as to the validity of liens or conveyances, and they may be attacked as fraudulent.^ In a reference as to title in parti- tion, a party can assail a mortgage held by another party on the ground that it is fraudulent and void as against credit- ors.^ It is asserted that no good reason exists why the fraudulent character of conveyances cannot be tested in such proceedings. When the jurisdiction of equity is once acquired, the court has the right to proceed to the end and administer complete justice between the parties."^ This ' Bushnell v. Eastman, 2 Abb. Pr. N. Barb. (N. Y.) 618 ; Fliess v. Buckley, 90 ,.S. (N. Y.)4ii. N. Y. 292. ^ Bergen v. Carman, 79 N. Y. 147 ; ^ Halsted v. Halsted, 55 N. Y. 442. S. C. I Am. Insolv. Rep. 341. Com- "• Manufacturing Co. v. Bradley, 105 pare Schafer v. Reilly, 50 N. Y. 61 ; U. S, 182; Oelrichs v. Spain, 15 Wall. Mutual Life Ins. Co. v. Bovven, 47 211; Martin v. Tidwell, 36 Ga. 345; Souder's Appeal, 57 Pa. St. 498, 502. § 64 REMEDY GOVERNED BY LEX FORI. 99 practice is considered more convenient for the disposition of cases of this character, and avoids the tedious process and increased expense incident to a distinct and separate action instituted for that purpose. Again, actions in aid of an execution at law are ancillary to the original suit, and are, in effect, a continuance of the suit at law to obtain the fruits of the judgment, or to remove obstacles to its en- forcement.^ Usually the titles of adverse claimants cannot be litigated in foreclosure.'^ § 64. Remedy governed by lex fori. — In a case already cited v^^hich arose in Massachusetts,^ it was said that the law of New York respecting fraudulent conveyances was the same as the common law and the law of Massachusetts ; and that although choses in action could not be attached or levied upon in New York, yet after execution issued on the judgment at law, such interests might be reached by supplementary proceedings ; while in Massachusetts these kinds of rights were subject to trustee process. The court said that the assignment having been found by the judge, before whom the case was tried without a jury, to have been made in fraud of the plaintiff, as a creditor of the assignor, and being under the law of either State voidable by creditors in some form of judicial process, the question whether it should be relieved against on the common law. or on the equity side of the court, was a question of remedy only, and governed by the lex fori} It may be observed that the general rule that the lex fori governs the remedy controls the right to arrest the debtor. Thus where goods were sold in New York on credit to parties who transacted ' Claflin V. McDermott, 12 Fed. Rep. mules that took place in Virginia, 375 ; S. C. 20 Blatchf. 522. where the stock was subsequently sent '•* Kinsley v. Scott, 58 Vt. 470 ; Mer- to Pennsylvania for pasturage, and was chants' Bank V. Thomson, 55 N. Y. 11; there seized on a foreign attachment Lewis V. Smith, 9 N. Y. 514. against the vendor, it was held that the ' Drake v. Rice, 130 Mass. 413. See validity of the transfer must be tested § 17. by the laws of Virginia. Born v. Shaw, •* In the case of a sale of horses and 29 Pa. St. 288. lOO REMEDY GOVERNED BY LEX FORI. § 64 business in Alabama, and the debtors subsequently disposed of their property in the latter State with intent to defraud their creditors, the New York Supreme Court held that an order of arrest was properly issued against the defendants by that court.^ In Pritchard v. Norton,'^ the court said : " The principle is that whatever relates merely to the remedy, and constitutes part of the procedure, is deter- mined by the law of the forum, for matters of process must be uniform in the courts of the same country ; but what- ever goes to the substance of the obligation, and affects the rights of the parties, as growing out of the contract itself, or inhering in it or attached to it, is governed by the law of the contract."^ It is foreign to the scope of this treatise to discuss at length the question of how far a transfer of personal property, which is lawful in the owner's domicil, will be respected in the courts of the country where the property is located, and where a different rule as to transfer prevails. This is a question upon which the courts are much at variance. It must be remembered that there is no abso- lute right to have such a transfer respected in the foreign forum, and it is only on a principle of comity that it is ever allowed, x-lnd this principle of comity always yields in cases where the laws and policy of the State in which the property is located have prescribed a different rule of trans- fer from that of the State in which the owner lives.* 1 Claflin V. Frenkel, 3 Civ. Pro. (N. ell, 35 N. Y. 657 ; Ockerman v. Cross, Y.) 109 ; Brown v, Ashbough, 40 How. 54 N. Y. 29 ; Howard Nat. Bk. v. King, Pr. (N. Y.) 226. See § 191. A fraudu- 10 Abb. N. C. (N. Y.) 346; People ex lent disposition of property in Pennsyl- re/. Hoyt v. Commissioners of Taxes, vania may be made the subject of at- 23 N. Y. 225 ; Chafee v. Fourth Nat. tachment in New York. Kibbe v. Wet- Bank, 71 Me. 514, and cases cited in more, 31 Hun (N. Y.) 424. the arguments of counsel. There is no * 106 U. S. 129. presumption that the common law pre- ^ See McDougall v. Page, 55 Vt. 187; vails in Russia (Savage v. O'Neil, 44 N. S. C. 28 Alb. L. J. 372. Y. 300), — a presumption of its existence ^ Green v. Van Buskirk, 7 Wall. 151 ; is indulged by the courts only in refer- reversing, s. C. sttd nomitte. Van Bus- ence to England and the States which kirk v. Warren, 4 Abb. App. Dec. (N. have taken the common law. In the Y.) 457. Compare Guillander v. How- absence of proof of the foreign law, the ^ 65 CUMULATIVE REMEDIES. ' lOI § 65. Cumulative remedies allowed and disallowed. — We have disclaimed the consideration of frand in the lisfht of a crime,- and entertain no design of noticing the penal stat- utes enacted for the punishment of fraudulent insolvents or their co-conspirators. This subject more legitimated ap- pertains to a treatise on criminal law,^ and is a matter regu- lated by statute. Sometimes resort to the penal statutes conflicts with the pursuit of the civil remedy. In a con- troversy which arose in Maine it was decided that one who had commenced an action to recover the penalty provided by the Revised Statutes'^ of that State, for knowingly aiding a debtor in the fraudulent transfer of his property to secure it from the creditors, waived his right to prosecute his suit by filing a petition against his debtor and having him de- clared a bankrupt, and then causing a suit to be commenced against the alleged fraudulent transferee by the assignee in bankruptcy, to recover the value of the property alleged to have been fraudulently transferred.^ As to civil remedies it was decided in Michigan that where a judgment-creditor had elected to treat as fraudulent a conveyance made by his debtor before the judgment, and, notwithstanding the trans- fer of title, had proceeded to sell the property on an execu- tion, he could not afterward maintain a bill in equity to set aside the conveyance.^ The logic of this ruling is scarcely apparent. Again, a creditor who has instituted an action at law for the recovery of a debt, and levied an attacbment, cannot, before judgment, bring a second suit to recover the debt, annul an alleged fraudulent judgment recovered against the debtor, and restrain its collection." In \cw law of the forum must furnish the rule of the statute. State v. Miller, 98 Iml. for the guidance of the courts. Savage 70. V. O'Neil, 44 N. Y. 301 ; Monroe v. =*€. 113, §51. Douglass, 5 N. Y. 447. •• Fogg v. La\vr>', 71 Me. 215. 'See §3. ' Cranson v. Smith, 47 Mich. 647. - An indictment alleging the making But see Erickson v. Quinn. 15 Ahb. of a fraudulent conveyance is sufficient Pr. N. S. (N. Y.) 168. where its recitals charge the language * Mills v. Block, 30 Barb. (N. Y.) 549. See §85. I02 IMPRISONMENT OF DEBTOR. §§ 66, 67 York, on the other hand, a complainant may institute sup- plementary proceedings and prosecute a suit to establish his judgment as a lien upon real estate; he may prosecute either or both proceedings until his judgment is satisfied.^ So he may bring a creditor's action to remove a cloud upon title, and also sell the debtor's land under execution.^ And in Massachusetts a remedy is given by statute,^ which enables a creditor to maintain a bill to reach equitable as- sets, without having previously recovered a judgment at law, and without admitting other creditors to join in pros- ecuting the suit. It was decided that this remedy was not superseded by the grant of general equity powers.^ § 66. Effect of imprisonment of debtor. — It may be consid- ered as settled law that while the creditor has the body of the debtor in execution on a ca. sa. his right to proceed against property is suspended. So long as the defendant is in custody the creditor cannot file a bill in chancery to reach his equitable assets.^ This rule proceeds upon the theory that the arrest and imprisonment of the debtor con- stitute a satisfaction of the judgment during the continu- ance of the imprisonment.^ § 67. Election of remedies. — In Cone v. Hamilton, ''^ the Supreme Court of Massachusetts said it had been decided in that State that levies of executions in favor of creditors passed no title where, at the time of the conveyance (which was before the Stat, of 1844, c. 107, took effect), there was no statute by which land paid for and occupied by a debtor, the leo;al title to which had never been in him, but had ' Gates V. Young, 17 Weekly Dig. 321 ; King v. Trice, 3 I red. Eq. (N. (N.Y.)55i. C.)573- ^ Erickson v. Quinn, 15 Abb. Pr. N. « Koenig v. Steckel, 58 N. Y. 475; S. (N. Y.) 166. Bowe v. Campbell, 63 How. Pr. (N. ^ Gen'l Stat.,c. 113, §2, sub. 11. Y.) 170; Ryle v. Falk, 24 Hun (N. Y.) ■* Barry v. Abbot, 100 Mass. 396. 255. Compare, especially, Kasson v. * Stilwell V. Van Epps, i Paige (N. People, 44 Barb. (N. Y.) 347. Y.) 615; Tappan v. Evans, 11 N. H. ' 102 Mass. 57. § 6/ ELECTION OF REMEDIES. IO3 been conveyed by his procurement to other persons in order to secure it from his creditors, could be attached or taken on execution at law as his property.^ Gray, J., con- tinuing, said : " Upon this state of facts, either of two rem- edies was opened to the judgment-creditors. The convey- ance being fraudulent as against them, the parties who took the legal title (though not participating in the fraud), pay- ing no consideration for the conveyance, and the equitable title being in the debtor who paid the purchase-money, the judgment-creditors might doubtless have maintained bills in equity to charge the land with their debts. '^ Or, it aj)- pearing that the land cannot be held under their levies, they might, by scire facias, have obtained new executions on the original judgments.^ It does not, however, follow that this bill can be maintained in its present form. The plain- tiff has acquired no interest in those judgments, or in the debts on which they were recovered. The only transfers from the judgment-creditors, under which she claims, are quitclaim deeds, without covenants of warranty, of the land taken on execution, which, as the grantors had no title, passed none. Those creditors are not made parties to this suit, either as plaintiffs or defendants, and would therefore be at liberty, notwithstanding any decree therein, to pursue their remedy by scire facias against their debtor. It would be inconsistent with the principles and the prac- tice of courts of equity to maintain this bill, upon the ground that the original conveyance was fraudulent and void as against the judgment-creditors, without making them part'es to the suit in due form." It may be further observed that a judgment-creditor is not obliged to folKjw ' Hamilton v. Cone, 99 Mass. 478. Johns. Ch. (N. Y.) 450; Lyndc v. Mc- « Huguenin v. Baseley, 14 Ves. 273 ; Gregor, 13 Allen (Mass.j 182. Neate v. Marlborough, 3 Myl. & Cr. ' Dennis v. Arnold, 12 Met. (Mass.) 407 ; Goldsmith v. Russell, 5 De G., 449 ; Dewing v. Durant, to Gray M. & G. 547 ; Bayard v. Hoffman, 4 (Mass.) 29 ; Gen. Stats, of Mass. c. 103, § 22. I04 creditors' bills. § 6S all the fraudulent conveyances which may have been made by several execution defendants, but may leave some of them to stand while he seeks to set aside others ; ^ nor can the debtor or the fraudulent alienee, as a general rule, com- pel the creditor to elect which method of procedure or class of property he will pursue.'^ § 68. Creditors' bills. — It is said in New York,^ that the object of a creditor's bill in that State ^ is to reach choses in action and equitable assets of the judgment-debtor which cannot be reached by execution. And, before such a bill can be filed, it is always necessary that an execution should be issued to the county where the judgment-debtor resides,^ and be returned unsatisfied ;^ and in such an action all the judgment-debtors are necessary parties, unless it can be shown that one omitted is insolvent or a mere surety for the defendant. The filing of a creditor's bill, and the service of process, as we have said,''' creates a lien in equity upon the effects of the judgment-debtor.^ It has been aptly termed an " equitable levy." ^ It may be here observed that a creditor's bill, in many of our States, is an appropriate ^ First Nat. Bank v. Hosmer, 48 ^ Compare Wadsworth v. Schissel- Mich. 200 ; Miller v. Dayton, 47 Iowa bauer, 32 Minn. 87. 312. "^ Compare The Holladay Case, 27 ' Gray v. Chase, 57 Me. 558 ; Vasser Fed. Rep. 845. V. Henderson, 40 Miss. 519 ; Edmunds ' See § 61. V. Mister, 58 Miss. 766 ; Baker v. Ly- •* Per Swayne, J., in Miller v. Sherry, man, 53 Ga. 339. 2 Wall. 249. Citing Bayard v. Hoff- ^ Fox V. Moyer, 54 N. Y. 128. Mr. man, 4 Johns. Ch. (N. Y.) 450; Beck Bispham says, in his Principles of v. Burdett, i Paige (N. Y.) 308 ; Storm Equity, § 246 : " In many of the States, v. Waddell, 2 Sandf. Ch. (N. Y.) 494 ; property of an equitable character, and Coming v. White, 2 Paige (N. Y.) 569 ; property conveyed in fraud of creditors, Edgell v. Haywood, 2 Atk. 35::^. See may be reached by a creditor s bill ; a Brown v. Nichols, 42 N. Y. 26 ; Lynch remedy which may be considered as v. Johnson, 48 N. Y. 33 ; Roberts v. having originated in the case of Spader Albany & W. S. R.R. Co., 25 Barb. V. Davis [5 Johns. Ch. (N. Y.) 280, de- (N. Y.) 662 ; George v. Williamson, 26 cided by Chancellor' Kent] in the year Mo. 190. 1 82 1, and which has been very exten- ^ Tilford v. Bumham, 7 Dana (Ky.) sively employed since that time." no ; Miller v. Sherr)', 2 Wall. 249, ^ See 2 R. S. 174; 2 Barb. Ch. Pr. 147. § 68 creditors' bills. 105 remedy to annul a conveyance in fraud of creditors. It ought always to be resorted to where this latter relief is de- sired. "A creditor's bill is the continuation of the former controversy, so far as the fruits of the judgment are con- cerned. The complainant asks the aid of the court to reach the assets of the defendant, so as to be made liable to his judgment, which assets have been secreted or fraudulently assigned to defeat the judgment."^ Usually creditors' bills are largely regulated by statute, and the relief extended is often in a measure dependent upon the local laws governing the subject. It may be asked in what respects a creditor's bill differs from an ordinary bill in equity, prosecuted to cancel a covinous conveyance or remove a fictitious trans- fer. The answer is that the creditor's bill, at least in some States, is broader and more effectual in its operations and results. The ordinary bill or suit in equity is generally brought to unravel some particular transaction, and to annul some particular conveyance, or remove a cloud on a i)iir- ticular title.^ A creditor's bill, on the other hand, is usually in the nature of a bill of discovery,^ and is more extended in its results ; not only does it reach property described therein, but by means of this form of remedy every species of assets, and even debts due the debtor of which the cred- itor knew nothing, and which were not referred to in the bill, may be reached through the instrumentality of a re- ceiver, and applied to the claim. For this reason it is ap- propriately called an omnibus bill.^ "Creditors' bills," says • Hatch V. Dorr, 4 McLean 1 12. the statutory bill, franiec] under 2 R. S. - See Brown v. Nichols, 42 N. Y. 26 ; 173, in aid of a judgment-creditor who Lynch v. Johnson, 48 N. Y. 33 ; Rob- has exhausted his remedy at law, to erts V. Albany & W. S. R.R. Co., 25 enable him to discover the debtor's Barb. (N. Y.) 662 ; George v. William- property, and to reach his ecjuitable in- son, 26 Mo. 190. terests. This bill was known belore ^ See Newman v.Willetts, 52 III. loi. the statute. (Hadden v. Spader, 20 •» In Conro v. Port Henry Iron Co. Johns. [N. Y.j 554.) And the statute (12 Barb. [N. Y.] 58), the court said: was framed to aid in carrying out the " There are two sorts of creditors' bills principle of that and other like deci- known to our jurisprudence ; the one is sions. In proceedings under such bill. io6 CREDITORS BILLS. §68 Mr. Bispham,^ "are bills filed by creditors for the purpose of collecting their debts out of the real or personal prop- erty of the debtor, under circumstances in which the pro- cess of execution at common law could not afford relief. it had always been held that several creditors, by judgment, of the same debtor, might unite in the action, though they had no other common in- terest than in the relief sought. (Ed- meston v. Lyde, i Paige [N. Y.] 637 ; Wakeman v. Grover, 4 Paige [N. Y.] 23.) All the judgment-creditors were proper parties, though not necessary parties, because the action could not be sustained by a single judgment-cred- itor. The same rule existed before the statute, and was applied in a creditor's suit by Chancellor Kent in McDermutt V. Strong (4 Johns. Ch. [N. Y.] 687). The other class of creditors' suits, not depending upon any statute, are suits brought for the administration of as- sets, to reach property fraudulently dis- posed of, or held in trust, etc. The bill in such case is filed in behalf of the plaintiff or plaintiffs, and all others standing in a similar relation, who may corns in under such bill and the decree to be made. It may be filed by simple contract creditors, and does not require a judgment to have been obtained. (Barb. Chan. Prac, vol. IL, p. 149)." In Fusze v. Stern, 17 Bradw. (111.) 432, the court said : " There are several kinds of original bills known to our laws, wherein courts of equity enter- tain jurisdiction to aid a creditor in ob- taining satisfaction of his claim from his debtor, and which are generally denominated creditors' bills, not only by the members of the legal profession, but by the courts as well, as where a debtor seeks to satisfy his debt out of some equitable estate of the defendant which is not subject to levy and sale under an execution at law ; then before he can have the aid of a court of equity to de- cree the equitable estate, subject to the payment of his debt, the creditor must show by his bill, as in other cases where invoking equitable jurisdiction, that he has no adequate remedy at law, which can only be shown by alleging and proving that he has exhausted all the means provided by the law for the col- lection of his debt, viz., a recovery of judgment, the issuing of execution, and its return tiulla bona by the officer charged with its collection. Another kind of bill analogous to this is where the creditor, having recovered judg- ment against his debtor, seeks to re- move a fraudulent conveyance or in- cumbrance out of the way of an execu- tion issued or to be issued upon such judgment. In such case equity will afford relief on the ground that such judgment is an equitable lien upon real estate, nominally held by a third party under such fraudulent conveyance, and the creditor having this lien is entitled to levy upon and sell upon his execu- tion such real estate discharged and un- trammeled from the cloud upon it caused by such conveyance. In bills of this kind the complainant need not even prove the return of e.Kecution ttitlla bona, as such conveyances are void by the statute, and courts of equity do not hesitate to declare them void because of such fraud, and place the creditor in the same position, respecting his judgment, that he would have occupied if such conveyance had not been made. A recovery of a judgment which at time of filing- the bill would, in absence of ' Bispham's Principles of Equity, §525. § 69 DIRECT AND COLLATERAL ATTACK. IO7 This equitable remedy may be made use of during the life- time of the debtor, or after his death. Creditors' bills filed against the estate of a decedent, generally, though not neces- sarily, partake of the nature of administration suits." § 69. Direct and collateral attack — Exceptional doctrine in Louisiana. — A novel principle relating to covinous convey- ances, derived from the civil law, prevails in Louisiana. If a sale is fraudulent as to creditors it must be regularly set aside in a direct action or proceeding instituted for that purpose. Not only is it binding between the original parties, which is the universal rule,^ but it is conclusive upon third parties until nullified by the form of action which the law provides, and the possession of the vendee is legal until the fraudulent instrument is avoided in the due course of law.^ The reasons for this practice are in- geniously given in Peet v. Morgan,^ by Porter, J., who there says: "Of its correctness the court entertains no doubt. It is clearly supported by authority, and it is sanc- tioned by reason and utility. The principle on which it rests is, that men are presumed to act honestly until the contrary is proved ; that the conveyances alleged to be such conveyance, be a legal lien under County of Morgan v. Allen, 103 U. S. the statute upon the land, is all that is 498 ; Crandall v. Lincoln, 52 Conn. 73 ; necessaiy to aver and prove." Citing Messersmith v. Sharon Savings Bank, Miller v. Davidson, 8 111. 518; Weigt- 96 Pa. St. 440; Stone v. Chisolm, 113 man v. Hatch, 17 111. 281 ; Shufeldt U. S. 302. V. Boehm, 96 111. 561. Mr. Bispham ' See Chap. XX\1. says, in Principles of Equity, § 527 : - Yocum v. Bullit, 6 Mart. N. S. (La.) " The threefold advantage of reaching 324; s. c. 17 Am. Dec. 184, and the property otherwise exempt, of setting learned note of A. C. Freeman, Esq. aside fraudulent conveyances, and of See Barbarin v. Saucier, 5 Mart. N. S. discovery, renders a creditors' bill a (La.) 361 ; Le Coaster v. Barthe, 2 very effective instrument for the collec- Rob. (La.) 388 ; Drummond v. Com- tion of debts." Creditors' bills are much missioners, 7 Rob. (La.) 234; I'rcsasv. used against insolvent corporations Lanata, 1 1 Rob. (La.) 288 ; Collins v. where the capital stock is treated as a Shaffer, 20 La. Ann. 41 ; Payne v. trust fund. See Sawyer v. Hoag, 17 Graham, 23 La. Ann. 771 ; Ford v. Wall. 610; Sanger v. Upton, 91 U. S. Douglas, 5 How. 166. 56; Hatch V. Dana, loi U. S. 205; ' 6 Mart. N. S. (La.) 137. I08 DIRECT AND COLLATERAL ATTACK. § 69 fraudulent are prima facie correct and fair ; and that it is improper in opposition to these presumptions, the creditor should exercise rights that could only properly belong to him, in case the acts of his debtor were null and of no ef- fect. In many instances, should a contrary doctrine pre- vail, sales which were alleged fraudulent might turn out to be bona fide, and the purchaser be deprived of the use and enjoyment of property which was honestly his. In the un- certainty which must prevail until the matter undergoes a judicial investigation, it is certainly the wisest course, and the one most conducive to general utility, to consider the thing sold as belonging to him in whom the title is vested." It is idle to speculate as to the utility of this doctrine, for it is entirely opposed to the general practice in the other States, and to the English and American authorities. The fraudulent transfer is not generally regarded as being ef- fectual against creditors ; it does not as to them divest the debtor's title, but his interest remains subject to their rem- edies, and may be seized and sold on execution.^ The property may be treated and reached by creditors as though the transfer had never been made.^ Thus in Imray v. Magnay,^ the court said: "It is now of frequent occur- rence that the sheriff is bound to take goods which have been fraudulently conveyed or assigned to defeat creditors, ' Jacoby's Appeal, 67 Pa. St. 434; 595; citing Jackson v. Myers, 11 Wend. Hoffman's Appeal, 44 Pa. St. 95 ; Rus- (N. Y.) 535 ; Jackson v. Burgott, 10 sell V, Dyer, 33 N. H. 186; Allen v. Johns. (N. Y.) 456; Remington v. Berry, 50 Mo. 90 ; Ryland v. Callison, Linthicum, 14 Pet. 84 ; Rogers v. 54 Mo. 513; Fowler v. Trebein, 16 Brent, 10 111. 580; Jamison v. Beau- Ohio St. 493; Staples V. Bradley, 23 bien, 4 111. 114; Baze v. Arper, 6 Minn. Conn. 167; Foley v. Bitter, 34 Md. 220; Cook v. Swan, 5 Conn. 140; 646; Gormerly v. Chapman, 51 Ga, Marcy v. Kinney, 9 Conn. 397 ; Lillie v. 421 ; Freeman on Executions, § 136. Wilson, 2 Root (Conn.) 517. "In an action of ejectment it is com- - Russell v. Winne, 37 N. Y. 591; petent to show that a conveyance re- Brown v. Snell, 46 Me. 490 ; Booth v. lied upon by one of the parties to the Bunce, 33 N. Y. 139; Angier v. Ash, action was made with intent to defraud 26 N. H. 99. creditors." Knox v. McFarran, 4 Col. ^ 11 M. & W. 267. § JO CASES OF FRAUD ON WIFE. IO9 and is responsible in an action for a false return at the suit of a creditor." Though the principle embodied in these Louisiana cases may seem logical and fair upon its face, certainly its practical operation would not be commensurate with the needs of creditors generally. The creditor cannot be expected to lay formal siege to every semblance of an obstruction that the debtor rears in his pathway. The theory concerning a fraudulent conv^eyance is that it has only the color and appearance of a valid act, and is not in itself effectual ; why then should the creditor be forced to undergo the vexatious delay and expense incident to pro- curing a formal adjudication vacating every covinous alien- ation of property which the ingenuity of the debtor may devise ? If the transfer is in fact fraudulent, then, by seiz- ing and selling the property on execution, the controversy is practically concluded without further trouble or suit, and the fraudulent alienee will not be rash enough to attempt to reclaim it. On the other hand, if the transfer is bona Jidc, the creditor is legally accountable for the seizure. If the creditor unjustly refuses to treat the transfer as valid the purchaser, if it relate to realty, may hold the possession and defend in ejectment ; while if it be personalty, he may recover it by replevin or sue in trover. In either case, if the vendee claims the property, indemnity would be ex- acted by the officer making the seizure. Under the Louisiana system a debtor, by selecting an irresponsible vendee, could shield him with a simulated transfer, and en- able him to dissipate the property in practical defiance of the creditor. g 70. Forms of relief in cases of fraud on wife. — Special treatment of the relationship of husband and wife as bear- ing upon fraudulent transfers will be found in the body of the vvork.^ We may allude here to the rule thai where a hus- band has fraudulently alienated his real property, as against • See Chap. XX. no PROCEDURE IN FEDERAL TRIBUNALS. § /I the rights of his wife or prospective wife, she may, even during his lifetime, bring suit to annul the deed as a fraud upon her right of dower ; ^ for an inchoate right of dower is an interest which the courts will protect.^ It is as much a fraud for a man to place his property out of his hands for the purpose of avoiding the right of dower w^hich is about to attach to it, as it is for a debtor who contemplates the contraction of debts to voluntarily dispose of his property in order to defeat the efforts of future creditors to secure their payment. The latter result, it is conceded, as else- where shown,^ cannot be successfully accomplished.^ The wife may in such cases maintain a bill in equity to reach the property fraudulently conveyed,^ or she may, according to some of the cases, file a bill in chancery to recover her dower in the property as though no conveyance had ever been executed.^ § 71. Procedure in Federal tribunals. — Statutes passed by State legislatures affecting rights of creditors, being local enactments and involving a rule of property, the Federal courts will adopt the construction which has been given to the statutes by the highest judicial tribunal of the State,^ even though, were it an open question " depending upon the general principles of jurisprudence," the conclusion of the court might have been different.^ A Federal court is bound to apply such a rule of property precisely as though it were sitting as a local court in the State ; and this is true • Youngs V. Carter, 10 Hun (N. Y.) ® See Brown v. Bronson, 35 Mich. 194; Petty V. Petty, 4 B. Mon. (Ky.) 415; Jiggitts v. Jiggitts, 40 Miss. 718. 216. "" Nichols V. Levy, 5 Wall. 443, 444; - Mills V. Van Voorhies, 20 N. Y. Sumner v. Hicks, 2 Black 532 ; Dun- 412; Simar V. Canaday, 53 N. Y. 298. das v. Bowler, 3 McLean 397; Hey- ' See Chap. VL dock v. Stanhope, 1 Curtis 471 ; Beach •* See Savage v. Murphy, 34 N. Y. v. Viles, 2 Pet. 675. See Williams 508 ; Case V. Phelps, 39 N. Y, 164. v. Kirtland, 13 Wall. 306; Ross v. '^ Gilson v. Hutchinson, 120 Mass. M 'Lung, 6 Pet. 283 ; Morse v. Riblet, 27 ; Petty v. Petty, 4 B. Mon. (Ky.) 22 Fed. Rep. 501. 215. ° Nichols V. Levy, 5 Wall. 443. § 71 PROCEDURE IN FEDERAL TRIBUNALS. Ill as to the observance of a State rule gov^erning voluntary conveyances/ general assignments,'-^ or sales rendered void for want of a change of possession.^ And sometimes re- lief may be had in a Federal court where the jurisdiction of the State court would have proved imperfect.' Where a State court acquires possession and control over an insol- vent debtor's property it has power to dispose of it and to give a good title. To this extent, as against a Federal court, the State law is a rule of property.'^ Where a credit- or's suit is removed from a State court to a Federal court on the ground that the controversy is between citizens of different States, jurisdiction is not lost by admitting as plaintiffs other creditors who are citizens of the same State as the defendants.*' As we have shown, the local law where the property has its situs governs in controversies to reach such property by creditors.^ It may be here observed that leave to sue and defend Z7i forma pauperis will be accorded to infants in the Federal courts, though a different rule pre- vailed in the State tribunals,^ and that equity jurisdiction in the Federal courts is wholly independent of the local laws of the State, and is the same in its nature and extent in all the States ; and that Federal courts are bound to proceed in equity causes according to the principles, rules, and usages which belong to the courts of chancery, as contra- distinguished from common-law courts.^ ' Lloyd V. Fulton, 91 U. S. 485. ' Spindle v. Shreve, 11 1 U. S. 542. ' Parker v. Phetteplace, 2 Cliff. 70; " Ferguson v. Dent, 15 Fed. Rep. 771. Jaffray v. McGehee, 107 U. S. 364; See Southvvorth v. Adams. 2 Flipp. Sumner v. Hicks, 2 Black 532. 282, in noiis. •■' Allen V. Massey, 17 Wall. 351. See ' Gordon v. Hobart, 2 Sumner 405 ; Howard v. Prince, 11 N. B. R. 327, As Burt v. Keyes, i Flipp. 69, per Stor>', to supplementary proceedings in Fed- J. ; McFarlane v. Griffith, 4 Wash. C. eral courts, see §61, n. C. 585; Gaines v. Relf, 15 Tct. 9. See * See Gorrell v. Dickson, 26 Fed. Green v. Creighton, 23 How. 90. A Rep. 454. creditor having a standing in the Fed- ' Burt V. Keyes, i Flipp. 62. See eral courts can contest the validity of a Wiswal V. Sampson, 14 How. 52; Will- voluntary assignment, and a State law iams V. Benedict, 8 How. 107 ; Payne cannot deprive him of this right. Adler V. Drewe, 4 East 523. v. Ecker, i McCrary 257. « Stewart v. Dunham, 115 U. S. 61. 112 RECAPITULATION. § 72 Questions as to appellate jurisdiction in Federal tribunals will be presently considered.^ § 72. Recapitulation. — As regards the enforcement of a judgment against real property fraudulently conveyed a creditor then may be said to have three modes of obtaining satisfaction of his demand. First. To obtain a decree of a court of equity declaring the conveyance fraudulent, setting it aside, and thereafter proceeding to sell the land on execution. Second. By inserting in the decree in an equitable ac- tion, in addition to the provisions avoiding the transfer, a further clause appointing a referee to sell at public auction, and directing the debtor to unite in the conveyance ; or a clause appointing a receiver and directing that the debtor convey the land to him and that he sell it. Third. The creditor may sell the land on execution, and the purchaser may then set up the fraud in the debtor's conveyance, and if this is established, obtain a judgment entitling him to the possession of the land.^ The advantages incident to a judicious selection from these remedies in particular cases should not be over- looked.^ Stated in a form of more universal application, it is, as we have seen, a familiar and unquestioned doctrine of equity, that the court has power to aid a judgment-creditor to reach the property of his debtor, either by removing fraudulent judgments or conveyances which obstruct or defeat the plaintiff's remedy under the judgment, or by ap- propriating toward the satisfaction of the judgment rights or equitable interests of the debtor, which are not the sub- ject of legal execution."^ ' See Chap. XXVII. ^ See Chap. XI. - Dawley v. Brown, 65 Barb. (N. Y.) * Robert v. Hodges, 16 N. J. Eq. 120. 302. CHAPTER IV STATUS OF ATTACKING CREDITORS. § 73- Rights of creditors at large. 74. Judgment conclusive as to in- debtedness. 75. Creditor must have lien before filing bill. 76. Judgments suflficient. TJ. Judgments insufficient. 78. Foreign judgments. 79. Creditors of a decedent. * 80. Rule as to judgments in equitable actions. 81. Specific lien by attachment. § 82. Property of the debtor taken in name of third party. 83. When judgment is unnecessary. 84. Absconding and non-resident debtors. 85. Exceptional practice in Indiana and North Carolina. 86. Return of execution unsatisfied. 87. Distinction between realty and personalty as to issuance of execution. 88. Raising the objection. " Courts of equity are not tribunals for the collection of debts." — Webster v. Clark, 25 Me. 314- § 73. Rights of creditors at large.— A creditor at large, commonly called a simple creditor, cannot assail as fraudu- lent against creditors, an assignment or transfer of property made by his debtor, until the creditor has first established his debt by the judgment of a court of competent jurisdic- tion, and has either acquired a lien upon specific property, or is in a situation to perfect a lien thereon and subject it to the payment of his judgment, upon the removal of the obstacle presented by the fraudulent assignment or trans- fer.^ This principle is elementary.^ A rule of procedure 1 Southard v. Benner, 72 N. Y. 426. Compare Case v. Beauregard, loi U. S. 688, and see Taylor v. Bowker, 1 1 1 U. S. 1 10 ; Briggs v. Oliver, 68 N. Y. 336. See § 52. ■^ Dodd V. Levy, 10 Mo. App. 122; Smith V. Railroad Co., 99 U. S. 401 ; Turner v. Adams, 46 Mo. 95 ; Crim v. . 8 Walker, 79 Mo. 335 ; Dawson v. Coffey. 12 Ore. 519; Baxter v. Moses, 77 Me. 465 ; Bassett v. St. Albans Hotel Co., 47 Vt. 314; Pendleton v. Perkins, 49 Mo. 565 ; Jones v. Green, i Wall. 330 ; Skeele v. Stan wood. 33 Me. 309 ; Meux V. Anthony, 11 Ark. 411 ; Webster v. Clark, 25 Me. 313 ; Voorhees v. How- 114 RIGHTS OF CREDITORS AT LARGE. § n which allowed any prowling creditor, before his claim was definitely established by judgment, and without reference to the character of his demand, to file a bill to discover assets, or to impeach transfers, or interfere with the busi- ness affairs of the alleged debtor, it is asserted would mani- festly be susceptible of the grossest abuse. A more power- ful weapon of oppression could not be placed at the disposal of unscrupulous litigants. A creditor at large, having no lien or trust,^ is not favored in the class of litigation under consideration,^ and, generally speaking, has absolutely no status in court for the purpose of filing a creditor's bill.^ ard, 4 Keyes (N. Y.) 371 ; Barrow v. Bailey, 5 Fla. 9 ; Burnett v. Gould, 27 Hun (N. Y.) 366; Reubens v, Joel, 13 N. Y. 488; Alnutt V. Leper, 48 Mo. 319; Mills V. Block, 30 Barb. (N. Y.) 552; Martin v. Michael, 23 Mo. 50; Public Works v. Columbia College, 17 Wall. 530 ; Kent v. Curtis, 4 Mo. App. 121 ; Tate v. Liggat, 2 Leigh (Va.) 84; Greenway v. Thomas, 14 111. 271 ; Fletcher v. Holmes, 40 Me. 364 ; Adsit V. Butler, 87 N. Y. 585 ; Taylor v. Bow- ker, III U. S. no; Tyler v. Peatt, 30 Mich. 63 ; Tolbert v. Horton, 31 Minn. 520 ; Vasser v. Henderson, 40 Miss. 519; People's Savings Bank v. Bates, 120 U. S. 562 ; McKinley v. Bowe, 97 N. Y. 93 ; Webster v. Lawrence, 47 Hun (N. Y.) 566 ; Lichtenberg v. Herdtfelder, 33 Hun (N. Y.) 57 ; Ben- nett V. Stout, 98 111. 47 ; McAuliffe v. Farmer, 27 Mich. 76 ; Smith v. Millett, 12 R. I. 59; Ferguson v. Bobo, 54 Miss. 121 ; Claflin v. McDermott, 12 Fed. Rep. 375 ; Haggerty v. Nixon, 26 N. J. Eq. 42 ; Cropsey v. McKinney, 30 Barb. (N. Y.) 47 ; Stewart v. Fagan, 2 Woods 215 ; McMinn v. Whelan, 27 Cal. 300; Hunt v. Field, 9 N. J. Eq. 36 ; Robinson v. Stewart, 10 N. Y. 189 ; McDermott v. Blois, i R. M. Charlt. (Ga.) 281 ; Sturges v. Vander- bilt, 73 N. Y. 384; Evans v. Hill, 18 Hun (N. Y.) 464; Sexey v. Adkinson, 34 Cal. 346 ; Dahlman v. Jacobs, 1 5 Fed. Rep. 863 ; Miller v. Miller, 7 Hun (N. Y.) 208 ; Griffin v. Nitcher, 57 Me. 270. See Ex parte Boyd, 105 U. S. 653. Compare Case v. Beauregard, loi U. S. 688, and see Taylor v. Bow- ker, III U. S. no; Jones v. Green, i Wall. 330. In Alabama " a creditor without a lien may file a bill in chan- cery to subject to the payment of his debt any property which has been fraudulently transferred, or attempted to be fraudulently conveyed, by his debtor." Revised Code, § 3446. In construing this statute the court said that it was obviously the intention of the legislature to enlarge the jurisdic- tion of the court of chancery, and in cases where the simple and pure rela- tionship of debtor and creditor existed to invest the creditor without a lien or a judgment with the privilege formerly confined to judgment-creditors. Rey- nolds V. Welch, 47 Ala. 200. ' Case V. Beauregard, loi U. S. 688. Compare Manufacturing Co. v. Brad- ley, 105 U. S. 175. - Herring v. New York, L. E. & W. R.R. Co., 63 How. Pr. (N. Y.) 502. ^ Dunlevy v. Tallmadge, 32 N. Y. 459. But the simple contract creditor is not always without redress in cases § TZ RIGHTS OF CREDITORS AT LARGE. II5 The possibility of a judgment will not suffice.^ The rule is peremptory. "A court of equity never interposes," says Ruffin, C. J.,^ " in behalf of a mere legal demand, until the creditor has tried the legal remedies, and found them inef- fectual." It is not intended by this rule to exclude simple contract creditors from the operation of the statutes against fraudulent conveyances, they being, except perhaps as re- gards statutory liens, as much protected as creditors by judgment ; but until such creditors have obtained a judg- ment and acquired a lien or a right to a lien upon the debtor's property, they are not in a position to assert their rights by a creditor's action.^ It is observed by Brown, J., in Paulsen v. Van Steenbergh,'* that " a court of equity is not X\\Q forum for litigating disputed claims, and, as a gen- eral rule, will not entertain an action or afford relief to a creditor until he has established his debt in a court of law." ^ Courts of equity are not tribunals for the collec- tion of ordinary demands.^ " The debt," said Field, J., " must be established by some judicial proceeding, and it must generally be shown that legal means for its collection have been exhausted."'' where a fraudulent disposition of prop- 396 ; National Bank of Rondout v. erty has been made. An attachment Dreyfus, 14 Weekly Dig. (N. V.) 160. or process in that nature may be se- '' 65 How. Pr. (N. Y.) 342 ; Howe v. cured against the fraudulent debtor, Whitney, 66 Me. 17; Taylor v. Bow- and the property improperly trans- ker, in U. S. no; Webster v. Clark, ferred, or any other property the 25 Me. 313 ; Griffin v. Nitchcr, 57 Me. debtor may have, can be seized under 270. such provisional process and held pend- ^ See Tasker v. Moss, 82 Ind. 62; ing the suit. Baxter v. Moses, 77 Me. 465. ' Griffin v. Nitcher, 57 Me. 272. " Webster v. Clark, 25 Me. 314. Compare Crompton v. Anthony, 13 See Dunlevy v. Tallmadge, 32 N. Y. Allen (Mass.) 36 ; Stephens v. White- 457 ; Bownes v. Weld, 3 Daly (N. Y.) head, 75 Ga. 297. 253. ^ Brown v. Long, i Ired. Eq. (N. C.) ^ Public Works v. Columbia College, 193. 17 Wall. 530; Powell V. Howell, 63 N. ' Southard v. Benner, 72 N. Y. 426; C. 284; Fox v. Moyer. 54 N. Y. 128. Geery v. Geery, 63 N. Y. 256. See Compare Case v. Beauregard, loi U. Frisbey v. Thayer, 25 Wend. (N. Y.) S. 688. A creditor's bill may be filed Il6 RIGHTS OF CREDITORS AT LARGE. § J ;^ When a conveyance is said to be void or voidable against creditors the reference is to such parties when they are clothed with judgments and executions, or stick other titles as the law has provided for the collection of debts.^ Judge Bronson, in Noble v. Holmes,^ after declaring that a fraud- ulent sale could not, under the provisions of the Revised Statutes of New York, be impeached by a creditor at large, added: "It must be a creditor having a judgment and ex- ecution, or some other process which authorized a seizure of the goodsT It may be urged that, where a debtor is manifestly guilty of fraudulent conduct with reference to his property, the prerequisites of a judgment and execution will prove serious impediments to an ordinary contract creditor who desires to take immediate action to reach the property which the debtor is dissipating or concealing. But the answer to this proposition has been that the rem- edy of a creditor so situated is not by creditor's bill ; he must seek provisional relief by arrest or attachment, or both, in a suit founded upon his contract claim.'^ A creditor in this position is not, as we have seen, entitled to interfere by injunction before judgment with any contemplated alienation of property by the debtor,* even after instituting suit by attachment.^ So stockholders cannot sue in the right of a corporation without first trying to set the body itself in motion ;^ and a creditor or member who desires to sue in place of a receiver must set forth that the receiver declines to proceed.''' on a judgment at law, after execution, •* Wiggins v. Armstrong, 2 Johns, notwithstanding the recovery of an- Ch. (N. Y.) 145 ; Adler v. Fenton, 24 other judgment on the judgment. EHz- How. 411; Moran v. Dawes, Hopk. abethtown Savings Inst. v. Gerber, 34 Ch. (N. Y.) 365. See § 52. N. J. Eq. 132, note ; Bates v. Lyons, 7 ^ Martin v. Michael, 23 Mo. 50. Paige (N. Y.) 85. ' Taylor v. Holmes, 127 U. S. 492 ; ^ Per Denio, J., in Van Heusen v. Greaves v. Gouge, 69 N. Y. 157; Moore Radcliff, 17 N. Y. 580; Gross v. Daly, v. Schoppert, 22 W. Va. 291 ; Hawes 5 Daly (N. Y.) 545 ; McElwain v. v. Oakland, 104 U. S. 450. WiUis, 9 Wend. (N. Y.) 561. ' Fisher v. Andrews, 37 Hun (N. * 5 Hill (N. Y.) 194. Y.) 180; Wait on Insol. Corps. § 100. ^ See Dodd v. Levy, 10 Mo. App. 121. § 74 JUDGMENT CON'CLUSIVE. II7 To recapitulate, then, the judgment and execution are necessary to a creditor before proceeding in equity — First, to adjudicate and definitely establish the legal demand, and save the debtor harmless from interference at the instiga- tion of unconscionable claimants ; second, to exhaust the legal remedy.^ The maxim, '' Lex neminem' cogit ad vana seu iiiutilia per agenda,'' has struggled for application in cases where it is manifest the judgment at law will be ineffectual or worthless,- but, though the sympathy of the profession seems to favor a relaxation of the rule requiring a judgment and execution before a proceeding by creditor's bill will lie, yet, generally speaking, the absence of a judgment proves fatal to such a bill.^ A guarded statutory reform might be suggested with a view to enlarge the facilities of creditors to reach equitable assets. Complainants holding liquidated demands, founded upon written instruments or express contracts, might be given a right to proceed to attack transfers, against debtors who have made general assign- ments, or against whom unsatisfied judgments rest, or who have suspended business solely from lack of funds or have become notoriously insolvent. § 74. Judgment conclusive as to indebtedness, — In cases where fraud is established, the creditor does not claim through the debtor, but adversely to him, and by a para- mount title, which overreaches and annuls the fraudulent conveyance or judgment by which the debtor himself would be estopped. It follows from the principles sug- gested, that a judgment obtained without fraud or collu- sion, and which concludes the debtor, whether rendered ' See Merchants' National Bank v. ing Co., 9 Ore. 202 ; Turner v. Adams. Paine, 13 R. I. 594. 46 Mo. 95; Des Brisay v. Hogan, 53 Me. ** See Lichtenberg v. Herdtfelder. 33 554; Terry v. Anderson. 95 U. S. 636. Hun (N. Y.) 57, 60, dissenting opinion » See Taylor v. Bowker, in U. S. of Davis, P. J.; Case V. Beauregard, loi iio; Baxter v. Moses, TJ Me. 476; U. S. 690; Hodges V. Silver Hill Min- Jones v. Green, i Wall. 330. 1 li JUDGMENT CONCLUSIVE. § 74 upon default, by confession or after contestation, is, upon all questions affecting the title to his property, conclusive evidence against his creditors, to establish, first, the rela- tion of creditor and debtor between the parties to the record, and secondly, the amount of the indebtedness. This principle is assumed in the New York statute in rela- tion to creditors' bills,^ and is so decided in Rogers v. Rogers.*^ The execution issued upon the judgment shows '2R. S. 174. §38. ^ 3 Paige (N. Y.) 379. See 2 Greenl. Ev. 531 ; Marsh v. Pier, 4 Rawle (Pa.) 288; Candee v. Lord, 2 N. Y. 275; Decker v. Decker, 108 N. Y. 128; Mat- tingly V. Nye, 8 Wall. 373, and cases cited. But compare Teed v. Valen- tine, 65 N. Y. 471. Creditors may of course attack a collusive judgment when it is a fraud upon them. Lewis V. Rogers, 16 Pa. St. 18; Sidensparker V. Sidensparker, 52 Me. 481 ; Edson v. Cumings, 52 Mich. 52 ; Clark v. Doug- lass, 62 Pa. St. 416, per Sharswood, J.; Wells V. O'Connor, 27 Hun (N. Y.) 428. Compare Voorhees v. Seymour, 26 Barb. (N. Y.) 569 ; Meeker v. Har- ris, 19 Cal. 278; Thompson's Appeal, 57 Pa. St. 175 ; Clark v. Foxcroft, 6 Me. 298 ; Uhlfelder v. Levy, 9 Cal. 607. See especially Shaw v. Dwight, 27 N. Y. 244 ; Mandeville v. Reynolds, 68 N. Y. 545 ; Burns v. Morse, 6 Paige (N. Y.) 108 ; Whittlesey v. Delaney, 73 N. Y. 571. So the alienee from whom it is sought to recover property may show that the judgment is fraudulent and collusive (Collinson v. Jackson, 14 Fed. Rep. 309; s. C. 8 Sawyer, 357. See Freeman on Judgments, §§335-7), or that there is, in fact, no indebtedness (Clark v. Anthony, 31 Ark. 549; King V. Tharp, 26 Iowa 283 ; Esty v. Long, 41 N. H. 103), for judgments may be fraudulent as well as deeds. Carter v. Bennett, 4 Fla. 283 ; Decker v. Decker, 108 N. Y. 128. Finch, J., said : "It does not alter the character of this fraudulent arrangement, or enable it to defy justice, that it was accomplished through the agency of a valid judg- ment regularly enforced. That often may be made an effective agency in ac- complishing beyond its own legitimate purpose a further result of fraud and dishonesty." Decker v. Decker, 108 N. Y. 128, 135. One who is in possession of property of the debtor transferred with intent to defraud creditors cannot defend himself on the ground that the debtor might have had a defense against the judgment had he chosen to assert it (Dewey v, Moyer, 9 Hun [N. Y.] 479); but confession of judgment by an administrator cannot deprive the grantee of his intestate of the defense of the statute of limitation. McDowell v. Goldsmith, 24 Md. 214. Then a de- cree confirming a conveyance of real estate from a husband to a wife in a suit between them, is not conclusive upon the husband's assignee in bank- ruptcy, seeking to annul the transfer as having been made in fraud of creditors. Humes v. Scruggs, 94 U. S. 22. Mr. Justice Hunt said in this case : " There would be little difficulty in making and sustaining fraudulent transfers of prop- erty, if the parties thereto could by a subsequent suit between themselves so fortify the deed that no others could at- tack it." See also Van Kleeck v. Mil- ler, 19 N. B. R. 494. A debtor may attack a judgment as having been ob- § 75 LIEN BEFORE FILING BILL. II9 that the remedy afforded at law has been pursued, and of course is the highest evidence of the fact. The return shows whether the remedy has proved effectual or not, and, because of the embarrassments which would attend any other rule, the return is generally held conclusive. The court will not ordinarily entertain inquiries as to the diligence of the officer in endeavoring to find property upon which to levy.^ § 75. Creditor must have lien before filing bill. — We must then accept the general rule that a court of equity will not interfere to enforce the payment of debts until the creditor has exhausted all the remedies known to the law to obtain satisfaction of the judgment. It is usually essential in order to give the court jurisdiction, and to reach equitable assets, that an execution should have been issued upon the judgment, and returned unsatisfied, or, if an action is brought in aid of an execution at law, that it be outstand- ing. The commencement of the action will then give the creditor a specific lien.^ The rule that the legal remedy must be exhausted by the judgment-creditor before relief can be solicited to reach property not subject to the lien of the judgment is an ancient one. It existed in England, and was recognized by the Court of Chancery in New York, before the provisions made by the Revised Statutes^ of that State, which require that an execution be issued and returned unsatisfied in whole or in part, before a bill can be filed to compel a discovery of property and to pre- vent a transfer of it. " This statute," says Chancellor Wal- tained by fraud. Richardson v. Trim- cases cited; Ross v. Wood. 70 N. ble, 38 Hun (N. Y.) 409. We may Y. 9. here state that the frauds which will ' Jones v. Green, i Wall. 332. sustain a bill to set aside a judgment or ' Adsit v. Butler, 87 N. Y. 5S7 ; be- Atcrtt betweftt the parties rQX\d&xQ(\hy low, 23 Hun (N. Y.) 45; Crippen v. a court of competent jurisdiction are Hudson, 13 N. Y. 161 ; Beck v. Bur- those which are extrinsic or collateral dett, i Paige (N. Y.) 305 ; Uunlevy v. to the issues litigated. United States Tallmadge, 32 N. Y. 461. V. Throckmorton, 98 U. S. 61, and ' 2 N. Y. R. S. 174, §38. I20 JUDGMENTS SUFFICIENT. § 76 worth, in Child v. Brace/ " is only declaratory of a principle which had before been adopted in this court." ^ Hence the creditors of an insolvent partnership must acquire a legal or an equitable lien upon the property of the firm to au- thorize them to invoke the equitable powers of the court in its administration.^ Nor does the fact that the debtor is an insolvent corporation, and has alienated its property in contravention of the statute, authorize a resort to equity until the remedy at law has been exhausted by judgment and execution returned unsatisfied,^ § 76. Judgments sufficient. — An ordinary money-judgment rendered in the State in which the debtor resides and the concealed property is located, is manifestly a proper founda- tion for a creditor's suit. A bill of this character may also be filed " to aid in the collection of money decreed in chancery." ^ "I have no doubt, however," said Chancellor Walworth, "that a creditor, by a decree in chancery, upon the return of his execution unsatisfied, is entitled to the same relief, against the equitable rights and property of his debtor, as a creditor by a judgment at law." ^ A justice's judgment will suffice,'^ especially if docketed in a court of record.^ And a judgment by confession, even though de- fective in form and particularity of statement, authorizes ^ 4 Paige (N. Y.) 309. See Greenwood v. Brodhead, 8 Barb. '^ See Dunlevy V. Tallmadge, 32 N. Y. (N. Y.) 593; Young v. Frier, 9 N. J. 460 ; Adsit V. Butler, 87 N. Y. 587 ; Eq. 465. Wiggins V. Armstrong, 2 Johns. Ch. ■* Adee v. Bigler, 81 N. Y. 349. (N. Y.) 144 ; Hendricks v. Robinson, 2 ^ Farnsworth v. Strasler, 12 111. 485 ; Johns. Ch. (N. Y.) 283; Brinkerhoff v. W^eigtman v. Hatch, 17 111. 281. Brown, 4 Johns. Ch. (N. Y.) 671; ^ Clarkson v. De Peyster, 3 Paige (N. Spader v. Davis, 5 Johns. Ch. (N. Y.) Y.) 320, 280 ; S. C. on error, 20 Johns. (N. Y.) '^ Bailey v. Burton, 8 Wend. (N. Y.) 554; Willetts V. Vandenburgh, 34 339; Newdigate v. Jacobs, 9 Dana Barb. (N. Y.) 424 ; Crippen v. Hudson, (Ky.) 18; Heiatt v. Barnes, 5 Dana 13N.Y. 161; Brooks V. Stone, 19 How. C^^yO 220; Ballentine v. Beall, 4 111. Pr. (N. Y.) 396. 204. ' Crippen v. Hudson, 13 N. Y. 161 ; ^ See Crippen v. Hudson 13 N. Y. Dunlevy v, Tallmadge, 32 N. Y. 457. 161. § ^^ JUDGMENTS INSUFFICIENT. 12 1 the creditor to impeach a fraudulent transfer.^ So does a demand classified and allowed by a probate court.^ Under a judgment against joint debtors only part of whom were served with process, a creditor's action may be prosecuted to reach joint property, but not the separate property of those not served with process in the original suit.^ Supple- mentary proceedings may be taken on a judgment so re- covered, to reach joint property.* § 77. Judgments insufficient. — It seems clear in New York at least, that a creditor's action cannot be founded upon a judgment recovered in a justice's court where the execution had only been issued to, and returned by, the justice.^ It should be docketed in, and made a judgment of, a court of record. It then becomes as much entitled to the aid of a court of equity as though originally recovered in a court of record,*' Again, a judgment in an attachment suit, where the de- fendant has not been brought into court so as to make it a personal judgment, is not evidence of the debt in another suit founded upon that record ;''' and a creditor's bill cannot be brought upon a judgment barred by the statute of limita- tions.^ And an action based upon a judgment rendered against executors in their representative capacity, is not ' Neusbaum v. Keim, 24 N. Y. 325. ■* Perkins v. Kendall, 3 Civ. Proc. If a creditor attacks a confession of (N. Y.) 240. judgment as being fraudulent against '' Crippen v. Hudson, 13 N. Y. 161. him he must plead the grounds of the See Dix v. Briggs, 9 Paige (X. Y.) 595 ; objection. A general averment will not Coe v. Whitbeck, 11 Paige (N. Y.) 42 ; suffice. Meeker V. Harris, 19 Cal. 278. Henderson v. Brooks, 3 T. & C. (N. Y.) 2 Wright V. Campbell, 27 Ark. 637. 445. Compare Catchings v. Manlove, 39 " Bailey v. Burton, S Wend. (N. Y.) Miss. 671. 339; Newdigate v. Jacobs, 9 Dana « Billhofer v. Heubach, 15 Abb. Pr. (Ky.) 18; Heiatt v. Barnes, 5 Dana (N. Y.) 143. See Produce Bank v. (Ky.) 220; Ballentinc v. Beall, 4 111. Morton, 67 N. Y. 199. Compare How- 204. ard V. Sheldon, 11 Paige (N. Y.) 558; ' Manchester v. McKee, 9 111. 520. Commercial Bank of Lake Erie v. " Fox v. Wallace, 31 Miss. 660. Meach, 7 Paige (N. Y.) 448. 122 FOREIGN JUDGMENTS. § 78 maintainable to set aside, as fraudulent as against creditors, a conveyance of real estate made by a decedent.^ This lat- ter case seems to result in a denial of justice. The court said that if the facts recited in the complaint were true it was the duty of the executors to reclaim the real estate. Earl, J., observed : " The fact that the fraudulent grantee is one of the executors furnishes no insurmountable obsta- cle. If she should refuse to restore the lands to the estate, she could be removed from her office of executrix, and then the remaining two executors could, under the act of 1858, disaffirm the conveyances of the real estate and bring an action to set them aside. Or the two executors could com- mence the action making the executrix a defendant, and in such an action obtain for the estate the relief demanded. If the two defendants refused to commence the action upon the application of the creditors or some of them, they could be compelled to commence it by an order of the surrogate." Parties experienced in suits instituted to annul fraudulent conveyances will readily appreciate the perfunctory manner in which these executors would be likely to prosecute their associate. § 78. Foreign judgments. — Usually a foreign judgment will not suffice as the foundation of a creditor's bill. In Buchanan v. Marsh,^ which was an action in the courts of the State of Iowa on a judgment rendered in Canada, an injunction was asked restraining the defendants from alien- ating or encumbering their real estate until the rights of the parties should be determined at law. Wright, C. J., said : " Plaintiffs are not judgment-creditors. For the pur- pose of the present inquiry, their action is like any ordinary one upon a note, account, or any simple contract, or evi- dence of indebtedness. They have a foreign judgment ; but until it becomes a judgment in our courts, they are no more than creditors at large, and until they obtain the ' Lichtenberg v. Herdtfelder, 103 N. Y. 302. * 17 Iowa 494. § 7^ FOREIGN JUDGMENTS. I 23 recognition of their claim by the adjudication of our State tribunals, they have no other or different rights as to the property of their debtor than if their demand was indorsed by a less solemn or conclusive proceeding or instrument. For, however effectual such judgment may be, or whatever the faith and credit to which it may be entitled, it is very certain that it cannot be enforced here until its validity is recognized and passed upon by the judgment of our courts. This being so upon common-law principles, we know of no principle upon which plaintiffs were entitled to this injunc- tion. The rule is, as far as we know, without exception, that the creditor must have completed his title at law, by judgment (if not by execution) before he can question the disposition of the debtor's property." The weight of au- thority sustains this view.^ On the other hand, upon a judgment recovered in Pennsylvania, an attachment was issued in New Jersey, and the lien thereby created was held to be sufficient to enable the creditor to attack a fraudulent transfer.^ Again, in Wilkinson v. Yale,'^ a creditors bill was maintained in the United States Circuit Court, founded upon a judgment of a court of the State in wliich the Federal court was sittinff."* Still the c^eneral rule is that a foreign judgment ranks as a simple contract debt ; it does not have the force and operation of a domestic judgment ' See McCartney v. Bostwick, 31 ^ But compare Tompkins v. Purcell, Barb. (N. Y.) 390, overruled 32 N. Y. 12 Hun (N.Y.) 664 ; Tarboll v. Griggs. 3 53 ; Claflin v. McDermott, 12 Fed. Rep. Paige Ch. (N.Y.) 208 ; Steere v. Hoag- 375; Davis v. Bruns, 23 Hun (N. Y.) land, 39 111. 264; Bullitt v. Taylor, 34 648; Bcrryman v. Sullivan, 21 Miss. Miss. 708, 743 ; Brown v. Bates, 10 Ala. 65; Tarbell v. Griggs, 3 Paige (N. Y.) 440; Goodyear Dental Vulcanite Co. v. 207; Farned v. Harris, 19 Miss. 366; Frissclle, 22 Hun (N. Y.) 174; Crim v. Davis V. Dean, 26 N. J. Eq. 436; Crim Walker, 79 Mo. 335 ; Claflin v. McDer- v. Walker, 79 Mo. 335. mott, 12 Fed. Rep. 375. It would seem '-' Smith V. Muirheid, 34 N. J. Eq. 4. from perusing these cases that the ju- See Watkins v. Wortman, 19 W. Va. risdiction to proceed in a State court 79. upon a Federal judgment is problemati- 2 6 McLean 16. See Bullitt v. Tay- cal. lor, 34 Miss. 708. 124 CREDITORS OF A DECEDENT. § 79 except for the purposes of evidence, beyond the jurisdiction in which it is obtained.^ § 79. Creditors of a decedent. — The question of the neces- sity of a judgment as the foundation of a creditor's pro- ceedings, in cases where the debtor is dead, has created much dissension in the courts. Estes v. Wilcox,^ an im- portant case in the New York Court of Appeals, is to the effect that a creditor without judgment and execution re- turned, cannot maintain an action to enforce a resulting trust under the statutes of uses and trusts, in lands pur- chased and paid for by the debtor, and deeded to another, although the debtor died insolvent. It was held that these facts did not dispense with the observance of the general rule that a debt must be fixed and ascertained by judgment, and the legal remedies exhausted.'^ ' It is contended that the reason of the rule that a creditor's debt must be ascer- tained by judgment before proceeding in equity, does not necessarily fail by the death of the debtor before judgment recovered upon the debt. The creditor may prosecute the claun to judgment against the personal representatives of the debtor, and. although it will not be conclusive against his heirs or his grantees by title acquired before his death, it would conclude the creditor as to the amount of his claim.* But we cannot discover that the judgment against the personal representatives would be of much worth to the creditor.^ This case certainly extends the requirement to an extreme limit.^ The correctness of this rule is not uniformly conceded, and in a number of States the princi- ' McElmoyle v. Cohen, 13 Pet. 312. den v. Brewster, 2 Wall. 196. See "" 67 N. Y. 264. also § 73. 3 See Allyn v. Thurston, 53 N. Y. ■* Estes v. Wilcox, 67 N. Y. 266 ; 622; Fox V. Moyer, 54 N. Y, 129; Burnett v. Gould, 27 Hun (N. Y.) 366. Shaw V. Dwight, 27 N. Y. 249 ; North ^ Lichtenberg v. Herdtfelder, 103 N. American Fire Ins, Co. v. Graham, 5 Y. 302. Sandf. (N. Y.) 200 ; Jones v. Green, i * See Merchants' Nat. Bank v. Paine, Wall. 332, per Justice Field ; Chitten- 13 R. I. 594. § 8o JUDGMENTS IN EQUITABLE ACTIONS. I 25 pie is asserted that no proof of the recovery of judgment is necessary where the debtor is dead,^ as the judgment would be useless and unmeaning.^ In Hagan v. Walker,'* Mr. Justice Curtis, a very learned and able jurist, held that a simple creditor might maintain a suit to remove a covin- ous conveyance and reach assets, against the administrator and the fraudulent alienee of a deceased debtor. The court was of opinion that such a case was not to be treated as an application by a judgment-creditor for the exercise of the ancillary jurisdiction of the court to aid him in executing legal process, but came under the head of original jurisdic- tion in equity.^ The authorities upon this subject cannot he reconciled. The best reasoning would seem to be with the cases holding that no judgment need be recovered as^ainst the decedent's estate, and in favor of allowinc: the creditor both to establish his claim, and to discover assets to be applied toward its payment, in the same action. The practice of allowing executors and administrators to prose- cute actions to annul fraudulent transfers, in the interest and right of creditors, will be noticed presently. Where the personal representatives sue the necessity for judgment and execution returned unsatisfied is superseded. "^ § 80. Rule as to judgments in equitable actions. — The remedy, it seems, must also be exhausted where the judg- ment proceeded upon was rendered in an equity suit. ' Johnson v. Jones, 79 Ind. 141 ; Loomis v. Tifft, 16 Barb. (N. Y.) 541 Kipper v. Glancey, 2 Blackf. (Ind.) (contra, Estes v. Wilcox, 67 N. Y. 264) ; 356; O'Brien V. Coulter, 2 Blackf. (Ind.) Doran v. Simpson, 4 Yes. 651 ; Alsa- 421 ; Spencer v. Armstrong, 12 Heisk. ger v. Rowley, 6 Ves. 749; Wright v. (Tenn.) 707; Love v. Mikals, 11 Ind. Campbell, 27 Ark. 637. 227 ; Spicer v. Ayers, 2 T. & C. (N. ' 14 How. 32. Y.) 628 ; Reeder v. Speake, 4 S. C. ■» See Green v. Creighton, 23 How. 293 ; Haston v. Castner, 29 N. J. Eq. 106; Bay v. Cook, 31 111. 336 ; Merry 536; Offutt V. King, I MacA. (D. C.) v. Fremon, 44 iMo. 518 ; Snodgrass v. 314 ; Fowler's Appeal, 87 Pa. St. 449; Andrews, 30 Miss. 472. Compare Shurts V. Howell, 30 N. J. Eq. 418 ; Hills v. Sherwood, 48 Cal. 386. Phelps V. Piatt, 50 Barb. (N. Y.) 430. "■ Barton v. Hosner, 24 Hun (N. Y.) •^ Piatt V. Mead, 9 Fed. Rep. 96; 471. See §§ 1 12, 1 13. 126 JUDGMENTS TN EQUITABLE ACTIONS. § 8o Thus in Geery v. Geery,^ which was an action brought to set aside conveyances of real estate alleged to have been made by the defendant, through other persons, to his wife, in fraud of creditors, there was no proof of the docketing of a judgment, and of execution returned unsatisfied, and the point was taken that the ordinary remedy usually avail- able to creditors had not been exhausted. The creditor sought to obviate this objection by urging that the rule did not apply where the judgment sought to be collected was rendered in an equitable action. It appeared that the foundation of the complainant's claim was a judgment ren- dered upon a partnership accounting, but the judgment had not been docketed, nor had any execution been issued upon it. Earl, J., said : " I can perceive no reason for a distinction. A suit in equity to enforce satisfaction of a judgment should not be allowed so long as there is a more simple and obvious remedy. The statute law gives a rem- edy by execution, and that remedy, upon every reason of public policy and convenience, should be exhausted be- fore a new suit should be allowed to be maintained."^ Then Johnson, J., observed, in Crippen v. Hudson,^ that " the court of chancery required executions to be returned unsatisfied, when issued on its own decrees, before it would entertain creditors' bills founded upon them."^ There is, however, a rule running through some of the cases to the effect that where the claim asserted is purely equitable, and such as a court of equity will take cognizance of in the first instance, equity will at the same time go to the extent of inquiring into the matter of obstructions which have been placed in the way of enforcing the demand.^ For instance, ' 63 N. Y. 252; overruling White v. Graham, 5 Sandf. (N. Y.) 198; Speigle- Geraerdt, i Edvv. Ch. (N. Y.) 336. myer v. Crawford, 6 Paige (N, Y.) 2 See supra, §§76, ^T. Clarkson v. 254. De Peyster, 3 Paige (N. Y.) 320 ; S. P. ' Halbert v. Grant, 4 Mon. (Ky.) Adsit V. Butler, 87 N. Y. 585-589. 583. Compare Shea v. Knoxville & 3 13 N. Y. 161. Kentucky R.R. Co., 6 Baxter (Tenn.) * See North Am. Fire Ins. Co. v. 277. § 8l SPECIFIC LIEN BY ATTACHMENT. 1 27 where a surety has paid money for a principal, chancery has jurisdiction of a suit for its recovery, and the complainant may add a prayer seeking to annul a fraudulent conveyance that stands in the way of a settlement or is calculated to defeat or embarrass the remedial action of the court.' § 81. Specific lien by attachment. — In cases where the sheriff takes property upon attachment which is subject to seizure and sale, but which has been fraudulently transferred, it seems that the plaintiff, after the service of the at- tachment, is not a mere creditor at large, but, according to some of the authorities, one having a specific lien upon the goods attached, and that the sheriff has a like lien, and the right to show, as a defense to an action for taking the property, that the title of the party claiming it is fraud- ulent as against the attaching creditor.^ Hence it was held, in an action brought by a general assignee for the benefit of creditors, to recover goods seized by a sheriff on a warrant of attachment issued against the assignor, that it was permissible for the sheriff to show that the assignment was fraudulent and void as against the attaching creditors.** There is some confusion, however, in the authorities on the question of the right of an attaching creditor to attack fraudulent transfers. The Supreme Court of Nebraska and the courts of some other States deny such right in a variety of instances.^ The Nebraska case is rested uj)C)n the authority of Brooks v. Stone, ^ which proceeds on the ' Waller v. Todd, 3 Dana (Ky.) 508. ' Carr v. Van Hoesen. 26 Hun (N. Compare Smith v. Rumsey, 33 Mich. Y.) 316. Compare Bates v. Plonsky, 184; especially, Swan v. Smith, 57 28 Hun (N. Y.) 1 12. Miss. 548. But see §85. ■* Wei! v. Lankins, 3 Neb. 384; Ten- * Gross V. Daly, 5 Daly (N. Y.) 542 ; nent v. Battey, 18 Kan. 324; Martin v. Rinchey v. Stryker, 28 N. Y. 45 ; S. C. Michael, 23 Mo. 50; Greenleaf v. Mum- 26 How. Pr. 75; Noble v. Holmes, 5 ford, 19 Abb. Pr. (N. Y.) 469; Mills v. Hill (N. Y.) 194; Van Etten v. Hurst, Block, 30 Barb. (N. Y.) 549; Melville 6 Hill (N. Y.) 311 ; Sheafe v. Shcafe, 40 v. Brown, 16 N. J. Law 364 ; McMinn N. H, 516; Webster v. Lawrence, 47 v. Whelan, 27 Cal. 300. Hun (N. Y.) 565. ' 19 How. Pr. (N. Y.) 395. 128 SPECIFIC LIEN BY ATTACHMENT. § 8 1 theory that the creditor's remedy at law is not exhausted, his claim is not established, and perhaps he will never get a judgment.^ So garnishment process does not create a suf- ficient lien to uphold a creditor's bill.^ In New York, a State in which the authorities relating to the different phases of our subject are burdened with subtle distinctions, it is said that an attaching creditor could not maintain an independent action in the nature of a creditor's bill to set aside a fraudulent transfer of a chose in action.^ This case rests upon the theory that the attachment, owing to the nature of the property, created no lien ; but, where a lien is in fact acquired, the rule, as already stated, seems to be different,"^ especially when the attaching creditor is a de- fendant, at the suit of the fraudulent alienee, and relief will be in some instances extended, both in that State and in sister States, for the vindication of the lien.^ In Bowe V. Arnold^ the courts of New York held that the plaintiffs, in an action instituted by attachment, could not join with the sheriff in a suit against an assignee claiming the prop- erty under an assignment which it was sought to set aside in the action as fraudulent. It was conceded that such parties might join in that State,''' in actions to collect debts, effects, or choses in action attached by the sheriff,^ but the court observed that this was not such a case. The counsel ' Compare Jones v. Green, i Wall. v. McGill, 52 Iowa 128; Heye v. 331. See §73. Bolles, 33 How. Pr. (N. Y.) 266; Mer- '' Bigelow V. Andress, 31 111. 322. riam v. Sewall, 8 Gray (Mass.) 316 ; ^ Thurber v. Blanck, 50 N. Y. 80. Falconer v. Freennan, 4 Sandf. Ch, (N. •* Carr v. Van Hoesen, 26 Hun (N. Y.) 565 ; Stone v. Anderson, 26 N. H. Y.) 316 ; Rinchey v. Stryker, 28 N. Y. 506 ; Dodge v. Griswold, 8 N. H. 425 ; 45, Compare Frost v. Mott, 34 N. Y. Hunt v. Field, 9 N. J. Eq. 36 ; Will- 255; Smith V. Longmire, 24 Hun (N. iams v. Michenor, 11 N.J. Eq. 520; Y.) 257; Hall V. Stryker, 27 N. Y. Sheale v. Sheafe, 40 N. H. 516. 596; Castle V. Lewis, 78 N. Y. 131 ; "^ 18 Weekly Dig. (N. Y.) 326; s. C. Ocean Nat. Bank v. Olcott, 46 N. Y. 31 Hun (N. Y.) 256 ; affi'd loi N. Y. 12 ; Deutsch v. Reilly, 57 How. Pr. (N. 652. Y.) 75. " See N. Y. Code Civ. Pro. §§ 655-667. * Heyneman v. Dannenberg, 6 Cal. ^ Compare Thurber v. Blanck, 50 N. 378; Scales V. Scott, 13 Cal. 76 ; Joseph Y. 86 ; Lynch v. Crary, 52 N. Y. 183. § 8 1 SPECIFIC LIEN BY ATTACHMENT. 1 29 sought, upon the authority of Bates v. Plonsky,' to main- tain the action as being instituted for the protection, pres- ervation, and enforcement of the Hen obtained by the sup- posed levy of the attachment, but the court said that the precedent cited was a suit of a different nature, and was prosecuted merely to enjoin the distribution of a fund until the rights of the conflicting claimants could be estab- lished. It is observed in the course of the opinion that a creditor could only file a bill to annul a fraudulent transfer after return of execution unsatisfied," or in aid of the exe- cution after the recovery of a judgment.'^ The judgment in this case is undoubtedly correct, but in view of the other authorities cited, it can scarcely be con- sidered as leaving the law of that State relative to the rights of an attaching creditor in a very clear or satisfactory con- dition. We deny that a mere attaching creditor can, under any correct theory of law, become an actor in a creditor's suit. Indeed the underlying principles of the cases in which it is sought to make a lien acquired by the provisional remedy of attachment the practical equivalent of a lien procured by final judgment, are subversive of the time- honored policy and rule of the courts, that a creditor's bill must be founded upon a definite claim, established by a judgment at law.^ If the innovations in modern j)n)ce(lure call for the abrogation of this old chancery practice, it should not be superseded by indirection, but deliberately, and by some carefully formulated legislative substitute. The requirement is neither artificial nor technical ; it is a necessary protection and safeguard to the debtor. Mani- festly, where the property in controversy is of such char- acter as not to be susceptible to an attachment lien, the attaching creditor cannot, either as plaintiff or defendant, ' 28 Hun (N. Y.) 112. 73; Ballou v. Jones, 13 Hun (N. Y.) * See Chatauque Co. Bank v. Risley, 629. 19 N. Y. 370 ; Cole v. Tyler, 65 N. Y. » See Adsit v. Duller. 87 N. Y. 585. ^ See §73. 9 130 PROPERTY TAKEN IN NAME OF THIRD PARTY. § 82 avoid or attack any alienation or disposition that may have been made of it ; he has no status and no lien. Where, however, an attachment lien has been actually acquired, and the officer or attaching creditor is made defendant in a suit by the fraudulent alienee, the efficacy of the lien may be vindicated by setting up the fraud by way of defense, be- cause the plaintiff will be forced to recover upon -the strength of his own title, and if it be shown that such title is affected wnth fraud as regards the defendant or attaching creditor, the plaintiff will fail to make out a good title. § 82. Property of the debtor taken in name of third party. — The rules of procedure in cases where property has been paid for by the debtor, but the title taken in the name of third parties, have already been noticed.^ The New York Court of Appeals, in The Ocean National Bank v. Olcott,^ said, ill-advisedly as we think, that it was difficult to per- ceive the reason for any distinction between the rights of creditors as to the property fraudulently transferred by the debtor personally, and property paid for by him and trans- ferred by the vendor or grantor to a third person. " Why," said Chief-Justice Church, " should creditors have different and superior rights to enforce their debts, in the latter case, to those enjoyed in the former ? T can see no reason for any distinction, and I do not believe the statute has created any. But, in either case, the commencement of an equita- ble action is necessary to constitute a lien or charge, in any legal sense, upon the land The harmony and analo- gies of the law are better preserved by requiring all availa- ble legal remedies to be resorted to, as a preliminary requi- site to an action for the application of the trust property." In Ohio it is said that the statute^ does not apply to cases where the title is taken in the name of a third party for the ' See § 57. lating the mode of administering as- ^ 46 N. Y. 22. signments in trust for the benefit of " Swan & Sayler's Stats. 397, regu- creditors. § S^ WHEN JUDGMENT IS UNNECESSARY. I3I reason that the avoidance of the conveyance merely leaves the title in the grantor, which, of course, does not benefit the creditor ; ^ such an interest it is argued must be reached by a creditor's bill.^ It cannot be sold on execution.^ This question arose in Spaulding v. Fisher.* It was held that property purchased with the funds of the debtor, though taken in the name of a third party, was the property of the debtor as regards his creditors. The court said : " Its fraudulent transfer and concealment is equally established, whether the transfer is directly from the debtor or from another by his direction and procurement, the property transferred having been purchased wnth his funds. The ob- ject of the statute is to afford a remedy to the creditor against any one to whom the property of his debtor, no mat- ter in what it consisted, or how situated, has been fraudu- lently transferred for the purpose, and with the intent on the part of the debtor transferring, and the individual rc- ceivins: such transfer, to conceal the same, so as ' to secure it from the creditors and prevent its attachment or seizure on execution.'"^ § 83. When judgment is unnecessary. — It has been de- cided, though the question is a debatable one, that in special cases, if the execution cannot be issued in the State in which the land lies, it will suffice if issued in the State of the debtor's residence ; ^ and if the debtor's property is in the hands of a receiver appointed by the court, so that a ' Shorten v. Woodrow, 34 O. S. 645. but had been conveyed to anotlicr pt-r- 2 Bomberger v. Turner, 13 O. S. 263. son in order to secure it from his credit- See Martin v. Elden, 32 O. S. 282. ors, could not be attached or taken on Compare Combs v. Watson, 32 O. S. execution as his property. Hamilton 228. V. Cone, 99 Mass. 478 ; Howe v. Bish- » Garfield v. Hatmaker, 15 N. Y. op, 3 Met. (Mass.) 26. See, also, Gar- 475. field V. Hatmaker. 15 N. Y.475 ; Web- •* 57 Me. 415. See § 57. ster v. Folsom, 58 Me. 230. Compare " In Massachusetts, until the St. of Guthrie v. Gardner, 19 Wend. (N. Y.) 1844, c. 107, took effect, land paid for 414. and occupied by a debtor, the legal " McCartney v. Bostwick, 32 N. Y. title to which had never been in him, 53. 132 WHEN JUDGMENT IS UNNECESSARY. § 83 levy cannot be made, levy is excused ;^ and where, by rea- son of special circumstances, the creditor has no remedy at law, it has been argued that the legal remedy cannot be exhausted before proceeding in equity.^ McCartney v. Bostvvick ^ seems to be in its general statements overruled by Estes v. Wilcox ;* at least the courts have so held.^ A distinction is drawn in McCartney v. Bostwick between property fraudulently alienated by the debtor, and property paid for by him and taken in the name of a third party. In the former instance, the proceeding is to remove imped- iments in the way of reaching the debtor s property ; in the latter, it is to charge with a statutory lien the property of a third party, which the debtor never owned ; in the one case, it is to exercise auxiliary jurisdiction in aid of legal process ; in the other to enforce a trust of which the courts of law have no jurisdiction. We have already shown that Chief-Justice Church, in a later case, could see no reason for this distinction.^ In a controversy which arose in Georgia, it was decided that where a creditor of an insol- vent estate was under injunction not to sue the executor, this constituted a good excuse for not obtaining judgment on his debt before proceeding by bill in equity to cancel a voluntary conveyance made by the testator in his lifetime.''' The court in this case seemed determined to favor the creditor, for it was held that if, during the pendency of the bill, a judgment or decree establishing the amount of the debt was obtained against the executor, it might be brought into the bill by way of amendment, and used as effectively 1 Stewart v. Beale, 7 Hun (N. Y.) Y.) 143, overruled in other respects, 59 405. This case contains an important N. Y. 212. See § 80, V review of the authorities, and is af- ^ 32 N. Y. 53.. iiirmed without an opinion in the Court •* 67 N. Y. 264. of Appeals. See 68 N. Y. 629. See ^ Evans v. Hill, 18 Hun (N. Y.) 465. also Adsit v. Sanford, 23 Hun (N. Y.) ^ The Ocean National Bank v. Olcott, 49. 46 N. Y. 22. See § 82. ' Ka,mp v. Kamp, 46 How. Pr. (N. ' Compare Shellington v. Howland, 53 N. Y. 371. § S^ WHEN JUDGMENT IS UNNECESSARY. 1 33 as if the adjudication had preceded the fiUng of the bill, and had been originally alleged therein.^ Where the per- formance of a condition becomes impossible or illegal, per- formance is excused.^ So in some States creditors may proceed against an insolvent estate without the return of an execution.^ In Case v. Beauregard,'' Mr. Justice Strong observed : " But, after all, the judgment and fruitless exe- cution are only evidence that his legal remedies have been exhausted, or that he is without remedy at law. They are not the only possible means of proof. The necessity of resort to a court of equity may be made otherwise to ap- pear. Accordingly the rule, though general, is not without many exceptions. Neither law nor equity requires a mean- ingless form, 'Bona, scd impossibilia non cogit lex! It has been decided that where it appears by the bill that the debtor is insolvent and that the issuing of an execution would be of no practical utility, the issue of an execution is not a necessary prerequisite to equitable interference.^ This is certainly true where the creditor has a lien or a trust in his favor." ° Still the observations of Mr. Justice Strong are not being accorded hearty approval even in the Supreme Court itself. '^ In Russell v. Clark, *^ Chief- Justice Marshall, in discussing the general subject, said : " If a claim is to be satisfied out of a fund, which is accessible ' Cleveland v. Chambliss, 64 Ga. 352. " loi U. S. 690. 2 Shellington v. Howland, 53 N. Y. ^ Citing Turner v. Adams, 46 Mo, 374; Cohen v. N. Y. Mutual Life Ins. 95; Postlewait v. Howes, 3 la. 365 ; Co., 50 N. Y. 610; Semmes V. Hartford Ticonic Bank v. Harvey, 16 la. 141; Ins. Co., 13 Wall. 158. Botsford v. Beers, n Conn. 369; Payne ' Steere v. Hoagland, 39 111. 264; v. Sheldon, 63 Barb. (N. Y.) 169. See McDowell V. Cochran, 11 111. 31 ; Bay Fink v. Patterson, 21 Fed. Rep. 609. V. Cook, 31 III. 336 ; Hagan v. Walker, ^ See Austin v. Morris, 23 S. C. 403. 14 How. 32; Merry v. Fremon, 44 Mo. ' Taylor v. Bowker. iii U. S. no; 518; Haston v. Castner, 29 N. J. Eq. People's Savings Bank v. Bates, 120 536 ; Johnson v. Jones, 79 Ind. 141 ; U. S. 556. Compare Thompson v. Piatt V. Mead, 9 Fed. Rep. 96. Com- Van Vechten, 27 N. Y. 568. 582 ; Bax- pare Crompton v. Anthony, 13 Allen ter v. Moses, 77 Me. 476; Jones v. (Mass.) 36 ; Wright v. Campbell, 27 Green, i Wall. 330. Ark. 637. See § 79. "7 Cranch 89. 134 ABSCONDING DEBTORS. § 84 only by the aid of a court of chancery, application may be made, in the first instance, to that court, which will not require that the claim should be first established in a court of law."^ Then, as we shall presently see,^ in cases where the statute gives a new remedy in favor of creditors at large, by giving to an assignee or trustee for their benefit a statutory right to property conveyed in fraud of creditors, this statutory right takes the place of the specific lien re- quired by law as a condition of the right of individual creditors to contest the validity of the transfers.'^ § 84. Absconding and non - resident debtors. — The fact that the debtor is a non-resident, and has no property within the State, is not proof that all the legal remedies have been exhausted.^ If he has fraudulently alienated real property within the State, his interest, whatever it may be, must be first reached by attachment.^ Where, however, the debtor has absconded so that no personal judgment can be obtained against him, and there is no statutory proceeding by which his property can be reached, it has been held that a creditor's bill will lie in the first in- stance, and from the necessity of the case.'' It is con- sidered as analogous to a proceeding to reach and subject the equities of a deceased debtor to the claims of creditors, or to satisfy a debt from a specific equitable fund, as to en- force a lien, in neither of which cases is a personal judg- ment required.''' A full review of the authorities upon this question may be found in Merchant's National Bank v. ' See Shufeldt V. Boehm, 96 111. 563 ; Greenway v. Thomas, 14 111. 272. Steere v. Hoagland, 39 111. 264. Contra, Anderson v. Bradford, 5 J. J. ' See Chap. VII. Marsh (Ky.) 69 ; Scott v. McMillen, i ^ Southard v. Banner, 72 N. Y. 427 ; Litt. (Ky.) 302. Barton v. Hosner, 24 Hun (N. Y.) 471 ; ^ See Turner v. Adams, 46 Mo. 95. Cady V. Whaling, 7 Biss. 430 ; Cragin ■> Pendleton v. Perkins, 49 Mo. 565. V. Carmichael, 2 Dillon 520; Piatt, As- Compare O'Brien v. Coulter, 2 Blackf. signee, v. Matthews, 10 Fed. Rep. 280. (Ind.) 421 ; Russell v. Clark, 7 Cranch * Ballou V.Jones, 13 Hun (N. Y.) 631. 89, per Chief- Justice Marshall. See ° Dodd V. Levy, 10 Mo. App. 121 ; §79. § 85 PRACTICE IN INDIANA AND NORTH CAROLINA. I 35 Paine/ an important and well-considered case. The court there maintain the right of a creditor, before the recovery of judgment, to file a bill to reach equitable assets where the absconding debtor had left no legal assets liable to at- tachment,^ and cite in support of their conclusion cases from Kentucky,'^ Virginia,* Indiana,^ South Carulina.'' and Missouri,'' and adopt the views of the Supreme Court of Missouri, already quoted. § 85. Exceptional practice in Indiana and North Carolina. — In Indiana a novel practice as to joinder of claims prevails. Thus a claim to cancel a conveyance of real property from a husband to his wife, as being fraudulent against creditors, may be united with a demand against the husband arising out of contract.^ Then in an action against a husband and v/ife, instituted to obtain judgment against the husband for the price of goods sold, a Cfaud- ulent conveyance from the husband to the wife may be set aside so as to let in the lien of the judgment when re- covered.'^ It should be observed that this practice is wholly at variance with the prevalent rule that only judgment- creditors can attack fraudulent transfers.^*^ Nevertheless its technical correctness seems to be recognized in North Carolina. There the court declare it obvious that the rule exacting the recovery of a judgment at law before proceed- ing in equity grew out of the relations of the two courts under the former system, one acting as an aid to the other, ' 13 R. I. 592. •* Peay v. Morrison's Exrs., 10 Gratt. * Scott V. McMillen, I Litt. (Ky.) (Va.) 149. 302. Compare Russell V. Clark's Exrs., * Kipper v. Giancey. 2 Blackl". (Ind.) 7 Cranch 69,89; Miller v. Davidson, 356; O'Brien v. Coulter, 2 Blackl'. 8 111. 518, 522 ; Greenway v. Thomas, (Ind.) 421. 14 111. 271 ; Anderson v. Bradford, 5 " Farrar v. Haseldcn, 9 Rich. Eq. J. J. Marsh (Ky.) 69; Meux v. An- (S. C.) 331. thony, II Ark. 411. See Turner v. ' Pendleton v. Perkins, 49 Mo. 565. Adams, 46 Mo. 95, 99; McDermutt v. " Lindley v. Cross, 31 Ind. 106. Strong, 4 Johns. Ch. (N. Y.) 687, 689. ' Frank v. Kessler, 30 Ind. 8. = ScoU V. McMillen, i Litt. (Ky.) '" See Mills v. Block. 30 Barb. (N.V.) •302. 549- See ^73. 136 rUACTICE IN INDIANA AND NORTH CAROLINA. § 85 and that it was essential to tlic harmony of their action in the exercise of their separate functions in the administra- tion of the law. Chief-Justice Smith continuing, said : " It must of necessity cease to have any force, when the powers of both, and the functions of each, are committed to a single tribunal, substituted in place of both. Why should a plaintiff be compelled to sue for and recover [judgment on] his debt, and then to bring a new action to enforce payment out of his debtor's property in the very court that ordered the judgment ? Why should not full relief be had in one action, when the same court is to be called on to afford it in the second ? The policy of the new practice, and one of its best features, is to furnish a complete and final remedy for an aggrieved party in a single court, and without needless delay or expense." ^ This method of procedure constitutes a startling innovation. New York, the birthplace and stronghold of the reformed pro- cedure, clings tenaciously to the old practice of requiring a judgment and execution before an appeal can be made to the equity side of the court. Not only has the rule been rigidly enforced in that State, but, as is shown elsewhere, it has been extended and strengthened.^ The rule has been relaxed in other States, but the cases which completely subvert or overturn it are comparatively few. The old method of procedure did not result, as the court supposed in Bank v. Harris,^ wholly from the relation of courts of law to courts of equity, nor is the necessity for its observ- ance abrogated by the amalgamation of these jurisdictions. ' Bank v. Harris, 84 N. C. 210. their individual liabilities under the Claims for judgment upon coupons and charter. Glenn v. Farmers' Bank, 72 for a mandamus to coerce payment N. C. 626. were joined. McLendon v. Commis- - See Estes v. Wilcox, 67 N. Y. 264 sioners of Anson, 71 N. C. 38. So it Burnett v. Gould, 27 Hun (N. Y.) 366 was held competent to proceed in the Crippen v. Hudson, 13 N. Y. 161 same action against an insolvent debtor Adee v. Bigler, 81 N. Y. 349. See bank and against stockholders upon §§ 79, 80. = 84 N. C. 210. ■ § S6 RETURN OF EXECUTION UNSATISFIED. 1 37 If the creditor is to be allowed to prove and recover judg- ment upon his simple demand, and cancel fraudulent con- veyances, or reach equitable assets in the same action, it would seem to follow that the usual incidents of a creditor's suit would attach to the proceeding. The creditor in an action for assault and battery, libel, or slander,^ might ap- ply for an injunction against the debtor, or for a receiver of his property, or embarrass him by filing a lis pendens. The time-honored rule that the debtor's manafrement and control of his property should not be interfered with by injunction or otherwise, before judgment, would be up- rooted,^ and an unscrupulous creditor, having only the faint- est shadow of a claim, could work out the debtor's financial destruction. The ancient practice must not be regarded as technical or artificial, but as a safeguard to the debtor dic- tated alike by reason and necessity. If the practice is to undergo a change, as seems likelv in some States, then the joinder should be limited to cases of liquidated demands of creditors, certain in their character, and provisional re- lief should be withheld. The union is calculated to crowd into a single action a multitude of complicated issues con- cerning distinct transactions, as to the debt and the facts attending the alienation, a result always to be deprecated ; and would necessitate the presence of the alleged fraud- ulent vendee in the action.^ § 86. Return of execution unsatisfied. — A cloud of cases may be cited to the general effect that, to reach personal property or equitable assets, by bill, a creditor must first secure the return of an execution unsatisfied'* unless it can 'See §90. V. Burnett, 37 Miss. 617; Vassrr v. ^ See § 52. Henderson, 40 Miss. 519; Scott v. ^ See § 131. W^allace, 4 J. J. Marsh (Ky.) 654 ; Ro- •* Morgan v. Bogue, 7 Neb. 429; per v. McCook, 7 Ala. 318; Baxter Castle V. Bader, 23 Cal. 76 ; Newman v. Moses, T] Me. 465 ; Weigtman v. V. Willetts, 52 111. 98; Brown v. Bank Hatch, 17 III. 286; Bigelow v. .Andress, of Mississippi, 31 Miss. 454; McElwain 31 111. 334; Beach v. Bcslor. 45 111. V. Willis, 9 Wtnd. (N. Y.) 548 ; Hogan 346. 138 RETURN OF EXECUTION UNSATISFIED. § 86 be shown that the property is not suseeptible to levy} And it is immaterial that the return of the execution was made at the request of the plaintiff and within sixty days after its issuance.^ An embarrassing conflict of decisions, which must be noticed, arose between the Court of Appeals of New York, in Thurber v. Blanck,^ and the Commission of Appeals of the same State, in Mechanics' Bank v. Dakin.'* The Commission held that when a suit had been commenced by attachment, and a judgment recovered, the plaintiff, after issuance of execution, and before its return, could maintain an equitable action to set aside a fraudulent assignment of a bond and mortgage, to the end that it might be applied toward the satisfaction of the judgment ; the theory being, that by the service of the attachment a lien was acquired upon the bond and mortgage, w^hich could be enforced after judgment, and to which the fraud- ulent assignment was no impediment.^ The Court of Ap- peals held, however, that an equitable action could not be brought in such a case until the remedy at law was first exhausted ; that is, until the execution on the judgment had been returned unsatisfied ; that no lien could be ac- quired by the attachment upon a bond and mortgage, the legal title to which was in a third person ; that in the case of choses in action and debts, the lien is constructive, and cannot operate through an intermediate or inchoate legal title ; that in such a case no debt at law is owing to the defendant, and there is nothing for the attachment to operate upon, since it can only act upon legal rights, and not upon mere equitable interests ; that debts and choses in action are legal assets under the attachment law only when the process acts directly upon the legal title, and that when they are so situated as to require the exercise of the equit- ' Snodgrass V. Andrews, 30 Miss472. 54 N. Y. 681. Compare McElwain v. - Forbes v. Waller, 25 N. Y. 430. Willis, 9 Wend. (N. Y.) 561 ; reviewed * 50 N. Y. 80. in Smith v. Weeks, 60 Wis. too. •* 51 N. Y. 519 ; re-argument denied, ' See §81. § 8/ REALTY AND PERSONALTY. 1 39 able powers of the court to place them in that condition they are to be regarded as equitable assets only, and that, in such a case, to allow the equitable action upon the issu- ance of an execution, and before its return, would l)c in direct conflict with the rule that a creditor has no standing in court to reach equitable assets until his remedy at law is exhausted. The decision of the Commission of Appeals, it may be observed, was unanimous, while that of the Court of Appeals was rendered by a majority of the court, three judges dissenting, and three concurring with the chief-justice. The Commission of Appeals was a tempo- rary court called into existence to relieve the overcrowded calendar of the Court of Appeals. Its duration as a court was limited and it has ceased to exist. The Court of .-\p- peals being the permanent appellate court its decision has been generally followed,^ though it must be conceded that the relief which the Commission of Appeals attempted to extend would, in many instances, prove highly serviceable to creditors. The decision of the New York Court of Appeals, in Thurber v. Blanck,^ is not to be taken as being in conflict with the class of cases in which it has been liekl that an equitable action may be brought after the issuance of an execution, and before its return unsatisfied, to set aside a fraudulent transfer of goods and chattels, or of real estate which can be levied upon under the execution when the fraudulent impediment is removed.^ § 87. Distinction between realty and personalty as to issu- ance of execution.— The predicate of the jurisdiction as affect- ' Gross V. Daly, 5 Daly (N. Y.) 543; 561 ; Heye v. Bolles, 2 Daly (N. Y.) Castle V. Lewis, 78 N. Y. 137. See 231 ; McCul!ouL,fh v. Colby, 5 Bosw. Smith V. Longmire, i Am. Insolv. R. (N. Y.) 477 ; Nonh AmiMJcaii Fire Ins. 426; Anthony v. Wood, 96 N. Y. 1S5, Co. v. Graham, 5 .Sanclf. (N. Y.) 200; citing this section. Falconer v. Freeman, 4 Sandf. Ch. (N. * 50 N. Y. 80. Y.) 565; Greenleaf v. Mumford. 30 '^ Gross V. Daly, 5 Daly (N. Y.) 542 ; How. Pr. (N. Y.) 30. McElwain v. Willis, 9 Wend. (N. Y.) 140 REALTY AND PERSONALTY. § 87 ing realty is that the creditor has a Hen,^ and of course if the lien has expired the creditor's action will fail.^ A. judg- ment is usually a lien upon real property by statute, and hence authority can be found for the proposition that a covinous conveyance of real property can be attacked by a judgment-creditor without the issuance, levy, or return of an execution.^ Jurisdiction is invoked in such cases in aid of the remedy at law. It may be observed that, as a cred- itor must usually exhaust the personal property of the judgment-debtor before having recourse to the realty, it is generally essential to show, in proceedings to reach the latter, that an execution has been issued.^ There is, how- ever, an absence of harmony in the authorities. The ques- tion recently came before the New York Court of Ap- peals,^ and the result of the decision is briefly to the effect that, in an action to set aside a fraudulent conveyance of realty, the complaint must allege the issuance of an execu- tion and its return unsatisfied, or the action must be brought in aid of an execution then outstanding. The authorities in that State, on the general proposition that all available legal remedies must be pursued before resort to equity,^ are reviewed, and Shaw v. Dwight"^ distinguished. This 1 Partee v. Mathews, 53 Miss. 146 ; 82 ; Multnomah Street Ry. Co. v. Har- PulHam V. Taylor, 50 Miss. 551-554; ris, 13 Ore. 198; Payne v. Sheldon, 63 Carlisle v. Tinclall, 49 Miss. 229-232. Barb. (N. Y.) 169 ; Weigtman v. Hatch, * Evans v. Hill, 18 Hun (N. Y.) 17 111. 281 ; Dargan v. Waring, 11 Ala. 464. 993. See Busvvell v. Lincks, 8 Daly 3 Cornell v. Radvvay, 22 Wis. 260; (N. Y.) 518. Mohawk Bank v. Atwater, 2 Paige (N. •* North Am. Fire Ins. Co. v. Graham, Y.) 58; Clarkson v. De Peyster, 3 Paige 5 Sandf. (N. Y.) 197 ; reviewed in Mc- (N. Y.) 320 ; Shaw v. Dwight, 27 N. Cullough v. Colby, 5 Bosw. (N. Y.) 477. Y. 249 {contra, Adsit v. Butler, 87 N. * Adsit v. Butler, 87 N. Y. 586. Y. 587); Brinkerhoff V.Brown, 4 Johns, « Ocean Nat. Bank v. Olcott, 46 N. Ch. (N. Y.) 671 ; Royer Wheel Co. v. Y. 12 ; Geery v. Geery, 63 N. Y. 252 ; Fielding, 61 How. Pr. (N. Y.) 437 ; Estes v. Wilcox, 67 N. Y. 264 ; Allyn McCalmont v. Lawrence, i Blatch. v. Thurston, 53 N. Y. 622 ; McCartney 232 ; Newman v. Willetts, 52 111. 98 ; v. Bostwick, 32 N. Y. 62 ; Fox v. Moy- Vasser v. Henderson, 40 Miss. 519; er, 54 N. Y. 125; Crippen v. Hudson, Baldwin v. Ryan, 3 T. & C. (N. Y.) 13 N. Y. 161. 253 ; Binnie v. Walker, 25 111. App. ' 27 N. Y. 244. § 8/ REALTY AND PERSONALTY. I4I decision being the most recent utterance of the court of last resort, it follows that in New York State at least, exe- cution must issue upon a judgment before a creditor's ac- tion, or a suit to annul a fraudulent conveyance of realty can be supported. This places real property and equitable interests on substantially the same basis, as regards the status of .an attacking creditor, and in some measure re- stricts his rights.-^ To obtain an equitable lien upon property not the sub- ject of levy and sale under execution, the creditor must, of course, have exhausted his remedy under his judgment or decree by the return of an execution unsatisfied.'^ The re- turn of the execution, even as to personalty capable of being subjected to a lien, is not always essential. In Bus- well V. Lincks,^ Chief-Justice Daly said : " The equitable aid of the court to set aside a fraudulent conveyance is given where the one invoking it has a lien upon the proj)- erty which is obstructed by the conveyance. In the case of personal property, a judgment-creditor acquires, by the ' See Verner v. Downs, 13 S. C. 449; veyance of real property on which the Hyde v. Chapman, 33 Wis. 399 ; Dana plaintiff's judgment is, as against his V. Haskell, 41 Me. 25. In the Halladay debtor, a lien without an execution. Case, 27 Fed. Rep. 845, the court say : In the latter case the right to maintain "The issue of an execution, and the re- the suit is based on the unsatisfied turn of «//■//« ^^wa thereon, is considered judgment, the fraudulent conveyance, sufficient evidence of the insolvency of and the insolvency of the debtor; which the judgment-debtor, and that the judg- latter fact may be proved by any com- ment-creditor is remediless at law. petent evidence, as well as a return of But it is not the only evidence of that fiulla bona on an execution." As to fact, nor, in my judgment, always the proof of insolvency, see Hodges v. Silver best. The authorities are in apparent Hill Mining Co., 9 Ore. 200 ; Terry v. conflict on this question. Wait Fraud. Tubman, 92 U. S. 156 ; Case v. Ikau- Conv. §68; Bump Fraud. Conv. 518, regard, loi U. S. 688 ; McCalmont v. 527. But where the diversity is not Lawrence, i Blatchf. 232. the result of local legislation, I think '• Clarkson v. De IVyster, 3 Paige the apparent conflict arises from con- (N. Y.) 320; Shaw v. Dwight, 27 N. founding creditors' bills to subject per- Y. 249 ; Brinkerhoff v. Brown, 4 Johns, sonal property to the satisfaction of a Ch. (N. Y.) 676 ; Adsit v. Butler, 87 judgment with an ordinary bill in N. Y. 587 ; Fox v. Moycr, 54 N. Y. 128. equity to set aside or postpone a con- ^ 8 Daly (N. Y.) 518. 142 RAISING THE OBJECTION. § issuing of an execution, a lien upon the personal property of the debtor as against a fraudulent conveyance, and the aid of the court is given in that case to remove the obstruc- tion in the way of the execution, which cannot be done if the execution has been returned, for the lien under it is then at an end." ^ § 88. Raising the objection. — The objection that the cred- itor's remedy is at law, or that his bill is without equity, or his lien is suspended, may be raised at the hearing,^ though it is, of course, safer to bring it up by demurrer, if apparent on the face of the pleading, or by answer, if the defect is not so shown. The court may itself raise the objection.^ In concluding this chapter we may state that, as a general rule, under both the old Chancery system and the reformed procedure in New^ York, the bill should generally show affirmatively that an honest attempt has been made to col- lect the debt by the issuing of an execution against the debtor and its return unsatisfied, and, where there are sev- eral defendants jointly liable, that such effort has been made and the remedy exhausted against all the judgment-debtors before jurisdiction will be entertained in chancery.* Where the sole purpose of the bill is to subject real property fraud- ulently aliened to the lien of a judgment the exaction that execution should have been returned is not uniformly en- forced. ' Citing Forbes v. Logan, 4 Bosw. ^ Oelrichs v. Spain, 15 Wall. 211. (N. Y.) 475 ; Watrous v. Lathrop, 4 •* Voorhees v. Howard, 4 Keyes (N. Sandf. (N. Y.) 700. Y.) 383. See Child v. Brace, 4 Paige 2 Meux V. Anthony, 11 Ark. 423; (N.Y.)309; Reed v. Wheaton, 7 Paige Tappan v. Evans, 1 1 N. H. 31 1 ; Brown (N. Y.) 663. V. Bank of Mississippi, 31 Miss. 454. CHAPTER V. EXISTING CREDITORS. I 89. Classes of creditors — existing and subsequent. 90. Contingent creditors. 91. Who are not creditors. 92. Transfer of right to sue. § 93. Voluntary alienations as to exist- ing creditors. 94. Such conveyances only presump- tively fraudulent. 95. Evidence of solvency. " The complainant, not showing that he was at the time a creditor, cannot complain. Even a voluntary conveyance is good as against subsequent creditors, unless executed as a cover for future schemes of fraud."— Mr. Justice Field in Horbach v. Hill, 112 U. S. 149. § 89. Classes of creditors — existing and subsequent. — As appertaining to the subject-matter of this treatise, credit- ors may be said to resolve themselves into two great classes or subdivisions, commonly named existing creditors and subsequent creditors. Existing creditors are those whose claims or demands against the debtor were in l)eing in some form at the date of the alleged voluntary or fraudulent alienation.^ Subsequent creditors are those to whom the insolvent became indebted at a time subsequent to the alienation which is the subject of inquiry. The rights of these two classes of creditors are manifestly and necessarily different ;^ the proofs in each case vary, and the measure of relief extended by the courts in particular instances is largely dependent upon the question as to which of these two classes or subdivisions the complaining creditor be- longs. " The difference," says Chancellor Williamson, " between existing and subsequent debts, in reference to voluntary conveyances, is this — as to the foniur the fraud 'See Horbach v. Hill, 112 U. S. ''See Gordon v. Reynolds. 114 III. 149. 123; Jones V. King, 86 III. 225. 144 CONTINGENT CREDITORS. § 90 is an inference of law, but as to the latter there must be fraud in fact." ^ This latter distinction as we shall pres- ently see is not universally applied. Manifestly if the debtor has made any secret reservation for his own benefit the alienation may be overturned by either class of cred- itors."^ § 90. Contingent creditors. — It has been repeatedly ad- judged that a party bound by a contract upon which he may become liable for the payment of money, although his liability be contingent, is a debtor within the meaning of the statute avoiding all grants made to hinder or delay creditors.'^ It follows that the person to whom he is bound is a creditor.^ A wife is a creditor under 13 Eliz. c. 5, in a case where her husband covenanted with trustees to pay her a sum of money after his death. ^ A surety is a cred- itor from the time the obligation is entered into ; ^ a person liable contingently as an accommodation indorser is a cred- itor before the dishonor of the note ; ^ and a warrantor, if at the date of the deed a paramount title was outstanding, is, from the time of the conveyance, a debtor to the war- rantee.® A municipal corporation is, upon the issuance to the proper officer of a tax warrant, a creditor within the statute.^ The date when the agreement or obligation came into existence governs ^"^ in determining the complaining or ' Cook V. Johnson, 12 N. J. Eq. 54. * Pennington v. Seal, 49 Miss. 525. ■■' See Gordon v. Reynolds, 114 111. ' Hamet v. Dundass, 4 Pa. St, 178. 123. ' Gannard v. Eslava, 20 Ala, 740; ^ Young V. Heermans, 66 N. Y. 384; Pennington v. Seal, 49 Miss. 525. Fearn v. Ward, 65 Ala. 33 ; Van Wyck ^ Stimson v. Wrigley, 86 N. Y. 332. V. Seward, 18 Wend. (N. Y.) 375, 383, A judgment for costs accrues at the and cases cited ; Shontz v. Brown, 27 time the judgment is rendered, and not Pa. St. 123 ; Bibb v. Freeman, 59 Ala. when the action is commenced, as re- 612; Cook V. Johnson, 12 N. J. Eq, gards the question of whether the 52; Hamet v. Dundass, 4 Pa. St. 178; claimant is an existing or subsequent Jenkins v. Lockard, 66 Ala, 381. creditor. Inhabitants of Pelham v. ■* See Jackson v. Seward, 5 Cow, (N. Aldrich, 8 Gray (Mass.) 515 ; Ogden Y.) 67; Jackson v. Myers, 18 Johns, v. Prentice, 33 Barb. (N. Y.) 160; (N. Y.) 425. Stevens v. Works, 81 Ind. 449. "■ Rider v. Kidder, 10 Ves. 360. '" Van Wyck v, Seward, 18 Wend, § 91 WHO ARE NOT CREDITORS. 1 45 attacking creditor's rights. As elscwiiere shown, a person whose claim arises from a tort,^ such as libel or slander,'^ is a creditor. The date the tort or injury was committed governs in determining the creditor's status, where the con- veyance was made in pursuance of a fraudulent design to defeat the judgment which might be recovered upon it.'' So a transfer to defeat a claim for deceit,* for usury penal- ties,^ breach of promise to marry,^ seduction," bastardy,*^ and assault and battery,^ may be annulled. And a wife may at- tack alienations intended to defeat claims for alimony.^" In Pendleton v. Hughes,^^ the defendants, at the date of the fraudulent alienation, had in their possession a 5-20 U. S. bond belonging to plaintiff which they afterward con- verted. The court held that plaintiff was equitably en- titled to protection against the fraudulent transfer to the same extent as thouirh the defendants had been indebted to her in that amount at the time of the fraudulent alienation. § 91. Who are not creditors. — In Baker v. Gilman,^* the court speaking by Johnson, J., said that the sole object of (N. Y.) 375 ; Seward v. Jackson, 8 •» Miner v. Warner, 2 Grant (Pa.) Covven (N. Y.) 406. See Wooldridge 448. V. Gage, 68 111. 158 ; Stone v. Myers, 9 ' Heath v. Page, 63 Pa. St. 108. Minn. 309. "Hoffman v. Junk, 51 Wis. 613; ' Post V. Stiger, 29 N. J. Eq. 558 ; McVeigh v. Ritenour, 40 Ohio St. 107. Scott V. Hartman, 26 N. J. Eq. 90 ; ' Hunsinger v. Hofer, 1 10 Ind. 390. Pendleton v. Hughes, 65 Barb, (N, Y.) " Schuster v. Stout, 30 Kans. 530. 136 ; Barling v. Bishopp, 29 Beav. 417 ; " Martin v. Walker, 12 Hun (N. Y.) Shean v. Shay, 42 Ind. 375 ; Bongard 46. V. Block, 81 111. 186; Weir v. Day, '"Morrison v. Morrison, 49 N. H. 57 Iowa 87; Jackson v. Myers, 18 69; Bouslough v. Bouslough, 68 Pa. Johns. (N. Y.) 425 ; Shontz v. Brown, St. 495 ; Turner v. Turner. 44 Ala. 27 Pa. St. 131; Harris v. Harris, 23 437; Dugan v, Trislcr, 69 Ind. 553; Gratt. (Va.) 737 ; Tobie & Clark Mfg. Bailey v. Bailey, 61 Me. 361 ; Liver- Co. V. Waldron, 75 Me. 472. See more v. Boutelle, 1 1 Gray (Mass.) 217 ; § 123. Chase v. Chase, 105 Mass. 385 ; Hinds "" Cooke V. Cooke, 43 Md. 522; Hall v. Hinds, 80 Ala. 225, 227, citing this V. Sands, 52 Me. 355. But see Fowler section ; Foster v. Foster, 56 Vt. 546; V. Frisbie, 3 Conn. 320. Stuart v. Stuart, 123 Mass. 370; Bur- ^ Miller v. Dayton, 47 Iowa 312; rows v. Purple, 107 Mass. 435. Evans v. Lewis, 30 Ohio St. 11 ; Ford " 65 Barb. (N. Y.) 136. V. Johnston, 7 Hun (N. Y.) 563. " 52 Barb. (N. Y.) 37. 10 146 TRANSFER OF RIGHT TO SUE. §§ 92, 93 the Statute " in declaring conveyances void, is to protect, and prevent the defeat of, lawful debts, claims, or demands, and not those which are unlawful, or trumped up, and which have no foundation in law or justice, and the verity of which is never established by any judgment, or by the assent of the person against whom they are made. As against claims and demands of the latter class, the statute does not forbid conveyances or assignments, nor declare them void." So a party who is not a bona fide creditor is not entitled to equit- able relief on a creditor's bill.^ A pretended creditor w^hose claim is illegal,^ or void as against public policy,^ or barred by statute at law,^ or who is not concerned in the transfer,^ cannot support a creditor's action. A court of equity can only lend its aid to enforce a judgment which could be en- forced at law. § 92. Transfer of right to sue. — It may be here observed that the right to avoid a fraudulent conveyance is not per- sonal to the then existing creditor ; his successors and as- signs may enforce the right. Thus the subsequent pur- chaser of a pre-existing note may attack a transfer.^ Camp- bell, J., says '.'^ " No change in the ownership or the form of the debt affects the right incident to the debt to attack a conveyance fraudulent as to it." Davis, J., observed : " The conveyance was void as against the person intended to be defrauded, and his heirs, successors, executors, ad- ministrators, and assigns, if their actions, suits, debts, etc., were liable to be delayed or hindered thereby."^ § 93. Voluntary alienations as to existing creditors. — At first blush it would seem apparent that every voluntary alienation of a debtor's estate, aside from the question of 1 Townsend v. Tuttle, 28 N. J. Eq. ^ Morrison v. Atwell, 9 Bosw. (N. Y.) 449. See § 73. 503 ; Powers v. Graydon, 10 Bosw. (N. « Fuller V. Bean, 30 N. H. 186. See Y.) 630. Walker v. Lovell, 28 N. H. 138. * Warren v. Williams, 52 Me. 349. ' Bruggerman v. Hoerr, 7 Minn. 337. ' Cook v. Ligon, 54 Miss. 655. * Edwards v. M'Gee, 31 Miss. 143. " Warren v. Williams, 52 Me. 349. § 93 VOLUNTARY ALIENATIONS, 14/ intent, ought to be avoided as to existing creditors. The debtor's property is the fund upon which the creditor re- lied in extending the credit, and that, after the claim ac- crued, this fund should be depleted and pass into the hands of persons who did not pay value for it, is a palpable in- justice to the creditor whose claim remains unpaid. Ex- actly how to accomplish substantial justice in such cases, and yet to give full scope and effect to the proi)er pre- sumptions and rules of law, is not easily determined. Shall such a conveyance be declared pruna facie or absolutely void ? Some of the confusion and uncertainty which has been introduced into this subject in this country may be traced to the celebrated decision of Chancellor Kent in the widely known case of Reade v. Livingston,^ \\\ which it was held that a voluntary marriage settlement after marriage, was of itself void as to existing creditors. This case has been de- clared by an essayist^ to be "the grandest monument of legal acumen and wide and varied erudition which New York has ever produced," and while it is conceded that the case was repudiated by the courts of the very Stale which gave it birth,^ it was asserted that "unless indications are wholly delusive the learned Chancellor was not more than a century in advance of his age.'"* The English Court of Chancery in Freeman v. Pope,^ substantially acknowledge > 3 Johns Ch. (N. Y.) 481 ; S. C. 8 * See Doe d. Davis v. McKinncy. 5 Am. Dec. 520. Ala. 719; Foote v. Cobb, 18 Ala. 585 ; • Fraudulent Conveyances to Bofta Gannard v. Eslava. 20 Ala. 732 ; Spcn- Ft'de Purchasers, etc.. by John Rcy- cer v. Godwin, 30 Ala. 355 ; Crawford v. nolds, Esq., cited stifira. Kirksey, 55 Ala. 282 ; Early v. Owens. = Seward v. Jackson, 8 Cow. (N. Y.) 68 Ala. 171 ; Cook v. Johnson. 12 N. 406. By statute in New York, as else- J. Eq. 51 ; Smith v. Vreeland, 16 N. J. where shown, the question of fraud is Eq. 198; Kuhl v. Martin, 26 N. J. Eq. made one of fact, and no conveyance is 60; Haston v. Castner, 31 N. J. Eq. considered fraudulent as against cred- 697 ; City National Bank v. Hamilton, itors or purchasers solely on the ground 34 N. J. Eq. 1 58 ; Aber v. Brant. 36 N. that it was not founded upon a valu- J. Eq. 116; Fellows v. Smith, 40 Mir" able consideration. See Dygert v. Re- 689 ; Matson v. Melchor. 42 Mich. merschnider, 32 N. Y. 636. ' L. R. 9 Eq. at p. 211. 148 CONVEYANCES PRESUMPTIVELY FRAUDULENT. § 94 the doctrine of this case and give the following emphatic and extreme illustration : If at the time of a voluntary set- tlement, the settler "had ^100,000, and put ^100 in the settlement, and a creditor for say ^10, happened to be unpaid in consequence of the settler losing his money in the interval, that would be quite sufficient to set aside the voluntary settlement"; and the doctrine of the case is un- reservedly followed in many American cases.^ Salmon v. Bennett,** a leading early case, created an exception to the rule set forth in Reade v. Livingston, and tends to uphold voluntary conveyances to relatives as distinguished from strangers, where actual fraud is not found. ^ § 94. Such conveyances only presumptively fraudulent. — If, however, the majority rule is to be applied in determining this conflict, or the cases are to be counted and not weighed, then it must be conceded that a voluntary alienation by a person who happens to be indebted at the time is ov^y prima facie fraudulent.* In Smith v. Vodges,^ Swayne, J., said : " In order to defeat a settlement made by a husband upon his wife, it must be intended to defraud existing creditors, or creditors whose rights are expected shortly to supervene, 1 See Crawford v. Kirksey, 55 Ala. Hill's Ch. (S. C.) 113; s. C. 26 Am. 282; Spencer v. Godwin, 30 Ala. 355; Dec. 192; Heiatt v. Barnes, 5 Dana Hanson v. Buckner, 4 Dana (Ky.^ 251 ; (Ky.) 220; Koster v. Hiller, 4 Bradw. Emerson v. Bemis, 69 111. 540 ; Annin (III.) 24 ; Fellows v. Smith, 40 Mich. V. Annin, 24 N. J. Eq. 184; Richard- 691; Grant v. Ward, 64 Me. 239; son V. Rhodus, 14 Rich. Law (S. C.)96. French v. Holmes, 67 Me. 190; War- * I Conn. 525. ner v. Dove, 33 Md. 579 ; Babcock v. ^ See § 242. Foster v. Foster, 56 Eckler, 24 N. Y. 623 ; Greenfield's Es- Vt. 548; Lloyd V. Fulton, 91 U. S. tate, 14 Pa. St. 489 ; Clark v. Depew, 479; Babcock v. Eckler, 24 N. Y. 623 ; 25 Pa. St. 509; Pomeroy v. Bailey, 43 Gale V. Williamson, 8 M. & W. 405. N. H. 118; Dewey v. Long, 25 Vt. •* See note to Jenkins v. Clement, 14 564; Lloyd v. Fulton, 91 U. S. 485 ; Am. Dec. 705 ; Pence v. Croan, 51 Ind. Hoxie v. Price, 31 Wis. 82. The vol- 336; Gwyer v. Figgins, 37 Iowa 517 ; untary donee "is entitled only to that Wilson V. Kohlheim, 46 Miss. 346 ; which his donor could honestly give." Bank of U. S. v. Housman, 6 Paige Adams' Equity, p. 149. See Green v. (N. Y.) 526 ; Holden v. Bumham, 63 Givan, 33 N. Y. 343. N. Y. 74; Eigleberger v. Kibler, i ^ 92 U. S. 183. § 95 EVIDENCE OF SOLVENXV. 1 49 or creditors whose rights may and do so supervene ; the settler purposing to throw the hazards of business in which he is about to engage upon others, instead of honestly hold- ing his means subject to the chance of those adverse re- sults to which all business enterprises are liable."' "The sentiment of these cases," says Mr. Freeman,^ " is well ex- pressed in Lerow v. Wilmarth,^ by Chief-Justice Bigclow : ' We do not wish to be understood as giving our sanction to the doctrine that a voluntary conveyance by a father for the benefit of his child is /^^r j^ fraudulent as to existing creditors, although shown not to have been fraudulent in fact, and is liable to be set aside, because the law conclu- sively presumes it to have been fraudulent,' and shuts out all evidence to repel such presumption. The better doc- trine seems to us to be that there is, as applicable to volun- tary conveyances made on a meritorious consideration, as of blood and affection, no absolute presumption of fraud which entirely disregards the intent and purpose of the conveyance, if the grantor happened to be indebted at the time it was made, but that such a conveyance under such circumstances affords only prima facie or presumptive evi- dence of fraud which may be rebutted and controlled.'"'* § 95. Evidence of solvency. — The Supreme Court of Maine regard it as established law, that mere indebtedness is not sufficient to render a voluntary conveyance void. Consequently it was said that a man, chough indebted, may make a valid gift.° Mere insolvency will not, of course, ' Citing Sexton v.Wheaton, 8 Wheat, kins, 59 N. Y. 346; Walter v. Lane, i 229; Mullen V. Wilson, 44 Pa. St. 413 ; MacAr. (D. C.) 284; Parish v. Miir- Stileman v. Ashdown, 2 Atk. 481. phree. 13 How. 92 ; Moritz v. HofTman, "^ See note to Jenkins v. Clement, 14 35 III. 553 ; Koster v. Hiller, 4 Bradw. Am. Dec, 705. (111.) 24. ' 9 Allen (Mass.) 386. ' French v. Holmes, 67 Me. 193. * See Hinde v. Longworth, 1 1 Wheat. See McFadden v. Mitchell, 54 Cal. 628 ; 199; Verplank V. Sterry, 12 Johns. (N. Patterson v, McKinncy. 97 III, 47; Y.) 536. 559; Seward v. Jackson, 8 Hinde v. Long%vorth, 11 Wheat. 213; Cow. (N. Y.) 406 ; Dunlap v. Haw- Mcrrell v. Johnson, 96 111, 230. 150 EVIDENCE OF SOLVENCY. § 95 render a deed fraudulent provided it was made with the sole view of paying a debt due to the grantee.^ As a general rule if the donor is solvent, and has, after making the gift, sufficient assets remaining to satisfy his creditors, the gift will be upheld.^ Subsequent insolvency will not generally render it invalid.^ In such cases the creditors' trust fund cannot be said to have been depleted by the alienation. If their claims remain unsatisfied it is due to some subsequently accruing cause. Judge Lowell, in Pratt V. Curtis,^ derives the following propositions from the cases : " (i). A voluntary conveyance to a w'de or child is not fraudulent / McPherson v. Kingsbaker, 22 Kan. ^ 3 Johns. Ch. (N. Y.) 497. See 646 ; United States v. Stiner, 8 Blatchf. Chap. V. 544 ; Candee v. Lord, 2 N. Y. 275 ; ■* See Walter v. Lane, i MacAr. (D. Anon. I Wall. Jr. 113 ; Horn v. Ross, C.) 275. 20 Ga. 223 ; Black v. Nease, 37 Pa. St. ° See also Ede v. Knowles, 2 Y. & C. 433 ; Johnston v. Zane, 11 Gratt. (Va.) N. R. 172-178, cited in Story's Eq. Jur, 552. § 361, n.; Dewey v. Mover, 72 N. Y. 76. 2 Teed v. Valentine, 65 N. Y. 474, « 34 N. Y. 508. See Todd v. Nelson, and cases cited. 109 N. Y. 327. § 97 FRAUD UPON SUBSEQUENT CREDITORS. 1 55 against subsequent creditors. The design to obtain a credit after the conveyance by means of the continued possession and apparent ownership of the property, which the debtor thus placed beyond the reach of those who might give him future credit, was plainly fraudulent. The conclusion of fraud was not repelled by the circumstance that the delns owing by him at the time of the transfer were paid with the proceeds of credit subsequently acquired by the means already stated. The indebtedness then existing was merely transferred, not paid, and the fraud was as palpable as it would have been if the debts remaining unpaid were owing to the same creditors to whom he was oblijiated at the time of the transfers.^ § 97. — It may be here observed that a fraudulent and deceitful conveyance of property, made without valuable consideration, and with intent to injure the rights or avoid the debts of any other person, is invalid as to subsequent creditors as well as to those who were creditors at the time of the conveyance." In Parkman v. Welch, ^ Dewey, J., in speaking of the rights of subsequent creditors, said : " This raises the question whether the effect of the statute of 13 Eliz. c. 5, is to avoid conveyances made upon secret trust and with fraudulent intent, as well in favor of subseciuent as previous creditors. On this subject we apprehend the law is well settled, .... that a conveyance fraudulent at ' See S. p. Carr v. Breese, 18 Hun ing in some hazardous business requir- (N. Y.) 134 ; S. C. I Am. Insolv. Rep. ing such credit, or the debts wliich he 255. In Todd V. Nelson, 109 N. Y. has incurred were incurred soon after 327, Peckham, J., said : " The theory the conveyance, thus making the fraud- upon which deeds conveying the prop- ulent intent a natural and almost a erty of an individual to some third necessary inference, and in this way he party have been set aside as fraudulent has been enabled to obtain the prop- in regard to subsequent creditors of erty of others who were relying upon the grantor has been that he has made an appearance which was wholly dclu- a secret conveyance of his property sive." while remaining in the possession and ' McLane v. Johnson, 43 \'t. 48. seeming ownership thereof, and has See Clark v. French, 23 Me. 221. obtained credit thereby, while embark- •'' 19 Pick. (Mass.) 237. 156 FRAUD UPON SUBSEQUENT CREDITORS. § 97 the time of making it, might be avoided in favor of subse- quent creditors."^ In Toney v. McGehee,^ the rule is rec- ognized that a voluntary conveyance may be impeached by a subsequent creditor on the ground that it was made in ' See Carpenter v. McClure, 39 Vt. 9. In Day v. Cooley, 118 Mass. 527, the court observed : " It is well settled that if a debtor makes a conveyance with the purpose of defrauding either existing or future creditors, it may be impeached by either class of creditors, or by an assignee in insolvency or bankruptcy who represents both. Parkman v. Welch, 19 Pick. (jMass.) 231 ; Thacher V. Phinney, 7 Allen (Mass.) 146 ; Win- chester V. Charter, 12 Allen (Mass.) 606 ; Wadsworth v. WiUiams, 100 Mass. 126. As it was proved in this case that the grantor had an actual fraudulent design which was partici- pated in by the grantee, it is imma- terial whether the demandants are to be regarded as subsequent or existing creditors as to the conveyance." ' 38 Ark. 427 ; i Story's Eq. Jurisp. § 361 ; Claflin v. Mess, 30 N. J. Eq. 211; Pope V. Wilson, 7 Ala. 690; Smith V. Greer, 3 Humph, (Tenn.) 118; Reade v. Livingston, 3 Johns. Ch. (N. Y.) 481. Rights of subsequent creditors — Laughton v. Harden, — The rights of subsequent creditors are considered and the general policy of the courts in dealing with fraudulent transfers learnedly discussed in Laughton v. Harden, 68 Me. 208. The doctrine is there asserted that a voluntary conveyance from father to son, made with the intent to defraud creditors, may be avoided as to such credit- ors without allegations or proof that the grantee participated in the fraud- ulent intent. The court said : " The exact question presented is this : Is a voluntary conveyance from father to son, made by the grantor with an intent to defraud subsequent creditors, void as to such creditors, when there is no proof that the grantee partici- pated in that intent when he received or accepted the deed ? The statute of Elizabeth, c. 5, answers the question in the affirmative. It pronounces every conveyance, made to hinder, delay, or defraud creditors, utterly void as against such creditors, unless the estate shall be, ' upon good consideration, and bona fide, lawfully conveyed to such person,' not having at the time ' any manner of notice ' of such fraud. Can it be said that this estate was bo7ia fide, ' lawfully ' conveyed, or that a grantee who pays no consideration for land fraudulently conveyed to him has ' no manner of notice ' of the fraud ? But this is not all of the statute. It threat- ens a penalty against a party to such a conveyance who, being privy and know- ing thereto, ' shall wittingly and will- ingly put in use, avow, maintain, jus- tify, and defend the same,' as true and bona fide and upon good consideration. When a grantee in such a deed be- comes informed of the grantor's intent, does he not assist in executing that intent by an endeavor to uphold and maintain the deed ? Is he not, in the eye of the law, presumed to be a par- ticipator in the fraud ? Should not an honest grantee repudiate the deed ? The grantee, by the fraudulent act of his grantor, becomes the trustee or depositary of property which belongs to the grantor's creditors. By attempt- ing to witlihold it from the creditors, does not the grantee himself commit a fraud ? If innocent in the beginning, does he not become guilty in the end .'' The governing and acting intent was § 9^ PROOF OF INTENT. 1 57 fraud of existing creditors ; but, to be successful, the sub- sequent creditor must show either that actual fraud was intended, or that there were debts still outstanding, which the grantor owed at the time it was made. § 98. Proof of intent. — The subject of the intent of tne parties to an alleged fraudulent transfer will be considered presently.^ Speaking of the sufficiency of the evidence of the intent to defraud subsequent creditors, Johnson, J., said :^ " Upon the question of fraudulent intent, or whether the conveyance is fraudulent in fact, as to subsequent cred- itors, it is proper to consider the circumstances of its being voluntary, and the party indebted at the time ; and if ad- ditional circumstances connected with those two be suffi- cient to show fraud in fact, it is void as to subsequent cred- itors. It is not necessary that there should be direct proof to show the fraud ; it is to be legally inferred from the facts and circumstances of the case, where those facts and circumstances are of such a character as to lead a reasonable man to the conclusion that the conv'eyance was made with intent to hinder, delay, or defraud existing or future cred- itors."^ Folger, J., delivering the opinion of ilie New the grantor's. Does not the grantee apparent possession of means and prop- endeavor to avail himself of it and erty, be enabled to create a very great adopt it when he holds on to the deed ? amount of subsequent indebtedness. No other conclusion can be reached. How could a creditor show that the Of course it will not at this day be wife, and a fortiori, that the young questioned that any conveyance may minor children knew of the grantor's be avoided by subsequent as well as fraud, unless the knowledge can be by prior creditors, if fraud was by such imputed to them under such circum- conveyance meditated against subse- stances as a necessary implication of quent creditors. Wyman v. Brown, 50 law? It would be unnatural for a Me. 139; Bailey v. Bailey, 6i Me. 361. debtor's wife and children to believe Any other view of this question than him to be a dishonest man, and un- the one taken by us would permit and common for them to know much of his encourage most iniquitous frauds upon business affairs." the part of badly disposed debtors. A ' See Chap. .\IV. man might convey all his property to '• Rose v. Brown, 11 W. Va. 134. his wife or minor children upon the •'' See Carpenter v. Roe, 10 N. Y. eve of an expected bankruptcy, and, on 227; Larkin v. McMulIin, 49 Pa. St. account of his undoubted credit and 29. 158 CONVEYANCE BY EMBARRASSED DEBTOR. § 99 York Court of Appeals in Shand v. Hanley,' observes upon this subject that "there is no difference in result, as there is no difference in the intention to produce the result, be- tween a transfer of property to defraud a creditor existing at the time, and a creditor thereafter to be made."^ A conveyance intended to defraud creditors is voidable not only as to existing but as to future creditors.^ The intent must be mutual. Marriage, as vve shall elsewhere see, is a valuable consideration which is much respected in the law, and an antenuptial settlement, though made by the settler with the design of defrauding his creditors, will not be an- nulled in the absence of the clearest proof of participation in the fraud on the part of the wife.* § 99. Conveyance by embarrassed debtor. — In Wallace v. Penfield,^ it appeared that the debtor, who was somewhat indebted at the time, made a voluntary settlement upon his wife, by causing the title to the lands in question to be taken in her name, with the intention of immediately build- ing upon and improving the land and using it as a perma- nent residence for himself and family. It was shown by a preponderance of evidence that when the settlement was effected, and during the period the land was being built upon and improved, the debtor had property which credit- ors could have reached, exceeding in value his indebtedness by several thousand dollars, and was engaged in an active business with fair prospects. All the creditors whose claims existed at the date of the settlement, or during the period when the debtor was making expenditures for improve- ments, had been fully paid and discharged. The plaintiff's '71 N. Y. 319, 322; Matter of Thomson v. Dougherty, 12 S. & R. Brown, 39 Hun (N. Y.) 27; Case v. (Pa.) 448; Lockhard v. Beckley, 10 W. Phelps, 39 N. Y. 164. Va. 87. • See Mullen V.Wilson, 44 Pa. St. 416. ■* Prewit v. Wilson, 103 U. S. 22. ' Partridge v. Stokes, 66 Barb. (N. See Chap. XX, Y.) 586. See Case v. Phelps, 39 N. Y. ' 106 U. S. 260 ; S. C. I Sup. Ct. Re- 164; Carr v. Breese, 81 N. Y. 584; porter, 216. § 99 CONVEYANCE BY EMBARRASSED DEBTOR. I 59 claim accrued subsequently. The Supreme Court of the United States very properly decided that these facts were entirely consistent with an honest purpose to deal fairly with any creditors the debtor then had, or might thereafter have in the ordinary course of his business, and that neither the conveyance to the wife, nor the withdrawal of the husband's means from his business for the purpose of improving the land settled upon the wife, had the effect to hinder or de- fraud his the-n existing or subsequent creditors. In Pepper V. Carter,^ the Supreme Court of Missouri said: "Some would make an indebtedness per se evidence of fraud against existing creditors ; others would leave every con- veyance of the kind to be judged by its own circumstances, and from them infer the existence or non-existence of fraud in each particular transaction. Without determining the question as to existing creditors, we may safely affirm that all the cases will warrant the opinion that a voluntary con- veyance as to subsequent creditors, although the party be embarrassed at the time of its execution, is not fraudulent pej' se as to them ; but the fact, whether it is fraudulent or not, is to be determined from all the circumstances. I do not say that the fact of indebtedness is not to weigh in the consideration of the question of fraud in such cases, but that it is not conclusive." The language of this case is quoted approvingly by the same court in the later case of Payne v. Stanton,^ where it is said : " The doctrine is well settled that a voluntary conveyance by a person in debt, is not, as to subsequent creditors, fraudulent/^?;-^*?. To make it fraudulent as to subsequent creditors, there must be proof of actual or intentional fraud. As to creditors existing at the time, if the effect and operation of the conveyance arc to hinder or defraud them, it may, as to them, be justly re- garded as invalid, but no such reason can he urued in behalf of those who become creditors afterwards." These cases ' n Mo. 543. ' 59 Mo, 159. l6o PLACING PROPERTY BEYOND RISK. § TOO in Missouri are quoted from at length, and declared to be controlling, by the United States Supreme Court in Wal- lace V. Penfield, ubi supra. In the latter case, however, the facts proved and found by the court expressly repel the idea that the debtor was embarrassed or insolvent when the settlement was made ; and the decision can scarcely be re- garded as fully approving Payne v. Stanton and similar cases to the effect that an embarrassed debtor may make a voluntary conveyance which will be upheld against subse- quent creditors. These Missouri cases are at least danger- ously near the border line. The court, in Payne v. Stanton, draws the distinction between existing and subsequent cred- itors, and says that the conveyance might hinder, delay, and defraud the former, " but no such reason can be urged in behalf of those who become creditors afterwards." This, we respectfully urge, is attaching undue importance to the exact date or period of time when the creditor's claim ac- crued. The embarrassed debtor, under this rule, might voluntarily alienate the mass of his property, then secure loans or incur obligations to creditors, whose claims would thus be subsequent to the voluntary conveyance, and with the money thus acquired liquidate the obligations existing when the conveyance was effected. The embarrassment of the debtor when the transfer \vas made calls into being the claims of, and obligations to, the new creditors ; the deficit then existed, and the liability has been merely transferred to new parties, while the debtor's embarrassed estate has been further crippled or rendered hopelessly insolvent by the voluntary alienation. It seems to follow that the safer and more prudent rule would be to hold that no voluntary conveyance by an embarrassed debtor should be upheld against creditors, whether their claims accrued prior or sub- sequent to the transfer. § 100. Placing property beyond the risk of new ventures or speculations. — This brings us to the most important branch § lOO PLACING PROPERTY BEYOND RISK. l6l of the subject, viz., the effect of conveyances, gifts, and settlements made to avoid the risks of losses likely to result from new business schemes. To illustrate, a baker who had been carrying on business for some years being about to purchase a grocery business, which he intended to carry on together with his own trade, made a voluntary settlement of nearly the whole of his property upon his wife and chil- dren. He then purchased the grocery business, and having lost money sold it, but continued in business as a baker. Three years after the settlement he filed a licjuidation petition. The court held that independently of the ques- tion whether he was solvent at the date of the settlement, it was voidable as against the trustee in liquidation, under the Stat. 13 Eliz. c. 5, on the ground that it was evidently executed with the view of putting the settler's property out of the reach of his creditors in case he should fail in the speculation on which he was about to enter, in carrying on a new business of which he knew nothing.^ If a settlement is made " on the eve of a new business, and with a view of providing against its contingencies, it is as unavailing against new creditors as against old ones."^ This same general principle was involved in Case v. Phelps,'^ in the New York Court of Appeals. Woodruff, J., a judge of much learning and great vigor of mind, said : '* May a per- son about to engage in business which he believes may in- ' Ex parte Russell. In re Butter- law should not be so framed or con- worth, 19 Ch. D. 588; s. C. 51 L. J. strued as to tempt men to desert their Ch. 521 ; 46 L. T. N. S. 113; 30 W. R. legitimate business, and engage in 584; following Mackay v. Douglas, 14 specious and hazardous speculations, L. R. Eq. 106. Compare Winchester concerning the dangers of which they V. Charter, 102 Mass. 272 ; Beeckman are ignorant, by allowing them to V.Montgomery, 14 N. J. Eq. 106 ; Cra- "make a feather bed on which they mer v. Reford, 17 N. J. Eq. 383; Na- may fall lightly." under the plea of tional Bank of Metropolis v. Sprague, affection for their wives and children. 20 N. J. Eq. 25; Annin v. Annin, 24 Thomson v. Dougherty, 12 S. & R. N. J. Eq. 194; Case v. Phelps, 39 N. (Pa.) 451. Y. 164. ' 39 N. Y. 169. ' Black V. Nease, 37 Pa. St. 438. The 11 l62 PLACING PROPERTY BEYOND RISK. § IQO volve losses, with a view to entering upon such business, convey his property to his wife, voluntarily, without con- sideration, to secure it for the benefit of himself and family, in the event that such losses should occur? I cannot re- o-ard this question, as in substance, other than the inquiry, May a man, for the purpose of preventing his future credit- ors from collecting their demands out of his property then owned, and/br the purpose of casting upon them the haz- ards of his success in the business in which he is about to engage, convey his property without consideration to his wife, in order to secure the benefit of it to himself and family, however disastrous such business may prove, and continue in the possession, not even putting the deeds upon record, until after such subsequent indebtedness arises ? " * The question of the validity of a gift or settlement, as to subsequent creditors, as we have said, turns upon the ques- tion as to whether it was made in contemplation of future debts,^ or to secure the debtor "a retreat in the event of a probable pecuniary disaster in a hazardous business in which he proposed to embark."^ To bring the transfer within this rule, " it must be executed with the intention and de- sign to defraud those who should thereafter become his creditors,"* the debtor proposing to throw the hazards of the business in which he is about to engage upon others, instead of honestly holding his means subject to the chance of the adverse results incident to all business enterprises.^ But these cases must be considered within proper restric- tions. Thus, where a man who was solvent paid for prop- ' See City Nat. Bank v. Hamilton, Sexton v. Wheaton, 8 Wheat. 229 ; 34 N. J. Eq. 160. Mullen v. Wilson, 44 Pa. St. 418; "^ Walter v. Lane, i MacAr. (D. C.) Stileman v. Ashdown, 2 Atk. 481. 282. Compare United States v. Griswold, 7 ^ Fisher V. Lewis, 69 Mo. 631. Sawyer 335; McPherson v. Kings- ^ Matthai v. Heather, 57 Md. 484. baker, 22 Kan. 646 ; Sheppard v. Thorn- See Williams v. Banks, 11 Md. 198; as, 24 Kan. 780; Kirksey v. Snedecor, Moore V. Blondheim, 19 Md. 172. 60 Ala. 192; Marshall v. Croom, 60 5 Smith V. Vodges, 92 U. S. 183; Ala. 121. * § lOI CONVEYANCES AVOIDED. 1 6 O erty which he procured to be conveyed to his wife, and there was no evidence tending to show that by so doing he intended to defraud any subsequent creditors, it has been held that the conveyance is perfectly valid in her favor as against his subsequent creditors, and that a husband had a right to make a settlement of property upon his wife, pro- vided it was free from fraud. ^ Subsequent indebtedness cannot be invoked to make that fraudulent which was hon- est and free from impeachment at" the time.*^ In Graham V. Railroad Co.,' a leading and important case, it is said to be a well-settled rule of law that if an individual, being solvent at the time, without any actual intent to defraud creditors, disposes of property for an inadequate considera- tion, or even makes a voluntary conveyance of it, subse- quent creditors cannot question the transaction. The argu- ment advanced is that such creditors are not injured ; they gave credit to the debtor in the status which he had after the voluntary conveyance was made. This rule was applied to an alienation by a corporation.* § loi. Conveyances avoided. — The Chancellor said, in Beeckman v. Montgomery :° "Aside from the fact that the deed was made by the father in contemplation of future indebtedness, there are strong circumstances indicating the existence of actual fraud. The deed was made on the eve of the grantor engaging in mercantile business, which would ' Curtis V. Fox, 47 N. Y. 301 ; Phil- in a note. In Porter v. Pittsburg Bes- lips V. Wooster, 36 N. Y. 412. semer Steel Co., 120 U. S. 673, the ^ See Babcock v. Eckler, 24 N. Y. court said: "It is a well-settled prin- 630; Reade v. Livingston, 3 Johns. Ch. ciple, that subsequent creditors cannot (N. Y.) 500 ; Seward v. Jackson, 8 be heard to impeach an executed con- Cow. {N. Y.) 406 ; Hinde's Lessee v. tract, where their dealings with the Longworth, 11 Wheat. 199. company, of which they claim the M02 U. S. 148. See Wallace v. benefit, occurred after the contract be- Penfield, 106 U. S. 260; Mattingly v. came an executed contract." Nye, 8 Wall. 370; Sexton v. Wheaton, ^ Compare Wabash, St. L. & P. Ry. 8 Wheat. 239, per Marshall, C. J. ; S. C. Co. v. Ham, 1 14 U. S. 587, 594. I Am. Lea. Cas. 17, where the law ' 14 N. J. Eq. 112. upon this subject is learnedly discussed 164 CONVEYANCES NOT FRAUDULENT. § I02 require for its successful pursuit both capital and credit. He disposed, at the time of the conveyance, of the entire control of his real estate, which constituted the bulk of his property, leaving himself an inadequate capital for con- ducting his business or raising loans. The credit which he obtained was due to his former standing as a man of responsibility. The conveyances to his children were not advancements adapted to the means and situation in life of the grantor — they absorbed his whole property. The deed to the defendant was made while he was an infant but six- teen years of age, not needing an advancement, and not of discretion to take charge and management of the property. It was kept secret for more than a year, and was not left at the office to be recorded till the day after a suit at law was commenced by the complainants for the recovery of their debt."^ If a person about to contract debts makes a voluntary conveyance, with the intent to deprive future creditors of the means of enforcing collection of their debts, and this purpose is accomplished, it is very clear that such creditors are injured and defrauded.^ A creditor has a right when extending credit, to rely upon the honesty and good faith of the debtor, and may assume, without in- quiry, that the debtor has made no fraudulent conveyances of property.^ § 102. Conveyances not considered fraudulent. — But the courts will not willingly overturn a settlement or voluntary alienation at the suit of a subsequent creditor, upon slight, unsubstantial, or intangible proof. Carr v. Breese"* is an 1 See City Nat. Bank v. Hamilton, 34 cock v. Kiely, 41 Conn. 611 ; Williams N. J. Eq. 158 ; Carpenter v. Carpenter, v. Davis, 69 Pa. St. 21 ; Pawley v. Vo- 25 N. J. Eq. 194; Dick v. Hamilton, gel, 42 Mo. 303 ; Herschfeldt v. George, Deady 322 ; Burdick v. Gill, 7 Fed. 6 Mich. 456 ; Hiiliard v. Cagle, 46 Miss. Rep. 668 ; Carter v, Grimshaw, 49 N. 309 ; Huggins v. Perrine, 30 Ala. 396. H. 100; Snyder v. Christ, 39 Pa. St. - Burdick v. Gill, 7 Fed. Rep. 670. 499 ; Mullen v. Wilson, 44 Pa. St. 413 ; ^ Ibid. Barlingv. Bishopp, 29Beav. 417; Clark •'Si N. Y. 584; overruling 18 Hun V. Killian, 103 U. S. 766, affi'g Killian (N. Y.) 134. See s. P. Phoenix Bank v. V. Clark, 3 MacAr. (D. C.) 379 ; Hitch- Stafford, 89 N. Y. 405. § I02 CONVEYANCES NOT FRAUDULENT. 1 65 illustration. In that case the New York Court of Appeals, overruling the court below, decided that where a husband, worth $22,000, owing debts amounting to $2,800, which were subsequently paid, and engaged in a prosperous busi- ness, purchased property costing about $16,000, and took it in the name of his wife, and paid about $10,000 of the consideration by mortgage on his real estate, and the bal- ance by mortgage upon the premises purchased, the settle- ment was not unsuitable or disproportionate to his means. Miller, J., speaking for the court, said : " There was no insolvency in fact or in contemplation, no new enterprise started which involved unusual or extraordinary hazard, but the continuance of the business of the grantor for the period of three years, and no dishonest failure, or attempt in any form to defraud. An existing indebtedness alone does not render a voluntary conveyance absolutely fraudu- lent and void as against creditors, unless there is an intent to defraud.^ This is especially the case when it is shown that the residue of the property was amply sufficient to pay all debts." ^ It may be observed that although in Babcock V. Eckler,^ the disproportion was far greater than in Carr V. Breese,"* the conveyance was upheld ; but in this case evidence was introduced tending to show that the convey- ance was not entirely voluntary.^ Again in Carpenter v. Roe,^ the court, citing Hinde's Lessee v. Longworth," say : " If it can be shown that the grantor was in prosperous cir- cumstances and unembarrassed, and that the gift was a rea- sonable provision, according to his state and condition in life, and leaving enough for the payment of the debts of ' Citing Van Wyck v, Seward, 6 ^ 24 N. Y. 623. Paige (N. Y.) 62. •• 81 N. Y. 584. ' Citing Jackson v. Post, 15 Wend, ° See Childs v. Connor, 38 N. Y. Su- (N. Y.) 588; Pliillips V. Wooster, 36 perior Ct. 471. N. Y. 412 ; Dunlap v. Hawkins, 59 N. " 10 N. Y. 227. Y. 342. ' II Wheat. 213. l66 SUBSEQUENT CREDITORS. §§ IO3, IO4 the grantor," the presumptive evidence of fraud would be met and repelled.^ § 103. Subrogation of subsequent creditors. — A device to which fraudulent insolvents often resort consists in making a voluntary conveyance and following this up by paying all the antecedent or existing creditors, practically with the moneys derived from the credit extended by subsequent creditors. Savage v. Murphy,^ already quoted, was such a case."'^ It is a most unsubstantial mode of paying a debt to contract another of equal amount. It is the merest fallacy to call such an act getting out of debt,^ and the case should be treated as if the prior indebtedness had con- tinued throughout.^ § 104. Subsequent creditors sharing with antecedent credit- ors. — In a case which arose in Massachusetts, in which an administrator sought to annul a fraudulent alienation made by his intestate, Dewey, J., said : "Though the ground of avoiding this conveyance is that the land was liable to be taken to satisfy existing creditors only, yet when the con- veyance is avoided, the proceeds of the sale will be assets generally, and other creditors will receive the benefit there- of incidentally."^ In Kehr v. Smith, ^ Davis, J., observed : " It is well settled, where a deed is set aside as void as to existing creditors, that all the creditors, prior and subse- quent, share in the fund pro I'atay^ Mr. Peachey ob- ' See Crawford v. Logan, 97 111. 396 ; " Norton v. Norton, 5 Cush. (Mass.) Clark V. Killian, 103 U. S. 766 ; Wal- 530. lace V. Penfield, 106 U. S. 260 ; Pepper ' 20 Wall. 36. V. Carter, 1 1 Mo. 540 ; Payne v. Stan- ® Citing Magawley's Trust, 5 De G. ton, 59 Mo. 158; Genesee River Nat. and Sm. i ; Richardson v. Smallwood, Bank v. Mead, 92 N. Y. 637. Jacob 552-558 ; Savage v. Murphy, 34 '^ 34 N. Y. 508. N. Y. 508 ; Iley v. Niswanger, Harp. ' See § 96. See also Churchill v. Eq. (S. C.) 295 ; Robinson v. Stewart, Wells, 7 Coldw. (Tenn.) 364; Moritz 10 N. Y. 189; Thomson v. Dougherty, V. Hoffman, 35 111. 553. 12 S. & R. (Pa.) 448; Henderson v. ' Paulk V. Cooke, 39 Conn. 566. Hoke, 3 Dev. (N. C.) Law 12-14 I Kis- ° Edwards v. Entwisle, 2 Mackey sam v. Edmundson, i Ired. Eq. (N. C.) (D. C.) 43. 180; Sexton v. Wheaton, i Am. Lea. § I05 SUBSEQUENT AND ANTECEDENT CREDITORS. 16/ serves :^ " It has, howev^er, never been disputed but that a sub- sequent creditor would participate in the benefit of a decree instituted by a prior creditor, and would have the same equity for having the property applied. Again no distinc- tion has been drawn in such cases between the different classes of creditors, that is, between those whose debts ex- isted at the time the deed was executed, and those who be- came creditors subsequently, or that any priority can be given to those who were creditors at the date of the instru- ment over the subsequent creditors ; all would, in fact, participate pro rata.'"^ There has been, however, some hesitancy on the part of the courts in holding that a deed which existing creditors could avoid, was, after avoidance by them, to be considered void as to all creditors ; for that is practically the effect of letting in subsequent creditors, especially to share pro rata. Though the deed cannot be set aside at the instance of subsequent creditors, yet the author- ities seem to give them the same benefit when the antecedent creditors succeed in annulling it. It would seem to re- sult that while there is a discrimination in the right to at- tack the conveyance, there is none as to sharing in the suc- cessful result. In considering this feature, however, the rule that a creditor, by filing a bill, acquires an ecjuitable lien and preference in certain cases, must not be overlooked.^ § 105. Mixed claims accruing prior and subsequent to alien- ation. — The right of a grantee or vendee, from whom a Cas. 45 ; Norton v. Norton, 5 Cush. Appeal, 63 Pa. St. 289. See Churchill (Mass.) 529; O'Daniel v. Crawford, 4 v. Wells, 7 Coldw. (Tenn.) 364: Trim- Dev. (N, C.) Law 197-204; Reade v. ble v. Turner, 21 Miss. 348; Kipp v. Livingston, 3 Johns. Ch. (N. Y.) 481- Hanna, 2 Bland's Ch. (Md.) 26; Beach 499; Townshend v. Windham, 2 Yes. v. White, Walker's Ch. (Mich.) 495; Sen. 10; Jenkyn V. Vaughan, 3 Drewry Thomson v. Dougherty. 12 S. & R. 419-424. See Bassett V. McKenna, 52 (Pa.) 448; Kidney v. Coussmaker, 12 Conn. 442, citing this section ; Day v. Ves. Jr. 136, note. Compare Converse Cooley, 118 Mass. 524. v. Hartley, 31 Conn. 379. ' Peachey on Marriage Settlements, •* See Pullis v. Robinson, 5 Mo. App. p. 197. 548. See §61 ; also Chap. XXV. - Cited wilh approval in Amnion's 1 68 MIXED CLAIMS. § IO5 creditor seeks to wrest property held in trust for a debtor, to require the creditor to show, in a proper case, that his debt accrued before the conveyance which is questioned, is clearly established. As a voluntary or fraudulent convey- ance is ordinarily good between the parties, and can be up- held except as against certain classes of persons, it follows that the vendee can force the plaintiff to show that he comes within some privileged class entitled to impeach the trans- action. Where it is important or vital to the creditor's success to show that he was an existing creditor as to the conveyance, and it appears that some of the items of his claims accrued prior and others subsequent to the conveyance, and all these items are embodied in one judgment, it has been held in several cases that he is to be treated as a subsequent creditor, not entitled to attack the conveyance.^ In Baker v. Oilman^ the creditor was an attorney, and his claim was for services. Johnson, J., said : "The plaintiff was clearly a subsequent creditor of Oilman. His employment, by virtue of his retainer, was a continuous one until the de- termination of the actions. It was a single demand for services, a small portion of which were rendered before the conveyance, and the far larger portion long afterwards. This being embraced in one judgment, nearly two years after the conveyance, renders the plaintiff clearly a subse- quent creditor." In Reed v. Woodman,^ it appeared from the evidence that the greater part of the debt which was the foundation of the judgment rendered in favor of the de- mandant accrued subsequent to the date of the challenged conveyance. The court said : " The levy was entire, and cannot be so apportioned or divided as to constitute a satis- ' See Miller V. Miller, 23 Me. 22 ; s. 558. Contra, Ecker v. Lafferty, 20 C. 39 Am. Dec. 598, and notes ; Reed Pittsb. L. J. (Pa.) 135. V. Woodman, 4 Me. 400 ; Usher v. ' 52 Barb. (N. Y.) 38. Hareltine, 5 Me. 471 ; Quimby v. Dill, ' 4 Me. 400. 40 Me. 528 ; Moritz v. Hoffman, 35 111. § I06 STATUS OF CREDITORS. 1 69 faction for that part of his debt which was due prior to that deed. The demandant, having taken judgment for his whole demand, is to be regarded as a creditor subsequent to the conveyance of the land in question by his debtor. He cannot therefore impeach that conveyance but bv showing actual fraud." ^ § 106, Status of creditors whose claims accrued after notice of alienation. — As a general rule a subsequent creditor who acquired his claim with knowledge or notice of the con- veyance sought to be annulled, cannot attack it as fraudu- lent.^ In Baker v. Oilman, Johnson, J., said: "I do not think a creditor, who has trusted his debtor after being fully informed by the latter that he has put his property out of his hands, by a conveyance, valid as between him and his grantee, though voidable as to existing creditors, should ever be allowed to come into court and claim that such conveyance was fraudulent and void, as to him, on account of such indebtedness. As to such creditor, a conveyance of that kind would not be fraudulent, in any sense, and could not, on that ground, be avoided."^ ' See Humes v. Scruggs, 94 U. S, 22. ^ 52 Barb. (N. Y.) 39. See Sledge •* Lehmberg v. Biberstein, 51 Tex, v. Obenchain, 58 Miss. 670; Kane v. 457 ; Monroe v. Smith, 79 Pa. St. 459 ; Roberts, 40 Md. 594; Williams v. Banks, Herring v. Richards, 3 Fed. Rep. 443. 11 Md. 198; Sheppard v. Thomas, 24 See Knight v. Forward, 63 Barb. (N. Kans. 780. Compare Kirksey v. Sned- Y.)3ii; Lewis v.Castleman, 27 Tex. 407. ecor, 60 Ala. 192. CHAPTER VII. WHO MAY BE COMPLAINANTS. §107. 108. 109. no. III. 112. 113- 114. 115. 116. 117. Parties complainant. Joinder of complainants. Suing on behalf of others. " And others." Surety. [ Executors and administrators. Assignee in bankruptcy. General assignee. Receivers. Receivers of corporations. §118. Foreign receivers. 119. Creditors of corporations. 120. Sheriff. 121. Heirs — Widow. 122. Husband and wife. 123. Tort creditor. 124. Overseer of the poor. 125. Creditors having liens. 126. Purchaser removing brances. 127. Creditors opposing will. § 107. Parties complainant. — The rights of the two great classes — existing and subsequent — into which creditors are necessarily divided, having been considered/ the discussion would not be complete without noticing in detail the cases in which complainants in various capacities are allowed to prosecute the class of litigations under consideration. The principle must be kept constantly in view that fraudulent conveyances can be assailed only by those who have been injured,^ and are voidable only in favor of parties occupy- 1 See Chaps. V., VI. " Sides V. McCullough, 7 Mart. (La.) 654; s. C. 12 Am. Dec. 519; Hall v. Moriarty, 57 Mich. 345. A. conveyed to B. in fraud of creditors. A railroad company agreed to take the land and pay an award of damages. When sued for the amount of the award the com- pany set up that B. derived title by fraud. The plea was held bad. La- crosse & M. R.R. Co. V. Seeger, 4 Wis. 268. So a party with whom goods are deposited for safe keeping cannot set up fraud in the title, the court in one case saying : " We recognize the right of no man, in this way, to turn Quixote and fight against fraud, for justice sake alone. In the mouth, therefore, of this defendant, I do not perceive the right to set up this defense, even if it were true in fact." Hendricks v. Mount, 5 N. J. L. 738, 743. Compare Bell v. Johnson, in III. 374. § 107 PARTIES COMPLAINANT. l/I ing the positions of creditors^ or subsequent purchasers." The creditor who first institutes a suit in ciiancery to avoid a fraudulent conveyance is entitled to relief, without regard to other creditors standing in the same right, who have not made themselves joint parties with him,'^ or taken any pro- ceedings. The creditors spoken of as entitled to discover equitable assets or annul covinous transfers, are the creditors of the grantor or donor making the fraudulent conveyance."* That a " fraud upon the public" was the design of the trans- fer is not a sufficient ground for avoiding it.^ A fraudulent purpose is harmless if unattended with any wrongful effect. '^ Again, the fraudulent intent, as we shall show, must be con- nected with the transaction assailed, and not relate merely to some entirely independent act."^ But it is not necessary that any particular creditor should be mentioned by name.^ It is well observed by Chancellor Kent, in Brown v. Ricketts,^ that the question of parties is frequently perplex- ing and difficult to reduce to rule. The remark as will be manifest is peculiarly appropriate to the different actions and proceedings affecting fraudulent alienations. We may further state that suits by creditors form no exception to the rule which requires that all the parties in interest who are in esse shall be brought into the case.^*' ' See Moseley v. Moseley, 15 N. Y. que trust, against the personal repre- 334; Allenspachv. Wagner, 9 Col. 132 ; sentative of the trustee, to reach the Burke v. Adams, 80 Mo. 504. proceeds of land sold by the trustee, ^ Burgctt V. Burgett, i Ohio 469; S. which were held under a trust for the C. 13 Am. Dec. 634; Thompson v. benefit of creditors. Uiefendorf v. Moore, 36 Me. 47 ; Jewell v. Porter, 31 Spraker, 10 N. Y. 246. N. H. 34; Byrod's Appeal, 31 Pa. St. ' Griffin v. Doe d. Stoddard, 12 Ala. 241. 783. ^ McCalmont v. Lawrence, i Blatchf. " Buford v. Keokuk N. L. Packet Co.. 235. 3 Mo. App. I 59. * See Chapter IlL Morrison v. At- ' Wilson v. Forsyth, 24 Barb. (N. Y.) well, 9 Bosw. (N. Y.) 503; Powers v. 128. Graydon, 10 Bosw. (N. Y.) 630. A " Blount v. Costen, 47 G.i. 534. creditor's bill has been supported found- ' 3 Johns. Ch. (N. Y.) 555. ed upon the judgment claim of a cestui '" Bowen v. Gent, 54 Md. 555. 172 JOINDER OF COMrLAINANTS. § I08 § 108. Joinder of complainants. — Let us first notice the authorities relating to the joinder of complainants in the vari- ous forms of actions instituted by creditors. Parties who are creditors by several judgments may, as a general rule, join as complainants in an action to reach property fraudu- lently alienated by a debtor.^ In Robbins v. Sand Creek Turnpike Co.,^ the court quoted the following language approvingly: "Several persons having a common interest arising out of the same transaction or subject of litigation, though their interests be separate, may join in one suit for equitable relief, provided their interests be not adverse or conflicting And several judgment-creditors, holding different judgments, may unite in filing a creditors' bill to reach the equitable interests and choses in action of the debtor, or to obtain the aid of the court to enforce their liens at law." And in Powell v. Spaulding^ the doctrine is laid down to the effect that " where there is unity in inter- est, as to the object to be obtained by the bill, the parties seeking redress in chancery may join in the same complaint and maintain their action toofether."^ In Brinkerhoff v. ' Buckingham v. Walker, 51 Miss. Y.) 288. Compare Carroll v. Aldrich, 494; Butler V. Spann, 27 Miss. 234; 17 Vt. 569. The court decided, in El- Sage V. Mosher, 28 Barb. (N. Y.) 287 ; more v. Spear, 27 Ga. 196, that where Snodgrass v. Andrews, 30 Miss. 472 ; a creditor proposed to reach legal as North V. Bradway, 9 Minn. 183 ; Dewey distinguished from equitable assets, the V. Moyer, 72 N. Y. 74 ; Simar v. Cana- suit technically was not a creditors' day, 53 N. Y. 305 ; Bauknight v. Sloan, bill. Hence a single creditor was held 17 Fla. 286; Ballentine v. Beall, 4 111. to be entitled to institute a suit to reach 203 ; White's Bank of Buffalo v. Farth- legal assets, and if he thereby gained a ing, 9 Civ. Pro. (N. Y.) 64; S. C. loi priority over other creditors it was said N. Y. 344 ; Higby v. Ayres, 14 Kans. he could retain this advantage, and was 331 ; Chapman v. Banker & Tradesman not forced to divide with the others, but Pub. Co., 128 Mass. 478; Gates v. was entitled to the control of his own Boomer, 17 Wis. 455 ; Wall v. Fairley, case, and could not be required to make 73 N. C. 464; Reed v. Stryker, 4 Abb. other creditors parties to his bill. See App. Dec. (N. Y.) 26 ; Murray v. Hay, §§ 54, 55. I Barb. Ch. (N. Y.) 59. But compare ** 34 Ind. 461. See Bank of Rome v. Yeaton v. Lenox, 8 Pet. 123; Seaverv. Haselton, 15 B. J. Lea (Tenn.) 216. Bigelows, 5 Wall. 208. Judgment- ^ 3 Greene (Iowa) 443, 461. creditors cannot thus unite in an action •* See Strong v. Taylor School Town- at law. Sage v. Mosher, 28 Barb. (N. ship, 79 Ind. 208. In Hamlin v. Wright, § I08 JOINDER OF COMPLAINANTS. / O Brown, ^ Chancellor Kent ruled that different creditors might unite in one bill, the object of which was to set aside a fraudulent conveyance of their common debtor. It was so held also in McDermutt v. Strong,^ Edmeston v. Lyde,^ Conro V. Port Henry Iron Co.,"* Wall v. Fairley,^ and Me- bane v. Layton.*' And where a defendant in two separate bills, brought by different judgment-creditors to reach the same land, files one answer to both bills, it seems that he thereby virtually consolidates the suits, and they may be heard together as one cause, or as two causes under one style, without entering any specific order of consolidation.^ In one case a sheriff and the judgment-creditor under whose execution a levy had been made were allowed to join in a creditors' bill.® Each it was said had an interest in prevent- ing a multiplicity of suits, and in closing the matter in a single controversy ; their interests were in harmony, and in no respect conflicting, and hence of such character as entitled them to unite in the suit.^ There is, however, no obliiration upon judgment-creditors to join.^*^ Creditors by judgment and by decree may unite in one suit," but judgment credit- ors and simple contract creditors cannot join.^'^ Where one party is a creditor by judgment and another by decree, both having acquired liens upon the propert)' of their debtor which entitle them to similar relief against an act of the defendant, which is a common injury, they may join in a bill.^^ The general theory upon which creditors 23 Wis. 494, the court observe that ^ 86 N. C. 571. " different judgment-creditors may join " Rodgers v. Dibrell, 6 Lea (Tenn.) in one suit against the judgment-debtor 69. and his fraudulent grantees, though the "Adams v. Davidson, 10 N. Y. 309. interests of the latter are separate and 315. See §81. distinct, and were not acquired at the " Compare Bates v. Plonsky, 28 Hun same time. The object of such a suit (N. Y.) 112. is to reach the property of the debtor." '° White's Bank of BufTalo v. Farlli- ' 6 Johns. Ch. (N. Y.) 139. ing, 9 Civ. Pro. (N. Y.) 64. ^ 4 Johns. Ch. (N. Y.) 687. " Brown v. Bates. 10 Ala. 432. •"• I Paige (N, Y.) 637. '* Bauknight v. Sloan, 17 Fla. 284. ■* 12 Barb. (N. Y.) 27. '^ Clarkson v. De Peyster, 3 Paige » 73 N. C. 464. (N. Y.) 320. 174 JOINDER OF COMrLAINANTS. § Io8 arc permitted to unite as complainants is that they are seek- ing payment of their judgments out of a common fund, viz., the property of the debtor; his fraudulent conduct with reference to his assets affects them all, and is the sub- ject-matter of investigation. A receiver is often appointed to reach and take possession of equitable interests or prop- erty fraudulently alienated, and as he can act equally well for the different creditors, the expense, delay, and confusion incident to conducting different suits are avoided.^ A judg- ment-creditor of a firm who is also a judgment-creditor of one of the members of the firm may sue on both judgments to overturn an assignment.^ Obviously, hostile claimants cannot join in any form of action,"^ and a bill is demurrable where it appears that one of the complainants has no standing in court, or antago- nistic causes of action are set forth, or the relief for which the complainants respectively pray in regard to a portion of the property sought to be reached, involves totally distinct 1 See Gates v. Boomer, 17 Wis. 455 ; in an action brouglit for the purpose of Hamlin v. Wright, 23 Wis. 491 ; Ruff- declaring it void, and setting it aside ing V. Tilton, 12 Ind. 259; Baker v. because of a common fraud practiced Bartol, 6 Cal. 483 ; Pierce v. Milwaukee upon them in obtaining it. We think Construction Co., 38 Wis. 253 ; Dewey it comes directly within the principle of V. Moyer, 72 N. Y. 74 ; S. C. below, 9 the cases cited by appellant's counsel, Hun (N. Y.) 476; Higby v. Ayres, 14 and although the plaintiffs were uncon- Kansas 331 ; Buckingham v. Walker, nected parties with respect to the in- 51 Miss. 494. In Smith v. Schulting, debtedness to them, they may join in the 14 Hun (N. Y.) 54, the court say : "The suit because there was one connected principal issue presented by this com- interest among them all centering in plaint is the invalidity of the alleged re- the principal point in issue." Citing lease. It is manifest by the admissions Binks v. Rokeby, 2 Madd. 234; Ward of the complaint itself, that unless the v. Northumberland, 2 Anstr. 469, 477 ; release be set aside there can be no re- Whaley v. Dawson, 2 Sch. & Lef. 370. covery of the indebtedness to the several ^Genesee County Bank v. Bank of firms. They have a common interest, Batavia, 43 Hun (N. Y.) 295. therefore, in this principal issue, and ^ See Hubbell v. Lerch, 58 N. Y. inasmuch as the release is, or under 237 ; St. John v. Pierce, 22 Barb. (N. the allegations of the complaint must Y.) 362, afii'd in Court of Appeals, 4 be assumed to be, a joint one, obtained Abb. App. Dec. (N. Y.) 140; Sedg. & by a common fraud, there is no reason Wait on Trial of Title to Land, 2d ed., why all the parties to it may not unite § 188. § I09 SUING ON BEHALF OF OTHERS. 175 questions requiring different evidence and leading to differ- ent decrees.^ § 109. Suing on behalf of others. — Mr, Pomeroy says : '^ " One creditor may sue on behalf of all the other creditors in an action to enforce the terms of an assignment in trust for the benefit of creditors, to obtain an accounting and settlement from the assignee, and other like relief ; also, in an action to set aside such an assignment on the ground that it is illegal and void ; and also one judgment-creditor may sue on behalf of all other similar creditors in an action to reach the equitable assets, and to set aside the fraudulent transfers of the debtor. In all these classes of cases the creditors have a common interest in the questions to be determined b}^ the controversy." '^ The complainant may sue alone or with other judgment-creditors.^ It is remarked by Nelson, J., in Myers v. Fenn,^ that "the practice of permitting judgment-creditors to come in and make them- selves parties to the bill, and thereby obtain the benefit, assuming at the same time their portion of the costs and expenses of the litigation, is well settled"/' but this inten- tion must be manifested by suitable averments in tiie bill ;^ and if, after a finding of a court annulling a fraudulent ' Walker v. Powers, 104 U. S. 245. (N. Y.) 42 ; Brooks v. Peck, 38 Barb. Compare Emans v. Emans, 14 N. J. (N. Y.) 519; Innes v. Lansing, 7 Paige Eq. 1 14 ; Sawyer v. Noble, 55 Me. 227. (N. Y.) 583 ; Conro v. Port Henrj' Iron The creditor may proceed by ancillary Co., 12 Barb. (N. Y.) 59 ; Hammond v. proceedings in any other court of con- Hudson River I. & M. Co., 20 Barb. current jurisdiction with the court ren- (N. Y.) 378; Chewett v. Moran, 17 dering the judgment, to remove clouds Fed. Rep. 820; Ponsford v. Hartley, from the titles of any property which is 2 Johns. & H. 736; Bailentine v. Beall. deemed to be subject to the lien of the 4 111. 203 ; Terry v. Calnan, 4.S. C. 508. judgment. Each judgment makes a •* Marsh v. Burroughs, i Woods 467, separate cause of action. Scottish- and cases cited. American Mortgage Co. v. Follansbee, ' 5 Wall. 207. 14 Fed. Rep. 125. * Compare Strike v. McDonald, 2 H. * Pomeroy's Remedies & Remedial & G. (Md.) 192; Shand v. Hanley, 71 Rights, § 394. See Pfohl v. Simpson, N. Y. 324; Barry v. Abbot, 100 Mass. 74 N. Y. 137. 396 ; Neely v. Jones, 16 W. Va. 625. '' See Greene v. Breck, 10 Abb. Pr. ' Burt v. Keyes, i Flipp. 72. 176 "AND OTHERS." § IIO preference, other creditors seek to come in as co-com- plainants, they may be allowed to do so, but their demands will be postponed in favor of the original complainant.^ Stockholders may sue in the right of the corporation where the latter refuses to proceed ; ^ but where there is unreasonable delay in bringing the suit, the cause of action may be defeated by the application of the doctrine of equit- able estoppel.'^ " Where one incurs expense in rescuing: property belonging to many, a court of equity has power unquestionably to direct that the expenses so incurred shall be paid from the common fund."^ § no. "And others." — It is a mistake to suppose that the statute of Elizabeth only avoids deeds and conveyances coming within its exact provisions as to creditors. The statute is much broader in its operation.^ It enacts that every conveyance made to the end purpose and intent to delay, hinder, or defraud creditors and others of their just and lawful actions, etc., shall be void. " It extends not only to creditors, but to all others who have cause of action or suit, or any penalty or forfeiture"; and, as we shall see, embraces claims for slander, trespass, and other torts.'' The claimant may not come within a sharply defined meaning of the word "creditor," but he may maintain his standing "in the equity of creditors."' So in Feigley v. Feigley,^ the court say : " The statute seems to design to embrace others than those who are strictly and technically cred- ' Smith V. Craft, 11 Biss. 340. ' Gebhart v. Merfeld, 51 Md. 325. ■-Taylor v. Holmes, 127 U. S. 492; See Cooke, Garn. v. Cooke, 43 Md. Hawes v. Oakland, 104 U. S. 450 ; 523 ; Sexton v. Wheaton, i Am. Lea. Greaves v. Gouge, 69 N. Y. 157 ; Wait Gas. 42, notes; Jackson v. Myers, 18 on Insolvent Corps. § 74. Johns. (N. Y.) 425 ; Lillard v. McGee, 3 Sheldon Hat Blocking Co. v. Eicke- 4 Bibb (Ky.) 165 ; Lowry v. Pinson, 2 meyer Hat Blocking Machine Co., 90 Bailey's (S. C.) Law 324, 328, and other N. Y. 607. cases there cited. •*Merwin v. Richardson, 52 Conn. ' Shontz v. Brown, 27 Pa. St. 131. 223, 237. ' 7 Md. 561. =^See§i6. § I I I SURETY, / / itors ; and if, under such a comprehensive clause as ' cred- itors and others,' a wife, who has been made the victim of her husband's fraud, is not to be included, we are at a loss to ascertain to whom else it was designed to relate."^ Then the principle that a voluntary post-nuptial settlement made by a person indebted \s prima facie fraudulent, as to creditors, applies as well in behalf of the representatives of a deceased partner as of general creditors ; ^ and a partner who liquidates firm judgments stands in the position of a creditor with regard to fraudulent alienations of his co- partner/^ § III. Surety. — ^Sureties on an appeal bond may be sub- rogated to the rights of the judgment-creditor, to bring a creditor's action to set aside fraudulent deeds,'* even though the principal informed the sureties of the fraud before they became bound. ^ Sureties may enforce their rights in the creditor's name if their interests require it,® for " a surety who pays a debt for his principal is entitled to be put in the place of the creditor, and to all the means which the creditor possessed to enforce payment against the principal debtor." ~ It may be here recalled that a surety is a cred- ' See Welde v. Scotten, 59 Md. 72. was of the others whose just and law- Conveyancc to defeat alimony .—^n ful actions, suits, and reliefs would be Bailey v. Bailey, 61 Me. 363, the court delayed, hindered, or defeated by such very properly ruled that if an estate conveyance." See Green v. Adams, was conveyed to prevent the enforce- 59 Vt. 602 ; Foster v. Foster, 56 Vt. ment of a decree awarding alimony, or 546; Burrows v. Purple, 107 Mass. other proper aid, such conveyance was 428 ; Morrison v. Morrison, 49 N. H. 69. fraudulent as to the wife and might be - Alston v. Rowles, 13 Fla. iiS. avoided. It was contended on the part ^ Swan v. Smith, 57 Miss. 548. of the husband that a person in the ^ See Lewis v. Palmer. 2S N. Y. 271 ; situation of the wife could not be re- Hinckley v. Kreitz, 58 N. Y. 590. garded as a creditor so as to come ■' Martin v. Walker. 12 Hun (N. Y.) within the statutes of Elizabeth relat- 53. ing to fraudulent conveyances. The * Townsend v. Whitney, 75 N. Y. court decided, however, that the statute 425 ; atifi'g 15 Hun (N. Y.) 93. Com- covered creditors and others, and cited pare Cuyler v. Ensworth. 6 Paige (N. Livermore V. Bouteile, 11 Gray (Mass.) Y.) 32; Speiglemyer v. Crawford, 6 217, a similar case, in which the court Paige (N. Y.) 254. said: " If she was not a creditor she ' Lewis v. Palmer. 28 N. Y. 271. 12 178 EXECUTORS AND ADMINISTRATORS. § 112 iter of the principal obligor, and of his co-sureties from the time the obligation is entered into,^ and that a conveyance by a surety for inadequate consideration to defeat a con- templated liability for contribution to a co-surety will be set aside.^ A person who pays a debt as security for a firm be- comes a creditor of the firm and is not entitled to any greater rights than simple contract creditors.^ § 112. Executors and administrators. — Ordinarily an ex- ecutor or administrator will not be allowed to impeach the fraudulent conve3^ance of his testator or intestate. Like the heirs he is bound by the acts of the deceased."* "As a party to a fraudulent conveyance cannot allege its illegal- ity, with a view to its avoidance, so neither can his heirs nor representatives, coming in as volunteers, and standing, as it were, in his shoes. " ^ This language is employed in Rhode Island : " If the deceased has conveyed his estates away in fraud of his creditors, the creditors who have been defrauded are the proper parties to prosecute the remedy." ^ Statutory changes supported by the tendency of the courts ' Pennington v. Seal, 49 Miss. 525 ; 190; Loomis v. Tifft, 16 Barb. (N. Y.) Williams v. Banks, 1 1 Md. 242 ; Sex- 545 ; Van Wickle v. Calvin, 23 La. ton V. Wheaton, i Am. Lea. Cas. 37 ; Ann. 205 ; Choteau v. Jones, 1 1 111. Rider v. Kidder, 10 Ves. 360. See 319; Snodgrass v. Andrews, 30 Miss. § 90. 472 ; Peaslee v. Barney, i D. Chip. ^ Pashby v. Mandigo, 42 Mich. 172. (Vt.) 331 ; Hawes v. Loader, Yelv. ^ McConnel v. Dickson, 43 111. 99. 196; Livingston v. Livingston, 3 Johns. Chief-Justice Thurman said, in a case Ch. (N. Y.) 148; Estes v. Howland, 15 in Ohio: "A surety against whom R. I. 128; Burton v. Farinholt, 86 N. judgment has been rendered, may, C. 260. without making payment himself, pro- ' McLaughlin v. McLaughlin, 16 Mo. ceed, in equity, against his principal, to 242. See Hall v. Callahan, 66 Mo. subject the estate of the latter to the 316 ; Beebe v. Saulter, 87 111. 518 ; payment of the debt." Hale v. Wet- Crawford v. Lehr, 20 Kans. 509 ; Rhem more, 4 Ohio St. 600. See McConnell v. Tull, 13 Ired. Law (N. C.) 57. It V. Scott, 15 Ohio 401 ; Horsey v. Heath, has been held in New York, that a 5 Ohio 354 ; Stump v. Rogers, i Ohio surrogate had no jurisdiction to deter- 533. mine the validity of such a transfer. ^ Blake v. Blake, 53 Miss. 193; Merry Richardson v. Root, 19 Hun (N. Y.) v. Fremon, 44 Mo. 522 ; ZoU v. Soper, 473 ; Barton v. Hosner, 24 Hun (N. Y.) 75 Mo. 462 ; Davis v. Swanson, 54 Ala. 468. 277; George v. Williamson, 26 Mo. ^ Estes v. Howland, 15 R. I. 129. §112 EXECUTORS AND ADMINISTRATORS. I 79 to prevent the confusion incident to splitting up tiie admin- istration of estates between creditors and personal repre- sentatives, have led to the general establishment of the practice of permitting and imposing the duty upon execu- tors and administrators to sue for property fraudulently alienated by the deceased in his lifetime.^ Thus in New York, executors and administrators, who could not for- merly effectually impeach the conveyances of the deceased on the ground of fraud against creditors, are now enabled to do so by statute.^ This new remedy, however, is not exclusive. In that State, if the personal representative is in collusion with the fraudulent vendee, the creditors may bring an action against the personal representative and vendee to have the covinous transfer set aside, and the property applied as assets.^ And in Wisconsin the cred- itor may in a proper case compel the executor or adminis- trator to bring the action, or bring it himself.^ In Penn- sylvania it is said that the administrator's intervention would not seem to be necessary if the creditors prefer to proceed for themselves.^ But it seems in such a case, in New York, that the creditor must ordinarily first exhaust ' See Martin v. Root, 17 Mass. 222; 524; Sullice v. Gradenigo, 15 La. Ann. Welsh V. Welsh, 105 Mass. 229; Gib- 582; note to Hudnal v. Wilder, 17 Am. son V. Crehore, 5 Pick. (Mass.) 154; Dec. 744 ; s. c. 4 McCord's (S. C.) Law Hills V. Sherwood, 48 Cal. 392; Mc- 294; Bassett v. McKenna, 52 Conn. 437. Knight V. Morgan, 2 Barb. (N. Y.) '•' Moseley v. Moseley, 15 N. Y. 336; 171 ; Morris v. Morris, 5 Mich. 171; Bate v. Graham, 11 N. Y. 237; Barton McLane v. Johnson, 43 Vt. 48 ; Parker v. Hosner, 24 Hun (N. Y.) 469 ; Bryant V. Flagg, 127 Mass. 30; Bouslough v. v. Bryant, 2 Rob. (N. Y.) 612; South- Bouslough, 68 Pa. St. 495 ; Bushnell v. ard v. Benner, 72 N. Y. 427 ; McKnight Bushnell, 88 Ind. 403 ; Cross v. Brown, v. Morgan, 2 Barb. (N. Y.) 171 ; Lore 51 N. H. 486; also note to Ewing v. v. Dierkes. 19 J. & S. (N. Y.) 144. Handley, 14 Am. Dec. 157; Barton v. ^ phelps v. Piatt, 50 Barb. (N. Y.) Hosner, 24 Hun (N. Y.) 468 ; Johnson 430 ; Sharpe v. Freeman, 45 N. Y. 802 ; V. Jones, 79 Ind. 141 ; Holland v. Cruft, Bate v. Graham, 1 1 N. Y. 237 ; Barton 20 Pick. (Mass.) 321 ; Martin v. Bolton, v. Hosner, 24 Hun (N. Y.) 468. St-e 75 Ind. 295; German Bank v. Leyser, §§114 and 115. 50 Wis. 258 ; Garner v. Graves, 54 Ind. ■» German Bank v. Leyser, 50 Wis. 188; Forde V. Exempt Fire Co., 50 Cal. 258. 299 ; Norton v. Norton, 5 Cush. (Mass.) '" Appeal of Fowler, 87 Pa. St. 454. l8o EXECUTORS AND ADMINISTRATORS. §°'lI2 his legal remedies, and reduce his claim to judgment ;' and in Wisconsin the insufficiency of the estate to pay debts must first be ascertained by the county court.' This pre- requisite, as already shovvn,^ is not universally conceded to be essential. The Supreme Court of the United States asserts, in a comparatively recent case (1879),* ^^at the au- thorities are abundant and well settled, that a creditor of a deceased person has a right to go into a court of equity for the discovery of assets, and to secure the payment of the debt ; and the creditor, when there, would not be turned back to a court of law to establish his debt. The court being in rightful possession of the cause for a discovery and account, will proceed to a final decree upon all the merits.^ So debts which are made by statute a lien upon lands of a deceased debtor, will furnish a creditor at large, the correctness of whose claim is acknowledged by the ex- ecutor, a standing in court to file a creditors' bill to set aside conveyances alleged to have been made by the testa- tor in fraud of creditors.^ The creditors' bill in Kennedy v. Creswell,"^ was filed against an executor and devisees, and alleged that the com- plainant held the testator's notes for $12,000; and recited that the personal assets were insufficient to meet the debts, and that the executor was paying some of the claims in full, and leaving others unsatisfied. The creditors prayed for an accounting of the personal estate, a discovery of the real estate, and an applicat'on of all the property to the payment of the debts. A plea was interposed setting forth that the executor had assets sufficient to pay the complain- ' Estes V. Wilcox, 67 N. Y. 264. ^ § 79- Contra, Johnson v. Jones, 79 Ind. 141 ; ** Kennedy v. Cresvvell, loi U. S. Appeal of Fowler, 87 Pa. St. 449 ; 645. Shurts V. Howell, 30 N. J. Eq. 418 ; ^ Thompson v. Brown, 4 Johns. Ch. Spencer v. Armstrong, 12 Heisk. (N. Y.) 619. See § 79. (Tenn.) 707 ; Offutt v. King, i MacAr. « Haston v. Castner, 31 N. J. Eq. . (D C.) 314. See § 79, supra. 697, and cases cited. See § 87. ^German Bank V. Leyser,5o Wis. 258. '' loi U. S. 641. §113 EXECUTORS AND ADMINISTRATORS. iSl ant and all other creditors. A replication was filed and proofs taken, which sustained the allegations of the bill, and demonstrated the falsity of the plea. The court de- cided that the complainant was entitled to a decree pro confesso^ and the defendant could not claim the right to answer after interposing a false plea ; that the admission of the executor that he had assets, could " be taken against him for the purpose of charging him with a liability," but it could not " serve him as evidence to prove the truth of his plea." § 113. — The personal representative may render himself individually liable to creditors for a failure to recover prop- erty fraudulently alienated by the testator or intestate,* and he should include such property in the. inventory,^ unless, of course, he has no knowledge of it.^ The per- sonal representative, as he stands for creditors when so act- ing, can only attack fraudulent transfers in cases where the estate is insolvent,^ and with a view to recover a sum suffi- cient to satisfy the creditors. The complaint should allege that the action is instituted for the benefit of creditors.*^ The legislation clothing personal representatives with the power to appeal to the courts to annul covinous alienations made by the deceased, is highly salutary in practice. The concurrent right of the creditor to seek redress is also of the utmost importance, for the personal representative is usually selected by, or is a near relative of, the deceased, ' See Dows v. McMichael, 2 Paige right to the lands of his intestate as (N. Y.) 345. will enable him to maintain a bill in ' Lee V. Chase, 58 Me. 436; Cross v. equity for the cancellation of a convey- Brown, 51 N. H.488 ; Danzey v. Smith, ance of the lands obtained by fraud, 4 Texas 41 1. provided the heirs are made parties. ' Minor v. Mead, 3 Conn. 289 ; Waddcll v. Lanier, 62 Ala. 347. Bourne V.Stevenson, 58 Me. 504; Booth ' Hess v. Hess, 19 Ind. 238 ; Pringle V. Patrick, 8 Conn. 106; Andruss v. v. Pringle, 59 Pa. St. 281; Wall v. Doolittle, II Conn. 283. Provident Inst., 3 Allen (Mass.) 96. '' Booth V. Patrick, 8 Conn. ic6. In '■ Crocker v. Craig, 46 Me. 327. Alabama an administrator has such a l82 ASSIGNEE IN BANKRUPTCY. ^ I I4 and may, in some cases, be prompted by motives of friend- ship or self-interest to shield the parties who have depleted the estate ; and, in some instances, is himself the fraudu- lent alienee. Where the personal representatives sue, a multiplicity of suits is prevented in cases where the cred- itors are numerous, and the necessity of a judgment or execution is avoided,^ features important to the body of creditors.^ § 114. Assignee in bankruptcy.— An assignee in bank- ruptcy, under the late bankrupt act, represented the whole body of creditors, and could in their behalf impeach, as fraudulent, a conveyance of property by the bankrupt, whenever the creditors might, by any process, acquire the right to contest its validity. This rule is of quite general application.^ It is said, however, in the New York Court of Appeals,^ that, " if the assignee should refuse or neglect to sue for and reclaim property fraudulently transferred, it is abundantly established that the creditors may commence an action to reach the property, making the assignee, the debtor, and his transferees parties defendant. And, in such an action, the property will be administered directly for the benefit of the creditors."^ It is believed, however, that it ' Barton v. Hosner, 24 Hun (N. Y.) Day v. Cooley, 118 Mass. 527; Wads- 471. worth V.Williams, 100 Mass. 126. The ■ Fletcher v. Holmes, 40 Me. 364. adjudication exempted the debtor's ^ Southard v. Benner, 72 N. Y. 427 ; property from attachment. Williams Piatt V. Mead, 7 Fed. Rep. 95 ; Butcher v. Merritt, 103 Mass. 184. As to when V. Harrison, 4 Barn. & Adol. 129; an assignee in bankruptcy cannot over- Brackett v. Harvey, 25 Hun (N. Y.) turn a fraudulent conveyance, see War- 503; Nicholas v. Murray, 5 Sawyer ren v. Moody, 122 U. S. 132. 320 ; Trimble v. Woodhead, 102 U. S. * Dewey v. Moyer, 72 N. Y. 78. 647 ; Bates v. Bradley, 24 Hun (N. Y.) ^ Citing Sands v. Codwise, 2 Johns. 84 ; Doe d. Grimsby v. Ball, 1 1 M. & (N. Y.) 487 ; Freeman v. Deming, 3 W. 531; Moyer v. Dewey, 103 U. S. Sandf. Ch. (N. Y.) 327; Seaman v. 301; Ball V. Slafter, 26 Hun (N. Y.) Stoughton, 3 Barb. Ch. (N. Y.) 344; 354; Phelps V. McDonald, 99 U. S. Fort Stanwix Bank v. Leggett, 51 N. 298 ; Glenny v. Langdon, 98 U. S. 28 ; Y. 552; Card v. Walbridge, 18 Ohio Shackleford v. Collier, 6 Bush (Ky.) 411; Phelps v. Curtis, 80 111. 109; 149; Badger v. Story, 16 N. H. 168 ; Francklyn v. Fern, Bam. Ch. 30; First §115 GENERAL ASSIGNEE. 1 83 is impossible to reconcile this doctrine with the decisions of the United States Supreme Court, ^ for, according to the latter court, if the assignee in whom the right is vested neglected to prosecute during the two years allowed by the act, the right to attack the fraudulent transfer would be ab- solutely gone.^ The assignee appointed under the act be- came vested with the title to the bankrupt's assets by an assignment from the court, into whose custody the estate was, in theory of law, intrusted. Even a claim in favor of the bankrupt against a foreign government passed to the assignee.'^ The assignee is regarded merely as a trustee for creditors. When his accounts are passed, and he is dis- charged, the property not disposed of reverts to the debtor by operation of law without reassignment.'* § 115. General assignee. — It is a general rule of law that a person cannot, by any voluntary act of his own, transfer to another a right which he does not himself possess. A fraudulent transfer of property by a debtor, made with in- tent to defeat creditors, is, as we shall presently show, con- clusive upon the debtor so that he cannot himself reclaim it. No logical theory can be easily framed ui)on which it can be said that an assignment, wholly voluntary on the debtor's part, vests in his assignee the right to attack fraud- Nat. Bank v. Cooper, 9 N. B. R. 529; ^ Phelps v. McDonald, 99 U. S. 302 ; Boone v. Hall, 7 Bush (Ky.) 66. See Comegys v. Vasse, i Pet. 195. Bank v. Cooper, 20 Wall. 171 ; Sands ■• See Dewey v. Moyer, 9 Hun (N. V. Codwise, 4 Johns. (N. Y.) 536; Kid- Y.) 480; Colie v. Jamison, 4 Hun (N. der V. Horrobin, 72 N. Y. 164; Bates Y.) 284; Page v. Waring. 76 N. Y. V. Bradley, 24 Hun (N. Y.) 84. 473, and cases cited ; Boyd v. Olvey, ' Compare Moyer v. Dewey, 103 U. 82 Ind. 294. In Stewart v. Piatt. loi S. 303; Trimble v. Woodhead, 102 U. U. S. 738, the court said: "In Yeat- S. 649; Glenny v. Langdon, 98 U. S. man v. Savings Institution, 95 U. S. 20 ; Lowry v. Coulter. 9 Pa. St. 349 ; 764, we held it to be an established McMaster v. Campbell, 41 Mich. 514; rule that, 'except in cases of attach- McCartin v. Perry, 39 N. J. Eq. 201. ments against the properly ol the bank- ■^ Compare I5ates v. Bradley, 24 Hun rupt within a prescribed lime preceding (N. Y.) 84; Allen v. Montgomery, 48 the commencement of proceedings in Miss. loi. bankruptcy, and except in cases where 1 84 GENERAL ASSIGNEE. §1. Lilcnt transfers.^ Consequently, it has been decided tiiat the right to impeach or set aside a mortgage which is fraudulent and void as against the creditors of the mort- gagor, did not pass to an assignee of the mortgagor, by a voluntary general assignment in trust for the benefit of creditors, subsequently executed, and unaffected by any statute in force at the time.^ Still, there are many States in which an assignment in insolvency or a voluntary assign- ment is held to vest in the assignee the right to avoid a conveyance made in fraud of creditors; and in some States the power is statutory.^ Such an assignee may also set aside a mortgage or other conveyance which is void as to creditors, for want of registration, or other defects.* And the disposition of property by the bank- rupt is declared by law to be fraudulent and void, the assignee takes the title subject to all equities, liens or incum- brances, whether created by operation of law or by act of the bankrupt, which existed against the property in the hands of the bankrupt.' Brown v. Heathcote, i Atk. i6o; Mitchell v. Winslow, 2 Story 630; Gibson v. Warden, 14 Wall. 244; Cook v. Tullis, 18 Wall. 332 ; Donaldson v. Farwell, 93 U. S. 631 ; Jerome v. McCarter, 94 U. S. 734. He takes the property in the same ' plight and condition ' that the bankrupt held it. Winsor v. Mc- Lellan, 2 Story 492." ' Pillsbury v. Kingon, 31 N. J. Eq. 619 ; Brownell v. Curtis, 10 Paige (N. Y.) 210; Storm V. Davenport, i Sandf. Ch. (N. Y.) 135 ; Sere v. Pitot, 6 Cranch 332 ; Estabrook v. Messersmith, 18 Wis. 545; Browning v. Hart, 6 Barb. (N. Y.) 91 ; Leach v. Kelsey, 7 Barb. (N. Y.) 466 ; Maiders v. Culver's Assignee, i Duv. (Ky.) 164; Carr v.Gale, 3 Woodb. & M. 68 ; Flower v. Cor- nish, 25 Minn. 473; S. C. i Am. Insolv. Rep. 184; Day v. Cooley, 118 Mass. 527. 2 Flower V. Cornish, 25 Minn. 473. ^ Hallowell v. Bayliss, 10 Ohio St. 537 ; Gibbs v. Thayer, 6 Cush. (Mass.) 30; Blake v. Sawin, 10 Allen (Mass.) 340 ; Freeland v. Freeland, 102 Mass. 475; Spring V. Short, 12 Weekly Dig. (N. Y.) 360, affi'd 90 N. Y. 544; Lynde v. McGregor, 13 Allen (Mass.) 172; Waters v. Dashiell, i Md. 455; Simpson v. Warren, 55 Me. 18; Ship- man v. ^tna Ins. Co., 29 Conn. 245 ; Shirley v. Long, 6 Rand. (Va.) 735 ; Clough v. Thompson, 7 Gratt. (Va.) 26 ; Staton v. Pittman, 1 1 Gratt. (Va.) 99; Doyle V. Peckham, 9 R. L 21; Southard v. Benner, 72 N. Y. 424 ; Mc- Mahon v. Allen, 35 N. Y. 403 ; Mon- cure V. Hanson, 15 Pa. St. 385 ; Tams V. Bullitt, 35 Pa. St. 308. See 22 Alb. L. J. 60, 81 ; Kilboume v. Fay, 29 Ohio St. 264. ■* Rood V. Welch, 28 Conn. 157; Hanes v. Tiffany, 25 Ohio St. 549; In re Leland, 10 Blatchf. 503 ; Barker v. Smith, 12 N. B. R. 474. But see Will- iams V. Winsor, 12 R. I. 9; Dorsey v. Smithson, 6 H. & J. (Md.) 61 ; Van Heusen v. Radcliff, 17 N. Y. 580; Ball V. Slaflen, 98 N. Y. 622. § Il6 RECEIVERS. 185 in some cases it is held that the assi<]:nee mav affirm such fraudulent conveyance, and thereby estop creditors from impeaching it.^ In New York creditors cannot assail a fraudulent alienation so long as there is a valid assignment in force. The right of attack is vested by statute in the assignee.^ § 116. Receivers. — Under the practice in New York, and in some of the other States, the receiver of a debtor mav impeach fraudulent transfers.^ The appointment confers upon him the right to set aside all transfers made by the debtor to defraud his creditors, which the creditors them- selves could have avoided.^ In Bostwick v. Menck,^ it was decided that the right of a receiver representing creditors and acting;- in their behalf, was no greater than that of the creditors themselves ; that the legal and equitable right of the creditors was limited to securing a judgment setting aside transfers as fraudulent only in so far as might be neces- sary to satisfy debts ; and that, when this was accomjilished, the receiver's duties, and consequently his powers, and his right to act further in behalf of the creditors, ceased as to the property that had been conveyed by the debtor.^ The receiver stands in the place of the judgment-creditor.'' In Olney v. Tanner,® after a careful examination of the authori- ties,^ the conclusion is reached that a receiver appointed in ' Butler V. Hildreth, 5 Met. (Mass.) Underwood v. SutclifTe, 77 N. Y. 62 ; 49 ; Freeland v. Freeland, 102 Mass. Dunham v. Byrnes, 36 Minn. 106 477 ; but see Matter of Leiman, 32 ■'A new receiver (Bowden v. John- Md. 225 ; Dugan v. Vattier, 3 Blackf. son, 107 U. S. 264), or an assignee of a (Ind.) 245. bankrupt, may be substituted as plain- "^ Loos V. Wilkinson, no N. Y. 209; tiffin the appellate courts. Spring V. Short, 90 N. Y. 538 ; Grouse ' 40 N. Y. 386. V. Frothingham, 97 N. Y. 105, 113; * See Manley v. Rassiga, 13 Hun Laws of 1858, Chap. 314. (N. Y.) 290. ^ Osgood V. Laytin, 48 Barb. (N. Y.) ' Kennedy v. Thorp, 51 N. Y. 174. 463, aff'd 5 Abb. Pr. N. S. (N. Y.) See Olney v. Tanner, iS Fed. Rep. 636. 9; Hamlin v. Wright, 23 Wis. 492; "10 Fed. Rep. 113; aflVd 18 Fed. Barton V. Hosner, 24 Hun (N. Y.) 469; Rep. 636. Porter v. Williams, 9 N. Y. 142; 'See Rodman v. Henry, 17 N. Y. 1 86 RECEIVERS." § Il6 supplementary proceedings cannot be held to be vested by virtue of his appointment with the title to property fraudu- lently conveyed by the judgment-debtor. The court will refuse to put him summarily in possession of the property covnnously alienated ; it will not authorize him to meddle with it, and will refuse to protect him in so doing. The receiver may, as we have seen, assail the covinous transfer by an action.^ Grover, J., said, in Bostwick v. Menck :^ " He (the receiver) acquires no right to the property (fraudulently assigned), by succession to the rights of the debtor ; .... no rights {i. e. of property) other than those of the debtor are acquired. He does not acquire the legal title to such property by his appointment. That is confined to property then owned by the debtor ; and the fraudulent transferee of property acquires a good title thereto as against the debtor, and all other persons, except the credit- ors of the transferrer. The only right of the receiver is, therefore, as trustee of the creditors. The latter have the right to set aside the transfer and to recover the property from the fraudulent holder ; and the receiver is, bv law, in- vested with all the rights of all the creditors represented by him in this respect."^ In New Jersey, a receiver, appointed by virtue of the statute providing a method for discovering the concealed property of a judgment-debtor,* can, in his ofificial character, 484 ; Lathrop v. Clapp, 40 N. Y. 333 ; Moyerv. Dewey, 103 U. S. 301. Where Brown v. Gilmore, 16 How. Pr. (N. Y.) there is an assignee a receiver has no 527 ; Teller \^ Randall, 40 Barb. (N. standing. Olney v. Tanner, 18 Fed. Y.) 242 ; Field v. Sands, 8 Bosw. (N. Rep. 637. Y.) 685 ; Bostwick v. Menck, 40 N. Y. * 40 N. Y. 383. 383; Becker V. Torrance, 31 N. Y. 637. ^ In New York the receiver takes ' It is only through the instrumen- title to the debtor's real property by tality of an assignee, that a creditor can virtue of his appointment. Cooney v. reach property fraudulently transferred Cooney, 65 Barb. (N. Y.) 525 ; Fessen- by a bankrupt prior to adjudication, den v. Woods, 3 Bosw. (N. Y.) 556; Olney v. Tanner, 18 Fed. Rep. 637; Bostwick v. Menck, 40 N. Y. 384; Glenny v. Langdon, 98 U. S. 20 ; Trim- Underwood v. Sutcliffe, jy N. Y. 62. ble V. Woodhead, 102 U. S. 647 ; •* Revision of 1877, p. 393. § ir; RECEIVERS OF CORPORATIONS. 187 exhibit a bill in chancery to annul sales of such property or encumbrances upon it, on the ground that such sales or en- cumbrances are in fraud of creditors.^ In the case first cited, Parker v. Browning^ is quoted with approval. In the lat- ter case, in speaking of the course to be taken, when prop- erty, which is claimed by a receiver appointed by the chan- cellor, is in the hands of a third party, who claims the right to retain it. Chancellor Walworth says : " The receiver must either proceed by suit, in the ordinary way, to try his right to it, or the complainant should make such third person a party to the suit, and apply to have the receivership ex- tended to the property in his hands." ^ A sequestrator or receiver of personal property and rents appointed in an action may, under the direction of the court, test a fraudu- lent alienation of property * though this question is much confused in New York.^ § 117. Receivers of corporations. — Receivers of insolvent corporations, when suing for portions of the capital, repre- sent creditors, and not the corporation,^ and are clolhed • Miller v. Mackenzie, 29 N. J. Eq. 292. But compare Higgins v. Gilles- heiner, 26 N. J. Eq. 308. * 8 Paige (N. Y.) 388. ' See Carr v. Hilton, i Curt. C. C. 230 ; Hamlin v. Wright, 23 Wis. 492 ; Bostvvick V. Menck, 4 Daly (N. Y.) 68. Willard, J., in Porter v. Williams, 9 N. Y. 142, 150, said: "The act which the receiver seeks to avoid in this case was an illegal act of the debtor. The ob- ject of the action is to set aside an as- signment made by the debtor with intent, as is alleged, to defraud the creditor under whose judgment and execution the plaintiff was appointed receiver, and the other creditors of the assignor. Such conveyance was void at common law, and is expressly for- bidden by the statute. It is void as against the creditors of the party mak- ing it, though good as between him and his grantee. The plaintiff, repre- senting the interests of the creditors, has a right to invoke the aid of the court to set aside the assignment. He stands in this respect, in the same con- dition as the receiver of an insolvent coq^oration, or as an executor or ad- ministrator, and like them can assail the illegal and fraudulent acts of the debtor whose estate he is appointed to administer." ■* See Donnelly v. West, 17 Hun (N. Y.) 564; Foster v. Townshend, 2 Abb. N. C. (N. Y.) 29. ' See Foster v. Townshend, 68 N. Y. 203; Ogden V. Arnot, 29 Hun (N. Y.) 150; Keeney v. Home Ins. Co., 71 N. Y. 396; Fincke v. Funke, 25 Hun (N. Y.) 618. 6 Osgood V. Ogden, 4 Kcycs (N. V.) 1 88 FOREIGN RECEIVERS. § Il8 with Other rights than those which the corporation pos- sessed.^ It is a fundamental principle, upon which the American cases at least proceed, that the capital of a corpo- ration, especially after insolvency, is a trust fund for the benefit of creditors.^ It is foreign to our purpose to enter into the wide field of corporation law relative to insolvency,^ but the principles of these cases are valuable as showing that the representative, receiver, or liquidator of a corpo- ration is, like an administrator, assignee, or receiver of a debtor, vested with the status of a creditor. Where a statute creates a cause of action in favor of creditors who are within certain prescribed conditions a receiver cannot enforce it.* It may be observed here that the power of the comptroller of the currency to wind up the affairs of a national bank in certain contingencies does not exclude the authority of a competent tribunal to appoint a receiver in other cases.^ § iiS. Foreign receivers. — In Booth v. Clark ^ the court say : " A receiver is appointed under a creditor's bill for one or more creditors, as the case may be, for their benefit, to the exclusion of all other creditors of the debtor, if there be any such Whether appointed, as this re- ceiver was, under the statute of New York, or under the rules and practice of chancery, as they may be, his official 70; Ruggles V. Brock, 6 Hun (N. Y.) Sawyer v. Hoag, 17 Wall. 610; Hatch 164 ; Sawyer v. Hoag, 17 Wall. 610, v. Dana, loi U. S. 205 ; Dayton v. 619; Webster v. Upton, 91 U. S. 65, Borst, 31 N. Y. 435; New Albany v. 71; Chubb V. Upton, 95 U. S. 665, Burke, 11 Wall. 96, 106; Upton v. 667; Dayton v. Borst, 31 N. Y. 435; Tribilcock, 91 U. S. 45, 47 ; Bartlett v. Wait on Insolv. Corps., Chap. X. Drew, 57 N. Y. 587 ; Lamar Ins. Co. ' Ruggles V. Brock, 6 Hun (^N. Y.) v. Moore, i Am. Insolv. Rep. 62 ; 164; Upton V. Englehart, 3 Dillon, Wait on Insol. Corps., § 142. 496, 503; Osgood V. Ogden, 4 Keyes ^ See Wait on Insolvent Corpora- (N. Y.) 70, 88 ; Porter v. Williams, 9 tions, Baker, Voorhis & Co., 1888. N. Y. 142, 149; Osgood V. Laytin, 3 ■* Farnsworth v. Wood, 91 N. Y. 308. Keyes (N. Y.) 521 ; Gillet v. Moody, 3 * Irons v. Manufacturers' Nat. Bank, N. Y. 479. 6 Biss. 301. ^ Wood V. Dummer, 3 Mason 308 ; M7 How. 338. § Il8 FOREIGN RECEIVERS. 1 89 relations to the court are the same. A statute appoint- ment neither enlarges nor diminishes the limitation upon his action. His responsibilities are unaltered. Under either kind of appointment he has at most only a passive capacity in the most important part of what it may be necessary for him to do, until it has been called by the direction of the court into ability to act. He has no extra- territorial power of official action ; none which the court appointing him can confer, with authority to enable him to go into a foreign jurisdiction to take possession of the debtor's property ; none which can give him, upon the prin- ciple of comity, a privilege to sue in a foreign court or an- other jurisdiction, as the judgment-creditor himself might have done, where his debtor may be amenable to the tribunal which the creditor may seek." ^ So in Brigham v. Ludding- ton,^ which was a bill filed in the southern district of New York by a receiver appointed on a judgment-creditor's bill in the eastern district of Wisconsin, the suit was dismissed.^ To the suggestion of counsel that, by the statutes of Wis- consin, receivers appointed on creditors' bills are vested with full title, and have full authority to maintain suits, which the Circuit Court of the United States for the south- ern district of New York ought to recognize, Mr. Justice Woodruff said: "(i). This receiver was appointed under and by virtue of the general power of courts of equity, and with such effect only as is due to the order of the court making the appointment. He was not appointed under or by virtue of any statute. (2). The statutes of the State of Wisconsin cannot enlarge or alter the effect of an order or de- cree of the Circuit Court of the United States, nor enlarge or modify the jurisdiction of that court or its efficiency."'* ' See especially Olney v. Tanner, 10 ' See Hope Mutual Life Ins. Co. v. Fed. Rep. 104, and cases cited. Taylor. 2 Rob. (N. Y.) 278, 284. '•' 12 Blatchf. 237. ' Citing Payne v. Hook, 7 Wall. 425. 190 CREDITORS OF CORPORATIONS. § U9 A doctrine is growing up in favor of recognizing foreign receivers by comity.^ § 119. Creditors of corporations. — Creditors of an in- debted corporation may have the aid of a court of equity against the corporation and its debtors to compel the col- lection of what is due, and the payment of its debts.^ In Graham v. Railroad Co.^ will be found an important dis- cussion, by the learned Mr. Justice Bradley, of the effect of a voluntary alienation of property by a corporation as affecting subsequent creditors. In this case counsel urged that the property of a corporation was a trust fund for creditors,* and that this meant all creditors becoming such during the life of the corporation. The court, however, could discover no reason why the disposal by a corporation of any portion of its assets should be questioned by sub- sequent creditors of the corporation, any more than a like disposal by an individual of his property should be so at- tacked.^ This would seem to put corporations and in- dividuals upon the same footing as to voluntary alienations, as regards a certain class of creditors ; but the distinction must not be overlooked that the corporation itself may re- cover the property, where the voluntary or fraudulent trans- fer was effected by faithless or corrupt officials. Creditors of a corporation who have exhausted their remedy at law, may proceed in equity to compel a stock- holder to pay up a balance due upon a subscription.*^ So judgment-creditors of a corporation may follow corporate ' National Trust Co. v. Miller, 33 N. Wall. 392 ; Sawyer v. Hoag, 17 Wall. J. Eq. 159; Bidlack V. Mason, 26 N. J. 610; Dayton v. Borst, 31 N. Y. 435; Eq. 230 ; National Trust Co. v. Mur- Upton v. Tribilcock, 91 U. S. 45, 47 ; phy, 30 N. J. Eq. 408. Compare Mat- Bartlett v. Drew, 57 N. Y, 587. See ter of Waite, 99 N. Y. 433. § 1 17- ^ Ogilvie V. Knox Ins. Co., 22 How. ^ See Chap. VI. 380 ; 2d appeal, 2 Black 539 ; Hatch v. * Hatch v. Dana, loi U. S. 205 ; Dana, loi U. S. 205. Ogilvie v. Knox Ins. Co., 22 How. 3S0 ; ' 102 U. S. 148. Pierce v. Milwaukee Cons. Co., 38 Wis. ■* See Railroad Co. v. Howard, 7 253. §§ I20, 12 1 SHERIFF. HEIRS WIDOW. I9I assets into the hands of stockholders amongst whom it was divided before the debts of the association were paid.' § 120. Sheriff. — When process comes to his hands the sheriff may undoubtedly attach any property which lias been transferred by an alleged fraudulent assignment, and hold it subject to the decision of the court upon the (jues- tion of fraud. In such a case the sheriff must defend the seizure in behalf of the creditors, and show that the assign- ment was fraudulent as to them. As to creditors the title to such property does not pass if the assignment is fraudu- lent, but it remains liable to seizure to satisfy their debt.* The case is different when the assigned property has been sold by the vendee and its identity destroyed ; the proceeds cannot be attached or levied upon by the sheriff as the debtor's property. Merely setting aside the assignment would not vest the title to such proceeds in the debtor. The only remedy of the creditor in such a case is to insti- tute a creditor's suit, and fasten a trust upon such proceeds for the benefit of creditors, which necessarily confirms the legal title of the assignees to the assigned property, instead of annulling it, as would be the case if the sheriff had seized the assigned property instead of the proceeds.^ § 121. Heirs— Widow. — The heir of a grantor canned im- peach his ancestor's deed on the ground that it was made in fraud of creditors,* for he can claim no right which the ancestor w^as estopped from setting up. The statutes avoid- ing fraudulent transfers are, as we have shown, ^ available ' Bartlett v. Drew, 57 N. Y. 587. 35 N. Y. 320. See Thurber v. Blanck, 2 See Kelly v. Lane, 42 Barb. (N. Y.) 50 N. Y. 83; Adams v. Davidson. 10 610. Compare Greenleaf V. Mumford, N. Y. 309, 315. See §81. Compare 4 Abb. Pr. N. S. (N. Y.) 134; Gross V. Clark v. Foxcroft, 6 Me. 296. and Daly, 5 Daly (N. Y.) 542; Rinchey v. Quincy v. Hall, i Tick. (Mass.) 357 ; S. Slryker, 28 N. Y. 45 ; Carr v. Van C. 11 Am. Dec. 19S. Hoesen, 26 Hun (N. Y.) 316. See ■* Moseley v. Mosclcy. 15 N. Y. 334. § 81. See Vance v. Schroyer, 79 Ind. 380. = Lawrence v. Bank of the Republic, ' Sec Chap. IH. ; also § 107. 192 HUSBAND AND WIFE, § T22 only to the person or persons who might be delayed, hin- dered, or defrauded.^ The heir at law is not a proper party to enforce an alleged trust in personal property in favor of an intestate,^ It may be here observed, though possibly extraneous to our general theme, that one of several heirs may maintain a suit to set aside a conveyance procured from the ancestor by means of the fraud and undue influ- ence of the grantee, and that the other heirs may testify in the suit as to personal transactions with the deceased;^ A widow cannot sue in chancery to have her husband's lands sold, her dower right satisfied, and the balance ap- plied to creditors;'* nor can a widow who has knowingly joined in a fraudulent deed maintain a bill to set the trans- fer aside.^ § 122. Husband and wife. — The relationship of husband and wife assumes considerable prominence in our subject and will be specially treated. We may here observe that a husband compelled to pay ante-nuptial debts of his wife becomes her creditor, and as such is entitled to set aside fraudulent conveyances made by her in contemplation of marriage ; ^ so also a wife may attack conveyances executed by her husband with intent to defeat her right of dower which was about to attach.''' " It seems to be well settled, that, pending a divorce suit, a wife asserting a just claim for alimony is, within the meaning of statutes prohibiting fraudulent conveyances, to be deemed a creditor."^ 1 See Button v. Jackson, 2 Del. Ch. * Ware v. Galveston City Co., 1 1 1 U. 86; Morrison v. Atwell, 9 Bosw. (N. S. 170. Y.) 503 ; Powers v. Graydon, 10 Bosw. ^ Smith v. Meaghan, 28 Hun (N. Y.) (N. Y.) 630. See infra. Chap. XXVI. 423 ; Hobart v. Hobart, 62 N. Y. 80. Legatees. — A legatee cannot avoid, •* Hull v. Hull, 26 W. Va. i. on the ground of fraud, a transaction ^ Barnes v. Gill, 21 111. App. 129. which was binding on his testator; ^ Westerman v. Westerman, 25 O. S. Guidry v. Grivot, 2 Mart. N, S. (La.) 500 ; affirming S. C. 9 Am. Law Reg. 13; S. C. 14 Am. Dec. 193 ; but in Ad- (N. S.) 690. dison V. Bowie, 2 Bland's Ch. (Md.) ■> See § 70; also Chap. XX. 606, it is said, a legatee may in certain ' Lott v. Kaiser, 61 Tex. 665, 673, cit- cases file a creditor's bill. ing Feigley v. Feigley, 7 Md. 538 ; Cla- § 123 TORT CREDITOR. 1 93 § 123. Tort creditor. — A right to damages arising from a tort is within the protection of the statute 13 EHz. c. 5,' and a conveyance made to defeat such right will be set aside. '^ If the intent was in part to evade fines upon crim- inal prosecution, and also to evade the payment. of any judgment which might thereafter be obtained in the civil action, the conveyance would be wholly fraudulent. It cannot be upheld in part and avoided in part.^ Ilcncc it has been held that an action at law, although in 7nalcJicio, is within the meaning of the statute which protects "cred- itors and others''' against conveyances made to defraud them of their just and lawful actions, suits, debts, accounts, damages, penalties, forfeitures, and demands.^ The judg- ment-creditor in an action of trespass has a judgment for such a cause of action as justifies his attacking in some form any conve3^ance made by the defendant pending the suit, as being fraudulent against him, and should not be prevented by injunction from putting himself into such a position that he may have the question of the bona fides of the grantee's purchase tested in a court of law and before a jury through an action of ejectment.^ gett V. Gibson, 3 Cranch C. C. 359; (N. Y.) 136; Barling v. Bishopp, 29 Boils V. Boils, i Coldw. (Tenn.) 285; Beav. 417; Shean v. Shay, 42 Ind. 375 ; Morrison V. Morrison, 49 N.H. 69; Tur- Bongard v. Block, 81 111. 1S6; Weir v. ner v. Turner, 44 Ala. 438 ; Brooks v. Day, 57 Iowa 87; Corderv. Williams, 40 Caughran, 3 Head (Tenn.) 465 ; Bous- Iowa 582 ; Harris v. Harris, 23 Gratt. lough V. Bouslough, 68 Pa. St. 495 ; (Va.) 737 ; Hoffman v. Junk, 51 Wis. Frakes v. Brown, 2 Blackf. (Ind.) 295. 613 ; Westmoreland v. Powell, 59 Ga. ' Post V. Stiger, 29 N. J. Eq. 558. 256. But compare Evans v. Lewis, 30 See Lillard v. McGee, 4 Bibb (Ky.) Ohio St. 11. 165; Jackson v. Myers, 18 Johns. (N. 'Weir v. Day, 57 Iowa 87. .See Y.) 425; Farnsworth v. Bell, 5 Sneed infra. Void ancl Voidable Acts. (Tenn.) 531 ; Langord v. Fly, 7 Humph. ^ Scott v. Hartman, 26 N. J. Eq. 90; (Tenn.) 585 ; Walradt v. Brown, 6 111. Jackson v. Myers, 18 Johns. (N. Y.) 397. See § 22. 425. See Leukenerv. Freeman, Frcem. ' Scott V. Hartman, 26 N. J. Eq. 90; Ch. Rep. 236; Fox v. Hills, i Conn. Jackson v. Myers, 18 Johns. (N. Y.) 295; Barling v. Bishopp, 29 Bcav. 417. 425; Clapp V. Leatherbee, 18 Pick. See §110. (Mass.) 138 ; Fox v. Hills, i Conn. ' Wclde v. Scotten, 27 Alb. L. J. 295 ; Pendleton v. Hughes, 65 Barb. 337 ; S. C. 59 Md. 72. See Gebhart v. 13 194 CREDITORS HAVING LIENS. §§124,125 § 124. Overseer of the poor. — In New York an overseer of the poor has no standing in court before judgment to impeach the voluntary deed of the father of a lunatic child, upon the theory that the conveyance was executed with the intention of imposing the burden of supporting the son upon the town. It seems to be clear that an overseer cannot secure equitable relief setting aside a fraudulent transfer, if he is not a creditor by judgment or by simple contract ; and no liability has been established in his favor, by adjudication or otherwise, against the alleged fraudu- lent grantor.^ § 125. Creditors having liens. — A conveyance is not con- sidered fraudulent as to a creditor whose debt is secured by judgment or other lien upon the land transferred. The grantee necessarily takes subject to the lien, and the creditor may pursue the land in the same manner as if it had been conveyed to one who had purchased in good faith for a full consideration. He may follow the land irrespective of changes in the title, whether honest or dishonest. A judi- cial sale upon his lien vests in the purchaser the title which the debtor had when the lien attached, and of course divests the title of the debtor's grantee. The creditor, therefore, stands in no need of aid from a court of equity to revoke the debtor's transfer.^ This question was con- sidered in Armington v. Rau,^ in which Haak's Appeal"* was cited with approval, and the court further said: "The .debtor conveys subject to the lien. He has a right, upon such condition, to sell or give away his land, and if he does so fraudulently, the grantee's title is good against all the '^erfelcl, 51 Md. 325 ; Bockes v, Lans- ' Bowlsby v. Tompkins, 18 Hun (N. ing, 74 N. Y. 441 ; Freeman v. Elmen- Y.) 220, dorf, 7 N. J. Eq. 475 ; Winch's Appeal, ^ Haak's Appeal, 100 Pa. St. 62 ; 61 Pa. St. 426; Moore v. Cord, 14 Wis. Zuver v, Clark, 104 Pa. St. 226. 413; Heywood v. City of Buffalo, 14 ^ 100 Pa. St, 168. N. Y. 539 ; Townsend v. Mayor of ■* 100 Pa. St. 62. New York, T] N. Y. 542 ; Van Doren V. Mayor, etc., 9 Paige (N. Y.) 388. § 126 PURCHASER REMOVING INCUMBRANCES. 195 world, except creditors and persons intended to be hin- dered, delayed, or defrauded. A prior lien creditor is not such person. The conveyance, whether bo7ia fide or fraud- ulent as respects creditors who have no liens, is no obstruc- tion or hindrance to the enforcement of payment of the prior lien." § 126. Purchaser removing incumbrances. — A purcliascr at execution sale takes the creditor's right to avoid all fraud- ulent conveyances and incumbrances,^ and may file a bill in equity for that purpose.* A creditor who has obtained judgment and issued execution, may seize and sell the property of his debtor, and try the title of any one who sets up a prior lien or incumbrance affected with usury. ^ ' Gerrish v. Mace, 9 Gray (Mass.) 236 ; Orendorf v. Budlong, 12 Fed. Rep. 24 ; Hildreth v. Sands, 2 Johns. Ch. (N. Y.) 35 ; Best v. Staple, 61 N. Y. 78; Gallman v. Perrie, 47 Miss. 131. Chief-Justice Sherwood said: " The law is well settled in this State, that, where a debtor conveys his land with the fraudulent design above men- tioned, a resulting trust is thereby cre- ated in favor of his creditors, and is the subject of execution sale. And it is equally well settled, that a purchaser at such sale will occupy as advantage- ous a position as though he were a creditor, when proceeding to set aside the debtor's conveyance on the ground of fraud." Ryland v. Callison, 54 Mo. 514. "^ Gould V. Steinburg, 84 III. 170. See Hoxie V. Price, 31 Wis. 82-89. ^^ ap- peared in this action that a deed of lands from defendants to a third per- son, and from him back to the wife, and a patent of certain other lands to the \\ife, were considered as fraudulent and void as to the husband's creditors. A purchaser of the land, at execution sale under a judgment agamst the hus- band, and before becoming entitled to the sheriff's deed, brought a suit to set aside the wife's deed and patent and to restrain her from incumbering the land. The suit was upheld upon the theory that the wife by alienating or incumbering the land to a bona fide purchaser or mortgagee, would abso- lutely defeat complainant's equitable rights. See Avery v. Judd, 21 Wis. 262; Phelan v. Boylan, 25 Wis. 679; Wood V. Chapin, 13 N. Y. 509. In Remington Paper Co. v. O'Dougherty, 81 N. Y. 481, the complainant was an execution purchaser; the time for re- demption had expired as to the debtor but not as to other creditors. The purchaser was held to be possessed of an inchoate title and equitable interest sufficient to maintain an action for the cancellation of instruments or incum- brances which, within the doctrine of courts of equity, are considered as clouds upon title. See Hagir v. Shind- ler, 29 Cal. 48. •' Dix V. Van Wyck, 2 Hill (N. Y.) 525 ; Mason v. Lord, 40 N. V. 486. See Post V. Dan, 8 Paige fN. Y.) 639; re- versed, 7 Hill (N. Y.) 391 ; Thompson V. Van Vechten, 27 N. Y. 568. 196 CREDITORS OPPOSING WILL. § 12/ So a conveyance of property gives to the grantee or as- signee the right to file a bill to annul a previous invalid conveyance made by the same grantor,^ and a judgment- creditor may compel the cancellation of prior judgments against the debtor upon the ground that they have been paid.^ § 127. Creditors opposing will. — As a general rule no creditor has the right to oppose the probate of a will.^ The right of contest is limited to the heirs at law and next of kin.^ It may be here observed that, in Fisher v. Bas- sett,^ it is said that no debtor of an estate could be allowed " to plead ne ungues administrator in bar of an action for the recovery of a debt due to the estate. The greatest confusion and mischief would ensue if such were the law ; for then, wherever delay was desired, every debtor would deny the jurisdiction, and arrest the recovery of a just debt, by embarrassing inquiries as to the decedent's domi- cil or the place of his death." ^ 1 McMahon v. Allen, 35 N. Y. 403. ^ Shaw v. Dwight, 27 N. Y. 244. See Dickinson v. Burrell, L. R. i Eq. ^ Menzies v. Pulbrook, 2 Curteis 845 ; 337. But compare Cockell v. Taylor, Heilman v. Jones, 5 Redf. (N. Y.) 398 ; 15 Beav. 103; Anderson v. Radcliffe, Elme v. Da Costa, i Phillim. 173. E. B. & E. 806 ; Milwaukee & M. R.R. * Taff v. Hosmer, 14 Mich. 249. Co. V. Milwaukee & W. R.R. Co., 20 ^ 9 Leigh (Va.) 133. Wis. 174; Prosser V. Edmonds, i Y. & "See Fosdick v. Delafield, 2 Redf. C. 481 ; French v. Shotwell, 5 Johns. (N. Y.) 392; Drexel v. Berney, i Dem. Ch. (N. Y.) 555 ; especially, Graham v. (N. Y.) 163. Railroad Co., 102 U. S. 156. CHAPTER VIII. PARTIES DEFENDANT § 128. Debtor as defendant in credit- ors' actions. 129. When debtor not necessary de- fendant. 130. Defendants need not be equally guilty. 131. Fraudulent assignee or grantee must be joined. 132. Joining defendants. 132a. Conveyance pending suit. § 133. Assignee and receiver as defend- ant. 134. Objection as to non-joinder — How raised. 135. Misjoinder of causes of action. 136. Executors, administrators, heirs, and legatees. 1 37. Trustee and cestui que trust. 138. Party having lien. 139. Stockholders. § 128, Debtor as defendant in creditors' actions. — The doubts and difficulties incident to the selection or joinder of proper parties are not restricted to the class of com- plainants, but, on the contrary, cases of alleged misjoinder and non-joinder of defendants are frequently up for adjudi- cation in different forms. As a general rule all persons participating in making a fraudulent conveyance are proper parties to a suit to set the transfer aside.^ " It is a general rule that all parties interested in a controversy, or wiio may be affected by a decree rendered therein, should be made parties ; all who are nominally or really interested may therefore be joined although the interests of all may not be affected alike by the relief which may be granted.""'^ Let us briefly look through the authorities. The question of the necessity of joining the grantor or debtor as a party de- fendant in an action brought by a creditor to secure a discovery of assets, or cancel a fraudulent conveyance, is involved in some obscurity and confusion, and the authori- Miller v. Jamison, 24 N. J. Eq. 41. ' Raynor v. Mintzer. 67 Cal. 164. 198 DEBTOR AS DEFENDANT. § I 28 ties relating to the subject must be carefully distinguished and classified. Prof. Pomeroy says,^ that "in an action by a judgnient-creditor to reach equitable assets of the debtor in his own hands, or to reach property which has been transferred to other persons, or property which is held by other persons under such a state of facts that the equitable ownership is vested in the debtor, the judgment-debtor is himself an indispensable party defendant, and the suit can- not be carried to final judgment without him." This state- ment of the matter is, as we shall presently see, entirely too general and sweeping. In New York the necessity for making the debtor a party defendant is made to depend upon the nature of the particular proceeding. In Miller v. HalP the action was brought to have an assignment of a bond and mortgage made by the debtor to the defendant declared fraudulent and void as to creditors. The New York Court of Appeals held that it was well settled, in the case of a creditors' bill to reach a chose in action, which was the character of the suit in question, the judgment- debtor was a necessary party. The earlier authorities show that the practice of joining the debtor prevailed.^ In Shaver V. Brainard** the action was in the nature of a creditors' bill brought by a receiver to set aside a conveyance of real estate as fraudulent, and apply the proceeds upon the plain- tiff's judgment. The grantor and judgment-debtor was not made a party defendant, and the judgment was reversed for that reason.^ In another case, where a receiver filed a bill against a trustee of the debtor to reach equitable interests of the latter in a trust fund, the debtor was declared to be ' Pomeroy on Remedies and Re- Green v. Hicks, i Barb. Ch. fN. Y.) 309. medial Rights, § 347. See Wallace v. Eaton, 5 How. Pr. (N. '^ 70 N. Y. 252 ; S. C. below, 40 N. Y. Y.) 99. Supr. Ct. 266. •* 29 Barb. (N. Y.) 25. ^ Edmeston v. Lyde, i Paige (N. Y.) ^ See Allison v. Weller, 3 Hun (N. 637 ; Boyd v. Hoyt, 5 Paige (N. Y.) 65 ; Y.) 608, affi'd 66 N. Y. 614 ; North v. Fellows V, Fellows, 4 Cow. (N. Y.) 682 ; Bradway, 9 Minn, 183. § 128 DEBTOR AS DEFENDANT. 1 99 a necessary party.^ In Haines v. Hollister*^ the assignee of an insolvent firm, the personal representatives of a deceased partner, and the surviving partners, were held to be properly joined in a creditors' action to compel an accounting by the assignee, and to recover of the representatives the balance of the plaintiffs' claims. In Lawrence v. Bank of the Re- public^ the court observed : "In a creditors' suit against a judgment-debtor to set aside a prior assignment made by him in trust for the benefit of creditors, on the ground of fraud, he is a necessary party. Indeed he must be deemed the principal party, otherwise different persons, claiming portions of the assignee's property, could not be joined as defendants. The common point of litigation is the alleged fraudulent transfer of the property."^ The case of Gaylords V. Kelshaw^ is sometimes cited ° as an authority for the proposition that in any form of action to annul a convey- ance as fraudulent the debtor must be summoned. The court said that the debtor was properly made defendant to the suit, as it was a debt which he owed which the creditor sought to collect, and it was his insolvency that was to be established, and his fraudulent conduct that required in- vestigation. It was expressly held, however, that it was not necessary to decide whether the suit could proceed without him, because as matter of fact he had been found in the district and had answered the bill. Miller, J., said: "It is simply the case of a person made a defendant by the bill, who is also a proper [the court did not say necessary] de- fendant, according to the principles which govern courts of chancery as to parties, and who has been served with pro- cess within the district and answered the bill ; but whose ' Vanderpoel v. Van Valkenburgh, 6 ^ 64 N. Y. i. N. Y. 190. See Voorhis v. Gamble, 6 ^ 35 N. Y. 324. Mo. App. I ; Lawrence v. Bank of the * See Beardsley Scythe Co. v. Foster, RepubHc, 35 N. Y. 320 ; Beardsley 36 N. Y. 566. Scythe Co. v. Foster, 36 N. Y. 561 ; ' i Wall. 81. Miller v. Hall, 70 N. Y. 252. « See Taylor v. Webb, 54 Miss. 42. 200 DEBTOR NOT NECESSARY DEFENDANT. § I 29 citizenship is not made to appear in such a manner that the court can take jurisdiction of the case as to him." In an action for unpaid subscriptions a judgment-creditor may join all the stockholders, or if they are too numerous he should so allege in the bill ; ^ and the corporation may be joined.^ § 129. When debtor not necessary defendant. — Fox v. Moyer^ is an illustration of a case in which the debtor is not a necessary party defendant. The plaintiff was a judg- ment-creditor with execution returned unsatisfied. He claimed that his judgment was a lien upon certain real es- tate which one of the judgment-debtors had fraudulently conveyed to the defendant, and he commenced this action to have the cloud resting on the lien of his judgment re- moved, and to have his judgment satisfied out of this land, notwithstanding the conveyance. Earl, C, in delivering the opinion of the New York Commission of Appeals, said : " The conveyance was good, as between the parties thereto, and hence no one had any interest to defend this suit but the defendant, and he was therefore the only proper party defendant."^ Fox v. Moyer was relied upon by the plaintiff's counsel in Miller v. HalP as controlling, but the Court of Appeals said that the former case was not a cred- itors' bill, and was plainly to be distinguished from the other cases which we have noticed. In Bufhngton v. Har- vey^ it was urged that the assignee's bill was defective be- cause the bankrupt was not joined. Bradley, J., after re- marking that the bankrupt had no interest to be affected except what was represented by the assignee, said : "As to ' Adler v. Milwaukee Patent Brick Patterson v. Lynde, 112 111. 196; Tay- Mfg. Co., 13 Wis. 57 ; Vick v. Lane, 56 lor on Corps., §704. Miss. 681 ; Wetherbee v. Baker, 35 N. ^ 54 N. Y. 130. See Leonard v. J. Eq. 501 ; Holmes v. Sherwood, 3 Green, 34 Minn. 140. McCra. 405 ; Bronson v. Wilmington, •* See Campbell v. Jones, 25 iVIinn.155. N. C, Life Ins. Co.. 85 N. C. 411. ' 40 N. Y. Supr. Ct. 268, affi'd 70 N. ^ Wetherbee v. Baker, 35 N. J. Eq. Y. 252. 501 ; Perkins v. Sanders, 56 Miss. 733 ; * 95 U. S. 103. § 129 DEBTOR NOT NECESSARY DEFENDANT. 20I the bankrupt himself the conveyance was good ; if set aside it could only benefit his creditors. He could not gain or lose, whichever way it might be decided."^ In Potter v. Phillips ^ the court said that though the debtor was a proper party, it did not see why he was to be regarded as a neces- sary party ; whether the conv^eyances were fraudulent or in good faith the property irrevocably passed beyond his con- trol. He could be prejudiced in no way, in a legal sense, by a determination which subjected the property to the payment of his debts. So it was decided in Minnesota, that where a creditor sold land which the debtor had fraud- ulently alienated, the fraudulent grantee might bring an action against the purchaser to determine his title without bringing in the fraudulent grantor.^ It is remarked in some of the cases that the fraudulent grantor should be joined because it is his conduct that is to be investigated. The Supreme Court of Mississippi observe, however, that the object of the proceeding is to reach property, not char- acter. In truth the proceeding is in rem, and while the complainant may, if he chooses so to do, join as defendants all who are connected with the property, or the transac- tions to be investigated, he is only compelled to join those in whom the legal title vests, or those who have a beneficial interest to be affected.'* Cases are cited in consonance with this reasoning.^ What inference then is to be deduced from this mass of authority, and which class of cases embodies the best logic ? Should the debtor be joined as a defendant in an action to annul a fraudulent transfer? The best reasoning of the authorities seems to establish the rule that the debtor's ' Benton v. Allen, 2 Fed. Rep. 448; ray v. Mason, 48 Me. 178; Mern,- v. Weise v. Wardle, L. R. 19 Eq. 171. Fremon, 44 Mo. 518; Cornell v. Rad- "■ 44 Iowa 357. way, 22 Wis. 260. See Shaw v. Mill- ' Campbell v. Jones, 25 Minn. 155. saps, 50 Miss. 380; Jackman v. Robin- •* Taylor v. Webb, 54 Miss. 36. son, 64 Mo. 289. * Smith V. Grim, 26 Pa. St. 95 ; Dock- 202 DEFENDANTS NOT EQUALLY GUILTY. § I30 presence as a defendant is superfluous in suits brought against fraudulent alienees to annul specific covinous con- veyances. The transfer is conclusive upon him, and hence his joinder cannot aid the creditor, or benefit the debtor ; the suit is a proceeding in rem to clear the title to the property only so far as the creditor's needs may require ; under established principles of law the debtor can gain nothing by it ; he is practically a stranger to the property, nor can he be prejudiced by a decree which applies the property to the payment of a fixed judgment-debt. On the other hand, where the suit prosecuted is purely a cred- itors' bill embodying the elements of a bill of discovery, the debtor's presence would seem to be essential to the jurisdiction of the court. The practitioner must be careful to distinguish between an action instituted to reach specific property fraudulently alienated, and a suit brought to dis- cover equitable interests which are not subject to execu- tion, and the title to which is in the debtor. In the latter case the debtor must of necessity be a defendant. Espe- cially should the complainant make the debtor a defendant where it appears that parties holding separate property under distinct conveyances are joined. In such proceed- ings the debtor constitutes the king-pin of the action. In any case it is the safer and more prudent practice to sum- mon the debtor as a defendant, for a vexed question is then put at rest, and the misfortune similar to that which over- whelmed the creditors' representative in Miller v. Hall ^ will be averted.^ § 130. Defendants need not be equally guilty. — hs a gen- eral rule where the subject-matter of a suit is real or per- ' 70 N. Y. 252. no fraud or concealment is imputed, - When the sole design of a bill is to no discovery sought, and no ruling have individual property of one partner, asked, is neither a necessary nor a claimed to have been fraudulently alien- proper party. Randolph v. Daly, 16 ated, applied in payment of a firm judg- N. J. Eq. 31 5. ment, another partner against whom § 130 DEFENDANTS NOT EQUALLY GUILTY. 203 sonal property, and the purj)ose of the plaintiff is to set aside fraudulent judicial proceedings in reference to it, the complainant should make all persons parties who were act- ors in the proceedings, especially if they claim a present interest in the property in dispute. A complaint so framed is not demurrable on the theory that there is an improper joinder of several causes of action against different persons ; on the contrary it is regarded as a single cause of action affecting all the defendants. Westcott, J., in delivering the opinion of the Supreme Court of Florida,^ very appro- priately says : " It is apparent from the case stated that all of the defendants were not jointly and equally concerned in each distinct fraudulent act charged. There was a series of acts in this well-conceived network of fraud, all termi- nating in the deception and injury of the plaintiff. The defendants performed different parts in the drama. These acts affected the property of the debtor — some the per- sonal property, others the real estate. The object of the plaintiff in this complaint is to get the assistance of this court in unravelling this network of fraud in respect to each species of property, and to have a due application of the same to the payment of the claims of creditors. The right of the plaintiff is against the whole property, and his right against all portions of it is of the same nature. The decree in chancery and the sale thereunder are but acts of fraud, which are sought to be set aside in order to enforce this general right. In fact the right to set aside these pro- ceedings can only coexist with an equity affecting the prop- erty which was the subject of them. There can be no such thing as an equity or right to set aside these proceedings distinct and independent of rights and equities attached to the subject-matter that they affect. The result is that these are not several causes of action, but are acts which, con- nected with the debt due plaintiff, constitute a grounil for one action alone." ' Howse V. Moody, 14 Fla. 63. 204 FRAUDULENT ASSIGNEE. §§ 1 3 1, T32 § 131. Fraudulent assignee or grantee must be joined. — A jud<;^ment as a general rule only binds parties and privies. As the property which is the object of pursuit is usually in the hands of a transferee, it follows that such person must be joined as defendant, so that he may be affected and concluded by the judgment. The proceeding would be futile if it omitted him.' It was accordingly held, in a case where a creditors' bill was filed to reach moneys due upon a mortgage which was alleged to have been fraudu- lently assigned by the debtor, that the assignee of the mortgage, although he resided out of the State, must be joined as a defendant.^ Parties to intermediate convey- ances need not be joined,^ nor grantees pende7ite lite, for they stand in no better position than those under whom they claim.* In a suit to set aside a fraudulent conveyance there is no necessary inconsistency in averring the grantee to be a fictitious person, and stating that the deed in his name was made to hinder and defraud creditors.^ § 132. Joining defendants. — The rules with reference to the joinder of defendants will be noticed somewhat at length in discussing the subject of complaints bad for mul- tifariousness.^ The cases there reviewed seem to establish the principle that different fraudulent purchasers of distinct pieces of property may be joined as defendants. In such cases the debtor is a necessary party, as he is "the very link which unites them all together, the common centre to which they are all connected, and it is because he is a party 'Sage V. Mosher. 28 Barb. (N. Y.) Dousman, 18 Wis. 456; Hamlin v. 287. Wright, 23 Wis. 491. 2 Gray v. Schenck, 4 N. Y. 460. See ^ Stout v. Stout, 'j'j Ind. 537 ; Walter also Tichenor v. Allen, 13 Gratt. (Va.) v. Riehl, 38 Md. 211 ; Jackman v. Rob- 15 ; Jackman v. Robinson, 64 Mo. 289 ; inson, 64 Mo. 289. Hammond v. Hudson River I. & M. ^ Schaferman v. O'Brien, 28 Md. Co., 20 Barb. (N. Y.) 379; Copis v. 565. Middleton, 2 Madd. 410; Thornberry * Purkitt v. Polack, 17 Cal. 327. V. Baxter, 24 Ark. 76; Winslovv v. ^ See §§ 150, 151, 152. § 12,2a CONVEYANCE PENDING SUIT. 205 defendant that they can all be joined in one action as co- defendants."^ The defendants in such cases are said to be united in a common design. Each is charged with collud- ing with the debtor in order to defraud his creditors. Where there is one entire case stated, as against the debtor, it is no objection that one or more of the defendants to whom parts of the property have been fraudulently con- veyed had nothing to do with the other fraudulent trans- actions. The case against the debtor is so entire that it cannot be prosecuted in several suits, and yet each of the defendants is a necessary party to some part of the case stated.^ If, however, the party reached and made defendant has a remedy over against other parties for contribution or indemnity, it will be no defense to the primary suit against him that such persons are not made parties. A creditor might never get his money if he could be stayed until all the parties who were obligated could be made to contribute their proportionate shares of the liability.^ § 132a. Conveyance pending suit. — The law is established that a party who intermeddles with property in litigation does so at his peril, and is as conclusively bound by the re- sults of the litigation, whatever they may be, as if he had ' Pomeioy's Remedies and Remedial Compare Atty.-Genl. v. Corporation of" Rights, §347; Lawrence v. Bank of Poole, 4 Mylne & Cr. 31; Brinkerhoff the Republic, 35 N. Y, 324; Trego v. v. Brown, 4 Johns. Ch. (N, Y.) 671 ; Skinner, 42 Md. 432 ; Haines v. Hoi- Fellows v. Fellows, 4 Cow. (N. Y.) lister, 64 N. Y, I ; Vanderpoel v. Van 682 ; Boyd v. Hoyt. 5 Paige (N. Y.) Valkenburgh, 6 N. Y. 190; Waller v. 78; Turner v. Robinson, i Sim. & S. Shannon, 53 Miss. 500; Bauknight v. 313; Marx v. Tailer, 12 N. Y. Civ. Sloan, 17 Fla. 284; Donovan v. Dun- Pro. 226. ning, 69 Mo. 436; Van Kleeck v. Mil- ' Marsh v. Burroughs, i Woods 468. ler, 19 N. B. R. 484; Bank v. Harris, Where an action is brouglu to forfeit a 84 N. C. 206 ; Roycr Wheel Co. v. charter a lessee of the corporation may Fielding, 61 How. Pr. (N. Y.) 437. be let in to defend. Pcojjle v. Albany See § 150. Chase v. Searles, 45 N. H. & Vt. R.R. Co., 77 N. Y. 232. The 511; Allison V. Weller, 6 T. & C. (N. husband of the transferee is not a Y.) 291 ; Boone County v. Keck, 31 proper defendant in an action to set Ark. 387. aside the transfer. Lore v. Dierkes, ■' Way V. Bragaw, 16 N. J. Eq. 216. 19 J. & S. (N. Y.) 144. As to when a 206 ASSIGNEE AND RECEIVER AS DEFENDANT. § 1 33 been a party to it from the outset.^ Were the rule other- wise endless entanglements would result.^ § 133. Assignee and receiver as defendant. — In a case which arose in New York, in which the assignee of an in- solvent copartnership had been joined as defendant, the Court of Appeals said: "As this is an equity action, the assignee of the firm, who had received its assets and never rendered any account for the same, was a proper party. He represents the firm, stands in its place so far as prop- erty is concerned, and the avails of the same in his hands are first liable to be appropriated to pay the demands of the plaintiffs. No valid reason exists why a person thus situated is not a proper party, in connection with the sur- vivors of the copartnership and the representative of the deceased partner."^ If an action is brought by a judgment- creditor to reach property fraudulently alienated, the fact that the debtor has made a general assignment for the benefit of creditors is no defense to the debtor or to his fraudulent alienee, because they can have no interest what- ever in the fund, and are not vested with the right to guard any interests the assignee may possibly have ; it is the as- signee's exclusive privilege to personally assert such rights.^ Furthermore, under some circumstances, the creditor may maintain an action in his own name to set aside a fraudu- lent conveyance, even though the assignee has the same right, if it can be shown that the assignee is in collusion with the fraudulent parties, or has refused on proper re- quest to become a plaintiff.^ In any case the defense of the non-joinder of the assignee, to be available, should be cause of action to set aside a mortgage Salisbury v. Morss, 7 Lans. (N. Y.) on the ground of usury and a cause of 359, affi'd 55 N. Y. 675. action to annul a fraudulent convey- -' See §157. ance cannot be joined, see Marx v. ^ Haines v. Hollister, 64 N. Y. 3. Tailer, 12 N. Y. Civ. Pro. 226. •* Fort Stanwix Bank v. Leggett, 51 ' Tilton V. Cofield, 93 U. S. 168 ; N. Y. 554. Inloes' Lessee v. Harvey, 11 Md. 524; * Bate v. Graham, 11 N. Y. 237. See §114- § 134 OBJECTION AS TO NON-JOINDER. 20/ taken by demurrer or answer,^ disclosing the names of the omitted parties,^ or it will be considered waived.^ § 134. Objection as to non-joinder — How raised. — Durand V. Hankerson'* is perhaps an extreme illustration of this latter proposition. That action was prosecuted by a cred- itor to cancel a deed. The conveyance was held to be good, but it appeared that the debtor had taken back a mortgage upon the property, which remained unsatisfied, and the evidence tended to show that the debtor had as- signed the mortgage to a person not a party to the suit. It was proved and found that this assignment was fraudulent, and the purchaser from the debtor was directed to pay the mortgage to a receiver. The purchaser strenuously re- sisted this decree, upon the ground that the pretended assignee of the mortgage not being a party, was not bound by the judgment, but the learned Woodruff, J., held that while it presented a case of possible hardship, as payment might perhaps be enforced a Second time, yet the purchaser should have protected himself by raising the objection in the manner prescribed by law. The defendant, who neither by answer nor demurrer takes such an objection, waives it, and therefore cannot afterward be heard to object on that ground to any decree to which, upon the facts alleged and proved, the plaintiff may be entitled. The cause thereafter proceeds, as to him, with the like right in the plaintifT to a decree as if the supposed proper or necessary party had been brought into court. We may here observe that the appointment of a re- ceiver does not absolutely dissolve a national bank, and that in an action to establish the rejected claim of a cred- itor, the bank and the receiver may both be made parties defendant.^ ' Fort Stanwix Bank v. Leggett, 51 ' Annin v. Annin, 24 N. J. Eq. 184 ; N. Y. 554. Lyman v. Place, 26 N. J. Eq. 30. ■' Bay State Iron Co. v. Goodall. 39 ' 39 N. Y. 287. N. H. 234. " Green v. Walkill Nat. Bank, 7 Hun 208 EXECUTORS AND ADMINISTRATORS. §§135,136 § 135, Misjoinder of causes of action. — A cause of action ao"ainst sureties upon the bond of an administrator, claim- ins; a breach of its condition, cannot be united in the same complaint with a cause of action arising out of the fraud- ulent disposition of property,^ against the administrator of the deceased intestate and others. § 136. Executors, administrators, heirs, and legatees. — We have already considered the status of personal repre- sentatives,^ heirs, and legatees,'^ as complainants. Let us briefly advert to the question of their joinder as defend- ants. In Allen v. Vestal,^ it was said that a creditor, in an action to set aside a fraudulent conveyance to heirs of a deceased debtor, should allege that the personal property had been first exhausted, and should make the adminis- trator a party ; or, if there was none, should secure one to be appointed.^ This is but another phase of the general question as to the necessity of joining the debtor as a de- fendant. Authorities can bp cited to the effect that the administrator is not a necessary party to the creditors' pro- ceedings,*^ and to the opposite effect,^ and holding that heirs need not be joined,^ and, in New York, as is elsewhere (N. Y.) 64; Turner v. First Nat. Bank, 75 Mo. 462 ; Jackman v. Robinson, 64 26 Iowa 562. Compare Pahquioque Mo. 289. See Coffey v. Norwood, 81 Bank v. Bethel Bank, 36 Conn. 325; Ala. 516; Munn v. Marsh, 38 N. J. Kennedy v. Gibson, 8 Wall. 498. Eq. 410. ' Howse V. Moody, 14 Fla. 59. Com- ' Alexander v. Quigley, 2 Duv. (Ky.) pare, generally, N. Y. & N. H. R.R. 400 ; Postlewait v. Howes, 3 Iowa Co. V. Schuyler, 17 N. Y. 607 ; Town 366 ; Coates v. Day, 9 Mo. 300; Boggs of Venice v. Woodruff, 62 N. Y. 470. v. McCoy, 15 W. Va. 344; Pharis v. - See §§ 112, 113. Leachman, 20 Ala. 662. See Bach- " See § 121. man v. Sepulveda, 39 Cal. 688. * 60 Ind. 245. ' Smith v. Grim, 26 Pa. St. 96 ; Wall * Boggs V. McCoy, 1 5 W. Va. 344. v. Fairley, 73 N. C. 464 ; Shaw v. Contra, Jackman v. Robinson, 64 Mo. Millsaps, 50 Miss. 384. Compare 289. Compare Smith v. Grim, 26 Pa. Simmons v. Ingram, 60 Miss. 886. St. 95. The conveyance made by their an- * Dockray v. Mason, 48 Me. 178 ; cestor, it is said, though fraudulent. Merry v. Fremon, 44 Mo. 518; Tay- concludes them, and effectually cuts off lor V. Webb, 54 Miss. 36 ; Cornell v. all their interest in the property. Har- Radway, 22 Wis. 260; Zoll v. Soper, lin v. Stevenson, 30 Iowa 371. It may § 136 HEIRS AND LEGATEES. 209 shown,' a distinction is made as to the form of the action, the debtor being a necessary party in a creditors' action,^ but not in a suit in equity to remove a fraudulent cloud.'* Where this distinction is recognized, it might be extended to cover the cases of personal representatives and heirs. The United States Supreme Court leans to the view that, in a suit to charge real estate with the payment of a debt, the heirs and devisees should be made parties to the bill,'' In a creditors' bill under which an executor had been re- moved from office, the Supreme Court of South Carolina held that the legatees were necessary parties, and that the receiver appointed in the place of the deposed executor did not represent them.^ Again the Supreme Court of Ohio has decided, that where the grantee dies after the here be observed that the power of a court of equity to charge real estate in the hands of heirs with the payment of the ancestor's debts is undoubted. Chewett v. Moran, 17 Fed. Rep. 820; Payson v. Hadduck, 8 Biss. 293 ; Rid- dle V. Mandeville, 5 Cranch 322 ; Strat- ford V. Ritson, 10 B^v. 25 ; Ponsford V. Hartley, 2 Johns. & H. 736 ; Adams' Eq. 257 ; Stor)''s Eq. Plead. 99-102. By statute in New York heirs of an in- testate who have inherited land must, in certain cases, be sued jointly, and not separately, for a debt due from the deceased. Kellogg v. Olmsted, 6 How. Pr. (N. Y.) 487, See Selover v. Coe, 63 N. Y. 438. ' See §§ 128, 129. » Miller v. Hall, 70 N. Y. 252. ^ Fox V. Moyer, 54 N. Y. 130. •* Walker v. Powers, 104 U. S. 251. Administrator not necessary party — Cornell v. Radway. — In an action which arose in Wisconsin, it appeared that a debtor in his lifetime received an absolute deed of land and failed to record it, and subsequently destroyed the deed with a fraudulent design, and procured the grantor to execute an- 14 other deed to a third person without consideration. Ajudgment-creditor of the deceased debtor, whose judgment was recovered while the deceased held the first deed, brought a suit against the third party, and the widow and heirs of the deceased debtor, to estab- lish the debtor's title and enforce the lien of the judgment. Objection was raised that the administrator was not a party. The court said : " This is well answered when it is said that this is a proceeding for the benctit of the estate, and that the administrator could make no opposition if he were present. We do not see, therefore, how the estate can be prejudiced or the plaintiff's right to relief affected by the absence of the administrator. The conveyance to the defendant Jones [the third party) being set aside, and the title adjudged to have been in the deceased judgment- debtor from the time of his purchase, the plaintiff will then proceed as if the debtor had died seized of the land with full evidence of title in himself. The administrator is not a necessarj' party." Cornell v. Radway, 22 Wis. 265. ' Eraser v. Charleston. 13 S. C. 533. 2 TO TRUSTEE AND CESTUI QUE TRUST. § 1 37 rendering of a decree in favor of a judgment-creditor set- ting aside a conveyance and ordering a sale of the prop- erty, the failure to revive the decree against the heirs of the grantee did not affect the title of a purchaser under the decree.^ What then is the result of the cases upon this point ? Necessarily much the same conclusion must be reached as is gathered from the authorities upon the question of the joinder of the debtor in an action to reach assets in the hands of a third party. We have already seen that the personal representatives may, in certain cases, annul covin- ous alienations made by the deceased, but only so far as mav be necessary to satisfy creditors.^ In States where the right of the creditor to seek direct relief is upheld, it is difficult to see why the personal representatives or heirs should be joined ; the conveyance is conclusive upon such parties, and their presence in the suit will neither aid the creditors nor benefit them, § 137. Trustee and cestui que trust. — Mr. Pomeroy says :^ "There is a broad distinction betvv^een thecase of an action brought in- opposition to the trust, to set aside the deed or other instrument by which it was created, and to procure it to be declared a nullity, and that of an action brought in furtherance of the trust, to enforce its provisions, to estab- lish it as valid, or to procure it to be wound up and settled. In the first case, the suit may be maintained without the presence of the beneficiaries, since the trus- tees represent them all and defend for them." The Su- preme Court of Georgia,* adopting this general rule, held that where a creditor claims not under but in oppo- sition to a deed of trust made by his debtor, and seeks to set the same aside on the ground that it is, as to him. ' Beaumont v. Herrick, 24 Ohio St. ^ Remedies and Remedial Rights, 446. § 357. ' See §§ 128, 129. •* Tucker v. Zimmerman, 61 Ga. 599. § 138 PARTY HAVING LIEN. 211 fraudulent and void, he is at liberty to proceed against the fraudulent trustee who is the holder of the lejral estate in the property, without joining the cestui que tiiist} A decree setting aside the deed, or charging the property with the creditor's demand, will, if fairly and honestly ob- tained, conclude the cestui que trust as being represented by the trustee, but is subject to be impeached for fraud or collusion.^ § 138. Party having lien. — It certainly is reasonable, and seems to be recognized as an established rule, that where a party has a lien, by way of mortgage for example, upon the property which is the subject of contention, and no ruling is asked against such lien, and it is not assailed, but the title under it is conceded to be valid, there is no ground upon which the holder of the lien can be regarded as a nec- essary party to the suit.^ The creditors, having elected to avoid the fraudulent conveyance, take the property as though the transfer had never been made, and subject to all lawful liens upon it.^ But where the lien holder is made a party to the suit, and the validity of his claim is investigated and disposed of by the judgment adversely to the validity of the lien, a sale by the receiver will transfer to the grantee a title superior to such lien or claim. ^ ' Rogers v. Rogers, 3 Paige (N. Y.) ^ Shand v. Hanley, 71 N. Y. 324. 379. See Chautauqua Co. Bank v. Risley, 19 ' Russell V. Lasher, 4 Barb. (N. Y.) N. Y. 372. Where a debtor has con- 232 ; Wheeler v. Wheedon, 9 How. veyed property in fraud of creditors, Pr. (N. Y.) 300. and the alienee at the debtor's request ^ Trego V. Skinner, 42 Md. 431. has given a mortgage upon it to a See Walter v. Riehl, 38 Md. 211; Yen- creditor whose debt existed at the date able V. Bank of the United States, 2 of the conveyance, the latter is regard- Pet. 107 ; Erfort v. Consalus, 47 Mo. ed as a purchaser " for a valuable con- 213. Compare Reynolds v. Park, 5 sideration," 2 R. S. N. Y. 137. §5; Lans. (N. Y.) 149 ; reversed, 53 N. Y. and although the conveyance is set 36. aside by other creditors, the lien of the ■• Hutchinson v. Murchie, 74 Me. mortgage cannot be affected. Murphy 190 ; Avery v. Hackley, 20 Wall. 411. v. Briggs, 89 N. Y. 446, distinguishing Compare Murphy v. Briggs, 89 N. Y. and limiting Wood v. Robinson, 22 N. 446. Y. 564. 212 STOCKHOLDERS. § 1 39 § 139, Stockholders. — The assets of a corporation are, as we have seen,^ regarded as a trust fund for the payment of its debts, and its creditors have a lien upon it, and the right to priority of payment over its stockholders.^ Hence where property of a corporation had been divided among its stock- holders before its debts had been paid, the court decided that a judgment-creditor, with execution returned unsatis- fied, could maintain an action in the nature of a creditors' bill against any one stockholder to reach whatever had been received by him, whether wrongfully or otherwise. It is unnecessary to make all the stockholders defend- ants.^ The question of the statutory liability of stockholders to the creditors of a corporation where the capital has not been all paid in and a certificate to that effect filed as re- quired by statute, has given rise to much litigation in New York and other States where such provisions exist. This liability is said to rest in contract/ The statute in effect withdraws the protection of the corporation from the stock- holders, and holds them liable as copartners.^ If the lia- bility was penal the statute could of course have no opera- tion in another State,^ for penal statutes are strictly local in their operations and results.^ Hence it was held that, as the obligation imposed upon a stockholder under the New York statute rested in contract, it could be enforced in Florida,^ ' See §§ 1 1 7-1 19; Wait on Insolvent ^ pjash v. Conn, 109 U. S. 371; Corps., Chap. VII. Wiles v. Suydam, 64 N. Y. 173. - Bartlett v. Drew, 57 N. Y. 587 ; * Corning v. McCullough, i N. Y. Upton V. Tribilcock, 91 U. S. 45-47 ; 47. Sawyer v. Hoag, 17 Wall. 610. ^ Flash v. Conn, 109 U. S. 376. ^ Bartlett v. Drew, 57 N. Y. 587. A ' See The Antelope, 10 Wheat. 66 ; stockholder of an insolvent bank may Scoville v. Canfield, 14 Johns. (N. Y.) be compelled to pay an unpaid sub- 338 ; Western Transp. Co. v. Kilder- scription to the assignee, and he has house, 87 N. Y. 430 ; Lemmon v. Peo- no right to set off the amount of his pie, 20 N. Y. 562 ; Henry v. Sargeant, deposit in the bank. Macungie Sav- 13N. H.32[; Story's Conflict of Laws ings Bank v. Bastian, i Am. Insolv. (8th ed.), § 621. Rep. 484. " Flash v. Conn, 109 U. S. 379. § 139 STOCKHOLDERS. 213 the rule being that a transitory action may be brought in any court having jurisdiction of the parties and the sub- ject-matter,^ ' Dennick v. Railroad Co., 103 U. S. But it may be noted that a creditors' II. We cannot here venture, except bill may be filed against a county, incidentally, into the wide field regu- Lyell v. Supervisors of St. Clair, 3 lating the remedies of creditors against McL. 580 ; Wait on Insolv. Corps. insolvent corporations or their officers. §111. See Wait on Insolv. Corps., Chap. II. CHAPTER IX. COMPLAINT. § 140. Recitals of the complaint, 141. Pleading fraud. 142. Evidence not to be pleaded. 143. Alleging insolvency. 144. Allegations concerning consider- ation. 145. Fraudulent intent, 146. Pleading in equity. 147. Seeking discovery. 148. Excusing laches — Concealment of fraud. 149. Explaining delay — Discovery of fraud. 150. Complaints bad for multifarious- ness. not multifa- 15M 152. f Pleadings held rious. 153. Alternative relief. 154. Attacking different convey- ances. Prayer of complaint — Variance — Verification. Amendment. Description — Lis pe7idens. 157a. Change of venue — Territorial jurisdiction. 155 156, 157 § 140. Recitals of the complaint. — To successfully impeach a fraudulent conveyance, it ordinarily devolves upon the complainants to aver in the pleading that they were credit- ors at the time of the alienation in controversy,^ and to state against Vv'hom the judgment proceeded upon was re- covered, '^ The complaint will ordinarily be considered de- fective unless it appears upon its face that an indebtedness exists,'^ and that the plaintiff has exhausted his remedy at law;* and such averments cannot usually be supplied by ' Merrell v. Johnson, 96 111. 230 ; Uhre V. Melum, 17 Bradw. (111.) 182; Donley v. McKiernan, 62 Ala. 34 ; Walthall V. Rives, 34 Ala. 91, Com- pare Newman v. Van Duyne, 42 N. J. Eq. 485. •^ Lipperd v. Edwards, 39 Ind. 169. See Chap. IV. A bill in chancery is not good as an attempt to set aside a fraudulent conveyance, procured by a debtor to be made to his daughter, if it neither alleges that there is a judg- ment against the father, nor that the debt due at the time the conveyance was made is still due, and fails to pray for such relief. Ferguson v. Bobo, 54 Miss. 121. ^ Elwell v. Johnson, 3 Hun (N. Y.) 558; s. C. 74 N. Y. 80. * Beardsley Scythe Co. v. Foster, 36 N. Y. 565. See Allyn v. Thurston, 53 N. Y. 622 ; Suydam v. Northwestern Ins, Co., 51 Pa. St. 394; Scott v. Mc- Farland, 34 Miss. 363 ; Cassidy v. Meacham, 3 Paige (N. Y.) 311. See Chap. IV. § 140 RECITALS OF THE COMPLAINT. 215 an allegation of a total want of property/ or the useless- ness of an execution,'^ and, if it does not appear that the execution was issued to the county of the debtor's resi- dence, or other proper county, the complaint is not aided by an averment that it was returned unsatisfied.^ Accord- ing to some of the cases it is not sufficient to entitle the creditor to the aid of a court of equity merely to show that the debtor made a fraudulent disposition of a portion of his property. The complainant must set forth that the alienation of property complained of embarrassed him in obtaining satisfaction of his debt, "for if the debtor has other property subject to the judgment and execution suf- ficient to satisfy the debt, there is no necessity for the creditor to resort to equity."* The bill should recite facts sufficient to indicate that the judgment cannot be collected without equitable aid.^ This averment is material, and a decree upon proofs without this necessary allegation is said to be erroneous, since "the defendant cannot be required to meet and overcome evidence not responsive to the pleadings."^ It may be here observed concerning the rules of pleading, that, generally speaking, it is the right of an antagonistic defendant to have all the material facts on ' See McElwain v. Willis, 9 Wend. Randolph v. Daly, 16 N. J. Eq. 317, (N. Y.) 548 ; Crippen v. Hudson, 13 the court said : " It is not necessary to N. Y. 165 ; Beardsley Scythe Co. v. aver that the firm is insolvent in order Foster, 36 N. Y. 565. to entitle the complainants to relief. ■■' Adsit V. Sanford, 23 Hun (N. Y.) The partnership property may be amply 45. sutficient to satisfy all the debts of the ^ Payne v. Sheldon, 63 Barb. (N. Y.) firm, yet it may be so covered up, or 176. placed beyond the reach of process, as ■* Dunham v. Cox, 10 N. J. Eq. 467. not to be amenable to execution at ^ Emery v. Yount, i West Coast law, and to render the interference of Rep. 499; S. C. 7 Col. 109. In an equity essential to the ends of justice. action to set aside a conveyance of All that can be required is, that it land upon the ground of fraud the should appear by the bill that the com- complaint should aver the delivery plainant has exhausted his remedy at of the deed claimed to be fraudulent, law, and that the aid of this court is Doerfler v. Schmidt, 64 Cal. 265. necessary to enable him to obtain sat- '■ Thomas v. Mackey, 3 Col. 393. In isfaction of his judgment." 2l6 PLEADING FRAUD. § H^ which relief is sought specifically set forth in the bill, to the end that such facts may be admitted or controverted by the answer and testimony ; and usually no proofs will be admitted unless secundum allegata} Hence, where it is the purpose of the complainants to seek relief for creditors other than themselves, such intention should be manifested by suitable averments in the bill. § 141. Pleading fraud. — Fraud has been said in a general t-^ way to be a conclusion of law, though perhaps, more cor- rectly speaking, it is the judgment of law upon facts and intents.^ A mere general averment that a deed was fraud- ulent, or that it was made with the intent to hinder, delay, or defraud creditors, has been regarded as an insufficient method of pleading. Peckham, J., has said : " Mere gen- eral allegations of fraud or conspiracy are of no value as stating a cause of action." ^ There must, ordinarily, be averments of the facts which constitute the fraud, or which tend to support the conclusion.* Relief will not be af- forded upon the ground of fraud unless it be made a dis- tinct allegation in the bill, so that it may be put in issue by the pleadings.^ In Flewellen v. Crane,^ the averments were that a conveyance, purporting on its face to be made in payment of a debt due from the grantor to the grantee, was " fraudulent and void as against pre-existing creditors," and that it was " made with the intent to hinder, delay, or defraud said creditors.'"'' There was no avernrient impeach- ' Burt V. Keyes, i Flipp. 72. Uncer- bert v. Lewis, i De G., J. & S. 49 ; tainty in a pleading should be reached Myers v. Sheriff, 21 La. Ann. 172 ; by motion. Moorman v. Shockney, 95 Rhead v. Hounson, 46 Mich. 246 ; Ind. 88. Jones v. Massey, 79 Ala. 370. ^ See § 13. ' Patton v. Taylor, 7 How. 159; ^ Wood V. Amory, 105 N. Y. 282 ; Noonan v. Lee, 2 Black 508 ; Voorhees citing Van Weel v. Winston, 1 15 U. S. v. Bonesteel, 16 Wall. 29 ; Beaubien v. 228 ; Cohn v. Goldman, 76 N. Y. 284; Beaubien, 23 How. 190. Knapp V. City of Brooklyn, 97 N. Y. ^ 58 Ala. 627. 520. ' See Rowland v. Coleman, 45 Ga. ^Pickett V. Pipkin, 64 Ala. 523; 204; Meeker v. Harris, 19 Cal. Flewellen v. Crane, 58 Ala. 627 ; Gil- 278. § 141 PLEADING FRAUD. 21 7 ing the adequacy or bona fides of the consideration ex- pressed ; nor asserting that the debt was not justly due from the grantor to the grantee ; no setting up a secret trust for the grantor. The pleading was declared insuffi- cient to support a final decree, rendered upon a decree pro confcsso, which adjudged the conveyance void for fraud. The rule is that the facts upon which the fraud is j)redi- cated cannot be left to inference, but must be distinctly and specifically averred.^ If a bill is filed to set aside a deed upon the ground of undue influence, it is not neces- sary to allege every fact showing the actual exercise of un- due influence, but the relations of the parties ought to be stated, and the general fact of undue influence alleged, and some specific instances given from which the court could infer it."^ The common-law rule was clearly settled that fraud must be distinctly alleged and as distinctly proved, and that it was not allowable to leave fraud to be inferred wholly from the facts. While it may not be absolutely essential to employ the word " fraud " in the pleading, yet the facts stated should show distinctly that fraud is charged.^ The New York Court of Appeals say that the use of the word "fraud" or *' fraudulent," in order to characterize the transaction, or specify the ground of relief, is not abso- lutely necessary.'* Where the circumstances are such as do not warrant the court in avoiding the transaction in toto, it may be avoided as an absolute conveyance, and permit- ted to stand as a security ;° but such relief cannot be af- forded unless the complaint contains allegations adapted ' Thomas v. Mackey, 3 Col. 393 ; ■• Whittlesey v. Delaney, 73 N. Y. Small V. Boudinot, 9 N. J. Kq. 391 ; 575 ; Warner v. Blakeman, 4 Abb. Ct. Klein v. Horine, 47 111. 430 ; Bryan v. App. Dec. (N. Y.) 530; Maher v. Spruill, 4 Jones' Eq. (N. C.) 27; On- Hibernia Ins. Co.. 67 N. Y. 283. See tario Bank v. Root, 3 Paige (N. Y.) Hamlcn v. McGillicuddy, 62 Me. 478. 268. - I Drewry's Eq. PI. 15. ' Bigelow v. Ayrault, 46 Barb. (N. ' See Davy v. Garrett, 7 Ch. D. 489 ; Y.) 143; May on Fraudulent Convey- Smith V. Kay, 7 H. L. Cas. 763. ances, p. 235. See § 51. 2l8 EVIDENCE NOT TO BE PLEADED. §§ I42, I43 thereto/ An averment of an intent to defraud is one of fact, and not a statement of a conclusion of law.^ It must be alleged as well as proved,^ and it maybe directly testified to as a fact.'* § 142. Evidence not to be pleaded. — General certainty is sufficient in pleading in equity ; and though a mere gen- eral charge of fraud is insufficient, it is not to be under- stood that the particular facts and circumstances which confirm or establish it should be minutely charged.^ It is not necessary, or proper, that pleadings at law or in equity should be incumbered with all the matters of evidence the complainant may intend to introduce.^ A general averment of facts — not of conclusions of law—upon which the rights of the parties depend, is sufficient. By the elementary rules of pleading facts may be pleaded according to their legal effect, without setting forth the particulars that lead to it ; and necessary circumstances implied by law need not be expressed in the plea.''' So much of the complaint, how- ever, as sets out in detail the inceptive steps which culmi- nated in the alleged fraudulent conveyance, is not irrelevant or redundant matter.^ § 143. Alleging insolvency. — As elsewhere shown, a volun- tary conveyance is not generally regarded as fraudulent /^r ' Van Wyck v. Baker, 16 Hun (N. which necessarily tend to hinder, de- Y.) 171. lay, and defraud creditors, these pro- ° Piatt V. Mead, 9 Fed. Rep. 91. visions are conclusive evidence of the ^ Genesee River Nat. Bank w Mead, design of the parties to the instrument. 18 Hun (N. Y.) 303. . . . . It is not necessary in pleading ■* Clarke v. Roch. & S. R.R. Co., 14 to point out the particular features or N. Y. 570. " The complaint contains clauses of the instrument which are ob- a distinct charge that the assignment jected to." Jessup v. Hulse, 29 Barb, was made to hinder, delay, and defraud (N. Y.) 541; reversed, 21 N. Y. 168, the creditors of the assignor, and that on another point, it is therefore fraudulent and void. * Story's Eq. PI. § 252. This is unexceptionable and sufficient ^ Zimmerman v. Willard, 114 111. 370. pleading, luhcre the vice of the instrii- ~' Sullivan v. Iron & Silver Alining Co., ^fient is inherent itt its terms. When 109 U. S. 555. an assignment contains provisions " Perkins v. Center, 35 Cal. 714. § 143 ALLEGING INSOLVENCY. 2I9 se} If a debtor is perfectly solv^ent, he can do what he will with his property so long as he does not dispose of so much of it as to disable him from paying his debts. This is a rule of pleading as well as of evidence. Hence a bill which contained no allegation that the debtor at the time of the alienation was insolvent or embarrassed, was held bad,^ for it is only when an inadequate amount of property remains that creditors have the legal right to complain.^ The court said that, for aught that appeared in the plead- ing, the debtor might have been possessed of ample means, other than the property in controversy, to pay his debts ; and in such a case the conveyance is not ordinarily open to the attack of creditors. A man is said to be insolvent " w^hen he is not in a con- dition to pay his debts in the ordinary course, as persons carrying on trade usually do,"'* or when all his obligations could not be collected by legal process out of his own means.^ A complaint which states that " the said W. L. J., at the time of making said deed, did not have sufficient property remaining, subject to execution, to pay all his said debts, but by means of said conveyance rendered himself, wholly insolvent, and has not now nor has, at any time since said conveyance, had sufficient property, subject to execution, out of which said debts could be made," is suf- ficient.^ ' Young V. Heermans, 66 N, Y. 374 ; Hines, 72 Ind. 12 ; Whitesel v. Hiney, Holden v. Burnham, 63 N. Y. 75 ; 62 Ind. 168. Thomas v. Mackey, 3 Col. 390. See ■* Shone v. Lucas, 3 Dowl. & Ry. § 208. 218. '^ Burdsall v. Waggoner, 4 Col. 261. * Herrick v. Borst, 4 Hill (N. Y.) See Merrell v. Johnson, 96 111. 230; 652; Potter v. McDowi-ll, 31 Mo. 73. McCole V. Loehr, 79 Ind.431 ; Spauld- * Jennings v. Howard, 80 Ind. 216. ing V. Blythe, 73 Ind. 93 ; Noble v. See Price v, Sanders, 60 Ind. 310. It Hines, 72 Ind. 12 ; Sherman v. Hog- is said by Danforth, J., in an important land, 54 Ind. 578, 584 ; King's Heirs case before the New York Court of V. Thompson, 9 Pet. 204 ; Warner v. Appeals, Van Dyck v. McQuadc, 86 N. Dove, 33 Md. 579. Y. 44 : " .^.n individual may purchase ' Lee V. Lee, 77 Ind. 253. See Piatt property, contract debts, incur new lia- V. Mead, 9 Fed. Rep. 91 ; Noble v. bilities, and keep on in business, al- 2 20 FRAUDULENT INTENT. §§ 1 44- I 46 § 144. Allegations concerning consideration. — As regards allegations of consideration, the bill will be upheld if it dis- tinctly recites either of three things : First, that the con- veyance was wholly without consideration ; second, that it was fraudulent and there was a consideration which, in cases of technical or constructive fraud, the complainant was willing to allow or has offered to return ; or third, that the complainant is not informed and has no means of ascer- taining whether there was a consideration, and that these facts are peculiarly within the defendant's knowledge. In this latter case the bill should pray for a discovery.^ § 145. Fraudulent intent. — It is usually of vital importance that the creditor should allege in the bill that the convey- ance attacked was made with the intent to hinder, delay, or defraud creditors.^ The effect of intent, as related to fraud- ulent alienations, is elsewhere made a special subject of discussion.^ We may here observe that an averment to the effect that the grantee, the debtor's wife, gave no consider- ation, and that the whole consideration came from the debtor, sufficiently shows bad faith or fraudulent intent on her part* § 146. Pleading in equity. — The plaintiff's title and claim to the assistance of a court of equity must always be ex- posed by the pleadings ; but the style and character of pleading in equity has always been of a more liberal cast than is permitted in other courts,^ as mispleading in matter of form has never been held to prejudice a party, provided though he has debts unpaid ; and if he Ch. [N. Y.] 513 ; Hodges v. New Eng- does this in good faith and hope of a land Screw Co., i R. I. 312)." more prosperous fortune, he violates ' Des Moines & M. R. Co. v. Alley, no moral or legal duty. And this is 16 Fed. Rep. 733. See § 147. so, although at the time of purchase he * See Morgan v. Bogue, 7 Neb. 434. is aware that his property is not sufii- See §§ 9, 10, 11. cient to pay his debts (Nichols v. Pin- ^ gee Chap. XIV. See §§ 9, 10, 1 1. ner, 18 N. Y. 295). The principle of ^ Newman v. Cordell, 43 Barb. (N. this rule applies to the managers of Y.) 448. corporations (Scott v. Depeyster, i Edw. * See § 60. §§147.14^ SEEKING DISCOVERY. EXCUSIxNG LACHES. 221 the whole case is just and right in matter of substance, and supported by proper evidence.^ As a creditors' bill is often brought for a discovery as well as for relief, the complain- ant is at liberty to avail himself of any objections to pro- ceedings on the part of the defendant affecting his rights, even though not specified or charged in the bill. This rule results from the necessity of the case, as a creditor cannot be supposed to be thoroughly acquainted with the conduct of his debtor toward third persons, especially when, as is generally the case in fraudulent transactions, efforts have been made to conceal the circumstances from the public.^ § 147. Seeking discovery. — The complainant, especially if he is prosecuting in a representative capacity, as. for instance, an assignee in bankruptcy, in seeking to set aside a fraudu- lent conveyance of real and personal property, has the right, as ancillary to the principal relief, to have a discovery from the defendants, and he properly seeks it with a view to supply the deficiency in his own knowledge ; and his ignorance of the particulars sought not only entitles him to the discovery, but excuses the want of more precise specification of the particular fraud alleged.^ § 148. Excusing laches — Concealment of fraud. — It fre- quently becomes vitally important to excuse, by appropri- ate recitals in the bill, apparent laches on the part of the creditor in commencing the suit. In Forbes v. Overby,* which was a bill filed by an assignee, charging fraud and conspiracy, and praying for a discovery and disclosure, the defendants contended, upon a motion to dissolve an injunc- tion, that the bill was insufficient in form and sul)stance. • Tiernan v. Poor, i Gill & J. (Md.) 190, per Woodruff, J. See Howden v. 216 ; s. C. 19 Am. Dec. 225. See § 60. Johnson, 107 U. S. 263. per Blatchford, Ridgely v. Bond, 18 Md. 450 ; Warner J. ; Ex parte Boyd, 105 U. S. 653, 655 ; V. Blakeman, 4 Keyes (N. Y.) 507. Hendricks v. Robinson, 2 Johns. Ch. « Burtus V. Tisdall, 4 Barb.'(N. Y.) (N. Y.) 283; Mounlford v. Taylor, 6 580. , Ves. Jr. 788. ' Verselius v. Verselius, 9 Blatchf. •* 4 Hughes, 441, 444. 2 22 EXCUSING LACHES. § I48 and ought to be dismissed ; first, because of complainant's laches in bringing this suit (it having been brought within a year from the discovery of the clue to the fraud) ; and second, because the bill failed to set forth specifically the impediments to an earlier prosecution of the claim. It was objected that the bill did not explain why the com- plainant had remained in ignorance of his rights, and that it failed to recite the methods employed by defendants to fraudulently keep the complainant in such ignorance ; and that it did not disclose how and when the complainant first came to a knowledge of the matters alleged as the basis of the suit. The court observed that there had been a great variety of decisions upon the question as to what lapse of time was sufficient to bar cases of this character, and de- clared the general rule to be that each suit must be gov- erned by its own peculiar circumstances. The case under consideration, being a bill for a discovery, was distin- guished by the court, on that ground, from Badger v. Badger,^ and it was said that a court would not compel a complainant, who was manifestly ignorant of the particu- lars of a fraud, to set out in his bill the very particulars concerning which a disclosure was sought. Lord Erskine said : " No length of time can prevent the unkennelling of a fraud." In Alden v. Gregory,^ Lord Northington exclaims : " The next question is in effect whether delay will purge a fraud ? Never while I sit here ! Every delay arising from it adds to the injustice, and mul- tiplies the oppression." Mr. Justice Story stated the rule as follows :^ "It is certainly true that length of time is no bar to a trust clearly established ; and in a case where fraud is imputed and proved, length of time ought not, upon principles of eternal justice, to be admitted to repel relief. On the contrary, it would seem that the length of ' 2 Wall. 87, and infra. ^ Prevost v. Gratz, 6 Wheat. 497. - 2 Eden, 285. §149 EXPLAINING DELAY. 223 time during which the fraud has been successfully con- cealed and practiced is rather an aggravation of the offense, and calls more loudly upon a court of equity to give ample and decisive relief." It must be remembered, however : First, that the trust must be ** clearly established"; second, that the facts must have been fraudulently and successfully concealed by the trustee from the knowledge of the cestui que trust} Long acquiescence and laches by parties out of possession, are productive of much hardship and injus- tice to others, and cannot be excused but by showing some actual hindrance or impediment caused by the fraud or concealment of the parties in possession which will appeal to the conscience of the chancellor. The party who makes such an appeal should set forth in his bill specifically what the impediments to an earlier prosecution of his claim were, how he came to be so long ignorant of his rights, and the means used by the respondent to fraudulently keep him in ignorance ; and how and when he first came to a knowl- edge of the matters alleged in the bill. Otherwise the courts will not grope after the truth of facts involved in the mists and obscurity consequent upon a great lapse of time. § 149. Explaining delay — Discovery of fraud. — In cases where it is sought to avoid the statute of limitations, or rather to come within the exception to it, the plaintiff has been held to stringent rules of pleading and evidence. " Especially must there be distinct averments as to the time when the fraud, mistake, concealment, or misrepresentation was discovered, and what the discovery is, so that the court may clearly see whether, by ordinary diligence, the dis- covery might not have been before made."^ This is neces- sary to enable the defendant to meet the fraud and disprove ' Badger v. Badger, 2 Wall. 92. National Bank v. Carpenter, loi U. S. ^ Wood V. Carpenter, loi U. S. 140; 567; Rosenthal v. Walker, 11 1 U. S. Stearns v. Page, 7 How. 819, 829; 190 ; Wollensak v. Reiher, 115 U.S. 96. 224 DISCOVERY OF FRAUD. § I49 the alleged time of its discovery.-^ A general allegation of ignorance at one time, and of knowledge at another, is of no effect. If the plaintiff made any particular discovery, it should be stated when it was made, what it was, how it was made, and why it was not made sooner.^ Fraud that will arrest the running of the statute must be secret and concealed, and not patent or known. ^ The party seeking to elude the statute by reason of fraud must aver and show that he used due diligence to detect it ; and if he had the means of discovery in his power he will be held to have known it.^ In Cole v. McGlathry^ it appeared that the plaintiff had provided the defendant with money to pay certain debts. The defendant falsely affirmed that he had paid them, and fraudulently kept possession of the money. It was decided that the plaintiff was not entitled to recover for the reason that he had at all times the means of discov- ering the truth of the statements by making inquiries of the parties who should have received the money. This principle is further illustrated in the analogous case of Mc- Kown V. Whitmore,^ in which it appeared that the plaintiff had handed the defendant money to be deposited for the plaintiff in bank. The defendant told the plaintiff that he had made the deposit. It was held that even though the statement was false, and made with a fraudulent design, the plaintiff could not recover because he might at all times have inquired at the bank and learned the truth. '^ In Boyd 1 Moore v. Greene, 19 How. 72; Glover, 21 Wall. 342 ; Gifford v. Helms, Beaubien v. Beaubien, 23 Id. 190; 98 U. S. 248; Upton v. McLaughlin, Badger v. Badger, 2 Wall. 95. 105 U. S. 640. - Carr v. Hilton, i Curt. C. C. 230. * Buckner v. Calcote, 28 Miss. 432, ' Martin v. Smith, i Dill. 85. This 434. See Nudd v. Hamblm, 8 Allen case contains a full review of the au- (Mass.) 130. Compare Baldwin v. thorities. See also McLain v. Ferrell, Martin, 35 N. Y. Super. Ct. 98 ; Barlow I Swan (Tenn.) 48; Buckner v. Cal- v. Arnold, 6 Fed. Rep. 355; Erickson cole, 28 Miss. 432 ; Cook v. Lindsey, v. Quinn, 3 Lans. (N. Y.) 302. 34 Miss. 451 ; Phalen v. Clark, 19 Conn. ^ 9 Me. 131. 421 ; Moore v. Greene, 2 Curt. C. C. ® 31 Me. 448. 202, affi'd 19 How. 69, 72; Rosenthal ' See, further. Rouse v. Southard, 39 V. Walker, in U. S. 189; Bailey v. Me. 404. § 150 COMPLAINTS BAD FOR MULTIFARIOUSNESS. 225 V. Boyd,^ it was ruled that the concealment which would avoid the statute must go beyond mere silence. It must be something done to prevent discovery. The conceal- ment must be the result of positive acts.^ An allegation that the defendants pretended and professed to the world that the transactions were bona fide was looked upon as be- ing too general. In Wood v. Carpenter,^ a pleading which read as follows : " And the plaintiff further avers that he had no knowledge of the facts so concealed by the defend- ant until the year a.d. 1872, and a few weeks only before the bringing of this suit," was held to be clearly bad. The court in this case, in a critical and exhaustive opinion, re- view many of the cases which have just been considered, and then observe that a wide and careful survey of the au- thorities leads to the following conclusions : First, the fraud and deceit which enabled the offender to do the wrong may precede its perpetration. The length of time is not mate- rial, provided there is the relation of design and its con- summation. Second, concealment by mere silence is not enough. There must be some trick or contrivance i?i- te?ided to exclude suspicion and prevent inquiry. Third, there must be reasonable diligence, and the means of knowledge are the same thing in effect as knowledge itself. Fourth, the circumstances of the discovery must be fully stated [pleaded] and proved, and the delay which has oc- curred must be shown to be consistent with the requisite diligence.* § 150. Complaints bad for multifariousness. — Judge Story says that multifariousness is " the improperly joining in one bill distinct and independent matters, and thereby con- ' 27 Ind. 429. fraudulent intent is drawn, is the ab- ■ Stanley v. Stanton, 36 Ind. 445. sence of any valuable consideration for ^ loi U. S. 135. the conveyance. So long as the cred- ■» In Erickson v. Quinn, 47 N. Y. 413, itor was ignorant of that essential and Rapallo, J., said: "The fundamental controlling fact, the statute ought not fact from which the conclusion of a to run against him." 15 2 26 COMPLAINTS BAD FOR MULTIFARIOUSNESS. § I50 founding them ; as, for example, the uniting in one bill of several matters, perfectly distinct and unconnected, against one defendant, or the demand of several matters of a dis- tinct and independent nature against several defendants in the same bill."^ " What is more familiarly understood by multifariousness as applied to a bill, is where a party is brought as a defendant upon a record, with a large portion of which, and of the case made by which, he has no con- nection whatsoever." ^ In United States v. Bell Telephone Company,^ Mr. Justice Miller used these words: "The principle of multifariousness is one very largely of con- venience, and is more often applied where two parties are attempted to be brought together by a bill in chancery who have no common interest in the litigation, whereby one party is compelled to join in the expense and trouble of a suit in which he and his co-defendant have no common in- terest, or in which one party is joined as complainant with another party with whom in like manner he either has no interest at all, or no such interest as requires the defendant to litigate it in the same action."'* The authorities bearing upon this question are very numerous, but there is deduci- ble from them all no positive inflexible rule as to what, in the sense of courts of equity, constitutes multifariousness, which is fatal on demurrer.^ Indeed it seems to be gener- ally recognized as an impossibility to formulate a general rule as to what is considered multifariousness ; every case must be governed by its own circumstances, and the court must exercise a sound discretion on the subject.^ The rule > Story's Ex. PI. § 271, See Walker Knye v. Moore, i Sim. & S. 61 ; Ken- V. Powers, 104 U. S. 251. sington v. White, 3 Price 164 ; Corn- ■^ Story's Eq. PI. § 530. See Camp- well v. Lee, 14 Conn. 524 ; Middletown bell V. Mackay, i Mylne & Cr. 617. Sav. Bank v. Bacharach, 46 Conn. 522. 3128U. S. 352. ^Gaines v. Chew, 2 How. 619; * Citing Oliver v. Piatt, 3 How. 333 ; Oliver v. Piatt, 3 How. 333. See Mc- Walker V. Powers, 104 U. S. 245. Lean v. Lafayette Bank, 3 McLean ^ DeWolf v. Sprague Mfg. Co., 49 415 ; Abbot v. Johnson, 32 N. H. 26; Conn. 292. See generally Att'y Gen- Carter v. Kerr, 8 Blackf. (Ind.) 373 ; eral v. Cradock, 3 Mylne & Cr. 85 ; Butler v. Spann, 27 Miss. 234 ; Brown §151 PLEADINGS HELD NOT MULTIFARIOUS. 227 in relation to multifariousness, say the Supreme Court in Iowa, is one of convenience, and though the matters set forth in the pleading are distinct, yet if justice can be administered between the parties without a multiplicity of suits, the objection will not prevail.^ The objection that the bill is multifarious is always discouraged by the courts when, instead of advancing, it will defeat the ends of justice.^ § 151. Pleadings held not multifarious. — -Such being the general condition of the authorities as to multifarious plead- ings, it follows that the practitioner must rely upon in- stances and illustrations drawn from reported cases, for his guidance. In a suit before the Supreme Judicial Court of New Hampshire,^ it was decided that it was not multifarious to join in a creditor's bill, as parties defendant with the debtor, several persons to whom he conveyed distinct parcels of property, out of which the creditor sought satisfaction of his debt, although such persons might have no common in- terest in the several parcels conveyed.'* And in Dimmock V. Bixby,'^ it was held that a demurrer for multifariousness would hold good only when the plaintiff claimed several matters of a different nature, and not when one general right was asserted, although the defendants might have separate and distinct rights. The same principle is recog- nized in Boyd v. Hoyt.^ That was a case of a creditor's bill brought to reach property of a judgment-debtor which V. Haven, 12 Me. 164; Richards v. ment of a will, though the necessary- Pierce, 52 Me. 560 ; Warren v. War- parties to the suit may be the same, ren, 56 Me. 360 ; Bugbee v. Sargent, 23 their interests and attitude are de- Me. 269 ; Weston V. Blake, 61 Me. 452, cidedly at variance, and the bill is See § 132. bad for multifariousness. McDonnell v. ' Bowers v. Keesecher, 9 Iowa Eaton, 18 Fed. Rep. 710. 422. ' Chase v. Searles, 45 N. H. 519. » Marshall v. Means, 12 Ga. 61. ■• See §§ 54, 55, 132. Where two distinct subjects are em- ' 20 Pick. (Mass.) 377. braced in a bill, e.g., the avoidance of '• 5 Paige (N. Y.) 65. See Rinehart a marriage settlement and the annul- v. Long. 95 Mo. 396. 2 28 PLEADINGS HELD NOT MULTIFARIOUS. § 15 1 had been fraudulently transferred to two or more persons holding different portions of it by distinct conveyances, and it was decided that such persons might be joined. The chancellor lays it down that when the object of a suit is single, but different persons have or claim separate inter- ests in distinct or independent matters, all connected with and arising out of the single object of the suit, the com- plainant may bring such persons before the court as de- fendants, so that the whole object of the bill may be ef- fected in one suit, and further unnecessary and useless litigation prevented. The case of Morton v. Weil ^ is an important illustration in point. Creditors by different judg- ments united in bringing a suit against the executors under the will of a decedent, alleging the fraud of that person in contracting the debts, and joined as defendants various par- ties having liens upon, or title to, the property in question by reason of judgments or assignments, alleging that such liens or titles were fraudulently obtained, and praying that the same might be vacated, and the defendants compelled to account for and pay over the -property. On demurrer to the bill it was decided that the parties to it were properly joined, and that in other respects it was sufficient.^ In an- other case,^ a creditors' bill filed against the debtor and his grantees, for the purpose of setting aside a number of volun- tary conveyances, severally made to each of the parties, was held to be good. And in Harrison v. Hallum,* the court say that it is proper, where there are several judgment-debt- ors in the same judgment, and one of them has made a fraudulent conveyance to one grantee, and another has made a similar conveyance to another grantee, and a third has 1 33 Barb. (N. Y.) 30. See, further. Way v. Bragaw, 16 N. J. - See Lawrence v. Bank of the Re- Eq. 213; Hicks v. Campbell, 19 N. J. public, 35 N. Y. 320; Reed v. Stryker, Eq. 183; Randolph v. Daly, 16 N. J. 12 Abb. Pr. (N. Y.) 47; Fellows v. Eq. 313. Fellows, 4 Cow. (N. Y.) 682 ; Lewis v. ^ Williams v. Neel, 10 Rich. Eq. (S. St. Albans Iron & Steel Works, 50 Vt. C.) 338. 481 ; Arnold V. Arnold, 11 W. Va.449. •* 5 Coldw. (Tenn.) 525. § 152 PLEADINGS HELD NOT MULTIFARIOUS. 229 made a like conveyance to still another grantee, to unite all the debtors and their several fraudulent grantees in one common bill for the relief of the judgment - creditors. Again, where a debtor, with intent to defraud his creditors, purchased land, causing the deed to be made to his wife, who participated in the fraud and conveyed the land to an- other person with the same intent, who in turn conveyed it to a third, both grantees being cognizant of the fraud, it was held, in an action brought by a creditor to set aside the con- veyances, that both transactions being of the same nature, though different in form, could be properly joined in the same complaint.^ A bill is not regarded as multifarious, though brought to recover different portions of the estate of a debtor, from several defendants, if the alleged illegal transfers were the result of a common purpose on the part of the defendants to dismember the estate.^ § 152. — The cases upon this subject are almost without number. In De Wolf v. Sprague Mfg. Co.,^ it appeared that the plaintiff held a judgment lien upon certain real es- tate upon which a trust-mortgage had been executed, which, if valid, was entitled to priority. The suit was brought to set aside or postpone the mortgage, on the ground that it was void against the complaining creditor, and for a fore- closure of the judgment lien, and for possession, and the mortgagors and the trust-mortgagee were made defendants. The court, after protracted argument and an extended re- view of the authorities, held that the bill was not multifari- ous. In Parker v. Flagg^ the court say: "The bill is brought by the executor, representing all the creditors of an insolvent estate, to set aside conveyances made by the testator of all his property, real and personal, in fraud of ' North V. Brad way, 9 Minn. 183. Hoyt, 5 Paige (N. Y.) 65; Piatt v. ' Van Kleeck v. Miller, per Choate, Preston, 19 N. B. R. 241. J., 19 N. B. R. 486 ; citing Boyd v. » 49 Conn. 282. •• 127 Mass. 30. 230 PLEADINGS HELD NOT MULTIFARIOUS. §152 those creditors, to his wife, who is the sole defendant ; some of the property consists of mortgages, to recover which the plaintiff has no adequate remedy at law ; all the conveyances appear to have been part of one scheme, and no objection is, nor, it would seem, could be taken to the bill for multifariousness. The demurrer was erroneously sustained, and should have been overruled."^ It is per- haps unnecessary to further multiply illustrations. Some of the cases have certainly gone to an extreme limit, and parties have been held together as defendants in one action by a very slender thread of reasoning. The St. Louis Court of Appeals, commenting upon the subject, say : " The principle that it is not sufficient that the defendants are all concerned in some general charge, such as fraud on the part of the debtor, or that as grantees of distinct pro-p- erties by distinct conveyances they obtained title through him, but that all the defendants should at least have an in- terest in the principal point in issue in the case, is surely of some value as a general test. In cases like the present it would be decisive. Here there is no material issue in which all the defendants have a common interest, and con- sequently no tie to make them defendants in one suit. . ... It is obvious that, merely from convenience to plaintiffs, the defendants ought not to be put to the trouble and expense of litigating matters with which they are un- connected."^ These observations were made in a case in which there were twenty defendants having a common source of title from an alleged fraudulent grantor ; the con- veyances were separate and made at different times, and the defendants were beneficiaries and trustees indiscrimi- nately joined. The bill was pronounced multifarious. The decision, however, can scarcely be harmonized with some of the authorities already discussed.^ > Chase v. Redding, 13 Gray (Mass.) ^ Bobb v. Bobb, 8 Mo. App. 260. 418; Welsh V. Welsh, 105 Mass. 229; ^ As to bills held not to be multifari- Gilson V. Hutchinson, 120 Mass. 27. ous, see Richmond v. Irons, 121 U. S.27. §§ 153-155 PRAYER OF COMPLAINT. 23 1 § 153. Alternative relief. — In Alabama it was held that a creditors' bill may be filed for a double purpose ; asking in the alternative to have two or more conveyances can- celled as intended to hinder, delay, and defraud creditors, or to have them construed as tos^ethcr constituting a creneral assignment inuring, under the statute of that State, to the benefit of all the insolvent's creditors equally.^ But in a later case in that State '^ the court feel constrained to depart from and overrule the decision upon this point. § 154. Attacking different conveyances. — The fact that a plaintiff seeks to set aside two or more conveyances as fraudulent, does not require that each conveyance shall be set forth in a separate paragraph as the basis of a separate cause of action. They constitute but one cause of action, the fraudulent disposition of his property by the judgment- debtor.^ § 155. Prayer of complaint — Variance — Verification. — As a general rule in the modern procedure a mistake in the de- mand for relief is not fatal.'* In Buswell v. Lincks ^ the court said: "The point is made that the bill was framed upon the basis of a claim that there had been a fraudulent trust-deed, and a receiver had been prayed for, while the relief given in setting aside the fraudulent conveyance and adjudging a sale of the leasehold under execution was in- consistent with the prayer of the complaint. The sufficient answer to this proposition is, that the judgment was such as the court was bound to give upon the allegations and proofs without reference to the relief demanded." And where the bill, in addition to the general demand for relief, contained a prayer that a deed be set aside, it was held that, merely because of a prayer that the defendant be de- ' Crawford v. Kirksey, 50 Ala. 591. * See Bell v. Merrifield, 109 N. Y. ' Lehman v. Meyer, 67 Ala. 404. 202. ' Strong V. Taylor School Township, » 8 Daly (N. Y.) 527. 79 Ind. 208. 232 PRAYER OF COMPLAINT. § 155 creed to give the complainant possession of the land, the bill would not be treated as a bill for possession, nor dis- missed on the ground that ejectment was the proper rem- edy.^ As a general rule complainants are entitled, under a prayer for general relief, to any judgment consistent with the case made in their bill,^ but they are not usually en- titled to a decree covering and including matters not re- ferred to in the pleadings, and as to which the respondents have never had their day in court.^ The court will not hesitate to dismiss a bill which presents a case totally dif- ferent from the testimony in the record;* and no decree can ordinarily be made on grounds not stated in the bill.^ "The rule is explicit and absolute, that a party must re- cover in chancery according to the case made by his bill or not at all, 'secundum allegata' as well as ' probaia'"^ Matters not charged in the bill should not be considered on the hearing.''' If, however, the special prayers are inapt and incongruous, and so framed that no relief can be granted under them, the court under the prayer for general relief may render any appropriate judgment consistent with the case made by the bill.^ Courts of equity give judg- ment for money only where that is all the relief needed.' The objection that a bill is not verified is immaterial, as a bill in equity need not usually be sworn to unless it is sought to use it as evidence upon an application for a pro- visional injunction or other similar relief.^" 1 Miller v. Jamison, 24 N. J. Eq. 41. Wright v. Delafield, 25 N. Y. 266 ; Gor- See Sedg. & Wait on Trial of Title to don v. Reynolds, 114 111. 123. Land, 2d ed., § 169. « Bailey v. Ryder, 10 N. Y. 370; "^ Bell V. Merrifield, 109 N. Y. 206. Clark v. Krause, 2 Mackey (D. C.) 573 ; ^ Wilson V. Horr, 1 5 Iowa 492 ; Eyre v. Potter, 1 5 How. 42. Tripp V. Vincent, 3 Barb. Ch. (N. Y.) ' Hunter v. Hunter, 10 W. Va. 321. 613 ; Parkhurst v. McGraw, 24 Miss. * Annin v. Annin, 24 N. J, Eq. 188. 139; Hovey v. Holcomb, 11 111. 660. ' Bell v. Merrifield, 109 N. Y. 207 ; * Roberts v. Gibson, 6 H. & J. (Md.) Murtha v. Curley, 90 N. Y. 372. 123 ; Truesdell v. Sarles, 104 N. Y. 168. '" Hughes v. Northern Pacific R.R. ' Bailey v. Ryder, 10 N. Y. 363 ; Co., i West Coast Rep. 24. §§ 156, 157 AMENDMENT. DESCRIPTION. 233 § 156. Amendment. — A variance between the actual date of the judgment and that set forth in a creditors' bill based on it, may be corrected by amendment at any time during the proceedings ; but as the complainant is not absolutely confined to the exact date stated in the bill the amendment may be unnecessary.^ An amendment of a bill as to the description of the property under well-established rules of procedure only operates from the time of the service of the amended pleading.^ The bill may be amended on the final hearing in the United States Circuit Court, so as to state that the value of the matter in dispute exceeds five hundred dollars.^ Speaking upon the subject of amendments, Davis, J., said, in Neale v. Neales:* "To accomplish the object for which a court of equity was created, it has the power to adapt its proceedings to the exigency of each particular case, but this power would very often be ineffectual for the purpose, unless it also possessed the additional power, after a cause was heard and a case for relief made out, but not the case disclosed by the bill, to allow an alteration of the pleadings on terms that the party not in fault would have no reasonable ground to object to. That the court has this power and can, upon hearing the cause, if unable to do complete justice by reason of defective pleadings, permit amendments, both of bills and answers, is sustained by the authorities."^ The granting of amendments of pleadings in chancery rests in the sound discretion of the court. ^ § 157. Description. — Aside from interests not liable to execution, the fact that a creditor is compelled to file a bill in equity usually implies ignorance on his part of the exact character and form in which the debtor has invested or • First Natl. Bank of M. v. Hosmer, ing, 326, 331 ; Story's Equity Pleading, 48 Mich. 200. §§ 904, 905 ; Daniel's Chancery Pr. & 3 Miller v. Sherry, 2 Wall. 250. PI. 463, 466 ; Smith v. Babcoclc, 3 Sum- ^ CoUinson V. Jackson, 8 Sawyer 358. ner 583; McArtee v. Er.gart, 13 III, ■* 9 Wall. 8. 242. * Citing Mitford's Chancery Plead- ^ Gordon v. Reynolds, 114 111. ii8. 234 DESCRIPTION. § 157 secreted his property. If such were not the case, process of execution would be invoked. It should not, therefore, be necessary to particularly describe or indicate in the com- plaint, the assets, whether legal or equitable, which it is proposed to reach by the bill.-^ Thus a bill was entertained which alleged that the defendant " has equitable interests, things in action, and other property which cannot be reached by execution, and that he has also debts due to him from persons unknown."^ In Miller v. Sherry^ the original bill was in the form of a creditor's bill. It contained nothing specific except as to certain transactions between the debtor and one Richardson. There was no other part of the bill upon which issue could be taken as to any particular prop- erty. The court held that it was effectual for the purpose of creating a general lien upon the assets of the debtor, as a means of discovery, and as the foundation for an injunc- tion and an order that the debtor execute a conveyance to a receiver. Furthermore, that if it became necessary to litigate as to any specific claim, other than that against Richardson already specified, an amendment to the bill would have been indispensable. The bill did not create a lis pendens^ operating as notice affecting any real estate. To have that effect the recital in the description must be so definite that any one reading it can thereby learn what property is intended to be made the subject of the litiga- tion,^ Where the complainant in a creditor's bill seeks to obtain satisfaction out of lands inherited or devised, and is ' Shainvvald v. Lewis, 6 Fed. Rep.766. ■* As to the application of the doc- ^ Lanmon v. Clark, 4 McLean 18. trine of lis pendens to creditors' suits, " The jurisdiction of a court of equity see Webb v. Read, 3 B. Mon. (Ky.) to reach the property of a debtor justly 119; Jackson v. Andrews, 7 Wend. applicable to the payment of his debts, (N. Y.) 152. even when there is no specific lien on ^ See Griffith v. Griffith, 9 Paige (N. the property, is undoubted." Public Y.) 317. Compare Sharp v. Sharp, 3 Works V. Columbia College, 17 Wall. Wend. (N. Y.) 278; King v. Trice, 3 530, Ired. (N. C.) Eq. 573 ; McCauley v. ' 2 Wall. 249, Rodes, 7 B. Mon. (Ky.) 462. §157 DESCRIPTION. 235 unable to specify the lands, he may state that fact in the bill, and call upon the heirs to discover the lands devised or inherited, so that they may be reached by amendment of the bill or otherwise.^ If the description be indefinite it may be aided by the evidence.* The rule that an alienation of property made during the pendency of an action is subject to the final decree is, as shown by Mr. Bishop,^ of very ancient origin. Murray v. Ballou* is the leading case in this country. The doctrine is important both as regards the titles of purchasers and the question of preferences among judgment-creditors. In Scouton V. Bender,^ where an assignment was over- turned, it was decided that the creditors were entitled to satisfaction of their judgments, respectively, out of the funds derived from the real estate in the order of priority of the judgments ; and out of the personal fund in the order in which the bills were filed and the equit- able liens created. The doctrine of lis pendens, it may be further remarked, is said to have no application to corporate stock, "^ or negotiable securities.''' Mr. Justice Bradley said in County of Warren v. Marcy:** "Whilst the doctrine of constructive notice arising from lis pendens, though often severe in its application, is, on the whole, a wholesome and necessary one, and founded on principles affecting the authoritative administration of justice, the exception to its application is demanded by other consider- ations equally important, as affecting the free operations of • Parsons v. Bowne, 7 Paige (N. Y.) ^ Bishop on Insolvent Debtors, Sup- 354. See § 147. plement; § 228a. ^ Williams v. Ewing, 31 Ark. 235. •• i Johns. Ch. (N. Y.) 566. See Til- The circumstance that a deed did not ton v. Cofield, 93 U. S. 168. give an accurate description of the land ^ 3 How. Pr. (N.Y.) 185. See § 132a. intended to be conveyed will not defeat " Holbrook v. New Jersey Zinc Co., a settlement where the description used 57 N. Y. 616. could leave no one in serious doubt as ' County of Warren v. Marcy. 97 U. to the land intended. Wallace v. Pen- S. 96. field, 106 U. S. 263. " 97 U. S. 109. 236 CHANGE OF VENUE. § 157^ commerce, and that confidence in the instruments by which it is carried on, which is so necessary in a business com- munity."^ An attempt to discuss the various phases of the law of lis peiidens is not possible in this connection. The exceptions that have crept into the rule that a party who meddles with property in controversy does so at his peril have frequently brought the proceedings of diligent creditors to naught. § 157(3:. Change of venue — Territorial jurisdiction. — In New York State a motion to change the place of trial of an ac- tion, brought to annul a fraudulent conveyance, to the county in which certain real estate passing under the as- signment is situated, cannot be defeated by an offer on the part of the plaintiff to stipulate that he will not attempt to reach such real estate.^ When a court of equity attempts to act directly upon real or personal property by its decree the property must be within the territorial jurisdiction of the court. " It is equally well settled that where one is the owner of land or other property in a foreign jurisdic- tion, which in equity and good conscience he ought to con- vey to another, the latter may sue him in equity in any jurisdiction in which he may be found, and compel him to convey the property. The decree in such case directing a conveyance of the property does not directly affect the title to the property, yet the enforcement of it does result in the complete change of the title." ^ ' For phases of the doctrine of lis Y. 631 ; Boynton v. Rawson, i Clarke pendens, and of the rule as to the pref- (N. Y.) 584 ; Claflin v. Gordon, 39 Hun erence obtained by filing a bill, see (N. Y.) 57; Shand v. Hanley, 71 N. Y. Leitch V. WeUs, 48 N. Y. 585 ; Fitch 324. V. Smith, 10 Paige (N. Y.) 9 ; Albert v. ' Wyatt v. Brooks, 42 Hun (N. Y.) Back, 20 J. & S. (N. Y.) 550, affi'd 502. Compare Acker v. Leland, 96 N. loi N. Y. 656 ; Davenport v. Kelly, 42 Y. 384. N. Y. 193 ; Van Alstyne v. Cook, 25 ^ Johnson v. Gibson, 116 111. 294. N. Y. 489; Becker v. Torrance, 31 N. CHAPTER X. OF THE PLEA OR ANSWER. § 158. Answer'and burden of proof, 159. Avoiding denial. Answer as evidence for or against co-defendant. Pleading to the discovery and the relief. 162. Particularity of denial in answer. 160. 161, § 162a. Bill of particulars. 163. Denying fraud or notice. 164. Admission and avoidance. 165. Avoiding discovery. 166. Affirmative relief. 167. Waiver of verification. § 158. Answer and burden of proof. — Usually, as we have seen, in creditors' actions to reach assets, or bills in equity to annul fraudulent alienations, the debtor and the fraudu- lent alienees are made parties defendant. The latter are necessary parties to the end that the judgment may con- clude them, and the court obtain jurisdiction over and pos- session of the assets in their hands, and annul the colorable transfer. It is manifest that the defendant alienee has rights in the suit different from and superior to those of the debtor. The latter is of course concluded by the judg- ment upon which the bill proceeds, and can withhold from his creditor nothing but exempt property. The alienee, on the other hand, may claim to be a bona fide purcliaser, or may show the absence of actual fraud, and thus be allowed to hold the property as security for advances. The grantor may " intend a fraud, but if the grantee is a fair, bona fide, and innocent purchaser, his title is not to be affected by the fraud of his grantor."^ It follows that the alienee cannot be prejudiced by the fact that judgment /r^ confcsso j)asses ' Sands v. Hildreth, 14 Johns. (N. Y.) 2 Mich. 310 ; Kittering v. Parker, 8 Ind. 498, per Spencer, J. ; Hollister v. Loud, 44. See Chap. XXIV. 238 AVOIDING DENIAL. § 1 59 ao"ainst the debtor,^ or that fraud is admitted or alleged in the debtor's answer.^ The defense that a party is a bona fide purchaser is an affirmative defense only in cases where fraud in some previous holder of the title has been shown, ^ and ordinarily a sworn answer responsive to a direct inter- rogatory or specific charge of fraud must be accepted as true until disproved."* Fraud, as we have already seen,^ is not a thing to be presumed, but must be proved and estab- lished by evidence sufficient for that purpose,^ although, as already made manifest/ it is sometimes practically a legal deduction from uncontrov^erted facts, or from evidence the weight of which is practically conclusive.^ Where a defendant's title is attacked on the ground of fraud he may, under a general denial, introduce any proof showing that his title is not fraudulent.^ § 159. Avoiding denial. — The general rule prevails, under equity procedure, that an answer under oath, so far as it is responsive, is to be taken as true unless overcome by com- petent proof.^*^ When the defendant, by his answer under oath, has expressly negatived the allegations of the bill, and the testimony of only one person has affirmed what has been negatived, the court will not decree in favor of the complainant. There is then oath against oath." The com- plainant generally calls upon the defendant to answer on oath, and is therefore bound to admit the answer, so far as he has called for it, to be prima facie true, and as much worthy of credit as the testimony of any witness. This rule does not extend, however, to averments embodied in 1 Thames v. Rembert, 63 Ala. 561. « Grover v. Grover, 3 Md. Ch. 35. See Dick v. Hamilton, i Deady 322 ; ' See §§ 9, 10. Fulton V. Woodman, 54 Miss. 158-173. * See § 10. ^ See Scheitlin v. Stone, 43 Barb. ' Ray v. Teabout, 65 Iowa 157. (N. Y.) 637. '"Wright v. Wheeler, 14 Iowa 13; ^ Fulton V. Woodman, 54 Miss. 172. Allen v. Mower, 17 Vt. 61 ; Parkhurst ^ Fulton V. Woodman, 54 Miss. 159; v, McGraw, 24 Miss. 134. Hartshorn v. Karnes, 31 Me. 98. " Jacks v. Nichols, 5 N. Y. 178. ^ See § 6. § 159 AVOIDING DENIAL. 239 the answer not directly responsiv'^e to the allegations con- tained in the bill, since the complainant has not called for such averments.^ Allegations not responsive to the bill, if denied by a general replication, must be proved before be- coming available to the party making them.^ In Green v. Tanner^ the court said : " That the answer, being responsive to the bill, is evidence for the defendants as to facts within their own knowledge, is not denied. And by a well-estab- lished rule of equity, the answer must be taken to be true, unless contradicted by two witnesses, or by one witness with probable and corroborating circumstances."^ In Bow- den V. Johnson^ it was contended by counsel that, as the bill prayed that the defendant should answer its allegations on oath, the answer was evidence in his favor, and was to be taken as true unless it was overcome by the testimony of one witness, and by corroborating circumstances equiva- lent to the testimony of another witness. The court found facts " sufficient to satisfy the rule of equity," and cite from Greenleaf* to the effect "that the sufficient evidence to outweigh the force of an answer may consist of one witness, with additional and corroborative circumstances, which cir- cumstances may sometimes be found in the answer itself ; or it may consist of circumstances alone, which, in the ab- sence of a positive witness, may be sufficient to outweigh the answer even of a defendant who answers on his own knowledge."''' It seems that the credibility of the defend- ants' answers setting forth consideration, will be destroyed by proof that the vendee permitted the vendor to assert in his hearing, without contradicting him, tliat no indebted- ness existed.® ' Seitz V. Mitchell, 94 U. S. 582. 234 ; Hoboken Bank v. Beckm.in, 33 ^ Humes v. Scruggs, 94 U. S. 24. N. J. Eq. 55. 3 8 Mete. (Mass.) 422. ' 107 U. S. 262. * Flagg V. Mann, 2 Sumner 487. ' Greenleaf on Evidence, vol. 3, § 289. See Tompkins V. Nichols, 53 Ala. 198; ^ S. P. Williamson v. Williams, 11 Parkman v. Welch, 19 Pick. (Mass.) Lea (Tenn.) 365. ' Bradley v. Buford, Snecd (Ky.) 1 2. 240 DISCOVERY AND RELIEF. §§ 160, 161 § 160. Answer as evidence for or against co-defendant. — The equity practice seems to be settled that generally- speaking the answer of one defendant cannot be used against another defendant.^ In Salmon v. Smith,^ the rule is recognized that the answer of one defendant to a bill in chancery which shows that the complainant is not entitled to the relief sought, inures in favor of his co-defendant as evidence.^ So it is said by Mr. Greenleaf,^ " that where the answer in question is unfavorable to the plaintiff, and is responsive to the bill, by furnishing a disclosure of the facts required, it may be read as evidence in favor of a co- defendant, especially where the latter defends under the title of the former."^ Where the complainants choose to rely upon admissions or confessions in an answer, the de- nials and admissions must, of course, be considered as a vvhole.*^ A sworn answer should be taken as true unless overcome by the testimony,'^ but the denials to make an an- swer evidence must be of facts stated in the bill.^ It may be here recalled that the testimony of a single witness, un- corroborated by circumstances, has been considered not sufficient to overcome a verified answer positively denying fraud. ^ § 161. Pleading to the discovery and the relief. — Chancel- lor Walworth stated in Brownell v. Curtis,^° that, in certain cases, where the discovery asked for would tend to crimi- ' Salmon v. Smith, 58 Miss. 408; gan v. Henderson, i Bland (Md.) 261. Powles V. Dilley, 9 Gill (Md.) 222; But see Cannon v. Norton, 14 Vt. 178. McKim V. Thompson, i Bland (Md.) ^ Crawford v. Kirksey, 50 Ala. 597. 161, ' Hurd V, Ascherman, 117 111. 501. * 58 Miss. 400, 408. ^ Gainer v. Russ, 20 Fla. 162. ^ Davis V. Clayton, 5 Humph. (Tenn.) ' See Garrow v. Davis, 15 How. 272 ; 446. Evans v. Bicknell, 6 Ves. 184; Lord * 3 Greenl. Ev. § 283. Cranstown v. Johnston, 3 Ves. 170; * See Mills v. Gore, 20 Pick. (Mass.) Pilling v. Armitage,i2 Ves. 78; Thomp- 28; Miles v. Miles, 32 N. H. 147; son v. Sanders, 6 J. J. Marsh (Ky.) 93. Powles V. Dilley, 9 Gill (Md.) 222 ; Compare Allen v. Cole, 9 N. J. Eq. Field V. Holland, 6 Cranch 8 ; Clason 286. V. Morris, 10 Johns. (N. Y.) 524; Lin- *' 10 Paige (N. Y.) 214. § 1 62 DENIAL IN ANSWER. 24 1 nate the defendant, or subject him to a penalty or forfeit- ure, or entail a breach of confidence, the defendant was not bound to make a discovery to aid in establishing the facts,* although the complainant might be entitled to relief. In the course of the opinion it was further said : " But where the same principle upon which the demurrer to the dis- covery of the truth of certain charges in the complainant's bill is attempted to be sustained, is equally applicable as a defense to the relief sought by the bill, the settled rule of the court is that the defendant cannot be permitted to de- mur as to the discovery only, and answer as to the relief.'^ This general rule is equally applicable to the case of a plea ; and the defendant cannot plead any matters in bar of the discovery merely, when the matters thus pleaded would be equally valid as a defense to the relief." § 162. Particularity of denial in answer. — Chancellor Kent, in Woods v. Morrell,'^ in discussing the sufficiency of an answer to the allegations of a bill in equity, said : " The general rule is, that to so much of the bill as is material and necessary for the defendant to answer, he must speak directly, without evasion, and not by way of negative preg- nant. He must not answer the charges merely literally, but he must confess or traverse the substance of each charge positively, and with certainty ; and particular pre- cise charges must be answered particularly and precisely, and not in a general manner, even though a general answer may amount to a full denial of the charges."'* This rule is well illustrated in Welcker v. Price,^ where the bill charged that the land conveyed by the debtor to his wife was " all the property of which the said John F. was possessed." The 'Citing Atty.-Genl. v. Brown, i 129; Story's Eq. Pleadings 254, n. i; Svvanst. 294; Dummer v. Corporation Welf. Eq. Pleadings 133. of Chippenham, 14 Ves. 245 ; Hare on ^ i Johns. Ch. (N. Y.) 107. Discovery 5. See § 165. ■« See Hunter v. Bradford, 3 Fla. 2S5 ; - Citing Morgan v. Harris, 2 Bro. C. Barrow v. Bniley, 5 Fla. 23. C. 124; Waring v. Mackreth, Forrest ' 2 Lea (Tenn.) 667. 16 242 BILL OF PARTICULARS. § 162a answer set forth that the debtor " was then in good circum- stances, with means enough and more than enough to pay all his debts." This latter statement was characterized as a mere legal conclusion which a party was not permitted to draw for himself, or to express an opinion concerning, without disclosing facts to justify it, and as being a mere evasion of the real issue as to the possession of other property. It is a familiar rule that a positive denial of fraud in an answer will not prevail against admissions, in the same pleading, of facts which show that the transaction was fraudulent ; ^ also, that in weighing the whole evidence in the case, the fact that the defendant answers only gener- ally, denying the fraud, will operate against him whenever the bill charges him with particular acts of fraud,^ A charge in a bill that the deed in question was never prop- erly delivered, and that the grantor retained possession ^after the conveyance, should, if untrue, be specifically de- nied.^ § 162a. Bill of particulars. — The granting of an order for a bill of particulars in an action rests largely in the sound discretion of the court. Such orders have been granted in almost every form of action.^ In a Special Term case in New York, prosecuted to set aside an assignment as hav- ing been made in fraud of creditors, Lawrence, J., ordered the plaintiff to furnish certain preferred creditors with a bill of particulars of the times, places, acts, and things which it was intended to prove as showing the fraudulent intent.^ A similar application was denied in a later case upon ' Robinson v. Stewart, 10 N. Y. 194; ^ Hudgins v. Kemp, 20 How. 52. Jackson v. Hart, 1 1 Wend. (N. Y.) 349, * See Dwight v. Germania Life Ins. per Savage, Ch. J. See Hoboken Bank Co., 84 N. Y. 493 ; Tilton v. Beecher, 59 V. Beckman, 33 N. J. Eq. 53 ; Sayre v. N. Y. 176. Fredericks, 16 N. J. Eq. 205. s ciaflin v. Smith, 13 Abb. N. C. (N. ' Parkman v. Welch, 19 Pick. (Mass.) Y.) 205. 234. § 163 DENYING FRAUD OR NOTICE. 243 slightly dissimilar facts.^ It would be destructive to cred- itors' proceedings in many cases to allow a debtor to exact in advance a bill of particulars of the specific acts of fraud relied upon to support the action. Fraud is generally es- tablished by developing a series of minute circumstances, earmarks, and indicia. These sometimes appear at the trial for the first time when the creditor has obtained an opportunity to explore the enemy's country by cross-ex- amination it may be. As the presumption of good faith in all transactions rests with the defendant, and the general character of the plaintiff's cause of action must be outlined in the pleading, it would seem to be most unjust to require, in addition, a statement of the items of the creditors' evi- dence in advance of the trial. Creditors are considered to be a favored class, and are entitled, with proper restrictions, to " fish " through the debtor's transactions in pursuit of hidden assets, and should not be fettered by any restrict- ing orders, § 163. Denying fraud or notice. — In order to entitle a party to protection as a purchaser without notice he must deny notice of the fraud fully and particularly, whether the defense be set up by plea or answer,' and even though notice is not charged in the bill.-' A plea of bona fide pur- chaser for value and without notice, must be as full under the Code as under the former system of equity pleading.'* We may here observe that constructive fraud is not re- garded as a fact, but is treated rather as a conclusion of law drawn from ascertained facts. Hence, as has been shown, '^ where an answer denies the fraud, but nevertheless admits facts from which the existence of fraud follows, as a natural ' Passavant V. Cantor, 21 Abb. N.C. Friedenwald v. Mullan. 10 Heisk. (N. Y.) 259. (Tcnn.) 226. -Stanton v. Green. 34 Miss. 592; » Manhattan Co. v. Evertson. 6 Paige Gallatin v. Cunningham, 8 Cow. (N. (N. Y.) 466. Y.) 374; 2 Lea. Cas. in Eq.,pp. 85.86; ' Weber v. Rothchiid. 15 Ore. 388. Miller v. Fraley, 21 Ark, 22. Compare =■ See § 162, 244 AVOIDING DISCOVERY. §§ 1 64- 1 66 and legal if not a necessary and unavoidable conclusion, the denial will not avail to disprove it.^ § 164. Admission and avoidance. — It is an established rule of evidence in equity that, where an answer filed in a cause admits a fact and insists upon a distinct fact by way of avoidance, the fact admitted is established, but the fact insisted upon must be proved ; otherwise the admission stands as if the fact in avoidance had not been averred.* § 165. Avoiding discoveiy. — An important question is frequently presented as to whether or not a defendant can defeat a discovery by pleading that the disclosure may sub- ject him to a criminal prosecution. Such a plea has been held not sufficient to excuse a discovery,^ while in many cases it is regarded as sufificient to excuse the party from answering.* This same question comes up in various forms in civil procedure, and, at least in the United States, the general rule and practice is that a party may omit to verify a pleading, or decline to make a disclosure which will tend to degrade or criminate him. § 166. Affirmative relief. — No afifirmative relief can ordi- narily be accorded to the defendant unless it is claimed by cross petition, or as an affirmative defense ; yet where such relief has been granted without objection in the court be- low, the decree will not always, for that reason, be reversed on appeal.^ It may be here observed that under the prac- tice in Alabama the fact that the debtor has other property which might be subjected to the payment of the judgment, ' Sayre v. Fredericks, 16 N. J. Eq. See Wich v. Parker, 22 Beav, 59. 209 ; s. P. Cunningham v. Freeborn, Compare Reg. v. Smith, 6 Cox C. C. II Wend. (N.Y.) 253. 31. See § 161. "^ Clements v. Moore, 6 Wall. 315 ; ■* Michael v. Gay, i Fost. & Fin. 409 ; Presley's Evidence, p. 13; Hart v. Ten Bay State Iron Co. v. Goodall, 39 N. Eyck, 2 Johns. Ch. (N. Y.) 62 ; Clarke H. 237 ; Horstman v. Kaufman, 97 Pa. V. White, 12 Pet. 190. St. 147. ' Devoll V. Brownell, 5 Pick. (Mass.) '" Kellogg v. Aherin, 48 Iowa 299. 448 ; Bunn v. Bunn, 3 New Rep. 679. § 1 67 WAIVER OF VERIFICATION. 245 is not available to a voluntary alienee unless presented by cross bill.^ The homestead may be protected by cross bill.'* As elsewhere shown the vendee, when deprived of the prop- erty, may obtain reimbursement for the amount actually advanced if no intentional wrong is shown. It is intimated- in McLean v. Letchford,'^ that the court would not consider his claim to reimbursement in the absence of a cross bill, though it is conceded that reimbursement has been made, in a proper case, where no cross bill had been filed.* § 167. Waiver of verification. — The pleadings in the class of litigation under discussion are usually verified. Where code practice prevails, if a verified bill of complaint is filed, all subsequent pleadings must be under oath except demur- rers, which, of course, only raise questions of law. Though the complainant waive an answer under oath from the de- fendant, yet the latter may nevertheless verify the plead- ing. So held in Clements v. Moore.^ Swayne, J., said : " It was her right so to answer, and the complainants could not deprive her of it. Such is the settled rule of equity practice, where there is no regulation to the contrary'. " It is said that the practice of waiving an answer under oath originated in the State of New York, by virtue of a pro- vision incorporated in the statute," at the suggestion of Chancellor Walworth, and was intended to introduce a new principle into the system of equity pleading. It was de- signed to leave it optional with the complainant to com- ' Leonard v. Forcheimer, 49 Ala. shall waive an answer under oath, or 145, shall only require an answer with re- ' Thomason v. Neeley, 50 Miss. 313. gard to certain specified interrogatories, * 60 Miss. 182, the answer of the defendant, though * Compare Dunn v. Chambers, 4 under oath, except such part thereof as Barb. (N. Y.) 381; Grant v. Lloyd, 20 shall be directly responsive to such in- Miss. 192 ; Alley v. Connell, 3 Head terrogatories, shall not be evidence in (Tenn.) 578. See § 51, his favor, unless the cause be set down '6 Wall. 314. The 41st Rule in for hearing on bill and answer only,' Equity of the Supreme Court now pro- etc. vides : " If the complainant in his bill " N. Y. R. S., p. 175, § 44. 246 WAIVER OF VERIFICATION. §167 pel a discovery in aid of the suit, or to waive the oath of the defendant if the complainant was unwilling to rely upon his honesty, and chose to establish his claim by other evidence.* ' See Armstrong v. Scott, 3 Greene (la.) 433 ; Burras v. Looker, 4 Paige (N, Y.) 227. CHAPTER XL OF THE JUDGMENT OR DECREE. § 1 68. The judgment conclusive. 169. Judgment res adjudicata though the form of procedure be changed. 170. Judgment appointing receiver. 171. Judgment avoids sale only as to creditor — not absolutely. 172. Judgment transferring title. 173. No judgment in favor of unrep- resented parties. 173a. Creditor suing in place of as- signee. 174. Confession of judgment. § 175. Impoundingproceedsof a fraud- ulent sale. 176. Accounting by fraudulent ven- dee to debtor. 177. \ Personal 178 179- 180. judgment against fraudulent vendee. Money judgment, when disal- lowed. Personal judgment against wife. 181. Judgment must conform to re- lief demanded. 182. Must accord with complaint. 183. Contradictory verdicts. 183^1. New trial. § 168. The judgment conclusive. — The form of the judg- ment or decree in suits to annul fraudulent transfers, or to reach equitable assets, and the rights secured by the adjudi- cation, constitute important branches of our subject. The usual attributes attach to the judgment in this class of cases. It is regarded as an estoppel upon the parties as to the subject-matter investigated.^ But the estoppel has no wider effect. Raymond v. Richmond^ is an illustration of our meaning. There the action was instituted by an as- signee against a sheriff and an execution creditor, for levy- ing upon property which had theretofore been adjudged to belong to the assignee, in an action to which the assignee, the assio^nor, and the execution defendant were parties. ' See In re Hussman, 2 N. B. R. 441 ; Downer v. Rowell, 25 Vt. 336; Raymond v. Richmond, 78 N. Y. 351 ; Bell v. Merrifield, 109 N. Y. 21 1. ' 78 N. Y. 351 ; second appeal, 88 N. Y. 671. 24S JUDGMENT RES ADJUDICATA. §§ 1 69, 1 70 The court very properly held that as the creditor, under whose judgment and execution the seizure had been ef- fected, was not a party to the prior litigation, the adjudi- cation did not conclude him. Hence such creditor was entitled to show that the transfer made by the execution defendant, although the title had been adjudged to be in the assignee, was fraudulent in fact, and the seizure of the property by the creditor therefore justifiable. Manifestly a purchaser of a chattel mortgage is not concluded by a subsequent adjudication in an action against the mortgagor and mortgagee to which he was not a party, declaring the mortgage to be fraudulent.^ And a decree between hus- band and wife, establishing in the wife's favor a resulting trust in the husband's lands, is not conclusive upon the husband's existing creditors.^ § 169. Judgment res adjudicata though the form of procedure be changed. — Where creditors seek by bill in equity to sub- ject a vested estate in remainder to their claims, and the courts decide against them, the question will be res adju- dicata if the creditors afterward try to levy by execution on the same interest, when it has become an estate in pos- session by the death of the life tenant.^ § 170. Judgment appointing receiver. — The particular form of a decree in a creditor's action to cancel a fraudulent conveyance is, in some instances, of vital importance to the complainant. A court of equity undoubtedly possesses the power to pronounce a judgment annulling and clearing away the fraudulent obstruction, and then, by acting upon the person of the debtor, to compel him to convey the title to a receiver.^ The practitioner, however, should be cau- ' Zoeller v. Riley, 100 N. Y. 102. 19 N. Y. 374; Cole v. Tyler, 65 N. Y. - Old Folks' Society v. Millard, 86 ^^. Compare McLean v. Carj', 88 N. Tenn. 657 ; Humes v. Scruggs, 94 U. Y. 391 ; White's Bank of Buffalo v. S. 22 ; Branch Bank of Montgomery v. Farthing, 9 Civ. Pro. (N. Y.) 66 ; S. C. Hodges, 12 Ala. 118. loi N. Y, 344; New York Life Ins. Co. 3 Nichols V. Levy, 5 Wall. 433. v. Mayer, 19 Abb. N. C. (N. Y.) •• Chautauque County Bank v. Risley, 92. § 170 JUDGMENT APPOINTING RECEIVER. 249 tious about entering up such a judgment, as the title which the receiver or a purchaser from him acquires rests upon the debtor's own conveyance, and has no relation to the original judgment which is the foundation of the bill in, equity. It has been intimated that when the creditor pur- sues this course he abandons the lien of his judgment and seeks satisfaction of his debt out of the debtor's property generally. In Chautauque County Bank v. Risley,^ the creditor's action was founded upon the first judgment re- covered against the debtor, and the property was, under the order of the court, conveyed by the debtor to a re- ceiver. It was decided that another creditor, whose judg- ment was subsequent to that which was the foundation of the creditors' bill, but which was entered prior to the time the bill was filed, might sell the real estate on execution, and the purchaser at such sale would acquire a better title than the grantee from the receiver. The creditor should therefore be careful not to sacrifice the advantage which the prior judgment gives him, and, having cleared the fraudu- lent conveyance out of the way, should, especially if subse- quent judgments have been entered, proceed by execution and sale on his first judgment.^ In Cole v. Tyler ^ the judgment set aside the conveyance and merely directed that the receiver should sell, execute deeds, etc. It is not easy to discover the theory upon which the receiver could be said to have acquired the title. The improper form of the judgment was assigned as a ground for its reversal, but the court said that if the direction to sell, etc., was errone- ous, the error would not be rectified by an appeal, but the correct procedure was by motion to correct the judgment, the matter being one merely of detail, and not affecting the decision upon its merits. . ' 19 N. Y. 374. Warner, 12 Hun (N. Y.) 309; Cole v. « Compare White's Bank of Buffalo v. Tyler, 65 N. Y. 73. Farthing, loi N. Y. 344 ; Shand v. Han- ^ 65 N. Y. n. ley, 71 N. Y. 319 ; Union Nat. Bank v. 250 JUDGMENT AVOIDS SALE. § I?! § 171. Judgment avoids sale only as to creditor — not abso- lutely. — The principle must always be kept in view, that a fraudulent sale is good between the parties. Giving effect to this doctrine generally controls the form of the judg- ment in a creditors' action. Thus in Orr v. Gilmore,^ the conveyance was found to be voidable as against the cred- itor, but the court decided that the only judgment to which the complainant was entitled was a decree for the sale of the lot in suit and the payment of the amount of the claim with interest and costs. The sale being valid between the debtor and the fraudulent vendee, there was nothing to warrant a judgment declaring it null and void as to every one. In the case cited the judgment which was held by the higher court to be erroneous declared that the property belonged to the debtor. This was manifestly wrong, for, where it does not appear that there are other creditors, the judgment, whether it directs a sale on execution by the sheriff,^ or by a receiver,^ should only declare the convey- ance void as to the plaintiff's judgment, and direct a sale for the payment of that alone. The grantee is entitled to all that might remain of the proceeds in the shape of sur- plus,* and, when the creditor is paid, the decree cancelling the conveyance is satisfied.^ " The action of chancery," said Nelson, J., " upon the fraudulent grantor or assignee, is only to the extent of supplying a remedy to the suitor creditor ; as to all other parties, the assignment remains as if no proceedings had been taken." ^ Under the Civil Code in Louisiana if the action is successful the judgment is that the conveyance be avoided as to its effect on the complain- ing creditors.'' ' 7 Lans. (N. Y.) 345 ; Duncan v. ^ Rawson v. Fox, 65 111. 202. See Custard, 24 W. Va. 731. Bostwick v. Menck, 40 N. Y. 383; * Orr V. Gilmore, 7 Lans. (N. Y.) 345. Kerr v. Hutchins, 46 Tex. 384. ' Chautauque Co. Bank v. Risley, 19 ^ McCalmont v. Lawrence, i Blatchf. N. Y. 369. 235. •» Van Wyck v. Baker, 10 Hun (N. ' Claflin v. Lisso, 27 Fed. Rep. Y.) 40 ; Collinson v. Jackson, 8 Sawyer 420. 365 ; In re Estes, 6 Sawyer 460. §§ 172, 173 JUDGMENT TRANSFERRING TITLE. 25 1 § 172. Judgment transferring title. — The court has no power to effect a transfer of title to land by ordering a sale of it, except in special cases authorized by statute, such as mortgage and partition sales, sales of infants' lands, ordi- nary execution sales, and the like. In suits brought to reach lands conveyed with intent to defraud creditors, the proper decree, in New York at least, is to set aside the fraudulent conveyance, and permit the creditor to issue an execution and sell under it, or compel the debtor to convey to a receiver and direct the latter to sell. It was said by Gilbert, J., in Van Wyck v. Baker,* that " the fraudulent deed being annulled, the title remains in the debtor, and can be passed only by her deed."* If, however, the re- ceiver is directed to sell without obtaining a prior convey- ance from the debtor the erroneous judgment is not, as we have seen,* to be rectified by an appeal from the judgment, but a motion should be made to correct it.* Where an execution purchaser seeks to cancel a cloud on his title, of course no conveyance is requisite, as the plaintiff will be left in the full enjoyment of the title acquired by the sher- iff's deed.^ § 173. No judgment in favor of unrepresented parties. — In a case before the Supreme Court of California'^ it was said to be an anomaly in practice to render judgment in favor of a party who was not before the court, and was not rep- ' 10 Hun (N. Y.) 40. grantee, but the decree may proceed * Citing Jackson v. Edwards, 7 Paige to vest the title in the plaintiff. See (N. Y.) 404; Chautauque Co. Bank v. Kinealy v. Macklin, 2 Mo. App. 241 ; White, 6 N. Y. 236 ; Chautauque Co. Apperson v. Burgett, 33 Ark. 328. The Bank v. Risley, 19 N. Y. 369. See logical theory upon which this proced- Dawley v. Brown, 65 Barb. (N. Y.) 107. ure is founded is not easily discovered. ' See § 170. In the absence of statutorj' authority •* Cole V. Tyler, 65 N. Y. TJ. how can a court become possessed of * Hager v. Shindler, 29 Cal. 69. It any title which it can confer or bestow is said in Ames v. Gilmore, 59 Mo, upon the creditor.' Its province is to 541, that courts of chancery may, in clear incumbrances from titles, or to suits to annul a fraudulent deed, not coerce transfers. only divest the title of a fraudulent ' Bachman v, Sepulveda, 39 Cal. 688. 252 CREDITOR SUING. §§ 1 73«, 1 74 resented in any manner in the action. This observation was made in an action brought by a creditor against a fraudulent grantee to set aside a conveyance made by a deceased debtor, the ground of relief assigned being that the conveyance was made to hinder and delay creditors. The representative of the deceased debtor was not a party. The court very properly decided that it was error to render a judgment declaring a trust against the fraudulent grantee and in favor of the unrepresented estate of the grantor. § 173^. Creditor suing in place of assignee. — If an as- signee refuses in a proper case to institute proceedings to get possession of the assigned property, the creditors col- lectively, or one suing in the right of all who may join in the action, may compel the execution of the trust in equity, or cause the removal of the assignee and the appointment of another. It seems, however, that in either case a decree for a single debt would be erroneous ; the decree must fol- low the assignment, and the fruits of a recovery must be distributed according to its terms.^ § 174. Confession of judgment. — A transfer of property by a person heavily indebted, made by means of a confes- sion of judgment and sale on execution, was adjudged void in Metropolitan Bank v. Durant,^ upon proof that it was intended to defraud creditors, and that the purchaser had knowledge of the facts. Collusive judgments, as we have seen,"^ are always open to the attack of creditors. A judg- ment entered by confession upon an insufficient statement of facts is effectual and binding between the parties, and a sale of property under it is legal and valid against all the world except existing creditors having a lien upon the property.^ ' Crouse v. Frothingliam, 97 N. Y. ' See § 74, and note. 105. Compare Bate v. Graham, 11 N. ^ Miller v. Earle, 24 N. Y. 112. Com- Y. 237 ; Everingham v. Vanderbilt, 12 pare Marrin v. Marrin, 27 Hun (N. Hun (N. Y.) 75. Y.) 602 ; Dunham v. Waterman, 17 N. - 22 N. J. Eq. 35, Y. 9; Mitchell V. Van Buren, 27 N,Y.30o. §§ 175. I?^ IMPOUNDING PROCEEDS OF SALE. 253 § 175. Impounding proceeds of a fraudulent sale. — While it may be true that the money received by a fraudulent vendee from the sale of the property is not legally a debt due by the vendee to the fraudulent vendor, because the court will not assist to enforce or render effectual the fraud, yet in the intention of the parties it is a debt, and creditors may treat it as such and attach or reach it bv judicial process.^ The beneficent and remedial provisions of the statute 13 Eliz. would be of little avail if a fraudu- lent grantee could pass the property over to a mere volun- teer without notice of the fraud, and upon that ground claim that the property or its proceeds were safe from the pursuit of creditors.* § 176. Accounting by fraudulent vendee to debtor. — Though a party may have intended to defraud tiie cred- itors of a debtor by taking and converting his propertv into cash, such intent is rendered harmless by his deliver- ing the proceeds of the sale to the debtor or his authorized agent. If the party has accounted to the debtor for the proceeds of the property before proceedings are taken against him by the creditor, he cannot be forced to account for it over again. ^ The creditor must show that something 1 Heath V. Page, 63 Pa. St. 124; Blood, 57 Barb. (N. Y.) 671 ; Clements French v. Breidelman, 2 Grant (Pa.) v. Moore, 6 Wall. 299 ; Davis v. Graves, 319; Mitchell V. Stiles, 13 Pa. St. 306. 29 Barb. (N. Y.) 480. In Greenwood ""Where a transfer of property is v. Marvin, iii N. Y. 434, the New made, which is held void under the York Court of Appeals said: "The provisions of the bankruptcy act, as equitable rights of the parties were to against the assignee in bankruptcy, the remain the same ; the legal owner was transferee is properly to be regarded to account to the other party for the as a trustee for the plaintiff, and to be net profits of the business, and no held to account as such, especially other mode of division is suggested where, as in this case, it appears that than that of equality, if, therefore, some, if not all, of the property, has that agreement effected any change in passed away from the transferee." the relations of the parties, it operated Schrenkeisen v. Miller, 9 Ben. 65. as a temporary expedient to bridge ■^ Cramer v. Blood, 57 Barb. (N. Y.) over the period of Le Grand Marvin's 163, affi'd 48 N. Y. 684; Murphy v. pecuniary embarrassment, presumably Briggs, 89 N. Y. 446. See Cramer v. with a view of restoring the original 254 PERSONAL JUDGMENT. § -^n remains which ought to be applied on the judgment. Where a third person has in good faith received a convey- ance of the property in trust for an alleged fraudulent grantee, and has subsequently conveyed it to such grantee pursuant to the trust, it has been held that such third per- son is not a proper defendant in a creditor's action, simply because no cause of action exists against him.^ The trustee under an assignment of lands which is declared fraudulent at the suit of a creditor, cannot be compelled to account for the rents received and applied according to the pro- visions of the trust, before the commencement of the action.^ § 177. Personal judgment against fraudulent vendee. — The right of a judgment-creditor to a personal or money judg- ment against a fraudulent vendee of his debtor ^ comes up relations of the parties at some future time when it would be safe to do so. If that agreement was executed, as seems very probable, with a view of hindering and delaying the creditors of Le Grand, it was still competent for the parties, in the absence of interfer- ence by creditors, to rescind it at any time, and restore to each other an equal legal interest in the property acquired under such agreement." ' Spicer v. Hunter, 14 Abb. Pr. (N. Y.)4. Relief at law ajtd in equity. — In Clements v. Moore, 6 Wall. 312, the court said : " When the fact of fraud is established in a suit at law, the buyer loses the property without reference to the amount or application of what he has paid, and he can have no relief either at law or in equity. When the proceeding is in chancery, the juris- diction exercised is more flexible and tolerant. The equity appealed to — while it scans the transaction with the severest scrutiny — looks at all the facts, and giving to each one its due weight, deals with the subject before it accord- ing to its own ideas of right and justice. In some instances it visits the buyer with the same consequences which would have followed in an action at law. In others it allows a security to stand for the amount advanced upon it. In others it compels the buyer to ac- count only for the difference between the under price which he paid and the value of the property. In others, al- though he may have paid the full value, and the property may have passed be- yond the reach of the process of the court, it regards him as a trustee, and charges him accordingly. Where he has honestly applied the property to the liabilities of the seller, it may hold him excused from further responsibility." ' Collumb v. Read, 24 N. Y. 505. See § 26. As to when a judgment against an assignee cancelling an as- signment as fraudulent is a final judg- ment, and how the same should be entered and enforced, see Myers v. Becker, 95 N. Y. 486. 3 See § 62. § 177 PERSONAL JUDGMENT. 255 frequently for adjudication, and is discussed in man}^ of the authorities. In the recent case of Ferguson v. Hillman/ in the Supreme Court of Wisconsin, the conveyances and mortgages had been adjudged fraudulent as to creditors, and knowledge of the fraud had been fastened upon the grantee. The familiar principle elsewhere discussed to the effect that a fraudulent grantee in possession of the prop- erty of the debtor cannot be protected, as against the cred- itors of the debtor, even to the extent of the money or other consideration given for the transfer, was invoked and applied.*^ The court observed that it seemed to follow as a necessary consequence that a fraudulent grantee could not be protected in the possession of the proceeds of such property received by him upon effecting a sale of it. The property in the hands of a fraudulent purchaser is held by him in trust for the creditors of the fraudulent vendor, and when the property is converted into money the fund thus created is impressed with the same trust. Were the rule otherwise, the grantee might defeat the creditor's claim by fraudulently changing the character of the property. In equity such money in the hands of the fraudulent grantee is a fund held for the benefit of the creditors of the grantor ; and while such creditors may not be able to maintain an action at law for money had and received for their use, be- cause they were never the owners of, or had title to the property which had been converted into money, yet a court of equity, having all the interested parties before it, pos- sessed the power to direct such application of it as would be just. The court further held that if, in a proper case, equity had the power to order the fraudulent grantee to pay or apply the money received by him in satisfaction of ' 55 Wis. 190. See Mason v. Pier- Bank v. Warner, 12 Hun (N. Y.) 306; ron, 69 Wis. 585. Briq-gs v. Merrill, 58 Barb. (N. Y.) 3S9 ; '^ Gardinier v. Otis, 13 Wis. 460; Fullerton v. Viall. .]2 How. Pr. (N. Y.) Stein V. Hermann, 23 Wis. 132 ; Avery 294. V. Johann, 27 Wis. 246 ; Union Nat. 256 PERSONAL JUDGMENT. § 1 77 the debt of a creditor, then the fact that it directed a per- sonal judgment to be rendered against him for the money so received, and that the amount be collected on execution, was merely a matter of form, which did not prejudice his rights, and of which he could not complain. Fullerton v. VialP is an authority in point in this discussion. This important case, which certainly embodies features of vital interest to creditors and vendees whose good faith is ques- tioned, seems to have been affirmed both at the general term of the Supreme Court and in the Court of Appeals of New York, without any written opinion having been given. The published report of the case was prepared by one of the counsel. The facts were briefly as follows : The defendant had taken from a debtor a conveyance of real estate, subject to a mortgage of $800, agreeing to pay $1,000 in addition. The sum of $500 was paid to the debtor in cash, and $500 by cancelling a debt due from the debtor to the grantee. Before the creditor's suit was insti- tuted the grantee had sold the real estate to a bona fide purchaser, and realized from such sale the sum of $2,270. The court found that the conveyance was made in fraud of the pfrantor's creditors, and that the creditors were entitled to judgment against the fraudulent grantee for the value of the premises over and above the prior valid incumbrances. The recovery was not limited to the amount received by the fraudulent grantee on the sale, but his liability was held to extend to the value of the property fraudulently received by him, and which he had put beyond the reach of the creditors of his fraudulent grantor, subject, as already stated, to the prior valid incumbrances. The grantee must have found in this case that the way of the transgressor was hard, for he was neither allowed credit for his own debt which constituted part of the consideration, nor for the $500 paid to his grantor in cash.^ ' 42 How. Pr. (N. Y.) 294. 12 Hun 306-308; Ferguson v. Hill- ' See Union Nat. Bank v. Warner, man, 55 Wis. 192. § 1/8 PERSONAL JUDGMENT. 257 § 178. — Murtha v. Curley ^ apparently puts this question of the creditors' right to a personal judgment against the fraudulent vendee at rest in New York. The vendee had foreclosed a fictitious chattel mortgage upon the property of the debtor, and had converted the proceeds which ex- ceeded the creditors' claim to his own use. A money judgment was directed against the vendee for the amount of the plaintiffs' claim. The court held that this did not stamp the action as being legal rather than equitable, and that the judgment was proper in form. Earl, J., said : " A court of equity adapts its relief to the exigencies of the case in hand. It may restrain or compel the defendant ; it may appoint a receiver, or order an accounting ; it may compel specific performance, or order the delivery to the pla'ntiff of specific real or personal property ; or it may order a sum of money to be paid to the plaintiff, and give him a personal judgment therefor." Where the property has been converted there is nothing to be sold, and no oc- casion for a receiver and no special need to state an ac- count.* In Williamson v. Williams,^ the fraudulent vendee had sold the land to a bona fide purchaser, and it was said that having deprived the creditor of the property, and ob- tained its price, he must be held responsible by reason of this fraudulent disposition of the property to the amount of the consideration received by him. The money stood for the land in his hands.* ' 90 N. Y. 372 ; s. c. 12 Abb. N. C. ' See also Gillett v. Bate. 86 N. Y. (N. Y.) 12, and notes ; S. P. Warner v. 87 ; S. C. 10 Abb. N. C. (N. Y.) 88 ; Blakeman, 4 Abb. Ct. App. Dec. (N. Steere v. Hoagland, 50 HI. 377 ; Quinby Y.) 530. In Solinsky v. Lincoln Sav- v. Strauss, 90 N. Y. 664. ings Bank, 85 Tenn. 372, the court Mi Lea (Tenn.) 370. say: "When a fraudulent vendee has « In Wheeler v. Wallace, 53 Mich. 355, so concealed or disposed of the prop- it was held that creditors levying upon erty that creditors cannot reach or property fraudulently transferred had no identify it, the creditor may, in equity right to take from the transferee the at least, recover the proceeds or value increase ifthey had allowed it to accumu- thereof." Compare Eads v. Mason, 16 late for a long time under his manage- Bradw. (111.) 545. ment before attacking the transaction. 17 258 MONEY JUDGMENT. §§ I. 79, 180 § 179. Money judgment, 'when disallowed. — McLean v. Gary/ in the New York Court of Appeals, is a peculiar case in which a money judgment was denied. Plaintiff was a judgment-creditor. It was proved substantially that the debtor Greene sold to the other defendants certain machinery with an agreement that $12,000 of the consider- ation was to be paid in steam power. At a time when $9,000 remained unpaid a settlement was effected practi- cally on the basis of a balance of $4,000. The court avoided the settlement as being fraudulent against the creditor, and the question as to the authority to render a money judgment against the defendants was presented. The complaint, it may be observed, prayed that the settle- ment be set aside as fraudulent, that a receiver be ap- pointed, and that the creditor be paid out of the moneys realized by the receiver. No money judgment was de- manded, and the court held that under the circumstances none was authorized, as the contract was payable in steam power and not in money. Under the practice in Illinois it seems to be implied that a personal or money judgment is improper in an action to annul a fraudulent transfer. In Patterson v. McKinney^ this objection was taken, but the court said that as the cause was to be remanded it could be obviated hj making an alternative decree providing that if the judgment was not paid within a time to be limited, the land should be sold on execution. In Dunphy v. Klein- smith,^ which was a creditors' suit against a fraudulent vendee, a judgment for damages was held to be improper ; the correct relief was said to be by decree for an account.* § 180. Personal judgment against wife. — Where property is conveyed to a wife in fraud of her husband's creditors, it seems that a judgment in personam for its value cannot be taken against the wife, nor in case of her death, against her '88N. Y. 391. 3 II Wall. 615. '■ 97 111. 52. " See § 51. § l8o PERSONAL JUDGMENT AGAINST WIFE. 259 executors.^ Miller, J., said : " While the books of reports are full of cases in which real or personal property con- veyed to the wife in fraud of the husband's creditors has been pursued and subjected to the payment of his debts after it had been identified in her hands, or in the hands of voluntary grantees or purchasers with notice, we are not aware of any well-considered case of high authority where the pursuit of the property has been abandoned, and a judg- ment in persona7n for its value taken against the wife. Certainly no such doctrine is sanctioned by the common law ; and, though the present suit is a bill in chancery, the decree in this case is nothing more than a judgment at law, and could as well have been maintained in a separate suit at law for the money as in this suit. And the liability of the executors of the wife to this personal judgment must depend on the same principle as if, abandoning the pursuit of the res, the assignee had brought an action at law for the money." The modifications in the law peculiar to the relationship of husband and wife with reference to their property are so many and important that it would be im- practicable to attempt to formulate rules intended for gen- eral application to the subject. These Supreme Court cases certainly accomplish an unfortunate result, and prob- ably will not be universally accepted, if, indeed, the princi- ples they embody are not superseded in some States by the removal of the disabilities incident to coverture. In Post V. Stiger^ it appeared that property had been conveyed to a wife in fraud of the husband's creditors. The wife set up as a defense the fact that she had disposed of it. The court said that she must answer for its value. An attempt was made to show that she had subsequently lost by bad bargains all the property that she had acquired by the con- veyance. The proofs did not seem to sustain this view, ' Phipps V. Sedgwick, 95 U. S. 9; S. 304; Huntington v. Saunders, 120 followed, Trust Co. v. Sedgwick, 97 U. U. S. 78. « 29 N. J. Eq. 558. 26o FORM OF JUDGMENT. § l8l but the court remarked that even if it had been so proved this would not relieve her from liability, and continuing said : " She held the property as trustee of her husband's creditors, and dealt with it at her peril. A fraudulent grantee cannot repel the claims of the creditors of the grantor, by simply saying : ' I have lost, by imprudent bar- gains or collusive foreclosures, the property I attempted to conceal, and, therefore, I am answerable for nothing.' " It may be urged that this case is a dictum on the point cited. This is probably a legitimate criticism, for the court prac- tically found that the wife still had the property ; yet as an expression of opinion of a highly intelligent court pointing, as we claim, in the right direction, we regard the dictum as worthy of adoption as an absolute authority. § i8i. Judgment must conform to relief demanded. — As a general rule, the judgment must harmonize with the de- mand for relief.^ In Curtis v. Fox^ the plaintiff failed to establish that the conveyance by the debtor to his wife was fraudulent, and the complaint was consequently dismissed. It appeared that the wife died pending the action, and the creditor contended that the debtor defendant thereupon ac- quired a legal interest in her real estate, and that, instead of dismissing the complaint, a judgment should have been rendered providing for the sale of such interest, and an ap- plication of the proceeds to the satisfaction of the creditor's judgment. Cases like the Bank of Utica v. The City of Utica,^ and Cumming v. The Mayor of Brooklyn,^ were cited, in which it was held that, where both parties agree to submit the case to the jurisdiction of chancery, or the de- fendant omits to raise the objection by plea or in his answer, the court will retain jurisdiction and determine the case, although the plaintiff may have an adequate remedy at law. But the court held that the principle of these cases had no Dunphy v. Kleinsmith, 1 1 Wall. 615. ^4 Paige (N. Y.) 399. 47 N. Y. 299. Mi Paige (N. Y.) 596. § l82 MUST ACCORD WITH COMPLAINT. 26 1 application to the case of Curtis v. Fox above cited, because in that case Fox had no legal interest in the land, and did not acquire any until long after putting in his answer. The complaint did not allege any such interest, but sought relief solely upon the ground that the title of the wife was fraudulent as against the plaintiff, and this was the matter litigated. As the husband had no opportunity to raise the objection that a sale on execution was the proper remedy of the plaintiff, so far as the interest acquired upon the death of his wife was concerned, his silence did not waive it. § 182. Must accord with complaint. — It has been held in New York to be no ground of reversal of a judgment that the relief it extended was not prayed for in the complaint, provided it was such a decree as the plaintiff was entitled to upon the evidence.^ While the effect of an erroneous prayer in a complaint can ordinarily be overcome, yet the general rule is that the allegations of the complaint must support the judgment. Thus, it was said by the Supreme Court of California, that a judgment which was not sup- ported by the pleadings was as fatally defective as one which was not sustained by the verdict or finding. The judgment must accord with and be warranted by the plead- ings of the party in whose favor it is rendered.* This may be true under the liberal interpretation of the statutes regu- lating the reformed procedure, but it is unwise for a com- plainant to place strong reliance upon such a rule of j>rac- tice. On the contrary the bill should shadow forth the case which the evidence is calculated to disclose, or the variance may prove fatal. Thus, where the bill impeached a deed, and prayed its avoidance upon allegations of actual fraud, there is authority that, where the defendant is brouirht into court to answer such a charc^e, and so effect- • Buswell V. Lincks, 8 Daly (N. Y.) ' Bachman v. Sepulveda, 39Cal.6S9; 518. Bailey v. Ryder, 10 N. Y. 363. 262 CONTRADICTORY VERDICTS. § 1 83 ually repels it that the court would not be justified in hold- ing that the averment was proved, the complainant is not at liberty to change his ground, and obtain other relief, based upon proof of constructive fraud, or other equities supposed to be established by the evidence.^ And, where a bill charges actual and intentional fraud, and the prayer for relief proceeds upon that theory, the complainant can- not, under the prayer for general relief, rely upon circum- stances which make out a case for relief under a distinct head of equity, although such circumstances substantially appear in the bill, but are charged only in aid of the actual fraud alleged.^ § 183. Contradictory verdicts. — In Love v. Geyer,^ which was an action brought by a judgment-creditor of the grantor, against the grantor and grantee, to avoid a fraud- ulent conveyance, a general verdict was returned against both defendants. A new trial was awarded to the grantor and denied to the grantee, and the case was continued without judgment. At a subsequent term the cause was tried by the court as to the grantor, and a finding and judg- ment rendered in his favor. The court, over the objection of the grantee, rendered judgment against him, upon the former verdict of the jury setting aside the conveyance as fraudulent. On review, the judgment was very cor- rectly held to be erroneous.* Clearly, if no fraud had been practiced by the grantor, it was an absurdity to find that, as to the grantee, the conveyance was fraudulent. Both parties must necessarily be implicated in the fraud. ' Clark V. Krause, 2 Mackey (D. C.) missed." See, also, Fisher v. Boody, i 574. " If a bill charges fraud as a Curt. C. C. 206. ground of relief, fraud must be proved. ' Eyre v. Potter, 15 How. 42. The proof of other facts, though such ' 74 Ind. 12. as would be sufficient, under some ■* See Romine v. Romine, 59 Ind. circumstances, to constitute a claim for 346 ; also Hollingsworth v. Crawford, relief under another head of equity, 60 Ind. 70. will not prevent the bill from being dis- § iS^a NEW TRIAL. 263 § 183^, New trial. — The statutes granting statutory new trials as matter of right are not applicable to suits brought to annul fraudulent conveyances.^ ' See Somerville v. Donaldson, 26 Perry v. Ensley, 10 Ind. 378 ; Sedg. & Minn. 75 ; Shumway v. Shumway, i Wait on Trial of Title to Land, 2d ed., Lans. (N. Y.) 474, affi'd 42 N. Y. 143 ; § 595. CHAPTER XII. PROVISIONAL RELIEF INJUNCTION RECEIVER ARREST. § 184. Provisional relief. 185. Injunction, when allowed. 186. When injunction refused. 187. Receiver in contests over real property. § 188. Receivers of various interests. 189. Title on death of receiver. 190. Removal and dismissal of re- ceiver. 191. Arrest of defendant. § 184. Provisional relief. — In view of the class of debtors and alleged purchasers with whom creditors are called upon to litigate, it is perhaps needless to recall the great import- ance of prompt and efficient provisional remedies easily- accessible to complainants. The defendants may be con- templating flight, or may be engaged in wasting or convert- ing the property with a view of thwarting the creditors' proceedings. The relief afforded by final decree will per- haps come too late to be practically effectual. In some instances an order of arrest may be procured against the person of the debtor, or of his co-conspirators ; in others an injunction may issue restraining any misuse, incum- brance, or disposition of the property claimed to have been covinously alienated ; while in others a receiver may be ap- pointed to take possession and care of the property pend- ing the litigation.^ Indeed, the appointment of a receiver in a creditors' suit is almost a matter of course.^ A receiver may even be appointed before answer filed in an urgent case,^ or before judgment, ** but only when it is manifest » EUett V. Newman, 92 N. C. 523. ' Bloodgood V. Clark, 4 Paige (N. Y.) 577 ; Fitzburgh v. Everingham, 6 Paige (N. Y.) 29 ; Runals v. Harding, 83 111. 75 ; Shainwald v. Lewis, 6 Fed. Rep. 776. 3 Weis V. Goetter, 72 Ala. 259 ; Micou V. Moses, 72 Ala. 439. * Cohen v. Meyers, 42 Ga. 46. § 185 INJUNCTION. 265 that the fund is in danger of being lost.-^ The receivership will be denied when it does not distinctly appear that there is any property to be preserv^ed.^ § 185. Injunction, when allowed. — As has been elsewhere shown, the courts will not ordinarily interfere by injunction or otherwise, at the instance of a contract-creditor, to re- strain the debtor's control ov^er his business, or any disposi- tion of his property.^ Hyde v. Ellery ^ is an exception to the usual rule, additional to those heretofore noticed.^ It appeared in that case that the debtor had, by fraudulent means, purchased a large quantity of goods from various merchants, upon credit, and had sold the goods at auction so that it was practically impossible to trace them. An injunction was allowed in favor of simple contract-creditors, upon the theory that its issuance would prevent a multi- plicity of suits, and furthermore, because, as the relief sought was to set aside a transaction entered into with the inten- tion to defraud creditors, an injunction was necessary as ancillary to that relief. In another case which arose in Pennsylvania it was decided that a fraudulent severance of fixtures, made with a design to defeat the lien of a judg- ment, could be restrained in equity.'^ In suits to annul fraudulent transfers, relief by injunction is often indispensable. Thus, where the petition alleged that an action was pending by plaintiff against one of the defendants, in which certain real estate, which had previ- ously been fraudulently conveyed to another defendant, was attached, and the defendants were about to dispose of such real estate for the purpose of defeating plaintiff's claim, it was decided that a temporary injunction restraining such ' Rheinstein v. Bixby, 92 N. C. 307. 665 ; Johnson v. Farnuni, 56 Ga. 144; 'First National Bank v. Gage, 79 Adee v. Bigler, 81 N. Y. 349; May v. 111. 207. Greenhill, 80 Ind. 124. See § 52. ^ Uhl V. Dillon, 10 Md. 500; Mc- * 18 Md. 501. Goldrick v. Slevin, 43 Ind. 522; Dodge '■' See § 53. V. Pyrolusite Manganese Co., 69 Ga. • Witmer's Appeal, 45 Pa. St. 455. 266 WHEN INJUNCTION REFUSED. ^ 1 86 sale was properly continued to the final hearing, notwith- standing the filing of an answer denying all fraudulent in- tent.^ In a case in which the bill charged that the defend- ant, who was a trustee under an assignment for creditors, was a notoriously bad character, and had refused to allow an inventory of the assigned property to be made, and hence, if loss resulted, the creditors would be unable to show the extent of it. the court held that it was justified in granting an injunction and appointing a receiver without notice.^ And where a suit was brought by creditors of a deceased debtor to reach property fraudulently alienated by him in his lifetime, it was decided that pending the suit the court properly enjoined the defendant from incumbering or conveying the land.^ So an injunction may issue to stay waste.'* It may be observed that a denial in the defendant's answer that he has any property does not constitute a cause for dissolving an injunction restraining him from assigning or disposing of his property.^ § i86. When injunction refused. — An injunction will not be issued unless facts are shown from which its issuance appears to be a necessity in order to save the creditor's rights, and to prevent the wasting of the subject-matter of which he is in pursuit. Thus, in Portland Building Asso- ciation V. Creamer,^ it appeared that a creditor's bill was filed to set aside as fraudulent a conveyance of lands about one-half of which was woodland. The court held that an injunction which restrained the grantee from cutting and removing the timber from the premises would not be con- tinued, it being shown that the value of the land, without the timber, was ample to satisfy the creditor's claim in case the conveyance should ultimately be annulled. ' Joseph V. McGill, 52 Iowa 127. •* Tessier v. Wyse, 3 Bland's Ch. ' Rosenberg v. Moore, 1 1 Md. 376. (Md.) 29. See Blondheim v. Moore, 1 1 Md. 365. * New v. Bame, 10 Paige (N. Y.) 502. ' Appeal of Fowler, 87 Pa. St. 449. « 34 N. J. Eq. 107. § 187 CONTESTS OVER REAL PROPERTY. 267 § 187. Receiver in contests over real property. — Where real property is fraudulently transferred, the court, as we have seen, may adjudge and direct a transfer to a receiver/ Vause V. Woods ^ is an illustration of the disinclination of the court to interfere by the appointment of a receiver of real property, where the party in possession has what pur- ports to be the legal title. The case came up on appeal from an order appointing a receiver upon a creditor's bill to take possession of the property alleged to have been con- veyed in fraud of the plaintiff. Simrall, J., said (p. 128) : " As against the legal title, the interposition is with reluc- tance ; it will only be done in case of fraud clearly proved, and danger to the property."^ Provisional relief is not en- couraged in land cases because the subject-matter of con- tention is immovable, practically indestructible, and unlike personalty cannot be spirited away.** In New York a re- ceiver will not be appointed in ejectment before judgment.^ This practice has been a subject of criticism.^ The rule is otherwise in an equitable action to annul a conveyance of real property, even though it is conceded that ejectment could have been brought in the place of the equitable ac- tion ;' but even in such cases the relief is not easily se- cured.^ ' Cole V. Tyler, 65 N. Y. Tj ; Mc- ■• Sedg. & Wait on Trial of Title. Caffrey v. Hickey, 66 Barb. (N. Y.) 489, §631. 492 ; Chautauque County Bank v. Ris- * Guernsey v. Powers, 9 Hun (N. ley, 19 N. Y. 369; White's Bank of Y.) 78 ; Burdell v. Burdcll, 54 How. Pr. Buffalo V. Farthing, 9 Civ. Pro. (N. Y.) (N. Y.) 91 ; Thompson v. Sherrard, 35 66; S. C. loi N. Y. 344. See § 170. Barb. (N. Y.) 593; Sedg. & Wait on * 46 Miss. 120. Trial of Title (2d ed.), § 61 5. * Compare Lloyd v. Passingham, 16 * Sedg. & Wait on Trial of Title (2d Ves. Jr. 68 ; Mays v. Rose, Freem. ed.), § 632. Ch. (Miss.) 718 ; Jones v. Pugh, 8 Ves. ' Mitchell v. Barnes, 22 Hun (N. Y.) 71; Walker v. Denne, 2 Ves, Jr. 170; 194. See the dissenting opinion of Mapes V. Scott, 4 Brad. (111.) 268; Learned, P. J., in this case. The suit Sedg. & Wait on Trial of Title to Land, was instituted to annul a deed upon the Chapter XXIli.; Rheinstein v. Bi.xby, - 92 N. C. 307; Beach on Receivers, ' McCool v. McNamara, 19 Abb. N. §67. C (N. Y.)344- 268 TITLE ON DEATH OF RECEIVER. §§ l88, 1 89 § 188. Receivers of various interests. — On supplementary proceedings under the Wisconsin Code to enforce a decree for alimony, the court may appoint a receiver to take pos- session of the effects of the defendant in the divorce pro- ceedings ; the sheriff's return of the execution is sufficient ground therefor, and the receiver thus appointed may at- tack a fraudulent conveyance of the debtor's real estate made with intent to defeat the decree for alimony.^ A re- ceiver has been appointed of crops growing on a planta- tion ; ^ and in a case where an annuity, which was charged upon real property, was in arrear,^ and also of a living.^ § 189. Title on death of receiver. — Where a receiver of a debtor's property has been appointed, and the debtor has executed the usual assignment of the property to him, upon the death of the receiver the title to the property vests in the court. The receiver's possession is the court's posses- sion, and he is merely its agent or representative. The functions of the receiver continue after the death of the appointee, and it is competent for the court to appoint a successor to conduct and complete the litigation, and in other respects fulfil the duties which the first receiver left incomplete.^ Nor is it necessary that the defendants in the ground that the grantor was insane, 372 ; Hyman v. Kelly, i Nev. 179. and the conveyance was procured by Sea Ins. Co. v. Stebbins, 8 Paige (N. improper influences. The same relief Y.) 565 ; Cheever v. Rutland & B. R. could have been procured in ejectment. R. Co., 39 Vt. 654 ; Brown v. Chase, Van Deusen v. Sweet, 51 N. Y. 378. Walker's Ch. (Mich.) 43; Finch v. Hence, as a receiver could not be had Houghton, 19 Wis. 150; Callanan v. in ejectment it was argued, in this dis- Shaw, 19 Iowa 183. And a receiver senting opinion, that, by analogy, none may be had in an action to foreclose a should be appointed in the suit in contract for the sale of land. Smith v. equity. The majority of the court de- Kelley, 31 Hun (N. Y.) 387. clined to adopt this view. A receiver ' Barker v. Dayton, 29 Wis. 367. is frequently appointed in suits to fore- - Micou v. Moses, 72 Ala. 439. close mortgages, when it appears that ' Sankey v. O'Maley, 2 Moll. 491. the security is insufficient and the mort- •* Hawkins v. Gathercole. 31 Eng. gagor is insolvent. See Haas v. Chi- L. & Eq. 305 ; Beach on Receivers, cago Building Society, i Am. Insolv. § 619. Rep. 201 ; Myers v. Estell, 48 Miss. ' Nicoll v. Boyd, 90 N. Y. 519. § 190 REMOVAL OF RECEIVER. 269 suits should be given notice of proceedings for the appoint- ment of a successor to the first receiver,^ § 190. Removal and dismissal of receiver. — "The juris- diction of a court of equity," says Mr. Iligh,^ " which is exercised in the removal of receivers, bears a striking re- semblance to that which is called into action upon the dis- solution of an interlocutory injunction, and in both cases the power to terminate seems to flow naturally and as a necessary sequence from the power to create. And as an interlocutory injunction is usually dissolved upon the com- ing in of defendant's answer, denying under oath the allega- tions of the bill,^ so in the case of a receivership, if the answer under oath fully and satisfactorily denies the equities of the bill, or the material allegations upon which the ap- pointment was made, and these allegations are not sustained by any testimony in the case, the order of appointment will be reversed and the receiver removed."* It is said that the high prerogative act of taking property out of the hands of a party and putting it in pound ought not to be exercised except to prevent manifest wrong imminently impending. And when the court, upon the coming in of the answer, discovers that the danger is not imminent, and that there is no pressing necessity for the order, it may be revoked or modified on such terms as the court thinks wise.^ We may here state that it is not a sufficient cause for removing a re- ceiver of a judgment-debtor that he has employed the debtor as an agent to assist in collecting the assets, the receiver ' NicoU V. Boyd, 90 N. Y. 519. See Butler, 18 N. J. Eq. 220; Parkinson v. also Atty.-Genl. v. Day, 2 Madd. 246. Trousdale, 4 III. 367 ; Roberts v. An- •^ High on Receivers, § 826. derson, 2 Johns. Ch. (N. Y.) 202 ; » Citing Hollister v. Barkley, 9 N. H. Harris v. Sangston, 4 Md. Ch. Dec. 230; Armstrong V. Sanford, 7 Minn. 394 ; Kaighn v.P^uUer, 14N. J. Eq 419 ; 49; Anderson v. Reed, 11 Iowa 177; Schoefflcr v. Schwarting. 17 Wis. 30. Stevens v. Myers, 11 Iowa 183; Tay- ^ Citing Voshcll v. Hynson, 26 Md. lor V. Dickinson, 15 Iowa 483 ; Hatch 83: Drury v. Roberts, 2 Md. Ch. Dec. V. Daniels, 5 N. J. Eq. 14; Washer v. 157. Brown, 5 N. J. Eq. 81 ; Suffern v. ' Crawford v. Ross, 39 C^.a. 49. 270 ARREST OF DEFENDANT. § ^9^ being solvent and the trust otherwise properly executed.^ In many cases the debtor's knowledge of the business pecu- liarly qualifies him to render valuable services to the receiver. And the receiver should be served with notice and a specifi- cation of the grounds upon which the removal is sought.^ It may also be observed that where the order appointing a receiver was fraudulently procured, and was subsequently annulled, the receiver will be required to account for the fund intact, and will not be allowed any deductions.^ § 191. Arrest of defendant. — In New York, to authorize the arrest of a defendant in an action for alleged fraud- ulent disposition of his property, actual intent to defraud must be clearly established.^ Proof must be adduced of an actual and guilty intent to defraud creditors. A mere con- structive fraud such as the law implies because an act is done in violation of the statute or of the rights of the creditors at common law, is not sufficient.^ Hence an order of arrest against a partner who, with knowledge of the insolvency of the firm, paid individual debts with firm assets, was vacated. "^ Where there is no evidence of guilty knowledge, the debtor should not be subjected to arrest for acts of constructive fraud.''' The lex foi-i, as we have seen,^ gov^erns in cases involving the question of the right of arrest. ' Ross V. Bridge, 24 How. Pr. (N. Harwood, 30 Hun (N. Y.) 11. Com- Y.) 163. pare Neal v. Clark, 95 U. S. 704. - Bruns v. Stewart Mfg. Co., 31 Hun * Compare Wilson v. Robertson, 21 (N. Y.) 197. N. Y. 587 ; Menagh v. Whitwell, 52 N. ^ O'Mahoney v. Belmont, 37 N. Y. Y. 146. Super. Ct. 224. ' Sherill Roper Air Engine Co. v. ^ Hoyt V. Godfrey, 88 N. Y. 669. Harwood, 30 Hun (N. Y.) 11. See * Sherill Roper Air Engine Co. v. People v. Kelly, 35 Barb. (N. Y.) 444. ' See § 64. CHAPTER XIII. REIMBURSEMENT AND SUBROGATION. § 194. Void in part void in toto. § 192. Actual and constructive fraud — Security or reimbursement of purchaser. 193. No reimbursement at law. 195. Subrogation of purchaser to creditors' lien. " The law cares very little what a fraudulent party's loss may be, and exacts nothing for his sake." — Andrews, J., in Guckenheimer v. Angevine, 81 N. Y. 397. § 192. Actual and constructive fraud — Security or reimburse- ment of purchaser. — There is a plain and highly important distinction to be found in the authorities between actual and constructive fraud as affecting the question of repay- ment of the money actually advanced by a purchaser. If the transaction is fraudulent in fact it cannot stand even for the purpose of reimbursement or indemnity ;^ while if it is only constructively fraudulent,^ it may be upheld in favor of the vendee to the extent of securing restitution of the amount of the actual consideration given or paid by him, and only the excess of the property will be subjected to the creditor's debt.^ When the grantee purchases with- out actual notice of the fraud, but for a consideration which is so inadequate that it would be inequitable to allow the deed to stand as a conveyance, a court of equity may, upon appropriate allegations and proof, give it effect as a security for the consideration actually paid.* And in cases of mere ' Millington v. Hill, 47 Ark. 311; 'Wood v. Goff's Curator, 7 Bush Davis V. Leopold, 87 N. Y. 620 ; Shep- (Ky.) 63 ; Short v. Tinsley. i Met. herd v. W^oodfolk, 10 B. J. Lea (Tenn.) (Ky.) 398 ; Crawford v. Beard, 12 Ore. 598; Alley V. Connell, 3 Head (Tenn.) 458 ; Lobstein v. Lehn, 120 111. 555. 582. ' Van Wyck v. Baker, 16 Hun (N. « Lobstein v. Lehn, 20 Bradw. (III.) Y.) 171. See Clements v. Moore, 6 261. Wall. 312; McArthur v. Hoysradt, ll 272 ACTUAL AND CONSTRUCTIVE FRAUD. § 1 9; suspicious circumstances as to the adequacy of the consid- eration and fairness of the transaction the court will not entirely annul the conveyance, but on the contrary will so frame its judgment as to protect the purchaser to the amount of the money advanced.^ Again, where strangers to the fraud paid off valid incumbrances upon the property, they are held entitled to be reimbursed, and to be provided for in the decree, before the complainant's claim is satisfied.^ The rule is laid down by Chancellor Kent in the great and leading case of Boyd v. Dunlap,'^ that a deed, fraudu- lent in fact, will be declared absolutely void, and not per- mitted to stand as a security for any reimbursement or in- demnity, and this principle is upheld and followed in many cases.^ Thus in Shand v. Hanley,^ the vendee was not allowed to absorb the value of the premises in a claim for improvements made after constructive notice to her of the insecurity of her title, and of the equitable lien of the cred- itor. In Briggs v. Merrill,^ Johnson, J., said : A party bar- ofaininof with a debtor with fraudulent intent, " does it at the peril of having that which he receives taken from him Paige (N. Y.) 495. In Colgan v. Jones, was allowed to recover for improve- 44 N. J. Eq. 274, it appeared that a ments made in good faith where a deed debtor who had sustained personal in- to her was set aside as being in effect juries assigned his claim for $330 to voluntary. See Rucker v. Abell, 8 B. his attorney, who recovered thereon a Mon. (Ky.) 566; King v. Wilcox, 11 judgment of $4,000. It was decided Paige (N. Y.) 589. that the assignment as to the excess - Swan v. Smith, 57 Miss. 548. See beyond a reasonable compensation to Young v. Ward, 115 111. 264. the attorney for his services was void- ^ j Johns. Ch. (N. Y.) 478, able as to the debtor's antecedent * See Davis v. Leopold, Sj N. Y. 620 ; creditors. Union Nat. Bank v. Warner, 12 Hun ' United States v. Griswold, 8 Fed. (N. Y.) 306 ; Wood v. Hunt, 38 Barb. Rep. 504, citing Boyd v. Dunlap, i (N. Y.) 302 ; Briggs v. Merrill, 58 Barb. Johns. Ch. (N. Y.) 478 ; Crockett v. (N. Y.) 389 ; Alley v. Connell, 3 Head Phinney, 33 Minn. 157. See Taylor v. (Tenn.) 582; Shepherd v. Woodfolk, Atwood, 47 Conn. 508 ; Oliver V. Moore, 10 B. J. Lea (Tenn.) 598; Millington 26 Ohio St. 298; First Nat. Bank v. v. Hill, 47 Ark. 311, Bertschy, 52 Wis. 443; May on Fraud- = 71 N. Y. 323. ulent Conveyances, p. 235. In Borden •* 58 Barb. (N. Y.) 389. V. Doughty, 42 N. J. Eq. 314, a wife § 192 ACTUAL AND CONSTRUCTIVE FRAUD. ^/O by the creditors of the debtor whom he is attempting to defraud, without having any remedy to recover what he parts with in carrying out the bargain." The learned judge adds : " The law will leave him in the snare his own devices have laid." The court, in Stovall v. Farmers' and Mer- chants' Bank,* said that there was no rule which gave a lien under a fraudulent contract. Every person who enters into a fraudulent scheme forfeits all right to protection at law or in equity. The law does not so far countenance fraud- ulent contracts as to protect the perpetrator to the extent of his investment. This would be holding out inducements to engage in schemes of fraud, as nothing could be lost by a failure to effectuate the entire plan. Judge Spencer said he presumed there was " no instance to be met with of any reimbursement or indemnity afforded by a court of chan- cery to a particeps a'iminis in a case of positive fraud." ^ And Judge Story remarked, in Bean v. vSmith :^ " I agree to the doctrine laid down by Chancellor Kent in Boyd v. Dunlap"* and Sands v. Codwise,^ that a deed fraudulent in fact is absolutely void, and is not permitted to stand as a security for any purpose of reimbursement or indemnity ; but it is otherwise with a deed obtained under suspicious or inequitable circumstances, or which is only constructively fraudulent."^ " The loss of the amount paid by a fraudu- lent grantee is the penalty that the law indicts for the fraudulent transaction. To refund to such a grantee the amount he has paid would be to destroy the penalty."' It may be here observed that there seems to be author- ity for the proposition that loss resulting from depreciation may be apportioned between the debtor and tlie grantee, 1 16 Miss. 316. * 4 Johns. (N. Y.) 549. " Sands v. Codwise, 4 Johns. (N. Y.) " See Henderson v. Hunton, 26Gratt. 598. Compare note to Lore v. Dierkes, (Va.; 935 ; Coiron v. Millaudon.igHow. 16 Abb. N. C. (N. Y.) 47. 115. ^ 2 Mason 296, ' See Seivers v. Dickover, loi Ind. * I Johns. Ch. (N. Y.) 47S. 495. 498- 18 274 ACTUAL AND CONSTRUCTIVE FRAUD. 5 ^92 according to the sums respectively invested,^ when the con- veyance is attacked by creditors. Thus in Shaeffer v. Fithian,^ an insolvent purchased real estate for his wife, taking the title in her name, and advancing $2,460 of the consideration, the wife paying the balance of $4,000. The court ordered a sale of the property, and directed that twenty-four-hundred-and-sixty sixty-four-hundred-and-six- tieths of the proceeds of sale be applied in payment of the complainant's debt. The court, after observing that they could see no error in this decree to the prejudice of the wife, said : " She might well have been regarded as the sole owner of the property, and the quasi debtor of her husband. As such, she would be bound to bear the whole loss arising from depreciation of the property. The court below seems, however, to have considered the husband's interest as a kind of resulting trust in the property, making him in equity a tenant in common. This was certainly the most favorable view in behalf of the wife that could have been taken of the case. It results in saddling the loss arising from depreciation pro rata upon both parties." The Su- preme Court of Missouri say, in Allen v. Berry, ^ that there is no principle of equity which allows a fraudulent grantee to offset against the value of the property the amount he may have paid for it. " The fraud," observes Adams, J., " renders the deeds absolutely void as to creditors, and the plaintiff, who was a creditor, and as such became the pur- chaser, is entitled to recover the property and its rents, etc., as thouo:h no such fraudulent deeds ever had been made." Allowing the vendee to recover back the money would be in effect repaying him the amount which he expended in accomplishing the very thing which the law prohibits and condemns. As it was a wrong in him to obtain the title and the possession for a fraudulent purpose, it must be equally wrong to refund to him the price paid for it.* ' Shaeffer v. Fithian, 26 Ohio St. 282. ^ 50 Mo. 91. 2 26 Ohio St. 282. * McLean v. Letchford, 60 Miss. i8j. § 193 NO REIMBURSEMENT AT LAW. 275 § 193. No reimbursement at law. — While a court of equity, in setting aside a deed of a purchaser upon grounds other than those of positive fraud, annuls it upon terms, and re- quires a return of the purchase-money, or directs that the conveyance stand as a security for its repayment, this prin- ciple has no place as applied to an action at law. This constitutes one of the essential differences already dis- cussed^ between relief in equity and the judgment ex- tended by a court of law. The latter court, as we have said, can hold no middle course. The entire claim of each party must rest and be determined at law upon the single point as to the validity of the deed ; but it is the ordinary case in the former court to decree that a deed not abso- lutely void, yet, under the circumstances, inequitable as between the parties, may be set aside upon terms.^ ' See Chapter III., §§ 51, 60; Foster V. Foster, 56 Vt. 540. ° Coiron v. Millaudon, 19 How. 115. See Clark v. Krause, 2 Mackey (D. C.) 574 ; Drury v. Cross, 7 Wall. 299 ; Worthington v. Bullitt, 6 Md. 172. Flexible jurisdiction of equity. — In Clements v. Moore, 6 Wall. 312, a case which we have frequently quoted and cited, the court said : " A sale may be void for bad faith, though the buyer pays the full value of the property bought. This is the consequence, where his purpose is to aid the seller in perpetrating a fraud upon his cred- itors, and where he buys recklessly, with guilty knowledge. When the fact of fraud is established in a suit at law, the buyer loses the property without reference to the amount or application of what he has paid, and he can have no relief either at law or in equity. When the proceeding is in chancery, the jurisdiction exercised is more flex- ible and tolerant. The equity ai)pea!ed to, while it scans the transaction with the severest scrutiny, looks at all the facts, and giving to each one its due weight, deals with the subject before it according to its own ideas of right and justice. In some instances, it visits the buyer with the same consequences which would have followed in an ac- tion at law. In others, it allows a se- curity to stand for the amount advanced upon it. In others, it compels the buyer to account only for the difference be- tween the under price which he paid and the value of the property. In others, although he may have paid the full value, and the property may have passed beyond the reach of the process of the court, it regards him as a trustee, and charges him accordingly. Where he has honestly applied the property to the liabilities of the seller, it may hold him excused from further responsibility. The cardinal principle in all such cases is, that the property of th( debtor shall not be diverted from the payment of his debts to the injury of his credit- ors, by means of the fraud." See Tompkins v. Sprout, 55 Cal. 36. A grantee may be allowed for itnj)rove- ments. King v. Wilcox, 1 1 Paige (N. Y.) 589; see Shand v. Hanley, 71 276 VOID IN PART VOID IN TOTO. §§ 1 94, 1 95 § 194. Void in part void in toto. — We shall see presently, that, as a general rule, a transaction void in part for any cause is entirely void.^ Russell v. Winne~ is an illustra- tion of our meaning. In that case the question presented was whether a mortgage which was fraudulent against creditors as to a part of the property mortgaged, could be upheld as to the residue. The court decided that as the mortgage was a single instrument, given to secure one debt, to render it valid it must have been given in good faith, for the honest purpose of securing the debt, and without any intent to hinder or defraud creditors. Grover, J., continuing, said : " This cannot be true when the ob- ject, in part, or as to part of the property, is to defraud creditors. This unlawful design vitiates the entire instru- ment. The unlawful design of the parties cannot be con- fined to one particular parcel of the property. Entire honesty and good faith is necessary to render it valid ; and whenever it indisputably appears that one object was to defraud creditors to any extent, the entire instrument is, in judgment of law, void." § 195. Subrogation of purchaser to creditors' lien. — The doctrine of su-brogation is founded upon principles of equity and benevolence, and it may be decreed where no contract or privity of any kind exists between the parties.^ In Lidderdale v. Robinson,^ Chief-Justice Marshall said : " Where a person has paid money for which others v/ere responsible, the equitable claim which such payment gives him on those who were so responsible, shall be clothed with the legal garb with which the contract he has dis- charged was invested, and he shall be substituted, to every N. Y. 319, and the amount of incum- mins, 39 N. J. Eq. 577. Compare brances satisfied by the vendee may be Murphy v. Briggs, 89 N. Y. 446. allowed. Potter v. Gracie, 58 Ala. 303. ' See infra. Void and Voidable Acts. So when a conveyance is annulled a "^ 37 N. Y. 591, 596. mortgage in favor of a trust may be ' Cottrell's Appeal, 23 Pa. St. 294. validated. First Nat. Bank v. Cum- ■* 2 Brock. 168. § 195 SUBROGATION OF PURCHASER. 2/7 equitable intent and purpose, in the place of the creditor whose claim he has discharged." It may be noted that the party seeking subrogation must come into court with clean hands.^ This doctrine of subrogation is frequently in- voked in cases where fraudulent conveyances are annulled. Thus, in Selleck v. Phelps,'-^ it was said that a person who acquired the title to property under circumstances which enabled the creditors of the vendor to avoid the sale, whether he be a purchaser or a voluntary grantee, would, after the payment of the claims of attaching creditors, be subrogated to their rights so as to enable him to hold the property against subsequent attachments.^ Where goods were fraudulently conveyed but promptly seized by the creditors and sold by them, it was held that the fraudulent vendee should not be charged a greater sum than was real- ized upon the sale, and that he was entitled to a lien upon the proceeds of sale for the amount of a bona fide debt paid by the debtor out of the price given by the vendee.* The right of subrogation was recognized in Cole v. Mal- colm.^ It appeared that one Crawford conveyed real estate to his wife with intent to defraud creditors. Subsequently his wife died intestate and her heirs assigned the property to the defendant. One of Crawford's creditors then en- tered a judgment against him, and subsequently secured a decree setting aside the conveyance. The defendant then tendered the judgment-creditor the amount due him and demanded an assignment of the judgment against Craw- ford. The court held that under such circumstances, uj)()n ' Wilkinson v. Babbitt, 4 Dill. 207; ^ See Sheldon on Subrogation, §40. Railroad Co. V. Soutter, 13 Wall. 517; Compare Acker v. White, 25 Wend. Griffith V. Townley, 69 Mo. 13. The (N. Y.) 614; Tompkins v. Sprout, 55 doctrine of equitable subrogation will Cal. 31 ; Merrell v. Johnson, 96 111. 224. not be applied to relieve a party from a •* Flash v. Wilkerson, 20 Fed. Rep. loss occasioned by his own unlawful 257. Compare note to Lore v. Dicrkes, act. Guckenheimer v. Angevine, 81 16 Abb. N. C. (N. Y.) 47. N. Y. 394. ' 66 N. Y. 363 ; overruling the court ■ II Wis. 380. below, 7 Hun (N. Y.) 31. 278 SUBROGATION OF PURCHASER. § I95 payment of the judgment which he was obliged to satisfy in order to save his land from sale, the principles of justice and equity required that he should be subrogated to all the rights and securities of the judgment-creditor, especially as the latter had, when his judgments were paid, secured every- thing to which he was entitled.^ So then, again, the tend- ency of the court to prevent a merger where injustice would result, has been applied to cases of this character. Thus, in Crosby v, Taylor,^ it appeared that a grantee of land held it by a deed which was fraudulent as against the grantor's creditors. By a subsequent deed the grantee secured from a prior mortgagee a deed of quitclaim of all the latter's in- terest in the premises containing this clause, " which said mortgage is hereby cancelled and discharged." The court held that the deed constituted an assignment of the mort- gage and did not operate by way of merger of it as against the grantor's creditors. A fraudulent vendee may create a valid lien upon the property in favor of a mortgagee in good faith. ^ ' See Snelling v. Mclntyre, 6 Abb. ^ Murphy v. Briggs, 89 N. Y. 446 ; N. C. (N. Y.) 471. Compare Robin- First National Bank of Clinton v. Cum- son V. Stewart, 10 N. Y. 190. mins, 39 N. J. Eq. 577. " 15 Gray (Mass.) 64. CHAPTER XIV. INTENTION. § 196. What is intention ? 197. Actual intent not decisive. 198. Fraud of agent binding upon principal. 199. Mutuality of participation in fraudulent intent. 200. Intent afTecting voluntary alien- ations. § 201. or intention where consideration is adequate. 202. Intention to defraud subsequent creditors. 203. When question of intent res adjudicata. 204. Intent a question for the jury. 205. Testifying as to intent. 206. Proving intent. *' Where there is an actual intent to defraud, no form in which the transaction is put can shield the property so transferred from the claims of creditors." — Chief Judge Ruger in Bill- ings V. Russell, 101 N. Y. 226, 234. § 196.. What is intention? — Further .space cannot be de- voted to the discussion of the practical details of procedure in creditors' suits and proceedings. Let us next direct at- tention to a more complete consideration of the general principles and theories of law which these various remedies are devised to render effectual. The rules of evidence, which, as will appear, constitute a most important branch of the subject, will then be noticed in a general way. First, what is the fraudulent intent, under the statute of Elizabeth, which must ordinarily exist to enable a creditor to defeat the debtor's alienation?^ Sutherland, J., in Bab- cock V. Eckler.^ a case already cited, used these words : " Intent or intention is an emotion or operation of the mind, and can usually be shown only by acts or declara- tions ; and as acts speak louder than words, if a party does an act which must defraud another, his declaring that he did not by the act intend to defraud is wcighetl down by ' Harman v. Hoskins, 56 Miss. 142. ' 24 N. Y. 632. 280 WHAT IS INTENTION? § 1 96 the evidence of his own act."^ Fraud, it must l)e noted, does not consist in mere intention, but in intention acted out, or made effectual by hurtful acts,^ in conduct that operates prejudicially upon the rights of others, and which was so intended.^ A fraudulent purpose is an important element in the case, but it is not the only essential requi- site ; there must be superadded to it, besides the sale or transfer, actual fraud, hindrance, or delay resulting there- from to the creditors.* While it may possibly be true that the impressions, emotions, or operations of the mind are never effaced, yet they can be reproduced only by the per- son whose mind gave them birth. Their true nature can onl}'' be determined or guessed at by other persons from the color of the outward acts which the emotions inspired. Hence the court, as we have shown, will not be concluded by the statement of the debtor's mental operations, for he is usually an interested party ; nor will it accept his stand- ard of morality as its test. In Potter v. McDowell^ this language is used : " When a voluntary deed is made by a debtor in embarrassed circumstances, and a question arises as to its validity, in order to render the deed fraudulent in law as to existing creditors, it is not necessary to show that the debtor contemplated a frand in making it, or that it ' See Newman v. Cordell, 43 Barb, sioning an injury to some one." See (N. Y.) 456 ; Monteith v. Bax, 4 Neb. Masterton v. Beers, i Sweeny (N. Y.) 171. See §§8, 9, 10. 419. ■^ See §13. Learned, P. J., said in ^ Bunn v. Ahl, 29 Pa. St. 390. Com- Billings V. Billings, 31 Hun (N. Y.) 65, pare Smith v. Smith, 21 Pa. St. 370. 69: "There must be not only the in- •* Rice v. Perry, 61 Me. 150. tent, but the intent must be so carried ^ 31 Mo. 69. See White v. McPheet- out that some creditors are actually ers, 75 Mo. 294. In Wartman v. hindered, delayed, or defrauded Wartman, Taney's Dec. 370, Chief- A conveyance is made with fraudulent Justice Taney said: "As regards the intent only as to those who are in fact question, whether a contempt has or defrauded." In People v. Cook, 8 N. has not been committed, it does not Y. 67, 79, Willard, J., said : " Fraud depend on the intention of the party, can never, in judicial proceedings, be but upon the act he has done." See predicated of a mere emotion of the Cartwright's Case, 114 Mass. 239. mind, disconnected from an act occa- § 197 ACTUAL INTENT NOT DECISIVE. 28 1 was an immoral or corrupt act The law docs not concern itself about the private or secret motives which may influence the debtor"; he may believe he had the right to make it, and that it was his duty to do it, yet if the deed is voluntary, and hinders and delays his creditors, it is fraudulent. It may be observed here that a convey- ance is fraudulent if the grantor meant to hinder or defraud any of his creditors, and a charge conveying the idea that he must have meant to defraud all his creditors, is mislead- ing,^ Also that it is not necessary to show that the fraud- ulent intent constituted the sole purpose, but only that it constituted a part of. the purpose and design with which the scheme was entered into ; if it is 2i part of the scheme to hinder or delay creditors, the whole transaction is void.^ " The intent is the essential and poisonous clement in the transaction."^ It must be borne in mind that an intent to hinder, delay, or defraud, is sufficient to avoid the sale;'* it is not essential to show a union of these elements, though it must be conceded that it is not an easy task to distin- guish between an intent to hinder and an intent to delay.^ § 197. Actual intent not decisive. — The question of the donor's actual intent is not then necessarily decisive. A man may give his property to his wife or children in the belief that he has the right to do so, but if by so doing his existing creditors are hindered or delayed the conveyance will be set aside.*^ In Briorcrs v. MitchelF the court said : " The property conveyed to the wife so far exceeds in value the amount of the money which it was conveyed to secure, it is of itself sufficient to authorize the holding that the ' Allen V. Kinyon, 41 Mich. 282. •• See § 11. ^ Manning v. Reilly, 16 Weekly Dig. ' Rupe v. Alkire, 77 Mo. 642. See (N. Y.) 230 ; Holt V. Creamer, 34 N. J. Burgert v. Borchert. 59 Mo. 83. Eq. 187; Russell v. Winne, 37 N. Y. 'Winchester v. Charter, 97 Mass. 596, and cases cited ; Mead v. Combs, 140 ; Potter v. McDowell, 31 Mo. 62 ; 19 N. J. Eq. 112. Patten v. Casey, 57 Mo. 118. See 3 Moore v. Hinnant, 89 N. C. 455, Chaps. V., VI. 459 ; Worthy v. Brady, 91 N. C. 269. '' 60 Barb. (N. Y.) 316. 282 FRAUD OF AGENT. § I98 conveyance was fraudulent as against antecedent creditors, witliout the finding of actual or meditated fraud." In Lukins v. Aird/ Davis, J., said : " It is not important to inquire whether, as matter of fact, the defendants had a purpose to defraud the creditors of Aird, for the fraud in this case is an inference of law, on which the court is as much bound to pronounce the conveyance in question void as to creditors, as if the fraudulent intent were directly proved." " An act innocent in the intention may be so in- jurious in the consequences, that the law declares it to be a fraud and forbids it."^ That the debtor made the convey- ance to avoid the plaintiff's claim because he did not be- lieve it to be just will not sustain the transfer.^ This sub- ject has already been discussed.* § 198. Fraud of agent binding upon principal. — Warner V. Warren ^ establishes the principle that actual fraudulent intent, sufficient to avoid a transfer, need not be personal to the debtor. In this case a husband obtained a power of attorney from his wife authorizing him to transact business as her agent. By means of false statements he established a fictitious credit for her, incurred liabilities in her name, and then induced the wife to make an assignment. The wife was a guileless, artless woman, who took no part in the business, and intended to commit no wrong, but was a mere passive instrument in the hands of her husband, by whom the frauds were perpetrated. In avoiding the as- signment, in favor of an attaching-creditor, Grover, J., said that the husband's " objects became hers ; his frauds were her frauds ; and she is responsible therefor, however desti- tute of any knowledge thereof." This case is a valuable precedent, showing that intent may be established by im- 1 6 Wall. 79. 3 Barrett v. Nealon, 119 Pa. St. * Kisterbock's Appeal, 51 Pa. St. 171. 485. Compare Lawson v. Funk, 108 •* See §§ 8, 9, 10. 111. 507. 5 46 N. Y. 228. § 199 PARTICIPATION IN FRAUDULENT INTENT. 28 plication or substitution, and that mental operation or emo- tion is not necessarily the test.^ § 199. Mutuality of participation in fraudulent intent, — Generally speaking, to render a conveyance fraudulent and voidable as against creditors, there must have been mutu- ality of participation in the fraudulent intent, on the part of both the vendor and the purchaser.^ ' See §8. ■■'Curtis V. Valiton, 3 Mont. 157; Mehlhop V. Pettibone, 54 Wis. 652 ; Hall V. Arnold, 15 Barb. (N. Y.) 600; Wilson V. Prewett, 3 Woods 635 ; Hopkins v. Langton, 30 Wis. 379 ; Steele v. Ward, 25 Iowa 535 ; Schroe- der V. Walsh, 120 111. 403; Miller v. Byran, 3 Iowa 58 ; Chase v. Walters, 28 Iowa 460 ; Kittredge v. Sumner, 1 1 Pick. (Mass.) 50; McCormickv. Hyatt, 33 Ind. 546 ; Cooke v. Cooke, 43 Md. 522, 525 ; Fifield v. Gaston, 12 Iowa 218; Preston v. Turner, 36 Iowa 671 ; Drummond v. Couse, 39 Iowa 442 ; Kellogg V. Aherin, 48 Iowa 299; Rea V. Missouri, 17 Wall. 543 ; Leach v. Francis, 41 Vt. 670; Partelov. Harris, 26 Conn, 480 ; Ewing v. Runkle, 20 III. 448; Violett V. Violett, 2 Dana (Ky.) 323 ; Foster v. Hall, 12 Pick. (Mass.) 89 ; Byrne v. Becker, 42 Mo. 264 ; Bancroft v. Blizzard, 13 Ohio 30; Splawn V. Martin, 17 Ark. 146; Gov- ernor V. Campbell, 17 Ala. 566; Ruhl V. Phillips, 48 N. Y. 125; Jaeger v. Kelley, 52 N. Y. 274 ; Clements v. Moore, 6 Wall. 312 ; Astor v. Wells, 4 Wheat. 466 ; Howe Machine Co. v. Claybourn, 6 Fed. Rep. 441. Nopartictpaiio7i by infant in fraud- ulent intent. — The creditor is some- times embarrassed or foiled by a con- veyance to some person not sui juris, as for instance an infant. In Hamilton V. Cone, 99 Mass. 478, Gray, J., said : " The only case cited for the tenant which requires special consideration is that of Goodwin v. Hubbard, 15 Mass. 210. But in that case the person to whom the conveyance was made, as well as his subsequent grantee, the de- mandant, participated in the fraudulent intent of the debtor, who paid the purchase-money ; and the decision by which this court, having then no juris- diction in equity to redress fraud, held that a grantee who participated in the fraudulent intent could not maintain a writ of entry against a creditor who had taken the land on execution against the fraudulent debtor, cannot be ex- tended to this case, in which the de- mandant at the time of the conveyan'ce to him was an infant of less than a year old, and could not participate in the fraud, and there was no offer to show that the conveyance was without adequate consideration." Citing Howe V. Bishop, 3 Met. (Mass.) 30 ; Clark v. Chamberlain, 13 Allen (Mass.) 257. See Mathes v. Dobschuetz, 72 111. 438 ; Tenney v. Evans, 14 N. H. 343 ; s. C. 40 Am. Dec. 194. See, also, §26. In Matthews v. Rice, 31 N. Y. 460, it is asserted that the fact that the plaintiff was an infant and purchased partly upon credit from a firm in apparently straitened pecuniary circumstances, did not render the sale void in law as against creditors. The court said : " The infancy of the plaintiff did not alter or affect the transaction, save as a circumstance bearing upon the ques- tion of fraud in fact. There is no legal bar to the right of an infant to pur- 284 PARTICIPATION IN FRAUDULENT INTENT. § 1 99 In discussing this subject Chief-Justice Church used these words : " Nor is the vendor's fraudulent intent suffi- cient. The vendee must be also implicated."^ So in an- other case it is asserted that in order to set aside, as fraud- ulent against creditors, a conveyance to one creditor, he must have participated in or have been cognizant of the grantor's unlawful motives when he accepted the convey- ance.*^ In Prewit v. Wilson,^ Field, J., observed : " When a deed is executed for a valuable and adequate considera- tion, without knowledge by the grantee of any fraudulent intent of the grantor, it will be upheld, however fraudulent his purpose. To vitiate the transfer in such case, the grantee also must be chargeable with knowledge of the intention of the grantor." It is even held in Dudley v. Danforth,^ by the New York Commission of Appeals, that where a vendee purchased property solely with a view of receiving payment of an honest debt, an intent on the part of the debtor to hinder and defraud creditors would not affect the vendee's title, although the vendee had notice of thre intent, provided he did not participate in it.^ This would seem to justify action on the part of a creditor by chase property either for cash or upon embodied in Dudley v. Danforth may credit ; and the vendor cannot avoid well be doubted. The general rule is or retract the sale, or question its va- that notice of the debtor's fraudulent lidity on the ground that the vendee is design is fatal to the vendee's title, an infant, much less can a stranger im- Atwood v. Impson, 20 N. J. Eq. peach the sale on that ground. In this, 156, as in other cases of a sale of chattels. Rules as to corporations. — The rules its invalidity as to creditors depends governing fraudulent transfers are also upon whether it was made with intent applicable to corporations. See Curtis to defraud them." See Washband v. v. Leavitt, 15 N. Y. 9. In Graham v. Washband, 27 Conn. 424; Carter v. Railroad Co., 102 U. S. 161, Bradley, Grimshaw, 49 N. H. 100. J., said : " We see no reason why the ' Jaeger v. Kelley, 52 N. Y. 275. disposal by a corporation of any of its See Starin v. Kelly, 88 N. Y. 421. property should be questioned by sub- - Roe V, Moore, 35 N. J. Eq. 526. sequent creditors of the corporation, 3 103 U. S. 24. any more than a like disposal by an * 61 N. Y. 626, individual of his property should be so. '• Criticised in Roeber v. Bowe, 26 The same principles of law apply to Hun (N. Y.) 557. The proposition each," »^ 200 INTENT AFFECTING ALIENATIONS. 28s means of which the debtor could be deluded and a prefer- ence gained by the creditor vendee. § 200. Intent affecting voluntary alienations. — The rule as to intent in voluntary alienation, as we shall presently see, necessarily differs from cases where a valuable consideration is present. In the latter class of cases mutual participation in the fraudulent design must of course be established. Where the alienation is voluntary the invalidity may be predicated of the fraudulent intent of the vendor without regard to the knowledge or motives of the vendee. In such cases the vendee is, of course, cognizant of the fact that nothing was paid for the property. The cases relating to this branch of the inquiry are reviewed by the Supreme Court of Maine in Laughton v. Harden,^ an important case from which we have already quoted.^ Judge Story thus ' 68 Me. 213. See Tucker v. An- drews, 13 Me. 124; Lee v. Figg, 37 Cal. 328 ; Watson v. Riskamire, 45 Iowa 233 ; Stearns v. Gage, 79 N. Y. 102. ' See §§ 97, 98. T/te cases as to intent — Voluntary conveyances. — The court in Laughton V. Harden, 68 Me. 213, summarize the cases as follows : " In Hitchcock v. Kiely, 41 Conn. 611, it was decided that ' a voluntary conveyance, fraudu- lent in fact, will be set aside in favor of creditors, whether the grantee par- ticipated in the fraud or not.' In that case, the contending party was a cred- itor subsequent to the conveyance. In Beecher v. Clark, 12 Blatchf. 256, a voluntary conveyance was set aside for the benefit of both prior and subse- quent creditors. Hunt, J., says : ' I cannot assent to the proposition, that it is necessary that the grantee should have known that the intent of the grantor was fraudulent, and that she should have been an intentional party to the fraud. The fact that a wife re- ceived a voluntary conveyance of the same, in ignorance of these facts (show- ing fraud in fact), will not make the conveyance a valid one.' Savage v. Murphy, 8 Bosw. (N. Y.) 75, contains a learned and lengthy review by Hoff- man, J., of the earlier decisions by which subsequent purchasers and cred- itors were permitted to question con- veyances as being fraudulent against them, and this proposition is there laid down : ' Where a deed is made to de- fraud creditors, by one at the time in debt, and who subsequently continued to be indebted, it is fraudulent and void, as to all such subsequent as well as existing creditors.' See also Car- penter V. Roe, 10 N. Y. 227. In Mo- hawk Bank v. Atwater, 2 Paige (N. Y.) 54, Chancellor Walworth says : ' It is of no consequence in this suit whether the son knew of the extent of his fa- ther's indebtedness or not. The grantee without valuable consideration cannot be protected, although he was not privy to the fraud.' In Carter v. Crimshaw, 49 N. H. 100, the intent of minor chil- 286 WHERE CONSIDERATION IS ADEQUATE. § 201 States the rule borrowed from the civil law by both the common law and the courts of chancery : " Hence, all voluntary dispositions, made by debtors, upon the score of liberality, were revocable, whether the donee knew of the prejudice intended to the creditors or not."^ § 201. Of intention where consideration is adequate. — The rule that a voluntary conveyance of property by a debtor may be annulled at the suit of creditors, seems to commend itself as being both necessary and reasonable. The theory of the law is, as we have observed, that the debtor's prop- erty constitutes a fund upon which the creditors are sup- posed to have relied in extending the credit,^ and to which they are entitled to resort for payment of their claims. The plainest dictates of common sense, and the simplest principles of justice require that any depletion of this fund should not be permitted in favor of a voluntary alienee, in cases where creditors remain unpaid. Chief-Justice Shaw dren upon whom a settlement was made ' It (the allegation) avers that the con- was considered of no consequence at veyahce to Ogden was without consid- all. Coolidge v. Melvin, 42 N. H. 510, eration, and this is sufficient to avoid 534, sustains the same view. In Sav- it as to creditors of Lee (the grantor), age V. Murphy, 34 N. Y. 508, the same whether Ogden was aware of the fraud- idea is strongly presented by the court, ulent purpose of Lee and actively aided Among other things said about the it or not.' Lassiter v. Davis, 64 N. C. rights of subsequent creditors against a 498, decides that ' a voluntary gift is voluntary deed, this is added : ' The void, if it was the maker's intent to indebtedness then existing was merely hinder, delay, or defraud creditors, transferred, not paid, and the fraud is whether the party who takes the gift as palpable as it would be if the debts participated in the fraudulent intent or now unpaid were owing to the same not.' In Foley v. Bitter, 34 Md. 646, creditors who held them at the time of it was held to the same effect, and it is the transfers.' In Clark v. Chamber- there said : ' The innocence of the lain, 13 Allen (Mass.) 257, 260, Hoar, trustee, or of the creditors named in J., remarks : ' Where the purpose of the deed, will not save it (an assign- the grantor is shown to have been act- ment) from condemnation under the ually fraudulent as to creditors, it is statute (of Elizabeth) if fraudulent in sufficient to prove that the grantee fact on the part of the grantor.' " takes without consideration, without > Story's Eq. Jur. §§ 351, 353, 355 ; provmg otherwise his participation in Spaulding v. Blythe, 73 Ind. 94. the fraudulent intent.' Lee v. Figg, 37 ^ See Chap. II. Cal. 328, concludes an opinion thus : § 20I WHERE CONSIDERATION IS ADEQUATE. 287 said: "In a voluntary absolute conveyance, the fact that no consideration is paid is, of course, known to both parties. If the grantor was in debt at the time, as such conveyance must necessarily tend to defeat the rights of creditors, and as all persons are presumed to contemplate and intend the natural and probable consequences of their own acts, the conclusion is irresistible that such conveyance was intended to defeat creditors, and is therefore fraudu- lent." ^ A different question, however, is presented where full pecuniary consideration has been paid by the pur- chaser. Can the transfer be nullified in such cases, and if so, in what instances and upon what theory ? The answer is that, generally speaking, a debtor's conveyance can be set aside where it is made with a mutual fraudulent intent to hinder, delay, and defraud creditors, and that adequacy of consideration will not save it. In this class of cases "the question of intent becomes prominently material."'' Lord Mansfield said, in discharging a rule for a new trial in Cadogan v. Kennett:^ "If the transaction be not bona fide, the circumstance of its being done for a valuable consideration will not alone take it out of the statute. I have known several cases where persons have given a fair and full price for goods, and where the possession was actually changed, yet, being done for the purpose of de- feating creditors, the transaction has been held fraudulent, and therefore void." The "several cases" of which tliis learned jurist had knowledge, where conveyances founded ' Marden v. Babcock, 2 Met. (Mass.) purchaser not a creditor who should 104. See First Nat. Bank v. Bertschy, buy the property of a debtor, however 52 Wis. 443. adequate might be the consideration ^ Bradley v. Ragsdale, 64 Ala. 559. which he paid, with a knowledge that " A sale of property, even for full it was the intention of the debtor by value, in order to hinder or delay cred- the sale to put the property beyond the itors, both vendor and vendee knowing reach of his creditors, would be a mala the fraudulent purpose, cannot be up- fide purchaser and entitled to no pro- held." Treat, J., in Stinson v. Haw- tection as against creditors." kins, 4 McCrary 504. In Grcenleve v. ^ 2 Cowp. 434. Blum, 59 Tex. 127, the court say: "A 288 WHERE CONSIDERATION IS ADEQUATE. § 20I upon adequate consideration had been overturned by rea- son of the bad faith of the participants, have grown to thousands, and the subject has become one of vital in- terest and paramount importance. That a conveyance, whether it be of real or personal property, founded upon adequate consideration, may be vacated for fraud, is estab- lished in an endless variety of cases, a few only of which we will cite.^ In Wadsvvorth v. Williams,^ Hoar, J., in delivering the opinion of the Supreme Court of Massa- chusetts, said : " A conveyance made with an actual pur- pose and intent to defraud creditors, present or future, is not valid against them in favor of a grantee who partici- pates in the fraudulent intention, although made for a full consideration, and by a grantor in the possession of any amount of property." The learned Chief-Justice Black observed: "If a debtor, with the purpose to cheat his creditors, converts his land into money, because money is more easily shuffled out of sight than land, he of course commits a gross fraud. If his object in making the sale is known to the purchaser, and he nevertheless aids and as- sists in executing it, his title is worthless, as against credit- ors, though he may have paid a full price. But the rule is different when property is taken for a debt. One creditor of a failing debtor is not bound to take care of another. It cannot be said that one is defrauded by the payment of another. In such cases, if the assets are not large enough to pay all, somebody must suffer. It is a race in which it is impossible for every one to be foremost."^ It matters not what price was paid, or how early after the sale pos- session was changed, or how notorious the transaction was, ' Brinks v. Heise, 84 Pa. St. 251 ; 3 M. & S. 371 ; Covanhovan v. Hart, Ashmead v. Hean, 13 Pa. St. 584; Cox 21 Pa. St. 500; Grover v. Wakeman, V. Miller. 54 Tex. 27; Stinson v. Haw- 11 Wend. (N. Y.) 192; Stone v. Spen- kins, 13 Fed. Rep. 833 ; Hartshorn v. cer, 77 Mo. 359. Eames, 31 Me. 93 ; Holbird v. Ander- ^ 100 Mass. 130. son, 5 T. R. 235 ; Pickstock v. Lyster, - Covanhovan v. Hart, 21 Pa. St. 500. § 20I WHERE CONSIDERATION IS ADEQUATE, 289 if the vendor made the sale in order to defraud his creditors, and the vendee purchased with the design to aid him in the perpetration of the fraud, the sale is no more valid or ef- fectual against such creditors than as if no consideration had passed.^ The right of a debtor, even in failing circum- stances, to prefer a creditor,^ or to sell and dispose of his property in good faith and for value, to whomsoever he wishes, is generally unquestioned in the courts.^ Thus the intention to defeat an execution creditor will not render the sale fraudulent if it was made for a valuable considera- tion, and is bo7ia fide and absolute,^ So a confession of judgment with intent to give priority is valid. '^ The trans- fers w^hich we have instanced as objectionable are those which are merely colorable, or in which some secret right, benefit, favor, or interest is reserved to the debtor, or some unusual incident attends the transaction, stamping it as be- ing out of the ordinary course of business, and as having been contrived to hinder, delay, or defraud creditors. Pay- ment of the consideration is often in such cases a part of the scheme to more completely cover and conceal the fraud. Hence it is said that it is not the consideration, but the in- tent with which a conveyance is made, that makes it good or bad as to creditors.*^ In Jones v. Simpson "' it was said that where bad faith, in the vendor appeared the burden was cast upon the vendee to show consideration, and this being established the cred- ' Stone V. Spencer, 'j'] Mo. 359. 19 Grant (Ont.) 578 ; Nimmo v. Kay- " Bostwick V. Burnett, 74 N.Y. 319; kendall, 85 111. 476; Riches v. Evans, Hauselt v. Vilmar, 2 Abb. N. C, (N. 9 C. & P. 640; Frazer v. Thatcher, 49 Y.) 222; Gray V. McCallister, 50 Iowa Texas 26; Clark v. Morrell. 21 U. C. 497. Q. B. 6c» ; Darvill v. Terr)-. 6 H. & N. ^ Hobbs V. Davis, 50 Ga. 214 ; Hall 807. V, Arnold, 15 Barb. (N. Y.) 599. "^ Beards v. Wheeler. 1 1 Hun (N. Y.) * Wood V. Dixie, 7 Q. B. 892 ; Storey 539 ; Holbird v. Anderson. 5 T. R. 235. V. Agnew, 2 Bradw. (HI.) 353 ; Wilson See § 1 1. V, Pearson, 20 111. 81; Francis v. Ran- « Hunters v. Waite, 3 Gratt. (Va.) kin, 84 111. 169; Dudley v. Danforth, 26 ; Lockhard v. Beckley, 10 W. Va.96. 61 N. Y. 626; Dalglish v. McCarthy, ' 116 U. S. 610. 19 290 INTENTION TO DEFRAUD. § 202 iters must assume the burden of attacking the vendee's good faith. This seems to state the rule correctly, but general expressions to the effect that proof of bad faith in the vendor throws the burden of establishing both consider- ation a7id good faith upon the vendee are frequently en- countered in the authorities. § 202. Intention to defraud subsequent creditors. — We have elsewhere seen that, generally speaking, a voluntary aliena- tion is, as to existing creditors, presumptively fraudulent, but, as to subsequent creditors, a fraudulent intent must be proved or established.^ While a conveyance made to de- fraud a subsequent judgment-creditor is within the statute,' it seems to be laid down in some of the cases that subse- quent creditors can only avail themselves of the fraud which is practiced against them.^ In Simmons v. Ingram"* the court said : " To make a deed void as to subsequent creditors, there must be proof of an intent to defraud them ; it is not sufficient that there is an intent to defraud others whose debts were in existence at the time." ^ In Florence Sewing Machine Company v. Zeigler,^ it was held that in order to avoid a sale founded upon an adequate new consideration — that is, not in payment of an antecedent debt — on the alleged ground that it was made to hinder, delay, and defraud creditors, the creditor attacking the sale must show two things : first, that the vendor made the sale with such intent, and second, that the purchaser participated in such intent, or knew of its existence, or had knowledge of ' Rose V. Brown, n W. Va. 134; 3 Harlan v. Maglaughlin, 90 Pa. St. Shand v. Hanley, 71 N. Y. 319-322 ; 293 ; Snyder v. Christ, 39 Pa. St. 499 ; Burdick v. Gill, 2 McCrary 488 ; Flor- Monroe v. Smith, 79 Pa. St. 459 ; Kim- ence S. M. Co. v. Zeigler, 58 Ala. 224 ; ble v. Smith, 95 Pa. St. 69 ; Haak's Harlan v. Maglaughlin, 90 Pa. St. 293, Appeal, 100 Pa. St. 62. See Mullen v. Wilson, 44 Pa. St. 416 ; ■'60 Miss. 898. Partridge v. Stokes, 66 Barb. (N. Y.) ' Citing Hilliard v. Cagle, 46 Miss. 586 ; Herring v. Richards, I McCrary 309 ; Prestidge v. Cooper, 54 Miss. 74. 574 ; City Nat. Bank v. Hamilton, 34 Compare Teed v. Valentine, 65 N. Y. N. J. Eq. 160. See Chapters V., VI. 474, and cases cited. '^ Hoffman v. Junk, 51 Wis. 614. ' 58 Ala. 224. §§ 203, 204 RES ADJUDICATA. 29 1 some fact calculated to put him on inquiry, and which if followed up would have led to the discovery that the vend- or's intent was fraudulent.^ § 203. When question of intent res adjudicata. — In Stock- well v. Silloway*^ the Supreme Court of Massachusetts said : " To prove the intent of the defendant in making the conveyances alleged to be fraudulent in the charges filed by the plaintiff, it was competent to show other fraud- ulent conveyances made about the same time, and as a part ' ~ of the same scheme of fraud. For this purpose the plain- tiff introduced the record of a judgment of the Superior Court rendered in proceedings between the same parties, under the provisions of the general statutes in relation to poor debtors, adjudging the defendant guilty of the charges therein alleged against him. The plaintiff asked the court to rule that this judgment was conclusive evidence that the conveyances set forth in the former case as fraudulent, and upon which the defendant was then convicted, were fraud- ulent, as alleged. We are of opinion that the court erred in refusing this ruling. When a fact has once been put in issue and determined by a final judgment in the course of a judicial proceeding, such judgment is conclusive evidence of the existence of the fact in all controversies between the same parties in which it is material. It is to be re yarded as a fixed fact between the parties for all purposes." ^ § 204. Intent a question for the jury. — The question of fraudulent intent is almost uniformly one of facf* to be sub- mitted to a jury,^ and it is regarded as error for the court to interfere With the province of the jury in this particular," ' Crawford v. Kirksey, 55 Ala. 282. ^ Weaver v. Owens, 16 Ore. 304. • 113 Mass. 385. " Peck v. Crouse, 46 Barb. (N. Y.) ^ See Burlen v. Shannon, 99 Mass. 151; Montcith v. Bax, 4 Neb. 171; 200, and cases cited ; Commonwealth Vance v. Phillips, 6 Hill (N. Y.) 433 ; V. Evans, loi Mass. 25 ; Dennis' Case, Hobbs v. Davis, 50 Ga. 214; Murray no Mass. 18. v. Burtis, 15 Wend. (N. Y.) 214 ; Syra- ^ Morgan v. Hecker, 74 Gal. 543. cuse Chilled Plow Co. v. Wing, 85 N. 292 INTENT A QUESTION FOR THE JURY. § 204 unless, as we have seen/ the fraud is apparent on the face of the instrument from a legal construction of it.*^ In determining the intent great latitude is allowed.^ The rule as to submission to the jury is not departed from even in strong and apparently conclusive cases. If the jury err the verdict may be set aside. Thus, in Vance v. Phillips,"* it appeared that an insolvent merchant sold his entire stock of goods to an infant, who was also his clerk and brother- in-law, taking the infant's note in payment, and then ab- sconded. A verdict of a jury, affirming the validity of the transaction, was promptly set aside as contrary to evidence.^ Especially will the verdict be overturned where it is appar- ent that the jury must have misapprehended the evidence.^ By statute, in New York the question of fraudulent intent in these cases " shall be deemed a question of fact, and not of law,'"^ and it was strenuously claimed in behalf of the vendee, in the recent and well-considered case of Coleman v. Burr,^ that there was no finding by the referee of a fraudulent intent ; but that on the contrary he had found the whole transaction to be fair and honest, and that there- fore the transaction should stand. The court say, however, that the referee has " found facts from which the inference of fraud is inevitable, and although he has characterized the transactions as honest and fair, that does not make them innocent, nor change their essential character in the eye of the law. Mr. Burr [the debtor] must be deemed to have intended the natural and inevitable consequences of his acts, and that was to hinder, delay, and defraud his credit- Y. 426 ; Van Bibber v. Mathis, 52 Tex. ^ See also Dodd v, McCravv, 8 Ark. 409; Winchester V. Charter, 102 Mass. 83; Potter v. Payne, 21 Conn. 362; 272 ; Peiser v. Peticolas, 50 Tex. 638. Marston v. Vultee, 12 Abb. Pr. (N. Y.) ^ See §§ 8, 9, 10. 143. - Van Bibber v. Mathis, 52 Tex. 409. ^ Edwards v. Currier, 43 Me. 474. ' Winchester v. Charter, 102 Mass. ' 2 N. Y. R. S. 137, §4. 2^76. ® 93 N. Y. 31, See Neisler v. Harris, '6 HilKl ". 115 Ind. 565. § 205 TESTIFYING AS TO INTENT. 293 ors."^ This principle has already been discussed in the opening chapter,^ but in view of the peculiar wording of the New York statute, it is deemed important to give the construction placed upon it by the court of final resort.'^ § 205. Testifying as to intent. — A party being a witness may testify as to his intention in performing an act where such intention becomes material.'* The purchaser may, in answer to a question, testify directly that he did not have any fraudulent intent and that the purchase was made in good faith. That it is proper to put such a question to the purchaser was directly decided in the case of Bedell v. Chase,^ though the contrary seems to be held in Minne- sota.® In Blaut v. Gabler ''' this question was asked : " Had anything transpired between Blaut and yourself — conversa- tion or otherwise — whereby you gave him to understand, or whereby it was understood, that the transaction was for an improper purpose, or the purpose of defrauding your creditors ? " The court decided that the question was prop- erly excluded upon the theory that it did not call for a statement of the witness as to his intent to defraud, but went far beyond this, and asked for a conclusion from what had transpired. The question was characterized as being indefinite and complicated, and as not coming within the rule which sanctions an inquiry as to the intent of a party. As a general rule, it is proper to allow the parties to testify concerning their intentions,^ though this class of testimony ' Citing Bump on Fraud. Conv. (3d See Hale v. Taylor. 45 N. H. 406 ; ed.) 22, 24, 272, 278 ; Cunningham v. Royce v. Gaian, 76 Ga. 79 ; Sedgwiclc Freeborn, 11 Wend, (N. Y.) 241 ; Ed- v. Tucker, 90 Ind. 281. gell V. Hart, 9 N. Y. 213; Ford v. '34 N. Y. 386; Starin v. Kelly, 88 Williams, 24 N. Y. 359 ; Babcock v. N. Y. 422. Eckler, 24 N. Y. 623, 632. ' Hathaway v. Brown, 18 Minn. 414. •■' See §§ 9, 10. ' 77 N. Y. 465. ^ See, as to intent to violate usury " Bedell v. Chase, 34 N. Y. 3S8 ; statutes, Fiedler v. Darrin, 50 N. Y. Griffin v. Marquardt, 21 N. Y. 121 ; 4j8. Snow V. Paine, 1 14 Mass. 520 ; Thacher ^ Graves v. Graves, 45 N. H. 323. v. Phinney, 7 Allen (Mass.) 146 ; Sey- 294 PROVING INTENT. § 206 is necessarily subjected to close scrutiny. When the cir- cumstances present conclusive evidence of a fraudulent in- tent, no proof of innocent motives, however strong, will overcome the presumption ; but where the facts do not necessarily prove fraud, but only tend to that conclusion, the evidence of the party who made the conveyance, when he is so circumstanced as to be a competent witness, should be received for what it may be considered worth. ^ It is believed, however, not to be proper to allow a witness to testify concerning the intent or motive of another per- son.' §206. Proving intent. — In King v. Poole ^ the court said: " In investigating an alleged fraud, the relevancy of a given fact does not depend upon its force, but upon its bearing. Does it bear, either directly or indirectly, with any weight whatever, on the main controversy or any material part of it ? Not only is fraud subtle, but that in- gredient of a transaction which renders it fraudulent in fact, namely intention, is covered up in the breast, hidden away in the heart. Outward manifestations of it may be slow in appearing, and when they do appear, may be dim and indistinct. To interpret their meaning, or the full meaning of any one of them, it may be necessary to bring them together and contemplate them all in one view. To mour V. Wilson, 14 N. Y. 567. An ac- duct of another." Riley v. Mayor, etc. cused person may testify as to his in- of N Y., 96 N. Y. 337. And it was tention in receiving a certain sum of said in the case last cited that : " Evi- money. People v. Baker, 96 N. Y. dence of a secret and undisclosed in- 340. tent, entertained by one party at the ' Seymour v. Wilson, 14 N. Y. 569, time of the making of a contract, either 570 ; s. P. Edwards v. Currier, 43 Me. express or implied, is not admissible to 474 ; Forbes v. Waller, 25 N. Y. 430 ; vary the legal presumptions arising Wheelden v. Wilson, 44 Me. i ; Miner from the acts and conduct of the par- V. Phillips, 42 111. 123. ties." Riley v. Mayor, etc. of N. Y., 96 5 See Hathaway V. Brown, 22 Minn. N. Y. 339. See Talcott v. Hess, 31 216 ; Peake v. Stout, 8 Ala. 647. " It Hun (N. Y.) 285. is not competent for one person to ' 61 Ga. 374. See Kempner v. state the motives influencing the con- Churchill, 8 Wall. 369. § 206 PROVING INTENT. 295 do this, one has to be picked up here, another there, and so on till the collection is complete." ^ Great latitude is allowed.^ On an inquiry as to the state of mind, senti- ments, or disposition of a person at a particular period, his declarations and conversations are admissible.' In con- cluding this chapter we may recall to the reader's attention the rule that if a transaction is entered into for the purpose of defrauding any creditor it is voidable at the suit of all creditors.* » Burdick V, Gill, 7 Fed. Rep. 668. Angevine, 15 Blatch. 537; Baker v. * Winchester v. Charter, 102 Mass. Kelly, 41 Miss. 703. 276 ; Rea v. Missouri, 17 Wall, 542. •* Allen v. Rundle, 50 Conn. 31. See s I Greenleat's Ev. § 108 ; Tyler v. Warner v. Percy, 22 Vt. 155. CHAPTER XV. CONSIDERATION. § 207. Concerning consideration and good faith. Voluntary conveyances. What is a valuable considera- tion } Love and affection. Transfer for grantor's benefit. 212. Ante-nuptial settlement — Mar- riage as consideration. 213. Illicit intercourse. 214. Illegal consideration. 208 209 210. 211, §215. Moral obligations. 216. Individual and copartnership debts. 217. Future advances. 218. Services by members of a family. 219. Proof of consideration. 220. Recitals of consideration as evi- dence. 221. Explaining recitals. 222. Sufficient consideration. 223. Insufficient consideration. § 207. Concerning consideration and good faith. — Consid- eration has been said to consist " either in some right, in- terest, profit, or benefit accruing to the one party, or some forbearance, detriment, loss, or responsibility, given, suf- fered, or undertaken by the other." ^ The subject cannot be here considered from an elementary point of view in all its ramifications, but its general bearing upon our particular topic will be briefly noticed. It will be found upon inves- tigation that, generally speaking, the question of considera- tion becomes important in the class of litigation under dis- cussion only in bona fide transactions. If the alienation is effected with a mutual design to hinder, delay, or defraud creditors, the presence of even the most bounteous or ade- quate consideration will not save or cure it.^ Thus a mort- 1 Currie v. Misa, L. R. 10 X. 162. 5 See Chap. XIV. Billings v. Rus- sell, loi N. Y. 232 ; Boyd v. Turpin, 94 N. C. 137. In Bradley v. Ragsdale, 64 Ala. 559, the court say : " If the conveyance be upon a valuable consid- eration, then the question of intent be- comes prominently material. The con- sideration may be paid in money — may be valuable and fully adequate, yet if it was made ' with intent to hinder, delay, or defraud creditors, purchasers, or § 207 CONSIDERATION AND GOOD FAITH. 297 gage though given for a just debt may be assailed as fraud- ulent.^ Unilateral evil intent will not, of course, suffice to overturn the transaction.^ '' Mala fides'' s-^ys Mr. May, " supersedes all inquiry into the consideration, but bona fides alone is not always sufficient to support a transaction not founded on any valuable consideration."^ The inadequacy of the consideration, as is elsewhere shown, is not a matter which the court will go into, except in so far as it may constitute evidence tending to show that the transaction was a sham ;^ and the law will not " weigh considerations in diamond scales."^ Though grossly inadequate consider- ation will render a conveyance fraudulent,*' the avoidance may be only to the extent of the inadequacy.'' Generally speaking, as we have already seen, the question whether a conveyance is fraudulent or not depends upon its being made upon good consideration arid bona fide. It is not sufficient that it be upon good consideration or bojia fide ; it must be both.^ The separation of these elements is fatal to the transaction as against creditors.^ This rule is con- cisely stated in a recent case of much importance in the United States Supreme Court. " It is not enough," says Woods, J., " in order to support a settlement against cred- other persons, of their lawful suits, ' May on Fraud. Conveyances, p. damages, forfeitures, debts, or de- 233. mands,' it is void, and stands for noth- ^ Per Sir W. M. James in Bayspoole ing." Citing Code of 1876, §2124; v. Collins, 18 W. R. 730. Planters' & M. Bank v. Borland, 5 Ala. * Per Lord Talbot, as quoted by Wil- 531 ; Cummings v. McCullough, 5 Ala. mot, C. J., in Roe v. Mitton, 2 Wils. 324; Hubbard v. Allen, 59 Ala. 283; 358 n. Howell V. Mitchell, in manuscript. ' Singree v. Welch, 32 O. S. 320. ' Billings V. Russell, loi N. Y. 233 ; See Rooker v. Rooker, 29 O. S. i. Syracuse Chilled Plow Co. v. Wing, 85 ' Jamison v. McNally. 21 O. S. 295. N. Y. 421, 426 ; Schmidt v. Opie, 33 See Black v. Kuhlman, 30 O. S. 196. N. J. Eq. 141 ; Blennerhassett v. Sher- " Sayre v. Fredericks, 16 N. J. Eq. man, 105 U. S. 117. 209; Schmidt v. Opie, 33 N. J. Eq. ' Prewit v. Wilson, 103 U. S. 24 ; 141 ; Billings v. Russell, loi N. Y. 232. Wood v. Stark, i Hawaiian Rep. 10; citing the text. Herring v. Wickham, 29 Gratt. (Va.) ' See § i 5. 628. See Chap. XIV. 298 - VOLUNTARY CONVEYANCES. § 208 itors, that it be made for a valuable consideration. It must be also bona fide. If it be made with intent to hinder, delay, or defraud them, it is void as against them, although there may be in the strictest sense a valuable or even an adequate consideration."^ "Forms," said Elliott, J., in a very recent case, " are of little moment, for where fraud appears courts will drive through all matters of form and expose and punish the corrupt act. A conveyance is not protected, although full consideration is paid, where grantor and grantee unite in a fraudulent design to defraud cred- itors."^ § 208. Voluntary conveyances. — It is perhaps unnecessary to observe that a voluntary conveyance " implies the total want of a substantial consideration,"^ or " is a deed without any valuable consideration." ^ Such a transfer is more easily susceptible to attack than a conveyance founded upon an adequate consideration ; for a transfer by a debtor without consideration, made for the purpose of defrauding his cred- itors, can be impeached by the creditors for fraud, even though the grantee was ignorant of the fraudulent purpose for which the covinous conveyance was given. ^ The onus of establishing a fraudulent intent is avoided. In Lee v. Figg" the court observed that whether the voluntary alienee participated in and aided the covinous intent or not was immaterial ; " he was not a purchaser in good faith." The ' Blennerhassett v. Sherman, 105 U. ' Buck v. Voreis, 89 Ind. 117; Bill- S. 117. See Twyne's Case, 3 Rep. 80 ings v. Russell, loi N, Y. 226. (2 Coke 212) ; Holmes v. Penney, 3 ' Washband v. Washband, 27 Conn. Kay & J. 90 ; Gragg v. Martin, 12 431. Allen (Mass.) 498 ; Brady v. Briscoe, * Seward v. Jackson, 8 Cow. (N. Y.) 2 J. J. Mar. (Ky.) 212 ; Bozman v. 430. Draughan, 3 Stew. (Ala.) 243 ; Farm- ^ Lee v. Figg, 37 Cal. 328 ; Beecher ers' Bank v. Douglass, 19 Miss. 469; v. Clark, 12 Blatchf. 256 ; Laughton v. Bunn V. Ahl, 29 Pa. St. 387 ; Root v. Harden, 68 Me. 213 ; Mohawk Bank v. Reynolds, 32 Vt. 139 ; Kempner v. At water, 2 Paige (N.Y.) 54 ; Hitchcock Churchill, 8 Wall. 362 ; Kerr on Fraud v. Kiely, 41 Conn. 611; Carter v. Grim- & Mistake, p. 200. shaw, 49 N. H. 100. See Chap. XIV. * 37 Cal. 336. § 209 VALUABLE CONSIDERATION. 299 distinction may be restated as follows : A voluntary gift or settlement is voidable if it was the intent of the maker to hinder, delay, or defraud creditors, whether the party who received the gift participated in the fraudulent intent or not ; an absolute conveyance for a valual)le consideration is good, notwithstanding the intent of the maker to de- fraud, unless the other party participated in the fraud.^ We have elsewhere shown that, in the majority of the cases, a voluntary alienation is regarded as presumptively fraudu- lent as to existing creditors,^ while in other cases this pre- sumption is conclusive.^ Where, however, a corporation, or individual, perfectly solvent at the time, and having no actual intent to defraud creditors, disposes of lands or prop- erty for an inadequate consideration, or by a voluntary con- veyance, subsequent creditors of the corporation cannot question the transaction.* If, as we have seen, it was made with the design to defraud subsequent creditors, this will render it fraudulent. It must be remembered, however, that in New York the question of fraudulent intent is in all cases to be deemed a question of fact, and not of law, and it is declared that no conveyance or charge shall be adjudged fraudulent as against creditors or purchasers solely on the ground that it was not founded on a valuable consideration.^ It is not per se void even as to existing creditors.^ § 209. What is a valuable consideration ? — Mucii has been said concerning the true import of the expression " a valu- ' Lassiter v. Davis, 64 N. C. 498. ' Babcock v. Eckler, 24 N. Y. 629 ; ' Lloyd V. Fulton, 91 U. S. 485 ; Dunlap v. Hawkins, 59 N. Y. 345 ; Holden v. Burnham, 63 N. Y. 74 ; Dygert v. Remerschnider, 32 N, Y. Dunlap V. Hawkins, 59 N. Y, 342 ; 629. Compare Coleman v. Burr, 93 Donnebaum v. Tinsley, 54 Tex. 365. N. Y. 31 ; Genesee River Nat. Bank v. * City Nat. Bank v. Hamilton, 34 N. Mead, 92 N. Y. 637 ; Emmerich v. J. Eq. 160. Compare McCanless v. Hefferan, 21 J. & S. (N. Y.) loi : Jack- Flinchum, 89 N. C. 373. son v. Badger, 109 N. Y. 632. * Graham v. Railroad Company, 102 " Dygert v. Remerschnider, 32 N. Y. U. S. 148. See Chap. VI. 629. 300 VALUABLE CONSIDERATION. § 2O9 able consideration." Certainly a moneyed consideration for an assignment of goods greatly disproportionate to the value of the property transferred would not take a convey- ance out of the statute against covinous alienations. The consideration must be adequate ; not that the courts will weigh the value of the goods sold and the price received, in very nice scales, but after considering all the circum- stances they will hold that there should be a reasonable and fair proportion between the price and the value. Cases in which the question of inadequacy of consideration arises between the grantor and grantee of a deed, where suit is instituted for the purpose of setting aside the grant on the ground of imposition, are not applicable in determining a question of the fairness of a consideration between a vendee and creditor under the statute concerning fraudulent con- veyances. Such inadequacy of consideration as would in- duce a court to set aside a conveyance at the instance of the grantor on the ground of imposition, presents an en- tirely different question from that degree of inadequacy which would avoid an assignment on the ground of fraud, in a suit instituted by a creditor or purchaser against the alleged fraudulent assignee. A grantor must of necessity make out a stronger case, calling for the interference of the courts, than a creditor, because the latter is not a partici- pant in the transaction, is guilty of no negligence or fraud, and belongs to a favored class. Unreasonable inadequacy of price is evidence of a secret trust, and it is said to be prima facie evidence that a conveyance is not bona fide if it is accompanied with any trust.^ In Cook v. Tullis^ the court observed that " a fair exchange of values may be made at any time, even if one of the parties to the transac- tion be insolvent."" It is said in the New York Court of Appeals that a ' Kuykendall v. McDonald, 15 Mo. '^ 18 Wall. 340. 420. » See Stewart v. Piatt, loi U. S. 738. § 2IO LOVE AND AFFECTION. 3OI valuable consideration is something mutually interchanged between the parties, and that it is not necessary that the subject-matters should be of equal values.^ It is also es- tablished that a gratuity cannot be subsequently con- verted into a debt so as to become the consideration of a conveyance made by the grantor to the injury of his cred- itors.* § 210. Love and affection. — In Mathews v. Feaver ^ Sir Lloyd Kenyon said: "This is a transaction between the father and the son, and natural love and affection is men- tioned as part of the consideration, upon which, as against creditors, I cannot rest at all. It is true it is a considera- tion which, though not valuable, is yet called meritorious, and which in many instances the court will maintain, but not against creditors." Natural love and affection is a sufficient consideration for a gift or voluntary transfer be- tween a brother and a sister,'* but as a general rule a con- veyance for such a consideration cannot be supported against the rights of existing creditors.^ It was said in Hinde's Lessee v. Longworth,*' and the rule is still good, that " a deed from a parent to a child, for the consideration of love and affection, is not absolutely void as against cred- itors. It may be so under certain circumstances ; but the mere fact of being in debt to a small amount would not make the deed fraudulent, if it could be shown that the grantor was in prosperous circumstances, and unembarras- sed, and that the gift to the child was a reasonable pro- vision according to his state and condition in life, and leav- ing enough for the payment of the debts of the grantor." The same principle appertains generally to conveyances founded upon such consideration.'^ ' Dygert v. Remerschnider, 32 N. Y. ' Moreland v. Atchison, 34 Tex. 351. 642. ** 1 1 Wheat. 213. '^ Clay V. McCally, 4 Woods 605. ' Good and valuable consideration. — ^ I Cox Eq. Cas. 278, 280. Judge Stor)- observes, i Story's Eq. * Arderson V. Dunn, 19 Ark. 658. Jur. §354: "A good consideration is 302 TRANSFER FOR GRANTOR's BENEFIT. §§2 11,212 § 211. Transfer for grantor's benefit. — As was observed by Peck, J., in Stanley v. Robbins,^ one cannot transfer his property " in consideration of an obligation for support for life, or perhaps for support for any considerable length of time, unless he retains so much as is necessary to satisfy existing debis."^ In Crane v. Stickles^ the court said : " It seems, that one week before the plaintiff's note fell due, they i.ook a sweeping sale of all the property of which the defendant was possessed, real and personal, and obligated themselves that they would support her for the same, as the only consideration, paying nothing and agreeing to pay nothing, only by way of support — and leaving nothing for the payment of debts. Now if the law would tolerate a proceeding like this, any person, having the means, may make ample provision for himself and family during life, at the expense of his creditors. But that would not be permitted." § 212. Ante-nuptial settlement — Marriage as consideration. — An ante-nuplial settlement, though made by the in- sometimes used in the sense of a con- tice. 2 Black. Com. 297 ; i Fonbl. Eq. sideration which is valid in point of B. i, c. 4, § 12, note. Deeds made law; and then it includes a meritorious upon a good consideration only, are as well as a valuable consideration, considered as merely voluntarj' ; those Hodgson V. Butts, 3 Cranch 140 ; Copis made upon a valuable consideration are V. Middleto ■ , 2 Madd. 430 ; Twyne's treated as compensatory. The words Case, 3 Rep. 8 1 (2 Coke 212); Taylor 'good consideration' in the statute, V. Jones, 2 Atk. 601 ; Newland on Con- may be properly construed to include tracts, c. 23, p. 386 ; Partridge v. Gopp, both descriptions ; for it cannot be Ambler 598, 599; s. C. i Eden 167, doubted that it meant to protect con- 168; Atherley on Mar. Sett. c. 13, pp. veyances made bona fide and for a 191, 192. But it is more frequently valuable consideration, as well as those used in a sense contradistinguished made bona fide upon the consideration from valuable ; and then it imports a of blood or affection. Doe v. Rout- consideration of blood or natural affec- ledge, Cowp. 708, 710, 711. 712 ; Copis tion, as when a man grants an estate v. Middleton, 2 Madd. 430 ; Hodgson to a near relation, merely founded upon v. Butts, 3 Cranch 140 ; Twyne's Case, motives of generosity, prudence, and 3 Rep. 81 (2 Coke 212)." natural duty. A valuable considera- ' 36 Vt. 432. tion is such as money, marriage, or the - See Crane v. Stickles, 15 Vt. 252 ; like which the law esteems as an equiv- Briggs v. Beach, 18 Vt. 115; Wood- alent given for the grant, and it is ward v. Wyman, 53 Vt. 647. therefore founded upon motives of jus- ' 15 Vt. 257. §212 ANTE-NUPTIAL SETTLEMENT. 303 tended husband with the design of defrauding his credit- ors, will not be set aside in the absence of the clearest proof of the wife's participation in the fraud.* In Magniac V. Thompson the court said : " Nothing can be clearer, both upon principle and authority, than the doctrine that to make an ante-nuptial settlement void, as a fraud upon creditors, it is necessary that both parties should concur in, or have cognizance of, the intended fraud. If the settler alone intended a fraud, and the other party have no notice of it, but is innocent of it, she is not and cannot be affected by it. Marriage, in contemplation of the law, is not only a valuable consideration to support such a settlement, but is a consideration of the highest value, and from motives of the soundest policy is upheld with a steady resolution."^ The courts are averse to annulling such a settlement, be- cause there can follow no dissolution of the marriage which was the consideration for it.^ The marriage subsists in full force even though one of the parties should forever be rendered incapable of performing his or her part of the marital contract.^ Marriage is not only a valuable consideration, but, as Coke says, there is no other consideration so much re- spected in the law.^ The wife is deemed to be a pur- chaser of the property settled upon her in consideration of the marriage, and she is entitled to hold it against all claim- ants.^ In Sterry v. Arden '' Chancellor Kent observed : ' Prewit V. Wilson, 103 U. S. 22. Wickham, 29 Gratt. (Va.) 62S ; An- See § 199. drews v. Jones, 10 Ala. 400. '7 Pet. 348, 393; approved and ^Herring v. Wickham, 29 Gratt. adopted in Prewit v. Wilson, 103 U. S. (Va.) 635. 22, 24; Frank's Appeal, 59 Pa. St. 194 ; "' See Bishop's Law of Married Wotn- Wright V. Wright, 59 Barb. (N. Y.) en, 775, 776 ; Magniac v. Thompson, 505, affi'd 54 N. Y. 437 ; Comer v. 7 Peters 348. Allen, 72 Ga. 12. '"' Herring v. Wickham, 29 Gratt. » Prewit V. Wilson, 103 U. S. 22 ; (Va.) 628. Barrow v. Barrow, 2 Dick. 504 ; Nairn ' i Johns. Ch. (N. Y.) 260-271 ; V. Prowse, 6 Ves. 752; Campion v. affirmed Verplank v. Sterry, 12 Johns. Cotton, 17 Ves. 264; Sterry v. Arden, (N. Y.) 536. 1 Johns. Ch. (N. Y.) 261 ; Herring v. 304 ANTE-NUPTIAL SETTLEMENT. § 212 " The marriage was a valuable consideration, which fixed the interest in the grantee against all the world ; she is re- garded from that time as a purchaser, and as much so as if she had then paid an adequate pecuniary consideration. .... It is the constant language of the books, and of the courts, that a voluntary deed is made good by a subsequent marriage, and a marriage has always been held to be the highest consideration in law." ^ It is unnecessary to dilate upon this branch of the subject. Where the wife partici- pated in the fraudulent intent and scheme the transaction may of course be annulled.^ The difficulties of implicating the wife in the fraudulent scheme are from the very nature of things often insuperable. Our meaning is illustrated by the language of Mr. Justice Field in a recent case which we have frequently cited : " It is not at all likely, judging from the ordinary motives governing men, that, whilst pressing his suit with her, and ofTering to settle property upon her to obtain her consent to the marriage, he informed her that he was insolvent, and would, by the deed he pro- posed to execute, defraud his creditors. If he intended to commit the fraud imputed to him, it is unreasonable to suppose that he would, by unfolding his scheme, expose his true character to one whose good opinion he was at that time anxious to secure. If capable of the fraud charged, he was capable of deceiving Mrs. Prewit as to his pecuniary condition. She states in her answer that she knew he was embarrassed and in debt, but to what extent, or to whom, she did not know, and that it was because of the knowl- edge that he w^as embarrassed that she insisted upon his making a settlement upon her." ^ This is perhaps an ex- treme case, but it illustrates the statement already ad- ' Jones' Appeal, 62 Pa. St. 324 ; ' Ex parte McBurnie, i De G., M. Armfield v. Armfield, Freem. Ch, & G. 441 ; Fraser v. Thompson, 4 De (Miss.) 311 ; Smith v. Allen, 5 Allen G. & J. 659. (Mass.) 454 ; Andrews v. Jones, 10 Ala. ^ Prewit v. Wilson, 103 U. S. 23. 400 ; Barrow v, Barrow, 2 Dick. 504. §2 13 ILLICIT INTERCOURSE. 3O5 vanced, that the creditor will be forced to travel a thorny pathway to annul an ante-nuptial settlement. It is some- times urged that the courts should not encourage a prac- tice the result of which is, so to speak, to allow a man to barter for a wife for a pecuniary consideration.^ This is scarcely a fair view of the transaction. By marriage the woman assumes new duties and responsibilities ; forsakes a home to which the marriage will ordinarily unfit her to return ; promises to live with her husband, and to bear her share of the burdens and cares of the family. Surely in assuming these responsibilities she is entitled to guard against poverty and distress. § 213. Illicit intercourse. — A contract the consideration of which is future illicit cohabitation is said to be utterly void.'^ But a conveyance in consideration of past cohabi- tation, intended or regarded as reparation or indemnity for the wrong done, is treated at common law as founded on a good consideration, and may be upheld.^ A transfer, how- ever, to a mistress or her children, by way of gift or ad- vancement, although not looking to future cohabitation, and intended merely as a provision for maintenance, is in- valid as against existing creditors.* This distinction is manifestly important. In Wait v. Day'^ the court said, that although the debtor " may have been under no legal liability to the defendant, yet if he paid the money in dis- charge of what he deemed a moral obligation to indemnify the defendant against the consequences which iiad already resulted from their illicit intercourse, I think the case would not be within the statute. He had made her the mother 1 " There is certainly something very ' Potter v. Gracie, 58 Ala. 305 ; Jack- repulsive in the idea of a parent bar- son v. Miner, loi III. 559. tering off an amiable and accomplished ' Ibid. daughter for lands and negroes, as he ' Potter v. Gracie, 58 Ala. 305. would sell a lamb for the shambles." » 4 I^en. (N. Y.) 439, 444. Davidson v. Graves, Riley's (S. C.) Eq. 236. 20 306 ILLEGAL CONSIDERATION. § 21 4 of two illegitimate children, and was at liberty to refund the money which she had already expended for the neces- sary support and education of those children. Where there is an existing obligation, either legal or moral, to pay so much money, and the payment is not made with any refer- ence to the future, nor by way of mere gratuity, the case is not within the mischief against which the legislature in- tended to provide." The same principle was applied in Fellows V. Emperor.^ In that case the grantee had been deceived into a marriage with the grantor, and had inno- cently lived with him for years, supposing she was his law- ful wife. It subsequently transpired that he had another wife living, whereupon she left him. The court, in sus- taining the conveyance, held that the grantor was under the strongest moral, if not legal obligation, to compensate the grantee for her services, arid to indemnify her as far as he could in a pecuniary point of view, against the conse- quences of his fraudulent and illegal acts. The conveyance was upheld against creditors.^ § 214. Illegal consideration. — One who has freely paid his money upon an illegal contract is particeps crimmis, and no cause of action arises in his favor upon an implied promise to repay it. But when an insolvent debtor, or one in embarrassed circumstances, pays his money upon such illegal consideration, he stands, in relation to his creditors, in the same position as if he had made a voluntary convey- ance of his property. In contemplation of law he has in ifact parted with his money for no consideration,^ because ' 13 Barb. (N. Y.) 97. also Leighton v. Orr, 44 Iowa 679 ; "^ Improper influences. — Conveyances Dean v. Negley, 41 Pa. St. 312; Kes- made by a dissolute man to a prosti- singer v. Kessinger, 37 Ind. 341. See tute, who had a strong influence over § 13 and note on "Undue Influence," him, may be annulled. Shipman v. giving the substance of the opinion in Furniss, 69 Ala. 555, and cases cited ; Shipman v. Furniss, 69 Ala. 555. S. C. 44 Am. Rep. 528, and the learned ^ i Story's Eq. §§ 353, 354; Clark v. note of Irving Browne, Esq., at p. 537 ; Gibson, 12 N. H. 386. §§ 215, 2l6 COPARTNERSHIP DEBTS. 3O7 it is no consideration which can be set up in a court of law.^ § 215. Moral obligations. — A debtor may acknowledge and prefer a claim barred by the statute of limitations, and such conduct is not conclusive evidence of a want of good faith ;^ and he is not bound to set up the statute of frauds ;' and an agreement by a husband to convey certain lands to his wife in consideration of her relinquishing an inchoate interest in his lands, which she carried out. is founded upon a valid consideration which the husband had a right to dis- charge.* So it is not absolutely necessary to the bo)ia fides of a charge of interest in an account, that it should be of such a character that it might be recovered in a suit at law brought by a creditor against his debtor. There are many dealings amongst men in which interest is habitually charged and paid, when it could not be claimed on the ground of strict legal right. These transactions are re- garded as fair and just as between the parties, and they cannot be considered fraudulent as to others.^ §216. Individual and copartnership debts. — One partner, it is asserted, cannot usually make a valid transfer of firm property in payment of his individual debt without the consent of his copartner.^ It is said that every one is bound to know that a partner has no right to appropriate the partnership property to the payment of his individual debts, and if one so deals with him he must run the risk of the interposition of partnership rights.' This broad propo- sition is disputed in Schmidlapp v. Currie.^ Tlic court ' Weeks v. Hill, 38 N. H. 205. See But compare Collinson v. Jackson, S infra. Void and Voidable Acts. Sawyer 357. 'French v. Motley, 63 Me. 326; ■* Spencer v. Ayrault, 10 N. V. 205. Keen v. Kleckner, 42 Pa. St. 529. ' Hartley v. White. 94 Pa. St. 36 ; » Cresswell v. McCaig, 11 Neb. 227 ; Todd v. Lorah, 75 Pa. St. 155. But see Cahill V. Bigelow, 18 Pick. (Mass.) Crook v. Rindskopf. 105 N. V. 482. 369. •' Todd V. Lorah, 75 Pa. St. 156. * Brown v. Rawlings, 72 Ind. 505. ' 55 Miss. 600. See Crook v. Rinds- kopf, 105 N. Y. 4S2. 308 COPARTNERSHIP DEBTS. § 2l6 said : "The firm creditors at large of a partnership have no lien on its assets, any more than ordinary creditors have upon the property of an individual debtor. The power of disposition over their property, inherent in every partner- ship, is as unlimited as that of an individual, and the jus disponendi in the firm, all the members co-operating, can only be controlled by the same considerations that impose a limit upon the acts of an individual owner, namely, that it shall not be used for fraudulent purposes. So long as the firm exists, therefore, its members must be at liberty to do as they choose with their own, and even in the act of dissolution they may impress upon its assets such character as they please. The doctrine that firm assets must first be applied to the payment of firm debts, and individual prop- erty to individual debts, is only a principle of administra- tion adopted by the courts, where from any cause they are called upon to wind up the firm business, and find that the members have made no valid disposition of, or charges upon, its assets."^ A transfer by one of the partners, or a lien created by him on the corpus of the partnership prop- erty to pay an individual debt has been in effect declared in New York to be fraudulent and void as to the creditors of the firm, unless the firm was solvent at the time.^ But Chief-Justice Ruger said in Crook v. Rindskopf :^ "It is lawful for an insolvent member of a firm, to devote his in- dividual property to the payment of firm debts, to the ex- clusion of his individual creditors."'* The authorities as to what dispositions of individual or of copartnership assets will be upheld as against the respective classes of creditors ' See Roach v. Brannon, 57 Miss. Shanks v. Klein, 104 U. S. 18; Crook 490. Distinguished in Goodbar V. Gary, v. Rindskopf, 105 N. Y. 482. 4 Woods 668. 3 105 N. Y. 482. - Menagh v. Whitwell, 52 N. Y. 146; •* Citing Dimon v. Hazard, 32 N. Y. Goodbar v. Gary, 4 Woods 668. See 65 ; Saunders v. Reilly, 105 N. Y. 12 ; Wilson V. Robertson, 21 N. Y. 587; Royer Wheel Co. v. Fielding, loi N. Keith V. Fink, 47 111. 272. Compare Y. 504; Kirby v. Schoonmaker, 3 Barb. Case V. Beauregard, 99 U. S. 119; Ch. (N. Y.) 46. §§ 2 17, 2l8 FUTURE ADVANCES. 3O9 are not in very satisfactory shape. It seems perfectly clear, however, that where the courts get possession of the funds for distribution, the distinction between the rights of the tvv^o classes of creditors will be respected and preserved. § 217. Future advances. — A judgment or mortgage may be taken and held as security for future advances and re- sponsibilities to the extent of the security, when that forms a part of the original agreement between the parties.^ " It is frequent," says Chief-Justice Marshall, " for a person who expects to become more considerably indei)ted, to mortgage property to his creditor, as a security for debts to be contracted, as well as for that which is already due."* But in order to secure good faith and prevent error and imposition in dealing, it is necessary that the agreement, as contained in the record of the lien, whether by mortgage or judgment, should give all the requisite information as to the extent and character of the contract.^ § 218. Services by members of a family, — In the absence of an express agreement the law will not imply a promise to pay a daughter for services rendered in the debtor's family,* and a mortgage given to a daughter under such circumstances, will be held to be without consideration, and fraudulent as against creditors.*^ A conveyance by an insolvent husband to his wife, in pursuance of a contract to compensate her for services in taking care of his aged mother, who resided with him, has been held in New York to be invalid and voidable as against creditors. The Court » Truscott V. King, 6 N. Y. 1 57, and * MiHer v. Sauerbier, 30 N. J. Eq. 74 ; cases cited ; Robinson v, Williams, 22 Irish v. Bradford, 64 Iowa 303. N. Y. 380. See Ackerman v. Hun- ' Gardner's Admr. v. Schooley. 25 sicker, 85 N. Y. 50. N. J. Eq. 150. See Ridgway v. Eng- « United States v. Hooe, 3 Cranch Hsh. 22 N. J. Law 409 ; Updike v. 89. See Lawrence v. Tucker, 23 How. Titus, 13 N. J. Eq. 1 51 ; Coley v. Coley, 14; Leeds V. Cameron. 3 Sumner 492, 14 N. J. Eq. 350; Updike v. Ten per Story, J.; Conard v. Atlantic Ins, Broeck, 32 N. J. Law 105; I'rickctt v. Co., I Pet. 448, Prickett, 20 N. J. Eq. 478. ^ Hart V. Chalker, 14 Conn. 77. 3IO PROOF OF CONSIDERATION. §219 of Appeals of that State decided that the wife, by render- ing service to her husband's mother, was simply perform- ing a marital duty which she owed to her husband ; that where she received no payment for the discharge of this duty from the person to whom the service was ren- dered, and was entitled to none, and brought no money or property to the husband by her service, she could not stipulate for compensation.^ Earl, J., said : " It would operate disastrously upon domestic life, and breed discord and mischief if the wife could contract with her husband for the payment of services to be rendered for him in his home ; if she could exact compensation for services, dis- agreeable or otherwise, rendered to members of his family ; if she could sue him upon such contracts, and establish them upon the disputed and conflicting testimony of the members of the household. To allow such contracts would degrade the wife by making her a menial and a servant in tne home where she should discharge marital duties in lov- ing and devoted ministrations, and frauds upon creditors would be greatly facilitated, as the wife could frequently absorb all her husband's property in the payment of her services, rendered under such secret, unknown contracts."^ § 219. Proof of consideration. — In Hanford v. Artcher,-^ in speaking of the presumption of fraud arising from a failure to change possession, the court said that, to rebut this presumption, the statute imposed upon the party claim- ing under a sale or a mortgage, the burden of proving good faith and an absence of any intent to defraud cred- itors. " Proof of a valuable consideration," said Senator Hopkins, " or an honest debt, is essential to show good faith ; and, if there be no such proof, I take it that the ' Coleman v. Burr, 93 N. Y. 17, 25 ; Y. 344; Birkbeck v. Ackroyd, 74 N. Y. S. C. 17 Weekly Dig. (N. Y.) 233. Com- 356; Reynolds v. Robinson, 64 N.Y.589. pare Filer v. N. Y. Central R.R. Co., ^ See Grant v. Green, 41 Iowa 88; 49 N. Y. 47 ; Whitaker v. Whitaker, 52 Dovvell v. Applegate, 8 Sawyer 427. N. Y. 368 ; Brooks v. Schwerin, 54 N. ^ 4 Hill (N. Y.) 295. ^§ 2 20, 221 EXPLAINING RECITALS. 3 II requirement of the statute in this respect is not complied with, and that the court may order a nonsuit Such proof of consideration, too, must go beyond a mere paper acknowledgment of it, that might be binding be- tween the paities." It is said by Chief-Justice Elliott, in Rose V. Colter,^ that "if it be shown that a valuable con- sideration was paid for the property, and that when the sale was made the seller was possessed of property far more than sufficient to pay all his debts, the presumption arising from the retention of possession is plainly overcome." As we have already said, there ought to be a fair and reason- able consideration corresponding to the value of the article sold.=^ § 220. Recitals of consideration as evidence. — It is said in Hubbard v. Allen, ^ that when a controversy arises between the grantee and an existing creditor as to the validity of a conveyance, it is a settled rule to regard the recital of a consideration as a mere declaration or admission of the grantor, and not as evidence against the creditor.^ § 221. Explaining recitals. — A conveyance of land made by a husband to his wife purported to be executed in con- sideration of love and affection, " and for the sum of one dollar cash in hand paid, the receipt whereof is hereby acknowledged," The court held that, the money consider- ation being- manifestly nominal, parol evidence was inad- missible, in an action brought to set aside the deed as in fraud of creditors, to show that there was in fact an ade- quate pecuniary consideration.^ But, in another case, where the consideration expressed in the deed was " five hundred ' 76 Ind. 593. Ala. 137 ; McCaskle v. Amarine, 12 ^ State V. Evans, 38 Mo. 150-154. Ala. 17; Falkner v. Leith, 15 Ala. 9; See § 209. Dolin v. Gardner, 15 Ala. 758. See ^ 59 Ala. 296. Kimball v. Fenner, 12 N. H. 248. ■• Citing McCain v. Wood, 4 Ala. ' Houston v. Blackman, 66 Ala. 559, 258; Branch Bank of Decatur v. Kin- 564; Galbreath v. Cook, 30 Ark. 417, sey, 5 Ala. 9 ; McGintry v. Reeves, 10 See Potter v. Gracie, 58 Ala. 308. 312 EXPLAINING RECITALS. § 221 dollars and other good causes and considerations," it was held competent to prove the consideration of blood. -^ This general subject is referred to in Hinde's Lessee v. Long- worth,^ where it was said, that if the evidence had been offered for the purpose of showing that the deed was given for a valuable consideration, and in satisfaction of a debt, and not for the consideration of love and affection as ex- pressed in the deed, it might well be considered as contra- dicting the deed. It would then be substituting -aivaluable for a good consideration, and a violation of the well-settled rule of law% that parol evidence is inadmissible to annul or substantially vary a written agreement.^ The subject was further considered in Betts v. Union Bank of Maryland,'* a case argued by Reverdy Johnson on one side, and by Roger B. Taney, afterward Chief -Justice of the United States, on the other, and the conclusion of the court was that marriage cannot be o-iven in evidence as the consider- ation of a deed of bargain and sale expressed to be made for a money consideration only.^ A mortgage, the ex- pressed consideration for which was $i,ooo, may be ex- plained by showing that it was in fact given to secure the mortgagee against liability on two accommodation notes of $500 each.^ The recital that the consideration has been paid may generally be contradicted by parol evidence \'^ and ' Pomeroy V. Bailey, 43 N. H. 118. shown that the consideration was a '^ II Wheat. 214. moneyed one. This would be proving 2 See Cunningham v. Dwyer, 23 Md. by parol that the consideration was 219. different m kzttd from that expressed * I Harr. & G. (Md.) 175. in the deed, and upon well-considered 5 Galbreath v. Cook, 30 Ark. 425 ; authority, is not allowable." Davidson v. Jones, 26 Miss. 63. In " McKinster v. Babcock, 26 N. Y. Scoggin V. Schloath, 15 Ore. 383, the 378. See Truscott v. King, 6 N. Y. court said : " The better rule appears 147 ; Lawrence v. Tucker, 23 How. 14. to be that if the consideration expressed 'Bingham v. Weiderwax, i N. Y. in the deed is natural love and affec- 514; Baker v. Connell, i Daly (N. Y.) tion, it cannot be shown to have been 470; Altringer v. Capeheart, 68 Mo. executed for a valuable consideration; 441; Miller v. McCoy, 50 Mo. 214; or if voluntary, or on consideration of Rhine v. Ellen, 36 Cal. 362, 370; San- marriage and the like, it cannot be ford v. Sanford, 61 Barb. (N. Y.) 302 ; §§ 2 2 2, 2 23 SUFFICIENT CONSIDERATION. 3I3 indeed there seems to be a prevalent tendency in the courts to admit parol proof of the true consideration of a deed in almost every case, though the fight is kept up to exclude evidence of consideration different in kind from that set forth in the instrument. Manifestly the recitals are not binding upon creditors in any event. §222. Sufficient consideration. — A bond given by a minor son to his father in consideration of permission to leave home and work for himself, or for his board while he re- mains at home and works on his own account, if bona fide, is neither against the policy of the law nor fraudulent as to creditors.^ And where a wife advances to her husband money to purchase land, under an agreement that the money shall be repaid to her children and its payment secured by mortgage, the contract is valid and may be set up as a defense to a suit charging the husband with mort- gaging the lands to his children in fraud of creditors.^ § 223. Insufficient consideration. — A deed from a debtor to his creditor is voluntary and not founded on a sufficient consideration if it is given for a pre-existing debt which was afterward treated by the parties as still due.^ And, as against creditors of an insolvent, a party cannot make title to his property as a purchaser for a valuable consideration, where what purports to be the consideration is a debt against a third person which is found as matter of fact to be worthless ; and this is true even though the transaction was in good faith on the part of the vendee.* Arnot V. Erie Railway Co., 67 N. Y. Adams v. Hull, 2 Denio (N. V.) 306 ; 321; Baker V. Union Mutual Life Ins. Miller v. jMcKenzie, 95 N. Y. 578: Co., 43 N. Y. 287 ; Harper v. Perry, 28 Scogs^in v. Schloath, 15 Ore. 383. Iowa 63; Lawton v. Buckingham, 15 ' Geist v. Geist, 2 Pa. St. 441. Iowa 22; Pierce v. Brew, 43 Vt. 295; - Goff, Assignee, v. Rogers, 71 Ind, Anthony v. Harrison, 14 Hun (N. Y.) 459. 2rC); Morris v, Tillson, 81 Tli. 616; 'Oliver v. Moore, 23 Ohio .St. 479 ; Taggart v. Stanbery, 2 McLean 54.6; Starr v. Starr, i Ohio 321. Wheeler v. Billings, 38 N. Y. 264; ^ Sevmour v. Wilson, 19 N. Y. 417. CHAPTER XVI. INDICIA OR BADGES OF FRAUD. ! 224. The creditor's embarrassments — rProof of fraud. 225. Badges of fraud defined. 226. Question for the jury. 227. Circumstantial and direct evi- dence. 228. Recital of fictitious considera- tion. 229. Antedating instrument. 230. Description of the property. 231. Conveyance of whole estate. 232. Inadequacy of purchase price. 233. Transfer pending suit. 234. Evidence of secrecy. § 235. Suppression or concealment — Subsequent fraud. 236. Evidence aliunde. 237. Concealment in fraud of bank- rupt act. 238. Absolute conveyance by way of security. 239. Insolvency. 240. Sales upon credit. 241. Unusual acts and transactions. 242. Effect of relationship upon debt- or's transactions. 243. /*r/;«^/i2«V cases of fraud. 244. Comments. § 224. The creditor's embarrassments — Proof of fraud. — The practical difficulties which a creditor encounters in seeking to discover equitable assets, or to reach property fraudulently alienated by the debtor, have already been the subject of comment.^ A transaction or conveyance having every appearance of fairness and legality, and to which the ordinary presumptions of good faith attach,^ is usually pre- sented at the threshold of the litigation. The debtor, and the fraudulent alienees acting in collusion with him, will be found, in most instances, to have taken every precaution to hide the evidences and traces of their frauds,^ and, ordi- narily, the guilty participants develop into witnesses pro- lific of plausible statements and ingenious subterfuges de- vised to uphold the colorable transactions. An intent to defraud is not published to the world, but, on the contrary. ' See §§ 5, 6, 13. = See § 6. 3 Cowling V. Estes, 1 5 Bradw. (111.) j6i. § 224 creditor's embarrassments. 315 the usual course of the participants is to give to the con- tract the appearance of an honest transaction, and to have the conduct of the interested parties correspond, as far as possible, with a bona fide act.^ Parties practicing fraud almost uniformly resort to expedients to conceal the evi- dence of it.^ Fraud always takes a tortuous course, and endeavors to cover and conceal its tracks.^ Lord Mans- field said :. " Hardly any deed is fraudulent upon the mere face of it."* Chief-Justice Bricknell observed : " Where a fraud is contemplated and committed upon creditors, con cealment of it is the first, and generally the most persistent, effort of those who are engaged in it. Publicity would render their acts vain and useless. Leaving direct and positive evidence accessible to those injured by it would be the equivalent of a confession of the culpable intent, and of the defeasible character of the transaction. There are numerous circumstances, so frequently attending sales, conveyances, and transfers intended to hinder, delay, and defraud creditors, that they are known and denominated badges of fraud. They do not constitute — are not ele- ments of fraud, but merely circumstances from which it may be inferred."^ The question presents itself, how can a creditor most effectually thwart the deep-laid schemes of the debtor and his fraudulent alienees, and overcome the usual jircsump- tions of honesty and good faith which the parties will in- voke ? No witness can look into the minds of the parties and thus be able to swear positively that they intended to defraud the creditors of the vendor ; and, hence, as we have already shown in this discussion,*' fraud can generally ' Tognini V. Kyle, 15 Nev. 468. MVorseley v. De Mattos, i Burr. "■ Sarle v. Arnold. 7 R. I. 585 ; Cowl- 467. 484. ing V. Estes, 15 Bradw. (111.) 261. ' Thames v. Rembert, 63 Ala. 567 ; 3 Marshall v. Green, 24 Ark. 418. Weaver v. Owens, 16 Ore. 304; Hick- See § 13. man v. Trout, 83 V'a. 491. ' See § 13. o 1 6 PROOF OF FRAUD. § 224 be established only by facts and circumstances which tend directly or indirectly to indicate its existence.^ Experience shows that positive proof of fraudulent acts is not gener- ally to be expected, and for that reason, among others, the law allows a resort to circumstances as the means of ascer- taining the truth. '^ "A deduction of fraud," says Kent, " may be made not only from deceptive assertions and false representations, but from facts, incidents, and circum- stances which may be trivial in themselves, but decisive evidence in the given case of a fraudulent design." ^ " Cir- cumstances altogether inconclusive," says Clifford, J.,^ " if separately considered, may, by their number and joint oper- ation, especially when corroborated by moral coincidences, be sufficient to constitute conclusive proof." Or they may be "a link in a chain, which, altogether, is very strong."^ Wills says:*^ "Although neither the combined effect of the evidence, nor any of its constituent elements, admits of numerical computation, it is indubitable, that the proving power increases with the number of the independent cir- cumstances and witnesses, according to a geometrical pro- gression. ' Such evidence,' in the words of Dr. Reid, ' may be compared to a rope made up of many slender filaments twisted together. The rope has strength more than suffi- cient to bear the stress laid upon it, though no one of the filaments of which it is composed would be sufficient for that purpose.' " ''' It can seldom be the duty of the court to instruct the jury that a single fact will warrant the jury in finding fraud. All the facts surrounding the transaction must be taken into account collectively.^ The judgment must be based " upon all the circumstances of the particular ' Thomas v. Sullivan, 13 Nev. 249; ^ Engraham v. Pate, 51 Ga. 537. Wheelden v. Wilson, 44 Me. 18. " Wills on Circumstantial Ev., p. * Castle V. Bullard, 23 How. 172, 273. 187; Goshorn v. Snodgrass, 17 W. Va. ■> Citing Reid's Essay on the Intel- 717. lectual Powers, Chap. III. ^ 2 Kent's Com., p. 484. "Sleeper v. Chapman, 121 Mass. ■* Castle V. Bullard, 23 How. 187. 404-409. § 225 BADGES OF FRAUD. 317 case."^ The frequency with which fraud is practiced upon creditors ; the difficulties of its detection ; the powerful motives which tempt an insolvent debtor to commit it;^ the plausible casuistry by means of which it is sometimes reconciled to the consciences even of persons whose pre- vious lives have been without reproach ; these are the con- siderations which prevent the court from classinjr it among the grossly improbable violations of moral dutv ; and there- fore judges often presume it from facts which may seem slight.^ " Fraud," says the Supreme Court of Iowa. " can- not always be shown by direct evidence, but is usually proved by circumstances. Neither can the knowledge of or participation in fraudulent designs and transactions be proved in many cases except by circumstances."'* The very charge of fraud " implies color and disguise, to be dissipated by indicia alone." ^ The signs or earmarks of fraud instanced in Twyne's Case*^ have already been given,''' and should be kept fresh in the memory of parties interested in this class of litigation. Mr. Roberts says, that the general conclusion to be derived from this remarkable case is " that evidence of the fraudulent intent supersedes the whole inquiry into the consideration, for no merit in any of the parties to a transaction can save it if it carries intrinsically or extrinsically the plain characters of fraud."** It may be observed that extrinsic proof of fraud can rarely be found unless it be in cases where the possession of the debtor contradicts " the visible purport of an absolute con- veyance." § 225. Badges of fraud defined. — The possible indicia of fraud are so numerous that no court could i)rctcn(l to ' Wait V. Bull's Head Bank. 19 N. (N. Y.) 353, 362, per Coueii, J. ; King B. R. 501. V. Moon, 42 Mo. 555. > See § 2. "3 Rep. 80. * Goshorn v.Sno(lgrass,i7 W.Va.767. ' See § 22. ' Craig V. Fowler, 59 Iowa 203. " Roberts on Fraudulent Convcy- ' Waterbury v. Sturtevant, 18 Wend, ances, 546. n (t. 0.(^.0] f^ BADGES OF FRAUD. § 225 anticipate and catalogue thcm.^ " They are as infinite in number and form as are the resources and versatihty of human artifice."^ The statutes of Elizabeth produce the most beneficial effects, by placing parties under a disability to commit fraud in requiring for the characteristics of an honest act such circumstances as none but an honest inten- tion can assume.^ A badge of fraud was said by Chief- Justice Pearson, in Peebles v. Horton,*to be "a fact calcu- lated to throw suspicion on the transaction," and which "calls for explanation."^ Substantially the same language is used by Elliott, J., in Sherman v. Hogland.^ So in Pil- ling V. Otis,"^ the court in construing the meaning of the expression " badge of fraud " as used in the charge of a judge, said: "It does not mean that the evidence must be conclusive, nor that it must require the jury to find fraud, but only that it is one of the signs or marks of fraud, and has a tendency to show it. There may be great difference 1 Phinizy v. Clark, 62 Ga. 623-627 ; Hickman v. Trout, 83 Va, 491. "^ Shealy v. Edwards, 75 Ala. 411, 417. 3 McKibbin v. Martin, 64 Pa. St. 356; Avery v. Street, 6 Watts (Pa.) 274. ■* 64 N. C. 376 ; Shealy v. Edwards, 75 Ala. 417; Terrell v. Green, 11 Ala. 213; Hickman v. Trout, 83 Va. 491. * In Hickman v. Trout, 83 Va. 491, the court say : " Certain circumstances are often referred to as indicia of fraud, because they are usually found in cases where fraud exists. Even a single one of them may be sufficient to stamp the transaction as fraudu- lent. When several are found in the same transaction, strong and clear evidence will be required of the up- holder of the transaction to repel the conclusion of fraudulent intent. In the case here, .... quite a number of the usual badges of fraud are found grouped together and left unexplained. These are : gross inadequacy of price ; no security taken for the purchase-money; unusual length of credit for the deferred instalments ; bonds taken payable at long periods, when the pretence is that the deferred instalments evidenced by them had already been satisfied in the main by antecedent debts due by the obligee to the obligor; the conveyance made in payment of alleged indebted- ness of father to son, residing together as members of one family ; the indebt- edness and insolvency of the grantor, and well known to the grantee ; the threats and pendency of suits ; the secrecy and concealment of the trans- action ; keeping the deed unacknowl- edged and unrecorded for over a year ; grantor remaining in possession as be- fore the conveyance, and cautioning the kinsman justice, who took the acknowl- edgment, to keep the matter private, and the relation between grantor and grantee." « 73 Ind. 473. ^ 13 Wis. 495. a ^\JL^ § 226 QUESTION FOR THE JURY. 3I9 in the weight to which different facts, constituting badges of fraud, are entitled as evidence. One may be almost conclusive, another furnish merely a reasonable inference of fraud. Yet both would be badges of fraud, and either might be so explained by other evidence as to destroy its effect. The books accordingly speak of strong badges and slight badges of fraud, of conclusive badges, and badges not conclusive, meaning by the word ' badge' nothing more than that the fact relied on has a tendencv to show fraud, but leaving its greater or less effect to depend on its intrinsic character." The expression is used " to distinguish the lighter grounds on which fraud may be established " as dis- tinguished from the cases where the fraud is apparent upon the face of the instrument and necessarily involves its invalidity.^ The circumstances which the law considers badges of fraud, and not fraud per se, should, as we shall see, be submitted to the jury, so that they may draw their own conclusions.'^ Where, then, a creditor shows indicia, or badges of fraud, the burden rests on the grantee to repel the presumptions which the facts so shown generate.^ It may here be observed that when the consideration for the transfer is clearly established, and the transaction is in effect a preference, it will not be affected by any weak, foolish, or even criminal conduct in the way of an attempt to sus- tain the case by manufactured evidence."* § 226. Question for the jury. — The question of fraud in a transfer must usually be submitted to a jury,^ save in a few cases where the transaction is manifestly fraudulent upon its face. The distinction between legal and equitable juris- diction as to this has already been pointed out ; '' and where the suit is in its nature purely equitable, the judge or clian- ' Burrill on Assignments, 4th ed., ■» Hill v. Bowman, 35 Mich. 191, per § 346, p. 518. Cooiey, C. J. * King V. Russell, 40 Tex. 133. 'Weaver v. Owens, 16 Ore. 304. * Harrell v. Mitchell, 6i Ala. 270. * See § 51. p9 Ct cif ^. 1^ 320 CIRCUMSTANTIAL EVIDENCE. §§ 227, 228 ccllor is responsible for the decision, though, of. course, he may secure the aid of a jury to pass upon framed issues.^ Otherwise the jury must be permitted to consider and draw their own inferences from badges of fraud, and the court should not interfere to formulate conclusions for them.^ To say that badges of fraud " constitute fraud in them- selves, would be to carry the doctrine beyond the limits of reason or authority, and to shut out the light of wisdom and truth." ^ Where the entire suit is tried by and sub- mitted to the court, without the aid of a jury, as is fre- quently the case in equity, the same consideration and effect should be given by the court to badges of fraud as though a jury had been summoned. § 227. Circumstantial and direct evidence. — In Kempner V. Churchill^ it appeared that the purchaser said to the debtor : " You had better not delay this matter. You had better let me have the goods and put the money in your pocket, and let the creditors go to the devil." The cir- cumstantial evidence which was held ample to confirm this direct evidence of fraud, was as follow^s : First, false re- ceipts given for full value on Saturday ; second, account of stock made out on Sunday ; third, removal of the goods into a cellar on Monday. " It is true the fraud must be in the inception of the transaction, but the subsequent acts of the parties are calculated to explain the motives which actuated them in the beginning, and give tone to the then original purpose."^ g 228. Recital of fictitious consideration. — Let us now pro- ceed to consider more minutely the particular circum- stances and surroundino^s of a transaction which constitute ' Dunphyv. Kleinsmith, II Wall. 615. ° Adler v. Apt, 31 Minn. 348, 350 Leasure v, Coburn, 57 Ind. 274; See Hungerford v. Earle, 2 Vem. 261 Herkelrath v. Stookey, 63 111. 486 ; Blennerhassett v. Sherman, 105 U. S King- V. Russell, 40 Tex. 133. 100; Blackman v. Preston, 24 111. App ^ Wilson V. Lott, 5 Fla. 316. 240; Coates v. Gerlach, 44 Pa. St * 8 Wall. 369. 43. fho.d^'L § 228 FICTITIOUS CONSIDERATION. 321 badges of fraud, or awaken suspicions or create presump- tions of the existence of fraud. A false statement of the consideration of a mortgage,^ or of a conveyance or transfer,- or the creation of a fictitious indebtedness,^ is a badge of fraud, and is a proper clement for the consideration of the jury in determining the dona fides of the transaction.^ Such a recital does not usually render the instrument void per se^ and in some instances the transaction will be allowed to stand for the amount of the consideration given,*^ and will be void onlv for the ex- cess.'^ So the issuing of an execution for an excessive amount will, in the absence of bad faith, avail the plaintiff to the extent of the debt remaining due.^ It may be ob- served here that the recital of the excessive consideration must be intentional, and not the result of a mere mistake in computation,^ and both parties must have participated ' United States v. Griswold, 7 Saw- yer 306 ; Stinson v. Hawkins, 16 Fed. Rep. 850; Lynde v. McGregor, 13 Al- len (Mass.) 179; McKinster v. Bab- cock, 26 N. Y. 382 ; Weeden v. Hawes, 10 Conn. 50 ; Butts v. Peacock, 23 Wis. 359 ; Blakeslee v. Rossman, 43 Wis. 123 ; Stover v. Herrington, 7 Ala. 142 ; Goff V. Rogers, 71 Ind. 459; Cordes v. Straszer, 8 Mo. App. 61 ; Venable v. Bank of U. S., 2 Pet. 112, per Story, J.; King V. Hubbell, 42 Mich. 599, per Cooley, J. See Keith v. Proctor, 8 Baxt. (Tenn.) 189 ; Shirras v. Caig, 7 Cranch 50. ^ Peebles v. Horton, 64 N. C. 374; Enders v. Swayne, 8 Dana (Ky.) 105 ; Thompson v. Drake, 3 B. Mon. (Ky.) 570; Foster v. Woodfin, 11 Ired. (N. C.) Law 346 ; Gibbs v. Thompson, 7 Humph. (Tenn.) 179; Turbevilie v. Gibson, 5 Heisk. (Tenn.) 565 ; Mar- riott V. Givens, 8 Ala. 694 ; Divver v. McLaughlin, 2 Wend. (N. Y.) 600. * Winchester v.Charter, 97 Mass. 140. 21 ^ Miller v. Lockwood, 32 N. Y. 299 ; Willison V. Desenberg, 41 Mich, 156; Lawson v. Alabama Warehouse Co., 80 Ala. 343. Elliott, J., said, in GoflF V. Rogers, 71 Ind. 461 : "There are no cases, however, that we have been able to find, going so far as to hold that a mortgage is to be conclusively pre- sumed fraudulent from tiie bare fact that it purports, on its face, to secure a sum in excess of the debt really due. The farthest that any of the cases go, except those based on an express stat- ute, is to hold that the fact that a mort- gage expresses on its face an amount materially greater than the true amount of indebtedness, is a badge of fraud." 5 Frost V. Warren, 42 N. Y. 207 ; Barkow v. Sanger, 47 Wis. 505. '' Colcy V. Coley, 14 N. J. Eq. 354. '' Davenport v. Wright, 51 I'a. St. 292. See §§ 192. 195. " Harris v. Alcock. 10 G. & J. (Md.) 227. ' Kalk V. Fielding, 50 Wis. 340. iac( 322 FICTITIOUS CONSIDERATION. § 228 in the fraudulent purpose.^ Hence, where a wife is igno- rant and innocent of fraud, the insertion of an inaccurate or untrue recital in a settlement will not vitiate it.'^ An immaterial misrecital will not be regarded.^ It is not our purpose, however, to lead the reader to con- sider an exaggerated or false recital of consideration as an unimportant factor in proving fraud. Far from it. In Hav/kins v^ Alston,'* Chief-Justice Ruffin forcibly said : " No device can be more deceptive and more likely to baffle, delay, or defeat creditors, than the creating incum- brances upon their property by embarrassed men, for debts that are fictitious or mainly so. The false pretence of a debt, or the designed exaggeration of one, is an act of di- rect fraud." Mr. May observed, that the fact that confes- sion of judgment " covers more property than is necessary for satisfying the debt, is a suspicious circumstance."^ Sharswood, J., declared that "a judgment confessed volun- tarily by an insolvent or indebted man for more than is due, \s prima facie fraudulent within the statute of 13 Eliz. c. 5."^ Then in Warwick v. Petty''' it is asserted that a judgment laid upon property of a debtor for more than was actually due and owing, is a clear violation of the policy of the law, and is fraudulent, and subject to attack by junior credit- ors.^ The judgment, however, must be knowingly, inten- tionally, and fraudulently obtained for a greater sum than was due,^ A transaction which on its face speaks an en- ^ Carpenter v. Muren, 42 Barb. (^N. ^ Clark v. Douglass, 62 Pa. St. 415. Y.) 300. See § 199. ■" 44 N. J. Law 542. ^ Kevan v. Crawford, L. R. 6 Ch. D. * Clapp v. Ely, 27 N. J. Law 555. 39. Compare Sayre v. Hewes, 32 N. J. Eq. 3 Fetter v. Cirode, 4 B.Mon.(Ky.)484- 652 ; Hoag v. Sayre, 33 N. J. Eq. 552 ; ■1 4 Ired. Eq. (N. C.) 145. Holt v. Creamer, 34 N. J. Eq. 187 ; ' May's Fraud. Conv. p. 88 ; citing Russell v. Winne, 37 N. Y. 596. Tolputt V. Wells, I M. & S. 395 ; Ben- "Fairfield v. Baldwin, 12 Pick, ton V. ThornhiU, 7 Taunt. 149; S. C. 2 (Mass.) 388; Davenport v. Wright, 51 Marsh. 427 ; Hodgson v. Newman, Pa. St. 292. Compare Peirce v. Par- mentioned in Holbird v, Anderson, 5 tridge, 3 Met. (Mass.) 44 ; Felton v, T. R. 236, 239. Wadsworth, 7 Cush. (Mass.) 589. §§ 229, 230 ANTEDATING INSTRUMENT. 2) -3 tirely different language from the real one, will always be "viewed by the law with the highest degree of distrust and disapprobation,"^ and will be "the object of doubt and sus- picion,"^ though, as we have seen, suspicion alone is insuffi- cient to establish fraud. ^ It results, then, from a review of the authorities, that a false recital of consideration in an instrument, in the ab- sence of explanation, justifies a finding of fraud ; that the misrecital must be intentional and not accidental, and is subject to explanation ; and that the evil design must be mutual ; otherwise the transaction will stand against credit- ors except as to the excess. §229. Antedating instrument. — Antedating an instrument seems to be regarded as an ijidicium of fraud,* and testi- mony tending to establish a fraudulent antedating of a paper is competent.^ Antedating a mortgage, though very improper, does not, however, affect a mortgagee who is not privy to it.^ It may be remarked that the date of a deed is not generally regarded as an essential part of the instru- ment ; it may be good with an impossible date, or have no date, and though the date is prima facie evidence of the time of delivery, it may be contradicted. § 230. Description of the property. — A suspicion or in- ference of fraud is sometimes predicated of a loose and vague description of the goods or property conveyed. " All the entire stock of goods in the possession of the said Lee, in his store in the city of Williamsburg," were the words used in Lang v. Lee,^ and in commenting upon the case the court said : " Does this look like a real bona fide transaction?" A clause in a mortgage by which 1 Ayres V. Husted, 15 Conn. 513. 521. But compare Patterson v. Bodcn- 2 Pickett V. Pipkin, 64 Ala. 526. hamer, 9 Ired. (N. C.) Law 96. ' See §§ 5, 6. ' Moog v. Benedicks, 49 Ala. 513. ^ Wright V. Hencock, 3 Munf. (Va.) « Lindle v. Neville, 13 S.& R. (Pa.) 228. ^ 3 Rand. (Va.) 423. ^^o,d s^ 324 CONVEYANCE OF WHOLE ESTATE. § 23 1 after-acquired property was attempted to be covered, was regarded as a feature for the consideration of the jury in Gardner v. McEwen.' So in a case in Tennessee,^ in which the description in the conveyance was so indefinite and general that it was impossible to designate the prop- . erty, this was considered a circumstance to be taken into account by the jury as an evidence of fraud.^ Still it does not follow by any means that an imperfect description of property in an instrument is of much weight as a badge of fraud. Carelessness in the character of the description in conveyances of realty, or in bills of sale, or mortgages of personalty, is very common in transactions concerning the good faith of which no question can fairly be raised. Mis- descriptions are often the handiwork of honest but blunder- ing scriveners. § 231. Conveyance of whole estate. — Lowell, J., observes : " I have often decided that the conveyance of the whole property of a debtor affords a very violent presumption of a fraudulent intent, so far as existing creditors are con- cerned." ^ In Bigelow v. Doolittle,^ however, the court refused to charge that "the conveyance of the whole prop- erty of a debtor affords a very violent presumption of a fraudulent intent, so far as existing creditors are con- cerned." In sustaining the ruling the appellate court ob- served that the generality of the conveyance was merely a circumstance to be considered by the jury in connection with all the other facts of the case, in determining whether '•or not the sale was fraudulent. Lyon, J., said: "Under ' 19 N. Y. 125. V. Fredericks, 16 N. J. Eq. 207 ; Clark ' Overton v. Holinshade, 5 Heisk. v. Wise, 39 How. Pr. (N. Y.) 97 ; re- (Tenn.) 683, versed, 46 N. Y. 612 ; Monell v. Scher- ' See § 157. rick, 54 III. 270 ; Redfield v. Buck, 35 * /« re Alexander, 4 N. B. R. 181 Conn. 328; Bradley v. Buford, Sneed [*46]. See Goshorn v. Snodgrass, 17 (Ky.) 12. W. Va, 717; Glenn v. Glenn, 17 Iowa ^ 36 Wis. 119. See Bishop v. Steb- 498-501 ; Hartshorn v. Eames, 31 Me. bins, 41 Hun (N. Y.) 246. 99 ; Sarle v. Arnold, 7 R. I. 582 ; Sayre § 231 CONVEYANCE OF WHOLE ESTATE. 325 some conditions the jury miglit regard such conveyance as raising a very violent presumption of fraud, while under other and different conditions the jury might properly de- termine that it was but a slight indication of a fraudulent intent." ^ Such a transfer must, however, be regarded as altogether unusual and extraordinary. The instances in which such transactions would occur in the usual course of business are very infrequent, and when the alienation proceeds from an embarrassed debtor, it creates a presump- tion of dishonesty and fraud. ^ The transfer, however, is not to be declared void as matter of law under such cir- cumstances. Hence, a sale by an insolvent debtor of all his real and personal estate, taking back notes payable in six, twelve, and eighteen months, is not per se fraudulent ; to avoid it there must be a finding of an actual fraudulent intent.^ When questions of relationship intervene, the motive for making these absolute conveyances becomes important. Hence where, pending a suit, a debtor trans- ferred all his property, save that which was exempt, to his wife, and hired out to her for his " board, clothing, and lodging," the transaction was held to afford grounds for suspicion, and to call for satisfactory proof of good faith and fair consideration.* Commenting upon the effect of the generality of the gift, Mr. May says,^ that it is "when taken in conjunction with other circumstances, a mark of fraud ^ for dolus versatur in genera libus ; ^ yet it is no con- ' Bigelow V. Doolittle, 36 Wis. 119; Booher v. Worrill, 57 Ga. 235. See S. P, Kerr v, Hutchins, 46 Tex. 389- § 242. 390. * May on Fraudulent Conveyances, ^ See Bibb v. Baker, 17 B. Men. p. 82. (Ky.) 305 ; Wheelden v. Wilson, 44 " Citing Chamberlain v. Twyne Me. 20; Hughes V, Roper, 42 Tex. 126. (Twyne's Case), F. Moo. 638; Stile- 2 Clark V. Wise, 46 N. Y. 612. See man v. Ashdown, 2 Atk. 477 ; Mathews Bigelow V. Doolittle, 36 Wis. 119; v. Feaver, i Cox's Eq. Cas. 280 ; Ware Alton V. Harrison, L. R. 4 Ch. App. v. Gardner, L. R. 7 Eq. 317. See 626. Compare Bank of Ga. v. Higgin- Blennerhassett v. Sherman, 105 U.S. 100. bottom, 9 Pet. 6i. ^ Citing Twyne's Case, 3 Rep. 81 a ; ^ Dresher v. Corson, 23 Kans. 315 ; Stone v. Grubham, 2 Bulstr. 225. o 26 INADEQUACY OF PURCHASE PRICE. § 232 eluding proof either under this statute (13 Eliz. c. 5) or by the eommon law." ^ Then as we have seen ^ in Twyne's Case, the very first mark of fraud specified was "that the gift was general, without exception of the donor's apparel, or of anything of necessity." Chief-Justice Marshall in the leading case of Sexton v. Wheaton,^ observed : " The proportional magnitude of the estate conveyed may awaken suspicion, and strengthen other circumstances ; but, taken alone, it cannot be considered as proof of fraud." Among the prominent badges of fraud affecting a conveyance as to subsequent creditors may be mentioned the contracting of debts, and engaging in a hazardous business or specula- tion, with the intention of shouldering the risk of loss upon creditors. The cases and principles appertaining to this subject have already been considered.^ To this class of evidence, McCrary, J., adds another badge, viz.: "The fraudulent disposition of the remaining estate of the grantor very soon after the conveyance." ^ § 232. Inadequacy of purchase price. — As has already been shown, to enable a creditor to invalidate a sale of property, tangible facts must be proved, from which a legitimate in- ference of a fraudulent intent can be drawn. It will not suffice to create a suspicion of wrong, nor vi^ill the jury be permitted to guess at the truth. *^ Mere proof of inadequacy of price by itself has been considered insufficient to impli- cate the vendee in the fraudulent intent, or to impeach his good faith,''' and inadequacy of consideration, unless ex- tremely gross, ^ does not per se prove fraud.^ It must ap- ' Citing Chamberlain v. Twyne, F. ' ' Burdickv.Gill, 7 Fed. Rep. 668, 670. Moo. 638 ; Nunn v. Wilsmore, 8 T. R. " See §§ 5, 6. 528; Ingliss V. Grant, 5 T. R. 530; 'Jaeger v. Kelley, 52 N. Y. 274. Meux V. Howell, 4 East i ; Janes v. See Sherman v. Hogland, 73 Ind. 477 ; Whitbread, 11 C. B. 406 ; Alton v. McFadden v. Mitchell, 54 Cal. 629. Harrison, L. R. 4 Ch. App. 622 ; See § 6. Evans v. Jones, 11 Jur. (N. S.) 784. " Archer v. Lapp, 12 Ore. 202 ; Daw- - § 22, son V. Niver, 19 S. C. 606 ; Witherwax ^ 8 Wheat. 229, 250. v. Riddle, 121 III. 145. * See §§ 96, 99, 100. ^ Kempner v. Churchill, 8 Wall. 369. § 232 INADEQUACY OF PURCHASE PRICE. 327 pear that the price was so manifestly inadequate as to shock the moral sense, and create at once upon its being men- tioned a suspicion of fraud. ^ It is even held that in the absence of other evidence tending to show fraud, the court will not deem inadequacy of consideration sufficient to do so.^ Gordon, J.,, said : " Other things being fair and hon- est, mere inadequacy of price cannot, of itself, beget even a presumption of fraud, much less is \\. per sc fraudulent."^ Still, authority is abundant to the effect that where a cred- itor or purchaser obtains the property or estate of an insol- vent debtor at a sacrifice or an under rate or value, there is a strong and even violent presumption of a fraudulent in- tent.^ Thus where a first lien for $1,200 on a farm worth $13,000, was transferred for a consideration of $400, this was considered evidence of fraud which must be submitted to a jury.^ Again it is more strongly stated in Davidson V. Little,^ that " the sale of lands or goods by an indebted person for less than their value is ipso facto a fraud in both vendor and vendee."" Where the value was $7,700, and the estimated consideration $1,537, it was held to be con- clusively fraudulent.^ The difference was regarded as " so great as to shock the common sense of mankind, and fur- nish in itself conclusive evidence of fraud." ^ The ques- tion, however, is usually submitted to the consideration of a jury,^° to determine the intent of the parties," and is almost ' Clark V. Krause, 2 Mackey (D. C.) ' Rhoads v. Blatt 84 Pa. St. 32; s. 566. C. I Am. Insolv. R. 45. " Emonds v. Termehr, 60 Iowa 92, ^ 22 Pa. St. 252. 96. See Cavender v. Smith, 8 Iowa ' See Doughten v. Gray, 10 N.J. Eq. 360 ; Boyd v. Ellis, 1 1 Iowa 97. 330. ' Schatzv. Kirker, 4East. R'^p.fPa.] 'Wilson v. Jordan. 3 Woods 642. 141^144. See Ratcliff v. Trimble, 12 B. Mon. *'see Shelton v. Church, 38 Conn. (Ky.) 32 ; Borland v. Mayo, 8 Ala. 104; 420; Bartles v. Gibson, 17 Fed. Rep. Prosser v. Henderson, 11 Ala. 484. 297 ; Brown v. Texas Cactus Hedge Co., " Hoot v. Sorrell, 1 1 Ala. 4cx>. 64 Tex. 400; Stern Auction & C. Co. '" Craver v. Miller, 65 Pa. St. 456. V. Mason, 16 Mo. App. 477- " Motley v. Sawyer, 38 Me. 68. 328 TRANSFER PENDING SUIT. § 233 always linked with other circumstances or indicia of fraud/ Inadequacy of consideration is a fact calling for explana- tion, and is often treated as a badge of fraud.^ Insuffi- ciency of price and insolvency of a debtor, say the Supreme Court of California, may be circumstances more or less potential in the determination of fraud as a question of fact, but failure of consideration is not in itself sufficient to justify a court in finding fraud as matter of law.^ § 233. Transfer pending suit. — The transfer of all, or, ac- cording to some authorities, of a portion of a man's goods during the pendency of a suit against him is a mark of fraud.^ One of the circumstances specified in Twyne's Case^ was that the " transfer was made pending the writ." ^ This fact usually induces the suspicion that the conveyance was made to secure the property from attachment or exe- cution in the pending suit, and to hinder, delay, or defraud creditors.'^ This inference may of course be rebutted.^ In > Hudgins v. Kemp, 20 How. 50. able value, the fact that the considera- * See Fisher V. Shelver, 53 Wis. 498; tion is small does not constitute a Williamson v. Goodwyn, 9 Gratt. (Va.) badge of fraud. 503 ; Laidlaw v. Gilmore, 47 How. Pr. ^ Redfield & Rice Mfg. Co. v. Dysart, (N. Y.) 68 ; Hudgins v. Kemp, 20 How. 62 Pa. St. 63 ; Godfrey v. Germain, 24 50; Fuller V. Brewster, 53 Md. 361: Wis. 416; Babb v. Clemson, 10 S. & R. Delaware v. Ensign, 21 Barb. (N. Y.) (Pa.) 424; Ford v. Johnston, 7 Hun (N. 85 ; Ames v. Gilmore, 59 Mo. 537 ; Y.) 568 ; United States v. Lotridge, i Scott V. Winship, 20 Ga. 429; Apper- McLean 246; Thomas v. Pyne, 55 Iowa son V. Burgett, 33 Ark. 338 ; Boyd v. 348 ; Schaferman v. O'Brien, 28 Md. Ellis, II Iowa 97 ; Barrow v. Bailey, 5 565 ; Crawford v. Kirksey, 50 Ala. 590; Fla.9; Loring V. Dunning, 16 Fla. 119; Hartshorn v. Fames, 31 Me. 99; Soden Bickler V. Kendall, 66 Iowa 703 ; Dout- v. Soden, 34 N. J. Eq. 115; Bean v. hitt V. Applegate,33Kans. 396; Easum Smith, 2 Mason 252; Calian v. Statham, V. Pirtle, 81 Ky. 563; Steere v. Hoag- 23 How. 477; Stoddard v. Butler, 20 land, 39 111. 264, Stevens v. Dillman, Wend. (N. Y.) 507; Booher v. Wor- 86 111. 233. See Metropolitan Bank v. rill, 57 Ga. 235 ; Stewart v. Wilson, 42 Durant. 22 N. J. Eq. 35. Pa. St. 450 ; King v. Wilco.x, 11 Paige 3 McFadden v. Mitchell, 54 Cal. 629 ; (N. Y.) 589. Jamison v. King, 50 Cal. 133. See ^ 3 Rep. 80 ; i Smith's Lea. Cas. 33. Motley V. Sawyer, 38 Me. 68. In Day •* See § 22. V. Cole, 44 Iowa 452, the court say that '' See Merrill v. Locke, 41 N. H. 490. where the incumbrances upon realty, ' Sipe v. Earman, 26 Graft. (Va.) with the consideration paid for its con- 563. See Skipwith v. Cunningham, 8 veyance, very nearly equal its reason- Leigh (Va.) 271. § 234 EVIDENCE OF SECRECY. 329 Ray V. Roe ex dem. Brown,' the court said that the pend- ency of a suit was " one of the many badges of fraud " which would induce a court of equity to set aside a con- veyance, or a jury to regard it as covinous. In Shean v. Shay^ it is characterized as "only one of the badges." The court further said : " The deed may be shown to be fraudulent and void as to creditors when no suit was pend- ing to recover the debt or damages when it was made." The pendency of a suit is a warning to a dishonest debtor to make haste to alienate and cover up his assets. While the service of process in a suit does not usually create a lien upon the defendant's property, and the doc- trine of lis pejidens is' limited in its application, yet trans- fers pending a suit are justly scanned with very gruat sus- picion ; and where it is certain that judgment would be rendered against the vendor, and evidence of inadequacy of consideration is adduced, the courts will conclude that the conveyance is colorable, and made with a view to hinder, delay, and defraud creditors.^ Mr. May^ states the rule to be that where the conveyance is made pejidcntc lite, it is, " when coupled with other circumstances, sug- gestive of fraud, but where the consideration is adequate, not a strong mark of a fraudulent intention." This, how- ever, can scarcely be regarded, under the American author- ities, as giving this important element of proof its proper weight. § 234. Evidence of secrecy.— An unusual degree of secrecy observed between the parties in the making of the sale is a badge of fraud ;^ and the secret removal of the .property immediately after the sale indicates a dishonest j)urpose.'' Circumstances indicative of concealment, or of a design to ' 2 Blackf. (Ind.) 258. ' Fishel v. Ireland, 52 Ga. 632. See * 42 Ind. 377. Callan v. Statham. 23 How. 480 ; " Jaffers v. Aneals, 91 III. 487, 493. Corlett v. Radcliffe, 14 Moo. P. C. 140. ^ May's Fraudulent Conveyances, p. '^ Delaware v. Ensij^n, 21 Barb. (N. 83. Y.) 88. 330 SUPPRESSION OR CONCEALMENT. § 235 give a man the appearance of possessing property which he does not own, are evidences of fraud, and are proper for a jury to weigh.'' Secrecy ** is a circumstance connected with other facts from which fraud may be inferred."^ An agreement, however, to conceal the fact of a purchase is not pc}'- se fraudulent, but is merely matter of evidence in favor of avoiding the sale, which, although perhaps very strong, is still capable of explanation.^ In Haven v. Rich- ardson ^ the court said : " Secrecy is not of itself evidence of fraud. It is likely to accompany fraud, and may give force to other evidence, under particular circumstances." Thus it is held in Massachusetts that an arrangement or understanding in regard to withholding mortgages from record until the mortgagors should have trouble, did not render the mortgages void, but was a matter entitled to consideration by the jury in passing upon the question of fraud at common law.^ On the other hand, an agreement that the transaction is to be kept secret until the debtor has an opportunity of escaping beyond the reach of process issued by his other creditors, or by which the deed is not to be offered for record until the other creditors threaten suit, will render it fraudulent. Secrecy in such cases is a part of the consideration ; the transaction is contaminated by it, and ought not to be regarded as bona fide.^ § 235. Suppression or concealment — Subsequent fraud. — As long ago as the case of Hungerford v. Earle,*^ it was held that, " a deed not at first fraudulent may afterwards be- ' Ross V. Crutsinger, 7 Mo. 249. * Hafner v. Irwin, I Ired. (N. C.) - Warner v. Norton, 20 How. 460. Law 499. Mr. May regards secrecy ^ Gould V. Ward, 4 Pick. (Mass.) 104. as always evidence, but not of itself ■*5N. H. 127. See Blennerhassett V. conclusive evidence of fraud May's Sherman, 105 U. S. 117. Fraudulent Conveyances, p. 83. See * Folsom V. Clemence, iii Mass. Griffin v. Stanhope, Cro. Jac. 454; 277. See Thouron v. Pearson, 29 N. Worseley v. De Mattos, i Burr. 467 ; J. Eq. 487. Rut compare Hildeburn V. Leonard v. Baker, i M. & S. 251 ; Brown, 17 B. Mon. (Ky.) 779. See Corlett v. Radcliffe, 14 Moo. P. C. 139. § 235. ' 2 Vern. 261. § 235 SUPPRESSION OR CONCEALMENT. 33 1 come so by being concealed, or not pursued, by which means creditors are drawn in to lend their money." This doctrine has been repeatedly recognized and reaffirmed in different forms in State and Federal tribunals.^ In Coates V. Gerlach ^ it appeared that a deed of land had been made by a husband directly to his wife. The deed was dated March 23, 1857, but was not filed for record until Decem- ber 2, 1857, over eight months thereafter. On Jan. 21, 1858, the husband, professing to act as the agent of the wife, effected a sale of the lands to a third party. The creditors of the husband attached the moneys in the hands of the vendees, and a contest arose as to which had the better right to the proceeds of the sale. Touciiing this controversy, Strong, J., said : "There is another aspect of this case, not at all favorable to the claim of the wife. It is that she withheld the deed of her husband from record until December 2, 1857. In asking that a deed void at law should be sustained in equity, she is met with the fact that she asserted no right under it ; in fact, concealed its existence until after her husband had contracted the debts against which she now seeks to set it up. There appears to have been no abandonment of possession by the hus- band Even if the deed was delivered on the day of its date, the supineness of the wife gave to the husband a false credit, and equity will not aid her at the expense of those who have been misled by her laches."^ In Blcnncr- hassett v. Sherman,'* Woods, J., in delivering the unani- ' Hildreth v. Sands, 2 Johns. Ch. J. Eq. 487; Stewart v. Hopkins, 30 (N. Y.) 35 ; Scrivenor v. Scrivenor, 7 Ohio St. 502. B. Mon. (Ky.) 374; Bank of the U. S. ' 44 Pa. St. 43, 46. V. Housman, 6 Paige (N. Y.) 526; ' See McWillianis v. Rodgcrs, 56 Ala. Beecher v. Clark, 12 Blatchf. 256 ; Bien- 87. nerhassett v. Sherman, 105 U. S. 100 ; ^ 105 U. S. 117. In Jaffrcy v. Brown, Coates V. Gerlach, 44 Pa. St. 43 ; Hal- 29 Fed. Rep. 481. the court said : " The ner V. Irwin, i Ired. (N. C.) Law 490; mortgages to all the relatives of the Blackman v. Preston, 24 111. App. 240. defaulting firm .... were recorded See Hildeburn v. Brown, 17 B. Mon. October 14th, three days before the (Ky.) 779; Thouron V. Pearson, 29 N. assignment. The suppression of these 332 EVIDENCE ALIUNDE. § 236 moLis opinion of the United States Supreme Court, ob- served : " But where a mortgagee, knowing that his mort- gagor is insolvent, for the purpose of giving him a ficti- tious credit actively conceals the mortgage which covers his entire estate and withholds it from the record, and while so concealing it represents the mortgagor as having a large estate and unlimited credit, and by these means others are induced to grive him credit, and he fails and is unable to pay the debts thus contracted, the mortgage will be declared fraudulent and void at common law, whether the motive of the mortgagee be gain to himself or advan- tao-e to his mortgao-or."^ But there must be some evi- dence of a preconcerted and contrived purpose to de- ceive and defraud the other creditors of the mortgagor, of which scheme the withholding of the instrument from the record constitutes a part. It is said in Curry v. McCauley:^ "When the mortgage was executed and de- livered nothing further was necessary to its validity as a complete transaction. It has, therefore, been held in Pennsylvania, by a long seiies of decisions, that, as be- tween the parties, a mortgage takes effect upon delivery, and that an unrecorded mortgage is good against an as- signee for the benefit of creditors." § 236. Evidence aliunde. — In a controversy which arose in Mississippi'^ it was decided that a deed of trust in the nature of a mortgage, valid on its face, and not made or received with any intent to defeat existing or future creditors, may mortgages until this critical moment is of the grantor, even though it may not a badge of fraud as to creditors, and be the real title of the debtor. Nelson they will be denied vahdity and effect- v. Henry, 2 Mackey (D. C.) 259. The iveness as liens upon the property of creditor must not, however, lose sight debtors." of the general rule that a judgment is ' In cases where the statute requires not usually good against an unrecorded that a deed should be recorded within conveyance, a certain period, and the grantee neg- ' 20 Fed. Rep. 584. lects so to record it, a creditor of the » Hilliard v. Cagle, 46 Miss. 309. grantor may pursue the ostensible title §237 CONCEALMENT. 00 J nevertheless be held to be fraudulent and void as to all creditors, existing and future, by evidence alumde showing the conduct of the parties in their dealings in reference to the deed. The principal circumstances relied on in this case to avoid the deed were the facts that the grantor re- tained possession of the property, and that the deed was withheld from record. This enabled the mortgagor to contract debts upon the presumption that the property was unincumbered. The court said : " The natural and loo ical effect of the agreement and assignment, and the conduct of the parties thereto, was to mislead and deceive the j-)ub- lic, and induce credit to be given to Baggett | the mort- gagor], which he could not have obtained if the truth had been known, and therefore the whole scheme was fraudu- lent as to subsequent creditors, as much so as if it had been contrived with that motive and for that object." ^ § 237. Concealment in fraud of bankrupt act. — In Blenner- hassett v. Sherman,'- a very important case reviewing the authorities concerning suppression and concealment of transfers, the court held that a mortgage executed by an insolvent debtor with intent to give a preference to his creditors, was void under the bankrupt act. It ajijicared that the creditor had reasonable grounds to believe the mortgagor insolvent, and knew that the instrument was made in fraud of the provisions of the bankrupt act ; and ' See Gill v. Griffith & Schley, 2 Md. newal upon record, to the prejudice of Ch. Dec. 270. In this case the court the other creditors who had trusted the decided that a party could not be per- debtor on the streng^th of the posses- mitted to take for his own security a sion and ostensible ownership of the bill of sale or mortgage of chattels from mortgaged property. The mortgage another, leaving the mortgagor at his which was in controversy was declared request in possession and ostensibly void, and the decree was aflirmed on the owner, and keep the public from a appeal. See, further, Hafner v. Irwin, knowledge of the existence of the mort- i I red. (N. C.) Law 490 ; Worselcy v. gage by withholding it from record for De Matlos, i Burr. 467; Tarback v. an indefinite period, renewing it peri- Marbury, 2 Vern. 510; Neslin v. Wells, odically, and then receiving the benefit 104 U. S. 428. of the security by placing the last re- '■' 105 U. S. 100-121. oj- ABSOLUTE CONVEYANCE. § 238 that the mortgagee had, for the purpose of evading the bankrupt law, actively concealed the existence of the in- strument, and withheld it from record for a period of more than two months. The security was avoided, notwithstand- ing it was executed over two months before the filing of the petition in bankruptcy.* § 238. Absolute conveyance by way of security. — It is fa- miliar learning that a deed absolute on its face may, despite the statute of frauds, be shown by extrinsic evidence to be a mortgage,^ and that the relationship of mortgagee and mortgagor with all the usual incidents may thus be estab- lished. If, however, the transfer was not devised by the debtor to defraud or delay his creditors, or if it was so de- signed, and the trustee or mortgagee afforded no aid in carrying out the intention of the principal, the transaction is valid,-^ though perhaps open to suspicion.^ A convey- ance by way of security must be in all respects as clean and clear as a conveyance for permanent ownership.^ If no fraud was in fact intended, the security may be enforced ; ^ but if the debtor made a secret reservation,'^ or the creditor comes into court with a fraudulent claim of an absolute title,^ other creditors may avoid the transaction.^ Williams, 1 The repeal of the Federal Bankrupt ^ Stevens v. Hinckley, 43 Me. 441; Act renders unimportant the consider- Reed v. Woodman, 4 Me. 400. ation of cases arising exclusively under ■* Smith v. Onion, 19 Vt. 429. its provisions. ^ Phinizy v. Clark, 62 Ga. 623-627. 2 Horn V. Keteltas, 46 N. Y. 605 ; * Gaffney's Assignee v. Signaigo, i Carr v. Carr, 52 N. Y. 251 ; Murray v. Dill. 158 ; Chickering v. Hatch, 3 Sum- Walker, 31 N. Y. 399 ; McBurney v. ner 474; Smith v. Onion, 19 Vt. 427. Wellman, 42 Barb. (N. Y.) 390 ; s. c. ' Lukins v. Aird, 6 Wall. 78. See sub nomine Dodge v. Wellman, 43 Oriental Bank v. Haskins, 3 Mete. How. Pr. (N. Y.) 427 : Odell v. Mon- (Mass.) 332. tross, 68 N. Y. 499 ; Hassam v. Barrett, " Thompson v. Pennell, 67 Me. 162. 115 Mass. 256 ; Henley v. Hotaling, 41 ^ The law is settled in Alabama that Cal. 22; Sedg. and Wait on Trial of an absolute conveyance of lands in- Title to Land, 2d ed., §337; Gay v. tended as security for a debt, or, in Hamilton, 33 Cal. 686 ; French v. other words, designed to operate as a Burns, 35 Conn. 359 ; Clark v. Finlon, mortgage, is fraudulent and void as to 90 111. 245 ; Butcher v. Stultz, 60 Ind. existing creditors. The court say that 170 ; McCarron v. Cassidy, 18 Ark. 34. the parties may not intend fraud, there § 239 INSOLVENCY. 335 Ch. J., said in Barker v. French:^ " xVlthough it is true that a person may take security for a debt by a deed abso- lute, or by a bill of sale, when it was intended for security, yet there should be no disguise, nor dissembling, nor false- hood ; and if the party claims an absolute purchase when the sale was only intended for security, and thereby seeks ■ to protect from the creditors the property of the vendor, and endeavors to conceal the true nature of the transaction, it is evidence of fraud." Probably the weight of the better authority and the sounder reasoning is to the effect that an absolute conveyance by way of security is a badge of fraud which may be removed by evidence of an honest intent.* It may be noted with reference to the law upon this sub- ject, that an absolute conveyance by way of security affords a convenient and tempting cover for fraud upon creditors, and the tendency to regard transactions of this kind with suspicion should be encouraged. Where the security is corrupted with fraud, not only can creditors secure it to be avoided, but, as is elsewhere shown, the parties themselves can get no relief.^ § 239. Insolvency. — Insolvency, as we have seen, does not deprive the owner of the power to sell his property,"* to pay his debts, whether to one or more of his creditors.'^ Indebtedness or hopeless insolvency is, however, an im- may be no actual intent to hinder, de- v. Roe, 35 N. J. Eq. 90. See Gibson lay, or defraud creditors, yet, because v. Seymour, 4 Vt. 522 ; Columbia Bank such is its inevitable consequence, the v. Jacobs, 10 Mich. 349; Harrison v. law condemns it. Sims v. Gaines, 64 Trustees of Phillips Academy, 12 Mass. Ala. 396. See Bryant v. Young, 21 456. Ala. 264; Hartshorn v. Williams, 31 ' Hassam v. Barrett. 115 Mass. 258. Ala. 149. To the same general effect, " Singer v. Goldcnburg, 17 Mo. App. see Ladd v. Wiggin, 35 N. H. 426, and 549. cases cited. Compare Prescott v. ^ Crawford v. Kirksey, 50 Ala. 591 ; Hayes, 43 N. H. 593 ; Chenery v. Stover v. Herrington, 7 Ala. 142. See Palmer, 6 Cal. 122. §§ 52, 95. Insolvency ol a corporation ' 18 Vt. 460. does not necessarily entitle stockholders ■^ Ross V. Duggan, 5 Col. 100 ; Ste- to secure a receiver. Denike v. N. Y. vens V. Hinckley, 43 Me. 440; Em- & Rosendale Lime & Cement Co., 80 raons V. Bradley, 56 Me. 333; Moore N. Y. 599. Wait on Insolv. Corps. § 178. 336 SALES UPON CREDIT. § 24O portant element of proof in marshalling badges of fraud to overturn a covinous transaction.^ The distinction be- tween the right of existing and subsequent creditors which, of course, has an important bearing upon this subject,^ is elsewhere considered. The conveyance, to be fraudulent, should bear such a ratio to the indebtedness as to tend directly to defeat the claims of creditors.^ A heavy in- debtedness of the grantor, together with a sale to a rela- tive, of necessity form strong badges or indications of col- lusion and fraud, but are not in themselves, unsupported by other material facts, deemed conclusive proofs of fraud. ^ Again, it is said that insolvency of the grantor, although a circumstance which may be taken, together with other material facts, to show a fraudulent design in disposing of property, is not regarded as sufficient of itself to establish it.^ The sale of all the effects of an insolvent copartnership upon credit at a fair valuation, to a responsible vendee who knew of the insolvency, is not per se fraudulent ;^ nor does proof of a sale upon credit, by a party in failing circum- stances, to one who had knowledge of these circumstances, necessarily establish fraud. '^ § 240. Sales upon credit. — It must be remembered that every delay to which a creditor is subjected in the collec- tion of his debt is not necessarily fraudulent.^ Insolvency, as is elsewhere shown, does not deprive a debtor of the right to sell his property ; ^ and if the sale is made in good ' Hudgins v. Kemp, 20 How. 45 ; Peirce v. Merritt, 70 Mo. 277 ; Fuller McRea v. Branch Bank of Alabama, v. Brewster, 53 Md. 358. 19 How. 377; Bibb V. Baker, 17 B. - See Chaps. V., VI. Mon. (Ky.) 292 ; Bulkley v. Bufifington, ^ Clark v. Depew, 25 Pa. St. 509. 5 McLean 457; Purkitt v. Polack, 17 •* Merrill v. Locke, 41 N. H. 490. Cal. 327 ; Hartshorn v. Eames, 31 Me. ° Leffel v. Schermerhorn, 13 Neb. 342. 93 ; Ringgold v. Waggoner, 14 Ark. ^ Ruhl v. Phillips, 48 N. Y. 125 ; S. C. 69 ; Blodgett v. Chaplin, 48 Me. 322 ; 8 Am. Rep. 522. Clark V. Depew, 25 Pa. St. 509 ; Bar- ' Loeschigk v. Bridge, 42 N. Y. 421. row V. Bailey, 5 Fla. 9. Compare Cox " Loeschigk v. Bridge, 42 Barb. (N. V. Fraley, 26 Ark. 20; State ex rel. Y.) 173; affi'd 42 N. Y. 421. » See § 52. § 241 UNUSUAL ACTS AND TRANSACTIONS. 337 faith, and without any intent to hinder, delay, or defraud creditors, the mere fact that it was made upon credit does not require that it should be declared invalid. The court in Roberts v. Shepard ^ said : "A sale upon credit of part of their property, by an insolvent firm, is a circumstance which may be considered, with others, bearing upon the question of fraudulent intent, but alone does not necessarily establish it." Certainly it will not do to say that the law presumes that every man who sells on credit does so with intent to hinder and delay his creditors.^ In Ruhl v. Phil- lips^ the New York Commission of Appeals, reversing the court below,^ held that the sale of the entire elTccts of an insolvent copartnership at a fair valuation, upon a credit ranging from four to twenty-four months, to a responsible vendee, having knowledge of the insolvency, was not fraud- ulent per se. In the New York Court of Appeals^ the principle is enunciated that the mere fact of a sale of his property by a party in failing circumstances, to a purchaser having knowledge of his condition, upon an average credit of sixteen months, did not per se establish fraud, or an in- tent to hinder or delay creditors." Where, however, it ap- pears upon the face of the transaction that the parties con- templated a large surplus, and the property is practically protected from forced sales or attachments or levies for two vears, the instrument will be declared void as hinderino: and delaying creditors.''' § 241. Unusual acts and transactions. — Courts and juries are often influenced in favor of creditors by slight circum- stances connected with the transaction indicating excessive efforts to give the conveyance the appearance of fairness, or by facts which are not the usual attendants of business .' 2 Daly (N. Y.) 112. ' Compare Brinley v. Spring-,. 7 Me. ^ Gillet V. Phelps, 1 2 Wis. 399. 241; Harris v. Burns, 50 Cal. 140; « 48 N. Y. 125. Lewis v. Caperton, 8 GratL (Va.) 148. * 2 Daly (N. Y.) 45. ' Bigelow v. Stringer, 40 Mo.. 195. * Loeschigk v. Bridge, 42 N. Y, 421. Compare Reynolds v. Crook, p Ala.634. 22 7^;^S UNUSUAL ACTS AND TRANSACTIONS. § 24I transactions. Honesty requires no stratagem or subter- fuge to support and aid it* In Adams v. Davidson^ the assignee took a fellow clerk with him to witness an at- tempted transfer of possession, and requested him to " pay- attention and recollect what he heard." The court were plainly influenced by the evidence of this request, and ob- served that it was wholly unnecessary if the parties in- tended to comply with the exactions of good faith in tak- ing and holding possession of the property assigned. To a similar effect is the case of Hartshorn v. Eames.'^ In that case the court said that there was no indication of great formality in transacting business between the parties, except on the occasion in question, when great precision was resorted to ; an accurate calculation and valuation gone into, and the claim of the grantee made to overbalance the valuation. These with other facts led the court to believe that the transaction resembled a farce rather than a dona yffl'^ transaction. Again it is said that " <5(??/«yf^^ transac- tions do not need to be clothed with the extraordinary pretence of prompt payment."^ In Langford v. Fly, ^ the deed of gift contained this clause : " Now this indenture is not to hinder or delay the collection of any of my just debts, but the same are to be paid." A suit for slander was pending at the time. The court said that this clause was evidently the result of a consciousness on the part of the assignor that others might think the deed was made v/ith a fraudulent design, and, as he was otherwise free from debt," it indicated that his purpose in making the transfer was to defeat the judgment which might possibly be recovered in the action for slander.^ " Studied for- 1 Comstock V. Rayford, 20 Miss. 391. "the parties took the precaution to go -5 JO N. Y. 309, 312. through with the formality of procur- * 31 Me. 100. ing, executing, and delivering a bill of * King V. Moon, 42 Mo. 551, 561. sale of the property ; conduct unusual 5 7 Humph. (Tenn.) 587. in respect to property of this character * In Mead v. Noyes, 44 Conn. 491, where the sale is honestly made. " This § 241 UNUSUAL ACTS AND TRANSACTIONS. 339 mality and apparent fairness" will not save a fraudulent transaction.^ In Crawford v. Kirksey^ it was contended by counsel that very great and unusual particularity fur- nished badges of fraud.^ The court observed that if the transaction was consummated quietly and without witnesses, then the complaint would he that it was secretly effected. If unusual publicity or particularity characterized the trans- action this would be urged as a badge of fraud. This it was said savored of the water test which in former years was applied to those suspected of witchcraft. If they sank they were innocent, but they incurred great hazard of losing their lives by drowning ; if they swam they were adjudged witches and perished at the stake. It may be observed that the absence of memoranda, or of any record of the consideration ;* the failure to take an ac- count of the stock, and no agreement as to the exact terms of settlement ;^ a false admission of the receipt of the con- sideration j*' unusual clauses in the instrument;'' a sale to a creditor without a surrender of the evidence of indebted- was regarded as one of the circum- never occur between parties whose stances attending the sale which tended only object was to place the purchased strongly to show the existence of actual .property in the hands of the purchaser fraud. for his use. The act, therefore, would ' First Nat. Bank v. Knowles, 67 rather be evidence of caution, like the Wis. 385. direction sometimes given to scriveners ' 55 Ala. 300. to draw up strong writings, which, to ^ The facts in Lake v. Morris, 30 say the least, would furnish as much Conn. 204, afford illustration of the ground to suspect the honesty of a general subject. The vendee was in transaction as it would evidence of its actual possession of the property pur- bona fides." chased. Hence counsel contended that * Hubbard v. Allen, 59 Ala. 300; the sale was void because there had Alexander v. Todd, i Bond 179. been no actual delivery of possession. * Wheelden v. Wilson, 44 Me. 20. The court in overruling the argument, * Alexander v. Todd, i Bond 180; said : " No such delivery could have Balto. & O. R.R. Co. v. Hoge, 34 Pa. taken place without first taking the St. 214; Watt v. Grove, 2 Sch. & Lef. horses from the plaintiff's possession 501. for the mere purpose of redelivering ■■ Pilling v. Otis, 13 Wis. 496; Gibbs them to him again. But a merely v. Thompson, 7 Humph. (Tenn.) formal act like this we presume would 179. 340 UNUSUAL ACTS AND TRANSACTIONS. § 24 1 ness;^ a sale not conducted in the '* usual and ordinary- course of business 'V conduct of the parties which is "ex- ceptional and peculiar";^ a conveyance of real estate with- out adequate security;* absence of authentic evidence of indebtedness, considerable in amount, other than a pencil memorandum;^ contradictory and irreconcilable accounts of the transaction given by the vendor and vendee ;^ receiv- ing the rents and managing the estate by the vendor after the alleged sale, under an assumed agency from the vendee, but without any evidence of a genuine agency other than the uncorroborated assertion of the party;'' absence of means in the vendee ;^ preparation of the deed at the sole instance of the grantee;^ leaving the business sign the same •,^^ employment of the vendor after the sale ;" sacrific- ing property for one-fourth of its value ;'^ deeding property to relatives without their knowledge ;^^ concealment ;^* ab- sence of evidence which is supposed to be within the reach of the party charged with the fraudulent act ; ^^ neglect to testify ;^^ destruction of letters relating to the contro- ' Gardner V. Broussard, 39 Tex. 372 ; Hurlburd v. Bogardus, 10 Cal. 518; Webb V. Ingham, 29 W. Va. 389. Rothgerber v. Gough, 52 111. 438. See - State ex rel. Peirce v. Merritt, 70 Bird v. Andrews, 40 Conn. 542. Mo. 283. '* Stevens v. Dillman, 86 111. 235. * Brinks v. Heise, 84 Pa. St. 253 ; '^ Lavender v. Boaz, 17 Bradw. (111.) Gollober v. Martin, 33 Kans. 255. 421. •* Owen V. Arvis, 26 N. J. Law 32. '^ Hoffer v. Gladden, 75 Ga. 538. ' Brinks v. Heise, 84 Pa. St. 253. '^ Newman v. Cordell, 43 Barb. (N. ^ Marshall v. Green, 24 Ark. 419. Y.) 448-461 ; Peebles v. Horton, 64 N. ' Sands v. Codwise, 4 Johns. (N. Y.) C. 374. 536. "* Graham v. Furber, 14 C. B. 410; " Danby v. Sharp, 2 MacAr. (D. C.) Goshorn v. Snodgrass, 17 W. Va. 770; 435; Stevens v. Dillman, 86 111. 233. Henderson v. Henderson, 55 Mo. 559. See Castle v. Bullard, 23 How. 186, In See Harrell v. Mitchell, 61 Ala. 270. Morford v. Dieftenbacker, 54 Mich. " The omission of Johnson to testify as 593, 607, Cooley, C. J., said; "A sale a witness for himself, in reply to the to a person without means when evidence against him, is of great ready money was the nominal purpose, weight." Bowden v. Johnson, 107 U. must necessarily be suspicious." S. 262. See Clark v. Van Riemsdyk, 9 " Sears v. Shafer, i Barb. (N.Y.) 408. Cranch 1 53 ; Clements v. Moore, 6 '" Danby v. Sharp, 2 MacAr. (D. C.) Wall. 299; Hoffer v. Gladden, 75 Ga. 435; Wright V. McCormick, 67 Mo. 430. 538. But see Clark v. Krause, 2 " McKibbin v. Martin, 64 Pa. St. 352 ; Mackey (D. C.) 570. § 241 UNUSUAL ACTS AND TRANSACTIONS. 341 versy ;' tendering security without solicitation ;' transfers pro- fessedly to prevent the sacrifice of the property ;^ taking additional security by way of chattel mortgage on a claim already secured by mortgage on real estate;* extending unusual credit ;^ all these are indicia of fraud upon creditors proper for the consideration of the jury, or of a court of equity, in cases where a jury trial is not had. On the other hand, a purchase of land by an attorney without making an abstract of title is not necessarily evi- dence of fraud ;^ nor is a sale by an insolvent of his whole stock in trade upon credit always covinous,' though it is circumscribed by fraudulent presumptions. It has been even held that evidence of a sale by a party indebted, of an uninventoried stock of goods, on credit, to a near relative, failed to establish fraud ; nor is a trust void because not particularly declared.^ Then the fact that the purchaser has no use for the property is not evidence of fraud.® The want of minute accuracy of language, and the disregard of the usual forms, will not render an assignment void,^° nor is it affected by a failure to file schedules,^* nor by the fail- ure to record it for a few days.^^ Giving more security than is necessary is not itself an indication of fraud. ^' In a Massachusetts case it was decided that a party was not entitled to offer the testimony of witnesses to the effect " that the giving of a mortgage, such as the mortgage in question, would not be in the usual and ordinary course of such business." That was considered to be the question for the jury to decide.^* ' Burke v. Burke, 34 Mich. 455. " Grubbs v. Greer, 5 Coldsv. (Tenn.) * Kellogg V. Root, 23 Fed. Rep. 525. 548. ' German Ins. Bank v. Nunes, 80 '" Meeker v. Saunders. 6 Iowa 67. Ky. 334. Compare State v. Kecler. 49 Mo. 548. " Crapster v. Williams, 21 Kans. 109. " Produce Bank v. Morton, 67 N. Y. *Cowlingv.Estes,i5Brad\v.(Ill.)26o. 203. See Brennan v. Wilson, i Am. « Jenkins v. Einstein, 3 Biss. 129. Insolv. Rep. 77. ' Scheitlin v. Stone, 43 Barb. (N. Y.) " Hoopes v. Knell, 31 Md. 553. 634, Sutherland, J., dissenting. '^ Colbern v. Robinson, 80 Mo. 541. " Forbes v. Scannell, 13 Cal. 287. '^ Buffum v. Jones, 144 Mass. 29, 31. 342 RELATIONSHIP. § 242 § 242. Effect of relationship upon debtor's transactions, — It is said by the Supreme Court of Pennsylvania that " there is no law prohibiting persons, standing in near rela- tions of business or affinity, from buying from each other ; or requiring them to conduct their business with each other in special form." ^ The sale of property by a father to his son, or by the son to his father, cannot in itself be consid- ered as a badge of fraud,^ and sometimes the strongest con- siderations of duty may prompt a son to prefer the claim of a widowed mother.^ " The relationship of assignor and assignee," says Finch, J., " and their intimacy and friend- ship, and the preference given to the latter as a creditor prove nothing by themselves. They are consistent with honesty and innocence, and become only important when other circumstances, indicative of fraud, invest them vvith a new character and purpose, and transform them from equivocal and ambiguous facts into positive badges of 4raud." ^ Relationship of the parties, however, is calculated to awaken suspicion,^ and the transaction will be closely scrutinized,® though the relationship is not of itself sufficient ' Dunlap V. Boumonville, 26 Pa. St. * Bumpas v. Dotson, 7 Humph. 73. See Reehling v. Byers, 94 Pa. St. (Tenn.) 310 ; Forsyth v. Matthews, 14 323. See McVicker v. May, 3 Pa. St. Pa. St. 100 ; Harrell v. Mitchell, 61 224; Forsyth v. Matthews, 14 Pa. St. Ala. 271 ; Engraham v. Pate, 51 Ga. 100 ; Bumpas v. Dotson, 7 Humph. 537 ; Sherman v. Hogland, 73 Ind. (Tenn.) 310 ; Shearon v. Henderson, 38 473 ; Moog v. Farley, 79 Ala. 246. Tex. 250 ; W^ilson v. Lott, 5 Fla. 305 ; •* Marshall v. Croom, 60 Ala. 121 ; Bowman v. Houdlette, 18 Me. 245 ; Fisher v. Shelver, 53 Wis. 501 ; Seitz Tyberandt v. Raucke, 96 111. 71 ; Pu- v. Mitchell, 94 U. S. 580; Simms v. sey V. Gardner, 21 W. Va. 477 ; Linin- Morse, 4 Hughes 582 ; Fisher v. Her- ger V. Herron, 18 Neb. 452. ron, 22 Neb. 185 ; Bartlett v. Chees- * Shearon v. Henderson, 38 Tex. brough, 23 Neb. 771. Mr. May says : 251; Fleischer v. Dignon, 53 Iowa " A settlement or other conveyance in 288 ; Wheelden v. Wilson, 44 Me. 1 1 ; favor of a near relative is open to more S. P. Demarest v. Terhune, 18 N. J. Eq. suspicion than one to a mere stranger, 49 ; Low V. Wortman, 44 N. J. Eq. 193. inasmuch as it is more likely to be in- ^ Coley V. Coley, 14 N. J. Eq. 350. tended, not as a real transfer of prop- * Shultz V. Hoagland, 85 N. Y. 468 ; erty by which the donor puts it out of S. P. Clark V. Krause, 2 Mackey (D. C.) his own reach, but a feigned and coUu- 566. See Renney v. Williams, 89 Mo. sive arrangement by which it is secretly 145. understood that the donee shall hold § 242 RELATIONSHIP. 343 to raise a presumption of fraud.' It may be considered, with the other facts, by the jury,^ and rather tends to aid tlie creditors,^ for it is regarded as highly probable that a party intending to perpetrate a fraud, would look for aid and con- nivance to a relative rather than to a stranger. When rela-i tionship is coupled with secrecy in the transaction, it pa)y unless explained or justified, be regarded as fraudulent. CThe same rule applies when the transfer conveys the debtor's entire estate, and other badges accompany it.^ It may be observed here that the fact that the creditors who obtained judgments by confession bore intimate relations to the debtors, the delay in the levy of the execution, the unusual time and order under which the assignee took possession, and the agency of the same attorney in all the proceedings, though, perhaps, casting suspicion upon the proceedings, are not in themselves sufficiently strong to sustain an im- putation of bad faith, or a charge of fraudulent preference.^ We may here advert to the rule of the common law that a debtor has a right to prefer one class of creditors to an- other, and that it is error " to encourage a jury to take into consideration the exercise of this right as ' a circumstance of suspicion' in deciding upon the fairness of the transfer.""^ The case of Salmon v. Bennett^ has exerted a potent in- fluence over decisions in this country concerning voluntary conveyances. In the course of the opinion Swift, C. J., said :^ " Merc indebtedness at the time will not, in all cases, render a voluntary conveyance void as to creditors, where the property against the claims of cred- "• Reiger v. Davis. 67 N. C. 189. itors or purchasers, and still let the » Embury v. Klemm, 30 N. J. Eq. donor receive benefits from it." May's 523 ; Johnston v. Dick, 27 Miss. Fraudulent Conveyances, p. 236. 277. ' King V. Russell, 40 Tex. 132 ; Mar- * Baldwin v. Freydendall, 10 Bradw. shall V. Croom, 60 Ala. 121. (111.) 107. * Engraham v. Pate. 51 Ga. 537 ; ' Born v. Shaw, 29 Pa. St. 292. Burton v. Boyd, 7 Kans. 17. " I Conn. 525. See 24 Am. Law Reg. » Demarest v. Terhune, 18 N. J. Eq. N. S. 496. 49. ' Salmon v. Bennett, i Conn. 525, 542. 344 PRIMA FACIE CASES OF FRAUD. § 243 it is a provision for a child in consideration of love and affection ; for if all gifts by way of settlement to children, by men in affluent and prosperous circumstances, were to be rendered void upon a reverse of fortune, it would in- volve children in the ruin of their parents, and in many cases might produce a greater evil than that intended to be remedied." This rule has been applied to conveyances to wives,^ as well as to children,^ grandchildren,^ and other near relatives.* § 243. Prima facie cases of fraud. — Taking a deed for prop- erty in the name of the wife, which property was purchased and paid for by the husband, who was involved in debt at the time, was said to make a prima facie case of fraud against creditors.^ In Purkitt v. Polack^ the court ob- served : " The control of the property after the alleged sale, the indebtedness of the grantor at the time, the ab- sence of the grantee from the State, and the failure on the part of the latter to show any payment of consideration, 1 See Clayton v. Brown, 17 Ga. 217 ; S. C. again 30 Ga. 490 ; Weed v. Davis, 25 Ga. 684; Goodman V, Wineland, 18 Reporter (Md.) 622 ; Kipp v. Hanna, 2 Bland Ch. (Md.) 26 ; Filley v. Regis- ter, 4 Minn. 391 ; Walsh v. Ketchum, 12 Mo. App. 580; Patten v. Casey, 57 Mo. 118; Potter v. McDowell, 31 Mo. 62 ; Amnion's Appeal, 63 Pa. St. 284 ; Carl v. Smith, 8 Phila. (Pa.) 569 ; Perkins v. Perkins, i Tenn. Ch. 537 ; Yost V. Hudiburg, 2 Lea (Tenn.) 627 ; Morrison v. Clark, 55 Texas 437 ; Belt V. Raguet, 27 Texas 471 ; Smith V. Vodges, 92 U. S. 183 ; Lloyd v. Ful- ton, 91 U. S. 479; French v. Holmes, 67 Me, 186 ; Winchester v. Charter, 12 Allen (Mass.) 606. ^ See Dodd v. McCraw, 8 Ark. 83 ; Smith V. Yell, 8 Ark. 470 ; Clayton v. B'own, 17 Ga. 217; Patterson v. Mc- Kinney, 97 111. 41 ; Worthington v. Bul- litt, 6 Md. 172 ; Worthington v. Shipley, 5 Gill (Md.) 449; Smith v. Lowell, 6 N. H. 67 ; Brice v. Myers, 5 Ohio 121 ; Crumbaugh v. Kugler, 2 Ohio St. 373 ; Grotenkemper v. Harris, 25 Ohio St. 510; Miller v. Wilson, 15 Ohio 108; Posten V. Posten, 4 Whart. (Pa.) 27 ; Chambers v. Spencer, 5 Watts (Pa.) 404 ; Mateer v. Hissim, 3 P. & W. (Pa.) 160 ; Burkey v. Self, 4 Sneed (Tenn.) 121 ; Hinde's Lessee v. Long- worth, II Wheat. 199; Brackett v. Waite, 4 Vt. 389 ; S. C. 6 Vt. 41 1 ; Church V. Chapin, 35 Vt. 223 ; Lerow V. Wilmarth, 9 Allen (Mass.) 386 ; Laughton v. Harden, 68 Me. 208 ; Ste- vens V. Robinson, 72 Me. 381. ' Bird V. Bolduc, i Mo. 701 ; Will- iams V. Banks, 11 Md. 198. ^ Pomeroy v. Bailey, 43 N. H. 118. See 24 Am. Law Reg. N. S. 497. * Alston V. Rovvles, 13 Fla. 117. « 17 Cal. 327-332. § 243 PRIMA FACIE CASES OF FRAUD. 345 were amply sufficient to raise a prima facie intendment of fraud in the transaction." In Reiger v. Davis ^ the court remarked that when a much-embarrassed debtor conveyed property of great value to a near relative, and the transac- tion was secret, no one being present to witness it but rel- atives, it was to be regarded as fraudulent. In Wilcoxen V. Morgan '^ the court said that in addition to the evidence of certain declarations made at the time of the preparation of the conveyance, "the relationship of the parties; the fact that the conveyance was made without the knowledge of the grantee ; the absence of consideration, and the sub- sequent long-continued possession and dominion of the premises by the grantor, sufficiently manifest that the pur- pose of G. in this conveyance was to put the estate beyond the reach of his creditors." When it appeared that after the conveyance the debtor had no other property subject to execution, that the grantee was his brother and had not means sufficient to enable him to pay for the property, that the debtor remained in possession and the grantee removed out of the State, these, and certain admissions of the cov- inous nature of the transfer, were considered sufficient to show that the conveyance was made to protect the prop- erty from creditors.^ In Danby v. Sharp ^ it is said that a sale of an entire stock-in-trade to a clerk in the employ- ment of the vendor, is colorable and fraudulent as to the creditors of the vendor, when the vendee has no means, except that he receives ten dollars a week for his services, and where he pays nothing at the time of the sale, but gives his unsecured promissory notes for the whole amount of the purchase-money, and no public notice' is given of the change, but the business sign remains the same, and the vendor is frequently about the premises. In Moore v. Roe ^ the court held that the transfer of all a debtor's prop- '67N. C. 186. * 2 MacAr. (D. C.) 435- •^ 2 Col. 477, 478. ' 35 N. J. Eq. 90. * McDonald v. Farrell, 60 Iowa 337. 346 COMMENTS. § 244 erty pending a suit against him; the taking of an absolute deed as security for money owing by the debtor, and loose- ness or incorrectness in stating the consideration of the conveyance, or in determining the value of the property conveyed, were indications of fraud. The further multiplication of these illustrations is a work of doubtful utility. Indeed the resources of fraudulent debtors are too great, the color and variety of the devices to elude creditors too numerous, to render classification of the different schemes practicable. It is to be noticed that the illustrations last given combine different badges of fraud, and it is very common in creditors' suits to find many of these indicia existing in a single case. § 244. Comments. — Frequent comment is made upon the extreme difficulty of the task of defining and establishing fraud, and it seems to be regarded as impossible to formu- late exact rules as to what is and what is not fraud. " To do so would be to give to persons fraudulently inclined the power of evading the jurisdiction of the courts by fresh contrivances which might be invented to elude any in- variable, inflexible rule."^ "As to relief against frauds," says Hardwicke, " no invariable rules can be established. Fraud is infinite, and were a court of equity once to lay down rules how far they would go, and no further, in ex- tending their relief against it, or to define strictly the species or evidence of it, the jurisdiction would be cramped and perpetually eluded by new schemes, which the fertility of man's invention would contrive." Vice-Chancellor Kin- dersley expressed the modern doctrine in these terms : " It was at one time attempted to lay down rules that particular things were indelible badges of fraud, but in truth, every case must stand upon its own footing, and the court or the jury must consider whether, having regard to all the cir- ' May's Fraudulent Conveyances, p. 80; Parke's History of Court of Chan- cery, p. 508. See § 13 and note. § 244 COMMENTS. 347 cumstances, the transaction was a fair one, and intended to pass the property for a good and valuable consideration." ^ In Jones v. Nevers,^ Allen, C. J., said : " Every case must stand on its own footing." But this leads to unsatisfac- tory and uncertain results. The profession are not given sufficient fixed rules with which to guide their actions, or advise clients, and must resort to the wilderness of single instances contained in the reports to discover analogous cases. The courts protest that it is not permissible to guess at the truth in the discovery of fraud ; that fraud must be proved and not presumed, and that speculative inferences are not the proper foundation of a legal judgment.^ Vet the most casual reading of many reported decisions will demonstrate that transfers of property have been avoided, especially in equity, upon the most shadowy and intangible grounds, and that in many instances innocent purchasers have been the victims of unfortunate circumstances. That on the other hand, fraudulent alienees have constantly es- caped the meshes of the law, and secured their ill-gotten gains, though the defrauded creditors were inwardly con- scious of the fraud which they were powerless to prove, is a matter of common experience. The impulse "to color more strongly the constructive indications of fraud, for the protection of valuable rights," is to be encouraged. The degrees of weight to be attached to particular classes of indicia should be carefully considered, for, in the pres- ent aspect of the law, the marks of fraud, which assume such prominence in this class of litigation, often, like a two-edged sword, injure both creditors and bona Jide alienees. __^ ' Hale V. Metropolitan Omnibus Co., ' i8 New Brunsw. 629. 28 L. J. Ch. -m. ' See §§ 5, 6. CHAPTER XVII. CHANGE OF POSSESSION DELIVERY. § 245. Concerning possession. 246. Chang-e of possession. 247. Possession as proof of fraud. 248. Transfers presumptively or pri- jna facie fraudulent. 249. The New England cases. 250. Rule in New York and various other States. 251. Fraudulent per se or conclu- sive. 252. Practical results of the conflict- ing policies. 253. Actual change of possession re- quired. 254. Question for the jury. 255. Overcoming the presumption. 256. Possession within a reasonable time. § 257. Change of possession must be continuous. 258. Temporary resumption of pos- session. 259. Concurrent possession insuffi- cient. 260. Possession of bailee. 261. No delivery where purchaser has possession. 262. When technical delivery is not essential. 263. Excusing want of change of pos- session. 264. Change of possession of realty. 265. Change of possession on judicial sale. 266. Delivery of growing crops. 267. Possession with power of sale. " By the possession of a thing we always conceive the condition in which not only one's own dealing with the thing is physically possible, but every other jserson's dealing with it is capable of being excluded." — Von Savigny^s Treatise on Possession, treinslated by Sir Erskine Perry, p. 2. § 245. Concerning possession. — Possession, or " the own- ing or having a thing in one's own power," ^ with the right to deal with it at pleasure, to the exclusion of others,'^ is said to be a degree of title, although the lowest.^ The ef- fect of a failure to change possession, more especially as relating to sales of personalty, will be found upon investi- gation to occupy a very prominent place in the law regu- lating fraudulent conveyances. Indeed, some of the writers seem to lose sight of the other characteristics of Twyne's ' Brown v. Volkening, 64 N. Y. 80. Compare Pope v. Allen, 90 N. Y. 298. ' Sullivan v. Sullivan, 66 N. Y. 41. ^ Swift V. Agnes, 33 Wis. 240 ; Raw- ley V. Brown, 71 N. Y. 85 ; Mooney v. Olsen, 21 Kans. 691. § 245 CONCERNING POSSESSION. 349 Case,^ and treat the question of the failure to change pos- session of the property as not only the controlling but the exclusive feature of the case. In Twyne's Casc^ the court said : " The donor continued in possession and used the goods as his own, and by reason thereof he traded and trafficked with others, and defrauded and deceived them."^ Hence Coke, in commenting upon this case, gives the fol- lowing advice to a donee: "Immediately after the gift take possession of the goods, for continuance of possession in the donor is a sign of trust." It will be at once manifest from this statement that the modern law upon the subject must have undergone a very material change since Coke wrote, for the failure to consummate the sale or gift by change of possession was then considered to be merely a mark, sign, or badge of fraud.^ We cannot but regard this feature of the law as occupying too prominent a place, and as receiving too great attention as applied to transactions which it is sought to annul as fraudulent under the statute of Elizabeth.^ The theory is. that a sale or gift unaccom- panied by possession is not apparent to third parties, but on the contrary is contradicted by the continued visible possession of the vendor. Yet, in the case of bailments in their many forms, the possession is held by parties who are not the owners, but this feature of the relationship is not ' See § 22. deceive and to defraud creditors and "^ 3 Rep. 80, 8ia. purchasers; and the law always pre- ^ See Putnam v. Osgood, 52 N. H. sumes, even in criminal matters, that 156; Wright V. McCormick, 67 Mo. a person intends whatever is the natural 430; Barr v. Reitz, 53 Pa. St. 256; and probable consequence of his own Manton v. Moore, 7 T. R. 72 ; also actions." Griswold v. Sheldon, 4 N. Twyne's Case, i Smith's Lea. Cas. i ; Y. 593. For exceptions to the general " Sales and Conveyances without De- rule see Bissell v. Hopkins, 3 Cow. (N. livery of Possession," 18 Am. Law Y.) 166, tn notis. Reg. (N. S.) 137. See § 22. ' In Davis v. Turner, 4 Gratt. (Va.) ■•"The statute does not introduce a 441, tiie court observed: "The truth new rule, nor does it make a forced or is, there is something rather loose and unnatural presumption. The direct indefinite in the idea of a delusive tendency of a conveyance of goods credit gained by the possession of per- without a change of possession is to sonal property." 350 CONCERNING POSSESSION. § 245 regarded as giving rise to any presumption of fraud. Any one can safely put his personal property in another's pos- session, or give another the use of it, without imperilling his title.^ It is said that " the possession of property never owned by the possessor raises no ... . presumption " of ownership.^ This surely is an unsatisfactory explanation of the distinction. The acts of ownership exercised over property by a bailee and by an owner, either before or after sale, are not necessarily dissimilar. Inquiry in either case would generally be necessary to ascertain the status of the title. The exercise of these very acts of ownership con- stitute the mischief sought to be obviated by the rule calling for change of possession. Chattels are not nego- tiable. Possession is not, as in the case of mercantile paper and money, an assurance of title, or of authority or power of disposition. "The servant," said Woodruff, J., "in- trusted with the possession of his master's property, does not thereby get authority to sell it, or to authorize another to sell it. The borrower of a chattel, or the ordinary bailee, does not, by his possession, gain any such power." ^ A man cannot be deprived of his property without his consent. Surely it is obvious that to prohibit altogether the sepa- ration of the title from the possession of personal property would be incompatible with an advanced state of society and commerce, and productive of great inconvenience and " Capron v. Porter, 43 Conn. 389. possession of property which he had Dillon, J., observes, that " the rule, de- sold or mortgaged, and yet of which he ducing fraud as a conclusion of law retained the possession, enjoyment, and from the simple retention of possession apparent ownership. The statute of 13 by the vendor or mortgagor, originated Elizabeth did not declare that such re- in England in a very early day, when tention would be fraudulent. This was there were no registry laws, or none a doctrine of the courts." Hughes v. requiring such instruments to be regis- Cory, 20 Iowa 402. See Bullock v. tered. It was founded upon public Williams, 16 Pick. (Mass.) 33. policy. That policy was to prevent a * Capron v. Porter, 43 Conn. 389. party from acquiring a false and de- See Davis v. Bigler, 62 Pa. St. 242. ceptive credit on the strength of the ^ Spraights v. Hawley, 39 N. Y. 446. § 246 CHANGE OF POSSESSION. 35 1 injustice in the pursuits and business of life.^ It would be " a remedy worse than the disease." § 246. Change of possession. — It is believed that the rule of the common law had its foundation in the doctrine al- ready noticed, that possession of personal property \s prima facie evidence of ownership. To allow the owner of such property to transfer the title by a secret conveyance, while retaining the possession and assuming to act as the owner, was regarded as permitting a fraud upon all persons who should deal with him upon the faith of his ownership. As we have said, the theory was that his possession and apparent ownership gave him credit, and. afforded him the means of defrauding others.^ An agreement to let a ven- dor retain the possession and use of the property after an absolute sale is not considered to be a common and ordi- nary transaction in the usual course of business. Such an arrangement, it is urged, excites suspicion, and it is re- garded in many of the cases as the bounden duty of the courts, for the safety and protection of creditors, to call upon and hold the vendee in all such cases, to explain clearly and satisfactorily how an absolute sale could have been bona fide, and yet the vendor retain the use and pos- session.^ ' Davis V. Turner, 4 Gratt. (Va.) 441. the usual course of dealing, and re- ' See Crooks V. Stuart, 2 McCrary, 1 5. quires a satisfactory explanation." "The controlling argument, .... is Again it is observed: "Retention of the danger of false credit and fraudu- possession not only tends to give false lent evasion of debt whenever delivery credit to the seller, but it is a sign of a and change of possession do not ac- secret trust in his favor." Brawn v. company and follow change of property Keller, 43 Pa. St. 106. whether absolute or qualified," per ^ Coburn v. Pickering, 3 N. H. 427. Verplanck, Senator, in Cole v. White, It must be remembered that, by the 26 Wend. (N. Y.) 523. Chief-Justice common law, delivery was not consid- Kent said, in Sturtevant v. Ballard, 9 ered necessary upon a sale of chattels Johns. (N. Y.) 337, 339: "Delivery of to vest the title in the vendee, (Miller possession is so much of the essence of ads. Pancoast. 29 N. J. Law 253; Fra- the sale of chattels that an agreement zier v. Fredericks, 24 N.J. Law 169; to permit the vendor to keep posses- Meeker v. Wilson, i Gall. 424 ; Mon- sion is an extraordinary exception to roe v. Hussey, i Oreg. 190; Davis v. 352 POSSESSION AS PROOF OF FRAUD. § 247 Such is the general condition of the law relating to this branch of the subject, whatever may be the force of the criticisms suggested. The subject by reason of its promi- nence calls for consideration somewhat in detail, and for a discussion of the many exceptions, real and apparent, to the general rule arising from the necessities incident to particular cases and from other causes.* § 247. Possession as proof of fraud. — As we shall presently show. It is commonly stated in some of the reports that the continued possession of the subject-matter of the sale by the grantor or vendor is prima facie evidence of fraud, while other authorities regard it as conclusive proof that the transaction is covinous. A learned writer^ has de- Tumer, 4 Gratt. [Va.] 426,) as between the parties. Philbrook v. Eaton, 134 Mass. 398, 400; Parsons v. Dickinson, 1 1 Pick. (Mass.) 352 ; Packard v. Wood, 4 Gray (Mass.) 307. ' Mr. May says in his treatise on Fraudulent Conveyances, 2d ed., p.i 18 : " It by no means follows, though, that be- cause there is no possession given there- fore a transfer is fraudulent : for those cases where the judges have said that if possession was not given it was fraudulent (Edwards v. Harben, 2 T. R. 587; Wordall v. Smith, i Campb. 332 ; Macdona v. Swiney, 8 Ir. C. L. R. 86) must be taken with reference to the circumstances of each case. The question of possession is one of much importance, but that is with a view to ascertain the good or bad faith of the transaction (Abbott, C. J., in Latimer V, Batson, 4 B. & C. 652 ; and see Arundell v. Phipps, 10 Ves. 139; Kidd V. Rawlinson, 2 B. & P. 59; Hoffman V. Pitt, 5 Esp. 22, 25 ; Eastwood v. Brown, Ry. & Mood. 312). In Arun- dell V. Phipps (10 Ves. 139, 145), Lord Eldon said that the mere circumstance of the possession of chattels, however familiar it might be to say that it proves fraud, amounts to no more than that it \^ prima Jacie evidence of prop- erty in the man possessing, until a title not fraudulent is shown under which that possession has followed ; that every case, from Twyne's Case (3 Rep. 80 b ; see the remarks of Littledale, J., in Martindale v. Booth, 3 B. & Ad. 498, 505) downwards, supports that, and there was no occasion otherwise for the statute of King James (21 Jac. i C. 19, §§ 10, II, which originated the law with respect to property remaining in the reputed ownership or order and disposition of a bankrupt). There is no sufficient authority for saying that the want of delivery of possession makes void a bill of sale of goods and chat- tels ; it is prima facie evidence of a fraudulent intention, and if it be a badge of fraud only, in order to ascer- tain whether a deed be fraudulent or not, all the circumstances must be taken into consideration. (Per Patte- son, J., in Martindale v. Booth, 3 B. & Ad. 498, 587)." - Possession as Evidence of Fraud, II Cent. L. J. 21. § 248 FRAUDULENT TRANSFERS. 353 clared this to be a loose method of referring to the matter, and has ventured to assert that " a careful examination of this branch of the law will show that neither of the views so expressed is correct." The argument advanced by the writer is that bald possession is not conclusive evidence of fraud ; it is only a circumstance admissible in evidence with other circumstances as bearing upon the question of the actual existence of fraud. The conclusion drawn in the article mentioned is that " possession is a link in a chain of circumstances, pertinent in proving fraud, having greater or less weight according to the circumstances of each case," and " is not necessarily either conclusive or prima facie evidence of fraud." Some accompanying circumstances attending the possession or, so to speak, coloring it must be shown to establish fraud. The statutory policy introduced in several of the States, under which a failure to effect a change of possession is made either presumptively or conclusively fraudulent, has robbed the question of much of its importance. We can- not but regard the theory advanced by this writer as sound, but we fail to discover that the cases fully support it. § 248. Transfers presumptively or prima facie fraudulent. — The question of how far retention of possession (»f the property by the vendor is to be considered as evidence of fraud in its sale has been a subject of much consideration by the courts and in legislative bodies in tlie United States.^ In some States the matter is regulated by statute, but the statutes and the rules for their interpretation vary in the different States. In other States the question is left to be disposed of by the rules and principles which obtain at common law. The general subject is capable of ex- tended discussion both because of its importance and for ' It must be remembered that "the changed possession draws no distinc- statute with its presumptions founded lion between modes of transfer. " Stim- upon non-delivery and absence of son v. Wrigley, 86 N. V. 337. 23 354 THE NEW ENGLAND CASES. § 249 the reason that the authorities relating to it are full of subtle distinctions. We can only consider its general out- lines and notice the leading cases and the important ex- ceptions to the general rule in the principal States. The struggle is between two policies and rules of evidence or proof, viz. : whether the neglect to change possession of the property shall be considered presumptively or conclu- sively fraudulent as to creditors. The prevalent policy is to consider the absence of a change of possession as prima facie or presumptive evidence of fraud.^ § 249. The New England cases. — The cases supporting the former theory will be first noticed, giving brief quota- tions from leading authorities. In Massachusetts, " posses- sion of the vendor is only evidence of fraud, which, with the manner of the occupation, the conduct of the parties, and all other evidence bearing upon the question of fraud, is for the consideration of the jury."^ In New Hampshire ' See Crawford v, Kirksey, 55 Ala. 300 ; Mayer v. Clark, 40 Ala. 259 ; Vredenbergh v. White, i Johns. Cas. (N. Y.) 1 56 ; Beals v. Guernsey, 8 Johns. (N. Y.) 446; Barrow v. Pax- ton, 5 Johns. (N. Y.) 258. In Bissell V. Hopkins, 3 Cow. (N. Y.) 166, 188, Savage, Chief-Justice, said : " The pos- session by the vendor of personal chat- tels after the sale is not conclusive evi- dence of fraud. The vendee may, not- withstanding, upon proof that the sale was bo}ia fide and for a valuable con- sideration, and that the possession of the vendor after such sale was in pur- suance of some agreement not incon- sistent with honesty in the transaction, hold under his purchase against cred- itors." See Davis v. Turner", 4 Gratt. (Va.) 422, where the doctrine of fraud per se is examined and repudiated. See Fotkner v. Stuart, 6 Gratt. (Va.) 197 ; Howard v. Prince, 1 1 N. B. R. 322. '^ Ingcills V. Herrick, 108 Mass. 354 ; Shurtleff V. Willard, 19 Pick. (Mass.) 202 ; Brooks v. Powers, 1 5 Mass. 244 ; Hardy v. Potter, 10 Gray (Mass.) 89. In Dempsey v, Gardner, 127 Mass. 381, Gray, C. J., said : " By the law as es- tablished in this commonwealth, it was necessar}', as against subsequent pur- chasers or attaching creditors, that there should be a delivery of the prop- erty. No such delivery, actual or sym- bolical, was proved. The buyer did no act by way of taking possession or ex- ercising ownership, and the seller did not agree to hold or keep the horse for him There was no evidence of delivery for the consideration of the jury, except such as might be implied from the execution and delivery of the bill of sale. That was not enough. Carter v. Willard, 19 Pick. (Mass.) i ; Shumway v. Rutter, 7 Pick. (Mass.) 56, 58 ; S, C. 8 Pick. (Mass.) 443, 447 ; Packard v. Wood, 4 Gray (Mass.) 307 ; Rourke v. Bullens, 8 Gray (Mass.) 549 ; Veazie v. Somerby, 5 Allen (Mass.) 280, 289." § 250 RULE IN NEW YORK AND OTHER STATES. 355 it is said that " in cases of absolute sales, possession and use by the vendor, after the sale, is T^WAys, priina facie, and, if unexplained, conclusive evidence of a secret trust." ^ So in Maine failure to change possession is presumptive evi- dence of fraud, and the jury are to determine the good faith of the transaction.^ In Rothchild v. Rowe^ the Supreme Court of Vermont said : " The law is well settled in this State that there must be a substantial and visible change of possession to protect property from attachment by the creditors of the vendor The vendee must acquire the open, notorious, and exclusive possession of the prop- erty, and this implies that the vendor is divested of the use, possession, or employment of the property."^ The rule that non-delivery of possession is prima facie evidence of fraud obtains in Rhode Island.^ § 250. Rule in New York and various other States. — After much fluctuation and discussion, the general rule is now established by statute in New York, that the retention of possession by the vendor is presumptively fraudulent. This presumption may be overcome by proof satisfactory to a jury that the retention of possession was in good faith, for an honest purpose, and with no design to defraud creditors.^ If good faith is established it is not essential in that State to show " a good reason for the want of change of posses- ' Coburn v. Pickering, 3 N. H. 428. Clifford, 54 Vt. 344 ; Weeks v. Pres- See Lang v. Stockwell, 55 N. H. 561 ; cott, 53 Vt. 57. Cutting V. Jackson, 56 N. H. 253 ; ■■ Sarle v. Arnold. 7 R. I. 582 ; Mead Sumner v. Dalton, 58 N. H. 295; v. Gardiner, 13 R. I. 257. See Beck- Stowe V. Taft, 58 N. H. 445 ; Shaw v. with v. Burrough. 13 R. L 294 ; Good- Thompson, 43 N. H. 130. ell V. Fairbrother, 12 R. L 233. As to 2 Shaw V. Wilshire, 65 Me. 485 ; the rule in Connecticut, see § 251. Bartlett v. Blake, 37 Me. 124 ; Fair- * Ball v. Loomis, 29 N. Y. 412 ; Mil- field Bridge Co. v. Nye, 60 Me. 372 ; ler v. Lockwood, 32 N. Y. 293 ; Ford Googins V. Gilmorc, 47 Me. 9. v. Williams, 24 N. Y. 359; Hollacher ^4 Vt. 389, 393. V. O'Brien, 5 Hun (N. Y.) 277; Burn- ■* Compare Kendall v. Samson, 12 ham v. Brennan, 74 N. Y. 597 ; Thomp- Vt. 515; Ridout V. Burton, 27 Vt. 383; son v. Rlanchard, 4 N. Y. 303. See Jewett V. Guyer, 38 Vt. 209; Fish v. Mumper v. Rushmore, 79 N. Y. 19. 356 FRAUDULENT PER SE. § 25 1 sion," ^ which is certainly crowding the rule to an extreme limit hostile to the creditor interests. The principle that the possession may be explained is extensively recognized. In addition to the States already named it obtains in New Jersey,^ Virginia,^ Alabama,^ Louisiana,^ Ohio,® Indiana/ Michigan,^ Minnesota,^ Wisconsin,^" Nebraska," Nevada, ^^ Arkansas, ^^ Kansas,^"* and in the Federal tribunals.^^ § 251. Fraudulent per se or conclusive. — The cases just considered give what may be termed the equitable and charitable view of the question. But the policy embodied in many of these cases, and in the statutes upon which they are in certain instances founded, is not considered in some of the States rigid or severe enough to suppress the evils engendered by this class of transactions. Thus in Con- necticut, Loomis, J., in delivering the opinion of the court in the case of Capron v. Porter,'^ observed : " That the re- tention of the possession of personal property by the vendor ' Mitchell V. West, 55 N. Y. 107 ; « Collins v. Myers, 16 Ohio 547 ; Hanford v. Artcher,4 Hill (N. Y.) 271. Thome v. Bank, 37 Ohio St. 254. ' Miller ads. Pancoast, 29 N. J. Law ' Kane v. Drake, 27 Ind. 29 ; Rose 253 ; Sherron v. Humphreys, 14 N. J. v. Colter, 76 Ind. 590 ; New Albany Law 220. " The possession by the Ins. Co. v. Wilcoxson, 21 Ind. 355. vendor of personal chattels after the * Molitor v. Robinson, 40 Mich. 200, sale is not conclusive evidence of fraud, per Cooley, J. The vendee may notsvithstanding, upon ' Blackman v. Wheaton, 13 Minn, proof that the sale was bona fide and 326; Benton v. Snyder, 22 Minn. 247 ; for a valuable consideration, and that Camp v. Thompson, 25 Minn. 175. the possession of the vendor after sale '° Wheeler v, Konst, 46 Wis. 398 ; was in pursuance of some agfreement Blakeslee v. Rossman, 43 Wis. 116; not inconsistent with honesty in the Osen v. Sherman, 27 Wis. 505. transaction, hold under his purchase " Uhl v. Robison, 8 Neb. 272 ; Dens- against creditors." Miller ads. Pan- more v. Tomer, 14 Neb. 392. coast, 29 N. J. Law 253. " Conway v. Edwards, 6 Nev. 190. 2 Howard v. Prince, 1 1 N. B. R. 322 ; Compare Doak v. Brubaker, i Nev. Davis V. Turner, 4 Gratt. (V&.) 423, a 218. leading case of international repute. '* George v. Norris, 23 Ark. 128. ■• Mayer v. Clark, 40 Ala. 259 ; Craw- " Phillips v, Reitz, 16 Kans. 396. ford V. Kirksey, 55 Ala. 282 ; Moog v. '^ Warner v. Norton, 20 How. 448. Benedicks, 49 Ala. 512. But see Hamilton v. Russel, i Cranch * Keller v. Blanchard, 19 La. Ann. 310. S3 ; Guice v. Sanders, 21 La. Ann. 463. '^ 43 Conn. 383. § 251 FRAUDULENT PER SE. 357 after a sale raises a presumption of fraud which cannot be repelled by any evidence that the transaction was bona fide and for valuable consideration, is still adhered to and en- forced by the courts in this State with undiminished rigor, as a most important rule of public policy. The reason of the rule is that as against a person who was once the owner of the property, and all who claim by purchase from him, the continued possession is to be regarded as a sure iji- dicium of continued ownership, and that the possessor would obtain by such continued possession a false credit to the injury of third persons, if there was no such rule to protect them."^ Clow v. Woods ^ is the leading case in Pennsylvania. Gibson, J., said : " Where possession has been retained without any stipulation in the conveyance, the cases have uniformly declared that to be, not only evi- dence of fraud, but fraud per se. Such a case is not in- consistent with the most perfect honesty ; yet a court will not stop to inquire whether there be actual fraud or not ; the law will impute it, at all events, because it would be dangerous to the public to countenance such a transaction under any circumstances. The parties will not be suffered to unravel it, and show, that what seemed fraudulent was not in fact so."° In Born v. Shaw** the court observed: " When possession is retained by the vendor, it is not only 'Compare Osborne v. Tuller, 14 156; McKibbin v. Martin, 64 Pa. St. Conn. 529; Norton v. Doolittle, 32 352 ; Carman v. Cooper. 72 I'a. St. 37 ; Conn. 405 ; Elmer v. Welch, 47 Conn. Worman v. Kramer, 73 Pa. St. 378 ; 56; Hull V. Sigsworth, 48 Conn. 258; Dawes v. Cope, 4 Binn. (Pa.) 258; Hatstat V. Blakeslee,4i Conn. 301 ; Sey- Davis v. Bigler, 62 Pa. St. 242 ; Shaw mour V. O'Keefe, 44Conn. 128; Meade v. Levy, 17 S. & R. (Pa.) 99; Bom v. V. Smith, 16 Conn. 346. See especially Shaw, 29 Pa. St. 288; Young v. Mc- Hamilton v. Russel, i Cranch 310; Clure, 2 W. & S. (Pa.) 151. " Clow v. and compare Warner v. Norton, 20 Woods, 5 S. & R. (Pa.) 275, decided How. 448 ; Gibson v. Love, 4 Fla. 217 ; by this court in 1819. is the magna Monroe v. Hussey, i Oregon 188. charta of our law upon this subject," ' 5 S. & R. (Pa.) 280. per Sharswood. J., in McKibbin v. ' See Thompson v. Paret, 94 Pa. St. Martin, 64 Pa. St. 356. 275 ; Pearson v. Carter, 94 Pa. St. * 29 Pa. St. 292. 358 CONFLICTING POLICIES. § 252 evidence of fraud, but fraud per se'' In Maryland^ a bill of sale may be recorded, and the title of the grantee is then as effectually protected as if the sale had been accompanied by delivery.^ It is a well-settled doctrine in Kentucky that where there is an absolute sale of movable property, the possession must accompany the title, or the sale will be void in law as to creditors or subsequent purchasers, even though the contract contain a stipulation that the vendor is to re- tain the possession till a future day.^ After much conflict,* the rule seems to be established in Missouri that a sale with- out delivery of possession is conclusively presumed to be fraudulent.^ In Illinois it is fraud/^r se to leave the vendor in possession.^ Much the same policy is pursued in lowa^ and California.^ § 252. Practical results of the conflicting policies. — Brush- ing aside for the present the objections already outlined to the prominence accorded the question of change of pos- session in controversies of the class under consideration, it becomes important to consider which of the two rules just instanced is the more salutary in practice. Possibly the creditor class would oftener effect a recovery when the pre- sumption of fraud from failure to change possession is ab- solute. It does not follow, however, that the latter rule is ' Kreuzer v. Cooney, 45 Md. 582. gert v. Borchert, 59 Mo. 80 ; Wright 2 Clary v. Frayer, 8 G. & J. (Md.) v. McCormick, 67 Mo. 426. 416, See Price v. Pitzer, 44 Md. 527. ° Thompson v. Yeck, 21 111. 73 ; * Robbins v. Oldham, i Duv. (Ky.) Ticknor v. McClelland, 84 111. 471 ; 28; Brummel v. Stockton, 3 Dana Rozier v. Williams, 92 111. 187; John- (Ky.) 135; Bradley v. Buford, Sneed son v. Holloway, 82 111. 334; Richard- (Ky.) 12; Morton v. Ragan, 5 Bush son v. Rardin, 88 111. 124 ; Greenebaum (Ky.) 334. See Cummins v. Griggs, 2 v. Wheeler, 90 111. 296 ; Hart v. Wing, Duvall (Ky.) 87. 44 111. 141. ■* See Claflin v. Rosenberg, 42 Mo. ' Prather v. Parker, 24 Iowa 26 ; 448 ; Rocheblave v. Potter, i Mo. 561 ; Boothby v. Brown, 40 Iowa 104 ; Hes- Foster v. Wallace, 2 Mo. 231 ; Sibly v. ser v. Wilson, 36 Iowa 152 ; Sutton v. Hood, 3 Mo. 290; King v. Bailey, 6 Ballou, 46 Iowa 517. Mo. 575 ; Shepherd V. Trigg, 7 Mo. 151. 'See Lay v. Neville, 25 Cal. 552; ^ Claflin V. Rosenberg, 42 Mo. 448 ; Hesthal v. Myles, 53 Cal. 623 ; Woods Bishop V. O'Connell, 56 Mo. 158 ; Bur- v. Bugbey, 29 Cal. 466. §252 CONFLICTING POLICIES. 359 a wise one, or the recovery in such cases always just. "In seeking to catch rogues" it is not the proper function of the courts to "ensnare honest men. We may become so zealous against fraud as to restrain the free action of honesty, a result that would be most disastrous. Better is it that many frauds should go undetected than that the means of detection or prevention should treat honest men as guilty, or teach men to be always suspicious of their neighbors, and watchful that honest acts be precisely meas- ured according to the standard of legal morality."^ Parties designing to make covinous alienations will so frame their actions as to endeavor to leave no indicia, or to create no presumptions of fraud. Honest people, on the other hand, conscious of no design to wrong others, and giving little thought to the appearance or form of the transaction, are often the victims of unfortunate circumstances, and sud- denly discover that the law imputes to their innocent acts or omissions wicked designs, than which nothing was fur- ther from their minds. Hence Cabell, J., in commenting upon the mischievous operation of the absolute rule, said : " I have found myself compelled as judge to pronounce transactions to be fraudulent and void as to creditors which were known to be perfectly fair and bojia fide, and were not intended or calculated to delay, hinder, or defraud creditors."^ The rule creating a fraudulent presumption in these cases seems to be sufficiently severe in its operation. A policy which blindly ignores the real intent of the parties, practically excludes all evidence concerning the transaction or its underlying motives, and conclusively brands it as fraudulent by closing the mouths of the wit- nesses, should be adopted with great reluctance. In such cases " the question is not whether the transaction was honest or otherwise, but whether there is not that evidence ' Hugus V. Robinson, 24 Pa. St. '^ Davis v. Turner, 4 Gratt. (Va.) 422, II. 471. J 60 CONFLICTING POLICIES. § 252 of fraudulent intent which precludes inquiry into its integ- rity as a question of morals," It is a rule of policy as well as of evidence.^ It seems clear that: "The statute of frauds ought not to be construed to make innocent parties sufferers."^ That such is often the result cannot be ques- tioned. It was found in Virginia that the cases of honest transfers in which the vendor retained possession were too numerous and too frequent to allow of a further adher- ence to the old arbitrary rule of fraud /^r se. It resulted in the decision of Davis v. Turner,^ repudiating the rule as to absolute presumptions. The court said : " It seems to be carrying a distrust of juries too far to suppose them in- capable, with the aid of a -wholtsomt prima facie presump- tion, to administer justice on this subject, in the true spirit of the statute, and it is better to confine the interpo- sition of the court to guiding, instead of driving them by instructions, and to the power of granting new trials in cases of plain deviation." In the same case the court ob- serve that the conclusive presumption as a test of a fraudu- lent purpose has no claim to certainty ; on the contrary it concedes its own fallibility, by crushing mercilessly the most convincing evidence of fairness and good faith.* ' Kirtland v. Snow, 20 Conn. 28. ness, and acting for the benefit of cred- * Sydnor v. Gee, 4 Leigh (Va.) 545 ; itors who have full confidence in his Cadogan v. Kennett, 2 Cowp. 432, integrity ; all these have grown out of per Lord Mansfield. the usages of modern society ; the 3 4 Gratt. (Va.) 423, 444. necessities of commerce ; the conven- •* Cole V. White. — " But when we iences of daily life ; the wants and look at the daily business of life, out usages of trade and industry. They of court, another aspect of this question have followed in the train of corn- presents itself. Mortgages of personal merce, credit, and enterprise. Like property, as ships, lake vessels, canal them, they have been largely produc- boats, and river craft ; the stock and tive of benefits to society ; yet those implements of the mechanic or small benefits, like the results of all other hu- manufacturer ; the furniture of the inn- man action, are not unmixed with evil, keeper ; assignments for the benefit of By such means the adventure, capacity, creditors, leaving the goods and debts acquirements, and industry of the young assigned publicly to be managed and or needy have been aided and stimu- disposed of by the original owner as an lated ; large concerns of honorable but agent, best acquainted with the busi- unfortunate merchants have been set- § 253 CHANGE OF POSSESSION. 36I § 253. Actual change of possession required. — The words "actual and continued ciiange of possession " in the statute in New York, are construed to mean " an o})en public change of possession, which is to continue and l)e mani- fested continually by outward and visible signs, such as render it evident that the possession of the judgment-debtor has ceased."^ In Crandall v. Brown* the court observed that " possession cannot be taken by words and inspection." In Otis V. Sill,^ Paige, J., said : " It has been rej)eatedly decided that if an assignee or mortgagee leaves goods as- signed or mortgaged in the possession of the assignor or mortgagor as his agent, this is not an actual change of pos- session within the meaning of the fifth section of the stat- ute of frauds."'* In Billingsley v. White, ^ Williams, J., in delivering the opinion of the Pennsylvania Supreme Court, said : " The delivery must be actual, and such as the nature of the property or thing sold, and the circumstances of the sale will reasonably admit, and such as the vendor is capable of making. A mere symbolical or constructive delivery, where an actual or real one is reasonably prac- ticable, is of no avail. There must be an actual separa- tion of the property from the possession of the vendor at the time of the sale, or within a reasonable time after- ward, according to the nature of the property."'^ It is suf- tled to the greatest advantage of the ' Topping v. Lynch, 2 Rob. (N. Y.) creditors and the least possible loss of 488 ; approved in Steele v. Benham, 84 the insolvent; and the kindness of N. Y. 638. Compare Hale v. Sweet. 40 parents or the generosity of friends has N. Y. 97; Cutter v. Copeland, 18 Me. been enabled to preserve the comforts 127; Osen v. Sherman, 27 Wis. 501 ; of a home to the wife and children of a Lesem v. Herriford, 44 Mo. 323. bankrupt, without the slightest injury '' 18 Hun (N. Y.) 461, 463. or fraud (save in legal fiction) to prior ' 8 Barb. (N. Y.) 102, 122. creditors or subsequent purchasers. ■» Sec Hanford v. Artchcr, 4 Hill (N. Society reaps nothing but unquestioned Y.) 271. benefit from nine-tenths of such assign- ' 59 Pa. St. 466. ments or securities occurring in actual " Where the goods are locked up and life." Cole v. White, 26 Wend. (N. Y.) the keys are delivered to the vendee, 523. and the vendor removes from the house, 362 QUESTION FOR THE JURY. §§ 254, 255 ficient if the possession taken of the goods is such as the nature of the case would permit.^ It may be observed that the fact that a party testified in a general way that he took possession, or was in possession, will have no weight when the evidence shows precisely what was done.*^ It is obvious from a casual consideration of these cases that a change of possession which will protect the title of the purchaser, as against creditors, must consist of a com- plete surrender and discontinuance of the exercise of acts of ownership by the vendor and the assumption of such acts on the part of the vendee. §254. Question for the jury. — The doctrine of Massachu- setts,^ followed by many of the States, makes continued possession, as evidence of fraud, a question for the jury.** It is a question of intent to be settled by them as a ques- tion of fact,^ even though the evidence of good faith and absence of intent to defraud is uncontradicted.^ If the jury err, justice may be obtained by setting the verdict aside, "^ but otherwise the court is not entitled to interfere with the prerogative of the jury. § 255. Overcoming the presumption. — The presumption of fraud, which the statute raises from the fact that there was no actual change of possession of the chattels sold, practi- cally becomes conclusive if not rebutted or overcome by this is as effectual as though the vendee Cutter v. Copeland, 18 Me. 127; Til- had actually removed the property, son v. Tervvilliger, 56 N. Y. 273 ; Smith Barr v. Reitz, 53 Pa. St. 256, See v. Welch, 10 Wis. 91 ; Allen v. Cowan, Benford v. Schell, 55 Pa. St. 393. 23 N. Y. 507; HoUacher v. O'Brien, 5 ' Manton v. Moore, 7 T. R. 71. Hun (N. Y.) 277 ; Warner v. Norton, * Steele v. Benham, 84 N. Y. 640 ; 20 How. 460 ; Scott v. Winship, 20 Miller v. Long Island R.R. Co., 71 N. Ga. 430; Chamberlain v. Stern, 11 Nev. Y. 380. 268. ' Ingalls V. Herrick, 108 Mass. 351. ^ Miller ads. Pancoast, 29 N. J. Law * See Mead v. Noyes, 44 Conn. 487 ; 254. Thompson v. Blanchard, 4 N. Y. 303 ; ' Blaut v. Gabler, 77 N. Y. 461. Griswold v. Sheldon, 4 N. Y. 581 ; ' Hollacher v. O'Brien, 5 Hun (N. Davis v. Turner, 4 Gratt. (Va.). 422 ; Y.) 277; Potter v. Payne, 21 Conn. 363. §§ 256, 257 POSSESSION. 36 0^0 competent proof in explanation.^ There is nothing left for the jury to pass upon or to consider. It was observed in the Supreme Court of Kansas,^ that the law did not imply that one purchasing property with- out taking actual possession, if there were creditors of the vendor, was presumptively engaged in a fraudulent trans- action, and that his conduct was to be scrutinized accord- ingly, but simply that one claiming under such a purchase takes nothing until he shows good faith and consideration. § 256. Possession within a reasonable time. — It is fre- quently said that the vendee must acquire possession of the subject-matter of the sale within a reasonable time. Ac- cording to some of the cases a " reasonable time" must be construed not with reference to the mere convenience of the party, but only with reference to the time fairly re- quired to perform the act of taking possession, or doing what is its equivalent.^ The cases where it is held that immediate delivery is not practicable are usually illustrated in the books by the case of a sale of a ship at sea where immediate delivery is a physical impossibility ; and the same principle has been applied to a case where the situa- tion of the parties at the time of the sale was so remote from the place where the property was situated, that imme- diate manual delivery was impossible. What is a reasona- ble time must be determined by the circumstances of each case ;■* no definite rule can be laid down.*^ § 257. Change of possession must be continuous. — -In a controversy which arose in New York, it appeared that the sale was accompanied by an immediate delivery of the prop- erty to the vendee, and an actual change of possession, and ' Mayer v. Webster, 18 Wis. 396 ; ' See Seymour v. O'Keefe, 44 Conn. Cheatham v. Hawkins, 76 N. C. 338, 132; Meade v. Smilh, 16 Conn, and cases cited ; State v. Rosenfeld, 35 346. Mo. 472. * State v. Kini;. 44 Mo. 238. ' Kansas Pacific Ry. Co. v. Couse, 17 ' Bishop v. O'Connell, 56 Mo. 158. Kans. 571-575- 364 RESUMPTION OF POSSESSION. § 258 that, after considerable time had passed, the property came again into the possession of the vendor. It was decided that the law would not measure the lapse of time from the sale and delivery to the renewed possession by the vendor directly from his vendee, and say that a change of posses- sion continued for a longer period would satisfy the statute, but for a shorter period would not have that effect. The statute was said to be imperative that the sale must be fol- lowed by a continued change of possession or the fraudu- lent presumption would obtain.^ § 258. Temporary resumption of possession. — Where it appears that the property passed into the hands of the vendor for a mere temporary purpose, and under circum- stances which showed that the return of the property was not effected with a view of enabling the vendor to use it as his own while the legal title was in another, the creditors of the vendor will not be authorized to attack the sale as fraudulent and void. This was held where the subject- matter of the sale was a cutter which the vendee occasion- ally allowed the vendor to use.^ Questions of this class often depend for their solution upon the locus of the ac- tion ; whether it be in a State w^here the presumption can be rebutted or one where it is conclusive. By way of contrast with Knight v. Forward, is Webster v. Peck,^ where it ap- peared that a vendor, who had sold a horse, within a week after the sale hired him of the vendee, and was using him to all appearances as his own, in the same manner as be- fore the sale. This was considered to be a restoration of the possession,^ and the vendee lost his horse to an attach- ing creditor of the vendor.^ ' See Tilson v, Terwilliger, 56 N. Y. ^ 31 Conn. 495. 273 ; Carman v. Cooper, 72 Pa. St. * See Davis v. Bigler, 62 Pa. St. 248 ; 37 ; Young v. McCIure. 2 W. & S. Barr v. Reitz, 53 Pa. St. 256. (Pa.) 147 ; Bacon v. Scannell, 9 Gal. ' Compare Boud v. Bronson, 80 Pa. 271 ; Miller v. Carman, 69 Pa. St. 134; St. 360 ; Johnson v. Willey, 46 N. H. Norton v. Doolittle, 32 Conn. 405. 75 ; Lewis v. Wilcox, 6 Nev. 215. ^ Knight V. Forward, 63 Barb. CN. Y.)3ii. §§ 259» 260 POSSESSION OF BAILEE. 365 § 259. Concurrent possession insufficient. — The authorities seem to be almost unanimous in holding that concurrent possession by the vendor and vendee will not satisfy the rule or the statute requiring a change of possession.^ "There cannot, in such case," said Duncan, J., " be a con- current possession ; it must be exclusive, or it would, by the policy of the law, be deemed colorable."^ Again, it is said to be " mere mockery to put in another person to keep possession jointly with the former owner." ^ In Wordall V. Smith'* Lord Ellenborough observed: "To defeat the execution by a bill of sale, there must appear to have been a bo7iafide, substantial change of possession A con- current possession with the assignor is colorable. There must be an exclusive possession under the assignment, or it is fraudulent and void as against creditors." ^ So it is no change of possession to leave the property in charge of the vendor's agent.^ § 260. Possession of bailee. — The sale of personal prop- erty in the hands of a bailee is good against an execution creditor, though there be no actual delivery, provided the vendor do not retake the possession.^ In Dempsey v. Gardner^ Chief-Justice Gray said: "Where property sold is at the time in the custody of a third person, notice to him of the sale is sufficient to constitute a delivery as against subsequent attaching creditors."^ The reason of ' Sumner v. Dalton, 58 N. H. 296; * r Campb. 332. Lang V. Stockwell, 55 N. H. 561; ' See Trask v. Bowers, 4 N. H. 314. Steelwagon v. Jeffries, 44 Pa. St. 407. ' Brunswick v. McClay, 7 Neb. 137. Compare Townsend v. Little, 109 U. But compare Allen v. Cowan, 23 N. S. 504. Y. 502. ' Clow V. Woods, 5 S. & R. (Pa.) ' Linton v. Butz, 7 Pa. St. 89 ; Wor- 287. See McKibbin v. Martin, 64 Pa. man v. Kramer, 73 Pa. St. 385 ; Good- St. 359, per Sharswood, J.; Regli v. win v. Kelly, 42 Barb. (N. V.) 194. McClure, 47Cal. 612; Brawn v. Keller, ' 127 Mass. 381, 383. 43 Pa. St. 106. 'Citing Tuxworlh v. Moore, 9 Pick. 3 Babb V. Clemson, 10 S. & R. (Pa.) (Mass.) 347; Carter v. Willard. 19 428. See Worman v. Kramer, 73 Pa. Pick, (^!ass.) i ; Russell v. O'Brien. St. 378. 127 Mass. 349. See Hildreth v. Fitts, 366 NO DELIVERY. §§ 26 1, 262 the rule calling for change of possession is entirely satisfied in such cases.^ § 261. No delivery where purchaser has possession. — Where at the time of the sale the property is in the pos- session and subject to the control of the vendee the law does not require an act of delivery. The sale is complete without it.^ In Warden v. Marshall,^ Hoar, J., said : "The oil being already in the plaintiff's possession in the bonded warehouse, no other delivery was necessary to complete the sale." In Lake v. Morris,'* Hinman, C. J., observed : " At the tihne of the purchase the plaintiff was keeping the horses for his nephew, and the defendant claims that, be- cause there was no formal delivery of the possession of them by the vendor to the purchaser, the sale was in point of law fraudulent and void against creditors. Of course no such delivery could have taken place without first taking the horses from the plaintiff's possession for the mere purpose of redelivering them to him again. But a merely formal act like this we presume would never occur between parties whose only object was to place the purchased property in the hands of the purchaser for his use." § 262. When technical delivery is not essential. — In some instances the necessities of the case render a technical de- livery of the property impossible ; in such cases the usual penalties will not be visited upon the purchaser. Thus a sale of cattle roaming over uninclosed plains with those of other owners, if bona fide, will not be invalid as against creditors of the vendor, merely for want of delivery, until 53 Vt. 684 ; Doak v. Brubaker, i Nev, Wood, 33 Vt, 338. See Chester v. 218; How V. Taylor, 52 Mo. 592; Bower, 55 Cal. 46. Kendall v. Fitts, 22 N. H. l. * Martin v. Adams, 104 Mass, 262 ; ' The rule is otherwise as to a mere Warden v. Marshall, 99 Mass. 305 ; servant; the possession of a servant is Nichols v. Patton, 18 Me. 231 ; Lake the possession of his employer. Hurl- v. Morris, 30 Conn. 204. burd v. Bogardus, 10 Cal. 519; Doak ^ 99 Mass. 306. V. Brubaker, i Nev. 218 ; Flanagan v, ^ 30 Conn. 204. § 263 TECHNICAL DELIVERY NOT ESSENTIAL. 367 the purchaser has had a reasonable time to separate and brand the cattle ; and the branding of the cattle by the pur- chaser will constitute a good delivery, although the cattle are afterward allowed to remain in the same uninclosed range of pasture.^ It is not essential that a transfer of stock should be made on the books of a corporation, to be valid against attaching creditors, when not called for by some positive provision of the charter.^ A symbolical delivery of a large quantity of logs, landed upon a stream preparatory to driving, has been considered sufficient.^ The law accommodates itself to the necessities of the business and the nature of the property, making a symbolical delivery sufficient where nothing but a con- structive possession can ordinarily be had.'* "It often hap- pens," says Sharswood, J., "that the subject of the sale is not reasonably capable of an actual delivery, and then a constructive delivery will be sufficient. As in the case of a vessel at sea, of goods in a warehouse, of a kiln of bricks, of a pile of squared timbers in the woods, of goods in the possession of a factor or bailee, of a raft of lumber, of articles in the process of manufacture, where it would be not indeed impossible, but injurious and unusual to remove the property from where it happens to be at the time of the transfer."^ § 263. Excusing want of change of possession. — 1 he con- ' Walden v. Murdock, 23 Cal. 540. ^ McKibbin v. Martin, 64 Pa. St. 357. Contra, Sutton v. Ballou, 46 Iowa 517. Citing Clow v. Woods, 5 S. & R. (Fa.) ♦ Boston Music Hall Assoc, v. Cory, 275; Cadbury v. Nolen, 5 Pa. St. 320; 129 Mass. 435. See Beckwith v. Bur- Linton v. Butz, 7 Pa. St. 89; Haynes rough, 13 R. L 294, and cases. v. Hunsickcr, 26 Pa. St. 58; Chase v. ^ Bethel Steam Mill Co. v. Brown, Ralston, 30 Pa. St. 539 ; Barr v. Reitz, 57 Me. 9. 53 Pa. St. 256; Benford v. Schell, 55 ■* Compare Terry v. Wheeler, 25 N. Pa. St. 393. See also P'itch v. Burk, Y. 520; Boynton V. Veazie, 24Me. 286; 38 Vt. 683; Hutchins v. Gilchrist. 23 Doak V. Brubaker, i Nev. 218; Long Vt. 82 ; Allen v. Smith, ro ^L^ss. 308; V. Knapp, 54 Pa. St. 514; Allen v. Conway v. Edwards, 6 Nev. 190 ; Wal- Smith, 10 Mass 308 ; Tognini v. Kyle, den v. Murdock, 23 Cal. 540 ; Cart- 17 Nev, 215. But compare Wilson v. wright v. PhoL-nix, 7 Cal. 2S1 ; Woods Hill, 17 Nev. 401. V. Bugbey, 29 Cal. 472. 368 POSSESSION OF REALTY. § 264 tention was urged by counsel, in Mitchell v. West,^ that in addition to proof that the sale of the chattels was bona fide, and that there was no intent to defraud the creditors of the vendor, it was necessary to show some valid excuse or reason for leaving the property in the possession of the vendor, or stated in another form, that the absence of in- tent to defraud creditors could not be established without showing a good reason for the want of change of posses- sion. The court upon the authority of Hanford v. Art- cher,^ held that this was not the case. The very purpose of the law in presuming fraud from a failure to deliver possession was to suppress sales made in bad faith and without consideration. Manifestly this presumption ought to disappear where both good faith and consideration are proved to exist. Clute v. Fitch ^ is an illustration of a sufficient excuse for failing to change possession. A sleigh was sold in July, and owing to the difficulty of removing it at that season of the year was stored, by agreement, in the vendor's barn until the ensuing winter. This was con- sidered a satisfactory explanation of the failure to change possession. It may be here noted that a vendee may con- tinue at the old stand the business which he has purchased of the vendor."^ § 264. Change of possession of realty. — There seems to be a distinction recognized in the law as to the effect of a failure to change possession of realty as distinguished from the rule applicable to personalty. In Phettiplace v. Sayles,^ a leading and highly important case, Story, J., said : " Another circumstance, relied on to invalidate the good faith of this conveyance, is, that no change of possession took place, but the grantor continued in possession not- withstanding the sale, and occupied the farm as he had ' 55 N. Y. 107. •* Ford v. Chambers, 28 Cal. 13. » 4 Hill (N. Y.) 271. ^ 4 Mason, 321. ' 25 Barb. (N. Y.; 428. § 264 POSSESSION OF REALTV. 369 been accustomed to do. This circumstance is not without weight, and, in a doubtful case, would incline the court not to yield any just suspicions arising from other causes. But possession, after a sale of real estate, does not per se raise a presumption of fraud, as it does in the case of personal estate. In the latter case, possession is prima facie evi- dence of ownership, and where a party, who is owner, sells personal property absolutely, and yet continues to retain the visible and exclusive possession, the law deems such conduct a constructive fraud upon the public, and the sale as to creditors, wholly inoperative, whether it be for a valu- able consideration or not. This doctrine has its founda- tion in a great public policy, to protect creditors against secret, collusive transfers. The same rule does not apply to real estates. Possession is not here deemed evidence of ownership The public look not so much to posses- sion as to the public records as proofs of the title to such property. The possession, therefore, must be inconsistent with the sale, and repugnant to it in terms or operation, before it raises a just presumption of fraud."' The rule seems to be established in New York to the effect that the continuance in possession of the grantor is merely a circumstance proper to be considered in connection with other evidence tending to establish a design to defraud creditors, but it did not of itself warrant a finding as a leeal conclusion that the deed was fraudulent.' ' See Every v. Edgerton, 7 Wend. (N. want of correspondent possession is less Y.) 260 ; Bank of the U. S. v. Hous- evincive of fraud than where a chattel man, 6 Paige (N. Y.) 526 ; Fuller v. is sold, because the title to the former Brewster, 53 Md. 363 ; Clark v. Krause, is evidenced by possession, not of the 2 Mackey (D. C.) 567. thing, but of th« title deeds, which, like ^ Clute V. Newkirk, 46 N. Y. 684. manual occupation in the case of a Compare Steward v. Thomas, 35 Mo. chattel, is the criterion." See Tibbals 202 ; Apperson V. Burgett, 33 Ark. 328 ; v. Jacobs. 31 Conn. 431; Merrill v. Tompkins v. Nichols, 53 Ala. 197; Locke, 41 N. H. 489; Ludwig v. High- Collins V. Taggart, 57 Ga. 355. In ley, 5 Pa. St. 132; Allentown Bank v. Avery v. Street, 6 Watts (Pa.) 249. Beck, 49 Pa. St. 394 ; Paulling v. Stur- Chief-Justice Gibson said : " It is well gus, 3 Stew. (Ala.) 95 ; Suiter v. Tur- established that where land is conveyed ner, 10 Iowa 517. 24 370 CHANGE ON JUDICIAL SALE. • § 265 The reader must not be misled by the observation of Judge Story, that "possession is not here deemed evidence of ownership." The word " here" is significant in this con- nection. The rule enunciated by the learned court is par- tially founded on the disinclination of the law to presume fraud, and is limited in its application. Possession, on the other hand, ordinarily raises a presumption of ownership by the occupant of real property. True, it is the lowest degree of title, but nevertheless it is evidence of owner- ship ;^ descends to heirs ;^ is subject to taxation ;^ may be sold at sheriff's sale ;^ and is sufficient proof of title to sup- port ejectment against trespassers.^ In these cases the presumption of ownership arising from possession is in- dulsfed because it does not conflict with an honest and law- ful intention, and does not lead to a conclusion bearing the stigma of fraud. § 265. Change of possession on judicial sale. — The rule is promulgated in Pennsylvania that a change of possession is not necessary to give validity to a judicial sale.^ Chief- Justice Sharswood said, in Smith v. Crisman -J " Nothing is better settled in this State than that the purchaser of personal property at sheriff's or constable's sale, may leave it in the possession of the defendant, as whose property it was sold, under any lawful contract of bailment." The retention of possession in such a case is not a badge of fraud, because the sale is not the act of the party retaining the property, but is the act of the law, and being a judicial 1 Rawley v. Brown, 71 N. Y. 85. v. Campbell, 25 Wis. 614; Doe v. West, See Ludlow v. McBride, 3 Ohio 241 ; l Blackf. (Ind.) 135; Christy v. Scott, Phelan V. Kelly, 25 Wend. (N, Y.) 389 ; 14 How. 282. See Burt v. Panjaud, 99 Teabout v. Daniels, 38 Iowa 158 ; Gil- U. S. 180 ; Sedgwick & Wait on Trial , Jett V. Gaffney, 3 Col. 351. of Title to Land, Chap. XXVIL - Mooney v. Olsen, 21 Kans. 691- « Bisbing v. Third Nat. Bank, 93 Pa. , 697. St. 79 ; Maynes v. Atwater, 88 Pa. St. ' Blackwell on Tax Titles, pp. 5, 6, 496. •* Yates V. Yates, 76 N. C. 142. "^ 91 Pa. St. 430. ^ Jones V. Easley, 53 Ga. 454 ; Bates § 266 DELIVERY OF GROWING CROPS. O/ sale conducted by a sworn officer of the law, is deemed to be fair and honest until proved otherwise.^ The rule is quite universal in its application that where a stranger purchases and pays for property on execution sale, his failure to remove it from the possession of the de- fendant in execution does not render the sale fraudulent per se or presumptively fraudulent.^ Under the statute in New York,^ however, as interpreted by the courts,^ the ex- ecution sale will be presumptively fraudulent unless accom- panied by immediate delivery, and followed by an actual and continued change of possession, whether the plaintiff in execution or a third person be the purchaser. The rea- son of the rule and the evil at which it is aimed is said to justify these decisions. Finch, J., observed : "As an honest purchaser buys because he wants the property and its pos- session, and, therefore, naturally and usually takes it, the absence of this fact indicates some purpose different from that of an honest purchaser, and requires proof of fjood faith and honest intention. These considerations apply equally to cases where the transfer of title from the vendor is through the agency of a judgment and execution fol- lowed by a sheriff's sale."^ § 266. Delivery of growing crops. — Where the property which is the subject-matter of sale is a growing crop, there is much dissension in the cases as to delivery of possession. It is said in Illinois that in the case of standing crops the possession is in the vendee until it is time to harvest them, and until then he is not required to take manual possession ' Craig's Appeal, ']'] Pa. St. 456 Myers k. Harvey, 2 P. & W. (Pa.) 478 '■^ Abney v. Kingsland, 10 Ala. 355 Latimer v. Batson, 7 Dowl. & R. 106 Anderson v. Brooks, 11 Ala. 953 Walter v. Gernant, 13 Pa. St. 515 Dick V, Lindsay, 2 Grant (Pa.) 431 Eq. (S. C.) 253. See Hanford v. Obrecht, 49 111. 146. Compare O'Brien V. Chamberlain. 50 Cal. 285. 3 3 N. Y. K. S. 222. §§ 5, 6. ■» Stimson v. Wrii^lcy, 86 N. Y. 336 ; Fonda v. Gross. 1 5 Wend. (N. Y.) 628 ; Gardcnier v. Tubbs. 21 Wend. (N. Y.) Poole V. Mitchell, i Hill's (S. C.) Law 169. 404 ; Guignard v. Aldrich, 10 Rich. ' Stimson v. Wrigley, 86 N. Y. 336. 372 POSSESSION WITH POWER OF SALE. § 267 of them.* Chief-Justice Cockburn, in speaking upon this subject, said : " It is impossible that there can be present delivery of growing crops. A growing crop is valueless, except so far as by its continuing growth it may hereafter benefit the purchaser, and it is only when it reaches matur- ity that it can be removed, nor is it intended that it shall be removed till it is ripe In a popular and practical sense, growing crops are no more capable of removal than the land itself."^ Kent said : " I do not know that corn, growing, is susceptible of delivery in any other way than by putting the donee into possession of the soil." Yet authority can be cited to the effect that the vendee does not acquire good title in such cases.^ § 267. Possession with power of sale. — The effect of leav- ing a mortgagor in possession of the mortgaged goods, with power to sell the property and substitute by purchase other property in its stead, has created much dissension in the courts, and engendered a vast amount of litigation. The question came up before the United States Supreme Court in Robinson v. Elliott,^ a case which we shall presently consider at length.^ The mortgagors were authorized by the express terms of the mortgage to continue in possession 'Of the mortgaged wares and merchandise, sell the same, -supply their places with other goods by purchase, the lien of the mortgage to extend to the replenished stock. The mortgage was adjudged absolutely void. It was said that whatever might have been the motive which actuated the parties to the mortgage, it was manifest that the necessary result of what they did was to allow the mortgagors, under ' Ticknor v. McClelland, 84 111. 471. ^ Smith v. Champney, 50 Iowa 174 ; See Bull v. Griswold, 19 111. 631; Lamson v. Patch, 5 Aljen (Mass.) 586 ; Thompson V. Wilhite, 81 111. 356; Bel- Stone v. Peacock, 35 Me. 385. See lows Y. Wells, 36 Vt. 600. Compare Raventas v. Green, 57 Cal. 255. Quiriaque v. Dennis, 24 Cal. 154. •* 22 Wall. 513. * Branton v. Griffits, L. R. 2 C. P. D. ' See infra. Chap. XXII., on Fraud- 212. ulent Chattel Mortgages. §267 POSSESSION WITH POWER OF SALE. ^73 cover of the mortgage, to sell the goods as their own, and appropriate the proceeds to their own purposes, and this, too, for an indefinite length of time. A mortgage which in its very terms contemplates such results, besides being no security to the mortgagees, operates in the most effect- ual manner to ward off other creditors ; and where the in- strument on its face shows that the legal effect of it is to delay creditors, the law imputes to it a fraudulent intent.^ ' See Egdell v. Hart, 9 N. Y, 213. CHAPTER XVIII. EVIDENCE. I 268. Concerning evidence. 269. Competency of party as wit- ness. 270. Proof and conclusiveness of judgments. 271. Burden of proof. 272. Secret trust. 273. Proof of insolvency of debtor. 274. Insolvency of vendee. 275. General reputation. 276. Concerning res gestce. § 277. Declarations before sale — Realty and personalty. 278. Declarations of debtor after sale. 279. Possession after conveyance. 280. Declarations of co-conspirators. 281. Proof of circumstances. 282. Other frauds. 283. Suspicions insufficient. 284. Proving value. 285. Testimony must conform to pleadings. "Where fraud appears courts will drive through all matters of form." — Buck v. Voreis, 89 Ind. 117. § 268. Concerning evidence. — Manifestly general princi- ples and rules of evidence cannot receive extended con- sideration in a special treatise relating to fraudulent alien- ations and creditors' bills. The sufficiency of the proofs requisite to uphold or defeat a creditor's proceeding to dis- cover equitable assets or annul fraudulent transfers must, however, necessarily receive passing attention in its promi- nent and peculiar phases. The character of the evidence germane to the subjects of consideration,^ notice,^ inten- tion,^ badges of fraud,^ creditors' liens,^ and change of pos- session,^ has been regarded as of sufficient importance to call for incidental treatment in separate ' chapters devoted to those topics, and will not be here discussed anew. Volun- tary and fraudulent conveyances, as elsewhere shown, "^ are ' See Chap. XV. 2 See Chap. XXIV. 2 See Chap. XIV. * See Chap. XVI. See Chap, IV. See Chap. XVII. See Chap. XXVI. §§ 269, 270 COMPETENCY AS WITNESS. 3/5 regarded as valid and operativ^e between the parties. Only a creditor or a purchaser from the donor or grantor can assail them, or inquire into the consideration, or the intent inspiring their execution. If the relationship of debtor and creditor is not admitted, the burden of proving it rests upon the creditor; the primary question in such cases is the ex- istence of this relationship,^ for if it is not established then the complainant stands in the attitude of an intermeddler raising a clamor which a court of equity would be illy em- ployed in silencing.^ § 269. Competency of party as witness. — Not only is it permissible for the defendant to testify as a witness in an equity cause,^ but he may be compelled to give evidence upon the demand of the complainant.* The rule of the common law that no party to the record could be called as a witness for or against himself, or for or against any other party to the suit,^ has been almost wholly abrogated.'' Mr. Justice Swayne said in Texas v. Chiles :" "The innovation, it is believed, has been adopted in some form in most, if not in all the States and Territories of our Union.^ It is eminently remedial, and the language in which it is couched should be construed accordingly." §270. Pfoof and conclusiveness of judgments. — We have already discussed the principle underlying the rule which requires a judgment as the foundation of a creditor's pro- ceeding to annul fraudulent alienations or discover equit- able assets;^ and the sufficiency or insufficiency of particu- lar judgments to satisfy this exaction.^" It follows from ' Cook V. Hopper, 23 Mich. 517, per ' i Greer.leaf's Ev. §§ 329, 330. Cooley, J. See Stanbro v. Hopkins, "See Texas v. Chiles. 21 Wall. 488; 28 Barb. (N. Y.) 271 ; Edmunds v. Clark v. Krausc, 2 Mackey (D. C.) Mister, 58 Miss. 765; Donley v. Mc- 571. Kiernan, 62 Ala. 34. '21 Wall. 490. ^ Means v. Hicks, 65 Ala. 243. ' Citing i Greenleaf on Evidence, ^ Clark V. Krause, 2 Mackey (D. C.) § 329. 571. • See Chap. IV., §§ 74-77. * Texas v. Chiles, 21 Wall. 488. "" See §§ 76, 77- 3/6 PROOF OF JUDGMENTS. § 27O what has been already said, and indeed has been expressly so decided, that a voluntary conveyance will be upheld as regards a judgment rendered against the debtor upon a fictitious debt/ It may be observed that where no evi- dence is offered to impeach the judgments, and it appears that they were regularly rendered by courts having juris- diction, and were conclusive as between the parties, such judgments are competent evidence tending to prove the debt, even as to third parties, until something is shown to the contrary by way of impeachment.^ A third party may, as a general rule, show that the judgment was collusive, and not founded upon an actual indebtedness or liability.^ Were the rule otherwise the greatest injustice would result, since a stranger to the record cannot ordinarily move to vacate the judgment or prosecute a writ of error or an ap- peal/ Teed v. Valentine' is a peculiar case relating to the admissibility of evidence to explain a judgment and the motives of the debtor. In that case it appeared that the debt, which was merged in the judgment, represented prop- erty sold after the delivery of the deed ; that is, the com- plainant was a subsequent creditor. The debtor was al- lowed to testify that he purchased the property as agent for ' King V. Tharp, 26 Iowa 283. Douglass, 62 Pa. St. 416; Wells v. ■^ Vogt V. Ticknor, 48 N. H. 245 ; O'Connor, 27 Hun (N. Y.) 428. Corn- Church V. Chapin, 35 Vt. 231 ; N. Y. & pare Voorhees v. Seymour, 26 Barb. (N. Harlem R.R. Co. V. Kyle, 5 Bosw. (N. Y.) 569; Meeker v. Harris, 19 Cal. Y.) 587 ; Hills V. Sherwood, 48 Cal. 278 ; Shaw v. Dwight, 27 N. Y. 245 ; 386 ; Law V. Payson, 32 Me. 521 ; Whittlesey v, Delaney, 73 N. Y. 571 ; Clark V. Anthony, 31 Ark. 546. See Mandeville v. Reynolds, 68 N. Y. 545. Goodnow V. Smith, 97 Mass. 69. See " Fraud and imposition invalidate a § 74, especially the note. judgment as they do all acts." Dob- ^ Vogt V. Ticknor, 48 N. H, 247 ; son v. Pearce, 12 N. Y. 165. Gregg V. Bigham, i Hill's (S. C.) Law "• See Guion v. Liverpool, L. & G. 299; Collinson v. Jackson, 14 Fed. Ins. Co., 109 U. S. 173; Sidensparker Rep. 309 ; s. C. 8 Sawyer 357 ; Clark v. Sidensparker, 52 Me. 487 ; Leonard V. Anthony, 31 Ark. 549; Carter v. v. Bryant, 11 Met. (Mass.) 370; Thomas Bennett, 4 Fla. 283. See Lewis v. v. Hubbell, 15 N. Y. 405 ; Ex parte Rogers, 16 Pa. St. 18; Sidensparker v. Cutting, 94 U. S. 14. Sidensparker, 52 Me. 481; Clark v. ' 65 N. Y. 471. ^271 BURDEN OF PROOF. '^'J'] his son, and that he did no business for himself. Though the judgment was conclusive as establishing that he was liable for the debt, it was considered competent to show that the debtor acted as agent, and was not personally en- gaged in business, and hence did not contemplate future indebtedness, and had no design to defraud future cred- itors.^ § 271. Burden of proof. — In general the obligation of proving a fact rests upon the party who substantially asserts the affirmative of the issue.^ With the possible exception of conveyances to a wife by a husband,^ the burden of proof, in cases where the instrument is valid upon its face, gener- ally rests upon the creditor to show a fraudulent intent or absence of consideration.** A creditor may succeed under the statute in New York simply by proving a fraudulent intent.^ If, however, the vendee having the burden thus cast upon him,^ shows that valuable consideration was paid for the transfer of the property in controversy, then proof of the vendor's fraudulent intent is insufficient ; there must be evidence of a fraudulent intent on the part of the vendee,''' or proof that he had notice of the vendor's evil design.^ Where a strong doubt of the integrity of the transaction is created, the duty of making full explanation, and the burden of proof to sustain the transfer, rests with • See Chap. VI., §§96-101. 652; Starin v. Kelly, 88 N. Y. 421 ; ' Greenl. Ev. § 74 ; Tompkins v. Tompkins v. Nichols, 53 Ala. 197 ; Nichols, 53 Ala. 197. The right to Barkow v. Sanger, 47 Wis. 500; Kel- open and conclude especially on the logg v. Slauson, 11 N. Y. 304; Pusey trial and sifting of facts to unravel the v. Gardner, 21 W. Va. 476 ; Hale v. subtleties of fraud, is an important legal West Va. Oil & Land Co., il W. Va. right and if improperly denied demands 229 ; Kruse v. Prindle, 8 Oregon 1 58 ; the granting of a new trial. Royce v. Townsend v. Stearns, 32 N. Y. 209. Gazan, 76 Ga. 79. * Starin v. Kelly, 88 N. Y. 421. •* See Chap. XX. ' Throckmorton v. Rider, 42 Iowa ■• See §§ 5, 6. Fuller v. Brewster, 53 86. Md. 359; Cooke V. Cooke, 43 Md. 533 ; ^ Jones v. Simpson, 116 U. S. Anderson v. Roberts, 18 Johns. (N. Y.) 609. 515; Mehlhop V. Pettibone, 54 Wis. * See Chap. XIV., §§ 196, 197. 378 SECRET TRUST. § 272 the insolvent.^ The fraud must be established by the party alleging it by a fair preponderance of proof.^ § 272. Secret trust. — The most common forms of fraudu- lent conveyances are those in which a secret trust or benefit is reserved for the debtor. Manifestly the law will not permit an insolvent to sell his land and convey it without apparent reservation, and yet secretly retain for himself the right to occupy it for a limited time for his own benefit.' A transfer of this character, even though founded upon a good consideration, lacks the elements of good faith, is not what it purports to be, conceals the real agreement existing between the parties, confers upon the debtor the enjoy- ment of a valuable right which it is intended to place be- yond the reach of creditors, and constitutes a fraud upon them.* It is immaterial whether the trust is express and apparent upon the face of the deed or is implied from ex- trinsic circumstances.^ The whole estate of the debtor is in theory of law liable for the payment of his debts, and it is fraudulent to conceal or secrete any part of the insol- vent's property from his creditors.^ Where a father caused foreclosure proceedings to be brought against himself, and his son became the purchaser, and the creditors of the latter proceeded to acquire such interest, it was held that the father would not be permitted to give evidence of a secret trust in the son for the benefit of the father." ' Clements v. Moore, 6 Wall. 315. Hun (N. Y.) 125; Dean v. Skinner, 42 See also Piddock V. Brown, 3 P. Wms, Iowa 418; Sims v. Gaines, 64 Ala, 289 ; Wharton V. May, 5 Ves, 49. 392-397; Rice v. Cunningham, 116 * Brown v. Herr, 21 Neb. 128. Mass. 469; Giddings v. Sears, 115 ' Lukins v. Aird, 6 Wall. 79. See Mass. 505. See Macomber v. Peck, 39 Wooten V. Clark, 23 Miss. 76; Arthur Iowa 351. V. Commercial & R.R. Bank, 17 Miss. ' Coolidge v. Melvin, 42 N. H. 510 ; 394; Towle V. Hoit, 14 N. H. 61 ; Paul Rice v. Cunningham, 116 Mass. 469. V. Crooker, 8 N. H. 288 ; Smith v. « Sparks v. Mack, 31 Ark. 670 ; Paul Lowell, 6 N. H. 67; Hills v. Eliot, 12 v. Crooker, 8 N. H. 288; Moore v. Mass. 26. Wood, 100 111. 454; Conover v. Beck- ■* See § 22. Young v. Heermans, 66 ett, 38 N. J. Eq. 384. See Chap. II. N. Y. 382; Crouse v. Frothingham, 27 " Conover v. Beckett, 38 N, J. Eq. 384. § 2 73 INSOLVENCY OF DEBTOR. 379 Secret trusts are manifestly most difficult to establish in court. Surrounding circumstances and the relations of the parties and their conduct and bearing may be given in evi- dence. Sometimes the isolated bits of evidence shadowing forth the secret arrangement or benefit seem most inconclu- sive and unsatisfactory, but when grouped together and considered as a whole the fraudulent device can be very clearly made to appear. § 273. Proof of insolvency of debtor. — The term insolvent is usually applied to one whose estate is not sufficient to pay his debts, or a person who is unable to pay all his debts from his own means.* On the other hand, a party is sol- vent who has property subject to legal process sufficient to satisfy all his obligations.^ An embarrassed debtor may of course effect any sales of his property which he deems ad- vantageous, to enable him to raise the necessary means for paying off his creditors, and, within reasonable restrictions, to prevent its sacrifice at forced sale under execution, and for this purpose the law generally recognizes his right to sell either for cash or on credit.^ Proof of insolvency of the debtor at the date of the alienation is frequently Of vital importance in creditors' suits. How can the evidence upon this point be best ad- duced ? The rule has been formulated that "the opinion of a witness that a person is solvent or insolvent is inad- 1 Riper v. Poppenhausen, 43 N. Y. " open and notorious insolvency," is 68 ; Marsh v. Dunckel, 25 Hun (N. Y.) said to imply not the want of sufficient 169, 170. See Buchanan v. Smith, 16 property to pay all of one's debts, but Wall. 308 ; Herrick v. Borst, 4 Hill (N. the absence of all property within reach Y.) 652 ; Brouwer v. Harbeck, 9 N. Y. of the law, applicable to the payment 594. of any debt. Hardesty v. Kinworthy, 2 Herrick v. Borst, 4 Hill (N. Y.) 8 Blackf. (Ind.) 304. 652 ; approved, Walkenshaw v. Perzel, ^ Dougherty v. Cooper, 77 Mo. 531. 32 How. Pr. (N, Y.) 240; Brouwer v. See Hickey v. Ryan, 15 Mo. 62 ; Buck- Harbeck, 9 N. Y. 594. See Eddy v. ner v. Stine, 48 Mo. 407 ; Waddams v. Baldwin, 32 Mo. 374; McKown v. Humphrey, 22 111. 663; Nelson v. Smith, Eurgason, 47 Iowa 637. The term 28 111. 495. See § 52. 38o INSOLVENCY OF DEBTOR. § 273 missible."^ In Denman v. CampbelP this question was put: " Is Donal Campbell a man of responsibility?" and the answer given under objection was : " So far as I know, he was not responsible." The reception of this evidence was held to be error. In a case which arose in New York, in which the primary and all-important question was whether a corporation was solvent or not, many of the witnesses examined on the point expressed nothing more than an opinion upon the subject, without referring to any facts from which such opinion was formed. It was very prop- erly ruled that such evidence was entirely insufficient, and could never form a basis for any action of the court.^ Evi- ' Lawson on Expert & Opinion Evi- dence, p. 515. Citing Brice v. Lide, 30 Ala. 647 ; Nuckolls v. Pinkston, 38 Ala, 615 ; Royall v. McKenzie, 25 Ala. 363. But see Breckinridge v. Taylor, 5 Dana (Ky.) 114; Crawford v. An- drews, 6 Ga. 244 ; Riggins v. Brown, 12 Ga. 273; Sherman v. Blodgett, 28 Vt. 149. ' 7 Hun (N. Y.) 88. In Babcock v. Middlesex Sav. Bank, 28 Conn, 306, the court said : " We think that the court below erred in receiving the opinion of the judge of probate as to the pecuniar)' ability of H. D. Smith, for the purpose of rebutting the evi- dence adduced by the defendants to show that he was destitute of property. The witness did not profess to have any knowledge whatever in regard to the property or pecuniary circumstances of Smith, or any means of forming a judgment or opinion on that subject, excepting from the style in which he and his family lived, the manner of his leaving the State, and the fact that he had made, before the court of probate, no disclosure of his property under oath, in the proceedings in insolvency against him. Although, as to the value of property we resort to the judgment or opinion of persons acquainted with it, its existence and ownership are facts to be proved, whether directly or other- wise, like other facts, by the knowledge of witnesses, and not by their opinions, inferences or surmises, derived from whatever source. The present is not like the cases where an opinion is sought of an expert ; or those in which, for certain purposes, the reputation of a person as to pecuniary ability may be shown by witnesses who have no per- sonal knowledge of his situation. The inquiry here was not whether Smith was reputed to be, but whether he was in fact, destitute of property. On such an inquiry nothing could be more dan- gerous than to receive the opinions of persons founded on such fallacious grounds as common rumor, or a man's professions as to his circumstances, or the representations or opinions of oth- ers, or, what in many cases is still less to be relied on, his style or manner of living." 3 See Brundred v. Paterson Machine Co., 4 N. J. Eq. 295. Compare Ninin- ger V. Knox, 8 Minn, 140 ; Andrews v. Jones, 10 Ala. 460, In Sherman v, Blodgett, 28 Vt, 149, the court said : " The solvency of an individual is a matter resting somewhat in opinion j and, in the present case, the witness §274 INSOLVENCY OF VENDEE. 38 1 dence that a man was generally reputed to be insolvent is competent upon the theory that the fact to be proved is of a negative character, scarcely admitting of direct and posi- tive proof.^ In the great majority of cases it would be impracticable, and exceedingly tedious and expensive, to procure any other proof of insolvency than that of general reputation in the community where the debtor resides and is known.^ If the witness is able to state numerous facts touching the property of the debtor, and the amount of his indebtedness, which show a very full and intimate acquaint- ance with his affairs and his utter insolvency, he may be permitted to answer a question whether or not the debtor was able to pay his debts at a particular time, in the usual course of business. This is considered as calling for a fact and not for the opinion of the witness.^ We may here state that there is no presumption of law, arising from knowledge of insolvency, that the assignee knew of the debtor's intention to defraud creditors.^ § 274. Insolvency of vendee. — The ability of the vendee to pay the purchase-money for the property before and at the time of the transaction, is a material circumstance for the consideration of the jury, and testimony upon that point should be admitted.^ For the purpose of showing had stated what property the bail kins v. Worthington, 2 Bland (Md.) owned at the time he entered bail, and 509, 540, 541. his means of knowing the situation ^ Thompson v. Hall, 45 Barb. (N. Y.) and circumstances of the bail ; cer- 216. See Blanchard v. Mann, i Allen tainly there could then be no objection (Mass.) 433 ; Iselin v. Peck, 2 Rob. (N. to his giving his opinion from his Y.) 629. knowledge of the bail, and of his af- ■• Cannon v. Young, 89 N. C. 264. fairs, what he thought he was worth." On the issue whether a conveyance of ' Nininger v. Knox, 8 Minn. 148; real estate is fraudulent as to creditors, Griflfith V. Parks, 32 Md. 4 ; Crawford evidence of the register of deeds for the V. Berry, 6 Gill & J. (Md.) 63 ; Metcalf district in which the estate lies, that he V. Munson, 10 Allen (Mass.) 493 ; has searched the records of the regis- Bank of Middlebury v. Rutland, 33 Vt. try, and found that there was no other 414 ; Lee v. Kilburn, 3 Gray (.Mass.) property standing in the name of the 594. grantor, is admissible. Bristol Co. Sav. * Griffith V. Parks, 32 Md. 4; Wat- Bank v. Keavy, 128 Mass. 298. ' Johnson v. Lovelace, 51 Ga. 19. o 82 GENERAL REPUTATION. § ^75 that a mortgage is fraudulent, it is competent to prove that in the country where the mortgagee was born and grew up, and continued to reside, he was never known to have any property or means, or to be engaged in any business,^ and was not in a position to lend money.^ So the creditor may show that the grantee was a married woman, having no separate estate, notoriously poor, and destitute of means to make the payment claimed or contemplated.^ Testimony of this kind is often of vital importance to creditors, as nothing is more common, or more persuasive to the minds of a court or a jury as to the presence of fraud, than proof that the debtor's property has passed into the hands of an irresponsible figurehead who was not possessed of the means with which to purchase it, and had no use for it. § 275. General reputation. — Evidence of the general repu- tation of all the parties to an alleged fraudulent transaction, as to their credit and pecuniary responsibility, may be ad- mitted.'^ In this respect the general reputation of the grantor is a fact which, with other circumstances, has some tendency to show that the grantee understood his motives in making the conveyance, and possibly participated in his unlawful purpose ; and proof of the grantee's want of credit would have a tendency to show that the conveyance was not made in good faith, especially if made in reliance upon his future ability to pay.^ Evidence that the grantee's general credit was bad, though somewhat remote, cannot be said to be incompetent.^ Where fraud is charged and sought to be established by proof of circumstances, evi- ' Stebbins v. Miller, 12 Allen (Mass.) S. C. sul> nom. Gordon v, Ritenour, 87 597. Mo. 54. ^ Demeritt v. Miles, 22 N. H. 523. * Sweetser v. Bates, 117 Mass. 468. * Amsden v. Manchester, 40 Barb. ^ Cook v. Mason, 5 Allen (Mass.) (N. Y.) 163. See s. P. Danby v. Sharp, 212. Compare Lee v. Kilburn, 3 Gray 2 MacAr. (D. C.) 435 ; Stevens v. Dill- (Mass.) 594; Metcalf v. Munson, 10 man, 86 111, 233; Castle v. Bullard, 23 Allen (Mass.) 491 ; Amsden v, Man- How. 186. Chester, 40 Barb. (N. Y.) 163. * Hall V. Ritenour, 2 West. Rep. 496 ; §§ 276, 2 77 CONCERNING RES GEST.€. 38 0"0 dence of general good character is admissible to repel it, as in criminal cases.^ § 276. Concerning res gestae. — Where it becomes neces- sary to discover the intention of a person, or to investigate the nature of a particular act, evidence of what the person said at the time of doing it is received as part of the res gestcs^ This important doctrine has been liberally applied in the United States, and especially in the class of litiga- tion under consideration. Thus a wife may employ her husband as an agent, and his utterances while so acting, in taking a bill of sale, constitute part of the res gestcB and are competent evidence for the wife.^ The declarations ac- companying an act are admissible as explanatory of the character and motives of the act.* They in this way be- come part of the res gestae. It is the duty of the jury to determine the weight of these declarations, by ascertaining whether they were sincere or were made to withdraw atten- tion from the real nature of the act, or to hide the real purpose of it.^ But declarations which are merely narra- tive of a past transaction are not admissible as part of the res gestce.^' § 277. Declarations before sale — Realty and personalty. — The conduct and declarations of the grantor respecting the estate conveyed, tending to prove a fraudulent intention on his part before the conveyance, are proper evidence for the jury upon an inquiry into the validity of the convey- ance by a creditor or subsequent purchaser, who alleges that it is fraudulent.'^ This evidence is considered compe- ' Werts V. Spearman, 22 S. C. 219. ' Kelly v. Campbell, i Keyes (N. Y.) 5 Waldele v. New York Central & H. 2c. R. R.R. Co., 95 N. Y. 274; Hanover ■• See Stewart v. Fenner, 81 Pa. St. Railroad Co. v. Coyle, 55 Pa. St. 396 ; 177. Loos V. Wilkinson, no N. Y. 211; ' Potter v. McDowell, 31 Mo. 74. Moore v. Meacham, 10 N. Y. 207 ; * Waldele v. New York Central & H. Schnicker v. People, 88 N. Y. 192; R. R.R. Co., 95 N. Y. 274. Swift V. Mass. Mutual Life Ins. Co., 63 ' Bridge v. Eggleston, 14 Mass. 245, N. Y. 186. per Parker, C. J.; S. C. 7 Am. Dec. 209. •584 DECLARATIONS AFTER SALE. § 278 tent to prove that the conveyance was fraudulent on the part of the grantor, and does not prejudice the grantee, who is not affected if he is a bona fide purchaser for a valu- able consideration. To avoid the transaction as covinous fraudulent intent must, as we have said, be shown on the part of the grantee as well as of the grantor.' So admis- sions made by one who, at the time, held the title to land, to the efifect that he had contracted to sell it to another, and had received payment for it, are competent evidence against those claiming title under him.^ The principle upon which such evidence is received is that the declarant was so situated that he probably knew the truth, and his interests were such that he would not have made the ad- missions to the prejudice of his title or possession unless they were true. The regard which one so situated would have for his own interest is considered sufficient security against falsehood. In New York, after some uncertainty, the rule was finally settled^ that such admissions in contro- versies concerning personal property would be excluded.'' § 278. Declarations of debtor after sale. — As a general rule the declarations of a vendor, after transfer and delivery See Alexander v. Caldwell, 55 Ala. 517 ; sequent to the assignment." See Bush Knox V. McFarran, 4 Col. 596; Ran- v. Roberts, in N. Y. 278. This state- degger v. Ehrhardt, 51 111. loi ; Chase ment of the rule would seem to be in- V. Chase, 105 Mass. 388 ; Stowell v. accurate. While a party holds the title Hazelett, 66 N. Y. 635 ; Davis v. Stern, and possession it would clearly seem 15 La. Ann. 177; McKinnon v. Reli- to be competent to give evidence of his ance Lumber Co., 63 Texas 31. See declarations made while the possession Elliott V. Stoddard, 98 Mass. 145 ; Mc- continued as characterizing the nature Lane v, Johnson, 43 Vt. 48 ; Wyckoff of it. Compare in this connection Von V. Carr, 8 Mich. 44. In Truax v. Sla- Sachs v. Kretz, 72 N. Y. 548 ; Loos v. ter, 86 N. Y. 632, Earl, J., is reported Wilkinson, no N. Y. 195; Clews v. in memorandum to have said : " The Kehr, 90 N. Y. 633. mere declarations of an assignor of a ' Carpenter v. Muren, 42 Barb. (N. chose in action, forming no part of any Y.) 300 ; Hughes v, Monty, 24 Iowa res gestcB, are not competent to preju- 499. See Chap. XIV. dice the title of his assignee, whether '' Chadwick v. Fonner, 69 N. Y. 404. the assignee be one for value, or merely ^ Paige r. Cagwin, 7 Hill (N. Y.) 361 ; a trustee for creditors, and whether Chadwick v. Fonner, 69 N. Y. 407. such declarations be antecedent or sub- •• Chadwick v. Fonner, 69 N. Y. 407. §278 DECLARATIONS AFTER SALE. 385 of possession, cannot be given in evidence asjainst the vendee.'^ Such declarations are mere hearsay,"^ and not made under the sanction of an oath ; the debt(jr bears no relation to the estate, and it has been frequently held that exceptions to the exclusion of this class of evidence should not be multiplied. A vendor after parting with his prop- erty has no more power to impress the title, eitlier by his acts or utterances, than a mere stranger.^ The declarations i Tilson V. Terwilliger, 56 N. Y. 277 ; Cuyler v. McCartney, 40 N. Y. 221 ; Chase V. Horton, 143 Mass. 118; Roberts v. Medbery, 132 Mass. 100; Winchester & Partridge Mfg. Co. v. Creary, 116 U. S. 161 ; Burnham v. Brennan, 74 N. Y. 597 ; Redfield v. Buck, 35 Conn. 328 ; Tabor v. Van Tassell, 86 N. Y. 642 ; Randegger V. Ehrhardt, 51 111. loi ; Kennedy v. Divine, ^'j Ind. 493 ; Garner v. Graves, 54 Ind. 188; Hirschfeld v. Will- iamson, I West Coast Rep. 150; Meyer v. Va. & T. R.R. Co., 16 Nev. 343; Sumner v. Cook, 12 Kans. 165 ; Scheble v. Jordan, 30 Kans. 353. In Holbrook v. Holbrook, 113 Mass. 76, Ames, J., said : " It has often been held, and is a well-established rule, that upon the trial of the question whether a particular conveyance was made to defraud creditors, it is not competent to show the acts or declarations of the grantor after the conveyance, to impair or affect the title of the grantee." Citing Bridge v. Eggleston, 14 Mass. 245; Foster v. Hall, 12 Pick. (Mass.) 89 ; Aldrich v. Earle, 1 3 Gray (Mass.) 578 ; Taylor v. Robinson, 2 Allen (Mass.) 562. See Clements v. Moore, 6 Wall. 299 ; Lewis v. Wilcox, 6 Nev. 215 ; Thornton v. Tandy, 39 Tex. 544 ; Pier v. Duff, 63 Pa. St. 59 ; City Nat. Bank v. Hamilton, 34 N. J. Eq. 163; Garrahy v. Green, 32 Tex. 202 ; Taylor V, Webb, 54 Miss. 36 ; Warren v. Will- iams, 52 Me. 346 ; Bullis v. Montgom- 25 ery, 50 N. Y. 358 ; Wadsworth v. Will- iams, 100 Mass. 126; Winchester v. Charter, 97 Mass. 140. Compare Truax v. Slater, 86 N. Y. 630; Bullis V. Montgomery, 50 N. Y. 358. ^ In Winchester & Partridge Mfg. Co. V. Creary, 116 U. S. 165, the court said : " The plaintiff was itself in actual possession, exercising by its agent full control. The vendors, it is true, en- tered plaintiff's service as soon as the sale was made and possession was sur- rendered, but only as clerks or sales- men, with no authority except such as employees of that character ordinarily exercise. What they might say, not under oath, to others, after possession was surrendered, as to the real nature of the sale, was wholly irrelevant. They were competent to testify under oath, and subject to cross-examination, as to any facts immediately connected with the sale, of which they had knowl- edge ; but their statements out of court, they not being parlies to the issues to be tried, were mere hearsay. After the sale, their interest in the property was gone. Having become strangers to the title, their admissions are no more binding on tiie vendee than the admissions of others. It is against all principle that their declara- tions, made after they had parted with the title and surrendered possession, should be allowed to destroy the title of their vendee." ' Stewart v. Thomas, 35 Mo. 207. 386 POSSESSION AFTER CONVEYANCE. § 279 of a former owner to qualify or disparage his title are only- admissible when made while the title is in him. Such utterances cannot be allowed to affect a title which is sub- sequently acquired.^ The declarations of the grantee while on his way to the magistrate to obtain the acknowl- edgment of the grantor, and before the deeds were deliv- ered, substantially to the effect that the deeds were being executed because of apprehensions on the part of the grantor that the property would be taken to satisfy the debt due the demandant were excluded, because the deed had not been delivered at the time the declarations were made, and it was clear that " as admissions in disparage- ment of title, the evidence was not competent."^ § 279. Possession after conveyance. — Elsewhere in this discussion the failure to effect a change of possession is shown to raise either a prmia facie or absolute presump- tion of fraud.^ As proof of the continued possession of the vendor is competent evidence to impeach the supposed transfer, it would seem to follow that any acts or declara- tions of the possessor while so retaining the property must also be competent as characterizing his possession.* So rlong as the debtor remains in possession of property which ^ once belonged to him, and which his creditor is seeking to ' Noyes v. Morrill, 108 Mass. 396; 63 Barb. (N. Y.) 311 ; Hilliard v. Phil- Stockwell V. Blarney, 129 Mass. 312. lips, 81 N. C. 104, Smith, C. J., dis- ''■ Stockwell V. Blarney, 129 Mass. senting upon the ground that the dec- 312. larations in this latter case did not ^ See Chap. XVII., §§ 248-252. qualify or explain the possession, nor ■• Kirby v. Masten, 70 N. C. 540; disparage declarant's title, but related Carnahan v. Wood, 2 Swan (Tenn.) to a pre-existing fact to impeach the 502 ; Yates v. Yates, 76 N. C. 142 ; validity and effect of his own act in Haenschen V. Luchtemeyer, 49M0. 51 ; conveying title. Its incompetency for Carney v. Carney, 7 Bax. (Tenn.) 287 ; such a purpose he considered fully es- Tedrovve v. Esher, 56 Ind. 447 : Unit- tablished by the authorities, i Greenl. ed States V. Griswold, 8 Fed. Rep. 560 ; Ev. §§ 109, no; Ward v. Saunders, Cahoon V. Marshall, 25 Cal. 202; Oatis 6 Ired. (N. C.) Law 382; Wise v. v. Brown, 59 Ga. 716 ; Mills v. Thomp- Wheeler, 6 Ired. (N. C.) Law 196; son, 72 Mo. 369 ; Adams v. Davidson, Hodges v. Spicer, 79 N. C. 223 ; Bur- jo N. Y. 309. See Knight v. Forward, bank v. Wiley, 79 N. C. 501. § 28o DECLARATIONS OF CO-CONSPIRATORS. 387 condemn as fraudulently conveyed, the res gestce of the fraud, if any, may be considered as in progress, and his declarations, though made after he has parted with the formal paper title, may be given in evidence for the cred- itor against the claimant,^ by. reason of the continuous pos- session which accompanied them. Where the assignor continues in possession of the assigned property, his acts and declarations while in actual possession may be giv^en in evidence as part of the res gesice,^ especially if there is ab- solutely no break made in the continuity of the possession after the real or pretended sale.^ The declarations are re- ceived in such cases upon the ground that they show the nature, object, or motives of the act which they accompany, and which is the subject of inquiry. To be a part of the res gestce, however, the declarations must be made at the time the act was done which they are supposed to char- acterize ; they must be calculated to unfold the nature and quality of the facts which they purport to explain ; and must harmonize with such facts so as to form one trans- action.* The declarations must be concomitant with the principal act or transaction of which they are considered a part, and so connected with it as to be regarded as the re- sult and consequence of co-existing motives.^ § 280. Declarations of co-conspirators. — Where it is proved that the debtor and others have joined in a conspiracy to defraud creditors by a fraudulent disposition of property, the acts and declarations of either of the parties, made in ' Williams v. Hart, 10 Rep. 74 ; it is said that the mere fact that a per- citing Oatis v. Brown, 59 Ga. 716. son, pending a suit against him, is in ''■ Newlin v. Lyon, 49 N. Y. 661 ; possession of personal property which Williamson v. Williams, 1 1 Lea (Tenn.) he has sold and constructively delivered, 368 ; Trotter v. Watson, 6 Humph, is not prima facie evidence that the (Tenn.) 509. sale is fraudulent as against a creditor. ^ Adams v. Davidson, 10 N. Y. 309. This is certainly a border case. The * Tilson V. Terwilliger, 56 N. Y. effect of the failure to change posses- 277. See Enos v. Tuttle, 3 Conn. 250. sion is elsewhere considered. See " In Towne v. Fiske, 127 Mass. 125, Chap. XVIL 388 DECLARATIONS OF CO-CONSPIRATORS. § 280 the execution of the common purpose, and in aid of its fulfilment, are competent evidence against any of the parties.^ Nor is it of consequence that the particular dec- larations under consideration were in reference merely to proposed acts of fraud which may not have been consum- mated in the particulars proposed, if such proposed acts were sui ge7ieris with those committed. A foundation must first be laid, by proof, sufficient to establish prima facie the fact of the conspiracy alleged in the complaint. That being done, every declaration of the participants in reference to the common object is admissible in evidence. It makes no difference at what time the defendant joins the conspiracy. Every one who enters into a common design is generally deemed in law a party to every act which has before been done by the others, in furtherance of the com- mon design ; and this rule extends to declarations.^ The statements of one of the co-conspirators, however, as to past transactions not connected with or in furtherance of the enterprise under investigation, are not competent.^ In case of conspiracy, where the combination is proved, the acts and declarations of the conspirators are not re- ceived as evidence of that fact, but only to show what was done, the means employed, the particular design in respect to the parties to be affected or wronged, and generally those details which, assuming the combination and the illegal purpose, unfold its extent and scope, and its in- fluence either upon the public or the individuals who suffer ' Dewey v. Moyer, 72 N. Y. 79, 80. Y. 503 ; Daniels v. McGinnis, 97 Ind. See Newlin v. Lyon, 49 N. Y. 661; 552. See Kelley v. People, 55 N. Y. 565. Cuyler v. McCartney, 40 N. Y, 221, - Tyler v. Angevine, isBlatchf. 541 ; per Woodruff, J. ; Tedrowe v. Esher, i Greenleaf's Ev. §111. 56 Ind. 445 ; Sherman v. Hogland, 73 ^ N. Y. Guar. & Ind. Co. v. Gleason, ind. 472 ; Stewart v. Johnson, 18 N. J. 78 N. Y. 503. See Johnston v. Thomp- Law 87 ; Lee v. Lamprey, 43 N. H. son, 23 Hun (N. Y.) 90 ; Baptist 13; Kennedy v. Divine, ']'] Ind. 493; Church v. Brooklyn F. I. Co., 28 N. Adams v. Davidson, 10 N. Y. 309; N. Y. 153; Cortland Co. v. Herkimer Co., Y. Guaranty, etc, Co. v. Gleason, 78 N. 44 N. Y. 22. § 28l PROOF OF CIRCUMSTANCES. 389 from the wrong, or show the exeadion of the illegal design. But when the only issue is whether there was a conspiracy to defraud, these declarations do not become evidence to establish it.^ The court may in its discretion receive the declaration first and the evidence of connection subse- quently,^ though it is conceded that the rule calling for preliminary proof should not be departed from except under particular and urgent circumstances. It has been said that the testimony of one witness is enough to let in the acts and declarations of a wrong-doer, and that the court will not decide upon the question of his credibility ;^ and in Pennsylvania the rule seems to prevail that the least degree of concert or collusion between parties to an illegal transaction makes the act of one the act of all.* § 281. Proof of circumstances. — In litigations of the class ifj^^J^ Cy under consideration, great latitude should undoubtedly be ^(rr'r/.& ^6~ allowed in regard to the admission of circumstantial evi- dence for the purpose of proving participation in manifest fraud." Objections to testimony as irrelevant are not ' Woodruff, J., in Cuyler v. McCart- purpose that they fairly constitute a ney, 40 N. Y. 229 ; Boyd v. Jones, 60 part of the res gestce. There was no Mo. 454 ; N. Y. Guaranty, etc. Co. v. such independent evidence in this case, Gleason, 7 Abb. N. C. (N. Y.) 334 ; and there is no foundation for the Kennedy v. Divine, 'j'j Ind. 493. In charge of a conspiracy between the Winchester & Partridge Mfg. Co. v, vendors and vendee to hinder credit- Creary, 116 U. S. 166, the court said : ors, outside of certain statements which " Without extending this opinion by a Webb is alleged to have made after review of the adjudged cases in which his firm had parted with the title and there was proof of concert or collusion surrendered possession." between vendor and vendee to defraud ^ Place v. Minster, 65 N. Y. 89. creditors, and in which subsequent ^ Abney v. Kingsland, 10 Ala. 355, declarations of the vendor were offered 361. in evidence against the vendee to prove ^ Confer v. McNeal, 74 Pa. St. 115; the true character of the sale, it is suffi- Gibbs v. Neely, 7 Watts (Pa.) 307 ; cient to say that such declarations are Rogers v. Hall, 4 Watts (Pa.) 361 ; not admissible against the vendee, McDowell v. Rissell, 37 Pa. St. 164; unless the alleged common purpose to Hartman v. Diller, 62 Pa. St. 37. defraud is first established by inde- ' Curtis v. Moore, 20 Md. 96 ; Shealy pendent evidence, and unless they have v. Edwards, 75 Ala. 416. See § 13. such relation to the execution of that Engraham v. Pate, 51 Ga. 537. 290 PROOF OF CIRCUMSTANCES. § 28 1 favored in such cases, since the force of circumstances de- pends SO much upon their number and connection.^ The evidence should be permitted to take a wide range, as in most cases fraud is predicated of circumstances, and not upon direct proof.^ Proof is said to estabhsh the truth, and circumstantial evidence to lead toward it ; hence any pertinent and legitimate facts, conducing to the proof of a litigated issue, constitute evidence of the disputed fact, stronger or weaker, according to the entire character and complexion of it, or as affected by conflicting evidence.'^ Though the evidence to prove fraud may be circumstantial and presumptive, it " must be strong and cogent, such as to satisfy a man of sound judgment of the truth of the alleofation."^ But the alleo^ation of fraud in a civil action need not, like the charge of crime, be proved by evidence excluding all reasonable doubt ; a preponderance of evi- dence will suffice.^ So it is not error to refuse to charge a jury that " they must be satisfied from the clearest and most satisfactory evidence," since it is the province of the jury to weigh the evidence.* " Circumstantial evidence," said Bradley, J., "is not only sufficient, but in most cases it is the only proof that can be adduced." ''' Often other things which go to characterize a transaction are more con- vincing than the positive evidence of any single witness, especially of an interested witness.^ The only true test is whether the evidence can throw light on the transaction, or whether it is totally irrelevant.^ It is the duty of the court, ' Sarle v. Arnold, 7 R. I. 586 ; Castle Poole, 61 Ga, 374 ; Sarle v. Arnold, 7 V. Bullard, 23 How. 187. R. I. 585 ; Castle v. Bullard, 23 How. ^ Ferris v. Irons, 83 Pa. St. 182. See 187 ; Winchester v. Charter, 102 Mass. Wright V. Linn, 16 Tex. 34. 275, 276 ; White v. Perry, 14 W. Va. * Miles V. Edelen, i Duv. (Ky.) 270. 66 ; Butler v. Watkins, 13 Wall. 456. * Henry v. Henry, 8 Barb. (N. Y.) » Molitor v. Robinson, 40 Mich. 202. 592. See Blue v. Penniston, 27 Mo. 274. * Strader v. Mullane, 17 Ohio St. 626. ' Heath v. Page, 63 Pa. St. 108-126, * Painter v. Drum, 40 Pa. St. 467. and cases cited. See Stewart v. Fen- ■■ Rea V. Missouri, 17 Wall. 543. See ner, 81 Pa. St. 177 ; Booth v. Bunce, Cooke V. Cooke, 43 Md. 525 ; King v. 33 N. Y. 159. § 28 1 PROOF OF CIRCUMSTANCES. 39I. however, to see that such evidence has at least a natural and reasonable tendency to sustain the allegations in sup- port of which it is introduced ; that it is of such a character as to warrant an inference of the fact to be proved, and amounts to something more than a mere basis for con- jecture or vague speculation.^ Evidence may be legally admissible as tending to prove a particular fact which by itself is utterly insufficient for that purpose. " It may be a link in the cham, but it cannot make a chain unless other links are added." "^ So in England it is settled that the pre- liminary question of law for the court is not whether there is absolutely no evidence, but whether there is none that ought reasonably to satisfy the jury that the fact sought to be proved is established. If there is evidence on which the jury can properly find for the party on whom the onus of proof lies, it should be submitted ; if not, it should be with- drawn from the jury.^ Greater latitude is undoubtedly allowable in the cross- examination of a party who places himself upon the stand than in that of other witnesses.^ The cross-examination of 1 Battles V. Laudenslager, 84 Pa. St. it. Courts have the power, and must. 451. prevent such a system of assault, other- - Howard Express Co. v. Wile, 64 wise fraud would ever be victorious. Pa. St. 206. It is a subtle element, and is to be Latitude of the inquiry. — In Balti- traced out, if at all, by the small in- more & Ohio R.R. Co. v. Hoge, 34 Pa. dices discoverable by the wayside where St. 221, Thompson, J., said: "It is a it travels; and to enable courts and great error, generally insisted on by de- juries to detect it, they must in most fendants, in cases involving questions cases aggregate many small items, be- of fraud, that each item of testimony is fore the true features of itarediscerni- to be tested by its own individual in- ble. Hence it is that great latitude in trinsic force, without reference to any- the investigation is a rule never de- thing else in the case ; and if on such a parted from in such cases. This rule test it does not prove fraud, it must be is elementary, and a citation of author- excluded. The system of destroying ities to prove it would not only be use- in detail forces designed for concen- less, but superfluous. " trated action does well, doubtless, in • Ryder v. Wombwell, L. R. 4 Exch. military operations ; but a skillful gen- 39; Jewell v. Parr, 13 C. B. 916. eral never suffers such a disastrous ^ Rea v. Missouri, 17 Wall. 542. result, except when he cannot prevent 392 OTHER FRAUDS. § 282 a witness not a party is usually confined within the scope of the direct examination.^ Then again proof of collateral facts tending to show a fraudulent intention is held to be admissible whenever a fraudulent intention is to be estab- lished.^ The fact that at the time of the sale suits were pending against the debtor, or that he was apprehensive suits would be commenced, and also his general pecuniary condition, are matters which the creditor should be per- mitted to show.^ The maxim " Omnia prcBsumuntur contra spoliatorem " is frequently invoked by creditors in cases where the debtor or those acting in collusion with him have spirited away witnesses, or altered, destroyed, or suppressed documents.'* And curiously enough the maxim '' De minimus non curat lex " has been applied where the sum claimed to have been misappropriated by the debtor was insignificant in amount.^ We have already glanced at the effect of inadequacy of consideration,^ and have seen that it may be so gross as to shock the conscience and furnish decisive evidence of fraud.''' In an Oregon case this language occurs : ''The fact that one person has obtained the property of another, under a form of purchase, without having paid any consid- eration therefor, and with a design of acquiring it for nothing, is fraudulent in itself."^ § 282. Other frauds. — It is competent, in order to estab- lish the fraudulent intent of the debtor, to give proof of ' Rea V. Missouri, 17 Wall. 542; sor, 24 Beav. 679 ; Armory v. Delamirie, Johnston v. Jones, i Black 216; Teese i Stra. 505. Compare State of Michi- V. Huntingdon, 23 How. 2. gan v. Phoenix Bank, 33 N. Y. 9. But ^ United States v. 36 Barrels of High we cannot enter this wide field. See 18 Wines, 7 Blatchf. 474 ; Wood v. United Am. Law Rev. 185. States, 16 Pet. 342-361. ^ Crook v. Rindskopf, 105 N. Y. 484. ^ Harrell v. Mitchell, 61 Ala. 278. " See § 232 ; Archer v. Lapp, 12 Ore. See Chap. XVI. 202. * See Wardour v. Berisford, i Vern. ' See Pomeroy's Eq. Jur., § 927. 452; Attorney General V. Dean of Wind- * Archer v. Lapp, 12 Ore. 202. § 282 ' OTHER FRAUDS. 393 Other fraudulent sales effected about the same time, and of his proposals to make other covinous alienations, together with his statements and declarations showing such intent.^ Johnson, J., said :^ " In actions involving questions of fraud, the intent is always a material inquiry, and for the purpose of establishing that, other acts of a similar charac- ter, about the same time, may always be shown." ^ This is especially the rule where there is any relation or connection between the different transactions,* or they form any part of a connected scheme to defraud.^ When the motives and intent of the parties to an act become material, they may be shown by separate and independent acts and declara- tions accompanying or preceding the act in question. How far back such proof may extend must depend upon the nature and circumstances of each particular case, and no positive rule can be laid down. In the case of fraudulent conveyances the proof will usually be limited to similar acts occurring about the same time.° It has been considered, however, not competent for a party imputing fraud to another to offer evidence to prove that the other dealt fraudulently at other times and in transactions wholly disconnected with the one under consideration. It is believed that such testimony would tend to prejudice the minds of the jury by impeach- ing the general character of the party charged with the fraud, when he had no right to expect such an attack, and could not be prepared to defend himself, however unim- peachable his conduct might have been.'' 1 Pomeroy v. Bailey, 43 N. H. 125, 'Warren v. Williams, 52 Me. 346; and cases cited; Blake v. White, 13 Flagg v. Willinglon, 6 Me. 386. N. H. 267 ; Pierce v. Hoffman, 24 Vt. •* Erfort v. Consalus, 47 Mo. 212. 527. But see Staples v. Smith, 48 Me. ' Smith v. Schwed, 9 Fed. Rep. 483 ; 470; Huntzinger v. Harper, 44 Pa. St. Clarke v. White, 12 Pet. 193. 204 ; McCabe V. Brayton, 38 N. Y. 198 ; " Pomeroy v. Bailey, 43 N. H. 125. Withrow V. Biggerstaff, 87 N. C. 176. ' Somes v. Skinner, 16 Mass. 360; ■ Amsden v. Manchester, 40 Barb. Grant v. Libby, 71 Me. 430. (N. Y.) 163. 394 SUSPICIONS INSUFFICIENT. §§ 283, 284 § 283. Suspicions insufficient. — Mere suspicion of the ex- istence of fraud, as we have said,^ is not sufficient to estab- lish its existence, but it must be clearly and satisfactorily- shown. The evidence must convince the understanding that the transaction was entered into for a purpose pro- hibited by law.* Tangible facts must be adduced from which a legitimate inference of a fraudulent intent can be drawn.^ Again circumstances amounting to a suspicion of fraud are not to be deemed notice of it, and where an infer- ence of notice is to affect an innocent purchaser, it must appear that the inquiry suggested would have resulted, if fairly pursued, in the discovery of the defect or fraud.* The transaction will not be overturned even though the court finds "that there is ground of suspicion."^ § 284. Proving value. — As we have seen, the value of the assigned property is always important in the question > Sherman v. Hogland, 73 Ind. 472 ; Clark V. Krause, 2 Mackey (D. C.) 565 ; Jaeger v. Kelley, 52 N. Y. 274. See §§ 5. 6. - Pratt V. Pratt, 96 111. 184. ' Sherman v. Hogland, 73 Ind. 477 ; Jaeger v. Kelley, 52 N. Y. 274. See Chap. XVI. ■*■ Simms V. Morse, 4 Hughes 583. See Ledyard v. Butler, 9 Paige (N. Y.) 132. * Parker v. Phetteplace, i Wall. 685. Mr. Jenks, the learned counsel for the creditor in this action, relied largely upon the suspicious circumstances in evidence, and urged that proof of a covenant to commit the fraud could not be adduced, nor even proof of words. Some of the greatest crimes which power has ever commanded have been consunftmated without a word of direct instruction. The learned reporter in a note to this case aptly quotes from King John, Act III.. Scene III.: King John " Hear me without thine ears, and make reply Without a tongue, using conceit alone. Without eyes, ears, and harmful sound of words; Then, in despite of broad-eyed watchful day, I would into thy bosom pour my thoughts ; But ah, I will not : — .... Dost thou understand me ? Thou art his keeper. Hubert. And I will keep him so, That he shall not offend your majesty." Again, after the murder, Act IV., Scene II. King John " Hadst thou but shook thy head, or made a pause, When I spake darkly what I purposed; Or turn'd an eye of doubt upon rny face, As bid me tell my tale in express words ; Deep shame had struck me dumb, made me break off. And those thy fears might have wrought fears in me : But thou didst understand me by my signs. And didst in signs again parley with sin, Yea, without stop, didst let thy heart consent. And, consequently, thy rude hand to act The deed which both our tongues held vile to name. — " ' § 285 TESTIMONY. 395 of fraud.^ Experts may be called to prove value. In Bristol Co. Savings Bank v. Keavy^ the witness was a real estate broker and auctioneer, and was accustomed to sell and value lands in various parts of the city in which the property was located, and had appraised land on the street where the premises were situated. He was held to be plainly qualified to testify as to the value of the land. § 285. Testimony must conform to pleadings. — The com- plainant will only be allowed to prove the truth of the alle- gations contained in his bill. Evidence relating to other matters will be excluded upon well-established principles of pleading which require the complainant to state the case upon which he seeks relief, to the end that the court may learn from the pleading itself whether the creditor is enti- tled to the relief prayed, and that the defendant may be advised as to the matters against which he is to defend.^ Facts admitted in the pleading cannot be contradicted or varied by evidence. ■ Stacy V. Deshaw, 7 Hun (N. Y.) • 128 Mass. 303, 451. See §§ 23, 41. 2 Parkhurst v. McGraw, 24 Miss. 139. CHAPTER XIX. DEFENSES. 286. As to defenses. 286a. Another action pending. 287. Laches. 28a [ L^P'" of time. 290. Discovery of the fraud. 291. Judge Blatchford's views. 292. Statute of limitations. § 293. Limitations in equity. 294. Insolvency or bankruptcy dis- charges. 295. Existing and subsequent credit- ors. 296. Sufficient property left — Gift of land. 297. What sheriff must show against stranger. § 286. As to defenses. — The principal defenses interposed in suits prosecuted to annul fraudulent transfers, as is else- where shown, are, that the purchaser acquired the title or property bona fide, without notice of, or participation in, the grantor's fraudulent intent, and that adequate consider- ation was paid or given for it. The principles and author- ities governing these branches of our investigation have been considered of sufficient moment to call for treatment in separate chapters,^ and need not be again discussed, but there are certain lines of defense common to this class of litigation which command at least passing attention. It may be observed at the outset that the fact that forms of law have been pursued is no protection in a court of equity, if the result aimed at, and reached, is a fraud.^ The transaction must be judged by its real character, rather than by the form and color which the parties have seen fit to give it.^ What cannot be done directly can- ' See Chaps. XV., XXIV. N. J. Eq. 190 ; Fiedler v. Darrin, 50 N. 2 Metropolitan Bank v. Durant, 22 Y. 440, where the rule is applied to N. J. Eq. 35, 41. usurious transactions. Judgment-cred- ^ Ouackenbos v. Sayer, 62 N. Y. 346 ; itors are considered to be acting in Vreeland v. New Jersey Stone Co., 29 privity with their debtor in attacking §§ 2S6a, 287^ LACHES. 397 not be done by indirection ; and when fraud appears the forms will be discarded and the corrupt act exposed and punished.^ § 286^. Another action pending. — The general and salu- tary principle of procedure that no person shall be twice vexed for the same cause, of course applies to proceedings instituted by creditors. Thus in a case which arose in Pennsylvania where a creditor's bill was filed against di- rectors of an insolvent bank charging mismanagement of its affairs, and an assignee of the bank subsequently brought an action at law in the name of the bank against the direct- ors for the same cause, it was held that the pendency of the bill was well pleaded in abatement in the action at law.^ § 287. Laches. — We have elsewhere discussed the cases relating to the sufficiency of pleas excusing apparent laches in filing a bill to annul a fraudulent transfer.^ Endeavoring to avoid unnecessary repetition, let us recur to the subject of laches considered as a defense or bar to a suit. " Courts of equity do not impute laches by an iron rule. Circum- stances are allowed to govern every case."^ It may be as- serted at the outset that equity will not be moved to set aside a fraudulent transaction at the suit of one who, after he had knowledge of the fraud, or after he was put upon inquiry with the means of knowledge accessible to him, has been quiescent during a period longer than that fixed by the statute of limitations.^ A stale and uncertain de- or defending any usurious contract ' Buck v, Voreis, 89 Ind. 1 17. which he may have made. Chandler ^ Warner v. Hopkins, 1 1 1 Pa. St. V. Powers, 24 N. Y. Daily Reg., p. 1201 328. (Dec. 28, 1883). See Merchants' Exch. = See §§ 148, 149. Nat. Bk. V. Com. Warehouse Co., 49 * Waterman v. Spragxie Manuf. Co., N. Y. 642, and note. It seems that it 55 Conn. 574. is not a fraud upon creditors for a ' Burke v. Smith, 16 Wall. 401. Corn- debtor or assignor to provide for the pare Mcader v. Norton, 1 1 Wall. 443 ; payment of a usurious debt. See Trenton Banking Co. v. Duncan, 86 N. Chapin v. Thompson, 89 N. Y. 271 ; Y. 221. Murray v. Judson, 9 N. Y. 73. 398 LACHES. § 287 mand, as for instance, a bill filed to set aside an alleged fraudulent conveyance nineteen years old, should not be al- lowed in a court of equity.^ In Eigleberger v. Kibler'^it appeared that the complainant had permitted the convey- ance in question to stand for nearly ten years, during which period many valuable improvements had been made by the S^rantee, and the creditor had also suffered other creditors, junior in date to him, to acquire prior liens, and thus con- sume the estate of the debtor. Upon this state of facts the court very properly decided that the creditor, having by his supineness allowed the fund to be taken away, could not subsequently be permitted to make his own laches a ground of injury to another. So it has been considered an important element that the transactions out of which the suit arose commenced about thirteen years before any at- tempt was made toward impeachment, and no efforts at concealment or secrecy were shown. ^ " After such delay," said Chief-Justice Waite, "we are not inclined to set aside what has been permitted to remain so long undisturbed, simply because of an inability to explain with exact cer- tainty from what precise source the money came, which went into the purchase of each particular parcel of prop- erty." * Chancellor Kent said:^ "There is no principle better established in this court, nor one founded on more solid considerations of equity and public utility, than that which declares, that if one man, knowingly, though he does it passively, by looking on, suffers another to purchase and expend money on land, under an erroneous opinion of title, without making known his claim, he shall not afterwards be permitted to exercise his legal right against such person. ' Dominguez v. Dominguez, 7 Cal. * Aldridge v. Muirhead, loi U. S. 424. 402. *i Hill's Ch. (S. C.) 113; S. C.26 ^ Wendell V. Van Rensselaer, I Johns. Am, Dec. 192, Ch. (N. Y.) 354. ' Aldridge v. Muirhead, 1 01 U. S. 401 . § 288 LAPSE OF TIME. 399 It would be an act of fraud and injustice, and his conscience is bound by this equitable estoppel." The Court of Ap- peals of New York could " see no reason why the same principle should not protect creditors, who have given credit upon the faith of the apparent ownership of property in pos- session of the debtor, against a secret unrecorded convey- ance, fraudulently concealed by the grantee ; as when, with knowledge that the debtor is holding himself out as owner, and is gaining credit upon this ground, he keeps silence, giving no sign."^ But in this latter case the creditor's suit failed because of his laches in not examining the record, and because of a lack of evidence of knowledge of cir- cumstances which called upon the defendant to record his deed. § 288. Lapse of time. — The general principle of equity jurisprudence, that lapse of time, independent of limita- tions or simple laches, may constitute a defense to a suit, is ably considered by McCrary, J., in United States v. Beebee,* in an action brought to annul fraudulent patents. The court says in substance, that the authorities support the proposition that lapse of time may be a good defense in equity, independently of any statute of limitations, and they show that the doctrine rests not alone upon laches ; it is often put upon one or all of the following grounds, namely : First, that courts of equity must, for the peace of society, and upon grounds of public policy, discourage stale demands by refusing to entertain them ; second, that lapse of time will, if long enough, be regarded as evidence against the stale claim, equal to that of credible witnesses, and which, being disregarded, would in a majority of cases lead to unjust judgments ; third, that, after the witnesses who had personal knowledge of the facts, have all passed away, it is impossible to ascertain the facts, and courts of equity ' Trenton Banking Co. v. Duncan, ^ 17 Fed. Rep. 3; 86 N. Y. 229. 400 LAPSE OF TIME. § 289 will, on this ground, refuse to undertake such a task. Thus Mr. Justice Story says: "A defense peculiar to courts of equity is founded upon the mere lapse of time, and the staleness of the claim, in cases where no statute of limita- tions directly o-overns the case. In such cases, courts of equity act sometimes by analogy to the law, and sometimes act upon their own inherent doctrine of discouraging, for the peace of society, antiquated demands, by refusing to interfere when there has been gross laches in prosecuting rights, or long and unreasonable acquiescence in the asser- tion of adverse rights."^ And in Maxwell v. Kennedy^ the Supreme Court of the United States, in answer to the argument that there was no statute of limitations applicable to the case at bar, said : " We think the lapse of time, upon the facts stated in the bill and exhibits, is, upon principles of equity, a bar to the relief prayed, without reference to the direct bar of a statute of limitations." § 289. — Again, in Clarke v. Doorman's Executors,^ the same court observed : " Every principle of justice and fair dealing, of the security of rights long recognized, of repose of society, and the intelligent administration of justice, for- bids us to enter upon an inquiry into that transaction forty years after it occurred, when all the parties interested have lived and died without complaining of it, upon the sugges- tion of a construction of the will different from that held by the parties concerned, and acquiesced in by them through all this time." In Brown v. County of Buena Vista'* the doctrine is expressed in these words : " The lapse of time carries with it the memory and life of witnesses, the muni- ments of evidence, and other means of proof. The rule which gives it the effect prescribed is necessary to the ' 2 Story's Eq., §1520. 107 U. S. 11 ; National Bank v. Car- - 8 How. 222. penter, loi U. S. 568 ; Kirby v. Lake 3 18 Wall. 509. Shore & M. S. R.R. Co., 120 U. S. 136 ; ■*95U.S.i6r. See Embry V. Palmer, Phillips v. Negley, 117 U. S. 675. §290 DISCOVERY OF THE FRAUD. 4OI peace, repose, and welfare of society. A departure from it would open an inlet to the evils intended to be excluded." In Harwood v. Railroad Co.^ the principle is concisely and clearly stated thus : " Without reference to any statute of limitations, the courts have adopted the principle that the delay which will defeat a recovery must depend upon the particular circumstances of each case." Lord Redesdale observed : " It is said that courts of equity are not within the statute of limitations. This is true in one respect ; they are not within the words of the statutes, because the words apply to particular legal remedies ; but they are within the spirit and meaning of the statutes, and have been always so considered." ^ Important discussions of this general principle may be found in Elmendorf v. Taylor^ and Badger v. Badger.'* In Boone v. Chiles^ the rule is thus laid down : "A court of chancery is said to act on its own rules in regard to stale demands, and independent of the statute. It will refuse to give relief where a party has long slept on his rights, and where the possession of the property claimed has been held in good faith, without dis- turbance, and has greatly increased in value." In Wilson V. Anthony,^ cited with approval by the Supreme Court of the United States in Sullivan v. Portland, etc., R.R. Co., the doctrine is well stated thus : " The chancellor refuses to interfere after au unreasonable lapse of time from con- siderations of public policy, and from the difhculty of doing entire justice when the original transactions have become obscured by time, and the evidence may be lost. " '' § 290. Discovery of the fraud. — It is a general rule that where the party injured by the fraud remains in ignorance • 17 Wall. 78, 81. « 19 Ark. 16. • Hovenden v. Lord Annesley, 2 Sch. ' 94 U. S. 811. And see Hume v. & Lef. 607. Beale, 17 Wall. 343; Hall v. Law, 102 ^ 10 Wheat. 172. U. S. 465 ; Godden v. Kimmeli, 99 U. * 2 Wall. 94. S. 210; Pusey v. Gardner, 21 W. Va, * 10 Pet. 248. 481. 26 402 JUDGE BLATCHFORD's VIEWS. § 29I of it, without any fault or want of care on his part, the statute does not begin to run until the fraud is discovered by, or becomes known to, the party suing, or those in privity with him.^ " To hold that by concealing a fraud," says Miller, J., ''or by committing a fraud in a manner that it concealed itself until such time as the party committing the fraud could plead the statute of limitations to protect it, is to make the law which was designed to prevent fraud the means by which it is made successful and secure."^ This, as we have already shown, is a rule of pleading,^ as well as a matter of evidence or of defense. § 291. Judge Blatchford's views. — This subject was ably discussed in Tyler v. Angevine,* by Blatchford, J., while a circuit judge. He said : " In suits in equity, the decided weight of authority is in favor of the proposition, that, where the party injured by the fraud remains in ignorance of it without any fault or want of diligence or care on his part, the bar of the statute does not begin to run until the fraud is discovered, though there be no special circum- stances or efforts, on the part of the party committing the fraud, to conceal it from the knowledge of the other party.^ On the question as it arises in actions at law, there is, in this country, a very decided conflict of authority. Many of the courts hold that the rule is sustained in courts of equity only on the ground that these courts are not bound by the mere force of the statute, as courts of common law are, but only as they have adopted its principle as express- ing their own rule of applying the doctrine of laches in an- « Upton V. McLaughlin, 105 U. S. * 15 Blatch. 541, 640; Bailey v. Glover, 21 Wall. 349; » Q^jng ggoth v. Warrington, 4 Bro. Gifford V. Helms, 98 U. S. 248; Erick- P. C. 163 ; South Sea Co. v. Wymond- son V. Quinn, 47 N. Y. 413; Richard- sell, 3 P. Wms. 143; Hovenden v. An- son V. Mounce, 19 S. C. 477. nesley, 2 Sch, & Lef. 634 ; Steams v. - Bailey V. Glover, 21 Wall. 349, Jz 305 wife's separate property. 415 husband from becoming the agent of his wife. All the property of a married woman is now her separate estate ; she holds it as di/eme sole, and has a right to embark it in business. She may lawfully engage in any kind of trade or barter. If she engages in business, and actually furnishes the capital, so that the business is in fact and truth hers, she has a right to ask the aid of her husband, and he may give her his labor and skill without rendering her property liable to seizure for his debts." ^ In Merchant v. Bunnell,^ Davies, Ch. J., said : "This court has frequently held that there is nothing in the marriage relation which forbids the wife to employ her husband as her agent in the manage- ment of her estate and property, and that such employment does not subject her property or the profits arising from such business, to the claims of the creditors of her hus- band." » § 304. Wife's separate property. — It follows from the cases cited, that a creditor cannot subject to the payment of his claim lands belonging to the debtor's wife, the pur- chase-money of which constituted a part of her separate estate ; * and where the wife was the owner of a farm upon which she resided, and which the husband carried on in her name, without any agreement as to compensation, it was held that neither the products of the farm, nor property taken in exchange therefor, could be attached by creditors of the husband. '^ § 305, Mingling property of husband and wife. — If a wife permits her husband to take title to her lands, and to hold himself out to the world as the owner of them, and to con- ' Citing Voorhees v. Bonesteel, 16 ^ Davis v. Fredericks, 104 U. S. 618. Wall. 31. See §218. Compare Rutherford v. Chapman, 59 " 3 Keyes (N. Y.) 539, 541. Ga. 177. ^ Citing Sherman v. Elder, 24 N. Y. ' Gage v. Dauchy, 34 N. Y. 293. 381 ; Knapp v. Smith, 27 N. Y. 277; See Buckley v. Wells, 33 N. Y. 518; Buckley v. Wells, 33 N, Y. 518; Gage Garrity v. Haynes, 53 Barb. (N. Y.) V. Dauchy, 34 N. Y. 293. 599 ; Bancroft v. Curtis, 108 Mass. 47. 4l6 MINGLING PROPERTY. § 305 tract debts upon the credit of such ownership, she cannot afterward, by taking title to herself, withdraw them from the reach of his creditors, and thus defeat their claims.* At least the courts of New Jersey so hold. And where a hus- band and wife acquire property by their joint industry and management, the title being taken and held in the husband's name, a conveyance of the property to the wife, without con- sideration, to the prejudice of existing creditors of the hus- band, will not it seems be supported.^ It is said by the Supreme Court of the United States : " If the money which a married woman might have had secured to her own use is allowed to go into the business of her husband, and be mixed with his property, and is ap- plied to the purchase of real estate for his advantage, or for the purpose of giving him credit in his business, and is thus used for a series of years, there being no specific agreement when the same is purchased that such real estate shall be the property of the wife, the same becomes the property of the husband for the purpose of paying his debts. He can- not retain it until bankruptcy occurs, and then convey it to his wife. Such conveyance is in fraud of the just claims of the creditors of the husband."^ Humes v. Scruggs is discussed and analyzed by Choate, J., in Van Kleeck v. 1 City Nat. Bank v. Hamilton, 34 N. Besson v. Eveland, 26 N. J. Eq. 471. J. Eq. 162. " Having constantly con- See Sexton v. Wheaton, 8 Wheat. 229. sented he should hold himself out to ^ Langford v. Thurlby, 60 Iowa 107. the world as the owner of this prop- ' Humes v. Scruggs, 94 U. S. 27. erty, and contract debts on the credit Citing Fox v. Moyer, 54 N. Y. 125, of it, up to the very hour of his disaster, 131 ; Savage v. Murphy, 34 N. Y. 508 ; it would be against the plainest prin- Babcock v. Eckler, 24 N. Y. 623 ; ciples of justice, and utterly subversive Robinson v. Stewart, 10 N. Y. 190; of everything like fair dealing, to per- Carpenter v. Roe, 10 N. Y. 227 ; Hinde mit her to step in now and withdraw v. Longworth, ir Wheat. 199; which from the process of the law, put in cases do not all seem to be entirely in motion by his creditors, the very prop- point for so broad a proposition. See erty she had permitted him, year after Wake v. Griffin, 9 Neb. 47 ; Odell v. year, to represent to be his, and the Flood, 8 Ben. 543 ; Besson v. Eveland, apparent ownership of which had given 26 N. J. Eq. 468 ; Moore v. Page, 1 1 1 him his business credit and standing." U. S. 119. § 305 MINGLING PROPERTY. 417 Miller/ and it was very properly considered that the lan- guage was not to be deemed as asserting the doctrine that the wife whose moneys were so received by the husband ceased to be his creditor for the money so retained, or for- feited by the use wiiich she had allowed the husband to make of the money any of her rights as creditor in case of bankruptcy.^ If the money is received by the husband as his wife's, and to be accounted for or secured by him to her, he waiving his marital rights thereto, she has an equit- able right to the fund sufficient to sustain a mortgage sub- sequently given to secure it, and the mere lapse of time would not invalidate the security.^ ' 19 N. B. R. 496. This language is employed by Hopkins, J., In re Jones, 6 Biss. 68, 73, in deciding a motion to expunge a proof of debt in bankruptcy filed by a wife against a husband : " She allowed him [the husband] to collect, deposit, and use the money when col- lected as his own, and to enjoy the credit and reputation that the reception and use of the money necessarily gave him ; and after parties have dealt with him, supposing and believing he was the owner of such money, she cannot be heard to assert her right to it, and thus defraud honest creditors who have trusted him, relying upon the truth of appearances of ownership which she permitted him to present." See Briggs V. Mitchell, 60 Barb. (N.Y.) 317, where Potter, P. J., said : " A quiet acqui- escence that her husband should use her estate as his own, mingling it indis- criminately with his own, in business, for a period of from twelve to nineteen years, without the recognition of its separate existence by even a written receipt, memorandum, or separate in- vestment, and without ever having dur- ing that period accounted for interest or principal, or even having talked about it, until the bona fide creditors were 27 about to call for it, is a kind of trust or settlement that cannot be recognized by any rule of law or equity, to stand against the rights of antecedent credit- ors." The argTiments advanced in the cases last quoted tend strongly toward the repression of fraudulent transfers of assets by husband to wife. Since the emancipation of married women from the bondage of the common law as regards their right to hold prop- erty, they have become the convenient alienees of dishonest husbands who are seeking to elude the just claims of creditors. Nothing is more natural than that courts should rigidly ex- amine, and, in proper cases, overturn transfers of this character. The chief ground usually assigned, that the hus- band gains a false credit by the ap- parent ownership and use of the wife's money and property might, it seems to us, be urged against any creditor who sold personal property to the debtor upon credit, reserving title, or any bailor who had entrusted the debtor with the temporary custody of chattels. • See Grabill v.Moyer, 45 Penn.St.530. ^ Syracuse Chilled Plow Co. v. Wing, 85 N. V. 426 ; Woodworth v. Sweet, 51 N. Y. 9. 41 8 MARRIAGE SETTLEMENTS. § 306 § 306. Marriage settlements — Amount of settlement, — If the amount of property settled is extravagant, or grossly out of proportion to the station and circumstances of the husband, this has been regarded as of itself sufficient notice of fraud. ^ In an able opinion, in the case of Davidson v. Graves,^ Justice Nott says : "There is no case that I have seen, where a man has been permitted to make an intended wife a mere stock to graft his property upon, in order to place it above the reach of his creditors. A marriage set- tlement must be construed like every other instrument. The question may always be raised, whether it was made with good faith, or intended as an instrument of fraud." ^ The usual test is that the settlement must be reasonable considering the grantor's circumstances.^ If it complies with this requirement it will be upheld. When a person possesses a large estate, and, owing debts inconsiderable in amount, makes a voluntary settlement of a part of his prop- erty upon a wife and child, retaining enough of his prop- erty himself to pay his existing debts many times over, it would not be a fair or reasonable inference that such a trans- action was intended to hinder or defraud persons to whom he happened to owe trifling debts.^ A settlement upon a wife of all a man's property exempt from execution, can- not, of course, be upheld, unless the marriage was not only ' the sole consideration for it, but the agreement was entered ^into by the wife in ignorance of her husband's indebtedness, and without knowledge of circumstances sufficient to put her upon inquiry.^ In Colombine v. Penhall,'' a celebrated English case, the court said : " Where there is evidence of an intent to defeat and delay creditors, and to make the ' Ex parte McBurnie, i De G., M. & ^ See Phipps v. Sedgwick, 95 U.S. 3. G. 441 ; Croft v. Arthur, 3 Dessaus. * Crawford v. Logan, 97 111. 399. (S. C.) 223. ^ Dygert v. Remerschnider, 32 N. Y. ^ Riley's Eq. (S. C.) 236 ; Colombine 637. V. Penhall, i Sm. & G. 228 ; Bulmer v. " Gordon v. Worthley, 48 Iowa 431. Hunter, L. R. 8 Eq. Cas. 46. ■ i Sm. & G. 256. §§ 3'^7> 30S POST-NUPTIAL SETTLEMENTS. 419 celebration of a marriage a part of a scheme to protect property against tlie rights of creditors, the consideration of marriage cannot support such a settlement." ^ § 307. Post-nuptial settlements. — The court decided in French v. Holmes,^ that a voluntary gift by a husband to his wife, if he was indebted at the time, was prima facie fraudulent as to creditors. Davis, J., states the rule to be that a voluntary post-nuptial settlement will be upheld " if it be reasonable, not disproportionate to the husband's means, taking into view his debts and situation, and clear of any intent, actual or constructive, to defraud creditors."^ Mr. Justice Field observes : "A husband may settle a por- tion of his property upon his wife, if he does not thereby impair the claims of existing creditors, and the settlement is not intended as a cover to future schemes for fraud." ^ A settlement consummated after marriage, in pursuance of an agreement entered into before marriage, will be upheld against creditors,^ and a voluntary conveyance for the benefit of a wife and children will not be overturned at the suit of a mortgage creditor who by reason of his own laches has lost his ample security.^ § 308. Purchase after marriage. — Purchases of either real or personal property made by the wife of an insolvent debtor during coverture are justly regarded with suspicion, unless it clearly appears that the consideration was paid out of her separate estate.' The community of interest between ' See Bulmer v. Hunter, L. R. 8 Eq. ' Seitz v. Mitchell, 94 U. S. 582 ; Cas. 46. Hinkle v. Wilson, 53 Md. 287 ; Simms ^ 67 Me. 189. V. Morse, 4 Hughes 579 ; Knowlton ^ Kehr v. Smith, 20 Wall. 35 ; Cook v. Mish, 8 Sawyer 627. In Hoey v. V. Holbrook, 146 Mass. 66. See Wis- Pierron, 67 Wis. 262, 269, the court well V. Jarvis, 9 Fed. Rep. 87. said : " Ps.?, to whether the debtor made ■* Moore V. Page, in U. S. 118. See iuui executed that mortgage to his wife Jones V. Clifton, loi U. S. 225. with the intent to hinder, delay, or '" Kinnard v. Daniel, 13 B. Mon. (Ky.) defraud his creditors, the court charged 499. the jury that the burden of proof was " Stephenson v. Donahue, 40 Ohio upon the defendant to show by clear St. 184. and satisfactory evidence that it was 420 VALID GIFTS. § 3O9 husband and wife requires that purchases of this character which are so often made a cover for a debtor's assets, and so frequently resorted to for the purpose of withdrawing his property from the reach of his creditors and preserving it for his own use, should be closely scrutinized, and in a contest between the creditors of the husband and those of the wife, there is, and should be, a presumption against her which she must overcome by affirmative proof. This was the rule of the common law, and it continues, though statutes have modified the doctrine which gave the husband title to the wife's personalty.^ § 309. Valid gifts — Subsequent insolvency. — It is said in a recent case in Texas that a gift from the husband to the wife is not necessarily fraudulent and void as to existing creditors. It might be a badge of fraud, a circumstance to be considered in determining whether the intent was fraudulent, if it were shown that he was then heavily in debt. But it does not follow that, because a man may be indebted to an inconsiderable or even a considerable :made by him with such intent. This been held, in effect, by this court that is assigned as error. Undoubtedly the the establishment of such ' actual in- 'burden of proving that the mortgage debtedness and the amount thereof,' lo the wife was given to secure an satisfies the requirements of the sec- actual indebtedness to her from her tion and shifts the burden of proof to husband for moneys or property ad- such defendant." See § 300. Tranced by her from her separate es- • Seitz v. Mitchell, 94 U. S. 582, 583 ; tate, or by some other person for her Gamber v. Gamber, 18 Pa. St. 366; use, was upon the wife ; but when that Keeney v. Good, 21 Pa. St. 349; ■was proved and, in effect, admitted. Walker v. Reamy, 36 Pa. St. 410 ; it shifted such burden to the defend- Parvin v. Capewell, 45 Pa. St. 89 ; aat. Semmens v. Walters, 55 Wis. Robinson v. Wallace, 39 Pa. St. 129 ; 683, 684 ; Evans v. Rugee, 57 Wis. Aurand v. Schaffer, 43 Pa. St 363 ; ^24. Assuming that the defendant Bradford's Appeal, 29 Pa. St. 513; made a case within the provisions of Glann v. Younglove, 27 Barb. (N. Y.) sec. 2319, R. S., which, in such case, 480; Edwards v. Entwisle, 2 Mackey declares that 'the burden shall be upon (D. C.) 43; Ryder v. Hulse, 24 N. Y. the plaintiff to show that such mort- 372; Duncan v. Roselle, 15 Iowa 501 ; gage was given in good faith, and Cramer v. Reford, 17 N. J. Eq. 367 ; to secure an actual indebtedness and Elliott v. Bently, 17 Wis. 591. See the amount thereof,' yet it has often Edson. v. Hayden, 20 Wis. 682. §§ 310' 311 ARTICLES OF SEPARATION. 42 1 amount at the time, he cannot settle a part of his property upon his wife or children, provided, as we have seen, he retains an ample amount of property to liquidate his just debts.^ Nor will the settlement be affected because it may turn out afterward, from accident or ill-fortune, that his property has perished or been swept away.^ The general rule then is that a conveyance by a husband, solvent at the time, to his wife and children, will be supported^ if he re- tains ample means to pay his debts,* and the gift or con- veyance is a reasonable one.^ § 310. Articles of separation. — Where a husband and wife executed articles of separation by which the husband bound himself to pay, in trust for his wife, a certain amount of capital, and interest on it till paid, it becomes a voluntary settlement if the parties become reconciled and again co- habit, even though there be an agreement that the settle- ment shall stand.^ A settlement has been avoided upon this theory, where it appeared that the amount of the hus- band's estate was $16,132, while the settlement was $7,000, leaving $9,132, to meet debts confessedly due amounting to $9,306. § 311. Statute of frauds. — In New York every agreement or undertaking made upon consideration of marriage, unless reduced to writing, and subscribed by the parties, is void,''' and a settlement made subsequently, in pursuance of such void agreement, is invalid as against creditors.^ ' Van Bibber v. Mathis, 52 Tex. 407 ; wife, creditors of the copartnership may Morrison v. Clark, 55 Tex. 444. See pursue the property in equity. Ed- Emerson V. Bemis, 69 111. 537 ; Hinde's wards v. Entwisle, 2 Mackey (D. C.) Lessee v. Longworth, 11 Wheat. 199. 43 ; Emerson v. Bemis, 69 111. 537 ; - Ibid.; Cooper, Chancellor, in Per- Mattingly v. Nye, 8 Wall. 370 ; Kesner kins V. Perkins, i Tenn. Ch. 543. v. Trigg, 98 U. S. 54. * Brown v. Spivey, 53 Ga. 155. * Kehr v. Smith, 20 Wall. 31. "• Chambers v. Sallie, 29 Ark. 407; ' Dygert v, Remerschnider, 32 N. Y. Kent V. Riley, L. R. 14 Eq. Gas. 629. 190. " Reade v. Livingston, 3 Johns. Ch. '" When a partner uses firm funds to (N. Y.) 481 ; Borst v. Corey, 16 Barb, purchase property to settle upon his (N. Y.) 136, and cases cited. 422 INSURANCE POLICIES. §§ 3 1 2, 313 § 312. Insurance policies. — As we have shown, in New- York, policies of insurance may be placed upon a husband's life for the benefit of his wife, free from the claims of cred- itors.^ But where assignments of policies, taken out by a debtor who was insolvent, are made in trust for the benefit of his wife, such transfers may be annulled in favor of cred- itors.^ The court, however, say in the case last cited, that they " do not mean to extend it to policies effected with- out fraud directly and on their face for the benefit of the wife, and payable to her ; such policies are not fraudulent as to creditors."^ In cases where a debtor at his own expense effects insurance on his life as security to a cred- itor, the representative of the debtor gets title to the surplus after the debt is paid. And if the debtor in his lifetime pays the debt, he is entitled to have the policy delivered up to him.* As already shown, a man may devote a portion of his earnings to insurance for the benefit of his family.^ § 313. Competency of wife as witness. — On a creditor's bill to set aside a conveyance of land by a husband to his wife, she is regarded in Illinois as a competent witness to prove the consideration of the conveyance and its good faith.^ It seems, however, to be doubted whether a wife can be com- ' See § 23. ^tna Nat. Bank v. land v. Isaac, 20 Beav. 389. As to United States Life Ins. Co., 24 Fed. who should sue to reach the proceeds Rep. 770 ; Charter Oak Life Ins. Co. of a policy where the debtor has made V. Brant, 47 Mo. 419. a general assignment, see Lower)' v. ' Appeal of Elliott's Exrs., 50 Pa. St. Clinton, 32 Hun (N. Y.) 267. 75. ^ Washington Central Bank v. Hume, ^ See Thompson v. Cundiff, 11 Bush. 128 U. S. 195. (Ky.) 567. Compare Nippes' Appeal, ® Payne v. Miller, 103 111. 443. The 75 Pa. St. 478 ; Gould v. Emerson, 99 testimony of a husband in favor of his Mass. 1 54 ; Durian v. Central Verein, wife, on a bill to subject land in her 7 Daly (N. Y.) 171 ; Leonard v. Clinton, name to the payment of his debts, 26 Hun (N. Y.) 290; Estate of Henry when not impeached, must be regarded Trough, 8 Phila. (Pa.) 214. the same as that of any. other witness * Re Newland, 7 N. B. R. 477. See having a personal interest or feeling as Lea V. Hinton, 5 De G., M. & G. 823 ; to the matters about which he testifies. Drysdale v. Piggott, 22 Beav. 238 ; Eads v. Thompson, 109 111. 87. Courtenay v. Wright, 2 Giff. 337 ; Mor- § 3^4 CONTEMPLATION OF MARRIAGE. 423 pelled to testify against her husband when he is a co- defendant with her, if the husband objects to her examina- tion.^ While the act of Congress'^ cut up by the roots all objections in Federal courts to the competency of a witness on account of interest, it is considered that the statute has no application to a wife, as her testimony is excluded solely upon considerations of public policy and not of interest.^ § 314. Fraudulent conveyances in contemplation of mar- riage. — Alienations of real property by a man about to be married, made without the knowledge of his intended bride, and with the intent and object of depriving her of the rights which she would otherwise acquire in his prop- erty by the marriage, may, as we have already seen,** be avoided by the wife as fraudulent.^ In Smith v. Smith^ the chancellor said : " I am of opinion that a voluntary- conveyance by a man, on the eve of marriage, unknown to the intended wife, and made for the purpose of defeating the interest which she would acquire in his estate by the mar- riage, is fraudulent as against her." The doctrine is not limited to covinous conveyances of realty, but where per- sonal property is disposed of by a colorable transfer, the husband retaining a secret interest, and the ultimate object being to deprive the wife of her share of it, the convey- ance may be avoided.''' The rule is also applied and en- forced where the conveyance is made by the husband dur- ing coverture with a like intent and purpose. Thus in ' Clark V. Krause, 2 Mackey (D. C.) day, 53 N. Y. 298; Petty v. Petty, 4 B. 572. Mon. (Ky.) 215 ; Thayer v. Thayer, 14 "U. S. Rev. Stat., §858. Vt. 107; Brown v. Bronson, 35 Mich. ' See Lucas v. Brooks, 18 Wall. 453. 415 ; Smith v. Smith, 12 Cal. 217 ; * See § 70. Kelly v. McGrath, 70 Ala. 75. See ^ DeArmond v. DeArmond, 10 Ind. § 70. 191 ; Pomeroy v. Pomeroy, 54 How. * 6 N. J. Eq. 522. Pr. (N. Y.) 228 ; Swaine v. Perine, 5 ' See Littleton v. Littleton, i Dev. & Johns. Ch. (N. Y.) 482 ; Youngs v. B. (N. C.) Law 327 ; Davis v. Davis, 5 Carter, i Abb. N. C. (N. Y.) I36n., Mo. 183; Stone v. Stone, iS Mo. 389; affi'd 10 Hun (N. Y.) 194; Smith v. Tucker v. Tucker, 29 Mo. 359 ; McGee Smith, 6 N. J. Eq. 515 ; Simar v. Cana- v. McGee, Ired. Law (N.C.) 105. 424 FRAUDULENT TRANSFERS. § 3^5 Gilson V. Hutchinson* it appeared that a mortgagor pro- cured a sale of the mortgaged estate under a power con- tained in the mortgage, with a view to evade Habihties to his wife, from whom he had been separated, and to deprive her of her right of dower. The court held that she could maintain a bill in equity for the recovery of the property, both as administratrix and in her own right.^ The rule has been said to embrace conveyances made by the intended wife as well as by the husband.^ Brickell, C. J., said: "We confess an inability to distinguish the ante-nuptial frauds of the husband from the ante-nuptial frauds of the wife, or to perceive any sound reason for repudiating and avoiding the one, while permitting the other to work out its injustice and injury."* § 315. Fraudulent transfers as affecting dower. — It seems to be quite clearly established ^ that where a deed made by a husband and wife is set aside as a fraud upon creditors, the judgment will not operate to bar the wife's right of dower. The creditors cannot claim under the conveyance ■ 120 Mass. 27. See Killinger v. provision for persons having meritorious Reidenhauer, 6 S. & R. (Pa.) 531; claims on him, and with that view, and Brewer v. Connell, 11 Humph. (Tenn.) not with the view to defeat nor for the 500; Jenny v. Jenny, 24 Vt. 324 ; Jig- sake of diminishing the wife's dower." gifts V. Jiggits, 40 Miss. 718. Compare Mcintosh v. Ladd, i Humph. * In Littleton v. Littleton, i Dev. & (Tenn.) 459; Miller v. Wilson, 15 Ohio B. Law (N. C.) 331, Chief-Justice Ruffin 108 ; Stewart v. Stewart, 5 Conn. 317 ; observed: "But ^^«« ^^^ conveyances, Kelly v. McGrath, 70 Ala. 75. that is to say, such as are not intended ^ Kelly v. McGrath, 70 Ala. 75. to defeat the wife, do not seem to be ■* See Butler v. Butler, 21 Kans. 522 ; within the meaning more than within Spencer v. Spencer, 3 Jones' Eq. (N. the words of the act. Such are sales, C) 404 ; Terry v. Hopkins, i Hill's to make which an unfettered power is Ch. (S. C.) i ; W^illiams v. Carle, 10 allowed the husband. Such, too, ap- N. J. Eq. 543 ; Freeman v. Hartman, pear to be bona fide gifts, whereby the 45 HI. 57; Belt v. Ferguson, 3 Grant husband actually and openly divests (Pa.) 289 ; Duncan's Appeal, 43 Pa. St. himself of the property and enjoyment 67 ; Fletcher v. Ashley, 6 Gratt. (Va.) in his lifetime, in favor of children or 332. others, thereby making, according to ^ See " Effect of Fraudulent Convey- his circumstances and the situation of ances upon the Right of Dower." 5 his family, a just and reasonable present Cent. L. J. 459, and cases cited. § 315 FRAUDULENT TRANSFERS. 425 and against it, or ask to have it annulled as to creditors and held valid as against the wife.^ The theory of the law is that the wife cannot release her dower in her husband's real estate, except by joining with him in a conveyance;^ a release to a stranger to the title is ineffectual,'^ and as the husband's deed is declared void at the creditor's instio^ation, the wife's release falls with it.^ Dower is not barred by an assignment under the Bank- rupt Act.^ ' Robinsop v. Bates, 3 Mete, (Mass.) 40; Summers v, Babb, 13 111. 483 ; Du- gan V, Massey, 6 Bush (Ky.) 81 ; Cox V. Wilder, 2 Dillon 47 ; Woodworth V. Paige, 5 Ohio St. 70 ; Richardson v. Wyman, 62 Me. 280 ; Morton v. Noble, 4 Chic. L. N. 157; Malony v. Horan, 12 Abb. Pr. (N. Y.) N. S, 289 ; S. C, 49 N. Y. Ill; Lo\vry v. Smith, 9 Hun (N.Y.)5i5. - Tompkins v. Fonda, 4 Paige TN. Y.) 448 ; Merchants' Bank v. Thomson, 55 N. Y. 12. ^ Harriman v. Gray, 49 Me. 537. ■* Monger v. Perkins, 62 Wis. 499. ^ Porter v. Lazear, 109 U. S. 84. CHAPTER XXI. FRAUDULENT GENERAL ASSIGNMENTS. §316. Voluntary assignments. 2i6a. Property transferred by assign- ment. 317. Word " void " construed. 318. Delay and hindrance. 319. Intent affecting assignments. 320. Fraud must relate to instrument itself. 321. pood faith. 322. Void on its face. 323. Constructive frauds defined by Story. 324. Assignments contravening stat- utes. 325. Transfers to prevent sacrifice of property. 326. Reservations — Exempt property. 327. Reserving surplus. 328. Releases exacted in assignments. 329. Preferring claims in which as- signor is partner — Rights of survivor. 330. Authorizing trustee to continue business. §331. Illustrations and authorities. „,* [ Delay — Sales upon credit. 334. Exempting assignee from liabil- ity. 335. Providing for counsel fees. 336. Authority to compromise. 337. Fraud of assignee. 338. Ignorance or incompetency of assignee as badge of fraud. 339. Transfers inuring as assign- ments. 340. Assets exceeding liabilities. 341. Assignments to prevent prefer- ence. 342. Threatening to make assign- ment. 343. Construction of assignments. 344. Explaining obnoxious provis- ions. 345. Assignments held void. 346. Foreign assignments. 346a. Assignments by corporations. § 316. Voluntary assignments. — To discuss the general phases of the law regulating voluntary assignments made hy debtors for the benefit of creditors would require a vol- ume,^ and is foreign to our purposes. When, however, as ' See Burrill on Assignments, 5th ed., by George L. Sterling, Esq. Baker, Voorhis & Co., New York. See, espe- cially, Chapter XXV. of that work. See §§114, 115 of the present treatise for the rules as to complainants. As to election to accept benefits which will estop creditors from attacking an assignment, see Wilson Bros. W. & T. Co. V. Daggett, 9 Civ. Pro. (N. Y.) 408, and cases cited by McAdam, C. J.; also Ryhiner v. Ruegger, 19 Bradw. (111.) 162. In Wright v. Zeigler, 70 Ga. 512, the court said : " So a creditor cannot be permitted both to assail and claim under an as- § 3i6 VOLUNTARY ASSIGNMENTS. 427 is frequently the case, these assignments are mere contriv- ances called into being to hinder, delay, or defraud credit- ors, and, from their surroundings, or upon their face, con- travene the provisions of the statute 13 Eliz. c. 5, creditors may attack and annul them. The principles of the law- regulating this branch of the subject are legitimately within the line of our discussion, and they will, upon investigation, he found to constitute a prolific source of legal controversy. It seems remarkable that the instrument under which an insolvent surrenders up his depleted estate to his creditors should so frequently be itself tainted with the poison of fraud. It may be observed at the outset that to constitute a general assignment there must be an element of trust, ^ and the conveyance must be voluntary.^ The property in pos- session of the assignee is not in custodia legist for the rea- signment ; one or the other of these alternatives he must take. His elec- tion should be made before he com- mences proceedings, and he should not be permitted to await the result of his suit in order to make his election. This would be unfair to others claiming under the assignment." Compare Haydock V. Coope, 53 N. Y. 68. As to when a bill of particulars will not be ordered in a suit to annul an assignment, see Passavant v. Cantor, 21 Abb. N. C. (N. Y.) 259. See § i62«. ' Hine v. Bowe, 46 Hun (N. Y.) 196 ; Brown v. Guthrie, no N. Y. 435. * Lewis V. Miller, 23 Weekly Dig. (N. Y.) 495. In Brown v. Guthrie, no N. Y. 441, Finch, J., said: "The view of the case which prevailed with the General Term was, that the mort- gage, and the agreement which led to it, taken together, amounted to a gen- eral assignment by an insolvent debtor, which was void because it reserved to him a possible surplus at the expense of unpaid creditors, and the right to make preferences subsequent to the conveyance. If the basis of the rea- soning be sound, the result reached was a proper inference ; but we are not satisfied that the mortgage and agreement amounted to a general as- signment by the debtor. In form it was an absolute sale upon a chattel mortgage given for a fixed and agreed consideration ; and while, nevertheless, such a sale, in spite of its form, may be proved to be an assignment in trust (Britton v. Lorenz, 45 N. Y. 51), yet in the present case we are unable to discover any such proof. The material and essential characteristics of a gen- eral assignment is the presence of a trust. The assignee is merely trustee and not absolute owner. He buys nothing and pays nothing, but takes the title for the performance of trust duties. There was no such element in the transaction between these parties. The purchaser became absolute owner and paid or secured the full amount of his mortgage." ' See Lehman v. Rosengarten, 23 Fed. Rep. 642. 428 PROPERTY TRANSFERRED. § 3l6« son that the assignee is not an officer of the court, but is a trustee bound to account according to the terms of the in- strument, and his authority depends upon the validity of the assignment, and is not conferred by the court.^ The assignee derives all his power from the assignment, which is both the guide and measure of his duty. Beyond that or outside of its terms he is powerless and without au- thority. The control of the court over his actions is limited in the same way, and can only be exercised to compel his performance of the stipulated and defined trust, and protect the rights which flow from it. He distributes the proceeds of the estate placed in his care according to the dictation and under the sole guidance of the assignment, and the statutory provisions merely regulate and guard his exercise of an authority derived from the will of the assignor. The courts, therefore, cannot direct him to pay a debt of the assignor, or give it preference in violation of the terms of the assignment and the rights of other creditors under it. To hold the contrary would be to put the court in the place of the assignor, and assert a right to modify the terms of the assignment, after it had taken effect, against the will of its maker, and to the injury of those protected by it. The assignee is merely the representative of the debtor and must be governed by the express terms of his trust."'* The parties cannot change the terms of the instrument, or with- draw the property from the jurisdiction of the court, or ab- solve the assignee from its control. Nor can the assignor substitute a successor if the assignee resigns. The new appointment must be made by the court.^ § 316^. Property transferred by assignment. — The discus- sion has already embraced the authorities declaring what assets creditors may reach by bill or other proceeding.'' As ■ Adler V. Ecker, I McCrary 257. '^ Chapin v. Thompson, 89 N. Y. ' Finch, J., in Matter of Lewis, 81 N. 280. Y. 424. See Nicholson v. Leavitt, 6 ■* See Chap. II. N. Y. 519. §2)^^^ PROPERTY TRANSFERRED. 429 creditors are frequently forced to accept upon their claims whatever the assignee is able to realize from the property, it is important to know what estate is acquired by such a transfer. Every interest to which the personal representa- tives of a deceased person could succeed may pass by a properly framed assignment.^ The assignee may acquire title to a claim for conversion ; ^ may gain a right to recover in replevin,'^ and to sue a common carrier for the loss of goods.* He takes moneys deposited in bank^ and lands*' which be- longed to the assignor. In Warner v. Jaffray "^ the court said : "The assignment was a mere voluntary conveyance, and can have no greater effect, so far as passing title to the property assigned, than any other conveyance," In New York State by statute the assignee is clothed with power to assail fraudulent alienations of property.^ Rights of action for personal torts which die with the person are not assign- able ;^ as for instance damages for an assault and battery ; ^^ so the title to trust property does not pass ; " nor does prop- erty in transit ; ^^ nor a wife's dower right ; " nor exempt property.^^ 'See Zabriskie v. Smith, 13 N. Y. ter of Cornell, iioN. Y. 360. The as- 322,335. See Bishop on Insol. Debtors, signee cannot divest himself or be di- § 143. vested of his right to sue for assets so ^ Whittaker v. Merrill, 30 Barb. (N. long as the trust continues. Stanford Y.) 389; Richtmeyer v. Remsen, 38 N. v. Lockwood, 95 N. Y. 582. Y. 206; Sherman v. Elder, 24 N. Y. " People v. Tioga Common Pleas, 19 381 ; McKee v. Judd, 12 N. Y. 622. Wend. (N. Y.) 73 ; Brooks v. Hanford, ' Jackson v. Losee, 4 Sandf. Ch. (N. 15 Abb. Pr. (N. Y.) 342 ; Hodgman v, Y.) 381. Western R.R. Co., 7 How. Pr. (N. Y.) * Merrill v. Grinnell, 30 N. Y. 594 ; 492. McKee v. Judd, 12 N. Y, 622, '" See Pulver v. Harris, 52 N. Y. 73 ; * Beckwith v. Union Bank, 9 N. Y. Bishop on Insol. Debtors, § 143. 211. " Kip v. Bank of New York, 10 Johns. « Matter of Marsh, 3 Cow. (N.Y.) 69. (N. Y.) 63. ' 96 N. Y. 254. '•' Lacker v. Rhoadcs, 51 N. Y. 641, ' Southard v. Benner. 72 N. Y. 424 ; '' Dimon v. Delmonico, 35 Barb. (N. Spring v. Short, 90 N. Y. 538 ; Ball v, Y.) 554. Slaften, 98 N. Y. 622 ; Fort Stanwix '^ Heckman v. Messinger, 49 Pa. St. Bank v. Leggett, 51 N.Y. 552; Matter 465 ; Baldwin v. Pcet, 22 Tex. 708 ; of Raymond, 27 Hun (N. Y.) 508 ; Mat- Smith v. Mitchell, 12 Mich. 180. 430 WORD "void" construed. §§317,318 The assignment, it may be here recalled, takes effect from the time of its delivery.^ ^317. Word "void" construed. — The distinction between void and voidable acts will be defined and discussed at length presently.' It will be shown that the term " void " is constantly interpreted to mean nothing more than " void- able," and that this construction is especially true as applied to voluntary assignments.^ Though the statute in chai^c- terizing assignments constantly uses the term "void as to creditors," it is obvious that " nothing more is intended than inoperative or voidable";* or, as was observed by Chief-Justice Shaw, "such conveyance is not absolutely void, but voidable only by creditors." ^ It is the distin- guishing characteristic of avoid act^ that it is incapable of ratification, but an assignment which is fraudulent upon its face is capable of confirmation by creditors,'' and is good between the parties, hence it is not logically speaking void. ^ 318. Delay and hindrance. — Mr. Burrill says :^ " The term »/&" delay has alf obvious reference to time, and hindrance to r the interposition of obstacles in the way of a creditor ; but, to a certain extent, the one involves and includes the other. \^ In point of fact, and as actually applied by the courts, they are always taken together. The following are prominent instances in which assignments have been declared void on the ground of hindrance and delay : Where the time of sale,^ or of collection by the assignee,^^ or of finally closing 1 Nicoll V. Spowers, 105 N. Y. i ; " See White v. Banks, 21 Ala. 713. Warner v. Jaffray, 96 N, Y. 248. Compare Hone v. Henriquez, 13 Wend. - See infra, Void and Voidable Acts. (N. Y.) 242 ; Geisse v. Beall, 3 Wis. ^ See Burrill on Assignments, 5th 367. ed., § 319, p. 502. "Burrill on Assignments, 5th ed., •• Per Redfield, Ch. J., in Merrill v. 1887, § 335, p. 527. Englesby, 28 Vt. 155. See § 445. '' Citing Hafner v. Irwiii, i Ired. (N. ' Edwards v. Mitchell, i Gray (Mass.) C.) Law 490. 241. '" Citing Storm v. Davenport, i Sandf. ' See infra, Void and Voidable Acts. Ch. (N. Y.) 135. §3^9 INTENT AFFECTING ASSIGNMENTS. 43 1 the trust/ has been, by the terms of the assignment, unrea- sonably or indefinitely postponed ; where the assignee has been expressly authorized to sell at retail, and on credit,^ or on credit simply ;^ where the assignment has been made with a view to prevent a sacrifice of the property;^ where the proceeds of the assigned property have been directed to be used in defending all suits which might be brought by creditors to recover their debts ; ^ and where creditors who should sue have been expressly debarred from the benefit of the assignment, '^ or postponed until all the other creditors are paid.'' All these were instances of delaying and hindering creditors in the prosecution of their reme- dies in the strict sense of the terms used in the statute." In the famous Sprague litigation, it is said that a debtor has no right to postpone or put in peril the claims of his creditors without their consent, and that a conveyance which attempts so to do, or which is executed for the pur- pose of depriving creditors of their right to enforce their just claims against the property of their debtor, by placing it beyond their reach or control for an unlimited, indefinite, or uncertain period, is in conscience, as well as in law, fraud- ulent.^ § 319, Intent affecting assignments. — " It is clear, how- ever," says Mr. Burrill, "from the language of the English statute of 13 Elizabeth, that its provisions were directed exclusively against conveyances made with an actual inletii, on the part of debtors, to hinder, delay, or defraud creditors. ' Citing Arthur v. Commercial & * Citing Planck v. Schermerhorn, 3 R.R. Bank, 17 Miss. 394. Barb. Ch. (N. Y.) 644; Mead v. Phil- '^ Citing Meacham v. Stemes, 9 lips, i Sandf. Ch. (N. Y.) 83. Paige (N. Y.) 398, 406. * Citing Spence v. Bagwell, 6 Gratt. ^ Citing Barney v. Griffin, 2 N.Y. 365; (Va.) 444 ; Berry v. Riley, 2 Barb. (N. Nicholson v. Leavitt, 6 N. Y. 510. Y.) 307. ■* Citing Van Nest v. Yoe, i Sandf. '' Citing Marsh v. Bennett, 5 McLean Ch. (N.Y.) 4; Vernon v. Morton, 8 117. Dana (Ky.) 247. But see Cason v. ' De Wolf v. Sprague Mfg. Co., 49 Murray, 15 Mo. 378. Conn. 325. 432 INTENT AFFECTING ASSIGNMENTS. § 319 as distinguished from the mere effect or operatioji of such conveyances. The expressions in the preamble — 'devised and contrived,' 'to the end, purpose, and intent to delay,' etc., leave no room for doubt on this point. Hence, it has sometimes been very expressively designated as the ' statute against fraudulent intents in alienation.'"^ It will be pres- ently shown that the learned writer has stated the rule too broadly, for a fraudulent intent is often imputed by the law in cases where the assignor's motives were undoubtedly honest.^ Generally speaking the subject of inquiry in these cases is the intent of the assignor or debtor,^ though there is authority tending to establish the rule that the fraudulent purpose sufficient to defeat the instrument must be partici- ' Burrill on Assignments, 5th ed., § 332, p. 524- '' See §§ 8, 9, 19, 322. ^ Wilson V. Forsyth, 24 Barb. (N. Y.) 120 ; Mathews v. Poultney, 33 Barb. (N. Y.) 127; Griffin v. Marquardt, 17 N. Y. 28 ; Cuyler v. McCartney, 40 N. Y. 221 ; Bennett v. Ellison, 23 Minn. 242 ; S. C. I Am. Insol. Rep. 36 ; Peck V. Grouse, 46 Barb. (N. Y .) 157 ; Put- nam V. Hubbell, 42 N. Y, 106 ; Ruhl v. Phillips, 48 N.Y. 125; Lesher V. Get- man, 28 Minn. 93 ; Jaeger v. Kelley, 52 N. Y. 274; Dudley v. Danforth, 61 N. Y. 626 ; Main v. Lynch, 54 Md. 658 ; Bennett v. Ellison, 23 Minn. 242 ; Forbes v. Waller, 25 N. Y. 439. " An assignee for the benefit of creditors stands in the place of the assignor, and is so affected with his intent, that if it is unlawful the instrument cannot stand." Tabor v. Van Tassel), 86 N. Y. 643. See §316. In Adler V. Ecker, I McCrary 256, the court remark that the only mtent which will determine the validity of an assignment is that of the assignor, at the time it is made, and contemporaneous fraudulent acts are evidence of this intent. It is then observed of the case under consider- ation, that it is in proof that one E. be- ing insolvent, and owing debts amount- ing to more than double the value of his assets, took from his business, within four weeks before his assign- ment, a sum equal to one-half of the value of the property assigned^ and with it erected a building upon a lot owned by his wife. Within a short time thereafter he joined with his wife in giving a mortgage upon this prop- erty to his father-in-law, for three times the amount of any debt owing either by him or his wife, and this mortgage and accompanying notes were sent to the father-in-law, without any request on his part, or any information on the subject, until the papers were received. The court comment upon the fact that there is no evidence to counteract or explain why the mortgage was given for so large a sum, after one-fourth cf the debtor's entire assets had been taken from his business in the manner stated, and under circumstances calcu- lated to show an intent to put a portion of his available means beyond the reach of his creditors, and arrive at the con- clusion that the assignment was fraudu- lent and void. § 319 INTENT AFFECTING ASSIGNMENTS. 433 pated in by the assignee or beneficiaries.* The testimony of both the assignor and assignee upon the question of in- tent is proper.'^ Recognizing the general rule, elsewhere discussed, that a voluntary conveyance or gift may be annulled at the instigation of creditors, without proof of an absolute fraudulent intent on the part of the donee,^ it would seem to follow by analogy that the cases which hold that proof of the fraudulent intent of the debtor or assignor is sufficient, establish the more logical and salutary rule. In a case which arose in New York it was expressly de- cided that an assignment by a debtor, with the intent to hinder or defraud creditors, may te avoided although the assignees were free from all imputation of participation in the fraudulent design, and were themselves bo7ia Jide crtdxt- ors of the assignor."* In Loos v. Wilkinson,' Earl, J., said : "An innocent assignee may not be permitted to act under a fraudulent assignment It may be true that in a particular case an honest assignee may .... undo all the fraudulent acts of the assignor preceding and attending the assignment and the preparation of the schedules under it. Yet, if the assignment was made by the assignor with the fraudulent intent condemned by the statute, the assignment may be set aside at the suit of judgment-creditors, and all powers of the assignee, however honest he may be, taken away. In assailing a voluntary assignment for the benefit ' See Thomas v. Talmadge, 16 Ohio for a valuable consideration,' however St. 433 ; Governor v. Campbell, 17 Ala. innocent he may be of participation in 566 ; Byrne v, Becker, 42 Mo. 264 ; the fraud intended by the assignor. Abercrombie v. Bradford, 16 Ala. 560; The uprightness of his intentions, State V. Keeler, 49 Mo. 548 ; Wise v. therefore, will not uphold the instru- Wimer, 23 Mo. 237 ; Mandel v. Peay, ment, if it would otherwise, for any 20 Ark. 329. reason, be adjudged fraudulent and '^ Forbes v. Waller, 25 N.Y. 439. See void." Griffin v. Marquardt, 17 N. Y. § 205. 30. See Loos v. Wilkinson, 1 10 N. Y. » See § 200. 195 ; Starin v. Kelly. 88 N. Y. 418, and * Rathbun v. Platner, 18 Barb. (N. compare Sipe v. Earman, 26 Gratt.(Va.) Y.) 272. " An assigTiee in trust for the 570. benefit of creditors is not 'a purchaser ' no N. Y. 209. 28 434 FRAUD. § 320 of creditors, it is important only to establish the fraudulent intent of the assignor/ and when that has been established the assignment may be set aside, and creditors may then pursue their remedies and procure satisfaction of their judgments as if the assignment had not been made." § 320. Fraud must relate to instrument itself, — Where it is sought to annul a fraudulent transfer, the evidence must ascertain and establish the assignor's intent at the time of the execution of the instrument.* If the assignment was valid in its creation, having been honestly and properly ex- ecuted and delivered, no subsequent illegal acts, either of omission or commission, can in any manner invalidate it.^ The subsequent acts should, however, be considered, as they " may reflect light back upon the original intent," and help to characterize and discern it more correctly.* It may be observed that neither conveyances without considera- tion, nor other frauds committed by a failing debtor prior to a general assignment for the benefit of his creditors, will operate to make it void as matter of law. These are cir- cumstances which may be taken into consideration by a court and jury, if nearly contemporaneous, but are not con- clusive of a fraudulent intent.^ To render the assignment invalid, when good on its face, the fact of a fraudulent in- tent in making it must be legitimately found from evidence that will fairly support the finding, and it must also be an intent to commit a fraud on creditors by making the as- signment, and not by some entirely independent act which might and probably would have been done precisely as it was, had no assignment been made or contemplated.^ ' Citing Starin v. Kelly, 88 N. Y. Shirk, 13 Pa. St. 589; Owen v. Arvis, 418. 26 N. J. Law 22. ' Shultz V. Hoagland, 85 N. Y. 467 ; ' Hardmann v. Bowen, 39 N. Y. 200. Mathews v. Poultney, 33 Barb. (N. Y.) " Shultz v. Hoagland, 85 N. Y. 468. 1 27 ; Beck v. Parker, 65 Pa. St. 262 ; * Livermore v. Northrup, 44 N. Y. Bailey v. Mills, 27 Tex. 434-438 ; Cor- in ; Probst v. Welden, 46 Ark. 408. nish V. Dews, 18 Ark. 172; Klapp v. ^ Wilson v. Forsyth, 24 Barb. (N. Y.) § 320 FRAUD. 435 Proof of an intentional omission from the schedules of as- signed property, of items of valuable property, is sufficient to establish a fraudulent intent. Referring to this subject, Finch, J., said : " The intentional omission, calculated to deceive, and to lull into slumber and inactivity the interest and diligence of the creditor, would plainly argue a fraudu- lent purpose. Not so, however, if shown to have been un- intentional, and the result of accident or oversight. It would be hard to find any schedules absolutely perfect, or any debtor who could inventory every item of his property with strict accuracy. Room must be allowed for honest mistake, and possibly even for careless and thoughtless error ; but, where the omission cannot thus be explained or excused, the inference of a fraudulent intent must follow." ^ The motive to prevent creditors from gaining a preference will of course not avoid the assignment.^ It may be here remarked that if an assignment is made in the form and manner provided by law, and duly recorded so as to pass all the property of the assignor, it is difficult to see how the motive existing in the assignor's mind can affect its validity. If in morals the motive be a bad one, yet in law it produces no forbidden result. In so far as it hinders or delays creditors it is a lawful hindrance and delay, and can- not be held fraudulent. The commission of a lawful act is not made unlawful by the fact that it proceeded from a malicious motive.^ 128. In Aaronson v. Deutsch, 24 Fed. ' Shultz v. Hoagland, 85 N. Y. 469. Rep. 466, the court said: "The rule See Baird v. Mayor, etc., of N. Y., 96 which the defendant seeks to invoke, N. Y. 593. that a deed valid in its inception will '' See §341. Horwitz v. Ellinger, 31 not be rendered invalid by any subse- Md. 504. quent fraudulent or illegal act of the ^ Wilson v. Berg, 88 Pa. St. 172; S. parties, has no application where the C. i Am. Insolv. Rep. 169; Jenkins v. fraudulent or illegal act is the con- Fowler, 24 Pa. St. 308 ; Prowler v. Jen- summation of an illegal agreement kins, 28 Pa. St. 176; Glendon Iron Co. made contemporaneously with the v. Uhler, 75 Pa. St. 467 ; Smith v. deed." Johnson, 76 Pa. St. 191. 436 VOID ON ITS FACE. §§ 32 1, 322 § 321. Good faith. — The term "good faith," if interpreted to mean " sincerity or honesty of purpose," can scarcely be applied in that sense to assignments, for these instruments are often annulled from considerations of public policy in cases where nothing was more foreign to the intention of the debtor than a dishonest design. The usual presump- tion of good faith incident to acts and transactions gener- ally,J. appertains to an assignment, and it will be upheld where the language of the instrument justifies a construc- tion which will support it."^ § 322. Void on its face. — An assignment for the benefit of creditors may undoubtedly contain a clause so plainly in- dicative of the fraudulent intent pointed out by the statute, or recognized by the policy of the law, " as to carry its death-wound upon its face." An instance of this might be a gratuitous provision out of the assigned property for the insolvent assignor or his family.^ The New York cases clearly establish the rule that where the assignment shows upon its face that it must necessarily have the effect of hindering and defrauding the creditors of the assignor, it is conclusive evidence of a fraudulent intent, and may be avoided.* The actual motive and belief of the debtor in such cases is immaterial. Where it is apparent from the face of the instrument itself that it is a conveyance to the use of the assignor, it is the duty of the court trying the ^ See §§ 5, 6, 224, 271. creditors, it affords no protection to ' Townsend v. Steams, 32 N. Y. 209, the assignee against a sheriff", who 218; Brainerd v. Dunning, 30 N. Y. seeks to enforce by execution a judg- 211; Campbell v. Woodworth, 24 N. ment against the debtor." Y. 304; Shultz V, Hoagland, 85 N. Y. * Kavanagh v. Beckwith, 44 Barb. 464; Coyne v. Weaver, 84 N. Y. 386, (N. Y.) 192; Goodrich v. Downs, 6 and cases cited. Hill (N. Y.) 438. See Wakeman v. 3 Nightingale v. Harris, 6 R. I. 329. Dalley, 44 Barb. (N. Y.) 503, affi'd 51 Danforth, J., said, in McConnell v. N. Y. 27 ; Griffin v. Marquardt, 21 N. Sherwood, 84 N. Y. 526 : " Where, Y. 121 ; Coleman v. Burr, 93 N. Y. 31 ; upon the face of an assignment or by s. P. Bigelow v. Stringer, 40 Mo. 205, proof aliunde, it appears to have been and cases cited. made with intent to hinder or delay §323 CONSTRUCTIVE FRAUDS. 437 cause to tell the jury as a matter of law that the convey- ance is fraudulent as against creditors/ In the case of Dunham v. Waterman, '^ Mr. Justice Selden, referring to the opinion of the Court of Errors in Cunningham v. Freeborn,'^ remarked : " It follows from the reasoning of Mr. Justice Nelson, which I regard as unanswerable, that wherever an assignment contains provisions which are cal- culated /^r se to hinder, delay, or defraud creditors, although the fraud must be passed upon as a question of fact, it never- theless becomes the duty of the court to set aside the find- ing, if in opposition to the plain inference to be drawn from the face of the instrument. A party must in all cases be held to have intended that which is the necessary conse- quence of his acts." ^ § 323. Constructive frauds defined by Story. — " By con- structive frauds," observes Mr. Justice Story, " are meant such acts or contracts as, although not originating in any actual evil design or contrivance to perpetrate a positive fraud or injury upon other persons, are yet, by their tend- ency to deceive or mislead other persons, or to violate private or public confidence, or to impair or injure the public interests, deemed equally reprehensible with positive fraud, and therefore are prohibited by law, as within the same reason and mischief as acts and contracts done malo animoy^ Again the commentator says: "Another class of constructive frauds upon the rights, interests, or duties of third persons, embraces all those agreements and other acts of parties, which operate directly or virtually to delay, defraud, or deceive creditors. Of course we do not here speak of cases of express and intentional fraud upon cred- itors, but of such as virtually and indirectly operates the ' Bigelow V. Stringer, 40 Mo. 205, Wakeman v. Dalley, 44 Barb. (N. Y.) ' 17 N. Y. 9, 21. 503 ; Gere v. Murray, 6 Minn. 305. =• II Wend. (N. Y.) 240-251. See §§ 9, 10. *• See opinion of Ingraham, J., in * i Story's Eq. Jur. § 258. 438 ASSIGNMENTS CONTRAVENING STATUTES. § 324 same mischief, by abusing their confidence, misleading their judgment, or secretly undermining their interest. It is dif- ficult, in many cases of this sort, to separate the ingredients which belong to positive and intentional fraud, from those of a mere constructive nature, which the law pronounces fraudulent upon principles of public policy. Indeed, they are often found mixed up in the same transaction." ^ § 324. Assignments contravening statutes. — We may state as a general rule that an assignment which contravenes the provisions of a statute, or vests the assignee with a discre- tion contrary to the terms of an express provision of law, and authorizes him to effect sales of the assigned property in a manner not permitted by the statute, will be declared void.^ This principle is learnedly discussed in a case re- cently decided in the Supreme Court of the United States.^ The assignment provided as follows : " The party of the second part [the assignee] shall take possession of all and singular the property and effects hereby assigned, and sell and dispose of the same, either at public or private sale, to such person or persons, for such prices and on such terms and conditions, either for cash or upon credit, as in his judgment may appear best and most for the interest of the parties concerned, and convert the same into money." It will be observed that the assignment did not by its terms prevent the assignee in the administration of his trust from following the directions of the statute in all particulars. Counsel contended that the assignment was valid (i) be- cause the discretion given the assignee by the assignment left him at liberty to follow the law, and (2) because even if the assignment required him to administer the trust in a ' I Story's Eq. Jur. § 349. & Aid. 691 ; Miller v. Post, i Allen ^ Jaffray v. McGehee, 107 U. S. 361- (Mass.) 434; Parton v. Hervey, i Gray 365; Collier v. Davis, 47 Ark. 369. (Mass.) 119; Hathaway v. Moran, 44 See Peck v. Burr, 10 N. Y. 294; Mac- Me. 67. gregor v. Dover & Deal R.R. Co., 18 ^ j^ffray v. McCehee, 107 U. S, Q. B. 618 ; Jackson v. Davison, 4 Bam, 361. §324 ASSIGNMENTS CONTRAVENING STATUTES. 439 manner different from that prescribed by the law, only such directions as conflicted with the law would be void, and the assignment itself would remain valid. The Supreme Court of the United States, however, did not adopt this view, but followed the construction given to the assignment law of Arkansas by the Supreme Court of that State in Raleigh V. Griffith,^ to the effect that such an assignment was void as to creditors, and held that the construction put upon the law by the highest court of the State where the assignment was made, was binding on the courts of the United States.' The substance of the opinion in Raleigh v. Griffith,'^ is that the statute is disregarded in the deed of assignment, the assignee being authorized to sell at private or public sale, and for cash or on credit. The assignee was vested with a discretion to prolong the closing of the trust for an indefi- nite period. The legislature having deemed it expedient, as a matter of public policy, to require an assignee for the benefit of creditors to sell the property within a specified time and prescribed manner, the dissenting creditors are not barred by a deed made in direct contravention of a plain provision of the statute. The provisions of the stat- ute are mandatory and not directory,* and it follows, in the words of Mr. Justice Woods, that an assignment " which vests the assignee with a discretion contrary to the man- dates of the statute, and in effect authorizes him to sell the property conveyed thereby in a method not permitted by the statute, must be void, for contracts and conveyances in contravention of the terms or policy of a statute will not be sanctioned."^ ' 37 Ark. 153. Citing Peck v. Burr, 10 N. Y. 294; '^ Brashear v. West, 7 Pet. 608 ; Sum- Macgregor v. Dover & Deal R.R. Co., ner v. Hicks, 2 Black 532; Leffingwell 18 Q. B. 618; Jackson v. Davison, 4 V. Warren, 2 Black 599. See §71. Barn. & Aid. 695; Miller v. Post, i ^ 37 Ark. 153. Allen (Mass.) 434; Parton v. Hervey, ■'See French v. Edwards, 13 Wall, i Gray (Mass.) 119; Hathaway v. Mo- 506. ran, 44 Me. 67. ' Jaffray v. McGehee, 107 U. S. 365. 440 SACRIFICE OF PROPERTY. §§ 325, 326 § 325. Transfer to prevent sacrifice of property. — In Ger- man Insurance Bank v. Nunes^ the material part of the deed read : " That whereas, the said first party is indebted to sundry persons in various sums, amounting in the aggre- gate to about thirty-eight thousand dollars, and is the owner of a large amount of assets, estimated to be worth more than fifty thousand dollars ; and whereas, the said first party is unable to convert his said assets into money fast enough to discharge his said indebtedness as it matures, and is de- sirous that the same shall not be sacrificed, but so managed and disposed of that they will realize their fair value at as little cost as possible, and satisfy his creditors in full, and leave a residue for him, etc." The court said that it was the intention which controlled, and that this could not be better determined than from the language of the convey- ance. The deed declared that it was made " to prevent a sacrifice" of the property and "to leave a residue" to the debtor. It also avowed that the assets were largely in ex- cess of the liabilities, and it would seem to follow that the primary object of the deed was not to secure creditors, but on the contrary to obstruct them in the enforcement of their legal remedies in order that the debtor might be ben- efited. The deed was declared to be fraudulent upon its face and was set aside.^ § 326. Reservations — Exempt property. — A favorite ground of attacking assignments made by debtors for the benefit of creditors is, that a reservation has been made in the debtor's interest,^ or that there has not been a complete surrender of the debtor's dominion and control over the property. The question comes up in various phases. Da- vis, P. J., observes : " It is well settled that the reservation ' 80 Ky. 334, 335. 3 Mon. (Ky.) i ; Bigelow v. Stringer, ' See, also, Vernon v. Morton, 8 Dana 40 Mo. 195. (Ky.) 247, 264; Van Nest v. Yoe, i 'Means v. Dowd, 128 U. S. 273; Sandf. Ch. (N. Y.) 4; Ward v. Trotter, McReynolds v. Dedman, 47 Ark. 351. § 326 RESERVATIONS. 44 1 of the least pecuniary character by the assignor or his fam- ily, and any device to cover up the property for the benefit of the assignor, or secure to him directly or indirectly any benefit, is fraudulent, and has always received the condem- nation of the courts. The debtor who makes an assignment of this character must devote all his property to the pay- ment of his debts, except such as is by law exempt from execution. The withholding of any considerable sum of money at the time of making an assignment, from the as- signee, must, we think, in some form be explained, other- wise it is sufficient to establish a fraudulent intent."^ An assignment is void which does not include the assignor's real estate.''' A reservation of $800 worth of property^ renders an assignment void on its face. And an assign- ment is invalid if the debtor prefers his landlord's claim for rent of a dwelling-house with intent to secure occupation for himself and family subsequent to the assignment with- out further payment.* We have already shown that according to the weight of the best authority, a conveyance of a debtor's exempt prop- erty cannot be annulled as fraudulent. The same principle appertains in the law regulating fraudulent voluntary as- signments reserving property exempt by statute. The as- signment is not rendered void, for the reason that creditors are " not hindered or delayed by the reservation of that which they have no right to touch." ^ This is an exception to the rule clearly deducible from the cases, " that no debtor can, in an assignment, make a reservation at the expense ' White V. Fagan, 25 N. Y. Daily ' Hildebrand v. Bowman, 100 Pa. St. Reg., p. 269 (Feb. 8, 1884). See S. C. 582. See Mulford v. Siiirk, 26 Pa. St. 18 Weekly Dig. (N. Y.) 358. 474; Ehrisman v. Roberts, 68 Pa. St. ' Price V. Haynes, 37 Mich. 487, per 311. To the same effect is Richardson Cooley, C. J. ; s. C. i Am. Insolv. Rep. v. Marqueze, 59 Miss. 80 ; s. C. 42 Am. 138. Rep. 353 ; See Derby v. Weyrich, 8 * Clark V. Robbins, 8 Kans. 574. Neb. 176 ; S. C. 30 Am. Rep. 827. See * Elias V. Farley, 2 Abb. Ct. App. §§ 46-50. Dec. (N. Y.) II. 442 RESERVING SURPLUS. § 327 of his creditors of any part of his income or property for his own benefit, nor can he stipulate for any advantage either to himself or family."^ Another reservation must be considered. § 327. Reserving surplus. — Where a debtor assigned all his property in trust to pay certain specified creditors, and then, without making provision for other creditors, to re- convey the residue of the property to the debtor, the instru- ment was declared fraudulent upon its face. The court held that it could not be made effectual by showing that there was, as matter of fact, no surplus resulting to the debtor after the preferred creditors were paid. Bronson, J., observed : " The parties contemplated a surplus, and provided for it ; and they are not now at liberty to say that this was a mere form which meant nothing. And although it should ultimately turn out that there is no sur- plus, still the illegal purpose which destroys the deed is plainly written on the face of the instrument, and there is no way of getting rid of it."^ The Supreme Court of Nebraska,^ however, refused to follow this doctrine, and considered that such a reservation was partial and only in- cidental. It merely stipulated for that which, had it been omitted, the law would have implied, and required to be done.* So in Hubler v. Waterman^ the court observed : "The reversionary clause is mere surplusage, for it w^ould have been implied if it had not been expressed."*^ The principle set forth in these latter cases certainly embodies the more logical rule. There is, however, an obvious dis- tinction in these cases. In Griffin v. Barney the surplus was to revert before all the creditors were paid, which was ' McCIurg V. Lecky, 3 P. & W. (Pa.) ' Morgan v. Bogue, 7 Neb. 433. 91. ■* See Curtis v. Leavitt, 15 N. Y. 9. ' Griffin V. Barney, 2 N. Y. 371. See * 33 Pa. St. 414. Smitli V. Howard, 20 How. Pr. (N. Y.) « See S. P. Johnson v. McAllister, 30 128. Compare Nicholson v. Leavitt, 6 Mo. 327; Richards v. Levin, 16 Mo. N. Y. 521. 598. § S^^ RELEASES. 443 palpably fraudulent, while in the other cases the surplus contemplated was that remaining after a/l the creditors had been satisfied. Of course the law will not permit a debtor in failing circumstances to convey all his property to trustees, with a view to exempt it from execution for an indefinite time, to authorize them to hold it against credit- ors until the profits pay all charges, expenses, and debts, and then to reconvey it or permit it to revert to the original owner. Property cannot be thus withdrawn from the operation of the law in its due course against the consent of existing creditors.^ § 328. Releases exacted in assignments. — Assignments ex- acting releases from creditors are looked upon with great disfavor by the courts.' The law seems to be settled that assignments will be declared fraudulent and void if creditors are preferred o/i condition of their subsequently executing releases of their respective demands. The reason is ob- vious.^ It is a clear attempt on the part of the debtor to coerce his creditors to accede to his terms, and a withhold- ing of his property from them unless they do so accede. As was observed in Hyslop v. Clarke : '* "It does not ac- tually give a preference, but is, in effect, an attempt on the part of the debtors to place their property out of the reach of their creditors, and to retain the power to give such preference at some future period If they can keep it locked up in this way in the hands of the trustees, and set their creditors at defiance, for three months, they may do so for three years, or for any indefinite period."^ The 1 Arthur V. Commercial & R.R. Bank, ^ Spaulding v. Strang, 38 N. Y. 12; 17 Miss, 433. Brown v. Knox, 6 Mo. 303 ; Bennett v. ^ Hubbard v. McNaughton, 43 Mich, Ellison, 23 Minn. 242 ; S. C. i Am. 224. See Lawrence V. Norton, 4 Woods Insolv. Rep. 36; May v. Walker, 35 406; Leitch V. Hollister, 4 N. Y. 211 ; Minn. 194; Greeley v. Dixon, 21 Fla. Baldwin v, Peet, 22 Tex. 708 ; Barney 425. V. Griffin, 2 N. Y. 365 ; Bennett v. El- •* 14 Johns. (N. Y.) 458, lison, 23 Minn. 242 ; S, C. i Am. Insolv. ' See Grover v. Wakeman, 11 Wend, Rep. 36. (N. Y.) 187, 444 PREFERRING CLAIMS. § 329 right of giving preferences cannot be so exercised as to secure to the debtor the future control of the assigned property or its proceeds, as continuing the business in an- other's name.* It has been considered competent for a debtor in failing circumstances to make an assignment for the benefit of creditors, providing that accommodation creditors shall be paid fir^t ; secondly, those creditors who had executed a conditional release should receive fifty per cent. ; and thirdly, the residue of the creditors should be paid.' The whole estate was by this instrument devoted to the pay- ment of the debts. It was considered that in no sense could it be said that an agreement by a debtor with a cred- itor to prefer him for one-half of his demand in an assign- ment, on condition or in consideration that the balance should be released, was a fraud upon those who refused to become parties to the contract. These cases certainly go to the verge in upholding an assignment of this char- acter ; ^ and where it is apparent from the face of the deed, or is a moral certainty, that nothing will be left to the non-assenting creditors, the court will annul the assign- ment.* § 329. Preferring claims in which assignor is partner — Rights of survivor. — It was contended by counsel in Welsh v. Britton,^ that if an insolvent person made an assignment for creditors, and preferred a debt due another firm, one member of which was also a member of the assigning firm, this constituted such a reservation to one of the assignors as would avoid the assignment. The case of Kayser v. Heavenrich ^ was cited, but the court said that it could not be said to establish so broad a principle. There a prefer- ' Haydock v. Coope, 53 N, Y. 68. * Seale v. Vaiden, 4 Woods 661. ' Spaulding v. Strang, 37 N. Y. 135 ; See Lawrence v. Norton, 4 Woods S. C, 38 N. Y. 9 ; explained, Haydock 406. V. Coope, 53 N. Y. 74. ' 55 Tex. 122. ^ Seale v. Vaiden, 4 Woods 661. * 5 Kan. 324. § 3^9 PREFERRING CLAIMS. 445 ence was given to one Lowentholl, and one of the assign- ing firm was an equal partner with Lowentholl in the pre- ferred claim. This was held to be a secret trust for the benefit of that member of the firm and to invalidate the as- signment. The fact of secrecy was also given prominence. On the other hand, the case of Fanshawe v. Lane ^ asserts the absolute right of an assigning firm to prefer such debts. The Supreme Court of Texas followed this latter case. We may here state that the insolvent cannot dele- gate to the assignee the power to give preferences at his discretion.^ A special partner cannot be preferred for the amount of his investment,^ and where a limited partnership becomes insolvent its assets are a special fund for the payment of its debts except those due to the special partner.^ A sur- viving partner may make a general assignment of the firm assets.^ Mr. Justice Harlan said : " But, while the sur- viving partner is under a legal obligation to account to the personal representative of a deceased partner, the latter has no such lien upon joint assets as would prevent the former from disposing of them for the purpose of closing up the partnership affairs. He has a standing in court only through the equitable right which his intestate had, as between him- self and the surviving partner, to have the joint property apphed in good faith for the liquidation of the joint liabili- ties. As with the concurrence of all of the partners the joint property could have been sold or assigned, for the benefit of preferred creditors of the firm, the surviving partner — there being no statute forbidding it — could make the same disposition of it. The right to do so grows out ' i6 Abb. Pr. (N. Y.) 82. ' Emerson v. Senter, 118 U. S. 3 ' Boardman v. Halliday, 10 Paige Williams v. Whedon, 109 N. Y. 341 (N. Y.) 223. Haynes v. Brooks, 42 Hun (N. Y.) 528 8 Whitcomb v. Fovvle, 10 Daly (N. Beste v. Burger, 17 Abb. N. C. (N. Y.) Y.) 23 ; s. C. I Am. Insolv. Rep. 160. 162, and note on the rights of surviv- •* Innes v. Lansing, 7 Paige (N, Y.) ing partners, and representatives of a 583. deceased partner. 446 TRUSTEE. § 330 of his duty, from his relations to the property, to administer the affairs of the firm so as to close up its business without unreasonable delay ; and his authority to make such a pref- erence — the local law not forbidding it — cannot, upon prin- ciple, be less than that which an individual debtor has in the case of his own creditors. It necessarily results that the giving of preference to certain partnership creditors was not an unauthorized exertion of power by Moores, the sur- viving partner." ^ § 330. Authorizing trustee to continue business. — It may be observed that an assignment drawn precisely as it ought to be will not undertake to speak to the assignee in regard to his duties under the trust. These duties, unless the creditors themselves direct otherwise, are simply to con- vert the estate and pay the debts in the order and with the preferences indicated in the instrument.^ There are numer- ous cases reported in which assignments in trust for the benefit of creditors have been sustained, although they con- tained provisions for the continuance of the business of the assignor, either by himself or by his trustee.^ It will be found upon examination that in many of these cases, the business authorized to be carried on by the assignment was merely ancillary to winding up the debtor's aJffairs, and that the authority was given with the view of more effectually promoting the interests of the creditors.^ In cases where 1 Emerson v. Senter, 118 U. S. 3, 8, property." Selden, J., in Dunham v. 2 Ogden V. Peters, 21 N. Y.24. "The Waterman, 17 N. Y. 20. true principle applicable to all such ' De Forest v. Bacon, 2 Conn. 633 ; cases is, that a debtor who makes a Kendall v. The New England Carpet voluntary assignment for the benefit of Co., 13 Conn. 383; Foster v. Saco his creditors may direct, in general Manuf. Co., 12 Pick. (Mass.) 451 ; terms, a sale of the property and col- Woodward v. Marshall, 22 Pick, lection of the dues assigned, and may (Mass.) 468 ; Hitchcock v. Cadmus, also direct upon what debts and in 2 Barb. (N. Y.) 381 ; Ravisies v. Al- what order the proceeds shall be ap- ston, 5 Ala. 297 ; Janes v. Whitbread, plied ; but beyond this can prescribe no 11 C. B. 406. conditions whatever as to the manage- ■• See De Wolf v. Sprague Mfg. Co., ment or disposition of the assigned 49 Conn. 326. ^ ^S'^ ILLUSTRATIONS AND AUTHORITIES. 447 the authority is given chiefly for the benefit of the debtor, or where it is intended or calculated to hinder and delay creditors for an unreasonable period in the collection of their debts, it renders the deed fraudulent and void. §331. Illustrations and authorities. — Cases relating to this class of assignments are numerous. In Owen v. Body^ the assignment, which was to trustees for the benefit of creditors, giving preferences, contained provisions invest- ing the trustees with power to carry on the trade of the debtor, and for that purpose to lay out money in payment of rent and keeping up the stock in trade. The deed was adjudged void as being an instrument to which creditors could not reasonably be expected to assent. Lord Wens- leydale, in giving his opinion in the House of Lords in the case of Wheatcroft v. Hickman,^ referring to this deed said that the provisions contained in it allowing the effects of the debtor, which ought to have been divided equally amongst his creditors, to be put in peril by being employed in trade, prevented it from being a fair deed and good against creditors. In American Exchange Bank v. Inlocs^ the deed contained a provision empowering the trustee at his discretion to sell the property conveyed gradually, in the manner and on the terms in which, in the course of their business, the assignors had sold and disposed of their merchandise. For that reason the deed was adjudged void. Mason, J., said : " Without adverting to other objection- able, if not fatal, provisions in this deed, the one to which we have just referred is sufficient, in the judgment of this court, to render the deed null and void as against creditors. It simply seeks, through the instrumentality of a trustee, to provide for carrying on the business of the concern in the same manner in which it had been before conducted, and for an indefinite period, free of all control or intcrfer- ' 5 Adol. & El. 28 (31 Eng. C. L. * 9 C. B. [N. S.] loi. 254). 2 7 Md. 380. 448 ILLUSTRATIONS AND AUTHORITIES. § 33 1 ence on the part of creditors. Surely if such a provision in a deed is not calculated to hinder and delay creditors, we are at a loss to know what could have such an effect, short of a conveyance in trust for the benefit of the grantor him- self. A debtor cannot thus postpone his creditors to an indefinite period without their assent. A conveyance which thus attempts to deprive creditors of their just rights to enforce their claims against the property of their debtor, by placing it beyond their control for an uncertain and in- definite period, must be regarded in conscience and law as a fraud," In a later case in the same State ^ an assignment in trust for the benefit of creditors, authorizing the trustee to carry on and conduct the business "for such time as in his judgment it shall be beneficial to so do," or to sell all the goods and stock in trade " at such times, in such man- ner, and for such prices as he may deem proper," was ad- judged void as against creditors. The court said : " It is obvious, the certain effect of this clause would be to hinder and delay creditors ; and as against them such provision renders the deed utterly void. It is an attempt on the part of the debtor to place his property, for an uncertain and indefinite period, beyond the reach of his creditors, and to make their rights in a great measure dependent upon the uncontrolled discretion of a trustee of the debt- or's own selection. The law will tolerate no such attempt, but treats the act as a fraud upon creditors, and the instru- ment of conveyance as simply void as against them."^ * Jones V. Syer, 52 Md. 211. better performance of the trust that the "^ See, also, Dunham v. Waterman, party of the second part shall have full 17 N. Y. 9. Authority given in the as- power and authority to finish such signment to the assignee to finish up work as is unfinished, to complete such unfinished work will not necessarily buildings as are incompleted, and to pay avoid the instrument. Robbins v. all necessary charges and expenses for Butcher, 104 N. Y. 575. In this case such completion prior to the payment the assignment contained the following of all debts and liabilities hereinbefore clause : " And it is further provided mentioned and provided." Finch, J., that should it be necessary and to the said : " The repetition of the word §332 DELAY. 449 § 332. Delay— Sales upon credit. — An insolvent debtor cannot deprive his creditors of their right to have his prop- erty converted into money without delay. He can make an assignment with preferences, but he cannot authorize his assignee to sell on credit.^ No delay is permitted other than such as is reasonably necessary to secure the applica- tion of the property to the payment of his debts.^ In Dun- ham V. Waterman,^ Selden, J., following the reasoning of Nelson, J., in Cunningham v. Freeborn,'* said: "That wherever an assignment contains provisions which are cal- culated per se to hinder, delay, or defraud creditors, al- though the fraud must be passed upon as a question of fact, it nevertheless becomes the duty of the court to set aside the finding, if in opposition to the plain inference to be drawn from the face of the instrument. A party must in ail cases be held to have intended that which is the neces- sary consequence of his acts."^ It follows that when this objectionable feature is embodied in the face of the assign- ment, the court itself will stamp it as fraudulent. In Beus ' that ' permits it to be said that this prior permission and approval, must be provision is an unfinished sentence and so exercised at his peril and subject to confers no authority at all, but no such their prohibition or direction at any criticism is made, and the meaning of moment, and upon the application of the language is more accurately ex- any person interested or aggrieved, and pressed by disregarding the word ' that ' so does not involve an intent to hinder, where it occurs the second time. Both delay, or defraud the creditors of the parties have argued the case upon such assignor. We think the latter view of construction. The appellant claims the instrument discloses its true and that the provision confers upon the intended meaning." assignee an authority derived from the ' Nicholson v. Leavitt, 6 N. Y. 510; assignor to unduly delay the execution Barney v. Griffin, 2 N. Y. 365. Com- of the trust and divert the trust funds, pare Brackett v. Harvey, 91 N. Y. 220. in the exercise of his discretion, and free -Bennett v. Ellison, 23 Minn. 242 ; from the supervision and control of the S. C. i Am. Insolv. Rep. 36. See Keevil courts, and so is fraudulent and void v. Donaldson, 20 Kans. 165 ; S. C. I upon its face. The respondent con- Am. Insolv. Rep. 153. tends that the authority given is upon a ' 17 N. Y. 21. condition which rests in the discretion * 11 Wend. (N. Y.) 251-254. and judgment of the courts, and if ex- ' See Coleman v. Burr, 93 N. Y. 31 ; ercised by the assignee without their also §§ 9, 10. 29 450 SALES UPON CREDIT. §33^ V. Shaughnessy^ the insolvent directed that the "times, places, and terms of selling the property shall be agreed on by the trustee and the majority in interest of the first and second class creditors," and that if they did not agree, then two-thirds of all of the creditors should direct such "times, places, and terms." The court said there seemed to be but one question to consider, and that turned entirely upon the construction to be placed upon the words " terms of selling," whether these words in the deed of trust em- braced the power to sell upon credit. Continuing, it was said that the courts generally held that deeds of assign- ment, giving authority to the assignee to sell upon credit, were fraudulent and void as to creditors not assenting thereto, and especially was this the case where the deeds made preferences between creditors. In New York this general rule is fully recognized. The case of Kellogg v. Slauson,^ at first reading would seem to be a departure from the rule, but upon a more careful consideration it will be found to be consistent with it. The assignees in that case were authorized to sell the property "on such terms as in their judgment might be best for the parties concerned, and convert the same into money." The court, in upholding the assignment said that this discretion must he exercised within legal limits. In Brigham v. Tilling- faast^ the case of Kellogg v. Slauson is referred to, and the court says that the words " convert the same into money," limited the disposition of the property to sales for cash, and that such was the purport of the ruling in that case. The same rule is reiterated in Rapalee v. Stewart."^ The assign- ' 2 Utah 499. See McCleery v. Al- with or without preferences ; but such len, 7 Neb. 21. assignees are bound to make an imme- - 1 1 JSf. Y. 302. diate application of the property. And ^ 13 N. Y. 215. any provision contained in the assign- * 27 _N. Y. 311. "The true rule to ment which shows that the debtor, at be observed is this : An insolvent the time of its execution, intended to debtor may make an assignment of all prevent such immediate application, his estate .to trustees to pay his debts will avoid the instrument, because it §333 SALES UPON CREDIT. 451 ment held to be valid in the case of Sumner v. Hicks ^ contained language similar to that found in Kellogg v. Slauson, and indeed the closing words of the objectionable provision were precisely the same, viz.: "And convert the same into money. "^ The inference from these cases is that if these last words had been omitted the assi^m- ments would have been held void as authorizing sales upon credit. The word "term " signifies, among other things, " a limit," " a boundary." If we say the power of sale is granted with- out " limit," without " boundary," it can be exercised to an unlimited extent and without bounds. In the case of Beus V. Shaughnessy^ there was no restriction whatever upon the power of sale granted to the trustees and a fixed pro- portion of the creditors. They were authorized to sell upon such "terms" as they might deem proper, and this power had no limits, no bounds. This broad grant cer- tainly would necessarily embrace the power to sell upon credit. § 333- — Ir» Wisconsin, in the case of Hutchinson v. Lord,* where the assignment empowered the assignee to sell in such manner and "upon such terms and for such prices as to him shall seem advisable," it was held that this language gave power to sell upon credit, which would necessarily operate to hinder and delay creditors, and rendered the assignment fraudulent and void. In the case of Keep v. Sanderson,^ although the objectionable words were exactly those found in Kellogg v. Slauson, yet the court held that they conferred an authority to sell upon credit, and thus shows that it was made with ' intent to courts." Brigham v. Tillinghast, 13 hinder and delay creditors in the coi- N. Y. 215-220. lection of their debts.' Such an intent ' 2 Black 532. expressed in the instrument .or proved ' See Keep v. Sanderson, 12 Wis. 362. aliunde, is fatal alike by the language ^ 2 Utah 499. of our statute and the well-settled ad- •» i Wis. 286. judications of the English and American ' 2 Wis. 42. 452 EXEMPTING ASSIGNEE. § 334 avoided the whole assignment. In Woodburn v. Mosher^ the authority to the assignees was to convert the property into money "within convenient time as to them shall seem meet." It was held that the assignment was void upon its face. In Keep v. Sanderson^ it was decided that a clause in an assignment authorizing the assignee to sell and dis- pose of the assigned property " upon such terms and con- ditions as in his judgment may appear best and most to the interest of the parties concerned," was authority to sell on credit, and that it was void as to creditors, in accord- ance with the decision on the former appeal.^ § 334. Exempting assignee from liability. — Another sub- terfuge of insolvent debtors must be noticed. In De Wolf V. Sprague Mfg. Co.^ the deed contained a clause which provided that "in case the same (meaning the mill, etc.) are thus run by him or otherwise, he shall not be liable person- ally for the expenses or losses arising therefrom, but the same shall be chargeable to the trust fund vested in him." This was held in connection with the right to run the mills and print works, to furnish additional evidence of the fraudulent purpose for which the assignment was executed. A failing debtor cannot be permitted to put at hazard the trust fund which justly belongs to his creditors by author- izing the trustee to manage it without due prudence and caution. This question was before the New York Court of Appeals in Litchfield v. White.^ In that case the assign- ment contained a clause by which it was mutually agreed between the parties to it that the assignee should not be held liable or accountable for any loss that might result to the trust property or the proceeds of it, unless the same ' 9 Barb. (N. Y.) 255. the benefit of creditors. Traer v. Clews, M 2 Wis. 361. 115U. S. 528. 3 A trustee in bankruptcy may sell * 49 Conn. 328. the property of the estate on credit * 7 N. Y. 442. where he deems such action most for § 335 PROVIDING FOR COUNSEL FEES. 453 should happen by reason of the gross negligence or willful misfeasance of the assignee. The assignment was adjudged void. Chief-Justice Ruggles said : " A failing debtor by an assignment puts his property where it cannot be reached by ordinary legal process. He puts it into the hands of a trustee of his own selection, often his particular friend, sometimes a man to whom the creditors would not have been willing to confide such a trust. The debtor has an interest in the application of the trust funds to the pay- ment of his debts ; but the creditors have usually a far greater interest therein ; and that interest depends in many cases on the competency and diligence of the assignee. The debtor cannot be permitted, by creating a trust for his creditors, to place his property where it cannot be reached by ordinary legal remedy, and at the same time exempt the trustee from his proper responsibility to his creditors."^ § 335- Providing for counsel fees. — The question of the right of the assignor to provide for or interfere in the mat- ter of the assignee's counsel fees has been before the courts in various forms. In Heacock v, Durand^ the assi2:nee was a lawyer, and by the provisions of the assignment was to be entitled to " a reasonable and lawful compensation or commission for his own services, both as assignee as aforesaid, and as the lawyer, attorney, solicitor, and counsel in the premises." The assignment was annulled on the theory that the power given to charge counsel fees tended so directly to the impairment of the fund and the injury of creditors, that it was impossible to offer a valid reason in its support. The provision places the assignee in two in- consistent positions. This question was before the New York Court of Appeals in Nichols v. McEwen,^ and the ' Compare Casey v. Janes, 37 N, Y. - 42 111. 231. 611 ; Matter of Cornell, no N. Y. 357 ; ^ 17 N. Y. 22. Matter of Dean, 86 N. Y. 398, as to duties of assignee. 454 AUTHORITY TO COMPROMISE. § 336 court held that such a clause was fraudulent in its character, and would vitiate the assignment. Roosevelt, J., observed that to sanction such a clause " would be establishing a practice pregnant in many cases with the most mischievous consequences." Denio, J., says, that an insolvent debtor has no right " to create such an expensiv^e agency for the conversion of his property into money, and distributing it among his creditors. Besides being wrong in principle, it is calculated to lead to obvious abuses."^ It is no objec- tion, however, to the instrument, that provision is made for the payment of a reasonable attorney's fee for the examin- ation of the facts, and for advice and services in drawing up the assignment and securing it to be properly acknowl- edged and placed on record. But at this point the control of the assignor ceases.^ § 336. Authority to compromise. — The authority given to the assignees " to compromise or compound any claim by taking a part for the whole, when they shall deem it expe- dient so to do," was considered by the New York Supreme Court not to expressly authorize or require an illegal act to be done, and the court refused to vitiate the assignment.^ And where the instrument authorized the assignee to com- pound " choses in action, taking a part for the whole when he shall deem it expedient," the assignment was sustained. This clause was held to vest no arbitrary power in the as- signee to compromise where such action was neither neces- sary nor proper, but merely to confer the discretion which the law recognizes to compound doubtful and dangerous debts in cases where the safety and interest of the fund de- manded such action. " It confers upon the assignee," said Finch, J., " no unlawful or arbitrary power, and takes away from the creditors no just protection."^ On the other hand, 1 Compare Campbell v. Woodworth, ^ Ginther v. Richmond, 18 Hun (N. 24 N. Y. 305 ; Dimon v. Hazard, 32 N. Y.) 234. Y. 71. ■* Coyne v. Weaver, 84 N. Y. 391 ; - Hill V. Agnew, 12 Fed. Rep. 233. s. C. i Am. Insolv. Rep. 395; S. P. §337 FRAUD OF ASSIGNEE. 455 the power given in the assignment to the assignee to com- promise with creditors, is held to restrain the creditors until the attempt to compromise is made. Thus they would be hindered, and a delay even for a single day would be fatal to the assignment, and whether the delay was directed by the instrument, or justified by its provisions, or made neces- sary in the execution of its provisions, made no difference.^ § 337- Fraud of assignee. — The fiduciary character of his position precludes the assignee from taking any advantage of his influence as such, or from using, for purposes of per- sonal gain or profit, any information acquired while acting in that capacity. Every agreement having such an object in view, made with the assignors, or with any of the cred- itors, especially if not approved by and communicated to all the parties in interest, is looked upon by the courts with great suspicion and distrust, and if tainted with the slight- est evidence of fraud, concealment, or misconduct on the part of the assignee in its procurement, will be set aside as inequitable and unjust, and he will not be permitted to reap any personal advantage from it.~ An assignment honestly made for a lawful purpose can- not be defeated by proof that the assignee abused his trust, misappropriated the property, or acted dishonestly in its disposal.^ Where the assignee is guilty of neglect or mis- feasance, the creditor feeling aggrieved should apply to the court for a compulsory accounting,* or seek his removal, and secure the appointment of a new trustee or assignee.^ Brown, J., said, in Olney v. Tanner i'^ " If an assignment McConnell v. Sherwood, 84 N. Y. 522 ; •• Shattuck v. Freeman, i Met. (Mass.) Bagley v. Bowe, 105 N. Y. 177. 15. ' McConnell v. Sherwood, 84 N. Y. ^ Olney v. Tanner, 10 Fed. Rep. 115. 531. Compare Glanny v. Lani^tlon, 98 U. S. ' Clark V. Stanton, 24 Minn. 232 ; S. 29, and cases cited. Benfield v. Solo- C. I Am. Insolv. Rep. 86. mons, 9 Ves. 83 ; Matter of Cohn, 78 ** Cuyler V. McCartney, 40 N. Y. 237 ; N. Y. 248; S. C. i Am. Insolv. Rep. Olney V. Tanner, 10 Fed. Rep. 114, 115; 221. Eicks V. Copeland, 53 Tex. 581. * 10 Fed. Rep. 114, 115. 456 INCOMPETENCY OF ASSIGNEE. § 338 is legally complete and perfect, and is intended to devote, and does devote, all the debtor's property to the payment of his debts, it cannot be invalidated through the subse- quent remissness or inefficiency of the assignee. Creditors have ample remedy against the assignee for his misconduct, if any ; and they should be held to these remedies, rather than be allowed to subvert the assignment on the claim that such remissness is an evidence of original fraudulent intent."^ On the other hand, if the assignment is set aside as fraudulent, the acts of the assignee, performed in good faith in the execution of the trust, will not be disturbed ; whether the assignment be fraudulent in fact or construct- ively so, the assignee will not be held to account for the property or its proceeds which have been paid out by him in good faith. ^ § 33^- Ignorance or incompetency of assignee as badge of fraud. — The selection of an incompetent assignee is regarded in the law as a badge of fraud.^ Blindness in the assignee is considered an indicuwi of fraud on the part of the as- signor who selects him.^ So, choosing an insolvent assignee \s prima facie evidence of an intent to defraud ;** as is the selection of an assignee unfit to attend to business by rea- ' Citing Hardmann v. Bowen, 39 N. must be assented to, and the instru- Y. 200 ; Shultz V. Hoagland, 85 N. Y. ment acknowledged by the assignee. 465. Rennie v. Bean, 24 Hun (N. Y.) 123 ; '^ Smith V. Craft, II Biss. 351 ; Wake- S. C. i Am. Insolv. Rep. 420; Hard- man V. Grover, 4 Paige (N. Y.) 23. In mann v. Bowen, 39 N. Y. 196; Britton Pennsylvania the assignment vests the v. Lorenz, 45 N. Y. 51. If a party title although the assignee may be ig- allows his name to be used in a fraud- norant of the assignment ; it is valid ulent assignment and suffers the prop- whether the assignee accepts the trust erty to be squandered he may be com- or not, for a trust will not fail for want pelled to account to creditors. Hughes of a trustee (Mark's Appeal, 85 Pa. St. v. Bloomer, 9 Paige (N. Y.) 269. 231 ; S. C. Slid nom. First Nat. Bank ^ Guerin v. Hunt, 6 Minn. 395. of Newark v. Holmes, i Am. Insolv. * See Cram v. Mitchell, i Sandf. Ch. Rep. 150. See Johnson v. Herring, 46 (N. Y.) 252. Pa. St. 415; Blight V. Schenck, 10 Pa. ^ Reed v. Emery, 8 Paige (N. Y.) St. 285), but in New York the trust 417. § 339 ASSIGNMENTS. 457 son of a lingering disease.^ It was with much doubt and hesitation that entire hititude in the selection of the trustee or assignee was confided to the debtor,^ and the insolvent having the choice of his own assignee,^ without consulta- tion with or consent of his creditors, must see to it that he appoints a person competent to protect the rights of all parties interested under the assignment. If it appears that the selection of an incompetent assignee was made in order to allow the assignor to control the administration of the estate, then the assignment will be avoided, because such an intent would be a fraud upon creditors. Where the assignee, however, is selected without any improper motive, and proves incompetent, he may be removed upon a proper application, and a suitable person substituted by the court to carry out the trust.* The words "misconduct" and " incompetency," as used in the New York statute relat- ing to the removal of an assignee, are construed to have no technical meaning, but were intended to embrace all the reasons for which an assignee ought to be removed.^ § 339- Transfers inuring as assignments. — Preferences in the absence of a bankrupt act are usually upheld, though avoided by the statutory system prevailing in some parts of the Union, A curious policy exists upon this subject in some of the States. Thus in Alabama it is said to be a settled proposition of law that a mortgage or deed of trust ' Currie v. Hart, 2 Sandf. Ch. (N. Y.) goner, 28 Pa. St. 430 ; Shultz v. Hoag- 353. land, 85 N. Y. 464 ; Baldwin v. Buck- '' See Cram v. Mitchell, i Sandf. Ch. land, 1 1 Mich. 389 ; Matter of Cohn, (N. Y.) 253. 78 N. Y. 248 ; s. C. I Am. Insolv. Rep. ^ See Burr v. Clement, 9 Col. i. 221 ; Montgomery v. Kirksey, 26 Ala. * See Guerin v. Hunt, 6 Minn. 395. 172; Burrill on Assignments, 5th ed., * Matter of Cohn, 78 N. Y. 248 ; S. C. § 92. The fact that the assignee is re- I Am. Insolv. Rep. 223. As to the quired to give a bond will not relieve effect of the selection of an incompe- the assignor from the exercise of pru- tent assignee, see Jennings v. Prentice, dence in his selection. Holmberg v. 39 Mich. 421 ; Connah v. Sedgwick, i Dean, 21 Kans. 73. Barb. (N. Y.) 210; Shryock v. Wag- 458 ASSETS EXCEEDING LIABILITIES. § 34O which conveys substa^itially all the debtor s property for the security of one or more particular creditors to the ex- clusion of others, the intention of which is to give a pref- erence or priority of payment to the former, operates as a general assia:nmcnt under- the statute, and inures to the benefit of all the creditors equally.^ In Illinois the sur- render by an insolvent of dominion over his entire estate, with intent to evade the operation of the assignment act, and to create preferences, whether made by one or more instruments, operates as an assignment under the act, the benefit of which can be claimed by any unpreferred cred- itor.''^ In New York, however, it was held that a specific assignment of property by a debtor for the benefit of one or a portion of his creditors did not come within the pro- visions of the assignment act of that State, and was not void by reason of its not being executed in compliance with the provisions of the assignment act.^ § 340. Assets exceeding liabilities. — The question often arises as to what persons are entitled to make assignments. Where it is clear that the assets are largely in excess of the liabilities of the debtor, it may raise a presumption of an intent to hinder and delay creditors in the collection of their just demands, and amount to a prhna facie case of fraud. ^ In the Missouri Court of Appeals an assignment which, after reciting that the assets amounted to three times the liabilities, clothed the trustees with discretionary power to carry on the business of the firm " for such time as the trustees shall deem for the best interest of the cred- ' Shirley V. Teal, 67 Ala. 451 ; Code, Corby, 21 Fed. Rep. 737; Clapp v. Ala. (1876), § 2126; Warren V. Lee, 32 Dittman, 21 Fed. Rep. 15; Kerbs v. Ala. 440 ; Stetson V. Miller, 36 Ala. 642. Evving, 22 Fed. Rep. 693. "^ White V. Cotzhausen, 129 U. S. * Royer Wheel Co. v. Fielding, loi 329. See Kellog v. Richardson, 19 N. Y. 504. Fed. Rep. 70, 72 ; Martin v. Hausman, * Livermore v. Northrup, 44 N. Y. 14 Fed. Rep. 160; Freund v. Yaeger- 109; Guerin v. Hunt, 8 Minn. 477. man, 26 Fed. Rep. 812, 814; Perrj' v. See Bates v. Ableman, 13 Wis. 644. § 340 ASSETS EXCEEDING LIABILITIES. 459 itors, and necessary for the purpose of preventing shrinkage and loss, and of closing out and liquidating the same to the best advantage," was declared voidable as tending to hinder, delay, and defraud creditors.^ It is sometimes contended that, as assignments for the benefit of creditors are generally made by embarrassed and insolvent debtors, such disposi- tions of property can only be made by that class of per- sons. "This doctrine," said Comstock, J., " has no foun- dation in principle or authority. These assignments are in their nature simply trusts for the payment of debts. The power to create such trusts is certainly not peculiar to in- solvent men. On the contrary it is a power more unques- tionably possessed by men who are entirely solvent This right of disposition, on general principles of law and justice, was never doubtful except in case of a debtor's in- ability to meet his engagements. In that condition the claims of creditors are in justice paramount, and the debt- or's power to dispose of his estate, even for their benefit, was not established without a struggle. In short, it was the insolvency rather than the solvency of a debtor which suggested the doubt in regard to the right of putting the whole or any part of his property in trust for the benefit of creditors."^ As gathered from the authorities, the vital question in these cases is, whether the transfer is honestly made with the sole intention of applying the property in satisfaction of the creditors' demands, or whether it is merely a scheme or contrivance to place the debtor's estate, for a time, beyond the reach of the creditors' remedies, pre- vent a sacrifice of the property, secure the payment of the creditors' claims, and ultimately realize a surplus to the as- signor. In the latter case it should clearly be regarded as a plan devised to hinder and delay creditors. Resort by a solvent man to the methods devised for insolvents is justly ' First Nat. Bank v. Hughes, loMo. ' Ogden v, Peters, 21 N. Y. 24. App. 14. 460 ASSIGNMENTS TO PREVENT PREFERENCE. § 341 calculated to arrest attention and excite the most searching inquiry as to hidden motives. § 341. Assignments to prevent preference. — According to the doctrines of the common law, the validity of an as- signment cannot be assailed simply because its effect is to prevent a party from obtaining, by judgment and execu- tion, a priority and preference over other creditors.^ Tem- porary interference with particular creditors in the prosecu- tion of their claims by the ordinary legal remedies, is a necessary and unavoidable incident to a just and lawful act, which, however, in no respect impairs the validity of the transaction.^ The rule of equity requires the equal and ratable distribution of the debtor's property for the benefit of all his creditors. It would be strange indeed if the debtor, by making a disposition of his property with the design to effectuate the application of this rule, should be adjudged guilty of hindering and delaying his creditors. This precise question arose in Pickstock v. Lyster.^ In that case a debtor, being sued, made an assignment by deed of all his effects, for the equal benefit of his credit- ors. The jury having been instructed that they must find the deed void if made with the intent to defeat the plain- tiff in his execution, returned a verdict in his favor. But the verdict was set aside upon the ground that the jury were misdirected. Lord Ellenborough held that the as- signment was "to be referred to an act of duty rather than of fraud, when no purpose of fraud is proved. The act arises out of a discharge of the moral duties attached to his character of debtor, to make the fund available for the whole body of creditors It is not the debtor who breaks in upon the rights of the parties by this assignment, but the creditor who breaks in upon them by proceeding in his suit. I see no fraud ; the deed was for the fair pur- ' Reed v. Mclntyre, 98 U. S. 510. ' Mayer v. Hellman, 91 U. S. 500. See Chap. XXV. ' 3 Maule & S. 371. § 341 ASSIGNMENTS TO PREVENT PREFERENCE. 46 1 pose of equal distribution." In the same case, Bayley, J., said : " It seems to me that this conveyance, so far from being fraudulent, was the most honest act the party could do. He felt that he had not sufficient to satisfy all his debts, and he proposed to distribute his property in liqui- dation of them ; this was not acceded to, for the plaintiff endeavored by legal process to obtain his whole debt, the obtaining of which would have swept away the property from the rest of the creditors."^ If the assignment has been fairly and legally made, and creditors obtain a ben- efit from it, their rights cannot be divested by proof of any stratagem practiced by the assignor to prevent at- tachments till this object could be secured. If no attach- ments were issued, even fraud practiced by the debtors to defeat such process would give the creditor no lien upon the property ; notwithstanding the grossest dishonesty of this kind, it would remain as it was; and so long as it continued the property of the debtors, unaffected by any attachments, no fraudulent conduct, calculated to impose upon a creditor and keep him at bay, would disqualify the debtor from making a valid assignment under the statute for the benefit of creditors generally." Fraud or misrepre- sentation on the part of the assignor, entering into or affect- ing the debt of a particular creditor, will not be sufficient to annul a general assignment in favor of creditors.^ ' See Pike v. Bacon, 21 Me. 281 ; whereby some of the creditors might Hauselt V. Vilmar, 2 Abb. N. C. (N. obtain an unjust preference, and to Y.) 222, afli'd 76 N, Y. 630 ; Baldwin secure it to be applied for the benefit V. Peet, 22 Tex. 708 ; Bowen v. Bram- of all the creditors, the assignment was idge, 6 C. & P. 140. See Holbird v. fraudulent and void. Anderson, 5 T. R. 235. It is said, - Pike v. Bacon, 21 Me. 286. however, in Dalton v. Currier, 40 N. ' Kennedy v. Thorp, 51 N. Y. 174; H. 246, that as the avowed purpose Spencer v. Jackson, 2 R. I. 35 ; Lin- and aim of the assignment, and its only inger v. Raymond, 12 Neb. 19; Hor- object and consideration, as stated in witz v. Ellinger, 31 Md. 504. But the instrument, was to defeat the lia- compare Wavcrly Nat. Bank v. Halsey, bility of the property to be attached, 57 Barb. (N. Y.) 249. 462 THREATENING TO MAKE ASSIGNMENT. § 342 Jaques v. Greenwood^ constitutes a possible exception to the rule above stated. A judgment had been entered against a firm by default ; they secured a stay of proceed- ings upon pretence of a defense to the action, which they failed to show, and upon an assurance given by their attor- nev that no assio^nment would be made. Meanwhile a preferential assignment was filed, and the judgment-cred- itors were prevented from realizing anything upon execu- tion. The assignment was, upon this state of facts, ad- judged to be made to hinder and delay the creditors in the collection of their debt. § 342. Threatening to make assignment. — Threatening to make an assignment seems to constitute no ground for pro- visional relief by attachment in New York,^ provided the threat is not to make a fraudulent assignment. "An un- lawful coercion of a creditor," says Fullerton, J., "cannot be predicated of the declaration of an intention by a debtor to do what the law sanctions as right and proper."^ ' 12 Abb. Pr. (N. Y.) 234. they were insolvent, and proposed to * Kipling V. Corbin. 66 How. Pr. their creditors a compromise of fifty (N. Y.) 13; Evans V. Warner, 21 Hun cents on the dollar, payable in nine, (N. Y.) 574 ; Dickerson v. Benham, 20 twelve, and fifteen months without se- How. Pr. (N. Y.) 343. curity. The evidence tended to show ^ Spaulding v. Strang, 37 N. Y. 139. that they had been engaged in a pros- In the case of National Park Bank v. perous business, yielding them large Whitmore, 104 N. Y. 305, Earl, J., said : profits, and they gave no satisfactory " But we think there were sufficient or intelligible explanation of their sud- facts set forth in the affidavits to give den alleged insolvency. They threat- the court jurisdiction to determine ened that unless their offer of compro- whether or not the defendants in threat- mise was accepted they would make an ening to make, and in making the as- assignment, preferring Whiting, and signment, were actuated by a fraudu- that then the rest of their creditors lent intent, A few days before the would get Httle or nothing. The efforts assignment was made the defendants of the defendants, with the co-opera- reported that they were entirely solvent tion of their assignee after the assign- and could pay all their debts in full, ment, apparently to coerce a compro- and they made a statement of their mise at twenty-five cents on the dollar, affairs showing a large surplus of assets their offer ' to fix it up ' with a creditor over liabilities. Soon after these repre- afterward if he would assent to the sentations they claimed that they could compromise, their selection of a foreign not pay their debts in full, and that assignee, the relations between him and § 343 CONSTRUCTION OF ASSIGNMENTS. 463 On the other hand there are cases tending to support the view that a debtor cannot use the power he possesses of assigning his property preferentially to intimidate creditors into abstaining from pressing the remedies allowed by law to collect debts, without being chargeable with intent to defraud creditors.^ In Gasherie v. Apple ^ the court ob- served: "The law allows a debtor to assign his property to pay his debts, and even to make preferences ; but com- pels him to make his selection without any conditions for personal gain to himself ; thus he cannot, by an assignment, hold out a hope of an extra share of his assets, or a fear of loss of any participation therein, as a means to induce a creditor to abandon all, or any part of his claim, or to for- bear pursuing his legal remedies therefor." This certainly embodies the safer rule. § 343. Construction of assignments. — In construing the provisions of a general assignment, we are to be governed by the rules applicable to ordinary conveyances.^ Prefer- ential assignments are not to be encouraged.* The law tolerates rather than approves such instruments, and they can only be supported when they make a full and uncondi- tional surrender of the property to the payment of debts.^ In Read v. Worthington,^ in construing a general assign- them, and the secret promise of a fu- Pr. (N. Y.) 64; Livermore v. Rhodes, ture preference, are also pertinent facts. 27 How. Pr. (N, Y.) 506. The court at General Term, looking at M4 Abb. Pr. (N. Y.) 64., 68, no one fact, but at all the facts, before •* Townsend v. Stearns, 32 N. Y. 213 ; and after the assignment, could, we Bagley v. Bowe, 105 N. Y. 171 ; Knapp think, find that the assignment was v. INIcGowan, 96 N. Y. 75 ; Crook v. threatened and made by the assignors, Rindskopf, 105 N. Y. 485 ; Ginther v. not solely for the honest purpose of de- Richmond, 18 Hun (N. Y.) 234. Corn- voting their assets to the payment of. pare Rapalee v. Stewart, 27 N. Y. 315, their just debts, but, while not actually ■• Nichols v. McKwen, 17 N. Y. 24. insolvent, to coerce a favorable compro- See Boardman v. Hallid;iy, 10 Paige mise from their creditors, and thus se- (N. Y.) 230. cure a benefit to themselves." ^ Griffin v. Barney, 2 N. Y. 371. ' See Anthony v. Stype, 19 Hun (N. * 9 Bosw. (N. Y.) 626. In Crook v. Y.) 267 ; Gasherie v. Apple, 14 Abb. Rindskopf, 105 N. Y. 485, Ruger, Ch. 464 CONSTRUCTION OF ASSIGNMENTS. § 343 merit, the court said: "There are three general rules of interpretation, which, applied to this case, show that the intent on the face of the instrument was honest to cred- itors : Firstly, that the general intent of the parties is to govern ; secondly, that the leaning of all constructions should be in favor of supporting, and not overthrowing, an instrument ; and thirdly, that fraud is not to be presumed,^ and assignments are subject to no different rules." ^ Courts are therefore under no obligation to be astute to destroy them,^ and an unreasonable construction should not he given to the language used in the assignment to render it void.^ The scope of the assignment is to be gathered from J., said: "While heretofore there has been some diversity of opinion in the courts in respect to the proper rule to be applied in the construction of such instruments, we think the tendency of modem decisions, especially those of most approved authority, has been to adopt the same rules which obtain in the interpretation of other contracts. (Knapp V. McGowan, 96 N. Y. 75, 87 ; Rapalee v. Stewart, 27 N. Y. 310, 315 ; Benedict v. Huntington, 32 N. Y. 219; Townsend v. Stearns, 32 N. Y. 209.) Among those rules is that requiring such an interpretation as will render the instrument consistent with inno- cence, and the general rules of law, in preference to such as would impute a fraudulent intent to the assignor, or defeat the general purpose and intent of the conveyance. (Bagley v. Bowe, 105 N. Y. 171 ; Ginther v. Richmond, 18 Hun [N. Y.] 232, 234; Rapalee v, Stewart, 27 N. Y. 315; Benedict v. Huntington. 32 N. Y. 219; Townsend V. Stearns, 32 N. Y. 209.) Such trans- fers are sanctioned by law and are, when made, like other contracts, to be fairly and reasonably construed with a view of carrying out the intentions of the parties making them. When au- thority to do an act is conferred in general terms it will be deemed to be and to have been intended to be exer- cised within the limits prescribed by law, (Kellogg v. Slauson, 1 1 N. Y. 302.) In such cases, as in others, doubtful and ambiguous phrases admitting of different meanings, are, in accordance with the maxim, ' ut res magis valeat qiiam pe.rcat,' to be so construed as to authorize a lawful disposition of the property only, although there may be general language in the instrument sus- ceptible of a different construction. (Townsend v. Steams, 32 N. Y. 209.)" ' Citing Kellogg v. Slauson, 1 5 Barb. (N. Y.) 56 ; Kellogg v. Barber, 14 Barb. (N. Y.) 11; Bamum v. Hemp- stead, 7 Paige (N, Y.) 569; Kuhlman v. Orser, 5 Duer (N. Y.) 250 ; Bank of Silver Creek v. Talcott, 22 Barb. (N.Y.) 561. See §§ 5, 6. - Citing Pine v, Rikert, 21 Barb, (N. Y.) 469. ^ See Turner v. Jaycox, 40 Barb. (N. Y.) 164 ; affi'd, 40 N. Y. 470. Es- pecially Townsend v. Stearns, 32 N. Y. 209 ; Grover v. Wakeman, 1 1 Wend. (N. Y.) 193; Kellogg v. Slauson, 11 N. Y. 302. •* Whipple V. Pope, 33 111. 334. «5 344 OBNOXIOUS PROVISIONS. 465 the whole instrument,^ and where two constructions are possible, that is to be chosen which upholds and does not destroy the instrument.^ "A court," said Finch, J., "may wrestle, if need be, with unwilling words to find the truth or preserv^e a right which is endangered."^ It must be re- membered that if a general clause be followed by special words which accord with the general clause, the deed should be construed according to the special matter.'* The case may, however, be taken out of its operation by the evident intent of the parties and the clearly expressed pur- pose of the deed.^ Thus where the instrument under con- sideration is a general assignment of all the property and effects of the assignor, and the intent to place all the prop- erty of every description within the trust is apparent in every part of the deed, although it contain a reference to a schedule of the assigned effects as annexed, this will not be construed as indicating an intention to qualify or limit the comprehensive or general language, and property not men- tioned in the schedule will pass to the trustee.^ § 344. Explaining obnoxious provisions. — When it is shown that the obnoxious provisions of the deed were not made deliberately, understandingly, or even knowingly, then the law's presumption of the intent to defraud is rebutted. The reason ceasing the rule ceases. In an inquiry collat- eral to the deed it is competent to show by parol that the deed w^as made in its objectionable form by the mistake of ' Price V. Haynes, 37 Mich. 487; S.C. construed. Wliite v. Cotzhausen, 129 I Am. Insolv. Rep. 137. U. S. 329, and cases cited. ^ Coyne v. Weaver, 84 N. Y. 390. •• Munro v. Alaire, 2 Caines (N. Y.) See Townsend v. Stearns, 32 N. Y. 209 ; 320. See Moore v. Griffin. 22 Me. 350 ; Brainerd v. Dunning, 30 N. Y. 211; Wilkes v. Ferris, 5 Johns. (N. Y.) Campbell v. Woodworth, 24 N. Y. 304; 335. Benedict v. Huntington, 32 N. Y. 219 ; ' Piatt v. Lott, 17 N. Y. 478. Coffin V. Douglass, 61 Tex. 406. " Holmes v. Hubbard, 60 N. Y. 185 ; 3 Coyne v. Weaver, 84 N. Y. 390; Turner v. Jaycox, 40 N. Y. 470; Emi- S. c. I Am. Insolv. Rep. 392. A volun- grant Ind. Sav. Bank v. Roche, 93 N. tary assignment act is to be liberally Y. 377. 30 466 ASSIGNMENTS HELD VOID. § 345 the scrivener, and without the intention and knowledge of the parties to it, and so to rebut the presumption of fraud. ^ § 345. Assignments held void. — It would be an arduous task to collate and cite the numerous cases in which assign- ments have been overturned at the instigation of creditors. The important features of the law will, however, be no- ticed. The instrument was avoided where it provided that the debtor "shall have the privilege of continuing his busi- ness for one year."^ In fact any reservation of benefit to the grantor is considered fatal. ^ Stipulating for possession of the assigned property,"* and providing for the payment of individual debts out of copartnership assets,^ are addi- tional illustrations of obnoxious provisions which will annul the instrument.'' So, as we have seen, the instrument is rendered void by intentional omissions of assets,^ and the insertion of fictitious Habilities.^ The insertion of a pro- ■ vision for the employment of the assignors furnishes some evidence of fraudulent intent.^ ■' Farrow v. Hayes, 51 Md. 500, 501. v. Hunter, 11 Weekly Dig. (N. Y.) 300. See Carpenter v. Buller, 8 M. & W. But see Crook v. Rindskopf, 105 N. Y. 212; Parks V. Parks, 19 Md. 323; Smith 476. V. Davis, 49 Md. 470. * An assignment is invalid as a con- ■•^ Holmes v. Marshall, 78 N. C. 262. veyance of a debtor's estate under the 2 Cheatham v. Hawkins, 76 N. C. insolvency statutes of New York (2 R. 335 ; Bigelow v. Stringer, 40 Mo. 195 ; S., p. 16), when the preliminary pro- Griffin V. Barney, 2 N. Y. 371 ; Leitch ceedings upon which it is based are V. Hollister, 4 N. Y. 211 ; Mackie v. void. Rockwell v. McGovern, 69 N. Cairns, 5 Cow. (N. Y.) 547 ; Harris v. Y. 294 ; s. C. i Am. Insolv. Rep. 59. Sumner, 2 Pick. (Mass.) 129; Burrill See Ely v. Cooke, 28 N. Y. 365. But on Assignments, 4th ed., § 343, p. 514. compare Striker v. Mott, 28 N. Y. 90. ■* Billingsley v. Bunce, 28 Mo. 547; In such a case the only beneficial in- Reed v. Pelletier, 28 Mo. 173; Brooks terest vested in the assignee is that V. Wimer, 20 Mo. 503 ; Stanley v. prescribed by the statute. Bunce, 27 Mo. 269. See Cheatham v. ' Probst v. Welden, 46 Ark. 409 ; Hawkins, 76 N. C. 335 ; Harman v. ShuUz v. Hoagland, 85 N. Y. 464 ; Hoskins, 56 Miss. 142; Joseph v. Levi, Waverly Nat. Bank v. Halsey, 57 Barb. 58 Miss. 843. (N.Y.) 249 ; Craft v. Bloom, 59 Miss 69. 5 Wilson V. Robertson, 21 N. Y. 587 ; ' Talcott v. Hess, 31 Hun (N. Y.) Schiele v. Healy, 61 How. Pr. (N. Y.) 282. 73 ; S. C. I Am, Insolv. Rep. 417 ; Piatt ' Frank v. Robinson, 96 N. C. 32. §§ 34^, 34^^ FOREIGN ASSIGNMENTS. 467 § 346. Foreign assignments. — The rule generally obtains that the statute laws of a particular State regulating assign- ments for the benefit of creditors, do not apply to foreign assignments ; ^ such transfers, if valid by the law of the place where made, are valid everywhere, and will protect the property from attachment,'^ except perhaps as regards creditors who are residents of the particular State in which it is sought to enforce the provisions of the instrument. As the foreign assignment is allowed to operate as a matter of comity, the courts sometimes refuse to enforce it to the prejudice of their own citizens.^ Manifestly an assignment will not take effect to pass title to personal property situate in another State in express contravention of the statute law of that State.^ The distinction should not be over- looked between assignments by act of the party and those by operation of law. The latter class of conveyances are generally founded upon statutory provisions, and have no extraterritorial force.^ This, however, is a line of mquiry foreign to our subject. § 34613:. Assignments by corporations. — Where charter re- strictions or statutory inhibitions do not exist a corpora- tion may make a general assignment. " Such a transfer is, ' Ockemian v. Cross, 54 N, Y. 29; Barb. Ch. (N. Y.) 124, affi'd 3 N. Y. Chafee v. Fourth Nat. Bank of N. Y., 238 ; Haxtun v. Bishop, 3 Wend. (N. 71 Me. 524 ; Bentley v. Whittennore, 19 Y.) 13 ; Bowery Bank Case, 5 Abb. Pr. N. J. Eq. 462. (N. Y.) 415 ; Hill v. Reed, 16 Barb. - Ockerman v. Cross, 54 N. Y. 29; (N. Y.) 280; De Camp v. Alward, 52 Bholen v. Cleveland, 5 Mason 174. Ind.473; Nelson v. Edwards, 40 Barb. ^ Chafee v. Fourth Nat. Bank, 71 (N. Y.) 279; Union Bank of Tenn. v. Me. 524. See Matter of Waite, 99 N. EUicott, 6 Gill & J. (Md.) 363; Sav- Y, 433. Compare Train v. Kendall, ings Bank of New Haven v. Bates, 8 137 Mass. 366. Conn. 505 ; Coats v. Donnell, -74 N. Y. ^ Warner v. Jaffray, 96 N. Y. 248. 178 ; Chew v. Ellingwood, 86 Mo. 273 ; ' See Hutcheson v. Peshine, 16 N. J. Lenox v. Roberts, 2 Wheat. 373 ; War- Eq. 167; Kelly v. Crapo, 45 N. Y. 86; ner v. Mower, 11 \'t. 385 ; Flint v. reversed, Crapo v. Kelly, 16 Wall. 610. Clinton Co., 12 N. H. 431 ; Ex parte See § 294. Conway, 4 Ark. 304 ; Catlin v. Eagle « Albany & R. Iron & S. Co. v. South- Bank, 6 Conn. 233 ; Ardesco Oil Co. em Agricultural Works, 76 Ga. 135; v. North Am. Oil & M. Co., 66 Pa. De -Ruyter v. St. Peter's Church, 3 St. 375. 468 ASSIGNMENTS BY CORPORATIONS. § 346^ however, prohibited by statute in New York,^ and some other States.^ Where assignments by corporations are allowed they are subject to attack " upon substantially the same grounds as in the cases of similar transfers by individuals." ' I R. S. 605, § I. - See Wait on Insolvent Corps., Chap. VIII. CHAPTER XXII. FRAUDULENT CHATTEL MORTGAGES. § 347. Chattel mortgages. ■ C Rule in Robinson v. Elliott. 349- S 350. Proof extrinsic to the instrument. 351, Comments in the cases. •JC2, ) ' > Opposing rule and cases. 354, Discussion of the principle in- volved. § 355. Authorizing sales for mortgagee's benefit. 356. Sales upon credit. 357. Possession — Independent valid transactions. 358. Right of revocation — Reserva- tions. 359. Rule as to consumable prop- erty. § 347. Chattel mortgages. — Questions affecting the valid- ity of chattel mortgages as against creditors are so largely- dependent upon and regulated by local statutory pro- visions, that the general principles governing the subject can be discussed with but little satisfaction. Such mort- gages are, as a general rule, valid between the parties,^ even ' Stewart v. Piatt, loi U. S. 731 ; Hackett v. Manlove, 14 Cal. 85. See Lane v. Lutz, i Keyes (N. Y.) 213 ; Smith v. Acker, 23 Wend. (N. Y.) 653. See Chap. XXVI. In Stewart v. Piatt, loi U. S. 739, the court said : " Al- though the chattel mortgages, by rea- son of the failure to file them in the proper place, were void as against judg- ment-creditors, they were valid and ef- fective as between the mortgagors and the mortgagee. Lane v. Lutz, i Keyes (N. Y.) 213 ; Wescott v. Gunn, 4 Duer (N. Y.) 107 ; Smith v. Acker, 23 Wend. (N. Y.) 653. Suppose the mortgagors had not been adjurlged bankrupts, and there had been no creditors, subsequent purchasers, or mortgagees in good faith to complain, as they alone might, of the failure to file the mortgages in the towns where the mortgagors respectively re- sided. It cannot be doubted that Stew- art, in that event, could have enforced a lien upon the mortgaged property in satisfaction of his clami for rent. The assignee took the property subject to such equities, liens, or incumbrances as would have affected it, had-no adjudica- tion in bankruptcy been made. While the rights of creditors whose executions preceded the bankruptcy were properly adjudged to be superior to any which passed to the assignee by operation of law, the balance of the fund, after satis- fying those executions, belonged to the mortgagee, and not to the assignee for the purposes of his trust. The latter representing general creditors,, cannot dispute such claim, since, had there been no adjudication, it could not have been disputed by the mortgagors." See Hauselt v. Harrison, 105 U. S..406. 470 ROBINSON V. ELLIOTT. '^N 348 though not recorded ; ^ and recording the instrument is made by statute in some States a substitute for change of possession, and repels the imputation of fraud which would arise from the retention of possession by the vendor.^ Many questions concerning the validity of these instru- ments are to be found in the reports, only the more prom- inent of which w^ill be noticed. § 348. Rule in Robinson v. Elliott. — The Supreme Court of the United States, in Robinson v. Elliott,^ committed itself unreservedly to the doctrine that an instrument which provided for the retention of the possession of the mort- gaged personalty by the mortgagor, accompanied with the power to dispose of it for his own benefit in the usual course of trade, was inconsistent with the idea of a security, or the nature and character of a mortgage, and of itself furnished a pretty effectual shield to a dishonest debtor, and consequently should be regarded as voidable as to cred- itors."* Davis, J., said : " In truth, the mortgage, if it can 'Stewart v. Piatt, loi U. S. 731; Minn. 533; Horton v. Williams, 21 Lane v. Lutz, i Keyes (N. Y.) 213. Minn. 187 ; Bishop v. Warner, 19 Conn. * See Bullock v. Williams, 16 Pick. 460; Place v. Langworthy, 13 Wis. (Mass.) 33 ; Feurt v, Rowell, 62 Mo, 629 ; Blakeslee v. Rossman, 43 Wis. 524; Hughes V. Cory, 20 Iowa 403, 116; Smith v. Ely, 10 N. B. R. 553; and cases cited ; Spraights v. Hawley, In re Cantrell, 6 Ben. 482 ; hi re 39 N, Y. 441. Kahley, 2 Biss. 383 ; Southard v. Ben- * 22 Wall. 513. ner, 72 N. Y. 424; £'.r/rtr/^ Games, ■* See Worseley v. De Mattos, i Burr. 12 Ch. D. 314 ; Cheatham v. Hawkins, 467, per Lord Mansfield; Edwards v. 80 N. C. 164; Tennessee Nat. Bank v. Harben, 2 T. R. 587 ; Bannon v. Bow- Ebbert, 9 Heisk. (Tenn.) 154; Joseph ler, 34 Minn. 418 ; Paget v. Perchard, v. Levi, 58 Miss. 845 ; Harman v. Hos- I Esp. 205, per Lord Kenyon ; Lang v. kins, 56 Miss. 142 ; Dunning v. Mead, Lee, 3 Rand. (Va.) 410; Addington v. 90 III. 379; Goodheart v. Johnson, 88 Etheridge, 12 Gratt. (Va.) 436 ; Mc- 111. 58; Davenport v. Foulke, 68 Ind. Lachlan v. Wright, 3 Wend. (N. Y.) 382; Barnet v, Fergus, 51 111. 352; 348; Edgell V. Hart, 9 N. Y. 213; Davis v. Ransom, 18 111. 396 ; Simmons Brackett v. Harvey, 91 N. Y. 214 ; Potts v. Jenkins, 76 111. 479 ; Mobley v. Letts, V.Hart, 99 N.Y. 168 ; Cobum v. Picker- 61 Ind. 11 ; Garden v. Bodvving, 9 W. ing, 3N. H. 415; Bank of Leavenworth Va. 122; City Nat. Bank v. Goodrich, V. Hunt, II Wall. 391; Coolidge v. 3 Col. 139; Sparks v. Mack, 31 Ark. Melvin, 42 N. H. 520; Collins V. Myers, 666; Orton v. Orton, 7 Oreg. 478 ; 16 Otio 547; Chophard v. Bayard, 4 Peiser v. Peticolas, 50 Tex. 638 ; Scott § 34^ ROBINSON V. ELLIOTT. 47 1 be so called, is but an expression of confidence, for there can be no real security where there is no certain lien. Whatever may have been the motive which actuated the parties to this instrument, it is manifest that the necessary result of what they did do was to allow the mortgagors, under cover of the mortgage, to sell the goods as their own, and appropriate the proceeds to their own purposes ; and this, too, for an indefinite length of time." ' It must be remembered that, in Twyne's Case, where the transfer was avoided, one of the objections urged against the trans- action was that the debtor tised the goods as his own.^ Mr. Pierce observes : "A mortgage or conveyance of this kind presents a false appearance, is only a pretence as a mort- gage, is calculated to deceive, cannot fail to deceive if it be operative, furnishes unusual facilities for fraud, reserves benefits to the grantor, and prejudices other creditors. When it thus appears that the transaction is, in its results, so fraudulent, and so injurious to creditors, that few trans- actions could be more so, even where an intent to defraud exists so as to bring them within the statute of 13 Eliz., the courts are as ready to adjudge the transaction fraudu- lent as they would be if a fraudulent intent appeared."^ V. Alford, 53 Tex. 82 ; Weber v. Arm- work entitled " Fraudulent Mortgages strong, 70 Mo. 217; Tallon v. Ellison, of Merchandise, a Commentary on the 3 Neb. 63 ; McCrasly v. Hasslock, 4 American Phases of Twyne's Case, by Baxt. (Tenn.) i ; Catlin v. Currier, i James O. Pierce," F. H. Thomas & Sawyer 7. See " An American Phase Co., 1884. The positions taken by Mr. of Twyne's Case," by James O. Pierce, Pierce in the Law Review, in support Esq., 2 Southern L. Rev. (N. S.) 731 ; of Robinson v. Elliott, are re-stated in " Fraudulent Mortgages of Merchan- this volume with commendable clear- dise," by Leonard A. Jones, Esq., 5 ness and force, and the different au- Southern L. Rev. (N. S.) 617; "A thorities in State and Federal tribunals Reply," by Mr. Pierce, 6 Southern L. bearing upon the question are collated Rev. (N. S.) 96; "Frauds in Chattel and discussed. Mortgages," by Mr. Jones, 7 Southern ' Robinson v. Elliott, 22 Wall. 525. L. Rev. (N. S.) 95 ; Reviewed by Ed. See Means v. Dowd, 128 U. S. 284. J. Maxwell, Esq., 7 Southern L. Rev. '^ See § 22. (N. S.) 205. This discussion relates ^ Pierce on Fraudulent Mortgages of mainly to Robinson v. Elliott, 22 Wall, Merchandise, § 122. 513. The controversy gave birth to a 47- ROBINSON V. ELLIOTT § 349 § 349. — In Edgell v. Hart ^ the license to sell was inferred from a written schedule attached to the instrument. Chief- Justice Denio held, \\^ith the concurrence of a majority of the court, that "the existence of such a provision out of the mortgage or in it, would invalidate it as matter of law, and that where the facts are undisputed this court should so declare."^ "Such an agreement," said Finch, J., "opens the door to fraud, and permits the mortgagor to use the property for his own benefit, utilizing the mortgage as a shield against other creditors."^ The debtor, in the lan- guage of Kent, " sports with the property as his own."^ In Mittnacht v. Kelly,^ Parker, J., observed: "The mortgag- ing the whole stock in trade, .... with the increase and decrease thereof, and the providing for the continued pos- session of the mortgagor, can have no other meaning than that the mortgagee should all the time retain a lien on the whole stock by way of mortgage, the mortgagor making purchases from time to time, and selling off in the ordinary manner, the intent being not to create an absolute lien upon any property, but a fluctuating one, which should op^n to release that which should be sold and take in what should be newly purchased. This is just such an arrange- ment as was held in Edgell v. Hart^ to render the mort- gage void. The case cannot be distinguished from that, and the law as pronounced in that case, must be held ap- plicable to this." In Griswold v. Sheldon,'^ Bronson, C. J., says: "There would be no hope of maintaining honesty and fair dealing if the courts should allow a mortgagee or vendee to succeed in a claim to personal property against creditors 1 9 N, Y. 213. •» Riggs V. Murray, 2 Johns. Ch. (N. ^ Compare Gardner v. McEwen, 19 Y.) 565. N. Y. 123; Mittnacht v. Kelly, 3 Keyes ' 3 Keyes (N. Y.) 407. (N. Y.) 407 ; Russell v. Winne, 37 N. ^9 N. Y. 213. Y. 591. ''4 N. Y. 590. * Brackett v. Harvey, 91 N. Y. 223, 224. § 35° EXTRINSIC PROOF. 473 and purchasers, after he had not only left the propert}^ in the possession of the debtor, but had allowed him to deal with and dispose of it as his own." "To attempt," says Mr. Pierce,^ "to fasten a valid and certain lien upon goods which may at any moment, at the will of the debtor, fly out from under the lien, is to attempt a legal and moral impossibility." It is a sham, a nullity — a mere shadow of a mortgage, only calculated to ward off other creditors — a conveyance in trust for the benefit of the person making it, and therefore void as against creditors.^ § 350. Proof extrinsic to the instrument. — The rule as we have seen is the same, whether the agreement is recited in the instrument or is extrinsic to it.^ Thus Allen, J., re- marked : " Whether the agreement is in or out of the mort- gage, whether verbal or in writing, can make no difference in principle. Its effect as characterizing the transaction would be the same. The difference in the modes of prov- ing the agreement cannot take the sting out of the fact and render it harmless. If it is satisfactorily established, the result upon the security must be the same."'* When not embodied in the instrument the agreement to sell must be proved. The mere expectation of one party or the other that this right is to be given is not enough ; there must be a conscious assent of both.^ In Potts \^ Hart,^ Earl, J., said : "A mortgage thus given is fraudulent and void as to creditors because it must be presumed that at least one of the purposes, if not the main purpose for giving it, was to cover up the mortgagor's property and thus hinder and de- lay his other creditors. It matters not whether the agree- ' Pierce on Fraudulent Mortgages of Ben. 482 ; Smith v. Ely, 10 N. B. R. Merchandise, § 125. 553; Re Kirkbride, 5 Dill. 116. * Catlin V. Currier, i Sawyer 12. ■* Southard v. Benncr, 72 N. V. 432 ; ^ Edgell V. Hart, 9 N. Y. 213; Mc- S. P. Russell v. Winnc, 37 N. Y. Lean v. Lafayette Bank, 3 McLean 623 ; 591. Bowen v. Clark, i Biss. 128; In re ' Brackett v. Harvey, 91 N. Y. 224. Kahley, 2 Biss. 383 ; In re Cantrell, 6 * 99 N. Y. 172. 474 COMMENTS IN THE CASES. § 35 1 ment that the mortgagor may continue to deal in the prop- erty for his own benefit is contained in the mortgage or exists in parol outside of it ; and where the agreement ex- ists in parol, it matters not whether it is valid so that it can be enforced between the parties or not ; for whether • valid or invalid it is equally effectual to show the fraudulent purpose for which the mortgage was given, and the fraud- ulent intent which characterizes it. It is always open to creditors to assail, by parol evidence, a mortgage or a bill of sale of property as fraudulent and void as to them. While between the parties the written contract may be valid, and the outside parol agreement may not be shown or enforced, yet it may be shown by creditors for the purpose of prov- ing the fraudulent intent which accompanied and character- ized the giving of the written instrument. It is usually difficult to prove by parol an agreement in terms that the mortgagor may continue to deal in the property for his own benefit. Parties concoctinor a fraudulent mortPfage would not be apt to put the transaction in that unequivocal form. But all the facts and circumstances surrounding the giving of the mortgage, and the subsequent dealing in the property with the knowledge and assent of the mortgagee, may be shown, and they may be sufficient to justify the court or jury in inferring the agreement ; and so the parol agreement was inferred in all the cases which have come under our observation." § 351. Comments in the cases. — Chief-Justice Parker, in speaking of these shifting liens, observes that " if this doc- trine were admitted, a mortgage of personal property would be like a kaleidoscope, in that the forms represented would change at every turn ; but, unlike that instrument, in that the materials would not remain the same." ^ The objection may be re-stated, to the effect that the mortgagor may dis- ' Ranlett v. Blodgett, 17 N. H. 305. §352 OPPOSING RULE AND CASES. 4/5 pose of the property, defeat the mortgage, and put the money in his own pocket ; but if he refuses to pay a debt, and creditors seize the property in execution against his will, the mortgage steps in and restores it to the debtor.^ Again, it is said that there is no specific lien, but " a float- ing mortgage, which attaches, swells, and contracts, as the stock in trade changes, increases, and diminishes ; or may wholly expire by entire sale and disposition, at the will of the mortgagor."- Such stipulations are not only inconsist- ent with the idea of a mortgage, but tend inevitably to give a fraudulent advantage to the debtor over his other cred- itors.^ § 352. Opposing rule and cases. — The rule embodied in Robinson v. Elliott" has, however, been a subject of much discussion and dissension. It seems to be conceded in the great mass of the cases, that an agreement for the retention of possession, with power of disposition by the mortgagor, may constitute evidence of fraud, proper to be considered by the jury or the court, as a fact in connection with all the circumstances arising in each particular case. The contention against the rule in Robinson v. Elliott is that the agreement does not render the instrument void per se, or as matter of law, or conclusively fraudulent, and that whether it is fraudulent m fact or not, should be " decided upon all the evidence, including, of course, the terms of the instrument itself." ° ' Collins V. Myers, 16 Ohio 547. Powers, 131 Mass. 333; Briggs v. Park- " Collins V. Myers, 16 Ohio 554. man, 2 Met. (Mass.) 25S ; Jones v. '^ Tennessee Nat. Bank v. Ebbert, 9 Huggeford, 3 Met. (Mass.) 515 ; Hunter Heisk. (Tenn.) 153. v. Corbett, 7 U. C. Q. B. 75: Miller •• 22 Wall. 513. See Means v. Dowd, ads. Pancoast, 29 N. J. Law 250 ; Price 128 U. S. 284. V. Mazange, 31 Ala. 701 ; Sleeper v. ^ Hughes V. Cory, 20 Iowa 399-410, Chapman, 121 Mass. 404; People v. per Dillon, J. ; Brett v. Carter, 2 Low- Bristol, 35 Mich. 28 ; VVingler v. Sib- ell 458; Gay V. Bidwell, 7 Mich. 519; ley, 35 Mich. 231 ; Hedman v. Ander- Googins V. Gilmore, 47 Me. 9; Clark son, 6 Neb. 392; Cheatham v. Haw- V. Hyman, 55 Iowa 14; Fletcher v. kins, 76 N. C. 335 ; Mitchell v. Winslow, 476 OPPOSING RULE AND CASES. § 353 § 353. — Lowell, J., ^seemed "to doubt both the general- ity and the justice " of the rule stated by Davis, J., in Rob- inson V. Elliott,^ and regarded the doctrine as substantially settled, that when a vendor or mortgagor was permitted to retain the possession and control of his goods and act as apparent owner, the question whether this was a fraud or not was one of fact for the jury. The court observed : "A conveyance for a valuable present consideration is never a fraud in law on the face of the deed, and if fraud is allesfed to exist, it must be proved as a fact." It is considered plain that the doctrine of Robinson v. Elliott " virtually prevents a trader from mortgaging his stock at any time for any use- ful purpose ; for if he cannot sell in the ordinary course of trade, or only as the trustee and agent of the mortgagee, he might as well give possession to the mortgagee at once and go out of business." It is to be noticed that the court by this sentence ex- presses the belief that shifting liens upon merchandise, which open and close at the will of the mortgagor, are not necessarily fraudulent contrivances devised to defeat cred- itors ; on the contrary, such mortgages seem to be con- templated as capable of subserving a " useful purpose." Many of the cases, however, which follow Brett v. Carter, in holding that fraud is a question of fact, concede, and often expressly state, that contrivances of this class are con- venient covers for fraud upon creditors. It seems to have been admitted in Brett v. Carter,^ that there was no fraud 2 Story 647; Miller v. Jones, 15 N. B. standing of the parties, expressed or R. 150; Barron v. Morris, 14 N. B. R. implied, is to remain in possession of 371 ; Frankhouser v. Ellett, 22 Kan. the property, with a power of sale, is 127; s. C. 31 Am. Rep. 171 ; Williams void upon a principle of public policy V. Wipsor, 12 R. I. 9. See S. C. 17 embodied in the State, irrespective of Alb. L. J. 359, an-l cases cited. It any question of actual and intended may be observed that Dillon, J., adopt- fraud." Re Kirkbride, 5 Dill. 117. ed the other rule when sitting as a cir- ' Brett v. Carter, 2 Lowell 458. cuit judge. He said : "A conveyance - 22 Wall. 513. of personal property to secure credit- ^ 2 Low. 458. ors, when the grantor, by the under- § 354 THE PRINCIPLE INVOLVED. 47/ in fdct as it is commonly termed ; that the transaction showed that all the stock, present and future, was hypoth- ecated to the payment of a certain debt by instalments. " No offer is made," said Lowell, J., "to prove that any one was deceived, or even was ignorant of the mortgage ; but I am asked to find fraud in law, when I know, and it is admitted, there was none in fact." The court cites Mr. May's treatise as authority for the statement that fraud is a question of fact,^ but omits to note that the learned au- thor was on the page cited discussing the question of the effect of the simple retention of possession, and fails to notice the following observation :* " The rule seems to be that where there is an absolute conveyance, and the grantor remains in possession in such a way as to be able to use the goods as his own, it is always void against creditors, even though made on valuable consideration."^ § 354. Discussion of the principle involved. — It is foreign to our design to kindle the smouldering embers of this dis- cussion into new flame. It will be seen at a glance that the subject-matter of contention in the controversy is the much-debated distinction between fraud in law and fraud in fact. The conclusion is reached in our opening chapter,* that this distinction is largely mythical, and relates only to the character and quantity of the proof adduced to nullify the transaction. Where the evidence is of sugh a con- clusive nature that the fraudulent intent unmistakably fastens its fangs upon the transfer, so that a verdict or find- ing contrary to the evident evil design so established would be erroneous, the court pronounces the transaction covin- ous, and imputes the fraudulent intent to the parlies in obedience to the principle of law tliat they must have con- templated the natural and necessary consetjucnces of their ' May on Fraudulent Conveyances, ' See Pierce on Fraudulent Mort- p. 106. gages of Merchandise, § 123. ^ Ibid., p. 100. ■• See §§9, 10. 478 SALES FOR mortgagee's BENEFIT. § 355 acts. Where the facts are not controverted and do not admit of a construction consistent with innocence, surely the burden is cast upon the court to declare the result. There is no question of intention to be submitted to the jury. As the mortgage shows upon its face that it was not designed by the parties as an operative instrument between them, its only effect is to prejudice others. The court should " pronounce it void, for the reason that the evi- dence conclusively shows it fraudulent."^ It is because such trusts are calculated to deceive and embarrass credit- ors, because they are not things to which honest debtors can have occasion to resort in sales of their property, and because they constitute the means which dishonest debtors commonly and ordinarily use to cheat their creditors, that the law does not permit a debtor to say that he used them for an honest purpose in any case.^ Chief-Justice Ryan said : " Intent does not enter into the question. Fraud in fact goes to avoid an instrument otherwise valid. But intent, bona fide or mala fide, is immaterial to an instru- ment per se fraudulent and void in law. The fraud which the law imputes to it is conclusive Fraud in fact imputed to a contract (valid on its face) is a question of evidence ; not fraud in law. And no agreement of the parties in parol can aid a written instrument fraudulent and void in law."^ § 355- Authorizing sales for mortgagee's benefit. — Three cases,** decided in the New York Court of Appeals in rapid succession, and recently approv^ed in the same court, ^ held that a chattel mortgage was not pei' se void because of a provision contained in it allowing the mortgagor to sell the mortgaged property and account to the mortgagee for the ' Russell V. Winne, 37 N. Y. 595. Conkling v. Shelley, 28 N. Y. 360 ; - Coolidge V. Melvin, 42 N. H. 520; Miller v. Lockvvood, 32 N. Y. 293. Winkley v. Hill, 9 N. H. 31. ^ Brackett v. Harvey, 91 N. Y. 221. 3 Biakeslee v. Rossman, 43 Wis. 124. See Hawkins v. Hastings Bank, i Dil- •* Ford V. Williams, 24 N. Y. 359 ; Ion 462. § 35^ SALES UPON CREDIT, 479 proceeds, and apply them to the mortgage debt. " These cases," says Finch, J., " went upon the ground that such sale and application of proceeds is the normal and proper purpose of a chattel mortg^age, and within the precise boundaries of its lawful operation and effect. It does no more than to substitute the mortgagor as the agent of the mortgagee, to do exactly what the latter had the right to do, and what it was his privilege and his duty to accom- plish."^ It may be observ-ed that a subsequent judgment- creditor is entitled to have an account of the sales so made stated, and to have the amount thereof applied to reduce the morto^aore debt.^ § 356. Sales upon credit. — The rule being established that the mortgagor may sell the property and account for the proceeds to the mortgagee, and that such an arrangement is not fraudulent in law if made with an honest intention,^ another phase of the controversy must be considered. What will be the effect if the mortgagor is not restricted to sales for cash, but is allowed to sell upon credit, in his discretion ? Elsewhere it is shown that general assign- ments permitting the assignee to sell upon credit are re- garded as fraudulent, because such agreements hinder and delay creditors and prevent the immediate application of the debtor's property to the payment of their claims.* The same principle has been extended and applied to sales of the mortgaged property made upon credit by the mort- gagor for the mortgagee. The arrangement is calculated to keep the creditors at bay, and is regarded as fraudulent • Brackett v. Harvey. 91 N. Y. 221 ; ' Ford v. Williams, 24 N. Y. 359 ; S. P. Wilson V. Sullivan, 58 N. H. 260 ; Brackett v. Han'cy, 91 N. Y. 221 ; Haw- Hawkins V. Hastings Bank, i Dillon kins v. Hastings Bank, i Dill. 462. 462 ; Overman v. Quick, 8 Biss. 134 ; ^ Nicholson v. Leavitt, 6 N. Y. 510 ; Abbott V. Goodwin, 20 Me. 408; Crow Barney v. Griffin, 2 N. Y. 365 ; Dun- v. Red River Co. Bank, 52 Tex. 362. ham v. Waterman, 17 N. Y. 21. See * Ellsworth V. Phelps, 30 Hun (N. §§ 332, 333. Y.) 646. 480 POSSESSION. § 357 per se} If, however, the accounts, where the sales are effected on credit, are immediately transferred to the mort- gagee at their face, and credited or allowed upon the mort- gage debt, the objectionable elements of the transaction are eliminated, and the arrangement will be tolerated.^ In Brown v. Guthrie,^ Finch, J., said : " The dealing, there- fore, must be treated as a chattel mortgage by the debtor to his creditor, the consideration of which was evidenced and settled by the outside agreement. So regarded, the findings declare it to have been in good faith and not fraud- ulent. The arrangement for the sale on credit was made harmless by the stipulation that Guthrie should take the credits as cash, and himself bear the delay, and risk the solvency of the purchasers." * § 357- Possession — Independent valid transactions. — Sell- ing or taking possession of the property under and b)^ virtue of the fraudulent mortgage cannot, of necessity, purge it of the vice of fraud. ^ The title remained fraudulent and voidable still as against creditors.^ Before and after taking possession, the title of the mortgagee rests equally upon the mortgage, and the question, as regards creditors of the mortgagor, is the validity of his paper title. The mortga- gee's possession under the mortgage is as good or as bad as the mortgage itself, and the court has not the power to ' City Bank v. Westbury, 16 Hun (N. Y.) 31 ; the Court of Appeals of New Y.) 458. York, in Parshall v. Eggert, 54 N. Y. ^ Caring v. Richmond, 22 Hun (N. 18 ; the Supreme Court of Wisconsin, Y.) 370, in Blakeslee v. Rossman, 43 Wis. 116, ^ no N. Y. 435, 443. and the Supreme Court of Minnesota, * Citing Brackett V. Harvey, 91 N.Y, in Stein v. Munch, 24 ]Minn. 390, — all 214. hold that where the mortgage is void '" In Wells V. Langbein, 20 Fed. Rep. for fraud as to creditors, taking pos- 183, 186, the court observe : " The Su- session thereunder, before a lien is ob- preme Court of California, in Chenery tained on the property in favor of a V. Palmer, 6 Cal, 123; the Supreme creditor, will not render it valid. The Court of New York, in Delaware v. fraud existing in the mortgage itself Ensign, 21 Barb. (N. Y.) 85, and vitiates all steps taken under it." Dutcher v. Swartwood, 15 Hun (N. *^ Smith v. Ely, 10 N. B. R. 563. § 35^ RIGHT OF REVOCATION. 48 1 transmute a void mortgage into a valid pledge.^ But even in cases where the mortgage is fraudulent, if the mortgagee repudiates the instrument and casts it aside, and obtains a pledge of the goods, accompanied by delivery and an open change of possession, and by a distinct agreement subse- quent to and independent of the mortgage, his rights will be protected as against the other creditors.'^ § 358. Right of revocation — Reservations. — We have seen that a debtor, before any lien attaches in favor of credit- ors, possesses the right to make any disposition of his property.^ The contract, however, by which he parts with it must be absolute and unconditional, for if he retain the right to revoke the contract and resume the ownership of the property, the reservation is considered as inconsistent with a fair, honest, and absolute sale, and renders the transfer fraudulent and void.* In the ffreat case of Riffffs V. Murray,^ in which the various instruments of transfer contained powers of revocation, Chancellor Kent held the transfers void, saying that there was a necessary inference of a purpose to " delay, hinder, or defraud creditors," that V the only effect of these^ssignments was "to mask the %<-3/ property"; and that such powers of revocation are fatal to the instrument and poison it throughout, appears to have been well established by authority.^ So a deed re- servino: the ric^ht to the c^rantor to sell and convev the property without the consent of the grantee, is incon- ' Blakeslee v. Rossman, 43 Wis. 127. Minn. 435 ; Baldwin v. Flash, 58 Miss. See Robinson v. Elliott, 22 Wall. 513; 593. Dutcher v. Swartwood, 15 Hun (N. Y.) " See § 52. 31 ; Stimson v. Wrigley, 86 N. Y. 332 ; * West v. Snodgrass, 17 Ala. 554. In re Forbes, 5 Diss. 510 ; Janvrin v. = 2 Johns. (N. Y.) 565. But see Fogg, 49 N. H. 340; Wells v. Lang- Murray v. Riggs, 15 Johns. (N. Y.) bein, 20 Fed. Rep. 183, 186. But com- 571. pare Baldwin v. Flash, 59 Miss. 66, and "^ Compare Smith v. Conkwright, 28 cases cited. Minn. 23 ; Shannon v. Commonwealth, "■ Pettee v. Dustin, 58 N. H. 309 ; 8 S. & R. (Pa.) 444 ; The King v. Brown v. Piatt, 8 Bosw. (N. Y.) 324 ; Earl of Nottingham, Lane 42 ; Smith First Nat. Bank v. Anderson, 24 v. Hurst, 10 Hare 30. 31 482 CONSUiMABLE PROPERTY. § 359 sistent with the idea of a sale, and may be avoided by creditors.^ § 359. Rule as to consumable property. — The mortgaging of property, the use of which involves its consumption, is an evidence of fraud of much weight. Unless satisfac- torily explained it will cause the condemnation of the in- strument.* Of course articles in their nature subject to be consumed in their use may be mortgaged without any im- putation of fraud, provided they are not to be used, and may be kept without damage until the mortgage debt shall become payable.'^ If, however, the mortgage covers arti- cles which would perish or be destroyed before the debts secured by the mortgage mature, it becomes manifest that the object was not to apply these things to the payment of the mortgage, but to secure the debtor in their possession and enjoyment.^ 1 Fisher v. Henderson, 8 N. B. R. 550; Shurtleflf v. Willard, 19 Pick. 175. Compare Henderson v. Down- (Mass.) 202 ; Robbins v. Parker, 3 ing, 24 Miss. 106; Coolidge v. Melvin, Met. (Mass.) 120. See Googins v. Gil- 42 N. H. 510; Donovan v. Dunning, more, 47 Me. 14; Putnam v. Osgood, 69 Mo. 436; Lukins v. Aird, 6 Wall. 51 N. H. 200. 78. See May on Fraudulent Convey- ^ Robbins v, Parker, 3 Met. (Mass.) ances, 93, 94. See § 11, and cases 120. Compare Miller v. Jones, 15 N. cited. B. R. 154. * Farmers' Bank v, Douglass, 19 " Farmers' Bank v. Douglass, 19 Miss. 540; Brockenbrough v. Brock- Miss. 541. See Quarles v. Kerr, 14 enbrough, 31 Gratt. (Va.) 590 ; Som- Gratt. (Va.) 48. merville v. Horton, 4 Yerg, (Tenn.) CHAPTER XXIII. SPENDTHRIFT TRUSTS. 360. Aversion to exemptions other than statutory. 361. Restraints upon alienation. •^ ■ ( Repugnant conditions. 364. Nichols V. Eaton ; the point act- ually involved. §365. The dictum in Nichols v. Ea- ton. 366. The correct rule. 367. Broadway Bank v. Adams. 368. Spendthrift trusts in Pennsyl- " It is a settled rule of law that the beneficial interest of the cestui que trusty whatever it may be, is liable for the payment of his debts. It cannot be so fenced about by inhibitions and restrictions as to secure to it the inconsistent characteristics of right and enjoyment to the beneficiary and immunity from his creditors." — Mr. Justice Swayne in Nichols v. Levy^ 5 Wall. 441. ^ 360. Aversion to exemptions not statutory. — Aside from statutory exemptions trivial in amount,^ the idea of the existence of rights of property of any kind in a debtor, which cannot be reached by creditors and applied toward the satisfaction of debts, is abhorrent to modern convic- tions of justice toward the creditor class. The personal liberty of the debtor being no longer in danger, there exists no controlling check upon his recklessness and im- providence.^ This is the source of the strong tendency, manifested in the courts, to strengthen, enlarge, and per- fect the creditors' remedies and recourses against the prop- erty and interests of the debtor class. The plain purpose manifested in our modern law in extending relief to cred'- itors, is twofold : first, to enforce the creditors' equitable lien upon the debtor's property considered as a trust fund;* and second, to inflict a species of negative punishment See §§ 46-50. 365- See § 2. ' See Egery v. Johnson. 70 Me. 258 ; Seymour v, Wilson, 19 N. Y. 418.. 484 AVERSION TO EXEMPTIONS. § 360 upon the debtor by depriving him of the personal comforts and enjoyments which result from the possession and use of property or accumulated wealth. There can be no spec- tacle more revolting to the mass of mankind, and especially in a community such as ours, than that of a bankrupt or insolvent revelling in luxury. It is opposed to a wise pub- lic policy that a man " should have an estate to live on, but not an estate to pay his debts with,"^ or that he should possess " tne benefits of wealth without the responsi- bilities."^ Chief-Justice Denio said : " It is against general principles that one should hold property, or a beneficial interest in property, by such a title that creditors cannot touch it."^ The feelings of the general community were shocked at the dictum of Wright, J., in Campbell v. Foster,^ to the effect that the surplus of a trust fund created by a third party, for the benefit of the debtor, was not available to his creditors. The more recent opinion of Rapallo, J., in Williams v. Thorn,^ holding that, whether the trust relate to realty or personalty, the surplus income of such an estate beyond what was needed for the suitable support and main- tenance of the cestui que trust and those dependent upon him, could be reached by a creditors' bill, was greeted with satisfaction. An effort, however, has been made to close ' Tillinghast v. Bradford, 5 R. I. 205, The general introduction of spendthrift 212. trusts would be to form a privileged ' Gray on Restraints on Alienation, class, who could indulge in every spec- p. 169. ulation, could practice every fraud, and, ^ Rome Exchange Bank v. Eames, 4 provided they kept on the safe side of Abb. App. Dec. (N. Y.) 83, 99. " That the criminal law, could yet roll in grown men should be kept all their wealth. They would be an aristoc- lives in pupilage, that men not paying racy, though certainly the most con- their debts should live in luxury on in- temptible aristocracy with which a herited wealth, are doctrines as un- country was ever cursed." Gray on democratic as can well be conceived. Restraints on Alienation, p. 174. They are suited to the times in which ^ 35 N. Y. 361. See § 45. the Statute De Bonis was enacted, and * 70 N. Y. 270. See Arzbacher v. the law was administered in the in- Mayer, 53 Wis. 391. terest of rich and powerful families. § 3^1 RESTRAINTS UPON ALIENATION. 485 another source of possible relief to creditors, by the class of cases already referred to,* and which will presently be con- sidered more at length. First, however, we will glance at the authorities which discuss the rights of the parties in cases where property has been conveyed with a restraint imposed upon its alienation, or an attempt has been made to vest it in the grantee without subjecting it to liability to his creditors. § 361. Restraints upon alienation. — The theory of the law is that no person shall be permitted to enjoy or hold any interest in property to which the incidents of ownership, i. e., the right of alienation and liability to the claims and remedies of creditors, do not attach.^ A condition or pro- viso in a grant or devise, that the land shall not be subject to alienation, attachment, or levy, is treated as void.^ The policy of the law will not permit property to be so limited ' See § 45, and note. "^ See Chap. II. ^ Blackstone Bank v. Davis, 21 Pick. (Mass.) 42; McCleary v. Ellis, 54 Iowa 311; S. C. 20 Am. Law Reg. N. S. 180; and the learned note by Henry Wade Rogers, Esq., at page 185, re- viewing the authorities. Prof. Gray says (Gray's Restraints on Alienation), p. 12 : "As in England, so in America, a condition, or a conditional limitation, restraining the owner in fee simple from selling his land, is bad. Henning V. Harrison, 13 Bush (Ky.) 723; Smith V. Clark, 10 Md. 186 ; Gleason v. Fayer- weather, 4 Gray (Mass.) 348 ; Campau V. Chene, i Mich. 400 ; McDowell v. Brown, 21 Mo. 57; Pardue v. Givens, I Jones' Eq. (N. C.) 306 ; Schermer- horn v. Negus, i Denio (N. Y.) 448 ; Lovett v. Kingsland, 44 Barb. (N. Y.) 560 ; S. C. sub nom. Lovett v. Gillender, 35 N. Y. 617 ; Walker v. Vincent, 19 Pa. St. 369 ; Williams v. Leech. 28 Pa. St. 89 ; Naglee's Appeal, 33 Pa. St. 89 ; Jauretche v. Proctor, 48 Pa. St. 466 ; Kepple's Appeal, 53 Pa. St. 211 ; Lario v. Walker, 28 Grant (Ont.) 216. These cases are, decisions directly in point, and dicta to the same effect are found in abundance, e.g., in Taylor v. Mason, 9 Wheat. 325, 350; McDonogh v. Mur- doch, 15 How. 367, 412; Andrews v. Spurlin, 35 Tnd. 262, 268 ; Deering v. Tucker, 55 Me. 284, 289 ; Hawley v. Northampton, 8 Mass. 3, 37 ; Gray v. Blanchard, 8 Pick. (\Liss.) 284, 289; Van Rensselaer v. Dennison, 35 N. Y. 393 ; Turner v. Fowler, 10 Watts (Pa.) 325; Reifsnyder v. Hunter, 19 Pa. St. 41 ; Doebler's Appeal, 64 Pa. St. 9 ; Grant v. Carpenter, 8 R. \. 36; Doe d. Mclntyre v. Mclntyre, 7 U. C. Q. B. 156; McMaster v. Morrison, 14 Grant (Ont.) 138, 141 ; Crawford v. Lundy, 23 Grant (Ont.) 244, 250 ; Fulton v. Fulton, 24 Grant (Ont.) 422. See De- horty v. Jones, 2 Harr. (Del.) 56, note ; Newkerk v. Nevvkerk, 2 Cai. (N. V.) 345-" 486 REPUGNANT CONDITIONS. § 362 as to remain in a party for life, free from the incidents of property, and not subject to his debts.^ § 362. Repugnant conditions. — Restraints upon either vol- untary or involuntary alienation are not favored in the law, and are defeated upon another ground. In De Peyster v. Michael,^ after a careful review of the authorities, the New York Court of Appeals observed : " Upon the highest legal authority, therefore, it may be affirmed that in a fee-simple grant of land, a condition that the grantee shall not alien, or that he shall pay a sum of money to the grantor upon alienation, is void, on the ground that it is repugnant to the estate granted." So in Bradley v. Peixoto,^ the court say that it is " laid down as a rule long ago established, that where there is a gift with a condition inconsistent with, and repugnant to such gift, the condition is wholly void. A condition that tenant in fee shall not alien is re- pugnant."* In Mandlebaum v. McDonell ^ will be found an elaborate review of the cases and an exhaustive consid- eration of the question. The court conclude that the only safe rule of decision is that which prevailed at common law for acres, to the effect that " a condition or restriction which would suspend all power of alienation for a single day, is inconsistent with the estate granted, unreasonable, and void." In Blackstone Bank v. Davis,^ a leading and im- portant case, it appeared that one Davis devised to his son the use of a farm of one hundred and twenty acres, with a provision that the land should not be subject or liable to conveyance or attachment. The plaintiffs recovered a judgment against the devisee and levied an execution upon the premises as being land held by the defendant in fee. The court said : " By the devise of the profits, use, or occu- ' 4 Kent's Com., p. 311. Jr. 429; McCullough v. Gilmore, 11 - 6 N. Y. 467, 497. Pa. St. 370. 5 3 Ves. Jr. 324. " 29 Mich. 78, 107. ■• See Brandon v. Robinson, 18 Ves. * 21 Pick. (Mass.) 42. § 3^3 REPUGNANT CONDITIONS. 487 pation of land, the land itself is devised. Whether the de- fendant took an estate in fee or for life only, is a question not material in the present case. The sole question is, whether the estate in his hands was liable to attachment and to be taken in execution as his property. The plain- tiffs claim title under the levy of an execution against the defendant, and their title is valid if the estate was liable to be so taken. That it was so liable, notwithstandinof the proviso or condition in the will, the court cannot entertain a doubt." § 363. — In Walker v. Vincent ' the testator devised certain real estate to his daughter and to her legal heirs forever, upon the express condition that she should " not alien or dispose of the same, or join in any deed or con- veyance with her husband for the transfer thereof, during her natural life." The court held the condition void, and that a fee-simple estate was devised, and said : " It makes no difference that the testator has expressly withheld one of the rights essential to a fee-simple, for the law does not allow an estate to be granted to a man and his heirs, with a restraint on alienation, and frustrates the most clear in- tention to impose such a restraint, just as it allows alien- ation of an estate tail, though a contrary intent is manifest. And it would be exceedingly improper, in any court, in construing a devise to a man and his heirs, to endeavor to give effect to the restraint upon alienation by changing the character of the estate to a life estate, with a remainder annexed to it, or with an executory devise over."* In Hall V. Tufts ^ the testator devised certain real estate to his wife for her life, and "the remainder of his estate, whether real or personal, in possession or reversion, to his ' 19 Pa. St. 369. Barb. (N. Y.) 560, affi'd sud nom. '^Restraints upon personalty. — A Lovett v. Gillender, 35 N. Y. 67; condition against alienation cannot be Barker v. Davis, 12 U. C. C. P. 344. imposed upon an absolute interest in ' 18 Pick. (Mass.) 455. personalty. Lovett v. Kingsland, 44 488 NICHOLS V. EATON. § 364 five children, to be equally divided to and among them, or their heirs, respectively, always intending and meaning that none of his children shall dispose of their part of the real estate in reversion before it is legally assigned them." The court held that the children took a vested remainder in the real estate given to the wife for her life, and that the clause restraining them from alienating it before the expiration of the life estate was void.^ § 364. Nichols V, Eaton ; the point actually involved. — The principle embodied in Nichols v. Eaton, ^ and more espe- cially the language employed by Miller, J., in delivering the opinion of the Supreme Court in that case, have pro- voked extended discussion and sharp criticism.'^ The im- portance of the case seems to call for an extended state- ment of the facts involved. It appeared that property had been devised to trustees with directions to pay the income to the children of the testatrix in equal shares, and on the death of each child, his or her share was to go over. If the sons respectively should alienate, or by reason of bank- ruptcy or insolvency, or any other cause, the income could no longer be personally enjoyed by them respectively, but ' " Repugnant conditions are those law will allow a man to enjoy rights in which tend to the utter subversion of property which he cannot transfer, and the estate, such as prohibit entirely the which his creditors cannot take for alienation or use of the property. Con- their debts, is a question becoming ditions which prohibit its alienation to more and more frequent in this coun- particular persons or for a limited try. In 1876 I shared the surprise, period, or its subjection to particular common to many lawyers, at the opin- uses, are not subversive of the estate ; ion of the Supreme Court of the United they do not destroy or limit its alien- States, in the case of Nichols v. Eaton, able or inheritable character." Field, 91 U. S. 716, containing, as it did, J., in Cowell v.Springs Co., 100 U.S. 57, much that was contrar)' to what, both citing Sheppard's Touchstone, 129, 131. in teaching and practice, I had hitherto ■ 91 U. S. 716. supposed to be settled law." Thepref- ' This decision called forth an essay ace adds that the book was substan- by Professor Gray, already cited, en- tially written before the decision of the titled Restraints on the Alienation of Supreme Judicial Court of Massachu- Property. These sentences may be setts in Broadway Nat. Bank v. Adams, found in the preface: "How far the 133 Mass. 170. See /;{/>-a, § 367. § 3^4 NICHOLS V. EATON. 4S9 would become vested in and payable to some other person, then the trust as to such portion so divested should im- mediately cease and determine. In that event, during the residue of the life of such son, the income was to be paid to his wife or child, and in default of such persons, to be added to the principal, and further, " in case, after the cessation of said income as to my said sons respectively, otherwise than by death, as hereinbefore provided for, it shall be lawful for my said trustees, in their discretion, but without its being obligatory upon them, to pay to or apply for the use of my said sons respectively, or for the use of such of my said sons and his wife and family, so much and such part of the income to which my said sons respectively would have been entitled under the preceding trusts, in case the forfeiture hereinbefore provided for had not hap- pened." One of the sons became a bankrupt, and his as- signee in bankruptcy brought a bill against the trustees to have the income of the son's share applied for the benefit of creditors.^ Mr. Justice Miller, in the opening sentences of his opin- ion, observes that the claim of the assignee is founded on the proposition " that a will which expresses a purpose to vest in a devisee either personal property, or the income of personal or real property, and secure to him its enjoyment free from liability for his debts, is void on grounds of ' Nichols V. Eaton, re-stated. — In subject to other dispositions. The as- Hyde v. Woods, 94 U. S. 526, Mr. signee of the bankrupt sued to recover Justice Miller takes occasion to ob- the interest bequeathed to the bank- serve that his own opinion in Nichols rupt, on the ground that this condition V. Eaton, 91 U. S. 716, " was well con- was void as against public policy. But sidered," and says : " In that case, the this court, on a full examination of the mother of the bankrupt Eaton, had be- authorities, both in England and this queathed to him by will the income of country, held that the objection was not a fund, with a condition in the trust well taken; that the owner of property that on his bankruptcy or insolvency might make such a condition in the the legacy should cease and go to his transfer of that which was his own, wife or children, if he had any, and if and in doing so violated no creditor's not, it should lapse into the general rights and no principle of public pol- fund of the testator's estate, and be icy." 490 NICHOLS V. EATON. § 364 public policy, as being in fraud of the rights of creditors ; or as expressed by Lord Eldon in Brandon v. Robinson:^ ' If property is given to a man for his life, the donor cannot take away the incidents to a life estate.'" "There are two propositions," continues the learned judge, " to be con- sidered as arising on the face of this will as applicable to the facts stated : (i) Does the true construction of the will bring it within that class of cases, the provisions of which on this point are void under the principle above stated ? and (2), If so, is that principle to be the guide of a court of the United States sitting in chancery ? " After review- ing the English authorities, the opinion continues : " Con- ceding to its fullest extent the doctrine of the English courts, their decisions are all founded on the proposition that there is somewhere in the instrument which creates the trust a substantial right, a right which the appropriate court would enforce, left in the bankrupt after his insol- vency, and after the cesser of the original and more absolute interest conferred by the earlier clauses of the will. This constitutes the dividing line in the cases which are appar- ently in conflict. Applying this test to the will before us, it falls short, in our opinion, of conferring any such right on the bankrupt. Neither of the clauses of the provisos contain anything more than a grant to the trustees of the purest discretion to exercise their power in favor of testa- trix's sons. It would be a sufficient answer to any attempt on the part of the son in any court to enforce the exercise of that discretion in his favor, that the testatrix has in ex- press terms said that such exercise of this discretion is not 'in any manner obligatory upon them,' — words repeated in both these clauses. To compel them to pay any of this income to a son after bankruptcy, or to his assignee, is to make a will for the testatrix which she never made ; and to do it by a decree of a court is to substitute the discretion > 18 Ves. 433. § 365 NICHOLS V. EATON. 49 1 of the chancellor for the discretion of the trustees, in whom alone she reposed it." Thus far we cannot but consider the case as correctly reasoned and decided, since a gift of a life estate or interest, with a proviso that it shall go over to a third person upon alienation, voluntary or involuntary, by the life tenant, is considered valid. We can formulate no well-founded objection to such a transaction. Probably the earliest case in which the point is so held is Lockyer v. Savage,^ decided in 1773, but the question seems now to be no longer a matter of dispute.^ § 365. The dictum in Nichols v. Eaton. — The court, how- ever, seemed disinclined to limit the discussion to the ques- tions before it. Referring to the implication in the remark of Lord Eldon, already quoted, the court were unable to see that the power of alienation was a necessary incident to a life estate in real property, or that the rents and profits of real property, and the interest and dividends of personal property, might not be enjoyed by an individual without ' 2 Stra. 947. V. Maguire, 5 Ir. Ch. 78 ; Nichols v. ^ Shee V. Hale, 13 Ves. Jr. 404; Eaton, 91 U.S. 716 ; Bramhall v. Ferris, Cooper V. Wyatt, 5 Madd. 482; Martin 14 N. Y. 41 ; Emer)^ v. Van Syckel, 17 V. Margham, 14 Sim. 230 ; Rochford v. N, J. Eq. 564, cited in Gray's Restraints Hackman, 9 Hare 475 ; Brandon v. on Alienation, § 78. Where a man Aston, 2 Y. & C. N. R. 24; ^t? Edging- settled his property upon himself for ton's Trusts, 3 Drew 202 ; Manning v. life, or until he should become a bank- Chambers, I De G. & Sm. 282 ; Carter rupt or insolvent, and after his death. V. Carter, 3 Kay & J. 617; Barnett v. bankruptcy or insolvency, in trust for Blake, 2 Dr. & Sm. 117; Re Mugge- his wife and children, and the settlor ridge's Trusts, Johnson, 625 ; Sharp v. being insolvent assigned his property Cosserat, 20 Beav. 470 ; Haswell v. to trustees for the benefit of creditors, Haswell, 28 Beav. 26 ; Dorsett v. Dor- it was held that the trust was void as sett, 30 Beav. 256 ; Townsend v. Early, against the assignee. /// re Casey's 34 Beav. 23 ; Freeman v. Bowen, 35 Trusts, 4 Irish Ch. 247. A bond pay- Beav. 17; Montefiore v. Behrens, 35 able to trustees for the benefit of a Beav. 95 ; Oldham v. Oldham, L. R. 3 wife on bankruptcy of the obligor is not Eq. 404; Roffey v. Bent, L. R. 3 Eq. good. Ex parte Hill, i Cooke's Bkr. 759 ; Craven v. Brady, L. R. 4 Eq. 209; Law 228 ; Ex parte Bennet, i Cooke's S. C. L. R, 4 Ch. App. 296 ; In re Am- Bkr. Law 228 ; In re Murphy, i Sch. herst's Trusts, L. R. 13 Eq. 464; Bill- & Lef. 44; Ex parte Taaffe. i Glyn & son V. Crofts, L. R. 15 Eq. 314; Ex J. no. parte Eyston, 7 Ch. D. 145 ; Caulfield 492 NICHOLS V. EATON. § 365 liability for his debts attaching as a necessary incident to such enjoyment. The opinion continues: " Nor do we see any reason, in the recognized nature and tenure of property and its transfer by will, why a testator who gives, who gives without any pecuniary return, who gets nothing of property value from the donee, may not attach to that gift the incident, of continued use, of uninterrupted benefit of the gift, during the life of the donee. Why a parent, or one who loves another, and wishes to use his own property in securing the object of his affection, as far as property can do it, from the ills of life, the vicissitudes of fortune, and even his own improvidence, or incapacity for self-pro- tection, should not be permitted to do so, is not readily perceived." The cases cited in support of the views of the court ^ are chiefly from Pennsylvania,^ and unfortunately, as we think, close with the well-known New York case of Campbell v. Foster.^ This case, as we have already seen,^ contains a dichwi to the effect that the interest of a bene- ficiary in a trust fund created by a person other than the debtor is not available to creditors, but, as heretofore shown, ^ this dictum is expressly repudiated by Rapallo, J., in deliver- ing the opinion of the New York Court of Appeals in Williams v. Thorn, ^ and the principle in support of which the case is cited in Nichols v. Eaton is proved never to have been the law of that State. Nichols V. Eaton embodies a dangerous and startling dicfzun. If the question whether or not it w^as permissible. ' Leavitt v. Beirne, 21 Conn, i ; Nick- ^ 35 N. Y. 361. See Cutting v. Cut- ell V. Handly, 10 Gratt. (Va.) 336 ; ting, 86 N. Y. 546. Pope's Ex'rs v. Elliott, 8 B. Mon. * See §§ 45, 360. (Ky.) 56. ' See §§ 45. 360. ' Fisher v. Taylor, 2 Rawle (Pa.) 33 ; ^70 N, Y. 270, See Tollis v. Wood, Holdship V. Patterson, 7 Watts (Pa.) 99 N. Y. 616; S. C. 16 Abb. N. C. (N. 547; Shankland's Appeal, 47 Pa. St, Y.) i, and the collection of cases in the 113; Ashhurst v. Given, 5 W. & S. notes. Parties interested in this class (Pa.) 323 ; Brown v. Wiliamson, 36 Pa. of litigation are referred to this valu- St. 338; Still V. Spear, 45 Pa. St. 168. able source of information. See §368. § 3^5 NICHOLS V. EATON. 493 aside from the rules of law establishing the tenure by which property is held and transferred, to allow a debtor to enjoy an interest in property free from the claims of creditors, were an open one, we should certainly answer that such a policy was neither judicious, safe, nor wise.^ This conclu- sion is not necessarily rested wholly upon the theory that such a vesting of property in a debtor is a fraud upon cred- itors, but rather that property, by the rules of law, includes not only the right of enjoyment, but also the right of alien- ation and liability for debts. While it is true that the owner of property may, while he owns it, use it as he likes, yet he should not be permitted to limit or control its use after he parts with it.'^ These trust estates and incomes are in the opinion likened to statutory exemptions ; the analogy is considered perfect ; the creditor, it is said, has no right to look to either of these sources for satisfaction of his claim. We challenge the justness of the analogy and ques- tion the correctness of the rule sought to be formulated from it. Statutory exemptions are trivial in value ; they do not clothe the debtor with indicia of wealth, or furnish him with comforts or luxuries. It would be inhumane to permit the creditor to take the insolvent's clothing from his back, the food from his table, or the bed from his house. It is equally against a wise public policy to deprive the pro- fessional man of his library, the mechanic of his tools, or the teamster of his horses, for by so doing the insolvent would be pauperized and perhaps rendered a public charge, and the possibility of repairing his ill-fortune by future in- dustry irretrievably lost. These exemption statutes so uni- versal in their operation reflect the charitable sentiments of a noble and generous people, and exhibit a willingness on the part of the law-makers to extend a protecting hand to unfortunate struggling insolvents. We den\- that the kindly spirit which inspired this humane legislation can be ' See § 360. ' See 10 Am. Law Rev. 595. 494 THE CORRECT RULE. §366 tortured or perverted so as to subserve the purpose of shielding vagabond spendthrifts from the remedies of their creditors.^ § 366. The correct rule. — The true rule should be that ^' whatever a man can demand from his trustees, that his creditors can demand from him."^ In Tillinghast v. Brad- ford ^ it appeared that the devise was to T. in trust to pay the income to H. for life ; anticipation or payment to as- ' In Spindle v. Shreve, 9 Biss. 199, 200, S. C. 4 Fed. Rep. 136, the will con- tained this provision : " One-half of each share (which half I wish to be income-paying real estate) I desire to be set apart and conveyed to a trustee, to be held for the use and benefit of each child during his or her life, and then descend to his or her heirs, with- out any power or right on the part of said child to encumber said estate, or anticipate the rents thereof." One of the children became a bankrupt and the question presented upon a bill filed by his assignee was whether this child " had such an interest in this property that it passed to the assignee, and so could be held for the benefit of the creditors ; or whether it was an estate which was to be held for his personal benefit for life, and over which he had no power or control, and which could not go for the benefit of creditors. I have come to the conclusion," con- tinues Drummond, J., " that under the provisions of this will there was no estate which passed to the assignee, but that the property in Chicago is to be held by the trustee to whom it was conveyed by the executor, for the ben- efit of the son during his life, and that the rents and profits of the estate are to be paid over to him personally, and that he has no power to transfer any interest which he has in the estate so as to defeat the provisions made in the will. This will is attacked on the ground that the provision made for the son is contrary to public policy, and is, therefore, inoperative and void. I hardly think the authorities warrant that conclusion, and, if they do not, then the only question is. What is the legal effect of this provision in the will, and what was the testator's intention in relation to the estate which was to be held by the trustee ? The author- ities collected in the case of Nichols v. Eaton, 91 U. S. 716, show that it was competent for the testator to make such a provision as this, namely : to declare by his will that his estate, or any portion of it, might be held for a child's sole benefit during life, and in such a way that it could not be reached by creditors." It is said in New Jer- sey that the jurisdiction of the Court of Chancery in reaching property of a judgment-debtor does not extend to trust property where the trust has been created by some person other than the debtor. Hence where a sum was left to executors in trust to pay the income and such part of the prin- cipal as the cestui que trust should wish, to her, and she requested the trustees to invest the fund in a farm, it was held that such farm could not be reached by a creditor of the cestui que trust. Lippincott v. Evens, 35 N. J. Eq. 553. See Easterly v. Keney, 36 Conn. 18. " Gray on Restraints, § 166. ' 5 R. I. 205. § '^d'J BROADWAY BANK V. ADAMS. 495 signs was prohibited, the income beinor intended for the sole and separate use of H. An assignee of H. for the benefit of creditors was awarded the income for the Hfe of H. The court said : " This has been the settled doctrine of a court of chancery, at least since Brandon v. Robinson,' and, in application to such a case as this, is so honest and just that we would not change it if we could. Certainly no man should have an estate to live on, but not an estate to pay his debts with. Certainly property available for the purposes of pleasure or profit should be also amenable to the demands of justice."^ In Bramhall v. Ferris,^ Corn- stock, J., observed that if a bequest is given "absolutely for life, with no provision for its earlier termination, and no limitation over in the event specified, any attempt of the testator to make the interest of the beneficiary inalien- able, or to withdraw it from the claims of creditors, would have been nugatory. Such an attempt would be clearly re- pugnant to the estate in fact devised or bequeathed, and would be ineffectual for that reason as well as upon the policy of the law.'"* And where trustees held property with power to apply such portion of it as they saw fit to the education and maintenance of a beneficiary until he should reach twenty-five years, and then to convey the principal with all accretions to him, the power being given to the trustees in their discretion to convey the estate to the beneficiary before he was twenty-five years of age, it was held that the beneficiary's interest was liable for his debts.^ § 367. Broadway Bank v. Adams. — We will not further pursue this subject except to notice an important case in ' 18 Ves. 429. ^ 14 N. Y. 41. * See Pace v. Pace, 73 N. C. 119; * Citing Blackstone Bank v. Davis, Bailie v. McWhorter, 56 Ga. 183 ; East- 21 Pick. (Mass.) 42 ; Hallett v. Thotnp- erly v. Keney, 36 Conn. 18. It should son, 5 Paige (N. Y.) 583 ; Graves v. be noted that Nichols v. Eaton, 91 U. Dolphin, i Sim. 66; Brandon v. Robin- S. 716, came up on appeal from the son, 18 Ves. 429. State in which Tillinghast v. Bradford, •' Daniels v. Eldredge, 125 Mass. 356. 5 R. I. 205, was decided. SeeHavensv.Healy,i5Barb.(N.Y.) 296. 496 BROADWAY BANK V. ADAMS. §3^7 Massachusetts — Broadway Bank v. Adams.' The object of the bill was to reach and apply to the payment of the plaintiff's claim the income of a trust fund created for the debtor's benefit by the will of his brother. Briefly the will gave $75,000 to executors, in trust, to pay the net income to the debtor semi-annually during his natural life, the pay- ments to be made personally or upon his order or receipt in writing, " in either case free from the interference or control of his creditors, my intention being that the use of said income shall not be anticipated by assignment." The income after the debtor's death was to go to his wife and children, and upon the death or remarriage of the wife, the principal and accumulations were to be divided among the children. Manifestly the intention of the testator was that the income should be free from the claims of credit- ors, and that the courts should be unable to compel the trustee to divert the income unless the provisions and in- tention were unlawful. The court observ^e at the outset that " the question whether the founder of a trust can secure the income of it to the object of his bounty, by pro- viding that it shall not be alienable by him or be subject to be taken by his creditors, has not been directly ad- judicated " in Massachusetts, but say that the tendency of the decisions has been in favor of such a power in the founder.^ The reason of the rule that a restriction upon the power of alienation is void because it is repugnant to the grant, is said not to apply to the case of a transfer of the property in trust, as by the creation of the trust the property passes to the trustee with all its incidents and at- tributes unimpaired. The trustee " takes the whole legal title to the property, with the power of alienation ; the cestui que trust takes the whole legal title to the accrued ' 133 Mass. 170. (Mass.) 405 ; Russell v. Grinnell, 105 * Citing Braman v. Stiles, 2 Pick. Mass. 425 ; Hall v. Williams, 120 Mass. (Mass.) 460 ; Perkins v. Hays, 3 Gray 344 ; Sparhawk v. Cloon, 125 Mass. 263, § -^6"] BROADWAY BANK V. ADAMS. 497 income at the moment it is paid over to him. Neither the principal nor the mcome is at any time inalienable." It is conceded by the court that from^ the time of Lord Eldon the rule has prevailed in the English Court of Chancery, to the effect that when the income of a trust estate is given to any person (other than a married woman) for life, the equitable estate for life is alienable by, and liable in equity to the debts of, the cestui que trust, and that this quality is so inseparable from the estate that no provision however express, which does not operate as a cesser or limitation of the estate itself, can protect it from his debts.^ The English rule, the court observe, has been followed in some of the American cases,'' while other courts " have re- jected it, and have held that the founder of a trust may secure the benefit of it to the object of his bounty, by pro- viding that the income shall not be alienable by anticipa- tion, nor subject to be taken for his debts." ^ Morton, C. J., said : "The founder of this trust was the absolute owner of his property. He had the entire right to dispose of it, either by an absolute gift to his brother, or by a gift with such restrictions or limitations, not repug- nant to law, as he saw fit to impose We do not see why the founder of a trust may not directly provide that his property shall go to his beneficiary with the restriction that it shall not be alienable by anticipation, and that his creditors shall not have the right to attach it in advance, instead of indirectly reaching the same result by a provi- sion for a cesser or a limitation over, or by giving his ' Brandon v. Robinson, i8Ves. 429; (N, C.) 480; Mebane v. Mebane, 4 Green v. Spicer, i Russ. & Myl. 395 ; Ired. Eq. (N. C.) 131. Rochford v. Hackman, 9 Hare 475 ; ^ Citing Holdship v. Patterson. 7 Trappes v. Meredith. L. R, 9 Eq. 229 ; Watts (Pa.) 547 ; Shankland's Appeal, Snowdon v. Dales, 6 Sim. 524; Rippon 47 Pa. St. 113; Rife v. Geyer, 59 Pa. V. Norton, 2 Beav. 63. St. 393 ; White v. White, 30 Vt. 338 ; "" Tillinghast v. Bradford, 5 R. 1.205 ; Pope v. Elliott, 8 B. Mon. (Ky.) 56; Heath v. Bishop, 4 Rich. Eq. (S. C.) Nichols v. Eaton, 91 U. S. 716; Hyde 46; Dick V. Pitchford, i Dev. & B. Eq. v. Woods, 94 U. S. 523. 32 498 SPENDTHRIFT TRUSTS. ^ 368 trustees a discretion as to paying it. He has the entire jus disp07ie7idi, which imports that he may give it absolutely, or may impose any restrictions or fetters not repugnant to the nature of the estate which he gives. Under our system creditors may reach all the property of the debtor not ex- empted by law, but they cannot enlarge the gift of the founder of a trust, and take more than he has given." This is probably the most advanced statement of the ob- jectionable doctrine. Reference is here made to cases like Broadway Bank v. Adams, and to the dictum in Nichols v. Eaton, not as embodying salutary rules or wise principles of law, but rather to record a protest against the existence and growth of a class of cases which at present are com- paratively few in number. The creation of an aristocracy of prodigals, who can dwell in luxury and defy their cred- itors, brings the administration of justice into disrepute, and has a demoralizing influence upon honest people. The creditor is unjustly deprived of the power to compel his debtor to forego the comforts and luxuries of wealth, or to feel the privations incident to insolvency. The tendency of these cases must be checked by legislation, or the sober second thought of the courts ; the doctrine will never be tolerated by the American people. § 368. Spendthrift trusts in Pennsylvania. — It is common to refer to Pennsylvania as the birthplace and stronghold of the doctrine of spendthrift trusts.^ Yet Chief-Justice Agnew said, in Overman's Appeal :^ *' It [a spendthrift trust] is exceptionable in its very nature, because it contra-- venes that general policy which forbids restraints on alien- ation and the non-payment of honest debts A trust to pay income for life may last for the longest period of ' See Fisher v. Taylor, 2 Rawle (Pa.) (Pa.) 323 ; Brown v. Williamson, 36 Pa. 33 ; Holdship v. Patterson, 7 Watts St. 338 ; Still v. Spear, 45 Pa. St. (Pa.) 547 ; Shankland's Appeal, 47 Pa. 168. St. 113 ; Ashhurst v. Given. 5 W. & S. * 88 Pa. St. 276, 281. ^ 368 SPENDTHRIFT TRUSTS. 499 human existence, and may run for seventy or eighty years. While the law simply tolerates such a trust, it cannot ap- prove of it as contributing to the general public interest. Property tied up for half a century contributes nothing to the general wealth, while it is a great stretch of liberality to the ownership of it to suffer it to remain in this anoma- lous state for so many years after its owner has left it be- hind him. Clearly it is against public interest that the property of an after generation shall be controlled by the deed [^gu. dead] of a former period, or that the non-pay- ment of debts should be encouraged."* * See Gray on Restraints, § 234. CHAPTER XXIV. BONA FIDE PURCHASERS ACTUAL AND CONSTRUCTIVE NOTICE FRAUDULENT GRANTEES. 1369. 370. 371. 372. 373- 374- 375- 376. 377. 378. 379- 380. 381. Rights oi bona fide purchasers. Generality of the rule. Mortgagee as bona fide pur- chaser. Without notice. Kinds of notice. Constructive notice of fraud. > Rule in Stearns v. Gage. Carroll v. Hay ward — Actual be- lief. Parker v. Conner. Facts sufficient to excite in- quiry. § 382. Actual belief. 383. Purchaser with notice. 384. Purchaser with notice from bona fide purchaser. 385. Fraudulent grantee as trus- tee. 386. Title from fraudulent vendee. 387. Creditors of fraudulent gran- tees. 388. Liability between fraudulent grantees. 389. Fraudulent grantee sharing in the recovery. § 369. Rights of bona fide purchasers. — As has been ob- served, creditors have an equitable interest in the property of their debtors, or in the means the latter have of satisfy- ing the creditors' demands,^ which the law will under cer- tain circumstances enforce, since the insolvent's property constituted the foundation and inducement of the trust and credit.^ But the interests of a bona fide purchaser of a debtor's property are superior to those of creditors, for the obvious reason that the former has not, like a mere general creditor, trusted "to the personal responsibility of the debt- or, but has paid the consideration upon the faith of the debtor's actual title to the specific property transferred."^ ' Seymour v. Wilson, 19 N. Y. 418. ' Seymour v. Wilson, 19 N. Y. 417, See Chap. II. 420. See Friedenwald v. Mullan, 10 '' Egery v. Johnson, 70 Me. 261. See Heisk. (Tenn.) 229; Goshom v. Snod- § 5. grass, 17 W. Va. 717 ; Thames v. § 3^9 BONA FIDE PURCHASERS. 5OI In such a case the interests of the general creditors are superseded or defeated by the purchaser's superior equity.^ It is merely a substitution of property. The value given or paid by the purchaser has taken the place of the prop- erty which he received. Hence the rights of di bona fide grantee who has paid a full valuable consideration are pro- tected,'^ though the grantor may have been actuated by a fraudulent intention. Still, as we have seen, a grantee is not protected when he has not paid such a consideration, though he may have acted in good faith. The two must concur.'^ If no consideration has been given then there has been no substitution of property. The amount of the consideration is not necessarily material when the grantor is solvent,^ but when he is insolvent the kind and amount of consideration become material and important, even in the absence of actual intent to defraud. Thus an asrree- ment to support an insolvent grantor may be a valuable consideration, but it is not sufficient to uphold a convey- ance as against prior creditors,*^ even though tliere may have been no actual intent to defraud.^ Persons receiving a conveyance from a grantor for such a consideration must Rembert, 63 Ala. 561 ; CoUumb v. * See« Hawkins v. Davis, 8 Baxt. Read, 24 N. Y. 516; Mansfield v. Dyer, (Tenn.) 508. 131 Mass. 200 ; Comey v. Pickering, 63 'Savage v. Hazard, 11 Neb. 327; N. H. 126; Zoeller v. Riley, 100 N. Y. Danbury v. Robinson, 14 N. J. Eq. 102; Simpson v. Del Hoyo, 94 N. Y. 213. See §§15, 207. In Keyser v, 189; Paddon v. Taylor, 44 N. Y. 371 ; Angle, 40 N. J. Eq. 481, it appeared Lore V. Dierkes, 16 A'ob. N. C. (N. Y.) that a sister purchased land of a bro- 47. ther who was in debt. She paid $50 ' In Zoeller v. Riley, 100 N. Y. 108, cash and gave her note for $650, which Earl, J., said : " A debtor may dispose he held for four years though very of his property with the intent to de- needy. It was held that if the sister fraud his creditors and yet give a good had notice of the fraud before she paid title to one who pays value and has no the note she was not a bona fiie pur- knowledge of, and does not participate chaser, even though she had no notice in the fraud. (2 R. S. 137, § 5 ; Starin when she took the deed. V. Kelly, 88 N. Y. 418; Murphy v, ■* Usher v. Hazeltine, 5, Me. 471; Briggs, 89 N. Y. 446; Parker v. Con- Hapgood v. Fisher, 34 Me. 407. ner, 93 N. Y. 118.)" ' Rollins v. Mooers* 25 Mc. 192-199. « Webster v. Withey, 25 Me.. 326. 502 BONA FIDE PURCHASERS. § 369 see to it that the existing debts of the grantor are paid,^ and it is immaterial that the consideration comprises a present sum of money paid in addition to the agreement for support, provided the money alone were palpably in- adequate.^ Three things must concur to protect the title of the purchaser.^ (i) He must buy without notice of the bad intent on the part of the vendor. (2) He must be a pur- chaser for a valuable consideration ; and (3) He must have paid the purchase-money before he had notice of the fraud.* Chief-Justice Marshall observes that "the rights of third persons, who are purchasers without notice for a valuable consideration, cannot be disregarded. Titles, which, ac- cording to every legal test, are perfect, are acquired with that confidence which is inspired by the opinion that the purchaser is safe. If there be any concealed defect, arising from the conduct of those who had held the property long before he acquired it, of which he had no notice, that con- cealed defect cannot be set up against him. He has paid his money for a title good at law ; he is innocent, what- ever may be the guilt of others, and equity will not subject him to the penalties attached to that guilt. All titles would be insecure, and the intercourse between man and man would be very seriously obstructed if this principle be overturned."^ Dillon, J., in Gardner v. Cole,^ said that '' where the first conveyance originates in a fraudulent pur- pose, and is without any consideration of value, and the grantor remains in possession, and claiming ownership sells the property as his own to a party who buys without actual notice of the prior deed and pays value, the latter pur- ' Hapgood V. Fisher, 34 Me. 407. * See Arnholt v. Hartwig, 73 Mo. ' Sidensparker v. Sidensparker, 52 485 ; Bishop v. Schneider, 46 Mo. 472 ; Me. 481. See Egery v. Johnson, 70 Dixon v. Hill, 5 Mich. 408. Me. 261. * Fletcher v. Peck, 6 Cranch 133. ° Dougherty v. Cooper, yj Mo. 532. * 21 Iowa 205, 214. §37 o GENERALITY OF THE RULE. 503 chaser may avoid the prior voluntary and fraudulent con- veyance." ^ § 370. Generality of the rule. — A court of equity acts only on the conscience of the party ; and if he has done nothing that taints it, no demand can attach so as to give jurisdic- tion.^ The rule is not limited to cases where conveyances are made in fraud of creditors, but applies to cases in which the vendor has been swindled out of his property by a vendee, for whenever the property reaches the hands of a bona fide purchaser for value, the rights and equities of the defrauded owner are cut off.^ " A purchaser for a valuable consideration, without notice of a prior equitable right, ob- taining the legal estate at the time of his purchase, is en- titled to priority in equity as well as at law, according to the well-known maxim that when the equities are equal the law shall prevail."* If creditors condone the fraud the grantee's title is good against all comers.^ ' See Hurley v. Osier, 44 Iowa 646. See note as to the rights of transferees and others under conveyances in fraud of creditors and of trusts, at end of Lore V. Dierkes, 16 Abb. N. C. (N. Y.) 47, 59. ^ Boone v. Chiles, 10 Pet. 177. In Knovvlton v. Hawes, 10 Neb. 534, it appeared that a father, after an obliga- tion had been incurred, but before judg- ment, conveyed his real estate, worth more than $5,000, to his son, who had but little means, for an expressed con- sideration of $4,900, $300 being paid in cash, $250 in a span of horses, and $450 for labor alleged to have been pre- viously performed, two unsecured notes, one for the sum of $1,000, payable in two years, and one for $2,000, payable in five years, and $900 to be paid in certain mortgages. It was held, on the testimony, that the son was not a bona fide purchaser of the land, and that it was liable for the payment of the judg- ment. ^ Paddon v. Taylor, 44 N. Y. 371 ; Brower v. Peabody, 1 3 N. Y. 1 2 1 ; Load v. Green, 15 M. & W. 216; Smart v. Bement, 4 Abb. App. Dec. (N. Y.) 253. Though the Rhode Island statute omits the provision about bona fide purchas- ers for value contained in the English statute, it is considered that the statute should be construed the same as though that provision had not been omitted. Tiernay v. Claflin, 15 R. I. 220. •■ Townsend v. Little, 109 U. S. 512. Citing Williams v. Jackson, 107 U. S. 478 ; Willoughby v. Willoughby, i T. R. 763; Charlton v. Low, 3 P. Wms. 328 ; Ex parte Knott, 1 1 Ves. 609 ; Tildesley v. Lodge, 3 Sm. & Giff. 543 ; Shine v. Gough, i Ball & B. 436 ; Bowen v. Evans, I Jones & La T. 264 ; Vattier v. Hinde, 7 Pet. 252. Absence of good faith must be made out by a clear preponderance of evidence. Brad- ford V. Bradford, 60 Iowa 202. * Millington v. Hill, 47 Ark. 309. 504 MORTGAGEE. WITHOUT NOTICE. §§371,372 § 371, Mortgagee as bona fide purchaser. — A mortgagee is a purchaser to the extent of his interest.^ New York has taken an advanced position on this question. It is held in that State that where property is conveyed to a voluntary grantee, and the latter, at the grantor's request, executes a mortgage upon the land to a creditor of the grantor, to secure a debt of the grantor's which existed at the time of the conveyance, the mortgagee is a bona fide purchaser for a valuable consideration, and though the con- veyance may be set aside by other creditors, the mortgagee will not be affected.*^ The giving of the mortgage was regarded as merely applying the property for the benefit of creditors by rescinding the fraudulent transaction, and entering into a new valid contract. As we have seen,'^ the law does not deprive parties of the right to restore to its legitimate purposes property which has been fraudulently appropriated.* § 372. Without notice. — Judge Story observes that : " It is a settled rule in equity that a purchaser without notice, to be entitled to protection, must not only be so at the time of the contract or conveyance, but at the time of the payment of the purchase-money." ^ On the other hand it was said in a case which arose in Georgia that the purchaser at a sale made with intent to defraud creditors, if himself free from all responsibility for the fraud, was not affected upon afterward discovering the seller's fraudulent intent, 1 Ledyard v. Butler, 9 Paige (N. Y.) Willoughby v. Willoughby, i T. R. 132 ; Murphy v. Briggs, 89 N. Y. 451 ; 763 ; Dickerson v. Tillinghast, 4 Paige Zoeller v. Riley, 100 N. Y. 108. (N. Y.) 215 ; Boyd v. Beck, 29 Ala. 713 ; 2 Murphy v. Briggs, 89 N. Y. 446. Wells v. Morrow, 38 Ala. 1 25 ; Porter See upon this confused question 2 Pom- v. Green, 4 Iowa 571. eroy's Eq. Jur. §§ 748, 749, and cases ^ See § 176. cited ; Metropolitan Bank v. Godfrey, •* Murphy v. Briggs, 89 N. Y. 446. 23 III. 579 ; Manhattan Co. v. Evert- But compare Wood v. Robinson, 22 son, 6 Paige (N. Y.) 457 ; Lowry v. N. Y. 564. Smith, 9 Hun (N. Y.) 514; Smart v. = Wormley v.Wormley, 8 Wheat.449. Bement, 4 Abb. App. Dec. (N. Y.) 253 ; See Arnholt v. Hartwig, 73 Mo. 485. § 2)7o KINDS OF NOTICE. 505 even though he had not then paid the purchase-money, and the notes given for it had not passed beyond the control of himself and the seller, it not appearing that he alone could control tiie notes without the co-operation of the seller, or that the latter could have been induced to cancel or sur- render the notes, which were negotiable.^ In the United States, even in States where the statutes are a literal rescript of the English statutes of 13 and 27 Elizabeth, the general doctrine is, that the right of the subsequent purchaser to avoid the first conveyance will depend on whether he had notice of* its existence at the date of his purchase.^ This leads us to the consideration of one of the most important branches of our subject, the doctrine of notice as applied to covinous alienations. § 373. Kinds of notice. — Notice is of two kinds, actual and constructive.^ Actual notice may be shown to have been received or given by all degrees and grades of evi- dence, from the most direct and positive proof to the slightest circumstance from which a jury would be war- ranted in inferring notice. It is a mere question of fact, and is open to every species of legitimate evidence which may tend to strengthen or impair the conclusion. Con- structive notice, on the other hand, is a legal inference from established facts ; and like other legal presumptions, does not admit of dispute."* " Constructive notice," says Judge Story, " is in its nature no more than evidence of notice, the presumption of which is so v«iolcnt that the court will not even allow of its being controverted." ° Substantially ' Nicol V. Crittenden, 55 Ga. 497. ^ Selden, ]., in Williamson v. Brown, ''See Prestidge v. Cooper, 54 Miss. 15 N. Y. 359; Griffith v. Griffith, i 77 ; Wyman v. Brown, 50 Me. 148, lays Hoffm. Ch. (N. Y.) 155 ; Hiern v. Mill, down the rule, however, that a fraudu- 13 Ves. 120; Claflin v. Lenheim, 66 N. lent voluntary conveyance is void as Y. 306 ; Birdsall v. Russell, 29 N. Y. against a subsequent purchaser even 220, 249. with notice. See Hudnal v. Wilder, 4 =■ Story's Eq. Jur. § 399 ; Rogers v. McCord's (S. C.) Law 295. Jones, 8 N. H. 270; Cambridge Valley * Lord Erskine in Hiern v. Mill, 13 Bank v. Delano, 48 N. Y. 339. Ves. 120. 506 NOTICE OF FRAUD. § 374 the same language is employed by Mr. Justice Woods in Townsend v. Little.^ Chancellor Kent said: " I hold him chargeable with constructive notice, or notice in law, be- cause he had information sufficient to put him upon in- quiry."^ "Constructive notice," said Wright, J., "is a legal inference from established facts ; and when the facts are not controverted, or the alleged defect or infirmity ap- pears on the face of the instrument, and is a matter of ocu- lar inspection, the question is one for the court." ^ Con- structive notice has been said to be of two kinds ; that which arises upon testimony and that which results from a record.* Actual notice is usually a question for the jury, and is to be established by implication or inference from other facts.^ There is no particular kind of evidence necessary to estab- lish it ; anything that proves it or constitutes legal evidence of knowledge is competent.^ It is otherwise as to con- structive notice. There the law imputes notice to the pur- chaser, and whether or not this will be done upon a con- ceded state of facts is not a question for the jury.'' § 374. Constructive notice of fraud. — The principles which govern and control the general doctrine of constructive notice of fraud as bearing upon our subject are not always ' 109 U. S. 511. Citing Plumb v. the purchaser was, in fact, entirely in- Fluitt, 2 Anstr. 432 ; Kennedy v. Green, nocent and free from any guilty knowl- 3 Mylne & K. 699. edge, or even suspicion of fraud ; but ' Sterry v. Arden, 1 Johns. Ch. (N. if they find that facts were known to Y.) 261, 267. him which were calculated to put him s Birdsall v. Russell, 29 N. Y. 249. on inquiry, his want of diligence in See Page v. Waring, 76 N. Y. 471. making such inquiry is equivalent to a ^ Griffith V. Griffith, i Hoffin. Ch. (N. want of good faith, and the presump- Y.) 156. tion of notice is a legal presumption * Bradbury v. Falmouth, 18 Me. which is uncontrovertible." Rapallo, 65. J., in Parker v. Conner, 93 N. Y. 124. * Trefts V. King, 18 Pa. St. 160. " The whole basis of the rule is negli- ' Birdsall v. Russell, 29 N. Y. 249. gence in the purchaser. It is a ques- " If the doctrine of constructive notice tion of good faith in him." Peckham, is applicable, it is immaterial how the J., in Acer v. Westcott, 46 N. Y. 384, fact is. The jury may be satisfied that 389. §374 NOTICE OF FRAUD. 507 entirely clear. Williamson v. Brown, ^ already cited, con- tains an important review of the authorities by the learned Justice Selden, as to the general subject of notice. Baker V. Bliss,^ where the question was as to whether or not a purchaser took with knowledge of the fraud affecting the title of his vendor, seems to clearly establish the rule that to charge a party with such notice the circumstances known to him must be of such character as ought reasonably to have excited his suspicion, and led him to inquire."^ It ap- peared that the purchaser had paid a valuable consideration, and had testified and the referee had found, that he had no actual notice or knowledge of the fraud which rendered the conveyance void as against creditors, " but that he had suf- ficient knowledge to put him upon inquiry, and that such knowledge was equivalent to notice, and in law amounted to constructive notice," Cases like Williamson v. Brown ^ are cited and applied in the opinion. In Ellis v. Horrman,^ a record act case, Tracy, J., said : " Notice sufficient to make it the duty of a purchaser to inquire, and failure so to do when information is easily accessible, is equivalent to actual notice within the rule of the authorities." Paige, J., observed in Williamson v. Brown :" " A party in possession of certain information will be chargeable with a knowledge of all facts which an inquiry suggested by such information, prosecuted with due diligence, would have disclosed tu him." " ' 15 N. Y. 362. Price 306 ; Jones v. Smith, i Hare 43- ' 39 N. Y. 70. 55. Compare Pringle v. Phillips, 5 ^ See Burnham v. Brennan, 10 J. & Sandf. (N. Y.) 157; Danforth v. Dart, S. (N. Y.) 79 ; reversed, 74 N. Y. 597. 4 Duer (N, Y.) loi ; Roeber v, Bowe, ■» 15 N. Y. 362. 26 Hun (N. Y.) 556 ; Pitney v. Leonard, * 90 N. Y. 473. I Paige (N. Y.) 461 ; Peters v. Good- * 15 N. Y. 364. rich, 3 Conn. 146 ; Booth v. Barnum, 9 ■■ See Howard Ins. Co. v. Halsey, 4 Conn. 286 ; Whitbread v. Jordan, 1 Y. Sandf. (N. Y.) 578 ; Kennedy v. Green, & C. 328 ; Shaw v. Spencer, 100 Mass. 3 Mylne & K. 699; Flagg v. Mann, 2 390; Jenkins v. Eldredge, 3 Story 181 ; Sumner 534 ; Bennett v. Buchan, 76 Heaton v. Prather, 84 111. 330 ; Garahy N. Y. 386 ; Grimstone v. Carter, 3 v. Bayley, 25 Tex. Supp. 294 ; Birdsall Paige (N. Y.) 421 ; Taylor v. Baker, 5 v. Russell, 29 N. Y. 220. 508 STEARNS V. GAGE. § 375 In Reed v. Gannon^ it appeared that the parties dealt upon the assumption that there were liens or incum- brances upon the property, but their number, extent, or character was not stated. Rapallo, J., said : " The insertion of these clauses in the instrument was sufficient to put the plaintiffs on inquiry as to the extent and description of the existing incumbrances referred to." It was such notice as in the language of the authorities " would lead any honest man, using ordinary caution, to make further inquiries."" " Constructive notice," says Haight, J., in Farley v. Car- penter,^ " is a knowledge of circumstances which would put a careful and prudent person upon inquiry, or such acts as the law will presume* the person had knowledge of, on the grounds of public policy ; as, for instance, the laws and public acts of the government, instruments recorded pur- suant to law, advertisements in a newspaper of a notice or process authorized by statute."^ § 375. Rule in Stearns v. Gage. — The question of what constitutes " notice " of fraud, or of a fraudulent intent, is one of manifest importance to creditors and purchasers. Some apparent dissension has been introduced into this branch of the subject by a dictum of Miller, J., in Stearns V. Gage,^ followed by the New York Supreme Court in Farley v. Carpenter,^ and recently approved in Parker v. ' 50 N. Y. 345. See Parker v. Con- third persons which he has the means ner, 93 N. Y. 126. of discovering, and as to which he is * Whitbread v. Jordan, i Y. & C. 328, put on inquiry. If he makes all the See Acer v. Westcott, 46 N. Y. 384 ; inquiry which due diligence requires, Cambridge Valley Bank v. Delano, 48 and still fails to discover the outstand- N. Y. 340. Compare, however, Batten- ing right, he is excused ; but if he fails hausen v. Bullock, 11 Bradw. (111.) 665. to use due diligence, he is chargeable, * 27 Hun (N. Y.) 362, as matter of law, with notice of the * " The doctrine of constructive no- facts which the inquiry would have tice," says Rapallo, J., " has been most disclosed," Parker v. Conner, 93 N. generally applied to the examination of Y. 124. See Acer v. Westcott, 46 N. titles to real estate. It is the duty of a Y. 384, and cases cited. purchaser of real estate to investigate ° 79 N. Y. 102. the title of his vendor, and to take no- ' 27 Hun (N. Y.) 359. See 23 Alb. tice ot any adverse rights or equities of L. J. 126. § 375 STEARNS V. GAGE. 5O9 Conner.^ According to the court's own statement it could not " be claimed that any question as to constructive notice was presented upon the trial" in Stearns v. Gage, and it seems unfortunate that the questionable sentences should have been embodied in the opinion. The court observe that " actual notice is required where a valuable considera- tion has been paid." The statute relating to fraudulent conveyances^ in New York contains a provision that it "shall not be construed in any manner, to affect or impair the title of a purchaser for a valuable consideration, unless it shall appear that such purchaser had previous notice of the fraudulent intent of his immediate grantor, or of the fraud rendering void the title of such grantor." The court say that " this plainly means that actual notice shall be given of the fraudulent intent or knowledge of circum- stances which are equivalent to such notice. Circum- stances to put the purchaser on inqtiiry ivhere fiill val^ie has been paid are not sufficient No authority has been cited which sustains the principle that a purchaser for a valuable consideration, without previous notice, is chargeable with constructive notice of the fraudulent in- tent of his grantor ; and such a rule would carry the doc- trine of constructive notice to an extent beyond any prin- ciple which has been sanctioned by the courts, and cannot be upheld." It must be noted that the word "actual" is not cm- bodied in the statute, but has been in effect interpolated by this construction. We dissent decidedly from the state- ment that the statute " plainly means that actual notice shall be given of the fraudulent intent." Such a construc- tion violates the settled rule that statutes of tiiis character shall be liberally construed for the suppression of fraud. ^ It is to be regretted that the utterances quoted occur in a case in which no facts sufficient to put a purchaser on in- 193N. Y. 118. » 2 R. S. N. Y. 137, § 5. 3 See §20. 5IO STEARNS V. GAGE. § 375 quiry, or to constitute what is often called constructive notice of fraud, were found or were actually present. Had the court been confronted with such facts and compelled to squarely face the question, these remarks, which we con- sider unfortunate, might never have been made. It is idle to assail the case with violent language, as has more than once been done ; but we should rather view the objection- able sentences as an unguarded utterance, and entertain the hope that the questionable features of the opinion will be hereafter limited and distinguished, and perhaps ultimate- ly overturned. " Knowledge of circumstances which are equivalent to " actual notice are regarded in the opinion as sufficient evidence of notice. This plainly implies that the court does not mean to require proof that as matter of fact the purchaser was informed personally of the debtor's or vendor's fraudulent intention, but leaves open the wide field of circumstances by which actual notice may be inferred, implied, and fastened upon him. In other words, "cir- cumstantial evidence " will suffice.^ In Farley v. Carpen- ter,^ which follows and adopts Stearns v. Gage,^ the court at general term say : " A person may be chargeable with constructive notice and still have no actual notice. Fraud implies an evil or illegal intent. Such intent can only ex- ist in case of knowledge. Under this statute fraud is not a question of negligence, it is a question of knowledge and intent ; a party may be negligent in not examining the records for liens and incumbrances on real estate before effecting a purchase, and still be strictly honest, and inno- cent of fraud." We deny that fraud necessarily " implies an evil or illegal intent." The transaction may be pure and honest as re- gards the debtor's mental emotions, or his belief, or when measured by his standard of morality, and yet be pro- ' Farley v. Carpenter, 27 Hun (N. ^ 27 Hun (N. Y.) 362. Y.) 362. 3 79 N. Y. 102. /iM6^^ 16 Johns. (N. Y.) 189. See §§112, 113, 121. '^ See Mercer v. Mercer, 29 Iowa 557 ; Tantum v. Miller, 11 N. J. Eq. 551; Bonesteel v. Sullivan, 104 Pa. St. 9 ; Lerow v. Wilmarth, 9 Allen (Mass.) 386; Bullitt V. Taylor, 34 Miss. 708, 737 ; Armington v. Rau, 100 Pa. St. 168 ; Haak's Appeal, 100 Pa. St. 62 ; Doe d. Abbott v. Hurd, 7 Blackf. (Ind.) § 395 CONVEYANCES BINDING. 541 same rule appertains to general assignments which, though voidable by creditors, are always valid between the imme- diate parties.* The conveyance, as between the parties, stands upon the same ground as if a full and adequate con- sideration had been paid.^ It is held in conformity with this rule that a debtor who has conveyed his property in order to defraud his creditors has no standinir in a court of equity to question the fairness or adequacy of price ob- 510; McGuire v. Miller, 15 Ala. 394, 397 ; Williams v. Higgins, 69 Ala. 523 ; Dyer v. Homer, 22 Pick. (Mass.) 253 ; Keel V. Larkin, 83 Ala. 142 ; Tyler v. Tyler, 25 111. App. 343 ; Songer v. Par- tridge, 107 111. 529 ; Barrow v. Barrow, 108 Ind. 345 ; Reichart v. Castator, 5 Binn. (Pa.) 109 ; S. C. 6 Am. Dec. 402, and note ; Newell v. Newell, 34 Miss. 385 ; Shaw v. Millsaps, 50 Miss. 380 ; Davis V. Swanson, 54 Ala. 277 ; Noble V. Noble, 26 Ark. 317 ; Lloyd v. Foley, 6 Sawyer 426 ; Van Wy v. Clark, 50 Ind. 259; Crawford v. Lehr, 20 Kans. 509 ; Peterson v. Brown, 17 Nev. 173 ; Allison V. Hagan, 12 Nev. 38 ; Stewart V. Piatt, loi U. S. 738 ; Harmon v. Harmon, 63 111. 512 ; Graham v. Rail- road Co., 102 U. S. 148 ; George v. Williamson, 26 Mo. 190 ; Sharpe v. Davis, 76 Ind. 17 ; Nichols v. Patten, 18 Me. 231 ; Ellis v. Higgins, 32 Me. 34 ; Bush V. Rogan, 65 Ga. 321 ; Good- wyn V. Goodwyn, 20 Ga. 600 ; McCles- key V. Leadbetter, i Ga. 551. In Bar- row V. Barrow, 108 Ind. 345, it was held that where a wife joined her hus- band in conveying his land in fraud of creditors, she could not, after obtain- ing a divorce, have the conveyance set aside, and the land subjected to the payment of her judgment for alimony. ' Ames V. Blunt, 5 Paige (N. Y.) 13 ; Mills V. Argall, 6 Paige (N. Y.) 577 ; Smith V. Howard, 20 How. Pr. (N. Y.) 121, 126; Bradford v. Tappan, 11 Pick. (Mass.) 76 ; Van Winkle v. McKee, 7 Mo, 435 ; Bellamy v. Bellamy, 6 Fla. 62 ; Rumery v, McCulloch, 54 Wis. 565. See Chap. XXI. * Chapin v. Pease, 10 Conn. 73. Relaxation of the rule. — Bowes v. Foster, 2 H. & N. 779, seems to evi- dence an intention to relax this salu- tary rule. Plaintiff being in financial difficulties, and fearing proceedings on the part of his creditors, made an agreement with defendant, who was also a creditor, that a pretended sale of a stock of goods should be made to defendant. An invoice was prepared, a receipt given for the purchase-money, and possession delivered to the defend- ant. The latter sold the goods as his own. Plaintiff brought trover and was permitted to recover upon the theory that the transaction never was in real- ity a sale. Pollock, C. B., said : " I am by no means sure that a man who, un- der the pressure of distress and misfor- tune, lends himself to such a transac- tion, is in the same delictum as a man who does so without such motive." Still more remarkable is the statement of Martin, B., who observed : " It is said that a person ought not to be al- lowed to set up his own fraud. But here there was no fraud ; it was only intended to give the defendant the power to pretend that he was the owner of the goods." If observations such as these are to pass unchallenged the principle of law for which we are con- tending would be practically nullified. 542 THE THEORY. § 396 tained at the public sale of the premises under a creditor's bill to reach such property.^ It is not material whether the party is alleging the fraud as matter of defense, or as a ground of action,^ for, as was said by Lord Mansfield,^ " no man shall set up his own iniquity as a defense, any more than as a cause of action." * § 396. The theory— No reconveyance. — Lord Chancellor Thurlow^ declared his opinion to be that in all cases where money was paid for an unlawful purpose the party, though particeps crwttms, might recover at law ; and the reason was that if courts of justice meant to prevent the perpetra- tion of crimes it must be, not by allowing a man who has possession to hold it, but by putting the parties back in the condition in which they were before entering into the transaction. The doctrine of the learned Lord Chancel- lor would seem to be sufficiently broad to cover the cases of conveyances made in fraud of creditors. Yet the au- thorities, as a general rule, reveal a singular absence of any disposition on the part of the courts to extend relief to fraudulent grantors. A fraudulent vendee is under no legal obligation to reconvey, though morally bound to do so ; and a court of equity will give no aid where both the vendor and vendee participate in the illegal transaction.'' It is familiar learning that equity will not decree a specific ' Guest V. Barton, 32 N. J. Eq. 120, main indisputable." McMaster v. ^ Williams v. Higgins, 69 Ala. 523. Campbell, 41 Mich. 516. Whenever it ^ Montefiiori v. Montefiori, i W. Bla. appears that the object of a suitor in 364. filing a creditor's bill is to aid a person ^"As between the grantor and who has placed his property in the grantees the conveyances made were name of another to hinder creditors to good and passed title to the property, regain control of it, equity will refuse And as to the creditors of the grantor assistance. Ruckman v. Conover, 37 they were not void, but merely voida- N. J. Eq. 583. ble at their option ; they, by proper * See Neville v. Wilkinson, i Bro. C. proceedings, could have them set aside, C. 547. but if no steps were taken by them for ^ Powell v. Ivey, 88 N. C. 256; S. C. such purpose, then undoubtedly the 28 Alb. L, J. 254. title of the grantees would be and re- § 39^ THE THEORY. 543 performance of an agreement by the fraudulent grantee to reconvey the property to the debtor,^ and will not interfere to correct a mistake in a deed that was executed for a fraudulent purpose.^ And if a party obtains a deed with- out consideration upon a parol agreement that he will hold the land in trust for the grantor, there is authority to the effect that such trust will not be enforced, as it would vio- late the statute of frauds, and also the general rule that parol evidence cannot be admitted to vary, add to, or contradict a written instrument.^ In a New Jersey case ^ it was decided that a note wiiich was given for property transferred to the maker for the purpose of defrauding the creditors of the payee could not be enforced in the hands of the payee against the maker. In the course of the opinion Chief-Justice Beasley indulged in the following re- freshing observations : " It was urged that the statute for the prevention of frauds and perjuries does not invalidate transactions the end of which is to prevent or make diffi- cult the collection of just claims, except so far as concerns creditors, and that, inter partes, such transactions, if con- taining no other infirmity, will be effectuated at law. It is certainly true, the statute referred to does not, proprio vigore, annul beyond the extent thus defined, the convey- ances and contracts at which it is levelled. Nothing more than this was necessary to effect its purpose, which was the relief and protection of creditors against this class of frauds. But it is also clear, that it has no tendency to legalize any act which was not legal at the time of its en- ' W^alton V. Tusten, 49 Miss. 577 ; v. Pease, 10 Conn. 72 ; Tyler v. Tyler. Sweet V. Tinslar, 52 Barb. (N. Y.) 271 ; 25 111. App. 343. See § 429. Canton v. Dorchester, 8 Cush. (Mass.) " Gebhard v. S.attler. 40 Iowa 152. 525; Grider v. Graham, 4 Bibb (Ky.) ' Pusey v. Gardner, 21 W. Va. 474; 70 ; Baldwin v. Cawthorne, 19 Ves. 166 ; Troll w Carter, 1 5 VV. Va. 567 ; Zane v. Ellington v. Currie, 5 Ired. (N. C.) Eq. Fink, 18 W. Va. 755. See Cutler v. 21 ; St. John v. Benedict, 6 Johns. Ch. Tultle. 19 N. J. Eq. 549. (N. Y.) Ill; Waterman on Specific ^Church v. Muir. 33 N. J. Law Performance, ed. 1881, § 340; Chapin 319. 544 MASSACHUSETTS CASES. § 397 actment A contract, the purpose of which is to protect a debtor against the just claims of creditors, is an immoral act. Such an affair is inimical to social policy. It is in direct opposition both to the letter and spirit of the statute for the prevention of frauds In their essence and in their effects, such contracts are as immoral and per- nicious as many of those which the law has declared to be utterly void. In these respects how are they to be dis- tinguished from contracts to indemnify persons against the consequences of their illegal acts ; against liability for the publication of a libel ; from promises by uninterested parties to furnish money for the prosecution of law-suits ; from agreements in contravention of the bankrupt or in- solvent acts, or in general restraint of trade ; or from that host of other conventions, which have been so often judi- cially condemned, not on account of any enormous immor- ality, but on the score of their inconsistency with public interest and good government ? I can see no reason why contracts to defraud creditors should stand on a different footing from the rest of those embraced in the class to which they evidently belong. They are hostile to fair deal- ing and commercial honesty, and, on this account, should be subjected to the ban of outlawry."^ §397. Massachusetts cases. — In Massachusetts a long series of cases has established the rule that a transfer either of real or personal property, made with a view to defraud the creditors of the grantor, although the grantee has par- ticipated in this intention, is good between the parties, and void only in favor of creditors ; or to speak accurately, is voidable by creditors at their election. If no creditors in- tervene the conveyance stands ; if creditors elect to affirm ' Compare Nellis v. Clark, 20 Wend, i Ohio St. 262 ; Hamilton v. Scull, 25 (N. Y.) 37, and dissenting opinion of Mo. 165 ; Andruss v. Doolittle, 11 Conn. Chief-Justice Nelson ; Briggs v. Mer- 283 ; Merrick v. Butler, 2 Lans. (N. Y.) rill, 58 Barb. (N. Y.) 389 ; Ager v. Dun- 103. can, 50 Cal. 325 ; Goudy v. Gebhart, § 39^ GENERAL RULE AND POLICY. 545 the transfer and receive the consideration, it is thereby rati- fied and confirmed. Payment of the grantor's debts to the full value of the property purges the fraud.^ This doctrine extends to executory contracts.^ In Freeland v. Freeland^ the court say : "A conveyance made in fraud of creditors is valid as between the parties, and can be avoided only by creditors, or by the assignee in insolvency representing them ; and, if he affirms it, it stands good."* § 398. General rule and policy. — These covinous convey- ances are binding upon heirs, ^ legatees,*' and, as is elsewhere shown,''' in certain cases upon personal representatives® and assignees.^ The fraudulent conveyance is treated as so far valid that creditors of the vendee may seize upon the prop- erty and may even cancel a reconveyance of it to the grantor.-*" Though a reconveyance cannot be enforced, the fraudu- lent vendee is said, in some of the cases, to be under a high moral and equitable obligation to restore the property" The law is not so unjust as to deny to men the right, while 1 Drinkwater V. Drinkwater, 4 Mass. son, 54 Ala. 277; Loomis v. Tifft, 16 354 ; Oriental Bank v. Haskins, 3 Met. Barb. (N. Y.) 545. (Mass.) 332; Crovvninshield v. Kit- ' See § 115 ; also Chap. XXL tridge, 7 Met. (Mass.) 520. '" Chapin v. Pease, 10 Conn. 69. See ' Knapp V. Lee, 3 Pick. (Mass.) 452; § 387. In Allison v. Hagan. 12 Nev. Dyer v. Homer, 22 Pick. (Mass.y 253. 46, the court said : " Nor will the courts, See The Lion, i Sprague 40; Harvey as between the parties to a fraudulent V. Varney, 98 Mass. 120. conveyance, or between a fraudulent 2 102 Mass. 477. grantee and his creditors, permit either ' Citing Butler v. Hildreth, 5 Met. the fraudulent grantor or grantee to be (Mass.) 49; Snow v. Lang, 2 Allen heard in avoidance ofthe fraudulent act." (Mass.) 18; Harvey v. Varney, 98 "In Fargo v. Ladd. 6 Wis. 106, it Mass. 118. See § 107. was held that where the grantee of » Moseley V. Moseley, 1 5 N. Y. 334. properly fraudulently conveyed had See § 121. voluntarily reconveyed to the grantor, « Guidry v. Grivot, 2 Martin N. S. in apparent execution of his trust, he (La.) 13; S. C. 14 Am. Dec. 193. See could not thereafter make a valid claim R 121^ n. to the property, or its proceeds, on the - See §§ 112, 113. ground of the original fraudulent con- " Blake v. Blake, 53 Miss. 193 ; Merry veyance. See Second National Bank v. V, Fremon, 44 Mo. 522 ; Davis v. Swan- Brady, 96 Ind. 505. 35 546 WHEN AID WILL BE EXTENDED. § 399 it is in their power to do so, to recognize and fulfill their obligations of honor and good faith. And until the cred- itors of the vendee acquire actual liens upon the property they have no legal or equitable claims in respect to it, higher than, or superior to, those of the grantor.-' It has been contended that the transfer only made visible an ownership which already existed though secretly.^ The boundaries of these rules as to the conclusiveness of voluntary or covinous conveyances between the parties have, however, been broken over in some instances. And the rule itself has been questioned upon the theory that both parties are seldom equally to blame in a transaction tinctured with fraud in each, and if they are the doctrine seems to encourage a double fraud on the one side to punish the single fraud on the other.^ § 399. When aid will be extended to grantors. — This rule, it has been said, did not in the nature of things apply where the grantor was not in pari delicto with the grantee, as where a creditor av^ailed himself of his power over a debtor and induced him by misrepresentation to make a fraudulent conveyance to him.* Thus in Roman v. ' Davis V. Graves, 29 Barb. (N. Y.) act should be void only as against those 485; Stanton V. Shaw, 3 Baxter (Tenn.) who should thereafter purchase upon 12. Mr. Roberts says (Roberts' Fraud- good, i. e. valuable, consideration. ulentConveyances, p.641), that " volun- 'See Keel v. Larkin, 83 Ala. 146, tary conveyances were always binding and cases cited ; Lillis v. Gallagher, 39 upon the party, and all claiming volun- N. J. Eq. 94. tarily under him ; and the statutes of * Gowan v. Gowan, 30 Mo. 476. Elizabeth against fraudulent convey- Compare Nichols v. McCarthy, 53 ances have expressly iguarded against Conn. 299. a construction in derogation of this ^ Austin v. Winston, i Hen. & M. rule." Thus in the statute 13 Eliza- .(V^l-) 33; Holliway v. Holliway, jj beth, c. 5, it was provided that the Mo. 396. In Mississippi it is held that fraudulent gifts and grants therein de- a defendant cannot resist payment of nounced should be void only against the purchase price of goods sold and those persons whose actions, debts, and delivered to him, on the ground that accounts are hindered and delayed ; the sale was in fraud of the creditors of 'and in 27 Eliz. it was with similar cau- the seller. Gary v. Jacobson, 55 Miss, tion provided that the voluntary con- 204. But see, contra, Church v. Muir, veyances in the contemplation of that 33 N. J. Law 318; Nellis v. Clark, 4 § 399 WHEN AID WILL BE EXTENDED. 547 Mali ^ the doctrine is asserted that there may be different de- grees of guilt as between the parties to a fraudulent or illegal transaction, and if one party act under circumstances of oppression, imposition, undue influence, or at a great dis- advantage, with the other party concerned, so that it ap- pears his guilt is subordinate to that of the defendant, the court in such case will extend relief. Parker, J,, said in James v. Bird :^ "There is no case in equity where anv re- lief has been given to a fraudulent grantor of property, the conveyance being made to protect it against his creditors, except that of Austin v. Winston,^ decided by a divided court, and perhaps, under the circtimstajices, properly de- cided." The authority of the case, however, has been in some measure acknowledged in several States.'^ The court in Fletcher v. Fletcher^ concede that it would assist the grantor in cases where circumstances were shown which warranted its interposition on recognized and settled grounds of equity jurisprudence, " such as fraud in pro- curing the deed, imposition by the grantee in violation of some fiduciary relation, delusion, or the like, on the part of the grantor, at the time of executing the deed." In Pinck- ston v. Brown ^ it appeared that at the time the deed was executed the plaintiff was old, infirm, weak of mind, and much diseased and distressed in body. The deed was made with a view to hinder and delay the collection of a debt. The party benefited was the plaintiff's oldest son, in wliose ability and integrity she had the greatest confidence. The transfer had undoubtedly been consummated by means of Hill (N. Y.) 424 ; Walton v. Bonham, v. Thomas, 6 Mich. in. But com- 24 Ala. 513. See Moseley v. Moseley, pare Clay v. WilMams, 2 Munf. (V'a.) 15N. Y. 334. 121; Starke v. Littlepage, 4 Rand. ' 42 Md. 513. (Va.) 371 ; Jones v. Comer, 5 Uigh « 8 Leigh (Va.) 510. (Va.) 357 ; Griffin v. Macaulay. 7 Gratt. 3 I Hen. & M. (Va.) 33. (Va.) 564. * See Bellamy v. Bellamy, 6 Fla. 104 ; '2 MacAr. (D. C.) 39, 40. Freeman V. Sedwick, 6 Gill (Md.) 41 ; '3 Jones' Eq. (N. C.) 496. See Cushwa V. Cushwa, 5 Md. 53 ; Quirk Nichols v. McCarthy, 53 Conn. 299. 548 WHEN AID WILL BE EXTENDED. § 399 the undue influence and deceit practiced upon and exercised over the aged and confiding mother by the son. The court held that the mother and son were in delicto, but not in pari delicto, and at the suit of the mother set the transac- tion aside.^ In a case which came before the Supreme Court of New York,*^ A. sued B. for slander. B. to protect himself conveyed property to C, who agreed to reconvey. B. defeated the slander suit. It was held that C. must re- convey. Johnson, J., said : " Oilman had at the time no other creditors, and his sole design was to get his property out of the way of any judgments which might possibly be recovered in those actions, and not to hinder, delay, or de- fraud any other person whatever. It turned out that the several plaintiffs in those actions had no 'lawful' claim against Oilman. They were not creditors, and, as to them, the conveyance was valid, as it was, also, between the grantor and grantee. It was not designed to defraud the plaintiff of his claim, as the referee expressly finds. As this con- veyance w^as not made with intent to hinder, delay, or de- fraud any existing creditor, or any person having a lawful claim, but only a person making an unlawful and unfounded claim, which the defendant Oilman disputed and denied, and ultimately defeated, it may present a grave question, whether it falls at all within the condemnation of the statute. .... The sole object of the statute here, in declaring con- veyances void, is to protect, and prevent the defeat of, law- ful debts, claims, or demands, and not those which are un- lawful, or trumped up, and which have no foundation in law or justice, and the verity of which is never established by any judgment, or by the assent of the person against whom they are made. As against claims and demands of the latter class, the statute does not forbid conveyances or assignments, nor declare them void." It may well be ' See Osborne v. Williams, 18 Ves. - Baker v. Gilman, 52 Barb. (N. Y.) 382 ; Story's Equity Jur. § 300. 36. § 400 CASES AND ILLUSTRATIONS. 549 seriously questioned, however, whether this contention can be uniformly upheld. The courts would be justified in re- fusing to inquire whether the grantor's apprehensions as to the recovery of a judgment against him were well or ill founded, and might well incline to leave the parties in the position in which it found them.^ § 400. Cases and illustrations. — In Boyd v. De La Mon- tagnie^ it appeared that a husband had secured a gratuitous transfer of property from his wife by means of false repre- sentations on his part, that she was liable for a debt, when in fact no such liability existed. Though the transaction was consummated in the belief that the efifect of the trans- fer would be to hinder and delay the creditors, or in some way to save the property, it was held to be no answer that the wife consented to the act with a view to defraud cred- itors. Chief-Justice Church said: "The parties do not stand on equal terms, and the husband cannot avail himself of the plea of particeps criminis on the part of the wife." A court of equity will interpose its jurisdiction to set aside instruments between persons occupying relations in which one party may naturally exercise an influence over the con- duct of another. A husband is held to occupy such a re- lation to his wife, and these equitable principles applv to them in respect to gratuitous transfers by the wife to the husband.^ So in Freelove v. Cole ** it was decided that as there are degrees of crime and of wrong, the courts can and will give relief in many cases as against the more guilty. " To exclude relief in such cases," said Smith, J., " the parties must not only be i7t delicto but /;/ pari de- licto!' Applying this doctrine it was held that where the plaintiff was infirm of mind and incompetent to manage • Compare Tantum v. Miller, 11 N. ' 73 N. Y. 498. J. Eq. 551 ; Harris v. Harris, 23Gratt. ' See Barnes v. Brown, 32 Mich. 146. (Va.) 737, 764, and stt contra, Fletcher ^ 41 Barb. (N. Y.) 326 ; affirmed, 41 V. Fletcher, 2 MacAr. (D. C.) 38. N. Y. 619, without an opinion. DO O CASES AND ILLUSTRATIONS. . § 4OO and conduct his business affairs with ordinary prudence and discretion, and the defendant was his son-in-law, con- fidential friend, and legal adviser, and had procured a con- veyance to himself of the property in order to place it be- yond the reach of the plaintiff's creditors, relief might still be accorded the plaintiff.^ Ford v. Harrington,^ an im- portant and leading case in the New York Court of Ap- peals, in which judges of the eminence of Denio, Johnson, Comstock, Selden, and Brown participated, seems clearly to establish the same general principle. It was there ex- pressly held that where an attorney procured from a client a conveyance of a valuable interest in land for a manifestly inadequate consideration, the conveyance being advised by the attorney with a view to defeat a creditor of the grantor, though the agreement was illegal, yet the rule prohibiting the attorney from obtaining any unconscionable advantage in dealing with his client must prevail, and the attorney could be compelled to reconvey the land.^ And where the parties to a conveyance are brothers, the grantor being crip- pled and diseased in body, weak in mind, and easily influ- enced, and under the control of the grantee, who was a person vigorous in both body and mind, the conveyance was set aside at the suit of the grantor, it appearing that no consideration was paid, that a reconveyance was promised, ' In O'Conner v. Ward, 60 Miss. Cited and quoted are Osborne v. Will- 1025-1035 (decided in April, 1883), the iams, 18 Ves. 382 ; Pinckston v. Brown, Supreme Court of Mississippi said : 3 Jones' Eq. (N. C.) 494 ; Smith v. " We do not agree with the proposi- Bromley, 2 Doug. 696 ; Browning v. tion announced by Mr. Bump in his Morris, Cowp, 790 ; Boyd v. De La work on Fraudulent Conveyances, that Montagnie, 73 N. Y. 498 ; W. v. B., 32 where a person has sufficient capacity Beav. 574; Ford v, Harrington, 16 N. to contract, and makes a conveyance Y. 285. with intent to hinder, delay, or defraud - 16 N. Y. 285. See Freelove v. Cole, his creditors, a court of equity will not 41 Barb. (N. Y.) 318 ; Gibson v. Jeyes, inquire into the degrees of guilt be- 6 Ves. 266 ; Smith v. Kay, 7 H. L. Cas. tween the grantor and the grantee. The 771. rule is not universal, and, as stated, is ^ See Boyd v. De La Montagnie, 4 T. not supported by the authorities." & C. (N. Y.) 153. § 40I THE CASES JUST CONSIDERED. 55^ and that the transfer was induced by operating upon the grantor's fears that he was in danger of losing the property by reason of a breach of promise suit which had no foun- dation in fact.* § 401. The cases just considered exceptional. — The practi- tioner, however, must be careful to remember that the cases just considered are exceptions to a well-defined and almost universal rule. While it is possible to deduce from them a general principle that degrees of guilt will be recognized in such transactions, and that grantors may, in certain cases, reclaim the property fraudulently alienated where the trans- action was superinduced by the unfair action of a vendee who occupied some relation of confidence which enabled him to unduly influence the vendor, yet a very clear case ' Holliway v. Hollivvay, ^]^ Mo. 396. See Cadwallader v. West, 48 Mo. 483 ; Bradshaw v. Yates, 67 Mo. 221 ; Ford v. Hennessy, 70 Mo. 581 ; Ranken v. Pat- ton, 65 Mo. 378 ; Garvin v. Williams, 44 Mo. 465. In Fisher v. Bishop, 108 N. Y, 25, 29, it appeared that plaintiff, who was much advanced in years, be- came involved as indorser for his son, who failed and absconded. Just prior to leaving the son gave the father scant security for the liability. W., a justice of the peace, was employed to draw the papers. Thereafter W., by threats to the effect that the conveyance was fraudulent and could be set aside, per- suaded plaintiff to give defendants a mortgage to secure a debt of the son which the father was under no obliga- tion to assume. Ruger, Ch. J., said : "The extent to which the plaintiff con- fided in the defendant Wattles is clearly shown by the fact that he had fre- quently employed him in business trans- actions, and that the conveyances which he then threatened to annul and over- throw were drawn by him, and ac- cepted under his advice and co-opera- tion. It was a gross breach of good faith for a person thus trusted, and who had by conducting the business, vouched for its validity and lawfulness, to turn around for the purpose of gain- ing a personal advantage, and assert that he had been engaged in an illegal transaction, which he could at his own option annul and destroy. The case shows that by these means the defend- ants have obtained security for a large amount, from an old man who was under no legal or moral obligation to give it, and without any consideration to support it except the nominal one of a dollar, and that this was extorted at a time when he was laboring under much distress and anxiety of mind, on account of the trouble that encom- passed him. The parties in this case did not meet on equal terms, and the defendants took an unfair advantage of the position in which they had been placed, and of the confidence reposed in them by the plaintiff, to procure from him a valuable security to which they had no legal right." 552 THE CASES JUST CONSIDERED. § 40 1 with well-defined reasons for excepting it from the general rule must be presented. Debtors contemplating fraudulent alienations should draw little encouragement from these exceptional cases, for, as a general rule, after passing through the troubled waters of insolvency they will find themselves stripped of the power to reach or recover the secreted property in the hands of their fraudulent grantees. The ancient rule, in paj'i delicto mclior est conditio possi- dentis, is not to be easily uprooted, and must not be consid- ered as overthrown or abrogated by these cases. The great effort has been, in at least a portion if not all of the cases just considered, to show that the parties were not i7i pari delicto because of the reliance and confidence placed in the grantee, especially when he assumed to advise or act in a professional capacity, or occupied a position where he could exercise undue influence over the vendor. In Renfrew v. McDonald,^ the fraudulent grantor, seeking to set aside a conveyance made to hinder creditors, was summarily dis- missed on the opening oral statement of his counsel. The plaintiff alleged great intimacy with and confidence in the defendant, and charged that it was through his influence and procurement that the fraudulent conveyance had been made, and that defendant had knowingly advised plaintiff that he had no defense to certain notes, the collection of which plaintiff sought to hinder and delay by the convey- ance in question, when in fact a defense did exist. The court said : " Nothing is alleged by way of excuse for the attempted fraud, except what might be with more or less truth alleged in every case. The recipient of property with intent to defraud creditors, possesses the intimacy and con- fidence of the fraudulent debtor, and advises the attempted fraud and consents to be made the instrument thereof. To allow the grantor in such a case to set aside the grant and be restored to all he has parted with for the illegal purpose. 'II Hun (N. Y.) 255. § 402 ENFORCING FRAUDULENT DEED. 553 would be to afford great encouragement to future attempts of that character." In Fredericks v. Davis ^ the doctrine is asserted that the grantor in an alleged fraudulent con- veyance, made with full knowledge of the facts, is estopped by his own warranty of title from testifying that the con- veyance is fraudulent.^ This doctrine is supported by the case of Phillips v. Wooster,^ wherein the court say : " The position which the plaintiff occupies in relation to the trans- action complained of as fraudulent, excludes him from al- leging the fraud, or claiming any benefit against it. Tlic conveyance against which he now seeks to derive advan- tage from the property, was made by himself, with a full knowledge of all the facts as they existed at the time, as we are bound to presume since he has shown nothing to the contrary.'* So that if the money paid was the debtor's, as he now insists it was, and the conveyance to the wife therefore fraudulent as against creditors, it was not fraudu- lent as against him, for he was not only consenting to the act, but himself performed it." § 402. Grantee enforcing fraudulent deed. — The rule being established that the courts will not interfere to set aside a fraudulent executed contract as between the parties, it has been contended that the same principle would preclude the grantee both from enforcing his apparent right to the pos- session of the land under the deed, and from collectinn' tiie rents or damages.^ A consideration of the reason and pcil- icy of the rule, however, led the courts to hold otherwise. It is considered a mistake to suppose that the jxirties being ill pari delicto, the court would refuse the grantee all rem- edy. The deed as between the parties is jierfectly good. The grantor, by a stern but necessary policy of the law, is ' 3 Mont. 251. 15 Gray (Mass.) 564 ; Harvey v. \'ar- "■ Compare Dodge v. Freednian's Sav. ney, 98 Mass. 118. & Trust Co., 93 U. S. 383; Pitts v. = 36 N. Y. 414. Wilder, l N. Y. 525 ; Gates v. Mowry, ^ Citing Grant v. Morse, 22 N.Y. 323. ' Peterson v. Brown, 17 Nev. 176. 554 FRAUD UPON A DEBTOR. § 403 excluded from presenting the proof which would show the fraud. He is in this respect the actor ; his fraud silences and estops him from averring against his deed.^ The rule operates only in cases where the refusal of the court to aid either party frustrates the object of the transaction, and destroys one of the temptations to enter into contracts vio- lating the policy of the law.^ To permit the grantor, when sued by the grantee, to plead the mutual fraud of the par- ties, in order to enable him to avoid the effect of the deed by being permitted to remain in possession of the property without the payment of rent or damages, would virtually be permitting him to reap the reward of his own iniquity since he was the real actor in the fraud, and would tend to encourage others to violate the law, with the hope of prof- iting by committing frauds upon their creditors. It would nullify the rule.^ There is a distinction between an exe- cuted and an executory fraudulent contract. As to the latter the court, where the parties are equally participants in the fraud, in pari delicto, will leave them in the predica- ment where they place themselves, refusing any relief or interference. And where the contract is executed, as by a deed transferring the title, the court acts upon the same principle, declining either to cancel the deed or restore the title. But the effect is very different ; in one case a specific performance will be refused ; in the other the fraudulent grantee remains owner of the estate as against the grantor, and all the world except the defrauded creditors.^ § 403. Fraud upon a debtor as distinguished from fraud upon creditors. — Fraud practiced by a third party upon a debtor is manifestly a different thing from fraud upon cred- itors, and it may well be doubted w^hether a creditor can ' Broughton v. Broughton, 4 Rich. 372. See Cushwa v. Cushwa, 5 Md. Law (.S. C.) 497. See Bonesteel v. 52; Murphy v. Hubert, 16 Pa. St. 57. Sullivan, 104 Pa. St. 9. ^ Murphy v. Hubert, 16 Pa. St. 57 ; ^ Peterson v. Brown, 17 Nev. 177 ; Peterson v. Brown, 17 Nev. I77-I79- Starke v. Littlepage, 4 Rand. (Va.) ■» Walton v. Tusten, 49 Miss. 576. § 404 DECLARING DEED A MORTGAGE. 555 seize property the title to which has passed to a third party, or attack such a conveyance where the creditor proceeds upon the ground that the purchaser committed a fraud upon the seller which entitled the latter to avoid the sale. In Garretson v. Kane^ the court used these words: "A creditor cannot redress all the wrongs done to his debtor. He cannot claim damages for a trespass or for a deceit. A fraud like that offered to be proved in this case would entitle the seller to relief in a court of cquitv upon projicr terms, and possibly a creditor may have relief there ; but he cannot step in and claim that such a sale was absolutely void at law. If he can interfere at all his rights will be the same as those of his debtor A creditor who seeks to avoid a sale as fraudulent against him, does not represent his debtor, but exercises rights paramount to his. There is in truth no similarity between [the] two kinds of fraud. In the one case it is, either in fact or in law, tlic fiaud of the debtor himself, while in the other the debtor is the vic- tim, and guilty of no wrong. A case may occur combining both descriptions of fraud." ^ It will be at once apparent that this element of the law enters largely into the cases in which the debtor or grantor has a standing to attack or avoid his own transfer. § 404. Declaring deed a mortgage. — As is elsewhere stated, an absolute conveyance may be shown to be a mortgage.'^ The theory of the decisions is that dealings between the borrower and the lender of money, or debtor and creditor, conducted by requiring an absolute deed for security, and a renunciation of all legal right of redemj)tion. are so sig- nificant of oppression, and so calculated to invite to or ' 27 N. J. Law 211. 6 Wis. 645 ; Hovey v. Holcomb, 11 III. -See Graham v. Railroad Co.. 102 660; McAlpine v. Sweetscr, 76 Ind. U. S. 148. Compare Eaton v. Perry, 78. 29 Mo. 96; Prosser v. Edmonds, i Y. -'Campbell v. Dearborn. 109 Mass. & C.481; French v. Shotwell, 5 Johns. 130; Carr v. Carr. 52 N. Y. 251. See Ch. (N. Y.) 555 ; Crocker v. Bellangee, § 238. 556 MORTGAGED PROPERTY. § 404^ result in wrong and injustice on the part of the stronger toward the weaker party in the transaction, as in them- selves to constitute a quasi fraud against which equity ought to relieve, as it does against the strict letter of an express condition of forfeiture. The grounds of relief being purely equitable, it may and should be refused if the equitable considerations upon which it rests are wanting. Therefore an absolute deed made by a debtor to one cred- itor, with the intention to defraud other creditors, will not be adjudged an equitable mortgage at the solicitation of the debtor. Fraud against creditors cannot be set up, it is true, by any one not standing upon the rights of a de- frauded creditor to defeat any legal claim or interest which the fraudulent debtor may seek to enforce. But such a party is in no condition to ask a court of equity to inter- fere actively in his behalf, to secure to him the fruits of his fraudulent devices. One who comes for relief into a court whose proceedings are intended to reach the conscience of the parties, must first have that standard applied to his own conduct in the transactions out of which his grievance arises. If that condemns him he cannot insist upon apply- ing it to the other party.^ § 404(7. Redeeming mortgaged property. — The courts will not seek to enlarge the scope or legal effect of a transac- tion that is tainted with a design to defraud creditors. Hence where property is pledged or mortgaged by a debtor the pledgor or mortgagor will be permitted to redeem it though the design to defraud creditors may have been present in his mind when the pledge was made or the loan procured. Such a transaction does not in itself purport to vest an absolute title in the pledgee or mortgagee, and the courts \\\\\ not strive to enlarge or vary its operation merely to inflict punishment upon a fraudulent debtor by ' Hassam v. Barrett, 115 Mass. 256, 258. § 404^ MORTGAGED PROPERTY. 557 cutting off the right to redeem.^ Another illustration may be cited. In Gowan v. Gowan^ it was expressly decided that where a debtor deposits personal property with a bailee to protect it from creditors, the bailee cannot defeat the debtor's action to recover the property by setting up the fraud. ' See Smith v. Quartz Mining Co., 14 109, 116; Jones v. Rahilly, 16 Minn. Cal. 242 ; Taylor v. Weld, 5 Mass. 320. ' 30 Mo. 472. CHAPTER XXVII. JURISDICTIONAL QUESTIONS CONCLUSION. § 405. Jurisdiction beyond State bound- aries. 406. Outside county of defendant's residence. § 407. Appeal to United States Su- preme Court — Uniting'claims. 407^;. Certificate of division. § 405. Jurisdiction beyond State boundaries. — A few mis- cellaneous observ^ations will bring this branch of the discus- sion to a close. Creditors may be reminded that the courts of one State cannot entertain jurisdiction of an action to recover lands lying in another State where the proceeding is in rem^ for actions for the recovery of real property, or for the deter- mination of an interest therein, are local and must be brought in the State and county where the premises are situated.^ But where the court has jurisdiction of the proper parties, it may, by its judgment or decree, as we have seen, compel them to do equity in relation to lands located without its jurisdiction. The court in such case acts in personam^ and may compel a specific performance of a contract for the sale of land beyond the borders of the State,^ or a conveyance of lands outside the State jurisdic- 1 Gardner v^. Ogden, 22 N. Y. 333. ' Gardner v. Ogden, 22 N. Y. 333 ; ■ Sedgwick & Wait on Trial of Title Arglasse v. Muschamp, i Vern. 75 ; to Land, 2d ed., § 465, and cases cited. Penn v. Lord Baltinnore, i Ves. Sr. See American Union Tel. Co. v. Mid- 444; Paschal v. Acklin, 27 Texas 173 ; dleton, 80 N. Y. 408 ; Blake v. Free- Dale v. Roosevelt, 5 Johns Ch. (N. Y.) man, 13 Me. 130. Foreign statutes 174; Newton v. Bronson, 13 N. Y. have no force ex proprz'o vigore, but 587 ; Sutphen v. Fowler, 9 Paige's Ch. the title of a foreign assignee may be (N. Y.) 280; Great Falls Mfg. Co. v, recognized by comity if this can be Worster, 23 N. H. 462. done without injustice to home citizens. '' Newton v. Bronson, 13 N. Y. 587, . Matter of Waite, 99 N. Y. 433. § 40^ defendant's residence. 559 tion when the title has been fraudulently obtained by a de- fendant ; ^ and a debtor may be compelled to convey lands in another State for the benefit of creditors, so as to vest in the grantee the legal title.^ So the court has power to decree the cancellation of a void mortgage which is an ap- parent lien and cloud upon property beyond the jurisdic- tion of the court. "This power," says Johnson, J., "has been frequently exercised to compel parties to perform their 'contracts specifically, and execute conveyances of lands in other States, and also to set aside fraudulent con- veyances of lands in other States."^ "Where the neces- sary parties are before a court of equity," said Swaync, J., " it is immaterial that the res of the controversy, whether it be real or personal property, is beyond the territorial jurisdiction of the tribunal. It has the power to compel the defendant to do all things necessary, according to the lex loci rei sit(s, which he could do voluntarily, to give full effect to the decree ai^ainst him."'* Without regard to the situation of the subject-matter, such courts consider the equities between the parties, and enforce obedience to their decrees by process i?i perso7iam^ § 406. Outside county of defendant's residence. — In a case which arose in Georgia,^ it appeared that the constitution and laws of that State required that suits must be brought in the county in which the defendant resided, and it was held that it was good ground of demurrer to a bill in equity to set aside a fraudulent conveyance of land that it was not filed in the county of the defendant's residence. The de- fect was held not to be cured by the fact that the bill was filed in the county where the land was situated, or because a lessee of the defendant in possession of the j)r()jUMly was ' Gardner v. Ogden, 22 N. Y. 327. ■* Phelps v. McDonald, 99 U. S. 308. ' Bailey v. Ryder, 10 N. Y. 363. ' Miller v. Sherry. 2 Wall. 249 ; ' Williams v. Ayrault, 31 Barb. (N. Mitchell v. Bunch, 2 Paige (N. Y.) 606. Y.) 364, 368. ° Taylor v. Cloud, 40 Ga. 288. 560 UNITING CLAIMS. §§ 407, 407^ a party to the bill, when no substantial relief was sought against such tenant.^ This is exceptional practice, for, at least so far as realty is concerned, the action to set aside a conveyance would be local, and local actions should be brought in the county where the land lies.^ § 407. Appeal to United States Supreme Court — Uniting claims.— When judgment-creditors join in a suit to set aside a fraudulent conveyance by their debtor, and the amounts found due to the creditors respectively are less than the jurisdictional limit of the United States Supreme Court, the several claims cannot be united to give jurisdiction on appeal.^ In Seaver v. Bigelows,'* Nelson, J., said : " The judgment-creditors who have joined in this bill have sepa- rate and distinct interests depending upon separate and distinct judgments. In no event could the sum in dispute of either party exceed the amount of their judgment The bill being dismissed each fails in obtaining payment of his demands. If it had been sustained, and a decree rendered in their favor, it would only have been for the amount of the judgment of each." In Schwed v. Smith ^ the same court held that if the decree was several as to creditors it was difficult to see why it was not also several as to their adversaries, the theory being that although the proceeding was in form but one suit, its legal effect was the same as though separate suits had been instituted on each of the separate causes of action.^ § 407^. Certificate of division. — Whether a sale and deliv- ery of a debtor's stock of goods, by way of preference of a bona fide creditor, is fraudulent against other creditors, in- > See Smith v. Bryan, 34 Ga. 53. S. 548 ; Ex parte Phoenix Ins. Co., 117 "" Sedgwick & Wait on Trial of Title U. S. 369 , Tupper v. Wise, 1 10 U. S. to Land, 2d ed., § 465. 398 ; Stewart v. Dunham, 1 15 U. S. 61. ' Schwed V. Smith, 106 U. S. 188; * 5 Wall. 208. Gibson v. Shufeldt, 122 U. S. 27. See " 106 U. S. 188. Fourth National Bank v. Stout, 113 U. " See Ex parte Baltimore & O. R.R. S. 684; Hawley v. Fairbanks, 108 U. Co., 106 U. 5. 5. § 407a CONCLUSION. 561 yolves a question of fact, depending upon all the circum- stances and cannot be referred to the United States Su- preme Court by certificate of division of opinion.^ This closes the discussion concerning fraudulent convey- ances and creditors' bills. We have traced the famous statute of Elizabeth from its enactment to the present time, and have seen how important the place it fills has become in our jurisprudence. The volume of litigation engendered by covinous alienations is scarcely creditable to the integrity of our people. The ability of the courts to successfully grapple with fraudulent debtors without the coercive aid of imprisonment frequently becomes a matter of grave doubt. Hence it is that the existence of cases accomplish- ing results like those of Cutting v. Cutting,^ and Broadway Bank v. Adams,^ is to be so deeply deplored. That the law regulating the remedies of creditors against covinous conveyances and for the conversion of equitable assets is developing in the right direction, and becoming more effect- ual against the debtor class, must be conceded. It is still, however, in an unsatisfactory condition. The many forms in which a debtor's assets can be secreted or spirited away, and the endless varieties of fraudulent devices, render the solution of the problem a matter of extreme difficulty. Time and experience alone can work out a satisfactory conclusion. The development must of necessity be in the courts ; we doubt the ability of the legislative power to further materially progress this branch of our law. ' Jewell V. Knight, 123 U. S. 426. ' See § 40. ' See § 367. 86 VOID AND VOIDABLE ACTS. CHAPTER I. VOID AND VOIDABLE ACTS DISCUSSED. § 408. Void and voidable acts. 409. Importance of the subject. 410. Scope of the inquiry. 411. The distinction generally stated — Illustrations. 412. Misleading definitions in the early cases. 413. Doctrine of degrees of void acts. 414. Other inaccuracies. 415. Nullities or void acts defined. 416. Illustrations of void acts. 417. Retrospective legislation affect- ing remedies. 418. Adjudications to avoid nullities. 419. No degrees of nullities. 420. Void and voidable acts distin- guished. 421. Absence of jurisdiction as dis- tinguished from excess of jurisdiction. 422. Jurisdiction and the exercise of jurisdiction. 423. Distinctions in jurisdiction con- sidered. 424. Legislation or acts in aid of the rebellion. 425. Result of the cases— Principles applicable to a nullity. 426. Voidable acts further defined. §427. 428. 429. 430- 431- 432. 433. 434- 435- 436. 437- 438. 439- 440. 441. 442. 443- 444- 445- 446. 446-1 446^. Effect of avoidance. Four classes of defective or in- effectual acts. Void and illegal acts discussed. Policy of the law. Guilty knowledge. Illegal acts. Presumption of legality. Void in part, void in Mo. Void acts which are not illegal. [ Acts void by statute of frauds. Void corporate acts. [ Consummated illegal acts. Void and voidable marriages. Irregularities and nullities dis- tinguished. Justification under irregular or erroneous process. Words " erroneous " and " ir- regular " discussed. Void used in the sense of void- able. Terms " become void " and " de- termined " distinguished. Void or voidable negotiable in- struments. , Defective public securities. §408. Void and voidable acts.— Covinous alienations be- long to one of the common classes of voitlable acts or transactions. The use of the word " void " in the sense of 564 VOID AND VOIDABLE ACTS. § 408 "voidable" in the statute of Elizabeth^ has also aided in creatine some of the confusion to be found in the author- ities concerning the legal signification of, and distinction between, these two words. The inquiry upon which we are about to enter has been suggested in part by these considerations. Though the discussion opens a wide field, we shall necessarily treat it in a limited and very gen- eral way, making only incidental reference to fraudulent conveyances. A glance at the authorities has convinced the writer that exhaustive treatment upon so general a theme is not, in the nature of things, possible. We would willingly suppress what has been here attempted, had not other counsels protested that it should be preserved. A clear comprehension of the legal characteristics of void and voidable acts, and an accurate statement of the dis- tinctions which exist in modern jurisprudence between such acts, is manifestly of the highest importance. These classes of acts are usually treated and considered as mere incidents in connection with the discussion of rights flow- ing from valid acts. No controlling objection, however, can be suggested to the independent classification and dis- cussion of such acts. A task of this kind successfully accomplished would tend to render the body of our law more compact and accessible, lighten the labors of the student, and be especially valuable as bringing, side by side, cases decided from common motives or considerations, arising out of dissimilar transactions. The great confusion which has been introduced into this branch of the law is due in part to the meagre, imperfect, and misleading defi- nitions of "nullities*' or "void acts" contained m the earlier reports; in part to the carelessness of judges and law writers, and largely to the improper use by legislative bodies of the word " void," in statutory enactments, where " voidable " was intended. ' See §§ 317, 445- § 409 IMPORTANCE OF THE SUBJECT. 565 Blunders in determining whether an act is void or void- able, or in deciding which of these two great classes em- brace it,- are often fraught with disastrous consequences to the rights of the parties interested. At the threshold of the inquiry there is presented a distinction in jurisdiction, and a distinction as to the form of action or procedure, or the character of the plea or answer to be interposed, in a legal controversy involving the transaction. If the act is an absolute nullity it may, as a general rule, be totally ignored and disregarded, and no loss of rights will result from laches or inaction or in any way. On the contrary, should the act be voidable merely, but not absolutely void, speedy action to affirm and ratify it, or disaffirm and avoid it, by plea, suit, notice, or other act, may become necessary to protect and preserve the rights of the parties. § 409. Importance of the subject. — These two words " void " and "voidable," or rather the legal results flowing from their constant use and application in the law, plav an im- portant part in our jurisprudence, and are constantlv com- ing up for interpretation and exposition in every phase of litigation, and are the subject of consideration in practically all the varying transactions of life. A careful study of the cases, and their number is large, where the boundaries be- tween nullities, or acts which are absolutely without legal effect, and voidable acts, or transactions which are or may become valid for some or all purposes, have been over- looked or disregarded, abundantly justifies special treat- ment of the subject, and renders necessary a discussion of the different methods of redress applicable to each class of acts.* This discussion, and the classification' of the cases 1 Void and voidable confounded. — third persons the distinction is highly " Probably no words are more inaccu- important, because nothing can be rately used in the books than void founded upon a deed which is af>so- SinA voidable." Chief-Justice Ryan in Itttely void ; whereas from those which Bromley v. Goodrich, 40 Wis. 139. are only voidable fair titles may flow. *' In regard to the consequences to These terms have not always been used c,66 IMPORTANCE OF THE SUBJECT. § 409 showing- the application of the principles by virtue of which void and voidable acts are defined and distinguished, will of necessity incidentally involve the rules and tests govern- ing acts, contracts, or transactions which possess all the necessary elements of vitality, are legal and binding, being neither void nor voidable, and the consummation of which does not contravene any settled principle of law. Rights resting upon or flowing from acts or contracts of this char- acter will not be considered, except in so far as may be requisite to point out the fatal error or imperfection in the void or voidable act under discussion, by comparison or analogy with an act which concededly would be valid and effectual for every purpose. with nice discrimination; indeed in some books there is a great want of precision in the use of them." Chief- Justice Parker in Somes v. Brewer, 2 Pick. (Mass.) 191. See Crocker v. Bel- langee, 6 Wis. 668. " The use of the word ' void ' in a loose and uncertain sense is no novelty, either in legislation or the language of jurists." Terrill v. Auchauer, 14 O. S. 85. See Van Shaack V. Robbins, 36 Iowa 204 ; Green v. Kemp, 13 Mass, 518 ; Brown v. Brown, 50 N. H. 552 ; Kearney v. Vaughan, 50 Mo. 284. " The word ' void ' has certainly been construed as ' voidable ' in some instances," Denman, Ch. J., in Pearse v. Morrice, 2 Ad. & El. 94. " It is by no means easy to lay down any one rule, whereby to distinguish between an irregularity and that which makes a proceeding a nullity," Cole- ridge, J., in Chambers v, Coleman, 9 Dowl. 594. " Deductions founded on the broadest meaning of this word (void) would lead to greater errors than are found in the most erroneous cases, while those founded on its nar- rower and more usual meaning seldom err. When we say that any given class of contracts is void, let us be sure of the meaning of the word before we undertake to declare all the conse- quences that follow from its applica- tion. Observation of its use will give us its meaning." Again it is said in this same case : " Acts tainted with an infirmity may very well, and in very correct language, be called by some void, and by others voidable, because, regarded in different aspects, they are both. A contract may for a time be voidable as against one, and void as against the others, whom it is intended to affect ; voidable as against the par- ties doing wrong, and void as against the persons wronged ; or vice versa, voidable in favor of the persons wrong- ed, and void in favor of the wrong- doer ; void as not binding to fulfil and voidable after fulfilment ; voidable in fact because void or not binding in right. And when the party wronged elects to avoid the act, it becomes bind- ing on neither, or rescinded as to both. Voidable because one party is bound, and the other, or some other person is not." PearsoU v, Chapin, 44 Pa. St. 13. " Many difficulties .... have arisen out of the use of the words 'void ' and 'voidable,' and the uncertain extent of meaning attached to them." Dillon, C. J., in Allen v. Berryhill, 27 Iowa 538. §§ 4TO> 411 THE DISTINXTION STATED. 567 § 410. Scope of the inquiry. — The inquiry will therefore be limited chiefly to immature and imperfect acts, to what are sometimes called legal abortions ; to acts which are void because settled principles of law have interfered to prevent their formation or consummation ; to cases where "a con- tract fails to be made when it seems to have been, or, hav- ing been made, can be rescinded by one side or the other, and treated as if it had never been,"^ The discussion will embrace not only a general classification of these acts, but in addition a consideration of the principles and rules gov- erning their avoidance or affirmance. § 411. The distinction generally stated— Illustrations. — It may be observed in a very general way that acts are con- sidered void largely for reasons prompted by considerations of public policy, for example, transactions which are mala in se, or in some cases rnala prohibit a ; that acts arc void- able chiefly where the rights of individuals who are regarded as under the guardianship of the law would be injuriouslv afl"ected by their enforcement.'^ These tests are not exclu- sive. The acts of infants, lunatics, and idiots arc familiar examples of the latter class. They are peculiarly Under the protection of the law. The infant is presumed to lack sufficient discretion to act or contract ; reason is wantino; in degree. In the case of a lunatic, however, espcciallv after inquisition, or of an idiot, ^ reason is wanting alto- gether. Hence it is said that a lunatic needs more pro- tection than a minor.'* The policy of the law rendering ' Holmes' Common Law, p. 308. more of the primary elements which ' Judge Holmes in his admirable lee- have been shown, or are seen at once, tures on the Common Law, says (p. to be necessary to the existence of a 308) : " When a contract fails to be contract." made, although the usual forms have ' See Owing's Case, i Blarwl's Ch. been gone through with, the ground of (Md.) 3S6 ; Stewart v. Lispenard, 26 failure is commonly said to be mistake, Wend. (N. Y.) 314; Crosswell v. Pco- misrepresentation, or fraud. But I pie, 13 Mich. 436 ; A'.r /» Savery v. King. 35 Eng. Law & Eq. torneys at Law, § 273; Nesbit v. Lock- 100, 104. man, 34 N. Y. 169. ' Jennings v. McConnel, 17 111. 148 ; ' Casborne v. Barsham, 2 Beav. 78. Dunn v. Record, 63 Me. 17 ; Kisling v. ' See Edwards v. Meyrick, 12 L. J. Shaw, 33 Cal. 425. Ch. 52; Wood V. Downe, 18 Ves. 120; ' Ford v. Harrington, 16 N. Y. 289; Lewis V. Hillman, 3 H. L. Cas. 607. Nesbit v. Lockman, 34 N. Y. 169. 664 PARENT AND CHILD. § 475 prejudice of his client would be subjecting him to " a crush- ing influence."^ For the same general reasons an attorney is not permitted to purchase the subject-matter of the liti- gation.^ Such purchases have been held absolutely void.^ It can, however, scarcely be said to be the policy of the law, to declare that a lawyer shall not have the power to pur- chase property from his client;^ on the contrary, the evi- dent purpose of the rule is to carefully scrutinize such transactions, and impose upon the attorney the burden of demonstrating that the price is fair, and as large as could possibly have been obtained from a stranger.^ § 475. Transactions between parent and child. — Transac- tions, contracts, and dealings between parent and child, it has been asserted, are sometimes classed with those be- tween attorney and client, and courts scrutinize such deal- ings, and interpose to set aside such contracts substantially for the same reasons in the one case as in the other.^ The court in Cowee v. Cornell,^ alluding to the pre- sumption against transactions where trust relations ex- ' Miles V. Ervin, I McCord's Ch, (S. of satisfying the court that the will was C.) 524 ; Yeamans v. James, 27 Kan. the free, untranimeled, and intelligent 207. In Matter of Will of Smith, 95 expression of the wishes and intention N. Y. 523, Andrews, J., said : " The of the testatrix." Compare Nesbit v. mere fact, therefore, that the proponent Lockman, 34 N. Y. 169; Cowee v. was the attorney of the testatrix did Cornell, 75 N. Y. 100. not, according to the authorities cited, ° Hall v. Hallet, i Cox's Eq. 134. create a presumption against the va- ^ West v. Raymond, 21 Ind. 305. See lidity of the legacy given by her will. Harper v. Perry, 28 Iowa 57 ; Simpson But taking all the circumstances to- v. Lamb, 40 Eng. L. & Eq. 59. gether — the fiduciary relation, the ■* Hess v. Voss, 52 III. 472 ; Roman change of testamentary intention, the v. Mali, 42 Md. 513. age, and mental and physical condition ^ See Yeamans v. James, 27 Kan. of the decedent, the fact that the pro- 195. ponent was the draftsman and principal * Ford v, Harrington, 16 N. Y. 292 ; beneficiary under the will and took an i Story's Eq. Jur. §§ 307-310. See active part in procuring its execution, Cowee v. Cornell, 75 N. Y. 91 ; Car- and that the testatrix acted without in- penter v. Soule, 88 N. Y. 256; Whit- dependent advice, a case was made ney v. Martine, 88 N. Y. 538; Matter which required explanation, and which of Will of Smith, 95 N. Y. 523. imposed upon the proponent the burden ' 75 N. Y. 91, loi. § 476 LEGAL EFFECT OF DRUNKENNESS. 665 ist, say: "The trust and confidence, or the superiority on one side and weakness on the other must be proved in each of these cases ; the law docs not presume them from the fact, for instance, that one party is a grandfather and old, and the other a grandson and young, or that one is an employer and the other an employer § 476. Other phases — Legal effect of drunkenness. — It can- not be laid down as a rule tiiat because a man is a drunk- ard he is of unsound mind.^ In Peck v. Cary,*^ a will case, the test is stated to be, that " in order to vitiate the act the testator must, at the time of executing the i)aper, have been under the influence of intoxicating liquor, and to such a degree as' to disorder his faculties and pervert his judg- ment." In Pierce v. Pierce 'Mt is said that the drunken- ness must exist " to such an extent as to deprive a testator of the power of controlling his conduct, and knowing what he is about." ^ In Van Wyck v. Brasher,^ Earl, J., said: "A drunkard is not incompetent like an idiot or one gen- erally insane. He is simply incompetent upon proof that at the time of the act challenfjed his understanding^ was clouded or his reason dethroned by actual intoxication." ** It is generally a question of fact for the court or jury to determine whether inebriety has had the effect of render- ing a man's mind unsound, either permanently or tem- porarily, covering the time of the performance of tiie act under consideration.^ Habitual drunkenness does not, as matter of law, ren- ' Estate of Johnson, 57 Cal. 529. Down v. McGourkey. 15 Hun (N. Y.) ^ 27 N. Y. 20. 444, affi'd 78 N. Y. 614. 3 38 Mich. 417. ' 81 N. Y. 262. * See, further, Estate of Cunningham, '''Citing Peck v. Car)-, 27 N. Y. 9; 52 Cal. 465 ; Duffield v. Morris, 2 Harr. Gardner v. Gardner, 22 Wend. (N. Y.) (Del.) 375; Nussear v. Arnold, 13 S. & 526, R. (Pa.) 323 ; Brown v. Torrey, 24 ' Estate of Johnson, 57 Cal. 529 ; S. Barb. (N. Y.) 583 ; "Waters v. Cullen, C. 2 American Probate Rep. 524, and 2 Bradf. (N. Y.) 354; Key v. Holloway, the learned note of Wm. \V. Ladd, 7 Baxter (Tenn.) 575 ; s. c. i Am. Esq., the editor. Prob. Rep. 360, and note of the editor ; 666 DELIRIUM TREMENS. § 4/7 der a man incapable of making a will. No presumption of incapacity attaches.^ A person adjudged an habitual drunkard, may even make a valid will while subject to the commission. The existence of the commission is only prima facie evidence of incapacity, which may be re- butted.^ It may be noted, however, that a greater degree of capacity is in general required to make a contract than to make a will.^ § 477. Delirium tremens as distinguished from drunken madness. — In United States v. McGlue^ the learned Judge Curtis, in charging the jury, said: "Although delirium tremens is the product of intemperance, and therefore in some sense is voluntarily brought on, yet it is distinguish- able, and by the law is distinguished from that madness which sometimes accompanies drunkenness. If a person suffering under delirium tremens is so far insane as I have described to be necessary to render him irresponsible, the law does not punish him for any crime he may commit. But if a person commits a crime under the immediate in- fluence of liquor, and while intoxicated, the law does pun- ish him, however mad he may have been. It is no excuse, but rather an aggravation of his offense that he first de- prived himself of his reason before he did the act It is an inquiry of great importance in this case .... ' See Gardner v. Gardner, 22 Wend, that a dissipated man cannot make a (N. Y.) 526 ; Lewis v. Jones, 50 Barb, contract or execute a will, nor that one (N. Y.) 645 ; Matter of Patterson, 4 who is in the habit of excessive indul- How. Pr. (N. Y.) 34 ; Thompson v. gence in strong drink, must be wholly Kyner, 65 Pa. St. 368; Leckey v. Cun- free from its influence when performing ningham, 56 Pa. St. 370; Pierce v. such acts. If fixed mental disease has Pierce, 38 Mich. 412. supervened upon intemperate habits, ' Lewis V. Jones, 50 Barb. (N. Y.) the man is incompetent and irrespon- 645. See Stone v. Damon, 12 Mass. sible for his acts. If he is so excited 488;Breed V. Pratt, 18 Pick.(Mass.)ii5. by present intoxication as not to be " Ritter's Appeal, 59 Pa. St. 9 ; War- master of himself, his legal acts are nock V. Campbell, 25 N. J. Eq. 485 ; void, though he may be responsible for Butler V. Mulvihill, i Bligh 137. In his crimes." See, further. Turner v. Peck V. Gary, 27 N. Y. 23, Chief Jus- Cheesman, 15 N. J. Eq. 243. tice Denio said: "It is not the law •* Curtis' C. C. 12. § 47^ DURESS. 667 whether this homicide was committed while the prisoner was suffering under that marked and settled disease of de- lirium tremens, or in a fit of drunken madness."' So a marriage will not be rendered void because entered into while the party was Intoxicated, while insanity from de- lirium tremens produced by intoxication will avoid it."'^ § 478. Duress ; its nature and classes. — Cases in which acts are avoided for duress not infrequently command the atten- tion of the courts. Duress, in its more extended sense, signifies that degree of severity, either threatened or im- pending, or actually inflicted, which is sufiicient to over- come the mind and will of a person of ordinary firmness.^ When the contract is made under such circumstances it is said to be void,^ which generally means that it may be avoided. The common law has divided duress into two classes, namely, duress of imprisonment, and duress per minas. It may be observed at the outset that it is not duress for a party to insist upon his legal rights.^ Where a woman was induced to do an act under a repre- sentation that it was the only thing that would save her son from imprisonment, or the act was induced by threats of suicide on his part, this was held, in the New York Court of Appeals, not to be duress in a legal sense, "^ But, on the other hand, a promissory note obtained from a married woman by duress, though it falsely stated that it was given ' See, further, United States V. Drew, which a contract is voidable, consists 5 Mason 28 ; United States v. Forbes, cither in violence to the person, or in Crabbe 558; Bennett v. State, Mart. & threatened violence of the same char- Yerg. (Tenn.) 133; Carter v. State, 12 acter ' duress /«•;- minas.' It will not Texas 500; Bales v. State, 3 W. Va. be enough if the safety of a man's house 685; People V. Rogers, 18 N. Y. 9. or goods only be threatened, and the ' See Clement v. Mattison, 3 Rich, fear caused must be, as has been said. Law (S. C.) 93. ' not a vain fear but such as may befall 'Fellows V. School District, 39 Me. a constant man"; '7>am' iimort's justa 561. cxcusatio fiofi est.'" Holland's Juris- ■* Burr V. Burton, 18 Ark. 214. prudence, p. 200. '" McPherson v. Cox, 86 N. V. 478. ° Metropolitan Life Ins. Co. v. Meek- " Duress, wliich is another ground on er, 85 N. Y. 614. 668 DURESS OF GOODS. § 47Q for the benefit of her separate estate, cannot be enforced, even in the hands of a bona fide holder for value.-^ In Baker v. Morton,^ Mr. Justice Clifford observed : "Actual violence is not necessary to constitute duress even at com- mon law, as understood in the parent country, because con- sent is the very essence of a contract, and if there be com- pulsion there is no consent, and it is well-settled law that moral compulsion, such as that produced by threats to take life or to inflict great bodily harm, as well as that produced by imprisonment, is sufficient to destroy free agency, with- out which there can be no contract, as in that state of the case there is no consent.^ Where a party enters into a con- tract for fear of loss of life, or for fear of loss of limb, or fear of mayhem, or for fear of imprisonment, the contract is as clearly void as when it was procured by duress of imprisonment, which is where there is an arrest for an improper purpose without just cause, or where there is an arrest for a just cause but without lawful authority, or for a just cause but for an unlawful purpose, and the rule is that in either of those events the party arrested, if he was thereby induced to enter into a contract, may avoid it as one procured by duress." § 479. Duress of goods. — Money paid under duress of goods may be recovered back ; such payments cannot be regarded as voluntary.^ Where a person gets possession of a deed, and, by threatening to destroy it, extorts money from another who is interested in it, the payment so made is involuntary, and the money may be recovered back.^ An ' Loomis V. Ruck, 56 N. Y. 462. ern Steamship Co., 74 N. Y. 125 ; Shaw '^ 12 Wall. 150, 157. V. Woodcock, 7 Barn. & C. 73 ; Briggs ^ Citing Chitty on Contracts 192; 2 v. Boyd, 56 N. Y. 293; Cook v. City of Greenl. Ev. 283 ; Co. Second Inst. 482 ; Boston, 9 Allen (Mass.) 393 ; McPher- 2Rolle'sAbr. 124; Richardson v. Dun- son v. Cox, 86 N. Y. 472; Benson v. can, 3 N. H. 508; Watkins v. Baird, 6 Monroe, 7 Cush. (Mass.) 125. See note Mass. 511. to London & N. W. Ry. Co. v. Ever- * Scholey v. Mumford, 60 N, Y. 498 ; shed, 24 Moak's Eng. Rep. 634. Baldwin v. Liverpool and Great West- ^ Motz v. Mitchell, 91 Pa. St. 114. § 479 ' DURESS OF GOODS. 669 important principle must be noticed in this connection. In Chandler v. Sanger^ it was held that money paid by a party to free his goods from an attachment levied for the purpose of extorting money, by a person who knew he had no cause of action, could be recovered back in assumpsit for money had and received, " without proof of such a termination of the former suit as would be necessary to maintain an action for malicious prosecution."^ In Harmony V. Bingham," Ruggles, J., said: "When a party is compelled, by duress of his person or goods, to pay money for which he is not liable, it is not voluntary but compulsory. Where the owner's goods are unjustly de- tained on pretence of a lien which does not exist, he may have such an immediate want of his goods that an action at law will not answer his purpose. The delay may be more disadvantageous than the loss of the sum demanded. The owner, in such case, ought not to be subjected to the one or the other, and, to avoid the inconvenience or loss, he may pay the money, relying on his legal remedy to get it back again." Where a person who paid tolls to a naviga- tion company denied at the time of payment its right to exact the tolls, and paid them only because the company threatened, in case of non-payment, to stop his business, which it was able to do, it was held that the payment was not voluntary, and that the amount paid could be recovered back if the tolls were unlawfully exacted.* W^here a pawn- broker refused to deliver pawned plate except upon pay- ment of excessive interest, and the owner paid it to obtain his property, he was allowed to recover back the excess.* ' 114 Mass. 365. well v. Peden, 3 Watts (Pa.) 328: ' See Watkins v, Baird, 6 Mass. 506; Cadaval v. Collins, 4 Adol. & El. 858 ; Shaw, C. J., in Preston v. Boston, 12 S. C. 6 Nev. & Man. 324 ; Gates v. Hud- Pick. (Mass.) 7, 14; Benson v. Mon- son, 6 Exch. 348. roe, 7 Cush. (Mass.) 125-131 ; Carew •'' 12 N. Y, 116. V. Rutherford, xo6 Mass. i, 11, et scq.; ^ Lehi<;h Coal Co. v. Brown, 100 Pa. Richardson v. Duncan, 3 N. H. 508; St. 33S ; S. C. 27 Alb. L. J. 499. Sartwell v. Horton, 28 Vt. 370; Col- '■• Astley v. Reynolds, 2 Slra. 915. 6-0 INVOLUNTARY PAYMENTS. §§ 480, 48 1 An action will lie to recover back money paid for goods unlawfully detained under a pretended lien,^ or money wrongfully exacted by a corporation as a condition of per- mitting a transfer of stock.^ § 480. Involuntary payments. — The Supreme Court of the United States say, that to constitute coercion or duress sufficient to render a payment involuntary, there must be some actual or threatened exercise of power possessed, or believed to be possessed, by the party exacting or receiv- ing the payment, over the person or property of the other, from which the latter has no other means of immediate relief than by making the payment.^ And, it is stated in the Court of Appeals of Maryland, that " a payment is not to be regarded as compulsory unless made to eman- cipate the person or property from an actual and existing duress, imposed upon it by the party to whom the money IS paid. §481. Undue influence.— " What is known in English law as ' undue influence' is also held to make a contract voidable.^ This consists in acts which, though not fraudu- lent, amount to an abuse of the power, which circumstances have mven to the will of one individual over that of an- other. In some relations, such as that of solicitor and client, or parent and child, the existence of this exceptional power is often presumed, but its existence is capable of being proved in other cases also." ^ A conveyance obtained by one person from another, where advantage is taken of ' Ashmole v. Wainvvright, 2 Ad. & Tillinghast, 18 Cal. 265; Mays v. Cin- El. (N. S.) 837 ; Harmony v. Bingham, cinnati, i Ohio St. 268 ; Fleetwood v. 12 N. Y. 109, 116; Briggs v. Boyd, 56 City of New York, 2 Sandf. (N. Y.) N. Y. 293. 475; Harmony v. Bingham, 12 N. Y. ^ Bates V. N. Y. Ins. Co., 3 Johns. 112. Cas. (N. Y.) 238. ' Davis v. Calvert, 5 Gill & J. (Md.) ^ Radich v. Hutchins, 95 U. S. 269 ; Eckert v. Flowry, 43 Pa. St. 46 ; 213. Conley v. Nailor, 118 U. S. 135. * Mayor of Baltimore V. Lefferman, 4 ^Holland's Jurisprudence, p. 200. Gill (Md.) 436. See Brumagim v. See § 13, note. § 481 UNDUE INFLUENCE. 67 1 the latter's weakness or clouded or enfeebled faculties, will not be sustained by a court of equity. But it is not suffi- cient to suggest mere weakness or indiscretion of the party conveying; it must be shown that there was fraud in the party contracting, or some undue means made use of to control that weakness; and, in such case, though fraud be found, it does not necessarily follow in ecjuity that the deed must be absolutely set aside as void ; it may be al- lowed to stand as security for whatever amount, if any, may be found to have been actually due between the par- ties.^ In order to avoid a grant on the ground of undue influence, it must be shown that the influence existed, and was exercised for an undue and disadvantageous purpose. The cause of the weakness of mind is not material. It may be from duress, general imbecility, accidental de- pression, constitutional despondency, or the result of sud- den fear or apprehension. " Undue influence," said Andrews, J.,^ "which is a spe- cies of fraud, when relied upon to annul a transaction inter partes, or a testamentary disposition, must be proved, and cannot be presumed. But the relation in which the par- ties to a transaction stand to each other, is often a material circumstance and may of itself in some cases be sufficient to raise a presumption of its existence." In the cele- brated case of Marx v. McGlynn,^ Earl, J., uses these words : *' Undue influence may be exercised 1)\- {>hysical coercion or by threats of personal harm and duress, by which a person is compelled, really against his will, to make a testamentary disposition of iiis property. That kind of undue influence can never be presumed. It must be shown by evidence legitimately proving the facts, ami where it is established the will cannot be admitted to probate, for the ' Anthony v. Hutchins, 10 R. I. 165. ^ 88 N. Y. 370. See Lodcr v. Whelp- See §§ 192-195. ley, m N. Y. 250. ^ MatterofV^illofSmith,95N.Y.522. 672 UNDUE INFLUENCE. § 48 1 reason that it is not the will of the testator. There is an- other kind of undue influence more common than that just referred to, and that is where the mind and the will of the testator has been overpowered and subjected to the will of another, so that while the testator willingly and intelligently executed a will, yet it was really the will of another, in- duced by the overpowering influence exercised upon a weak or impaired mind. Such a will may be procured by working upon the fears or the hopes of a weak-minded person ; by artful and cunning contrivances ; by constant pressure, persuasion, and effort, so that the mind of the tes- tator is not left free to act intelligently and understanding- Iv. It is not sufficient, however, for the purpose of estab- lishing undue influence, to show that the will is the result of affection or gratitude, or the persuasion which a friend or relative may legitimately use ; but the influence must be such as to overpower and subject the will of the testator, thus producing a disposition of property which the testator would not have made if left freely to act his own pleasure, and this kind of influence will not generally be presumed, but must be proved like any other fact by him who alleges It. Whenever one party is so situated as to exercise a con- trollinof influence over the will, conduct, and interests of another, contracts then made will be set aside, even upon slight evidence of the improper exercise of such influence.^ 1 The People v. Young Men's, etc. v. Barsham, 2 Beav. 76 ; Dent v. Ben- Society, 65 Barb. (N. Y.) 357. See nett, 7 Simons 539; Eadie v. Slim- Sears V. Shafer, 6 N. Y. 268 ; Casborne mon, 26 N. Y. 9. CHAPTER III. RATIFICATION OR AFFIRMANCE OF VOIDABLE ACTS. 1 482. Affirmance of voidable acts. 483. Knowledge essential to ratifica- tion — Effect. 484. Affirmance of executors' voida- ble acts. 485. Receipt of proceeds of sale un- der protest. 486. Executor's title. 487. Avoidance a personal right. 488. Ratification of infant's voidable act. I 489. No ratification of void act. 490. Ratifying void bill of lading. 491. Facts insufficient to constitute ratification by acquiescence. 492. Lord Tenterden's Act. 493. Affirmance by retention of the property. 494. Affirmance of voidable corpo- rate acts. 495. Affirmance effected by laches. § 482. Affirmance of voidable acts. — Ratification of the unauthorized act of another operates upon the act ratified precisely the same as though the authority to do the act had been previously given. ^ It is, in other words, equiva- lent to a prior authorization.*^ Huis the act of one assum- ing to be an agent, but done without authority, may be ratified, and in such case the liability of the principal arises from the ratification.^ It follows that a ratification can only be made when the party ratifying possesses the power to perform the act ratified.'' In order to operate as a con- ' Cook v. Tullis, 18 Wall. 332. "^ Sheldon H. B. Co. v. Eickemeyer H. B. M. Co.. 90N. Y. 613. = Conrad v. Abbott, 132 Mass. 331. See 'Clement v. Jones, 12 Mass. 60; Pratt v. Putnam, 13 Mass. 361 ; Fisher V. Willard, 13 Mass. 379; Emerson v. Newbury, 13 Pick. (Mass.) 377; Shaw v. Nudd, 8 Picjc. (Mass.) 9; Hewes v. Parkman, 20 Pick. (Mass.) 90. * Marsh v. Fulton Co., lo Wall. 683. 43 In this case Mr, Justice Field remarked : " It is also contended thai if the bonds in suit were issued without authority their issue was subsequently ratified, and various acts of the supervisors of the county are cited in support of the supposed ratification. Tlitsc acts fall very far short of showing any attempted ratification even by the suijcrvisors. But the answer to them all is that the power of ratification did not lie with 6/4 RATIFICATION. § 483 firmation, the act of the party must be intended to be a direct recognition and acknowledgment of the validity of the transfer, and not the result of a mere collateral agree- ment.^ It is said that there are three ways of affirming the voidable contract of an infant : First, by an express ratifi- cation ; second, by the performance of acts from which an affirmance may reasonably be implied ; and thirdly, by the omission to disaffirm within a reasonable time.^ § 483. Knowledge essential to ratification— Effect. — The rule that a ratification of an unauthorized act of an agent, to be binding, must be made with full knowledge of the facts, is sound in principle and firmly established by au- thority.^ Confirmation and ratification imply to legal minds knowledge of the defects in the act to be confirmed, and of the right to reject or ratify it.^ Hence a cestui que trust, against whom it is sought to establish a ratification, must not only have been acquainted with the facts, but must also have been apprised of the law as to how those the supervisors. A ratification is, in sions of approval, or in some other in- its effect upon the act of an agent, direct viray, give validity to acts, when equivalent to the possession by him of they were directly in terms prohibited a previous authority. It operates upon by statute from doing those acts until the act ratified in the same manner as after such vote was had. That would though the authority of the agent to do be equivalent to saying that an agent, the act existed originally. It follows not having the power to do a particular that a ratification can only be made act for his principal, could give validity when the party ratifying possesses the to such act by its indirect recogni- power to perform the act ratified. The tion." supervisors possessed no authority to ' Stout v. Stout, TJ Ind. 537. make the subscription or issue the - Kline v. Beebe, 6 Conn. 494. bonds in the first instance without the ''McClelland v. Whiteley, 15 Fed. previous sanction of the qualified voters Rep. 327 ; Owings v. Hull, 9 Pet. 607 ; of the county. The supervisors in that Combs v. Scott, 1 2 Allen (Mass.) 493 ; particular were the mere agents of the Pittsburgh & S. R.R. Co. v. Gazzam, county. They could not, therefore, 32 Pa. St. 340. See Craighead v. Pe- ratify a subscription without a vote of terson, 72 N. Y. 279; Yellow Jacket the county, because they could not S. M. Co. v. Stevenson, 5 Nev. 224; make a subscription in the first in- Oilman, C. & S. R.R. Co. v, Kelly, "j"] stance without such authorization. It III. 426. would be absurd to say that they could, •'Adair v. Brimmer, 74 N. Y. 554. without such vote, by simple expres- See Ritch v. Smith, 82 N. Y. 627. §4^4 executors' voidable acts. 675 facts would have been dealt with by a court of equity. And all that is implied in the act of ratification, when set up in equity by a trustee against his cestui que trust, must be proved, and will not be assumed. The maxim, '' igno- rantia legis exctisat nemijiem^' cannot be invoked in such a case. Proof must be adduced that the cestui qitc tj-nst was apprised of his legal rights.^ In Benninghoff v. Agri- cultural Insurance Company," Ruger, Ch. J., made use of this language : " It is essential to the validity of an act which is claimed to have been authorized by a subsequent ratification thereof, that the principal should have had full knowledge of the circumstances attending the performance of the act of the assumed agent at the time of such ratifi- cation." In a recent case Gray, J., remarked : " Ratifica- tion implies a knowledge of the circumstances, and of the right to reject or ratify."^ The maxim, '' oinnis I'atihabitio retroti'ahitur et mandato piHori cBquiparatur^' is fre- quently invoked by parties claiming the benefits of a rati- fication, and asserting that it has the same effect as a prior command.^ It may be noted that the law does not admit of a ratification which will defeat the intervening rights of third parties, and that it does not matter whether the third party is an individual or a corporation.^ § 484. Affirmance of executors' voidable acts. — In Pease V. Creque*^ it appeared that a deed of real property had ' Adair v. Brimmer, 74 N. Y. 554. erland, 3 El. & B. i ; Fag-an x. Harri- See Cumberland Coal Co. v. Sherman, son, 8 C. B. 388; Foster v. Bates, ra 30 Barb. (N. Y.) 575 ; Lammot V. Bow- M. & W. 226; Heslop v. Baker, 8 ly, 6 H. & J. (Md.) 526. Exch. 417; Robinson v. Gleadow, 2 - 93 N. Y. 501. Bing. N. C. 156, 161. ' King V. Mackellar, 109 N. Y. 223. ^ See Consolidated Frtiit Jar Co. v. Citing Nixon v. Palmer, 8 N. Y. 398 ; Bellaire Stamping Co., 27 Fed". Rep. Baldwin v. Burrows, 47 N. Y. 199; 382; Wood v. McCain, 7 AJa. 800 ; Adair V. Brimmer, 74 N.Y. 554; Whit- Stoddard v. United States,. 4 Ct. of ney v. Martine, 88 N. Y. 535. 540. Claims 511; Doe d. Lyster v. Goldwin, •• See Broom's Legal Maxims, p. 866 ; 2 Q. B. 143 ; Doe d. Mann v. Walters. Co. Litt. 207^;; Simpson V. Eggington, 10 Barn. & C. 626; Cook v. Tullis. i3 10 Exch. 845 ; Earl of MountcashcU v. WaJl. 33.^. Barber, 14 C. B. 53; Maclae v. Suth- * 15 Weekly Digest (N.Y.) 15. 6/6 PROCEEDS OF SALE. § 485 been made by executors to one of themselves. The court appHed the familiar rule that the deed was not abso- lutely void, but merely voidable at the election of the leg- atees under the v^ill.* It appearing that one of the lega- tees, with full knowledge of the facts, had received the proceeds of the sale in payment of his legacy, this accept- ance of the money was held to be an affirmance and ratifi- cation of the deed to the executor, and the court ruled that the legatee could not be allowed thereafter to avoid the transfer to the prejudice of a mortgagee who, relying upon such ratification,** had loaned money upon the land. The beneficiary or cestui que trust in such a transaction, may, if sui juris, elect to hold the trustee to the consequences of his act;^ and where no legal incapacity is shown in the ben- eficiary, and he has full knowledge of all the facts, and is wholly free from any undue influence arising out of the peculiar trust relations of the parties, a clear and unequiv- ocal afifirmance of the sale may conclude him. " Ordinarily, the acceptance of the money, with full knowledge and by persons free from disability, would be such an affirmance." This is especially so as regards third parties who have ad- vanced moneys or acquired rights upon the faith of the acquiescence. In such a case an element of estoppel is in- troduced. § 485. Receipt of proceeds of sale under protest. — As be- tween the immediate parties, however, it seems, according to some of the authorities, that the act is open to explana- tion, and, where the proceeds of such a sale or disposition of the property are merely received under protest, and with an express reservation of the right to controvert the valid- ' See Van Epps v. Van Epps, 9 Paige '^ See Boerum v. Schenck, 41 N. Y, (N. Y.) 238 ; Fulton v. Whitney, 66 N. 182. Y. 548; Bennett v. Austin, 81 N. Y. ' Boerum v. Schenck, 41 N. Y. 182; 308; Welch V. McGrath, 59 Iowa 519; Lingke v. Wilkinson, 57 N. Y. 452; s. C. 26 Alb. L. J, 540. Second National Bank v. Burt, 93 N. Y. 249. § 4^6 executor's title. 677 ity of the sale, such action was held not to estop or pre- clude a subsequent proceeding by the beneficiary to dis- affirm the transaction, and obtain a resale. A receipt given under these circumstances was held by the New York Court of Appeals to possess none of the characteristics of an estoppel. It is a mere consent to receive the money claimed to be the proceeds of a valid sale, reserving the right to contest the question of validity, or, excluding the otherwise apparent and implied intent thereby to affirm such validity. It admits nothing ; it misleads no one ; it can work no fraud upon any person. Not one of the req- uisites of an equitable estoppel, or estoppel in pais, can be found in it.^ Such is the argument advanced. The principle seems novel, that a beneficiary can receive the purchase-money, as the proceeds of a valid sale, and also be allowed to set aside the sale as invalid. This result con- flicts with the spirit of the familiar rule that a rescission or disaffirmance must be in toto. Probably the true theory is that the beneficiary is entitled to rescue so much of the estate from the dishonest trustee, instead of being forced to rely upon his personal responsibility. § 486. Executor's title. — An executor who has made a sale of property belonging to his trust estate to one who may acquire a good title to it, may buy the property from him, and thereby acquire the title of such purchaser.^ So held in Silverthorn v. McKinster,^ where the executors sold the property to one Burns, from whom one of the execu- tors subsequently purchased it. The court said : " As, then, .... Burns was by the sale invested with an estate recog- nized by our laws, there was nothing to hinder him from selling and conveying it to whomsoever he plcascil. Nor is there anything in the law or the transaction itself to pro- ' Boerum v. Schenck, 41 N. Y. ' Welch v. McGrath. 59 Iowa 519 ; 182. S. C. 26 Alb. L. J. 540. 8 12 Pa. St. 71. 678 AVOIDANCE A PERSONAL RIGHT. § 487 hibit Isaac Silvcrthorn (the executor) from becoming the purchaser. There is no suggestion of mala fides in the sale made by the executors to Burns, and it is clear that, in the absence of fraud, one who has sold an estate as a trustee may afterwards fairly re-purchase it for himself."^ There is no distinction between a purchase made by a trustee in- vested with the legal title at a sale made by him pursuant to the trust and a like purchase by one having a power in trust merely, at a sale made by virtue of such power in trust. The same reasons for holding the purchases voidable at the election of the beneficiaries are equally applicable to both sales, and the same rule should be applied. Nor does the right of the beneficiaries to repudiate the transaction rest upon proof of actual intent to cheat or defraud. Neither uprightness of intention nor the payment of a fair or adequate price or consideration will overcome the im- pediment. While the chief design of the rule is to shield and protect the beneficiaries from the fraud or bad faith of the trustee, yet the peculiar relation of the parties renders it unsafe and imprudent to allow any exception to it. § 487. Avoidance a personal right. — The rule is not con- fined to trustees or others who hold the legal title to the property to be sold, but applies universally to all who come within its principle, which is, that no party can be permit- ted to purchase an interest in property, and hold it for his own benefit, where he has a duty to perform in relation to such property which is inconsistent with the character of a purchaser on his own account.^ The right to elect to avoid ' Citing Painter v. Henderson, 7 Pa. sell, as trustee, whether at public auc- St. 48. tion or private sale, is voidable at the -Fulton V. Whitney, 66 N. Y. 548; election of the beneficiaries of the trust ; Bennett v. Austin, 81 N. Y. 308-322. and this rule will be enforced without In Scholle v. SchoUe, loi N. Y. 171, regard to the question of good faith or Earl, J., said : " The general rule is not adequacy of price, and whether the disputed that the purchase by a trustee trustee has or has not a personal inter- directly or indirectly of any part of a est in the same property. Nor is it trust estate which he is empowered to sufficient to enable a trustee to make MS; AVOIDANCE A PERSONAL RIGHT. 679 the sale, however, is the exclusive privilege of the ccsttii que trust or beneficiary, just as the defense of infancy, or the right to avoid a contract on the ground of infancy, is the exclusive privilege of the infant. A stranger cannot inter- fere to avoid the sale.^ In Beardsley v. Hotchkiss,** Earl, J., said: "As to contracts purely executory it must be shown that the infant ratified them after he became of age before they can be enforced against him. As to contracts executed, such as deeds of land or conveyances of personal property, they will generally be deemed to be ratified, and will thus become just as valid and effectual as the contracts of an adult, unless they be disaffirmed by the infant before he arrives at age, or within a reasonable time thereafter. such a purchase that the formal leave to buy, which is usually granted to the parties in a foreclosure or partition sale, has been inserted in the judgment. Such a provision is inserted merely to obviate the technical rule that parties to the action cannot buy, and is not in- tended to determine equities between the parties to the action, or between such parties and others (Fulton v. Whitney, 66 N. Y. 548; Torrey v. Bank of Orleans, 9 Paige [N. Y.] 649 ; Conger v. Ring, 11 Barb. [N. Y.] 356). But where the trustee has an interest to protect by bidding at the sale of the trust property, and he makes special application to the court for permission to bid, which, upon the hearing of all the parties interested, is granted by the court, then he can make a purchase which is valid and binding upon all the parties interested, and under which he can obtain a perfect title. (De Caters v. De Chaumont, 3 Paige [N.Y.] 178 ; Gal- latian v. Cunningham, 8 Cow. [N. Y.] 361 ; Davoue v. Fanning, 2 Johns. Ch. [N. Y,] 251 ; Bergen v. Bennett, i Cai. Cas. in Error [N. Y.] i, 20; Chapin v. Weed, I Clarke's Ch. [N. Y.] 464. 469 : Colgate's Exr. v. Colgate, 23 N. J. Eq. 372; Froneberger v. Lewis, 79 N. C. 426; Faucett v. Faucett, i Bush [Ky.] 511; Michoud V. Girod, 4 How. 503; Campbell v. Walker, 5 Ves. Jr. 678 ; Farmer v. Dean, 32 Beav. 327 ; Potter's Willard's Eq. Jur. 607; Lewin on Trusts [7th ed.] 443 ; Godefroi on Trusts, 184). Here, upon notice to all the beneficiaries, an order was made allowing these appellants to bid. After they had made their bids and signed the terms of sale, a further hearing was had upon notice to all the parties as to the fairness of the sales and the ade- quacy of the prices, and the sales were approved and confirmed by the court. Under such circumstances there can be no doubt that these appellants would get a good and perfect title to the lands purchased by them, and their title would be good, not only as against all the living parties to the suit, but as against unborn grandchildren, if any such should herealter come into being. (Code of Civ. Pro.. §§ 1 557. 1 577-)" ' See Jackson v. Van Dalfsen, 5 Johns. (N. Y.) 43 ; Lothrop v. Wight- man, 41 Pa. St. 297 ; Litchfield v. Cud- worth, 15 Pick. (Mass.) 24. - 96 N. Y. 211. 68o RATIFICATION OF VOIDABLE ACT. § 488 She did not disaffirm the contract in her life-time, and left it in full force at her death. Nor even if they could, did her husband or children disaffirm it after her death. There is no rule of law which will allow her husband's assignees or his creditors to disaffirm it. The defense of infancy is for the benefit and protection of infants, and other persons cannot set it up for their own benefit." It seems to be reasonable, and the authorities hold that where the sale of the property is precipitated by a violation or omission of a duty which rests upon a party in respect to the property of another, the person guilty of the breach of duty is abso- lutely disqualified from becoming a purchaser on his own account.^ § 488. Ratification of infant's voidable act. — The onus of showing a ratification rests upon the party asserting it.^ It may be stated as a general principle, deducible from the leading case of Whitney v. Dutch, ^ that the terms of the ratification by an infant need not be such as to impose a direct promise to pay. All that is necessary is that he should expressly agree to ratify his contract, not by doubt- ful acts such as payment of part of the money due or the interest, but by words, oral or in writing, which import a recognition and a confirmation of his promise. Hence it was held in the case just cited, that where the defendant, when called upon to pay the demand, acknowledged that the money was due, and promised that he would endeavor to procure the money on his return home, this was suffi- cient to justify a finding of a jury that he assented to and ratified the original promise. Zouch v. Parsons^ is referred to in Whitney v. Dutch, and Chief-Justice Parker said that the rule stated by Lord Mansfield in that case, to the effect that whenever the act done may be for the benefit of the infant, it shall not be considered void, but that he shall ' Bennett v. Austin, 81 N. Y. 308. ^ 14 Mass. 457; S. C. 7 Am. Dec. - Walsh V. Powers, 43 N. Y. 26. 229, and note p. 234. ■* 3 Burr. 1804. § 4^9 NO RATIFICATION OF VOID ACTS. 68 1 have his election when he comes of age, to affirm or avoid it, is the only clear and definite proposition that can be ex- tracted from the authorities.^ Where an infant made a mortgage of his land and after coming of age conveyed the land subject to the mortgage, the deed was holden to con- firm and make good the mortgage.^ § 489. No ratification of void acts. — As elsewhere shown, it is held in a great number of cases that an infant's power of attorney is absolutely void.^ Authorities following this ruling out to its legitimate results may be found in this country and in England. Thus Parke, B., referring to an infant's appointment of an agent, said : " It does not bind the infant, neither does his ratification bind him.'' ^ So, in Trueblood v. Trueblood,^ an infant's bond signed by his agent was declared. void. Perkins, J., said : " The bond of his [the infant's] agent, or one having assumed to act as such, is void, and not capable of being ratified";^ ^nd a void deed cannot be confirmed.'' It may be asserted as a general rule that " no number of subsequent promises to pay can infuse vitality into a contract originally void by the policy of the law."® Thus where A. agreed to pay B. one-half of the profits of an office if B. would withdraw as an applicant, and after A. was appointed the promise was renewed, it was held that the new promise was void.^ So a promise to pay a bill for lobbying services is void though made after the rendition of the services.'" And where A. ' See §450. A deed of land by an '8 Ind. 198. insane person is voidable only and not ' See Hicstand v. Kuns, 8 Blackf. void, and may therefore be ratified by (Ind.) 348 ; Cummings v. Powell, 8 him when he is of sane mind. Wait v. Texas 88. Maxwell, 5 Pick. (Mass.) 217 ; Arnold ' Chess v. Chess, i P, & W. (Pa.) 32 ; V. Richmond Iron Works, i Gray S. C 21 Am. Dec. 350. (Mass.) 434. " Firemen's Charitable Ass'n v. Berg- •^ Boston Bank v. Chamberlin, 15 haus, 13 La. Ann. 209, 210. Mass. 220. * Hunter v. Nolf, 71 Pa. St. 282. » See § 454. '" McKee v. Cheney. 52 How. Pr. (N. * Doe (i. Thomas v. Roberts, 16 M. Y.) 144. See Lyon v. Mitchell, 36 N. & W. 778. Y. 241. 682 VOID BILL OF LADING. §§ 49O, 49 1 withdrew his candidacy in favor of B., who agreed to pay his expenses thus far incurred and the expenses that might be thereafter incurred in running for another office, a prom- ise of payment made after the election was considered void.'' § 490. Ratifying void bill of lading. — A bill of lading signed by an agent, when no goods have been received for ship- ment, is not considered binding upon the principal.^ It does not follow, however, that the principal is not bound by the bill of lading if the goods be in fact subsequently delivered to be transported according to the terms of the contract. There is no element of illegality in the contract or any such vice that it is void and incapable of confirma- tion by acts of the parties done for that purpose ; and the old bill of lading is as good as a new one issued on delivery of the goods if the parties choose to make it so.^ § 491. Facts insufficient to constitute ratification by acquies- cence. — As a general rule simply remaining passive and silent, if not for an unreasonable length of time, cannot be construed into an acquiescence in or ratification of a void- able act.^ This question came up in a recent case before the New York Court of Appeals. Chief-Justice Church said : " Mere acquiescence for three years after arriving at age, without any affirmative act, was not a ratification."^ In Boody v. McKenney,^ the court, in speaking of affirm- ance or disaffirmance by an infant, said : " The mere acqui- ' Robinson v. Kalbfleisch, 5 T. & C. Co., 16 Fed. Rep. 60. See The Idaho, (N. Y.) 212. 93 U. S. 575. ° Pollard V. Vinton, 105 U. S, 7 ; ■• Baker v. Disbrow, 3 Redfield (N. Iron Mountain Railway v. Knight, 122 Y.) 360; Pinckney v. Pinckney, 2 Rich. U. S. 87 ; Schooner Freeman v. Buck- Eq. (S. C.) 219. ingham, 18 How. 182 ; contra, Armour ^ Green v. Green, 69 N. Y, 557 ; be- V. Mich. Central R.R. Co., 65 N. Y. low, 7 Hun (N. Y.) 492, and see cases III ; Bank of Batavia v. New York, L. cited in opinion of Gilbert, J., and in E. & W. R.R. Co., 106 N. Y. 195. the dissenting opinion of Smith, J. Com- ^ Robinson v. Memphis & C. R.R. pare Sparman v. Keim, 83 N. Y. 245. * 23 Me. 523. § 492 LORD TENTERDEN's ACT. 683 escence for 3^ears to disaffirm it, affords no proof of a rati- fication. Tiiere must be some positive and clear act per- formed for tiiat purpose. The reason is, that by his silent acquiescence he occasions no injury to other persons, and secures no benefits or new rights to himself. There is nothing to urge him as a duty toward others to act speed- ily. Language appropriate in other cases requiring him to act within a reasonable time, would become inappropriate here. He may, therefore, after years of acquiescence, by an entry or by a conveyance of the estate to another per- son, disaffirm and avoid the conveyance made during his infancy." ^ But a retention of the property, and an omis- sion to disaffirm within a reasonable time after arriving at the age of twenty-one years, will operate as an affirmance of the contract, and constitute an answer to the defense of infancy.^ § 492. Lord Tenterden's Act. — An infant though allowed as a personal privilege the right to avoid certain of his acts or contracts on the ground of lack of experience and ab- sence of judgment and discretion at the time of entering into them, may, when he reaches mature years, at the promptings of interest or conscience, affirm, assume, or ratify such acts. The voidable acts so ratified constitute a sufficient consideration for the new promise. Exactly what should be considered a sufficient ratification or new prom- ise has led to much discussion and conflict of opinion in the cases. With a view of settling the discussion, Lord Tenterden's act was passed, providing that " no action shall be maintained whereby to charge any person upon any promise made after full age to pay any debt contracted during infancy, or upon any ratification after full age of 'Citing Jackson v. Carpenter, 11 •'Walsh v. Powers. 43 N. Y. 26; Johns. (N. Y.) 539; Curtin v. Patten, Kline v. Beebe, 6 Conn. 494 ; Cecil v. II S. & R. (Pa.) 311 ; Tucker v. More- Salisbur)', 2 Vernon 224. land, 10 Peters 58. 684 AFFIRMANCE BY RETENTION. § 493 any promise or simple contract made during infancy, unless such promise or ratification shall be made by some writing signed by the party to be charged therewith." ^ Statutory provisions practically modelled upon this act may be found in some of our States.^ § 493. Affirmance by retention of the property. — Nelson, J., in Delano v. Blake, ^ said : " The purchase by an infant of real estate is voidable, but it vests in him the freehold until he disagrees to it, and the continuance in possession after he arrives of age is an implied confirmation of the contract."* So, in the case of a lease to an infant, the continuance in possession after the party becomes of age is a confirmation, and he must pay the rent.^ Ratification of a conveyance is a ratification of a mortgage made to secure payment of the purchase-money.^ Davies, J., in Henry v. Root,'' learnedly discusses the principles applicable to an infant's affirmance of a contract to purchase land. It appeared that the infant had purchased real estate, and had retained possession of it after reaching his majority, and yet by interposing a plea of infancy sought to avoid payment of the purchase-money.^ This case, it may be observed, must be carefully distin- guished from those elsewhere cited, to the effect that where the infant has wasted the consideration or avails of the ' Stat. 9 Geo. IV., c. 14, § 5 (1828). ' Bac. Ab. tit. Infant, 611, 612 ; - See, e. g., Thurlow v. Gilmore, 40 Holmes v. Blogg, 8 Taunt. 35. Me. 378. ' Young v. McKee, 13 Mich. 552. ^ II Wend. (N. Y.) 86. See Henry ' 33 N. Y. 526. V. Root, 33 N. Y. 551. ' The principle is firmly established ■* See Flinn v. Powers, 36 How. Pr. that the infant on attaining full age (N. Y.) 298 ; S. C. below, 53 How. Pr. cannot hold onto the purchase and thus (N. Y.) 279 ; S. C. 54 Barb. (N. Y.) 550 ; affirm it, and plead his infancy to avoid rev'd sub nomine, Walsh v. Powers, the payment of the ])urchase-money. 43 N. Y. 26 ; Lynde v. Budd, 2 Paige Henry v. Root, 33 N. Y. 553 ; Kline v. (N. Y.) 191; Lawson V. Lovejoy, 8 Me. Beebe, 6 Conn. 494; Bigelow v. Kin- 405 ; Boody v. McKenney, 23 Me. 517 ; ney, 3 Vt. 353 ; Cheshire v. Barrett, 4 Robinson v. Hoskins, 14 Bush (Ky.) McCord's (S. C.) Law 241 ; Lynde v. 393. Budd, 2 Paige (N. Y.) 191 ; Badger v. Phinney, 15 Mass. 359. § 493 AFFIRMANCE BY RETENTION. 685 property, his right of disaffirmance or avoidance is not lost. Here the infant sought to retain possession of the property, and repudiate payment of the purchase-monc}'. In other words, he tried to use his privilege as a sword. The argu- ment was adopted in this case, that the contracts of infants were voidable as distinguished from void, and were only suspended during his minority, and might be revived and ratified by him on arriving at age, upon the same princi- ples, and for the same reasons, and by the same means as a debt barred by the statute of limitations may be revived and restored to its pristine vigor and efficacv.^ A new promise, positive and precise, equivalent to a new contract, is not now essential ; but a ratification or confirmation of what was done during minority is sufficient to make the contract obligatory. These words " ratify " or "confirm" necessarily import that there was something in existence to which ratification or confirmation could attach, entirely ignoring, therefore, the notion that an in- ' See Stone v. Wythipol, Cro. Eliz. principle that the obligations of the in- 126 ; Morning v. Knop, Cro. EHz. 700; fant were void, and that on his attain- Thrupp V. Fielder, 2 Esp. 628. This ing his majority he was as much dis- action was assumpsit, and plaintiff charged from them on tliat ground as proved payment of £40 on account a bankrupt is by his discharge under of the bill since defendant came of age, the bankrupt or insolvent laws. See and contended that this admission by Rogers v. Hurd, 4 Day (Conn.) 57; the defendant of his liability to pay was Benham v. Bishop, 9 Conn. 333 ; Wil- tantamount to a new promise. Lord cox v. Roath, 12 Conn. 550; Smith v. Kenyon said: "This is not such a Mayo, 9 Mass. 62. In Whitney v. promise as satisfies the issue. The case Dutch, 14 Mass. 460, Chief-Justice of infancy differs from the statute of Parker said: " Bui tho temis uf the rati- limitations ; in the latter case a bare fication need not be such as to import acknowledgment has been held to be a direct promise to pay. All that is sufficient. In the case of an infant I necessary is that he expressly agrees to shall hold an acknowledgment not to ratify his contract, not by doubtful acts, be sufficient, and require proof of an .... but by words, oral or in writing, express promise to pay, made by the which import a recognition and a con- infant after he has attained that age firmation of his promise." See Thnmp- when the law presumes that he has dis- son v. Lay, 4 Pick. (Mass.) 48 ; Reed cretion." The court in Henry v. Root, v. Batchelder, I Mrtc. (.Mass.) 559: 33 N. Y. 540, observes, however, that Hall v. Gerrish, 8 N. H. 374; Robbins cases like this proceeded upon the v. Eaton, 10 N. H. 561. 686 AFFIRMANCE OF CORPORATE ACTS, § 494 fant's obligations or contracts were discharged or extin- guished by reason of the state of infancy.^ § 494. Affirmance of voidable corporate acts. — The doc- trine of equitable estoppel applies as well to members of a corporate body as to persons acting in a private capacity.^ In the case just cited in the New York Court of Appeals, it appeared that a corporation had transferred all its property, thus rendering it practically impossible for the corporation to continue the business for which it was originally incorporated, and inflicting upon it virtual political death. It was contended that the act was lUtra vires. The court, Tracy, J., delivering the opinion, said : " The act was not illegal. In transferring the property of the corporation to pay its debt the trustees believed that they were acting within the scope of their authority, and the defendant accepted the transfer and received the prop- erty in satisfaction of its claim against the plaintiff, in the honest belief that it thereby acquired good title thereto. If the trustees had no power, as the agents of the corpora- tion, to transfer all its property, thereby depriving it of the means of carrying on the business for which it was or- ganized, it is but the case of an agent making a contract in excess of his authority. The act is voidable, not void. The principal may, nevertheless, affirm the act, and a rati- fication is equivalent to a prior authorization. If all the stockholders of this corporation had, with full knowledge, subsequently ratified the transfer and affirmed the settle- ment, the act, though beyond the power given the trustees by the charter, could not be subsequently avoided by the stockholders or by the corporation." Thus, in Kent v. The Quicksilv'Cr Mining Company,^ it was held that the acts of 1 Henry v. Root, 33 N. Y. 545. ^ 78 N. Y. 159. See Sheldon H. B. ' Sheldon H. B. Co. v. Eickemeyer Co. v. Eickemeyer H. B. M. Co., 90 H. B. M. Co., 90 N. Y. 613. See 2 N. Y. 612. Story's Eq. Jur. § 1 539. § 495 AFFIRMANCE EFFECTED BV LACHES. 687 a corporation which are not per se illegal, or mahnit pro- hibihim, but which are 2iltra vires, affecting, however, only the interests of the stockholders, may be made good by the assent of the stockholders, so that a stranger to them, dealing in good faith with the corporation, will be protected in a reliance on these acts. A municipal corpo- ration may adopt and ratify a contract made by its engineer in excess of his authority.^ A subsequent ratification cannot make valid an unlawful act beyond the scope of corporate authority. An absolute excess of authority by the officers of a corporation, in vio- lation of law, cannot be upheld, and where the officers of such a body fail to pursue the strict requirements of a stat- utory enactment, under which they are acting, the corpo- ration is not bound. In such cases the statute must be strictly followed ; and a person who deals with a municipal body is obliged to see that its charter has been fully com- plied with. When this is not done, no subsequent act can make the contract effective.^ § 495. Affirmance effected by laches. — In Smallcombe's Case,'^ Lord Romilly, Master of the Rolls, declared that lapse of time and acquiescence on the part of the party whose interests are alleged to have been injuriouslv affected by irregular proceedings, will be a complete bar, unless the transaction is tainted with fraud involving grave moral guilt. Upon this ground an agreement between the share- holders and directors of a joint-stock company was uji- held, although admitted to have been originally ultra vires, and although the books of the company, accessible to the shareholders, did not show the real nature of the transac- ' McKnight v. City of Pittsburgh, West Troy, 43 Barb. fN.Y.) 48 ; Brown 91 Pa. St. 273. Compare Veeder v. v. The Mayor, 63 N. Y. 239, 244 ; Dil- Mudgett, 95 N. Y. 310. Ion on Mun. Corp. 463; McDonald v. ' Smith V. City of Newburgh, -j-j N. The Mayor, 68 N. Y. 23, 27. Y. 136; Peterson v. The Mayor, etc., ■' L. R. 3 Eq. Cas. 769. 17 N. Y, 449; Cowen v. Village of 688 AFFIRMANCE EFFECTED BY LACHES. § 495 tion. This case was affirmed in the House of Lords.^ In cases of actual fraud the courts of equity feel great reluc- tance to interfere where the party complaining does not apply for redress at the earliest convenient moment after the actual character of the fraudulent transaction comes to his knowledge. The party upon whose rights or interests a fraud is committed should not be allowed, after the fact comes to his knowledge, to speculate upon the possible advantages to himself of confirming or repudiating the transaction. He must repudiate at once and surrender his securities.* The lapse of twenty years is probably the shortest period which would constitute an absolute bar to the riofht to avoid a sale for breach of trust. '^ A resale was refused after sixteen years* in one case, and after eighteen years in another,^ while on the other hand the sale was set aside, in Hatch v. Hatch,^ after the lapse of twenty years, in Dobson v. Racey' after twenty-seven years, and in Pur- cell v. McNamara^ after seventeen years. Each case must be regulated by its special circumstances. It is regarded as dangerous to accept a title of this character, for "in- fancy, ignorance, concealment, or misrepresentation might come to explain and excuse the delay, and prevent it from amounting to acquiescence."^ It may be observed that mere silence will not amount to the ratification of an un- authorized lease executed by the officers of a corporation. ^° 1 Evans v. Smallcombe, L. R. 3 H. * Bergen v. Bennett, i Cai. Cas. in L. 249. See, also, Brotherhood's Case, Er. (N. Y.) i. 31 Beav. 365. ^ Gregory V. Gregorj-, [ G. Coop. 201. ^ Sheldon H. B. Co. v. Eickemeyer ^ 9 Ves. 292. H. B. M. Co., 90 N. Y. 617. See Parks ' 3 Sandf. Ch. (N. Y.) 60. V. Evansville, etc. R.R. Co., 23 Ind. * 14 Ves. 91. 567; Perrett's Case, L. R. 15 Eq. Cas. ' Finch, J., in The People v. Open 250. Board of Brokers, 92 N. Y. 104. * See People v. Open Board of Brok- '" Kersey Oil Co. v. Oil Creek and ers, 92 N. Y. 103, reviewing the cases ; Allegheny R.R. Co., 34 Leg. Int. (Pa.) Hawley v. Cramer, 4 Cow. (N. Y.) 735. 362. CHAPTER IV. AVOIDANCE OF VOIDABLE ACTS. § 496. Disaffirmance or avoidance by infant a personal privilege. 497. Acts avoided. 498. General requisites of acts of avoidance as compared with acts of confirmation. 499. Avoidance by infant of voidable acts. 500. Avoidance of infant's deed of land. 501. A sufficient avoidance of an in- fant's deed. 502. Fraudulent acts or suppression by infant. 503. Effect of inertness or silence. 504. No estoppel against infants. § 505. Laches of infant affecting avoid- ance. 506. Avoidance of infant's personal contracts. 507. Restitution by infant. 508. Disaffirmance of lunatic's deed. 509. Avoidance in equity of lunatic's acts. 510. Restitution by lunatic. 510^?. General rules as to restitution. 511. Personal representative cannot avoid his own voidable act. 512. Avoidance or cancellation of void or voidable instruments. 513. Distinction between instruments affecting realty and personalty. § 496. Disaffirmance or avoidance by infant a personal privilege. — The general and familiar rule is that the legal privileges of infancy are personal to the infant ami that no third person can take any advantage of them, and therefore, the infant's contracts, although voidable by him, are binding upon the persons sui juris whh whom he contracts.^ Hence it was decided in Oliver v. Huud- let," that a guardian had no power or authority t' ' ' ^'^'S^ ^^'- ^''^ '^^°- 702 RESTITUTION BY LUNATIC. § 5^0 § 510. Restitution by lunatic. — The rule of law with ref- erence to the restitution of the consideration upon the avoidance of a lunatic's contract, is somewhat different from that which governs where infancy exists. Thus in Molton V. Camroux,^ which was an action to recover money paid for annuities, it was held that when a person apparently of sound mind, and not known to be otherwise, entered into a fair and bo7ia fide contract for the purchase of property, which was executed and completed, and the property had been paid for and enjoyed, and could not be restored so as to put the parties in statu quo, the contract could not afterward be set aside either by the alleged lunatic or those who represent him. And in Beals v. See* the court decided that an executed contract by a merchant for the purchase of goods prior to inquisition could not be avoided by proof of insanity at the time of the purchase, unless fraud was shown or knowledge of the alleged lunatic's condition. The same principle is asserted in Lancaster County National Bank v. Moore.^ In Craw- ford V. Scovell* the court say that "the consideration need not be restored before commencement of the action, nor after, in all cases. To say that an insane man, before he can avoid a voidable deed, must put the grantee in statu quo, would oftentimes be to say his deed shall not be avoided at all. The more insane the grantor was when the deed was made, the less likely will he be to retain the fruits of his bargain so as to be able to make restitution. One of the obvious grounds on which the deed of an in- sane man is held voidable is not merely the incapacity to make a valid sale, but the incapacity prudently to manage and dispose of the proceeds of the sale. And the same incapacity which made the deed void may have wasted • 2 Exch. 487. ^ 94 Pa. St. 52 ; S. C. 39 Am. Rep. 2 10 Pa. St. 56. 769. ^ 78 Pa. St. 407 ; s. C. 21 Am. Rep. 24. § SlOa RULES AS TO RESTITUTION. 7O3 the price and made the restoration of the consideration im- possible."^ § 5iOrt. General rules as to restitution. — In an article in the Central Law Journal, by Mr. Crosby Johnson,'' it is said: " When one of the parties to a contract is an infant or in- sane person, and such contract does not relate to the pro- curing of necessaries ; or where one of the parties is of age and of sound mind, but entered into the contract in conse- quence of a mistake of fact, or through the fraud of the other party, such contract may be rescinded, provided equity can be done between the parties." Alluding to the return of consideration by infants, the learned writer con- tinues : " The infant is not bound to place the other party z'n statu quo as a condition precedent to the right to rescind. Unless he has the consideration by him received, he is not bound to make any return whatever to the other party.^ The fact that the infant has so mismanaged or mistreated the property as to depreciate its value and render it worth a o-reat deal less than when it was received bv him, will not defeat the right of the infant to rescind the contract.' Some of the cases seem to intimate that, although the in- fant should have the consideration in his hantis, he will not be required to make return thereof previous to exercising his privilege of rescinding, but would leave the other party to recover the same as best he could,^ But that view seems ' Citing Gibson v. Soper, 6 Gray & R. (Pa.) 309 ; Ruchizky v. De (Mass.) 279. Haven, 97 Pa. St. 202 ; Manning v. M 8 Cent. L. J. 482. Johnson, 26 Ala. 446; Carpenter v. " Citing Boody V. McKenney, 23 Me. Carpenter, 45 Ind. 142; Cresinger v. 517; Hovey v. Hobson, 53 Me. 453; Welch, 15 Ohio 156 ; Wallace v. Lewis, Robinson v. Weeks, 56 Me. 102; 4 Harr. (Del.) 75 ; Miller v. Smith, 26 Tucker v. Moreland, 10 Pet. 65 ; Sims Minn. 248; s. c. 37 Am. Rep. 407. V. Everhardt, 102 U. S. 300 ; Fitts v. "Citing White v. Branch. 51 Ind. Hall, 9 N. H. 441 ; Price v. Furman. 27 210; Whitcomb v. Joslyn, 51 V't. 79; Vt. 268; Richardson v. Boright, 9 Vt. S. C. 31 Am. Rep. 678, See Betts v. 368; Dana v. Steams, 3 Cush. (57 Carroll, 6 Mo. App. 51S. Mass.) 372; Walsh v. Young, no 'Citing Chandler v. Simmons. 97 Mass. 396; Gibson v. Soper. 6 Gray Mass. 508 ; Badger v. Phinney, 15 Mass. (72 Mass.) 279; Shaw v. Boyd. 5 S. 359; Skinner v. Maxwell. 66 N. C. 45. 704 RULES AS TO RESTITUTION. § 5IO^ to convert the shield into a sword. If it is admissible at all, it is only when the infant undertakes to exercise the privilege during the continuance of his infancy. But where he undertakes to exercise the right after attaining his ma- jority, he should be required, as a condition precedent, to return the consideration, or any specific fruits of the con- sideration, which he may then have in his hands or under his control in as good condition as they were when he be- came of age.^ In this way we should escape the presump- tion that an infant has greater capacity to take care of property and keep it in good condition than he has to pur- chase such property ; and at the same time secure to the other party whatever of judgment or discretion the infant may have actually displayed in his management of the con- sideration or of its proceeds. Thus the privilege would be preserved free from restriction without converting the shield into a sword." Referring to restitution by lunatics or their representa- tives, the same writer observes that if the party having transactions with the lunatic " knew that he was dealing with an insane person, or if the nature of the contract is such as only an imbecile or crazy man would have made, or if an unfair advantage was taken of the lunatic, a return of the consideration will not be exacted.^ But if the luna- tic in fact applied the consideration or any part of it so that it enured to his benefit, he must make restitution to the extent of benefits actually obtained ; or if the consider- ation, or specific fruits of such consideration, be in his hands at the time of rescinding, they should be restored to the ' Citing Bartlett v. Cowles, 15 Gray Tolson v. Garner, 15 Mo. 494; Craw- (81 Mass.) 445 ; Walsii v. Young, no ford v. Scovell, 94 Pa. St. 48 ; s. C. 39 Mass. 396 ; Dill v. Bowen, 54 Ind. 204 ; Am. Rep. 766 ; Henry v. Fine, 23 Ark. Bedinger v. Wharton, 27 Gratt. (Va.) 417; Van Deusen v. Sweet, 51 N. Y. 857. ' 378 ; Canfield v. Fairbanks, 63 Barb. ^ Citing Nichol v. Thomas, 53 Ind. (N. Y.) 461 ; Riggs v. American Tract 42 ; Gibson v. Soper, 6 Gray (72 Mass.) Soc, 84 N. Y. 330. 279 ; Halley v. Troester, 72 Mo. 73 ; § 5^0^ RULES AS TO RESTITUTION. 705 Other party." ^ The same writer, alkiding to the subject of the return of consideration required of a defrauded person, says : " All the cases are agreed that one who was induced to enter into a contract through the fraudulent contrivances or fraudulent representations of the opposite party, may re- scind the contract provided he can, by a return of the prop- erty received under the contract, place the other party in statu quo? An offer to rescind should be accompanied by a tender of the return of the property. Nothing else will absolve the buyer from payment."^ Unless the considera- tion is utterly worthless it should be returned." ^ Professor Schouler, referring to the authorities governing the return required in cases of mistake, said :^ "The rule is as to two innocent parties who have performed acts under a mutual misunderstanding, that the court will allow either to turn back, if he can take the other back with him ; in other words, the one party may unravel the contract if he can put the other iii statu quo. Therefore the buyer of a chattel who would rescind the sale on this ground, and get ' Citing Lagay v. Marston, 32 La. ■• Citing Morrow v. Rees, 69 Pa. St. Ann. 170; Lincoln v. Buckmaster, 32 368; Wolf v. Dietzsch, 75 111. 205; Vt. 652 ; Matthiessen & W. Refining Jopling v. Dooley, i Yerg. (Tenn.) Co. V. McMahon, 38 N. J. L. 536. 289; S. C. 24 Am. Dec. 450; Barr t. ^ Citing Lyon v. Bertram, 20 How. Baker, 9 Mo. 840. See Sanborn v. 155; Thurston v. Blanchard, 22 Pick. Batchelder, 51 N. H. 426; Houghton (Mass.) 18; S. C. 33 Am. Dec. 700; v. Nash, 64 .Me. 477; Spencer v. St. Urquhart v. Macphcrson, L. R. 3 App. Clair, 57 N. H. 9; Haase v. Mitchell, Cases 831 ; S. C. 24 Moak 545 ; Vance 58 Ind. 213; Bishop v. Stewart, 13 V. Schroyer, 79 Ind. 380; Thayer v. Nov. 25 ; Howe Machine Co. v. Rosine, Turner, 8 Mete. (49 Mass.) 550; Right- 87 III. 105; Blake v. Nelson. 29 La. er V. Roller, 31 Ark. 170; Freeman Ann. 245; Whitcomb v. Denio, 52 V. Reagan, 26 Ark. 373; Ketchum v. Vt. 382; Conner v. Hendt-rson, 15 Brennan, 53 Miss. 596; Van Trott Mass. 319; S. C. 8 Am. Dec. 103; V. Wiese, 36 Wis. 439; Manahan v. Bassctt v. Brown, 105 Mass. 558; Noyes, 52 N. H. 232; Doll v. Kath- Bartlett v. Drake, ico Mass. 174; man, 23 La. Ann. 486; Latham v. Vance v. Schroyer, 79 Ind. 380; \'an Ricky, 21 La. Ann. 425; Lane v. Liew v. Johnson, 4 Hun (N. Y.) Latimer, 41 Ga. 171; Estes v. Rey- 415; Merman v. HafTcneggcr, 54 Cal. nolds, 75 Mo. 563. 161. ' Citing Jaggers v. Griffin, 43 Miss. ' 2 Schouler's Personal Prop. 627. 134- 45 7o6 PERSONAL' REPRESENTATIVE. ^§ 5 1 I, 512 back his price, must restore the chattel to the seller, unless he can show that it is of no intrinsic value, and its loss no injury to that party." ^ § 511. Personal representative cannot avoid his own voida- ble act. — Generally speaking, an administrator who sells, mortgages or pledges any of the personal property of the estate in payment of, or as security for, his own individual debt, is guilty of a breach of trust, but the administrator cannot avoid his own sale or pledge, though he was guilty of a breach of trust in making it. It has been even held that if he dies or is removed and an administrator de bonis noil is appointed, the latter cannot avoid the wrongful sale or pledge by the first administrator.''^ Creditors, legatees, and distributees are the persons injuriously affected, and are the proper parties to bring suit to have the transactions avoided. § 512. Avoidance or cancellation of void or voidable instru- ments. — We have already seen that judgments may be pro- cured cancelling instruments and papers that are absolute nullities, the courts proceeding in such cases upon the prin- ciple quia timet. " The cases in which a court of equity exercises its jurisdiction to decree the surrender and can- cellation of written instruments are, in general, where the instrument has been obtained by fraud, where a defense exists which would be cognizable only in a court of equity, where the instrument is negotiable, and by a transfer the transferee may acquire rights which the present holder does not possess, and where the instrument is a cloud upon the title of the plaintiff to real estate." ^ The distinction in ' Citing Clarke V. Dickson, E. B. & E. Rand. (Va.) 51; Johnston v. Lewis, 148; Blackburn v. Smith, 2 Ex. 783; Rice's Eq. (S. C.) 40; Young v. Kim- Dorr V. Fisher, i Cush. (Mass.) 271 ; ball, 8 Blackf. (Ind.) 167; Slaughter v. Smith V. Smith, 30 Vt. 139; Lyon v. Froman, 5 Monroe (Ky.) 19; Hagthorp Bertram, 20 How. 149. v. Neale, 7 G. & J. (Md.) 13. " Stronach v. Stronach, 20 Wis. 133. ' Rapallo, J., in Town of Venice v. See Herron v. Marshall, 5 Humph. Woodruff, 62 N. Y. 466. (Tenn.) 443 ; Coleman v. McMurdo, 5 §5^3 REALTY AND PERSONALTY. 707 this regard between instruments affecting realty and those relating only to personalty is worthy of notice.* § 513. Distinction between instruments affecting realty and personalty. — Bills have been filed for the purpose of cancel- ling promissory notes, bills of exchange, policies of insur- ance, bonds, etc., as well as deeds, mortgages, and other instruments affecting real estate, and all these have been repeatedly entertained by the courts. There is, however, an obvious distinction between those instruments wiiich merely create a personal claim against a complainant, and those which affect his property, and especially his real es- tate. The first can rarely do him any injury so long as they remain dormant, while the latter may create such a cloud upon his title as seriously to impair its value. '-^ In the first of these two classes of cases, the question is in- volved in some doubt whether courts of equity will inter- fere to set aside the instrument where there is a complete defense at law. Lord Thurlow was inclined not to enter- tain jurisdiction in such cases,'^ but afterward Lord Lough- borough in Newman v. Milner,* and Lord Eldon in Brom- ley V. Holland,^ and in Jervis v. White,^ took the opposite ground. Chief-Baron I^ichards also, in Duncan v. Wor- rall,''' admitted with apparent reluctance that relief might be given in equity against a policy of insurance, notwith- standing it was entirely void at law. In cases, however, where the title to real estate is or may be affected, it seems never to have been regarded as a sufficient objection to a bill seeking relief in equity that the complainant has a per- fect lepfal defense. The distinction seems to have been practically taken in the case of Byne v. Vivian.** This was ' Compare Holden v. Hoyt, 134 Mass. * 2 Vcs. 483. 181,186. See §418. '7Ves. 3. ■-" Ward V. Dewey, 16 N. Y. 525. * 7 Vcs. 413. ' Ryan v. Mackmath, 3 Bro. C. C. ' 10 Price 31. 15; Colman v. Sarrel, i Ves. 50; Hil- ' 5 Vcs. 604. in V. Barrow, i Ves. 284. 708 REALTY AND PERSONALTY. § 513 a bill to cancel an annuity bond, and came before Lord Chancellor Loughborough in 1800. Three years before, the same learned chancellor had refused in Franco v. Bol- ton,^ to set aside a similar bond, although void, on the ofround that since the case of Collins v. Blantern^ the de- fense was available at law. An examination of the facts in Byne v. Vivian,^ reveals a plain reason for this apparent inconsistency. The annuity in Franco v. Bolton ^ was se- cured by a personal bond, while in Byne v. Vivian^ the bond was accompanied by a mortgage on real estate. In the latter case, Mansfield, counsel for the defendant, urged that the court ought not to entertain jurisdiction, for the reason not only that there was a good defense at law, but that the defense appeared upon the face of the proceedings under which the defendant must claim. Sir John Mitford, on the other hand, pressed the consideration that the secu- rity affected the title to real estate. He said : " This is an incumbrance upon the estate which cannot be disposed of till this term is disposed of. A court of equity has taken jurisdiction in cases where the security has been void at law. The party has a right to come to have the property cleared, and that the other shall not retain the security merely to keep a cloud upon the title." The distinction between cases where the invalidity of the instrument appears upon its face and where it does not is now universally recognized.*^ But Chancellor Kent, in Hamilton v. Cummings,'' came to the conclusion, after an elaborate review of the cases, that it was unsound. In Cox V. Clift,^ Gardiner, J., said: "Whatever opinions may have formerly obtained, it now seems to be established that ' 3 Ves. 371. Meserole, 26 Wend. (N. Y.) 136 ; Van - 2 Wils. 341. Doren v. Mayor, etc., 9 Paige (N. Y.) ^ 5 Ves. 604. 388 ; Cox v. Clift, 2 N. Y. 118 ; Peir- ^ 3 Ves. 371, soil V. Elliott, 6 Peters 95. » 5 Ves. 604. 'I Johns. Ch. (N. Y.) 517. * See Simpson v. Lord Howden, 3 ' 2 N. Y. 122, Myl. & Cr. 99 ; Mayor of Brooklyn v. § 513 REALTY AND PERSONALTY. /OQ whenever it is apparent from the writing or deed itself that no danger to the title or interest of the complainant is to be apprehended, a court of equity will not entertain a bill for the cancellation or delivery of the instrument. Nor is there any reason why a party should be allowed to resort to the expensive remedy of a suit in chancery to procure the relinquishment of a right which it is obvious the de- fendant never possessed, and against which, if asserted, the complainant had a perfect legal defense written down in the title deeds of his adversary." INDEX. ^References are to sectz'onsj] ABANDONED exemptions, 50. creditors may seize, 50. rule applies to homestead, 50. ABOLITION of imprisonment, 2. cause of fraudulent transfers, 2. effect upon remedies, 2. restricts creditors' rights, 2, 40 7^;. ABSCONDING and non-resident debtors, 84. remedies against, 84. policy of the different States, 84. ABSENCE, of jurisdiction as distinguished from excess of jurisdiction, 42 r, of means in vendee, 241, 274. effect of proof of, 241, 274. general reputation as to means, admissible, 274. of presumptions of fraud, 5, 6, 224. ACCOUNTING, by fraudulent vendee to debtor, 176. effect of, 176. vendee need not account second time, 176. for rents, 26, 176. for improvements, 26. judgment on, 51, 176. ACCUSED person, may testify as to intent, 205 n. ACQUIESCENCE, 482-495. See Ratification. by laches, 148, 287. facts insufficient to constitute, 491. ACTION, alienation pending, 157. ACTION AT LAW. See Creditors' Remedies. creditors may proceed by execution, 59. treat transfer as nullity, 59. does not interfere with remedy in equity, 60. advantages of suit in equity over, 60. ^12 Re/ere}ices'\ INDEX. \ are to sections. ACTS, void and voidable, 408-481. See Void and Voidable Acts. speak louder than words, 8, 196. void and voidable, 408-446. void by statute of frauds, 436, 437. of corporations void, 438. four classes of, ineffectual, 428. which are voidable, 426, 447. of infants and of lunatics compared, 449. ACTUAL motive or intent, when unimportant, 9, 10, 197, 322, 382. ACTUAL AND CONSTRUCTIVE FRAUD, 60, 192. distinction between, as regards reimbursement, 192. fraud in fact defeats reimbursement, 192. the principle discussed, 192. change of possession required, 253. intent not decisive, 10, 197, 322, 382. ACTUAL NOTICE, 372-389. See Notice. ACTUAL VIOLENCE, not essential to constitute duress, 478. ADJUDICATIONS to avoid nullities, 418, 512, 513. See Judgments. ADMEASUREMENT, dower before, available to creditors, t,^. reached in supplementary proceedings, 61. ADMINISTRATORS, as complainants, 112, 113. as defendants, 136, 136 n. conveyance binding upon, 112, 113, 398. cannot avoid their own act, 511. may sue for cancelled debt, 42. ADMITTED facts in pleading, 285. cannot be contradicted, 285. ADVERSE POSSESSION, as defense to suit, 292. AFFIRMANCE, of voidable acts, 482-495. of common law, statute of Elizabeth, 16. knowledge essential to ratification, 483. of executor's voidable acts, 484. of infants' acts, 482^ 488. effected by laches, 495. of corporate acts, 494. by receipt of proceeds, 485. of bill of lading, 490. by acquiescence, 491. of voidable corporate acts, 494. AFFIRMATIVE, relief, rule as to, 166. Re/erences^ INDEX. [are to sections. 7^3 AFFI RMATlVE—contwtted. statute does not repeal common law, i6. proof of deceit, 5. AGENT, husband as, for wife, 303. fraud of, affects principal, 198. voidable purchase by, 470, 472. affirmance of acts of, 483. AGREEMENT to prefer, validity of, 390, 394. AID, when extended to grantors, 399, 400. See Existing Creditors, Subsequent Creditors. AIDING DESCRIPTION, by evidence, 157. ALABAMA, creditor without judgment may file bill, 73 «. personal representative may file bill, 113 n. ALIENATION, restraints upon, 14, 361, 362. property susceptible of fraudulent, 23. aversion to restraints upon, 360. English and American cases concerning, 361 n. claims prior and subsequent to, 105. pending suit, 157. doctrine of lis pendens, 157. ALIMONY, conveyance to defeat, no n. may be avoided, no n. receiver for collection of, 188. ALIUNDE evidence of fraud, 236. ALLEGING insolvency, 143. fraud, 141. conspiracy generally, insufficient, 141. consideration, 144. See Complaint. ALLOWANCE, for improvements, 192 ;/, 193 n. for wife may be reached by her creditors, «2. ALTERNATIVE RELIEF, when extended, 153. cumulative remedies, 65. AMENDMENT, OF COMPLAINT, 83, 156. as to description, 156. as to statement of value, 156. rule as to permitting, 156. of pleading, discretionary, 156. ANCIENT PRACTICE as to necessity of judgment, 85. ANCILLARY RELIEF, by equity, 60. collateral to maintain action, 6^^. discovery as, 147. 714 Jie/erences'j INDEX. [ are to sections. "AND OTHERS," meaning of, no. who embraced in, no. claimant of alimony, no «. ANNUITIES may be reached, 24, 45. ANOTHER ACTION, pending, 286^. ANSWER OR PLEA, 158-167. (i.) Generally^ 158. accepted as true, when, 158, 159, 160. fraud not presumed, 5, 6, 158. denying fraud or notice, 163. overcoming denial in, 159. as evidence, 160. admission and avoidance, 164. evidence of witness against, 160. receiver before, 184. (2.) Pleading to discovery and relief , 161. rules as to, 161. particularity of denial in, 162. avoiding discovery, 165. (3.) Affirmative relief, 166. must be claimed in answer, 166. what accomplished by, 166. (4.) Verification^ 167. pleadings usually verified, 167. waiver of verification, 167. sworn answer taken as true, 160. ANTECEDENT agreement to prefer, 394. creditors, sharing with subsequent, 104. ANTEDATING instrument, badge of fraud, 229. ANTE-NUPTIAL SETTLEMENT, marriage as consideration, 212, 306. ANTICIPATING income by assignment, 367. APPARENT FAIRNESS, will not save transaction, 241. APPARENT LACHES, excusing, 148. APPARENT OWNERSHIP, rights acquired, 287. APPOINTMENT of receiver, in judgment, 170. in supplementary proceedings, 61, 116. of corporation, 117. contests over realty, 187. to collect alimony, 188. of various interests, 188. when matter of course, 184. Ee/et-encfsl INDEX. ^are to sections. 7^5 APPO I NTM ENT—contuiue^. in foreclosure, 187 n. See Receiver. ARREST OF DEFENDANT, 191. rule in New York, 191. actual intent to defraud must be shown, 191. constructive fraud insufficient, 191. of partner, 191. lex fori governs right to, 64, 191. ARTICLES OF SEPARATION, 310. become voluntary settlement upon reconciliation, 310. ASSAUET, claims for, cannot be reached, 34. claims do not pass to assignee, 316a. alienations to avoid demands for, 22. ASSERTIONS OF GOOD FAITH, inconclusive, 8. See Bona Fide Purchasers. ASSETS, available to creditors, 23^42. membership of stock exchange constitutes, 35. tangible property may be reached, 24. improvements, rents, and profits are, 26. crops constitute, 27. exceeding liabilities in assignments, 340. property substituted or mingled, 28. estates in remainder or reversion, 29. equitable interests, 30. equity of redemption, 31. reservations, 32, 272. of corporation, trust fund, 117, 119, 139. choses in action, 2)Z- trade-marks, 36. book royalties, 37. patent rights, 38. powers, 39, 40. promises of third parties, 43. income of trust estate, 45, 360, 364, 366. intentional omission of, 345. What are not assets. exempt property, 46-50, 365. gifts of small value, 41. powers, in New York, 40. claims for torts, 34. income of trust estate, 360-368. talents or industry, 50^. 7l6 Jie/erences^ INDEX. iare to sec/icns. ASSIGNED PROPERTY, value as affecting, 23. ASSIGNEE. See Fraudulent General Assignments. gets title to trade-marks, 36. property transferred to, 316a. may sue in replevin, 316a. not an officer of the court, 316. control of courts over, 316. general, rights of, as complainant, 115. attacks fraudulent conveyances in New York, 115. in bankruptcy, 114. title of, 35, ^6, 114, irs, 364. may sue carrier, 316^/. exempting from liability, 334, authority of, to compromise, ^;^6. fraud of, 337. innocent, rights of, 319. ignorance or incompetence of, as badge of fraud, 338. as defendant, 133. assignor cannot substitute successor for assignee, 316. in bankruptcy, as complainant, 1 14. represents creditors, 114, 115. property reverts after discharge, 114. discharge of, 114. ASSIGNMENT, 316-346. See Fraudulent General Assignments. what constitutes, 316. creditors may overturn, 108. assailing and claiming under, 316 ;;. takes effect from delivery, 316a;. ASSUMPSIT, remedy by, 62. will not lie against fraudulent vendee, 62, damages in, 62. ATTACHMENT, against property in name of third party, 57. specific lien by, 81. not sufficient to support creditors' bill, 81. judgment in suit by, 77. simple contract creditors may have, 73 n. ATTACKING CREDITORS, status of, 73-88. See Status of Attacking Creditors. ATTACKING different conveyances, 154. title on ground of fraud, 158. ATTORNEY, authorized to take supplementary proceedings, 61 n. purchase by, of client's property, 474. Re/erences\ INDEX. \ are /o sections. 7^7 ATTORNEY— con/inued. provision for fees of, 335. renders assignment fraudulent, 335. as fraudulent vendee, 62. conspiring with debtor, 62. power of, by infant, 454, 489. AUTHORITY to compromise debts, 336. effect of, in assignment, ^^6. AVAILABLE assets for creditors, 23-50, 50^'. what interests may be reached, 23-45. not exempt property, 46-50, 365. what cannot be reached, c,oa. AVERMENTS of complaint, 140-157. of delivery of deed, 140 //. of answer, 158-167. of fraud, 141. AVERSION to exemptions not statutory, 360. AVOIDANCE of voidable acts, 496-513. by infant a personal privilege, 496. acts avoided, 497. acts of avoidance as compared with acts of affirmance, 498. by infant, 499. of infant's deed, 500, 501. laches of infant atfecting, 505. of infant's personal contracts, 506. of lunatic's deed, 509. restitution by infant, 507. restitution by lunatic, 510. by personal representative, 511. of void or voidable instrument, 512. AVOIDING, denial in answer, 159. voidable acts, 496-513. must be overcome by competent proof, 159. discovery, 165. nullities, 418. AWAKENING SUSPICION, is notice, 379. BAD FAITH, in selling public securities, 446^. See Bona P'ide Purchasers. BADGES OF FRAUD, 224-244. (i.) Indicia or badges of fraud, 6, 224, 225. what constitute, 224, 7l8 Re/erences\ INDEX. ^nre to sections. BADGES OF YKh-UT)— indicia— continued. in Tvvyne's case, 22. theory of the law, 224. " a fact calculated to throw suspicion on the transaction," 225. not conclusive evidence, 225. strong and slight badges, 225. burden of proof changed by, 225. must be passed upon by jury, 226. (2.) Recital of fictitious consideration, 228. how considered, 228. important badge of fraud, 228. must be intentional, not accidental, 228. (3.) Antedating instnimefit, 229. is an indicium of fraud, 229. date not essential part of instrument, 229. (4.) Vague description as badge of fraud, 230. submitted to jury as a circumstance, 230. how explained, 230. (5.) Generality of the conveyaiice, 22, 231. raises presumption of fraud, 231. different views of the courts, 231. regarded as unusual, 231. was one of the badges in Tvvyne's case, 22, 231. various illustrations, 231. (6.) Inadequacy of purchase price, 232. effect of, as evidence, 232, does not prove fraud, 232. unless extremely gross, 6, 232. ( 7 . ) Transfer pending suit, 22, 157, 233. how regarded, 233. scanned with much suspicion, 233. (8.) Secrecy, evidence of, 234, 272. is fact from which fraud may be inferred, 234. (9.) Suppression or conceabnent, 235, 236. subsequent acts of fraud avoiding transfer, 235. failure to record instrument, 235. (10.) Concealment in fraud of bankrupt act, 237. the test applied, 237. (it.) Absolute conveyance by way of security, 238. proving absolute conveyance a mortgage, 238. valid if no fraud intended, 238. effect of secret resi '•vation, 238. convenient cover f l .- fraud, 238. Re/erences^ INDEX, \are to sections. /IQ BADGES OF FRAUD— co7i/inued. (i2.) Sa/es upon credit, 240, 332, 333. not necessarily fraudulent, 240. is a circumstance, 240. when considered fraudulent, 240. (13.) Umtsual acts and transactions, 241. many illustrations, 241. unusual particularity, 241. absence of memoranda, 241. false receipt, 241. exceptional and peculiar conduct, 241. absence of means in the vendee, 241, 274. (14.) Effect of relationship, 242. calculated to awaken suspicion, 242. transaction will be closely scrutinized, 242. not necessarily evidence of fraud, 242. when coupled with other badge, 242. (15.) Prima facie cases of fraud, 243. comments, 244. BAILEE, cannot set up fraudulent title, 107 //. BANKRUPT ACT, concealment in fraud of, 237. purpose of, to defeat preference, 390 n. '' void " in, means voidable, 445. assignee under, 114. BANKRUPTCY, bond payable on, when void, 364 n. assignee in, as complainant, 114. discharges as a defense, 294. property reverts after, 114. dower not barred by, 315. BEGIN AND REPLY, right to, 271 n. BILL IN EQUITY, 68. See Creditor's Bills. merits of relief by, discussed, 51, 60, 68. forms of relief, 4, 51-72. BILL OF LADING, ratification of, void, 490. BILL OF PARTICULARS, discretionary, 162^'. when granted or refused, 162^'. • BISPHAM, definition of creditor's bills by, 68. BLACK, J., views as to presumptions, 7. BLATCHFORD, J., views of, 291. as to ignorance of fraud, 291. limitations in equity, 291. BLINDNESS of assignee, badge of fraud, 338. 720 Re/erences] INDEX. ^^are io sctriians. BONA FIDE purchasers, 21, 369-384. See Notice. rights of, superior to creditors, 369. theory of the law, 369. payment of consideration constitutes substitution of property, 369. statute 27 EUz., 21. plea of, 163. (i.) Title of purchaser, hoiu protected, 369. three things must concur, 369, must buy without notice, 369. must be purchaser for value, 369. burden of proof, 158. (2.) Generality of the rule, 370. when equities are equal the law prevails, 370. (3.) Mortgagee as bona fide purchaser, 371. rule in New York, 371. pre-existing indebtedness as consideration, 371. (4). Without notice, 372. kinds of notice, 373. constructive notice of fraud, 374-382. rule in Stearns v. Gage, 375, 376. Parker v. Connor, 378. facts sufficient to excite inquiry, 378, 380, 381. actual belief, 382. purchaser with notice, 383, 384. BONA, sed impossibilia non cogit lex, 83, BOOK ROYALTIES, may be recovered, 24, 37, remedy to recover, 37. BOTH PARTIES, must be implicated in fraud, 183. BRANDING CATTLE, sufficient delivery, 262. BRETT V. CARTER, rule embraced in, 353. BROADWAY BANK v. ADAMS, 367- the case criticised, 367. BROTHER, conveyance by sister to, not fraudulent, 5. BURDEN OF PROOF, 158. conveyances by husband to wife, 301. rests on party asserting affirmative of the issue, 271. generally rests on creditor, 271. shifting, by showing fraudulent intent, 271. as to explanations, 271. as to consideration, 201. to repel presumption, 225. right to begin and reply, 271 n. J?e/erences\ INDEX. lare io seciions. 721 BUSINESS, authorizing trustee to continue, 330. continuance by insolvent, 143 71. CAMPBELL V. FOSTER, relied on in Nichols v. Eaton, 365. discarded in Williams v. Thorn, 45, 365. not the law of New York, 45, 365. CANCELING worthless debt, not a fraudulent alienation, 23. debts, when fraudulent, 42. by testator, not good against creditors, 42. CAPITAL STOCK, a trust fund, 117, 119, 68 «. See Corporation. CARELESSNESS, not proof of fraud, 5. CASE, action on the, 62. not appropriate against vendee, 62. damages too remote, 62. CASE V. BEAUREGARD, discussed,' 83. CATTLE roaming over plains, delivery of, 262. requisites of the change of possession, 262. branding cattle, sufficient delivery, 262. CAUSE, of fraudulent transfers, 2. CAUSES OF ACTION, misjoinder of, 135. uniting, 55, 154. CERTIFICATE of division, 407^:. CESTUI QUE TRUST and trustee, 137. suits in furtherance of, and opposition to trust, 137. voidable titles, 470, 471. CHAIN of evidence, 224. CHANGE IN ASSIGNMENT, parties cannot make, 316. CHANGE OF POSSESSION, delivery, 245, 246-267. concerning possession, 245. defined, 245, 253, 257, 259. feature of Twyne's case, 22, 245. changes in the law, 245. undue prominence of the subject, 245. cases of bailments, 245. excusing want of change of possession, 263. on judicial sale, 265. of grooving crops, 266, (i.) Possession as proof of fraud, 247. pritna facie evidence, 247, 248. criticisms of the doctrine, 247. statutory policy, 247. 46 72 2 Re/erencesj INDEX. [are io sections. CHANGE OF POSSESSION— proof of fraud— contt;wed. New England cases, 249. rule in New York and various other States, 250. (2.) Conclusive evidence, when., 251. theory of the cases, 251. results of the conflicting policies, 252. the principle discussed, 252. (3.) Actual change of possession required, 253. change cannot be effected by words, 253. must be by outward and visible signs, 253. assumption of ownership by vendee, 253. questions for the jury, 254. overcoming the presumption, 255. {4.) Requisites of the change, 253, 256, 257, 258, 259. possession within a reasonable time, 256. change must be continuous, 257. temporary resumption of possession, 258. concurrent possession insufficient, 259. possession of bailee, 260. no delivery where purchaser has possession, 261. (5.) When technical delive7'y is not essential, 262. cattle roaming over plains, 262. delivery of logs, 262. vessel at sea, 262. squared timber, 262. (6.) Change of possession of realty, 264. rules as to, stated, 264. CHANGE OF VENUE, territorial jurisdiction, 157a. CHARACTERISTICS of fraudulent conveyances, 15. made to avoid a debt or duty, 15. mutual fraud and injury, 15. CHATTEL MORTGAGES, questions affecting, 347. rights of purchaser of, 168. when fraudulent, 347-359- fraud in vitiate?, 357 n. of perishable property, 359. (i.) Questions affecting, regulated by statute, 347- effect of record of, 347. repels presumption of fraud, 347. (2.) Mortgage ivith power of sale, 267, 348-355. , rule in Rebinson v. Elliott, 348-351, 354. the case stated, 348. Re/erences} INDEX. [are fo sections. 7^"^ CHATTEL MORTGAGES— z^'/V/^/^A'^r of sale— continued. similar cases, 349. proof extrinsic to the instrument, 350. comments in the cases, 351. (3.) Rule opposed to Robinson v. Elliott., 352, Brett V. Carter, and similar cases, 353. discussion of the principle involved, 354. (4.) Sales for mortgagee' s benefit, 355. considered legal, 355. New York cases, 355. mortgagor acts as agent, 355. (5.) Sales upon credit, 240, 332, t^^t,, 356. not tolerated, 356. tend to hinder and delay creditors, 356. (6.) Possession, independent valid transaction., 357. void mortgage cannot be transmuted into valid pledge, 357. pledge, independent of fraudulent mortgage, sustained, 357. {1.) Right of revocation ; reservations, 358. when inconsistent with transfer may be avoided, 358. (8.) Rule as to consumable property, 359. mortgage upon, fraudulent, 359. when valid, 359. intent in such cases, 359. CHOSES IN ACTION, convinous transfers of, voidable, 17, 22, TiZ- conflict in the cases, 2>Z- true rule applicable to, ^^. what included in, 2,S n. CIRCUMSTANCES, proof of fraud from, 5, 13, 224, 225, 281. evidence of, 281. intent inferred from, 8. great latitude in admission of evidence of, 281. evidence of, wide range given, 281. proof of fraud from, must be strong, 281. test as to admission of, 281. direct proof of fraud not attainable, 13. GIRCUMSTANTIAE and direct evidence, 227. CLAIMS, for pure torts not assignable, 34, 3i6rtr. injury to property may be reached, 34. joinder of, 54, 55. prior and subsequent to alienation. 105. CLASSES of fraudulent conveyances, 15. three elements must concur, 15. 724 Re/erences\ INDEX. \a.rs to sections. CLASSES — continued. of infant's acts, 451. of defective or ineffectual acts, 428 of creditors, existing and subsequent, 89. of creditors' suits, 68, 68 }i. CLOUDS ON TITLE, 418 n. defined, 418 n. when action to cancel will lie, 418 «., 512 513. rule as to real estate, 418 ;z., 513. owner must usually wait until assailed, 418 n exceptions to the rule, 418 fi. actions will not lie when cloud is void on its face, 418 n. test as to a cloud on title, 418 fi. CO-CONSPIRATORS, declarations of, 280. when admissible, 280. must relate to transaction under investigation, 280, purpose of the rule, 280. COLLATERAL ATTACK of transfers,, rule as to, 69 exceptional practice in Louisiana, 69. of void act, 425. COLLATERAL, reUef to main action, 63. facts as evidence of fraud, 281, 282. COMITY, between States, 64, 346 the principle applied, 64, 346. yields in favor of residents, 64, 46. recognition of receivers by, 118. COMMERCIAL PAPER, void and voidable, 446a. COMMON FUND, when liable for expenses, 109. COMMON LAW, suspension of alienation void at, 362 statute of Ehzabeth declaratory of, 16, enjoins integrity, 16. rule as to presumption of its existence, 64 n rule as to competency of party, 269. statutory proceedings in derogation of, 469 statutes strictly construed, 469. fraudulent conveyances at, 16. affirmative statute does not repeal, 16. COMPETENCY, of party as witness, 269. defendant may be compelled to testify, 269. rule of the common law, 269. of wife as witness, 313. COMPIJVINANTS, who may be, 107-127, 89-106. Re/erences \ INDEX. \ are to seciions. • 7 2*5 COMPLAINANTS— continued. (i.) Who may assail fraudulent conveyances, 73, 107. status of complainants, 73-88, 107, conveyances voidable only as to creditors, 107, 395-404. question of parties difficult, 107. sequestrator as, 116. (2.) Joinder of complainants^ 108. creditors by several judgments, xo8. judgment-creditors cannot unite at law, 108 n. creditors by judgment and decree, 108. theory as to joinder, 108. hostile claimants cannot join, 108, (3.) Sui?ig for others, 109, no. rules regulating, 109. "and others" interpreted, no. equity of a creditor, no. (4-) Surety, subrogation of, in. entitled to stand in place of principal, in. (5O Executors and administrators, 112. ordinarily bound by decedent's act, 112, 398. statutory changes, 112. may now impeach fraudulent transfers, 112, 113. importance of the change, 113. (6.) Assignees, 114, 115. assignee in bankruptcy, 114. title of general assignee, 115. (7.) Receivers, 116. rights of, as complainants, 116. of corporations, 117. who are represented by, 1 1 7. foreign receivers, 118. creditors of corporations, 119. (8.) Rights of various complainants, 120-127. sheriff, 81, 120. heirs, 121. when heirs cannot sue, 121. husband and wife, 122, 298-315. widow, when not proper complainant, 121. tort creditor, 123. overseer of the poor, 124. creditors having liens, 125. purchasers removing incumbrances, 126. 726 • •' Re/erences\ INDEX. \are to sections. COMPLAINANTS — rights of various — continued. creditors opposing will, 127. wife, when creditor, 122. COMPLAINT, requisites of, 140-157^. (i.) Recitals of the complai7it, 140. complainants must be creditors, 140. indebtedness must be shown, 140. alternative relief, 153. remedy at law exhausted, 140. alleging insolvency, 143. concerning consideration, 144. (2.) Pleading fraud, 141. fraud defined, 13, 141. alleging fraud, 141. word "fraud" need not be used, 141. (3.) Evidence not to he pleaded, 142. general certainty sufficient, 142, circumstances not to be minutely charged, 142. circumstances implied in law, 142. (4.) Pleading in equity, 60, 146. more liberal than at law, 146. seeking discovery, 147. excusing laches, 148. explaining delay ; discovery of fraud, T49. (5.) Multifariousness, 150, 151, 152, complaints bad for, 150. pleadings held not to be, 151, 152. (6. ) Details of complaint., 1 5 5- 1 5 7 • prayer and verification, 155. amendment of, 156. description in, 157. COMPOSITION WITH CREDITORS, must be fair, 393. contract securing secret advantage, 432. COMPROMISE, power in assignee to, 336. how construed, 2^T^(i. with creditors, must be honest, 393. effect of secret preferential agreement, 393. when a fraud upon other creditors, 393. antecedent agreement to prefer, 394. CONCEALMENT OF FRAUD, 148, 234, 235. pleading concerning, 148. in fraud of bankrupt act, 237. References^ INDEX. \are to sections. 7 '^7 CONCLUSIVENESS of judgments, 74, 168, 270. of transfers between parties, 395-401. CONCURRENT remedies, legal and equitable, 51, 60. cumulative remedies, 65. possession insufficient, 259. CONDITIONS treated as void, 361. repugnant, are void, 362. what are, 363 n. CONDONATION of fraud, perfects title, 370. CONDUCT that is fraudulent, 13. CONFESSIONS of different judgments, 54. may be attacked in one suit, 54. collusive confessions avoided, 74 «., 174. by administrator, 74 n. sufficient to uphold creditor's bill, 76. transfer by confessed judgment, 174. CONFORMING testimony to pleadings, 285. CONSIDERATION, inadequacy of as evidence of fraud, 6. disparity must be great, 6, 232. allegations of complaint concerning, 144. general subject, 207-223. paid by debtor for third party, 57, 57 «. ( I . ) Concerning consideration and good faith, 207-223. defined, 207, 209. moral obligations, 215, when important as affecting alienations, 207. what is valuable consideration, 209. services by member of family, 218, sufficient consideration, 222. insufficient consideration, 223. alleging, 144. (2.) Voluntary conveyance, 208. implies total want of substantial consideration, 208. (3.) Good and valuable consideration, 210 n. Judge Story's views, 210 «. (4.) Marriage as consideration, 212, 306. the cases reviewed, 212. when part of fraudulent scheme, 306. no other consideration so highly respected, 212. (5.) Illegal consideration, 214. illicit intercourse, 213. (6.) Proofs of consideration., 219. 720 /ie/erencesl INDEX. \ are io sccizotis. CONSI DERATION— /r^^/y of— continued, recitals as evidence, 220. explaining recitals, 221. may be varied by parol, 221. CONSPIRACY, remedy by action of, 62. damages in action for, 62. CONSPIRATORS, declarations of, 280. why admitted, 280. statement of one witness, 280. CONSTRUCTION, of instrument, intent gathered from, 10, 322. rules of, same in equity as at law, 51. of assignments, 343. of bill, 54, 146. statutes as to frauds, liberal, 19, 20. in derogation of common law, 469. strictly construed, 469. rule in Twyne's case, 20, 22. principle applying to construction, 20. CONSTRUCTIVE FRAUD, does not justify arrest, 191. reimbursement allowed in cases of, 192. defined by Story, 323. is a conclusion of law, 163. CONSTRUCTIVE NOTICE OF FRAUD, 374, 382. See Notice. CONSUMMATED illegal acts, 439. CONTEMPLATION, of future indebtedness, 96, 97, 100. subsequent creditors must show, 96. of marriage, fraud in, 314. CONTEMPT, depends upon act done, 196 ;/. CONTINGENT CREDITORS, entitled to protection, 90. CONTINGENT REVERSIONARY INTEREST, recoverable, 29. remainder not liable to execution, 29 ;/. CONTINUOUS, change of possession must be, 257. CONTRACT CREDITORS, rights of, 73, 73 n. CONTRACTS, of infants voidable, 452. of lunatics, 460. what incapacity must be shown, 461. and devices, fraudulent, 447^. CONTRAVENING STATUTES, assignments, 324. CONTRIVANCE, to cover up fraud, 149. evidence of, 335. CONTROVERSY, all parties interested should be joined, 128. References^ INDEX. ^are to sections. 729 CONVERSION, claim passes to assignee, T,i6a. CONVEYANCE, hindering creditors by its terms, voidable, 9. fraudulent at common law, 16. of whole estate, presumption of fraud, 22, 231. valid between parties, 395-399. the theory, 396. fraudulent, defined, 15. meaning of word, 14 n. of choses in action, fraudulent, 17, 2,2>- avoided by subsequent creditors, 101. avoided in ejectment, 69, 69 n. COPARTNERS, and fraudulent alienees as defendants, 54. may sue copartner and fraudulent alienee, 54. special, cannot be preferred, 329. arrest of, 191. debts of, 216. preferring claims, 329. rights of, limited, 329. corporators, when liable as, 139. limited partnership assets, trust fund, 329. CORPORATE ACTS, affirmance of, voidable, 494. void, 438. CORPORATION, creditors of, may file bill, t,2,, 119. may be joined in bill as defendant, 128. receiver of, rights to bring suit, 117. and individuals on same footing,'ii9. acts of, ultra vires, 411. organized for fraudulent design, 15. assets of trust fund, 117, 119, 139. continuing business when insolvent, 143 n. stockholders of, suit against, 139. when corporators liable as partners, 139. may kdopt voidable act, 494. rules relating to subsequent creditors, applied to, 100. when insolvency not ground for receiver, 239 ji. no discharge granted to in bankruptc)', 294 n. rules as to fraudulent conveyances apply to, 199 //. assignments by, 346^7. COSTS, judgment for, rights of creditors, 90 n. COUNSEL FEES, providing for in assignment, 335. COUNTERFEIT MONEY, payment in, 447a. COUNTY, creditor's bill against, 139 n. 7^0 Re/erences\ INDEX. \are to sections. COVNTY—cofitinued. jurisdiction outside of, 406, execution issued to, 68. COUPONS, suit for judgment on and mandamus united, 85 n. COVINOUS alienations of exemptions, 48. COVINOUS TRANSFERS, 16-17. of choses in action, 17, t,;^. valid between the parties, 395-400. CREDIT, sales upon, 240, 332, 2,2>3- effect of, 332, 333. CREDITORS, status of. See Status of Attacking Creditors. of attacking creditors, 73-88. who are not, 91. right of, to oppose probate of will, 127. when they may sue stockiiolders, 119. when wife is creditor, 122. policy of the law to protect assets available to, 23-50. existing and subsequent, 89-106. must invoke process against debtor, 52. recitals not binding on, 221. See Existing Creditors ; Subsequent Creditors. CREDITORS' ACTIONS, purpose of, 4. bill to reach surplus income, 360 of corporations, relief to, 119. who may be complainants, 107-127. CREDITORS AT LARGE, rights of, 52, 73. cannot assail debtor's transfers, 73. not entitled to injunction, 52, 73. rights of, not favored in equity 73. of a decedent, 79. CREDITORS' BILLS, 68. See Creditors' Remedies; Supplemen tary Proceedings. why preferable, 60. merits of relief in equity discussed, 60. object of, in New York, 68. to reach equitable assets, 68. execution must precede, 6i. filing of, creates hen, 61, 68, 392. fraudulent conveyances annulled by, 68. usually regulated by statute, 68. distinguished from bill in equity, 68. is in nature of a discovery, 68. Xe/erences'j INDEX. ^are to secdotu. 73 1 CREDITORS' BILLS— conf I fmed. two kinds of, 68, 68 //. complainants in, 107-127 defendants in, 128-139. of fraudulent grantee, 387. CREDITORS' REMEDIES, 51-72. See Remedies of Creditors. legal and equitable, 51. injunction against debtor before judgment disallowed, 52. exceptions to the rule, 53. joinder of claims, 54, 55. land in name of third party, 57. relief before and after sale, 58. at law and in equity, 59, 60. supplementary proceedings, 61. assumpsit, case, conspiracy, 62. relief collateral to main action, 6;^. remedy governed by /ex fori, 64. cumulative remedies, 65. various illustrations, 65. election of remedies, 67. ; creditors' bills, 68. direct and collateral attack, 69. in federal courts, 71. recapitulation of, 72. CRIME, fraud in light of, not considered, 3. indictment changing fraud, 65 n. CRIMINATING disclosure, party need not make, 165. CROPS, rule as to, 27. liable to creditors' remedies, 27. delivery of, 266. CROSS-BILL, affirmative relief, 166. homestead protected by, 166. CROSS-EXAMINATION OF PA]R.TY, 281. great latitude allowed, 281. CROSS-PETITION, relief by, 166. CUMULATIVE REMEDIES, allowed and disallowed, 65. civil and criminal jurisdiction, 65. election of remedies, 67. CURTESY, right of, available to creditors, 30. reached by creditors' bill, 30. DAMAGES, judgment for, not allowed in equity, 51. decree must be for an accounting, 51. y "12 Re/erettcesl INDEX. ^nre to sectians. DAMAGES — continued. too remote in action of case, 62. exceptional cases, 62. in action for conspiracy, allowed, 62. in assumpsit, 62. DATE OF AGREEMENT, governs creditors' rights, 90. antedating instrument, 229. DAUGHTER, claim for services, 218. no promise to pay implied, 218. DE MINIMUS NON CURAT LEX, 281. DEATH, of receiver, title on, 189. punishment of insolvent under Roman law, i. rule as to in England, i n. of debtor, effect on lien in supplementary proceedings, 61 «. DEBT, worthless, cancellation of, not fraudulent, 23. foundation of the principle, 23. forgiven or cancelled, when fraudulent, 42. administrator may sue for, 42. must be in judgment before fiUng bill, 73. equity not forum to collect, 73. property of debtor must be devoted to payment of, 14. judgment conclusive as to, 74, 270. DEBTOR, reservation by, avoids conveyance, 10, 32, 272. as defendant in creditors' suit, 128, 129. rule as to, 128. insolvency of, 273. injunction against, before judgment, disallowed, 52. theory of the law, 52. exceptions to the rule, 53. secret trust for benefit of, 272. punishment of, in early times, i n. ^ cannot secure delay, 1 1. DECEDENT, creditors of, 79. when must have judgment, 79. confusion in the cases, 79. theory of the law, 79. judgment necessary in New York, 79. personal transactions with, 121. DECEIT, action for, innocence presumed, 5. DECLARATIONS before and after sale, 277. as to realty and personalty, 277. declarations after sale, 278 J?e/erences\ INDEX. I are io sections. "7 DECLARATIONS— conit'nued. of co-conspirators, 280. of past transactions, 276. as to acts sui generis with those committed, 280. not received to prove the conspiracy, 280. admitted to show its scope and extent, 280. of one witness as to the conspiracy, 280. DECLARATORY, of common law, statutes are, 16. " DECLARE," word commented upon, t6. DECREE, 168-183. See Judgment. when conclusive, 168. afifecting foreign land, 1 5 y^r must accord with relief demanded, 181. conform to complaint, 182. personal, against vendee, 177, 178. DEDUCTION OF FRAUD from facts and incidents, 224, 281, 282. DEED, avoidance of, by infant, 500, 501. fraudulent, mistake in not corrected, 3q6. when sufficient, 501. disaffirmance of lunatic's deed, 508. avoidance of void or voidable instruments, 418 «., 512, 513. evidence sufficient to overturn, 6. not avoided by loose evidence, 6. delivery of should be averred, 140. DEFECTIVE, or ineffectual acts, classes of, 428 complaint, 140. DEFENDANT, parties, 128-139. (i.) Debtor as defendant in creditors' actions, 128, i2g. general rule stated, 128. conflict in tl>e cases, 128, 129. when debtor not necessary defendant, 129. ] result of the cases, 129. defendants need not be equally guilty, 130. (2.) Fraudulent grantee must be Joined, 131 the reason, 131. parties to intermediate conveyances, 131. (3.) Assignee and receiver, 133. assignee of a firm a defendant, 133. raising objection to non-joinder, 133, 134. (4.) Executors, administrators, heirs, and legatees, 136 rule as to joinder of, as defendants, 136. Cornell v. Radway, 136 n. result of the cases, 136. yiA Re/erences\ INDEX. \are to sections. D EFEN D A 'i^T— continued. (5.) Trustee and cestui que trust, 137- distinction in the cases, 137. affirmance and disaffirmance of the trust, 137. (6.) Generally, 132, 136, 138, 139. stockholders, 139. parties having liens, 138. arrest of, 191. DEFENSES, as to, 286-297. "forms" no protection, 286. transaction judged by real character, 286. principal defenses, 286, 369-371. rebutting fraud, 158. of discharge in bankruptcy, 294 n. imprisonment of debtor, 66 against attachment, 81. (i.) Laches as a defense, 287. excusing apparent, 148, 149. equity will not aid party guilty of, 287. stale demands disallowed, 287, 289. (2.) Lapse of time, 109, 288, 289. constitutes a defense, 288. various illustrations, 288, 289. (3.) Discovery of the fraud, 290. statute does not begin to run until, 290. effect of a different rule, 290. Judge Blatchford's views, 291. (4.) Statute of limitations, 292, 293. runs from notice of fraud, 292. must be pleaded as defense, 292. limitations in equity, 293. (5.) Lfisolvency or bankruptcy discharges, 294. have no extra-territorial force, 294. not conclusive on non-residents, 294. the reasons stated, 294. pleading discharge, 294 n. (6.) Generally, 295. existing and subsequent creditors, 96-101, 295. fraud upon subsequent creditors, 100, 295. what sheriff, must show against stranger, 297. by bailee, 107 n. DEFINITION of fraud, none possible, 13. Re/erences\ INDP2X. \ are /o sections. DEFINITION— coniin7/eii. judgment of law on facts and intents, 13. undue influence, 13 /;. void act, 415, 425. voidable act, 420, 426. void and voidable acts, 412, 415, 425, 426. of fraudulent conveyances, 15. of creditors' bill, 68. DEGREES of guilt, 399, 400. of void acts, 413, 419. DELAY, sales upon credit, 240, 332, ;^;^;^. and hindrance, 11, 318. applied to general assignments, 318, ;^;i^. defraud, and hinder, 11. refers to time, 3x8. hindrance to obstacles, 318. debtor cannot secure, 318. DELAY OF CREDITORS, n. and hinder, 11. explaining, in pleading, 149. refers to time, 318. hindrance to obstacles, 31 8. debtor cannot secure, 11. DELIVERY, 245-267. See Change of Possession. essential to validity of sale as against creditors, 245-267 failure to effect, presumption of fraud, 248, conflicting policies as to, 252 must be actual, 253. must be continuous, 257, 258. of growing crops, 266. of possession of realty, 264. when not essential, 261, 262. symbolical, 262. of deed should be averred, 140 n. assignment takes effect from, ^i6a. DENIAL IN ANSWER, 158-162. particularity of, 163. of fraud or notice, 163. DENYING FRAUD or notice, 163. DESCRIPTION in complaint, 157. assets need not be specifically disclosed, 157 J -id Re/eyences~^ INDEX. ^arc to scctious. D ESC R I PT 1 ON—cojiiinued. sufficient to operate as lis pendens, i57- discovery may be called for, 157. in marriage settlement, 157 n. vague, as badge of fraud, 230, amendment of complaint, 156. DEVISE OF PROFITS is devise of land, 362. DEVICES, ineffectual against creditors, 15. DIRECTORS, cannot make personal profits, 470. DIRECT AND COLLATERAL ATTACK, 69. necessity for, 69. exceptional doctrine in Louisiana, 69. merits of rule, discussed, 69. DISAFFIRMANCE OF VOIDABLE ACTS, 496-513- a personal privilege, 496 general requisites of, 498. by infant, 499, 500, 501, 506. laches affecting, 505. by lunatic, 508, 509. personal representative, 511. restitution, 507, 510, 510^:. DISCHARGE, in insolvency or bankruptcy, 294. DISCOVERY, seeking, 147. of fraud, statute begins to run, 290, 291. creditors' bill is in nature of, 68, 68 n. advantages of, 68 n. pleading to the discovery, and the relief, x6i. avoiding discovery, 165. of lands, inherited or devised, 157. . DISHONEST PURPOSE not presumed, 5. not necessary to defeat conveyance, 8, 9, 10, 382. secret removal of property, 234. DISJUNCITVE, words hinder, delay or defraud used in, 11. DISMISSAL of receiver, 190. of assignee, 337. DISPARITY, as to consideration, 6, 232. must be glaring, 6, 232. DISPOSED, word construed, 12. DISSOLUTE man, conveyance by, 213 n. DISSOLUTION, appointment of receiver does not effect, 134. DISTINCT claims united, 54. DISTINCTION between void and voidable acts, 408, 420. Re/erences\ INDEX. ^nre fo sdious. y 2)7 DISTINCTION— co;i//nued. existing and subsequent creditors, 89. acts of infants and of lunatics, 449. titles voidable for infancy and for fraud, 448. fraud in fact and fraud in law, 9, 10, 322, 382. DISTRIBUTEES, reaching money of, 3^. DIVISION, certificate of, review, 407a. DIVORCE, after, when wife cannot overturn conveyance, 395 ;/. conveyance to defeat alimony, 110 //, DOCTRINE of degrees of void acts, 413. o{ ultra vires, 411, 411 n. DOWER RIGHT, creditors may reach, 30. before admeasurement, t^t^. in supplementary proceedings, 6t. relief in cases of fraud on, 70. relinquishment as consideration for settlement, 299. DRUNKARD, not always incompetent, 476. DRUNKENNESS, legal effect of, 476. DURESS, its nature and class, 478. of goods, 479. involuntary payments, 480. theory of recovery, 479, 480. insisting upon legal rights is not, 478. as 10 married women, 478. by i)awnbroker, 479. must be threatened exercise of power, 480. when payment compulsory, 4S0. EARLY STATUTES avoiding fraudulent conveyances, 18. declaratory of common law, 16. object of statutes, 18. 13 Eliz., c. 5, and its object, 19. its interpretation and construction, 20. 27 Eliz., c. 4, and its object, 21. EARNINGS, not liable in supplementary proceedings, 61 ;/. exempt for sixty days, 61 //. of daughter, 218. of wife, 218. of members of family, 218. EFFECT of avoidance, 427. EJECTMENT and equitable relief united, 54. conflict in the cases, 54. 47 7 'iS References^ INDEX. \are to sections. EJECTMENT— ^^«//V«/^//. no receiver in, 187. theory of the law, 187. rule as to receiver in New York, 187. conveyance avoided in, 51. by execution purchaser, 57. when purchaser may defend in, 69. what may be shown, 69 n. question of fraud tested by jury in, 123. lunatic's deed void in, 423, ELDON, LORD, views of, as to restrictions on life-estate, 364. ELECTION OF REMEDIES, 67, 316 «. debtor or alienee cannot compel, 67. ELIZABETH, statutes of, 19-21, 408. object of, II, 19. interpretation and construction of, 20, 408. interpretation refers to legal intent, 8. bottomed on immoral intention, 9 n. merely declaratory of common law, 16. universally adopted, 19, 22. Mr. Reeves' comments upon, 19. preamble to, 25. EMBARRASSED DEBTOR, conveyance by, 99. when considered valid, 99. the cases criticised, 99. the conclusion drawn from them, 99. EMOTION, intent is, 8, 196, 196 Ji. not conclusive, 197, 322, 382. fraud without evil emotion, 8, 382. EMPLOYMENT, of husband by wife, 303. of assignors, 345, 390 n. ENFORCING promises of third parties, 43. ENGLISH STATUTES as to property recoverable, 25. concerning fraudulent conveyances, 16, 18, 19-22. EQUALLY GUILTY, defendants need not be, 130. EQUILIBRIUM, of evidence, does not prove fraud, 5. EQUITABLE fraud, meaning of, 51. subrogation, when not applied, 195 n. estoppel, 287. EQUITABLE, INTERESTS, 30. frequent subject-matter of creditors's suits, 30. action, judgment in, 80. He/erencesl INDEX. \ are to sec/zons. 7^Q EQUITABLE, INTERFSrS—con/inued. suit, 60. jurisdiction, 4, 51, 56, 60, levy, 68, 392. in real property, sifus governs, 24. EQUITIES are equal, law prevails, 370. applied to bona fide purchasers, 370. EQUITY, invoked in two cases, 51. See Creditors' Remedies. in furtherance of remedy at law, 51. to reach equitable rights, 51, 60. reasons for resort to, 51, 60, 176 ;?. purchase at law either valid or void, 51. different rule in equity, 51. when jurisdiction exclusive, 56. relief before and after sale, 58. the jurisdiction explained, 58, 60. jurisdiction, its great importance, 60. proceeds without regard to forms, 60, 60 n. jurisdiction once acquired holds throughout, Gt,. power of, to protect right of dower, 70. not remedy to collect debts, 73. of a creditor, no. pleadings in, rules of, 146. limitations in, 293. procedure in federal courts, 71. cannot create a title, 60 n. EQUITY OF REDEMPTION, available to creditors, 31. transaction to conceal, 31. ERRONEOUS, and irregular, words discussed, 444. judgment, correction ot", 172. ESTATES, in remainder and reversion, 29, 30. vested remainder liable for debts, 29. attempted exemption of, 29, 360-368. contingent reversionary interest, 29. creditors' bills against, 68. no preference to vigilant creditors, 392. ESTOPPEL, does not operate against infants, 504. theory of the law, 504. equitable, 287. against cestui que trust, 485. receipt of proceeds of sale, 485. y AO lie/erences \ INDEX. \ are to sectiotts. ^^HO^Vm.— continued. element of, introduced, 484. to attack, 316 //. when not operative, 413 n. judgment is, 168. EVIDENCE, 268-285. See Badges of Fraud. to prove fraud, 5, 6. creating equilibrium insufficient, 5. to annul instrument in writing, 6. not to be pleaded, 142. to vary recital of consideration, 221. (1.) Concerning evidence, 268. burden of proof, 268, 271. how changed, 271. answer as, 160. personal transactions with decedent, 121, omnia prcesiwiunter contra spoliatoreni, 281. (2.) Proof a?id conclusiveness of judgment, 270. judgment essential to creditor's proceeding, l^-TT, 270. evidence until impeached, 270. attacking for collusion, 270, 74 n. (3.) Ifisolvency of debtor, 273. application of the term, 273. who considered solvent, 273. evidence of insolvency, 87, 87 ;;, 273. illustrations, 273. general repute as to, 273. opinion as to, 273, 273 71. (4.) Insolvency of vendee, 274. effect of proof of, 274. shown by general repute, 274. (5). General reputation, 275. evidence of, admitted, 275. tendency and effect of proof of, 275. (6.) Concerning res gestcc, 276. declarations admissible, 276. duty of jury to weigh, 276. importance of the doctrine, 276. (7.) Declarations, rule as to, 277. 278. before sale, admissible, 277. theory governing their admission, 277. References ^ INDEX. [are io sections. 74-^ EVIDENCE — Dec/arafions, ride as to — continued. concerning personalty, excluded, 277, declarations after sale, 277. excluded as mere hearsay, 278. illustrations, 278. (8.) Possession after conveyance, 279. effect of proof of, 2 79. declarations characterizing, 279. constitute part ol res gestee, 279. (9.) Declarations of co-conspirators, 280. in execution of common purpose, 280. proposed acts must be sui juris with those committed, 280. foundation for, 280. prima facie case must be shown, 280. admissions of declarations, 280. as to past transactions, incompetent, 280. not admissible to prove the conspiracy, 280, received to show its scope, 280. (10.) Proof of circumstances, 281. great latitude permitted, 281. objections for irrelevancy, not favored. 281, wide range of inquiry, 281. must be strong and cogent, 281. the test given, 281. latitude of the inquiry, 281 n- collateral facts, proof of, 281. (11.) Other frauds, 282. proof of commission of, 282. intent the object of inquiry, 282. other similar acts show it, 282. independent acts and declarations, 282. scope of the inquiry, 282. exception to the rule, 282. (12.) Suspicions insufficient, 3, 5, 6, 283. tangible facts must be shown, 283. of fraud, not notice of it, 283. (13.) Generally, 284, 285. proving value by experts, 284, testimony must conform to pleading, 285. EVIDENCE OF FRAUD, generally circumstantial, 13. proof of circumstances as, 281. great latitude allowed, 281. n A1 Re/erences\ INDEX. \ are to sections. EVIDExMCE OF FRAUD— ^^////««^^/. direct proof not attainable, 13. the test, 281. proof of collateral facts, 281. other frauds, 282. declarations, 280. EVIDENCE, OF INTENTION, when cannot change presumption, 9, 322, 382. when not necessary to establish frauds, 8-10, 382. of solvency, 95. not to be pleaded, 142. answer as, 160. of secrecy, 234. of wife, 313. See Intention. EXCEPTIONS to rule concerning injunction against debtor, 53 receivership, when allowed before judgment, 53. EXCLUSIVE jurisdiction in equity, 56. property not subject to legal process, 56. as to choses in action, 22, t^t,^ 56. supplementary proceedings not, 61. suits by personal representatives not, 112, EXCUSING want of change of possession, 263. rebutting presumptions of fraud, 263. laches, 148. EX DOLO MALO NON ORITUR ACTIO, 429. EXECUTION, contingent remainder not liable to, 29 n. seat in stock exchange not liable to, 35 n. property purchased in name of third party, 57. remedy by, 59. to county of debtor's residence, 68. must precede creditor's bill, 68. return of unsatisfied, 74, 68. return of officer conclusive, 74. conflict in new York, 86. distinction between realty and personalty as to, 87. raising the objection, 88. what bill should allege as to, 88, where jurisdiction is concurrent, 51. selling land under, 72. in State where land lies, 83, what bill should show as to, 88. Jieyerefices I INDEX. rare io seciioKS. 74-^ EXECUTORS AND ADMINISTRATORS, as complainants, 112, 113. as defendants, 136. as fraudulent grantees, 77. conveyance binding upon, 112, 113, 398. may sue for cancelled debt, 42. cannot avoid voidable sale, 511. affirmance of voidable acts of, 484. judgment against, 77. EXEMPTING assignee from liability, 334. renders assignment void, 334. theory of the law, 334. EXEMPTIONS, rule as to, 46-50, 50a. policy of the law, 365. reservation of, in assignments, 326. does not render assignment void, 326. do not pass by assignment, 316a. receiver gets no title to, 46. endure for life-time, 46, aversion to exemptions not statutory, 360. fraudulent purchase of, 47. covinous alienations of, 48. conflicting cases, 49. forfeited by fraud, 49. what cannot be reached, 50a. EXHAUSTING LEGAL REMEDY, 73, 86. object of, 73. establishes claim, 73. saves debtor from interference, 52, 73. EXISTING CREDITORS, 89-95. (i.) Classes of creditors, existmg and subsequent, 8^. who are existing creditors, 89. subsequent creditors, 89, 96, 97. their respective rights, 89, 96. decree when not binding, on, 168. (2.) Cofitingetit creditors, 90. wife and surety as creditors, 90. indorser and warrantor, 90. municipal corporation, 90. date of agreement governs, 90. tort claimant, 90. who are not creditors, 91. transfer of right to sue, 92. 'lAA Re/erences\ ' INDEX. are to sections. EXISTING Q^YA^YYOK^— continued. (3.) Voluntary alienations as to, 93, 94. presumptively fraudulent, 94. early conflict as to, 93. recent cases, 94. EXPENSES, when chargeable to common fund, 109. EXPERTS, proving value by, 284. illustrations, 284. EXPLAINING delay, discovery of fraud, 149. judgment, 270. recitals of consideration, 221. contradicting allegations of deed, 221. substituting valuable for good consideration, 221. EXTENDING UNUSUAL CREDIT, as evidence of fraud, 241. FACTS sufficient to excite inquiry, 379, 380, 381. as notice of fraud, 379-381. may be implied, 142. means of knowledge, 381. the test, 380, 381. admitted in pleading, 285. equity deals with, 60. FAIR PREPONDERANCE, fraud must be shown by, 271. FALSE REPRESENTATIONS, to avoid sale, 447^. FAMILY, services by members of, 218. by daughter to debtor, 218. no promise to pay implied, 218. wife to husband, 218. when claim of cannot be collected, 218. insurance for, 23. FATHER, gift by, improvements, 296. to son, sale by, 242. FEDERAL COURTS, rules of procedure in, 61 n., 71. supplementary proceedings in, 61 n.- not allowed in State court on federal judgment, 61 n. rules of property in, 71. State decisions followed, 71. as to fraudulent and voluntary assignments, 71. pauper litigants in, 71. chancery practice prevails, 51, 71. suit against stockholder in, 139. judgment in, 78, 78 n. Re/ercnces\ INDEX. \are to sections. 745 FEDERAL TRIBUNALS, procedure in, 71. heirs and devisees as parties, 136. FICTITIOUS CONSIDERATION, recital of, badge of fraud, 228. either in mortgage or conveyance, 228. to be considered by jury, 228. not fraud /t'r sc, 228. immaterial mis-recital, 228. to be fraudulent must be intentional, 228. FICTITIOUS, grantee, setting aside deed, 131. debt, avoids assignment, 345. FILING chattel mortgage, 347 n. FIRM, judgment creditor of, suit by, 108. assets of, how distributed, 216. FLEXIBLE JURISDICTION OF EQUITY, 60, 193 ;/. FORECLOSURE, proceedings attacking fraudulent conveyance, d^. in surplus-money proceedings, 63. receiver in foreclosure, 187 71. FOREIGN JUDGMENT, does not have the force of domestic judg- ment, 78. government, claims against, pass to assignee, 114. assignments, 346. statutes, no force ex propria vigore, 405 n. receiver as complainant, 118. FOREIGN RECEIVERS, recognized by comity, 118. FORMS, equity looks beyond, 60. FORMS OF RELIEF, 4, 51-72. See Creditors' Remedies, not regarded in equity, 60. in cases of fraud on wife, 70. FOUR CLASSES OF DEFECTIVE or ineffectual acts, 428. FRAUD, divisions of, 10. equitable, 51. rule as to pleading, 141. fraud in law and fraud in fact, 10. no definition of, 13. FRAUD INFERRED FROM TRUST, an inference of law, 10 //. FRAUD IN LAW and fraud in fact, 9, 10, 382. distinction discussed, 9, 10, 382. different intent cannot be shown, 9. cases explained, 9, 10. FRAUD, MUST BE PROVED, 5, 283. one of recognized heads of equity jurisdiction, 60. 746 Ke/erencc-s^ INDEX. [are io seciions. FRAUD, MUST BE VROVED—conhnued. is intention carried out by hurtful acts, 13, 196. as a legal deduction, 10. to annul written instrument, 6. possession as proof of, 247. character of, 6. perpetrated in secret, 6. may be unintentionally committed, 8. pleading fraud, 141. word need not be used, 141. cannot be defined, 13. nature and effect of, considered, 13. constructive, 323. suspicions as to, insufficient, 5, 283. shown from circumstances, 281, the test, 281. equilibrium will not establish, 5. disconnected acts as evidence, 280, 282. in conveyances, characteristics, 15. badges of, 224-244. in fact and in law, 8, 9, 10, 322, 382. as to existing creditors, 82-95. as to subsequent creditors, 96-106. irregularities and carelessness, 5, FRAUDS, statute of, agreement out of, 296. FRAUDULENT CONTRACTS and devices, 447^. FRAUDULENT, conveyance of equity of redemption, 31. purpose, when harmless, 107. FRAUDULENT CONVEYANCES, defined, 15. classes of, 15. necessary elements of, 15. at common law, 16. statutes declaratory, 16. early statutes avoiding, 18. property that may be reached, 23-50. grantee, creditors of, 387. liability between, 388. grantees sharing in recovery, 389. valid between the parties, 395-400. FRAUDULENT GENERAL ASSIGNMENTS, 316-346. (i.) Voluntary assignments, 316. general comments, 316. , References'} INDEX. \are to sections. 7 A7 FRAUDULENT GENERAL hS^.lG'i^M'El^iTS— voluntary— continued. property not in custodia legis, 316. assignee not officer of court, 316. must obey provisions of assignment, 316. control of court over, 316. parties cannot change character of, 316. assignor cannot substitute successor to assignee, 316. (2.) Delay and Jnndrance, 318. meaning of delay, 318, of hindrance, 318. instances, 318. (3.) Intent affecting assigni?ient, T,i(). actual intent not exclusive test, 319. of assignor generally governs, 319. conflict in the cases, 319. (4.) Fraud must relate to instrument itself^ 320. subsequent illegal acts immaterial, 320. independent acts not considered, 320. effect of omission from schedules, 320. (5.) Good faith, 321. means " sincerity or honesty of purpose," 321. presumption of, appertains to assignments, 321. (6.) Void on its face, 9, 10, 322. instances given, 322. actual motive or belief immaterial, 322. (7.) Contravening statutes, 324. may be avoided, 324. an illustration, 324. (8.) Transfers to prevent sacrifice, 325. will be set aside, 325. (9.) Reservations, 326. when fatal to instrument, 272, 326. for debtor's benefit, 326. of exempt property not fraudulent, 326. reserving surplus, 327. apparent conflict in the cases, 327. preferring claims in which assignor is partner, 329. (10.) Releases exacted in assignments, 328. looked upon with disfavor, 328. render assignments fraudulent, when, 328. different cases considered, 328. (11.) Authorizing trustee to continue business, 330, 331. when such provisions permissible, 331. 7a8 Refercnces\ INDEX. \are to sections. FRAUDULENT GENERAL ASSIGNMENTS— r^//////«/^^. (i2.) Delay, sales upon credit, 332, 333. creditors' right of immediate payment, 332. the cases reviewed, 332, 2tZZ- (13.) Exempting assignee from liability., 334. renders assignment void, 334. (i4.) Other features, 335^ 337- authority to compromise, 2>Z^- fraud of assignee, 337. providing for counsel fees, 335. assets exceeding Uabilities, 340. assignments to prevent preference, 341. threatening to make assignment, 342. (15.) Incompetency of assignee, 2>'h^- badge of fraud, 338. word " incompetency " construed, 338. selection of blind assignee, 338. (16.) Construction of assignment, 343. rules applicable to, 343. explaining obnoxious provisions, 344. assignments held void, 345. (i7-) Foreign assignments, 346. operate as matter of comity, 346. FRAUDULENT GRANTEES, valid title from, 386, 448 7U as defendants, 131. proceedings futile, if omitted, 131. intermediate grantees, 131. as trustees, 385. creditors of, 387. liability between, 388. sharing in recovery, 389. FRAUDULENT INTENT, fact for jury, 9, 204. allegations concerning, 145. when res adjudicata, 203. where consideration is adequate, 201. proving intent, 206. of agent binding on principal, 198. actual, not decisive, 197, 382. mutuality, 199, 302, 319. See Intention. FRAUDULENT PURCHASES OF EXEMPTIONS, 47. legality of, 47. conflicting cases as to, 49, 50. J?e/erences\ INDEX. \ are io secii'ans. 74-Q FRAUDULENT TRANSFERS, prevalence of, 2. cause of, 2. of choses in action, 17, ;^;^. of exemptions, 47. early statutes avoiding, 18. characteristics and classes of, 15. FRAUDULENT vendee, liability of, 176, 178, 195. FUND may be traced by creditors, 44. followed, in new investment, 44. the rule illustrated, 44. FUTURE ADVANCES, rule as to, 217. judgment or mortgage for, 217. should be shown on face of lien, 217. GENERAL ALLEGATIONS of fraud of no value, 141. GENERAL ASSIGNMENT, 316-346. See Fraudulent General Assignment. will supplant suit, when, 2^. character of, 316. property transferred by, 316^;. surviving partner may make, 329. when void, 345. by corporation, 346a. specific assignment is not, 339. threatening to make, 342, 342 n. construction of, 343. assignee under, as complainant, 115. GENERAL DENIAL, evidence under, 158. GENERAL REPUTATION, evidence of, allowed, 275. as to absence of means in vendee, 274. as to want of credit, 275. is competent, 275. GENERAL RULES, as to restitution, 510^. GENERALITY of gift or conveyance, 22, 231. evidence or badge of fraud, 231. commented on in Twyne's case, 22. views of Lowell, J., 231. creating violent presumption of fraud, 231. considered unusual and extraordinary, 231. various comments, 231. GENEROSITY, when not evidence of fraud, 5. GIFT, condition repugnant to, void, 362. oral, title by, 296. yCQ ReferencePi INDEX. ^re to sections. G I FT — continued. of small value not fraudulent, 41. from husband to wife, 309, as badge of fraud, 309. generality of, as evidence of fraud, 22, 231. GOOD and valuable consideration, 210. defined by Story, 210 n. See Bona Fide Purchaser. GOOD CHARACTER, evidence of, 275. GOOD FAITH, settled presumption of law, 6. and consideration, 207. defined, 321. relating to fraudulent assignments, 321, protecting purchasers, 369, 372. GRANT, conditions repugnant to void, 362, 363, 367. of entire estate, evidence of fraud, 231. GRANTEE, fraudulent, as trustee, 385. creditors of, 387. when they may seize the property, 387. doctrine of apparent ownership, 387. liability between, 388. sharing in recovery, 389. enforcing fraudulent deed, 402, GRANTING AMENDMENTS, discretionary, 156. GRANTOR'S BENEFIT, transfer invalid, 211. secret trust for, 272. conveyances fraudulent, 272. GRANTORS, defrauded of property, 399, 400. aid extended to, 399, 400, degrees of guilt, 399. GRATUITY, cannot be transformed into a debt, 209. GRAY, PROFESSOR, views as to spendthrift trusts, 364 «., 366. GROSSLY inadequate consideration, 207, 232. will overturn transfer, 6, 232. GROWING CROPS, change of possession of, 266. impossible to deliver, 266. conflicting views, 266. available to creditors, 27. when subject to execution, 27. GUILTY KNOWLEDGE, 431. renders contract illegal, 431. of debtor's fraud, 380. Re/ercnces} INDEX. [are to scciions. 7^1 HEARSAY, declarations after sale excluded as, 278. HEIRS, as complainants, 121. when not proper parties, 121. cannot impeach ancestor's deed, 121, 398. statutes construed as to, 121. testimony by, 121. reaching money due to, ^;^. suit by one of several, 121. HINDER, delay or defraud, words construed, 11, 11 n. not synonymous, 11. intent to do either, sufficient, 11. object of the statute, ir. legal hindrance, 1 1, 390. sales upon credit, 240, 332, ss3, 3.S6. delay refers to time, 318. hindrance relates to obstacles, 318. HINDRANCE AND DELAY, instances of, ti. no distinction between, 1 1 n. meaning of terms, 318. sales upon credit, 240, 332, ^^^, 356. HOMESTEAD, abandoned, 50. liable to creditors, 50. protected by cross-bill, 166. HONESTY, presumption of, prevails, 6. the law loves, 20. good motives to be imputed, 6. api)earance of, preserved by debtor, 224. HOSTILE claimants cannot join, 108. demurrer for joinder of, 108. the test, 108. HUSBAND AND WIFE, 122, 298-315. prominence of the subject, 122. when husband not proper party, 132 //. articles of separation, 310. husband as creditor of wife, 122. wife as complainant, 122, 314. separate property of wife, 304. (i.) T/ie marriage rclalioiiship, 298. confidence reposed in, 298. frauds in the relationship, 298. (2.) Wife as' husband'' s crcJifor, 299, husband may pay her honest debt, 299. 7C2 /ie/erencs \ INDEX. \ are io secii'ons. HUSPjAND and wife — 7cii/e as husband's creditor — continued. not bound to plead defenses, 299. common law rule abrogated, 299. (3.) Transactions between, how regarded, 300. closely scanned, 300. facilities for fraud, 300. onus in transactions between, 300. improvements by husband on wife's land, 26. (4.) Burden of proof , 301. burden rests upon wife, 301. must show value, 301. presumptions in favor of creditors, 301. presumption of ownership by wife, 301. (5.) Mutuality of fraudulent design, 199, 200, 302. to render settlement fraudulent, 302. fraud, how proved, 302. (6.) Husband as luifes agent, 303. husband may act as, 303, injustice of denying such right, 303. (7.) Mingling property of husband and wife, 305. wite may lose title thereby, 305. not where agreement to pay exists, 305. (8.) Marriage settlements, 306, 307. amount of settlement, 306. when avoided, 306. post-nuptial settlements, 307. purchase after marriage, 30S. gift from husband to wife, 309. (9.) Fraudulent conveyances in contemplation of marriage, 314. illustrations of the enforcenient of the rule, 314. applies to both husband and wife, 314. fraudulent transfers affecting dower, 315. ILLEGAL ACTS discussed, 429, 432. afford no cause of action, 429. policy of the law, 430. ILLEGAL consideration is no consideration, 214. acts, 432. instances of illegal acts given, 432. consummated acts not disturbed, 439. ILLICIT INTERCOURSE, illegal consideration, 213, 432. ILLUSTRATIONS of void acts, 416. IMPOUNDING proceeds of fraudulent sale, 175. l\c/erences\ INDEX. \ are to sections. 7S^ IMPRISONMENT of debtor, effect of, 66. constitutes satisfaction of claim during its continuanc.\ 66. IMPROVEMENTS, recovering, 26, 192 «., 193 //. on another's land, 26. the law follows them, 26. temporary or perishable, 26. by husband on wife's land, 26. to support gift, 296. INADEQUACY of purchase price, 232. as evidence of fraud, 6, 232. x\o\. per se fraudulent, 232. illustrations, 232. does wo\. per se prove fraud, 232. unless extremely gross, 6, 232. the test, 232. is fact calling for explanation, 232. INCEPTION OF TRANSACTION, fraud must be in, 227. INCHOATE INTEREST may be reached, 30. curtesy and dower, 30. unassigned dower, 61. INCOME, surplus may be reached, 45, 360. the rule applied, 45, 360. exempt earnings for sixty days, 61 «. INCOMPETENCY of assignee, 338. badge of fraud, 338. ground of removal, 337. INCORPOREAL RIGHT, membership of stock exchange is, 35. INCUMBRANCES, purchaser removing, 126. INDEFINITE TRUST, fraudulent, 11^ INDIANA, creditor's bill against absconding debtor, 84. excej)tional practice in, as to joinder of claims, 8c;. its features considered, 85. INDICIA OF FRAUD, 224-244. See Badges of Fraud. are circumstances or elements of fraud, 224. defined, 225, 225 «. INDICTMENT, alleging fraudulent conveyance, when sufficient, 65 //. INDIVIDUAL and copartnership debts, 216. consideration as affecting, 216. INDORSER as creditor, 90. liable on void paper, 446^-. INDUSTRY AND TALENTS, cannot be reached, 50./. INFANT, fraudulent intent ap[)lied to, 199 //. 48 yKA Re/erences'^ INDEX. ^are io sections. INFANTS' ACTS AND CONTRACTS, 448, 449-59- usually voidable, 411. are under the protection of the law, 411. acts of infants and of lunatics compared, 449. test of infants' acts, 450. classes of infants' acts, 451. judgments against infants, 453. infant's power of attorney, 454. void acts of, 455. voluntary assignments by, 456. liability for torts, 457. acts binding upon, 459. restitution by, 510^. no participation by, in fraudulent intent, 199 n. INFERENCE, of fraud from circumstances, 7. INJUNCTION against debtor before judgment, not allowed, 52, 185. theory of the rule, 52. exceptions to the rule, 53, 185. vexation and hardship incident to any other rule, 52. creditor must have certain claim, 52. against debtor, 185, 186. when allowed, 185. when disallowed, 186. INNOCENCE, presumed in actions for deceit, 5. of assignee, does not save assignment, 319. INQUIRY, facts sufficient to excite, 379, 380. constitute notice of fraud, 380. scope of, 3. INSOLVENCY, evidence of, 239. importance of proof of, 239. as proof of fraud, 239. considered a circumstance, 239. meaning of the term, 273. opinions as to, 273. of vendee, 274. proof of, 271. continuing business after, 143 n. of debtor, evidence of, 273. discharges as defense, 294. rule as to, 294. alleging in pleading, 143. defined, 143. Ke_/erences \ INDEX. \ are ia sections. 7 S "i INSOLVENT CORPORATION, capital stock of, 117, 68 «. See Corporation. INSUFFICIENT CONSIDERATION, 223. illustrations, 223, 232. judgments, 77. statement of confession, 174. INSURANCE, when not assignable, 23. policies, rights of creditors, 312. by married man, 23. when not in fraud of creditors, 23 ;/. IN PERSONAM, judgment to sustain supplementary proceedings, 61. to uphold creditor's suit, 77. INTANGIBLE interests may be reached, 17, 27. choses in action recoverable, 17, 24, 33. stocks, patent rights, legacies, 24, 37, ^S. INTEGRITY, paramount to generosity, 16. INTENT, is an emotion, 8. essential element, 196. inferred from circumstances, 8. fraudulent, 145. as a conclusion of law, 9, 10, 197, 322. cases considered, 10. evil, not evidenced by gifts of small value, 41. not conclusive, 197, 382. INTENTION, may oppose legal conclusion, 8, 382. when cannot change presumption, 9. reached by construction of instrument, 10, 322. as affecting subsequent creditors, 98, 202. generally, 8, 9, 10, 41, 196-206. (i.) Defined or outlined, 196. is an emotion or operation of the mind, 196. shown by acts or declarations, 196. fraud as affected by, 8, 9, 10, 196. debtor's statements not conclusive, 196. insolvent's standard of morality not the test, 196. hinder, delay or defraud, sufficient, 11, 196. when question of res adjiidicata, 203. question for the jury, 204. testifying to, 205. proving it, 206. (2.) Actual intent not decisive, 197. fraudulent purpose may be implied, 8, 9, 10, 197. debtor's belief immaterial, 8, 9, 10, 196, 197, 322, 382. 7C(5 References^ INDEX. yare to tections. INTYMTlO'ti— continued. (3.) F/-aud of agent binding on principal, 198, intent established by implication or substitution, 198. (4.) Mutuality of participation in fraudulent intent, 199, 207. the general rule, 199. vendor's intent insufficient, 199. fraudulent intent as applied to infant, 199 n. (5.) As affecting voluntary alienations, 200, 319. the cases reviewed, 200 //. differs from cases where consideration is present, 200. not essential to show mutual evil intent, 200. relating to general assignments, 319. (6.) Where consideration is adequate, 201. the rule considered, 201. (7.) To defraud subsequent creditors, 96, 97, 98, 100, 202. applications of the rule, 96, 97. 98, too, 202. creditor must show, 98, (8.) Intention not to pay, 447b- fraud arising from, 44Jb. INTENTIONAL OMISSION of assets, avoids assignment, 345. INTERESTS that may be reached, 23-50. tangible interests, 24. intangible rights, 17, 24, ss, 37, 38. rule in England, 25. profits and improvements, 26. crops, 27. choses in action, 2;^. powers, 39, 40. trust income, 45, 360. INTRODUCTORY observations, 1-22. INVOLUxNTARY PAYMENTS, 480. may be recovered back, 478, 480. IRREGULARITIES, and nullities distinguished, 442. not proof of fraud, 5. IRRESISTIBLE, evidence to establish fraud need not be, 7. ISSUE OF FACT, referred to jury in equity, 51. See Jury. JOINDER OF CLAIMS, 54, 108. rule in Ohio, 54. uniting causes of action, 55, 108, several grantees may be joined, 54. Jie/erences\ INDEX. [e io scciions. 7S7 JOIiNDER OF CLAIMS— continued. although separate defenses exist, 54. ejectment and equitable relief in one bill, 54. conflict in the cases, 54. exceptional practice in Indiana and North Carolina, 85. for judgment on coupons and mandamus, 85 n. JOINDER OF COMPLAINANTS, 108. creditors by distinct judgments, 108. various illustrations, 108. by judgment and decree, 108. general theory, 108. of hostile claimants, 108. JOINING DEFENDANTS, the rule, 128, 132, 150, 151, 152. the theory, 132. objections'to non-joinder, 134, debtors, 128, 129. stockholders, 128. JUDGMENT CREDITORS, may follow corporate assets, 119. may attack fraudulent conveyance, 73-88. JUDGMENT OR DECREE, rules as to, 168-183. status of attacking creditors, 73-88. when judgment unnecessary, 83. receiver before, 184. (i.) Judgment conclusive, 168, 169. attributes of the judgment, 168. operates as an estoppel, 168. conclusive, though form of action be changed, 169. judgment transferring title, 172. when not conclusive, 168. (2.) Judgment appointing receiver, 170. the practice explained, 1 70. effect of, 1 70. (3.) Judg7nent avoids sale only as to creditor, 171, 395-402. the principle, 171, 395. effect of action of chancery, 171, (4.) Impounding proceeds of fraudulent sale, 175. accounting by fraudulent vendee to debtor, 176. (5.) Relief at laiv and in equity, i 76 //. equity more flexible, 176 ;/. (6.) Personal judgment against fraudulent vendee, i77, 178- the subject discussed, 177. rule in various States, 177, 178, 178 ;/. yc^ Re/erences\ INDEX. \ are to sections. JUDGMENT OR DECREE— /^r^AWRF.\CE V. FOX, rule in, applied, 43. LEGACIES, recovered by creditors, 24. LEGAL AND EQUITABLE JURISDICTION, 4, 51, 59, 60. changes in modern procedure, 51. who responsible for decision in equity, 51. judgment for damages not allowed in equity, 51. reimbursement in equity, 192. equity more flexible than law, 60. LEGAL FRAUD, meaning of, 51. LEGAL PRESUMPTIONS, 7. Judge Black's views, 7. LEGATEE cannot avoid testator's transfer, 121 «. LEGISLATION or acts in aid of rebellion, 424. tendency of, to protect honest debtors from punishment, i n. to enlarge remedies against property, 3. retrospective, affecting remedies, 417. conferring jurisdiction on pending suits, 417. LEVY, when excused, 83. cannot be made against receiver, 83. LEX FORI, governs remedy, 64. cases and illustrations, 64. governs right to arrest, 64, 191. matters of procedure, regulated by, 64. LEX NEMINEM COGIT AD VANA SEU INUTILIA PERA- GENDA, 73. struggle for application of maxim, 73, LIBEL, claimant for damages from, is creditor, 90. LIEN, in supplementary proceedings, 61. See Status of Attacking Creditors. creditors must have, to file bill, 73, 75-88. created by creditor's bill, 68, 75, 392. by attachment, not sufficient to support bill, 81. creditors having rights of, 125. , parties having, as defendants, 138. judgment sufficient, 76, 80. judgment insufficient, 77, 78, 81. when unnecessary, 83. upon rents and profits, 26. judgment by statute, 87. LIFE INSURANCE, policies, may be reached, 24. when non-assignable, 23. by married man, 23. J!e/frefiees \ INDEX. \ are U sections. 7^1 LiMITA riONS upon ownership not favored, 360-368. inconsistent, are void, 362. statute of, 292. in equity, 293. effects of discovery of fraud, 290, 291. must be pleaded or raised, 202. acknowledgment of debt, 215. judgment barred by, 77. LIS PENDENS, rule as to, 157. to create, must describe property, 157. doctrine as to very ancient, 157. not applicable to bonds, 157. or to negotiable securities, 157. LITIGATION engendered by fraudulent transfers, 2. not creditable, 407. LOBBYING SERVICES, contract void, 432. LOCAL, penal statutes are, 139. territorial jurisdiction, i57rtr. LOGS, delivery of, 262. symbolical delivery sufficient, 262. illustrations, 262. LOUISIANA, doctrine as to collateral attacks, 69. its features discussed, 69. derived from civil law, 69. not generally acknowledged, 69. objections to rule, 69. form of judgment, 171. LOVE AND AFFECTION as consideration, 210. good between brother and sister, 216, not good against existing creditors, 210. explaining recitals in deed as to, 221.J LUNATICS, restitution to, 510^!. LUNATICS AND INFANTS, acts of, compared, 449. contract for necessaries, 463. acts after inquisition void, 464. judgment against, 465. void and voidable acts of, 466. deed of, 467. executory contracts of, 468. rule as to responsibility of, 411 //. sale of real estate of, 469. LUNATIC'S DEED, jurisdiction to attack, 423. ^02 /\c/erences\ INDEX. \ are io sfciwtts. MALICIOUS PROSECUTION, claims for, cannot be reached, 34. do not pass by assignment, 34. MARRIAGE as consideration, 212. the rule in the cases, 212. relationship, 298. settlement, rule as to, 306. ] post-nuptial settlement, 307, fraudulent conveyances in contemplation &f, 314. settlement, description in, 157 ;/. void and voidable, 441. statute of frauds, 311. MARRIED MAN, may devote earnings to life insurance, 23. See Agent. MARRIED WOMEN, rights of, 298. See Husband and Wife. MARSHALL, Chief-Justice, views of, as to moral turpitude, 8. MARSHALLING assets, 216. MASSACHUSETTS, rule as to spendthrift trusts, 367. rule as to crops on lands fraudulently conveyed, 27. jurisdiction of equity in, 49 ;i. choses in action reached, 64. remedies allowed, 65. no reconveyance, 397. promises of third parties, 43. MEMBER, suing in place of receiver, 73. MEMBERSHIP of stock exchange is assets, 35. not liable to execution, 35 n. MENTAL OPERATION and legal conclusion opposed, 8. illustrated in Coleman v. Burr, 382. intent is, 196. MESNE PROFITS recoverable, 26. during period of redemption, 26. when property is held under trust, 26. METHODS of obtaining redress, 72. annulling fraudulent deed, 72. appointing referee or receiver, 72. selling on execution, 72. MINGLED property, 28. rule as to, 28. of husband and wife, 305. wife may lose it, 305. conflicting views, 305. /ie/erences \ INDEX. \ are io seci ions. "lyi' M.\^Gl.Y.V>—co7iiiniied. rule in bankruptcy, 305 n. MISJOINDER of causes of action, 135. hostile claimants cannot join, 108. MISSOURI, issuance of attachment in, 12. creditor's bill against absconding debtor, 84. MISTAKE in fraudulent conveyance, not corrected, 396. MIXED CLAIMS, prior and subsequent to alienation, 105. MODERN CHANGES in the law, i. MONEY EARNED, but not due, available, n. MONEY JUDGMENT, wHcmi disallowed, 179. allowed against vendee, 177, 178. in equity, 51. MONOPOLY, which patent confers, is property, 38. MORAL SENSE, weak in some men, 8, 382. of debtor, not binding on creditor, 8. MORAL TURPITUDE, proof of, 8, 382. not exacted, 8. obligations as to consideration, 215, duty to pay debt barred by statute, 215. obligation, statute of frauds, 215. MORTGAGEE as bona fide purchaser, 371. rule in New York, 371. MORTGAGES, 347-359. Sec Chaitel Mortgages. when fraudulent, 347-359. for just debt, may be overthrown, 207. absolute conveyance as security, 238, 404. pre-existing indebtedness as consideration, 371. declaring deeds to be, 404. future advances should be shown on mortgage, 217. redeeming from, 404a, assignee may set aside, 115. MOTION, uncertainty in pleading reached by, 140 11. MOTIVES, often unimportant, 8, 382. not controlling, 187. testifying to, 205, 205 ;/. MULTIFARIOUS complaints, 150, 151, 152. complaints bad for, 150. pleadings held not to be, 151. 152. rules applicable to, 150-152. MUNICIPAL C0RP0R.\TI0N as creditor, 90. from date of tax warrant, 90. yOA. Ke/ercnces \ INDEX. \ are to sections . MUNICIPAL CORVOKAmO]^— continued. may adopt voidable act, 494. MUTUALITY of participation in fraudulent intent, 199, 302, 319. vendor's intent alone insufficient, 199. participation by infant, 199 n. as to voluntary alienations, 200, 200 ;/. Laughton v. Harden, 200 //. NATIONAL BANK, receiver of, 117. not dissolved by receivership, 134. NATURAL presumptions, 7. Judge Black's views, 7. consequence of an act, presumption as to, 9, 10, 382. NEGOTIABLE INSTRUMENTS, void and voidable, 446^. lis pendens doctrine not applicable, 157. NEW ENGLAND cases as to change of possession, 249. transfers presumptively fraudulent, 249. NEW APPOINTMENT of assignee made by court, 316. NEW TRIAL, not a matter of right, 183a. NEW YORK, value as affecting right to bring bill, 23 n. and Massachusetts, choses in action may be reached, 64. creditor's bill and supplementary proceedings at the same time, 65. no receiver in ejectment, 187. rule as to change of possession, 250. declarations as to personalty, 277. sales by mortgagor for mortgagee valid, 355. valid title from fraudulent vendee, 448 n. judgment by creditors of decedent, 79. supplementary proceedings are special proceedings, 61. assignee must attack fraudulent conveyance, 115. title of receiver to real property, 116, specific assignment not a general assignment, 339. NICHOLS V. EATON, the point actually decided, 364. the case stated, 364. the dictum, 365. criticised, 365. the true rule, 366. re-stated, 361 n. NON-RESIDENT DEBTOR, jurisdiction over, 84. NO REIMBURSEMENT at law, 193. NO DEFINITION of fraud, 13. NORTH CAROLINA, exceptional practice as to joinder of claims, 85. the practice deprecated, 85. He/ereTtces \ INDEX. \ are to seciions. JQ'- NOTICE, actual and constructive. 372-389 ( T . ) Without notice, 372. Judge Story's rule, 372. creditors after notice, 106. (2.) Kinds of notice, 373. two kinds, actual and constructive, 373. both defined, 373. (3.) Constructive notice of fraud, 374-376, 378-3S2. various definitions, 374. rule in Stearns v. Gage, 375. the doctrine discussed, 375, 376. illustrations, 376. actual belief, 377, 382. rule in Parker v. Conner, 378. comments, 382. (4.) Facts sufficient to excite inquiry, 379-381. many illustrations, 379-381. means of knowledge equivalent to knowledge, 381. NOTORIETY of change of possession, 253. symbolical delivery insufficient, 253. NULLA BONA, execution returned, 86, 87, 87 n. NULLITIES defined, 415, 425. attempted transfers treated as, 59, 69. and irregularities distinguished, 442, OATH against oath, effect of, 159. OBJECTIONS as to non-joinder, how raised 134. OBSTACLES to development of the law, 5. OFFER to rescind, tender, 510^2, OMISSION from schedules, when fraudulent, 32c. OMNIA PRAESUMUNTUR CONTRA SPOIJATOREM, 2S1. OMNIBUS BILL, creditors' bill so called, 68. ONUS, as to fraud, 5, 6, 224. affecting marriage relationship, 300. OPE^J AND CONCLUDE, right to, 271, 271 //. OPINION, evidence as to insolvency, 273, 273 n. as to value, 284, of the parties, accorded little weight, 8. ORDER OF ARREST, when vacated, 191. OTHER FRAUDS, as evidence, 282. " OTHERS," meaning of, iio. who included in, no. -56 References^ INDEX. ^are to seciions. " OTHERS ''—continued. suing on belialf of, no. design of the statute as to, no. OVERCOMING presumption from failure to change possession, 255. OVERSEER OF POOR, as claimant, 124 PARENT AND CHILD, transactions between, 475. daughter's services to father, 218. no implied promise to pay, 218. PAROL EVIDENCE, to vary consideration, 221. PARTICEPS CRIMINIS, no relief to, 192, 214. PARTICULARITY of denial in answer, 162. general answer operates against defendants, 162. PARTICULARS, bill of, ordering, 162^. PARTIES COMPLAINANTS, 68, 73, 107-127. ^'tr Complainants. joinder of complainants, 108. when heirs cannot sue, 121. when widow not entitled to proceed, 121. PARTIES DEFENDANT, 128, 129. Sec Defendant. joinder of defendants, 132, 133. in forfeiture action, 132a. question of, perplexing, 107. competency of, as witnesses, 269. cross-examination of, 281. PARTY, as witness, 269. PARTITION SUIT, mortgage assailed as fraudulent, 61. the theory, 63. PARTNERS, may sue copartners and fraudulent alienees, 54. object of suit in such case, 54. arrest of, 191. preferring claims, 329. special, cannot be preferred, 329. survivor may make assignment, 329. limited, assets are trust fund, 329. corporators, when liable as, 139. copartnership and individual debts, 216. PAST TRANSACTIONS, declarations as to, 276. PATENT RIGHTS, monopoly secured by, is property, 38. may be assigned by operation of law, 38. can be reached by creditors, 24, 38. inchoate right to, non-assignable, 38. PENALTY for non-payment of debts, i. inflicted upon stockholders, 139. References \ INDEX. \ are to sections. 7^7 PENDING the writ or suit, conveyance made, 22, 132^;. badge of fraud, 233. purchaser bound, 132a. PENNSYLVANIA, rights of administrators, 112. PER SE FRAUDULENT, inadequacy of price is not, 232. PERSONAL, judgment against fraudulent vendee, 177, 178, 17S n. money judgment, when disallowed, 179. against wife, 180. to sustain bill, 77. transaction with deceased, testifying to, 122. PERSONAL PROPERTY, mortgages upon, 347-359. delivery of possession of, 245-267. distijiction between, and realty, 264. as to return of execution, 87. PERSONAL REPRESENTATIVES, as complainants, 112, 113. as defendants, 136. conveyances binding upon, 112, 113, 398. may sue for cancelled debt, 42. cannot avoid voidable act, 511. claims of pass by assignment, 316(7. PERSONAL TRANSACTIONS with deceased person, i2r. evidence of, 121. PERSONALTY, restraint upon, not allowed, 363 n. in name of third party, liable to seizure, 57. admissions concerning title to, excluded, 277. PLEA or answer, 158-167, See Answer. of bona Jide purchaser, 163. PLEADING, 141-167. See Complaint. testimony must conform to, 285. amendment of, 156. bill of particulars, i62fl. charging fraud, 141. general allegations insufficient, 141 PLEADINGS IN EQUITY, not so strict as at law, 60, 146. held not multifarious, 151, 152. PLEDGE, purchase of, 473. voidable without pledgor's assent, 473. • PLEONASMS, in English statutes, 1 1 «. POLICIES of insurance for wife's benefit, 23, 312. when not assignable, 23. ^68 l\e/cye>ic,'s\ INDEX. \ are to sections. POSSESSION, change of, 245-267. See Change of Possession. definition of, 245. evidence of title, 245. concerning possession, 245. possession as proof of fraud, 247. transfers prima facie fraudulent, 248. as evidence of fraud per se, 251. result of the cases, 252. change of, must be continuous, 257. temporary resumption of, 258. concurrent, 259. excusing want of change of possession, 261, 263. change of possession of realty, 265. possession with power of sale, 267. after conveyance, 279. declarations characterizing, 277-279. by wife, presumption of ownership, 301. POSSIBILITY of judgment will not sustain bill, 73. POST-NUPTIAL marriage settlement, 307, 308. See HusijAND and Wife. upheld, if reasonable, 307. POWER OF ATTORNEY, of infants, 454. from wife to husband, 198. POWER OF SALE, by mortgagor in mortgages, 347-359. policy of the law considered, 347-359. POWERS, when assets for creditors, 39, 40. English rule as to, 39. views of Hardwicke and Somers, 39. rule the same both as to realty and personalty, 39. cannot be transferred, 39 //. statutory changes as to, 40. New York policy as to,deplored, 40. of alienations, restraints upon, 360-368. PRACTICE, 71. See Complaint ; Answer ; Co:\iplainants ; Defendants. in federal courts, 71. equity practice prevails, 71. following State rules, 71. PRAYER OF COMPLAINT, 155. mistake as to, not fatal, 155. inapt and incongruous prayers, 155. J^e/erencrsj INDEX. ^ are io seci ions. 76q PREFERENCE IS LEGAL, 390, 391. must represent actual debt, 391, of vigilant creditors, 392. why rewarded, 392, of claim in which assignor is partner, 329. of special partner, disallowed, 329. assignments to prevent, 341. purpose of bankrupt act to defeat, 390 //. theory of, 390. secret, when avoided, 393, 394. for wages, 392^;. by supplementary proceedings, 61. when upheld, 11, PREMIUMS, suit to recover, proofs, 23 n. PRESUMPTION, that natural consequence of an act was contemplated, 9, 10, 382. does not obtain that common law prevails in Russia, 64 //. against fraud, 5-7. rule as to, 7, of good faith, 5, 6. of innocence, 5. of legality, 433. of fraud in equity, 60. PRESUMPTIONS, legal and natural, 7. PRESUMPTIVELY FRAUDULENT, conveyances, 94, 248. PRETENDED CREDITOR has no status, 91. PREVALENCE of fraudulent transfers, 2. the cause, 2. PRIMA FACIE, cases of fraud, 243. numerous illustrations, 243. evidence of fraud, 247, 248. true, answer, 159. failure to change possession, 248, 250, 252. PRINCIPLES, applicable to a nullity, 425. nullity ineffectual for every purpose, 425. without warrant of law, 425, governing multifariousness, 150. PRIVATE PURPOSES, taxation not for, 438 //. PROCEDURE in federal courts, 71. at law and in equity,- 51, 59, 60. PROCESS, service of, creates lien, 6r, ^)8, 392. PROCRUSTEAN FORMULA, statutes not limited by, 22. 49 nhQ Re/erences\ INDEX. yare to sections. PROFITS, devise of, is devise of lands, 262. debtor cannot give away, 26. PROMISE TO MARRY by married person, void, 432. PROMISES, of third parties available, 43. doctrine of Lawrence v. Fox, 43. the rule not universal, 43. not recognized in Massachusetts, 43. nor in England, 43. theory of the rule, 43. avoids circuity of action, 43, founded on immoral conduct, 432. PROOF of moral turpitude, 8, 382. not essential to avoid transfer, 8. intent to defraud subsequent creditors, 98. judgment or lien, 270. of consideration, 209, 222. mutuality of intent, 199. PROPER AND NECESSARY PARTIES, 68 n. See Parties. PROPERTY susceptible of fraudulent alienation, 23-50. the rule, 24, 25. in name of third party, 57, 82. of debtor, theory as to, 11. subject to immediate process, 11. value of, affecting question of fraud, 23, 41. proving value of, 284. substituted or mingled, 28. of equitable character, 68 n. PROTECTION OF CREDITORS is the policy of the law, t. PROVING intent, 206. circumstances, 281. consideration, 219. recitals as evidence, 220, explaining recitals, 221. value, 284. PROVISIONAL RELIEF, injunction, receiver, arrest, 184-191. (i.) Importance of protnpt relief, 184. forms of relief, 184. (2.) Infimction as form of, 185, 186.. when allowed, 185. when disallowed, 186. References^ INDEX. \are to sections. 11^ PROVISIONAL ^YAAY.Y— continued. (3.) Receiver in contest over real property., 187. disinclination of the courts to appoint, 187. why provisional relief is discouraged, 187. no receiver in ejectment in New York, 187. (4,) Receiver to collect alimony., 188. practice in Wisconsin, 188. may attack fraudulent transfers, 188. (5.) Arrest of defendant, 19 [. actual intent to defraud necessary, 191. PUBLIC, fraud upon, not avoid conveyance, 107. securities, defective, 446^. policy rendering acts void, 411. PUNISHMENT, power to inflict, abrogated, 2, 3, 3 ;/. PURCHASE PRICP; inadequacy of, 232. PURCHASER removing incumbrances, 126. recovering in ejectment, 57. bona fide, 369. with notice from bona fide purchaser, 384. mortgagee as, 371. of chattel mortgage, 168. subrogation to creditor's lien, 195. See Notice ; Bona Fide Purchaser. PURPOSE of the inquiry, 3. QUESTION FOR COURT, fraud in law, 9, lo, 3S2. of equity, 51. QUESTION FOR JURY, intent, 9, 204. effect of badges of fraud, 226. to weigh declarations, 276, as to change of possession, 254. RATIFICATION of voidable acts, 482-495. knowledge essential to, 483. of executors' voidable acts, 484. receipt of proceeds of sale, 485. by infant, 488. void acts, no ratification, 489. ratifying voidable bill of lading, 490. by retention of the property, 493. of voidable corjiorate acts, 494. effected by laches, 495. 772 Jie/erences] INDEX. ^^are io seciians. REACHED, property that cannot be, 50, 50a. REAL PROPERTY, receiver of, 187. change of possession of, 264. possession evidence of title, 264. the cases considered, 264. land in foreign state, 157^. change of venue, 157^. receivers, title to, 116 n. situs of governs, 24. of lunatic, 469. REALTY AND PERSONALTY, declarations, 277. as to issuance of execution, 87. REASONABLE TIME, possession within, 256. RECAPITULATION of creditors' remedies, 72. RECEIVER, has no title to tort claims, 34. vi'hen cannot represent creditor, 117. no claim to exemptions, 46. in supplementary proceedings, 61, 116, as complainant, 116, 188. ' power to appoint over national bank, 117, recognition of, by comity, 118. appointed before answer, 184. when denied, 184. directing transfer to, 187. of various interests, 188. of annuity, 188. of a living, 188. in action to foreclose contract, 187 ft. represents creditors, 116. of corporation, rights of, 117. when insolvency not ground for, 239 n. judgment appointing, 170. in contests over real property, 187. title to realty, 116 ;/. to collect alimony, 188. title on death of, 189. removal of receiver, 190. entitled to notice, 190. employment of debtor, not ground of removal, 190. foreign, has no status, 118. summary process not extended to, 116. as defendant, 133. References I INDEX. I t^re to sections. '7 J ' suing in place of, 73. RECITALS of consideration as evidence, 220. of fictitious consideration, 228. of deed avoiding transfer, 10, 322. of complaint, 140-157. of answer, 158-167. explaining, 221. not binding on creditors, 221. RECONVEYANCE cannot be enforced, 396. theory of the law, 396. when allowed, 399. RECORD, of chattel mortgage, effect of, 347. withholding instrument from, effect of, 235, 236, failure to record in fraud of bankrupt act, 237. RECOVERING improvements and rents, 26. assets, 23-50. REDEEMING mortgaged property, 404 a. REDEMPTION, recovery of mesne profits during period of, 26. equity of, may be seized, 31. REFERENCE, when not ordered, 62a. views of Gilbert, J., as to, 62^5. REIMBURSEMENT and subrogation, 192-195. actual and constructive fraud, 192. actual fraud defeats, 192. constructive fraud does not defeat, 192. inequitable transactions set aside upon terms, 192. policy of the law, 192. (i.) No rciiiibiirsemciit at law, 193. transaction at law wholly valid or wholly void, 193. not so in equity, 192, 193. (2.) Subrogation of purchaser to creditors' lien, 195. when permitted, 195. RELATIONSHIP, effect of, 93, 242. calculated to awaken suspicion, 242. transaction will be closely scrutinized, 242. influence of Salmon v. Bennett, 242. not necessarily evidence of fraud, 242. when coupled with other badges, 242. RELEASES exacted in assignments, 328. regarded with disfavor, 328. in what form permitted, 328. 774 I?e/erencesl INDEX, ^nre io seciions. RELIEF before and after sale, 58. at law and in equity, 59, 60, 176 ;/. RELINQUISHMENT of dower, consideration for settlement, 299. REMAINDER, estates in, recoverable, 29. REMEDIES OF CREDITORS, 51-72. See Creditors' Remedies. two-fold object, 360. governed by lex fori, 64. forms of relief, 4. reference not ordered, 62^. REMEDY at law, 59. by suit in equity, 60. REMOVAL or dismissal of receiver, 190. similar to jurisdiction dissolving injunction, 190. employment of debtor no ground of, 190. to Federal courts, 71. RENTS, and profits recoverable, 26. debtors cannot give away, 26. REPLEVIN, assignee may bring, 316a. REPUGNANT CONDITIONS, void, 362, 363. defined, 2)^'^ n. theory of the law, 362. REQUISITES of a fraudulent conveyance, 23. characteristics and classes, 15. RES ADJUDICATA, question of intent, when, 203. judgment, when, 168. conclusive in other forms of procedure, 169. RESERVATIONS, by debtor, creditors may reach, 32. secret, effect of, 272. avoid assignments, 326. of exempt property, not fraudulent, 326. of surplus, by assignor, 327. RES GEST^, concerning, 276, 279. importance of the rule, 276. illustrations, 276. must be concomitant with principal act, 279. duty of the jury as to, 276. RESTITUTION by infant, 507. by lunatic, 510. reimbursement and subrogation, 192, 193, 195. general rules as to, 510^. RESTRAINTS upon ahenation, 14, 361. References \ INDEX. \ are to sections. Tl^ RESTRAI NTS—r^/^//;///^^. by debtor in fraud of creditors, 14. theory of the law, 361. English and American cases, 361 «. not favored, 362. upon personalty, not allowed, 263 ;/. RETROSPECTIVE LEGISLATION affecting remedies, 417. effect of, 417. no restrictions upon congress, 417 n. RETURN of execution unsatisfied, 74. 86. distinction between realty and personalty, 87, raising the objection, 88. chancery rule, 75. of officer, conclusive, 74. REVERSION, estates in, may be reached, 29. REVOCATION, reserving power of, 358. RHODE ISLAND, practice as to absconding debtors, 84. RIGHT to sue, transfer of, 92. of creditors, existing and subsequent, 89, 97 //. of creditors, protection of, i. ROBINSON V. ELLIOTT, rule embraced in, 348. opposing rule and cases, 352, 353. ROMANS, laws of, concerning insolvents, r. ROYALTIES on books, recoverable by creditors, 37. RULE as to exempt property, 46. fraudulent purchases of exemptions, 47. covinous alienations of exemptions, 48. conflicting cases, 49. abandoned exemptions, 50. of construction of statute of Elizabeth, 20. same at law and in equity, 29. of procedure in federal courts, 71. judgment in personal actions, 80. as to restitution, 510^;. RUSSIA, no presumption that common law prevails in, 64 //. SACRIFICE, transfer to prevent, 325. SALARY, not reached in supplementary proceedings, 61 //. exempt sixty days before proceedings, 6 [ //. of municipal officer, exempt, 61 //. SALE, possession with power of, 267. doctrine of Robinson v. Elliott, 348-351. 776 Re/erencss^ INDEX. \^are U sections. S A L E — contin tied. relief before and after, 58. judgment avoids, only as to creditors, 171, 395-401. declarations before and after, 277, 278, SALES UPON CREDIT, effect of, 240, 332, Z3?>^ 356. hinder and delay creditors, 332, 333 SCHEDULES, fraudulent omissions from, 320. unintentional omission, 320. SEATS in stock exchange are assets, 35. the cases discussed, 35. not liable to execution, 35 n. SECRECS^, evidence of, 234. is badge of fraud, 234. and concealment to be considered by jury, 234. agreement to conceal not per se fraudulent, 234. Mr. May's views as to, 234 n. SECRET PREFERENCE, 393. when avoided, 393, 394. SECRET TRUST, 272. common form of fraudulent conveyance, 272. policy of the law, 272. apparent on face of deed, 272. implied from extrinsic circumstances, 272. SECURITY, more than necessary, effect, 241. permitting conveyance to stand as, 141. corrupted with fraud, no relief, 238. SELECTING transfers to attack, 67. SEPARATE estate of wife, free from husband, 304. SEQUESTRATOR, when entitled to sue, 116. SERVICES by member of family, 218. do not constitute valuable consideration, 218. SETTLEMENT, payable on bankruptcy, void, 364 n. release of dower as basis of, 299. See Marriage Settlement. SEVERITY of Roman law, t. SHAM contrivance a fraud, 15. SHERIFF, money in hands of, reached, 2)3- promise made to, available to creditor, 43 1?. as complainant, 81, 120. what he must show against stranger, 297. SHIP at sea, possession of, 256. SIMPLE CREDITORS, cannot sue alienee in case, 62. Re/erences\ INDEX. [are to sections. 777 SIMPLE CREDITORS— ^^«//«//^^. not entitled to injunction, 52. rights of, 73. remedies of, 73 n. cannot unite with judgment-creditors, 108. SISTER, conveyance by, to brother, not fraudulent, 5. preference to, dividend, 390. SITUS, law of, governs in following real estate, 24. SLANDER, claims for, cannot be reached, 34. SOLVENCY, evidence of, 95. the cases considered, 95. SON to father, sale by, 242. SOUTH CAROLINA, creditor's bill against absconding debtor, 84. SPECIFICATION, of ground for removal of receiver, 190. SPECULATION, placing property beyond risk of, 100. such conveyances avoided by subsequent creditors, loo. SPENDTHRIFT TRUSTS, 360-368. policy of the law concerning, 360. Nichols v. Eaton reviewed, 364, 365. (i.) Aversion to exemptions not statutory, 360. purpose of the law, 360. creditor's property a trust fund, 360. Williams v. Thorn, 360. (2.) Restraints upon alienations, 361. theory of the law, 361. treated as void, 361. repugnant conditions, 362. illustrations, 362. (3.) Nichols V. Eaton ; the point actually decided, 364. the dictum, 365. comments upon it, 365. the correct rule, T^dd. (4.) Broadivay Bank v. Adams, 367. review of the case, 367. doctrine dissented from, 367. (5.) Spendthrift trusts in Pennsylvania, 368. birth-place of the doctrine, 368. dissent from it in that State, 368. STAND by, doctrine of, 287. STATE COURT, proceeding on judgment in federal court, 78. STATUS OF ATTACKING CREDITORS, 73-78, 106. (i.) Rights of creditors at large, 52-73. 778 Ne/erences'\ INDEX. ^are to seciions. STATUS OF ATTACIvIiNG CREDITORS— /vV/^/j 0/ creditors at large — continued. cannot assail assignments, 73. must have a lien, 73. equity not a remedy to collect debts, 73. judgment and execution essential, 73. judgment conclusive as to indebtedness, 74. rule as to necessity for judgment ancient, 75. existed in England, 75. recognized in chancery, 75. (2.) Judgments sufficient, 76. ordinary money judgment, 76. judgment in chancery sufficient, 76. justice's judgment, when docketed, 76. confession of judgment, 76. demand classified by probate court, 76. in equitable actions, 80, (3.) Judgments insufficient, 77. barred by statute, 77. judgment not personal, 77. justice's judgment, 77, foreign judgment, 78. (4.) Creditors of a decedent, 79. must have judgment in New York, 79. rule otherwise in other States, 79. reasons of the rule, 79. (5.) Specific lien by attachment, 81. the cases reviewed, 81. New York cases, 81. lien by attachment insufficient, 81. (6.) When judgment is unnecessary, ^t,. no remedy at law, 83. creditor under an injunction, 83. controversy in the cases, 83. absconding and non-resident debtors, 84. (7.) As to execution, 86, 87. return of execution unsatisfied, 86. distinction between realty and personalty, 87. raising the objection, §8. STATUTE 13 Eliz., c. 5, 19. basis of all legislation, 19. its object, II, 19. He/erenccsl INDEX. \ are io seciiotis. 77Q STATUTE — continued. bottomed on immoral intention, 9 ;/. its interpretation and construction, 20. merely declaratory of common law, 16. 27 Eliz., c. 4, 21. of limitations, begins to run when, 292. of limitations, in equity, 293. of frauds, 311. controlling in federal courts, 71. 2 Rich. II, 18. its purpose, 18. 3 Hen, VII, c. 4, 18. 50 Edw, III, c. 6, 18. foreign statutes, effect of, 405 //. STATUTE OF FRAUDS, debtor not bound to plead, 215. acts void by, 436, 437. nature of, explained, 436, 437, agreement outside of, 296. STATUTES OF ELIZABETH, declaratory of common law, 16. STATUTORY EXEMPTIONS, 46-50. aversion to exemptions not statutory, 360. covinous alienations of, 48. conflicting cases, 49. abandoned, 50. STATUTORY liability of stockholders, 139. STATUTORY PROCEEDINGS, affecting infants and lunatics, 469. in derogation of common law, 469. must be strictly followed, 469. fatal defects in, 469. changes as to executors and administrators, 112. STEARNS V. GAGE, rule in, 375. STOCK EXCHANGES, seats in, are property, 35. may be reached by creditor, 35. seats not liable to execution, 35 ;/. character of, discussed, 35. STOCKHOLDERS as defendants, 119, 139. when creditors may sue, 119. statutory liability of, rests in contract, 139. may be sued in foreign court, 139. when not entitled to sue, 73. suit by, 109. joining, 128. 730 Jie/ere»ces \ INDEX. \ are to sections. STOCKS may be reached, 24. lis pendens does not apply, 157. STORY, J., constructive fraud defined by, 323. STRANGER, may take advantage of void act, 416, 425. STUDIED FORMALITY, will not save transaction, 241. SUBROGATION of surety, in. of purchaser to creditor's lien, 195. the rule in New York, 195. and reimbursement, 192, 193, 195. of subsequent creditors, 103. See Reimbursement and Subrogation. SUBSEQUENT ACTS, to prove original purpose, 227. SUBSEQUENT CREDITORS, 96-106. (i.) Fraud upon subsequent creditors, 96, 97 n. the practical distinction, 96. the cases considered, 96-106. intent to defraud, 96, 97, 202. (2.) I?itent as affecting, 96, 202. must be directly shown, 98. may be inferred, 98. no difference between existing and subsequent, 98. (3.) Placing property beyond risk of ventures or speculations, 100, loi, theory of the law, 96, 97, 100, loi. conveyances avoided, loi. transfers sustained, 102. (4.) Mixed claims, 104, 105. subsequent creditors sharing with antecedent creditors, 104. accruing prior and subsequent, 104. (5.) With notice, 106. cannot generally avoid alienation, 106. SUBSTITUTED PROPERTY, rule as to, 28. goods, lien extended to, 385. SUFFICIENT CONSIDERATION, 222. not sufficient. 223. judgment to sustain bill, 76. SUING on behalf of others, 109. SUIT IN EQUITY, 51, 60. advantages of, 60. SUPPLEMENTARY PROCEEDINGS, nature of, 61, 64. remedy of, 61. a special proceeding in New York, 61. substitute for creditors' bills, 6t. References} INDEX. \are to sections. 78 1 SUPPLEMENTARY PROCEEDIxVGS— ^^«//;;//^^. commencement of, confers lien, 6i. lien of, how defeated, 6i. lien, effect of death, 6i n. what can be reached, 6i, 64. not exclusive, 61, creditors may abandon, 61. claims of third party, 61. must be based on judgment in personam, 6r, 76. receiver appointed in, 63, 188. receiver represents creditors, 61. interests reached by, 61. may be brought in Federal courts, 61 n. when not in State courts, 61 «. salary and earnings, 61 fi. SUPPORT, of debtor in early times, i n. as consideration for transfer, 211. SUPPRESSION or concealment, subsequent fraud, 235. of deed or mortgage, 235, 235 n. in fraud of bankrupt act, 237. SURETY, as creditor, 90, in. procedure by 1 1 1 ti. claim against, misjoinder, 135. on appeal bond, in. entitled to subrogation, nt. as simple creditor, in. SURPLUS income may be reached, 45, 360. theory of the law, 45. moneys reached, 63. SURROGATE, cannot determine as to fraudulent transfer, 12 n. SUSPICION, insufficient to establish fraud, 5, 228. tangible facts must be shown, 283. evidence must convince the understanding, 2S3. SWORN ANSWER, taken as true when, 160. SYMPATHY, with fraudulent debtors, 5. TALENTS of debtor, creditor cannot command, 50 a- TANGIBLE FACTS, to establish fraud, 5. suspicions insufficient, 5, 6, 283. TANGIBLE PROPERTY may be reached, 23. TAXATION, not for private purposes, 438 >i. TEMPORARY resumption of possession, 258. when does not render sale fraudulent, 258. -82 J^e/erentes^ INDEX. [ are to sections. TEM VO^KKY— continued. opposing illustration, 258. im])rovements, 26. TEMPTATION of debtors to commit fraud, 2. TENANT IN FEE, condition not to alien, void, 362. TERRITORIAL jurisdiction, change of venue, 157a. TESTIFYING as to intent, 205. as to value, 284. See Evidence. TESTIMONY must conform to pleading, 285. to overcome answer, 160. as to intent, 205. as to matters not in issue, excluded, 285. TESTS, of infant's acts, 450. of fraudulent conveyances, 15, 15a. THIRD PARTY, reaching property purchased in name of, 57, 82. is it liable to execution, 57. may be attached, 57. consideration paid by debtor for, 57, 57 n. enforcing promises of, 43. doctrine of Lawrence v. Fox, 43. conflict in the cases, 43. promise to sheriff available to creditor, 43 71. claiming property in supplementary proceedings, 61. THREATENING to make assignment, 342. not considered a ground of attachment, 342. conflict in the cases, 342. the safer rule, 342. TITLE, on death of receiver, 189. possession as evidence of, 245. from fraudulent vendee, 386, 448 ;/. voidable for fraud and for infancy, distinguished, 448. judgment transferring, 172. equity cannot create, 60 n. TORT CLAIMS, cannot be reached, 34. creditor, 123. not transferred by assignment, 316a. TORT, to property, is assignable, 34. claimant is a creditor, 90, 123. creditor as complainant, 123. illustrations of rights of, 123. TRACING THE FUND, 44. J^e/erences \ INDEX. [are io sections. ~S TRACING THE FVND—co»fm»ed. may be followed into any property, 44. TRADE-MARKS are assets, 36. pass to assignee as property, 36. under bankrupt law, 36. personal, rule as to, 36. TRANSACTIONS, palpably fraudulent, 10. fraud must be inception of, 227. with deceased, testimony concerning, 121. between husband and wife, 300. parent and child, 475. pledgor and pledgee, 473. attorney and client, 474. TRANSFER pending suit, effect of, 22, 233. is mark of fraud, 233. of right to sue, 92. to prevent sacrifice, 325. of property by assignment, 316^7. TRANSFERS inuring as assignments, 339. presumptively fraudulent, 248. TRESPASS, judgment-creditor in, as comjjlainant, 123. TRICK AND CONTRIVANCE to defraud creditors, 15. TRIVIAL VALUE, property which is of, 23, 41. not fraudulent to assign, 23. TRUST, for debtor's benefit avoids conveyance, 10. spendthrift, 360-368. Sir Spendthrift Trusts. for indefinite period, fraudulent, 11. fraud apparelled and clad with, 22. property in name of third party, 57, 57 //. essential to create assignment, 316, 316 //. TRUST FUND, creditor's property considered as, 360. capital of corporation is, 1 1 7. TRUST INCOME available to creditors, 45, 360. above, what is needed for support, 45. Williams v. Thorn considered, 45. TRUST PROPERTY, does not pass by assignment, 316.7. TRUSTEE, and cestui que trust as defendants, 137. when may sell on credit, 333 //. fraudulent grantee as, 385. ex maiejicio, 300. TURPITUDE need not be shown, 8. tendency of the cases, 8. 784 Re/crencesX INDEX. \are to sections. TWYNE'S CASE, stated and discussed, 22. decided in 160 1, 22. its great importance, 22. badges of fraud in, 22, 231, rule as to change of possession in, 245. its limited scope, 22. growth of the law since, 22. effect of secrecy as shown by, 22. generality of gift, 22. construed, use by vendor, 22. expression of honesty in deed, 22. ULTRA VIRES, doctrine of, 411, 411 7u UNCERTAINTY IN PLEADING, reached by motion, 140 n. UNDISCLOSED INTENT, evidence of inadmissible, 205 n. UNDUE INFLUENCE, 13 n, 481. not defined by the courts, 13 n. acts voidable for, 481. views of Andrews, J,, 481. UNFINISHED WORK, finishing up by assignee, 330, 331, 331 n. UNILATERAL evil intent will not overturn transaction, 207. UNITED STATES SUPREME COURT, appeal to, 407. certificate of division, 407(7. UNITING causes of action, 55. joinder of claims, 54. various illustrations, 55. ejectment and equitable relief, 55, complainants, 107. defendants, 132. UNNECESSARY, judgment when, 83, UNPAID SUBSCRIPTIONS, joinder of stockholders, 128. UNREASONABLE inadequacy of price, 209. evidence of secret trust, 209. UNRECORDED DEED or mortgage, 235, 235 n. concealment in fraud of bankrupt act, 237. UNREPRESENTED PARTIES, no judgment in favor of, 173. UNUSUAL ACTS and transactions, 241. constitute badges of fraud, 241. various illustrations, 241. USURY, liability of endorser on note void for, 446a. claims not joined, 132 //. debt, providing for, 286. Re/erences \ INDEX, \ are io sec(tt>nt. 7o^ VALID or void at law, 51. different rule in equity, 51. title from fraudulent vendee, 386, 448 n. between the parties, fraudulent conveyances, 395-400. VALUABLE CONSIDERATION, 207-223. See Consideration. what is, 209. VALUE, as affecting fraudulent transfer, 23. an important element, 23. former rule in New York, 23 n. change of rule as to, 23 n. Pennsylvania cases, as to, 23 n. gifts of small value not fraudulent, 41, proving it by experts, 284. recovering judgment for, 177, 178, ijS n. VARIANCE, rule as to, 155. testimony must conform, 2S5.] judgment must be for relief demanded, 181. must accord with complaint, 182. VENDEE, insolvency of, 274. fraudulent, may create valid lien, 195. evidence of, 274. title from fraudulent, 386. VENUE, change of, i57 425, 426. errors in early definitions, 412, 413. doctrine of degrees of void acts, 413. other inaccuracies, 414. nullities or void acts defined, 415. illustrations of void acts, 416. (3.) Void and illegal acts discussed, 429. void acts which are not illegal, 435. guilty knowledge, 431. illegal acts, 432. presumption of illegality, 433. (4.) Void acts lohich are not illegal, 435. acts void by statute of frauds, 436, 437. VOID USED IN THE SENSE OF VOIDABLE, 445. the error very common, 445. applied to fraudulent conveyances, 317, 408, 445. in leases and insurance policies, 445. assignments, 445. bankrupt act, 445. terms "become void" and "determined," distmguished, 446. Re/trenc9t\ INDEX. [ are to secitons. 7^7 VOIDABLE ACTS, 426, 447-481, "void" means "voidable," in act of Elizabeth, 317, 408, 445. when acts are, 411. etfectual until impeached, 426 n. defined and discussed, 426. (i.) Titles void for fraud and for infancy distinguished^ 448. valid title from fraudulent vendee, 448 //. (2.) Infants acts, 449-459. tests as to, 450. classes of, 45 i. usually voidable, 452. judgments against, 453. power of attorney, 454. acts binding upon, 459. (3.) Contracts of lunatics, A(yo-^6(). what incapacity must be shown, 461. weakness of mind insufficient, 462. for necessaries, 463. act of, after inquisition, 464. judgments against, 465. void and voidable, 466. deed of, 467. executory contracts of, 468. statutory proceedings affecting property of, 469. (4.) Purchases by parties occupying positions of trust, 470. of executors and trustees, 471. of agents, 472. of pledgee, 473. of attorney, 474. (5.) Other phases, 474-481. transactions between parent and child, 475. legal effect of drunkenness, 476. of duress, 475-480. undue influence, 481. VOIDABIvE PURCHASES by parties occupying positions of trust, 470. VOID CONDITIONS, 361. VOID IN PART, void /// toto, 194, 434- illustrations of tlie rule, 194, 434. the word construed, 317. VOLUNTARY CONVEYANCES, as to existing creditor.-, 92. to relatives, 242. confusion in the cases, 93. 788 References^ INDEX. [are to sectiom. VOLUNTARY CON\EYKNC¥.S— continued. only presumptively fraudulent, 94, 208. intent as affecting, 200, 208, 319. the cases as to intent affecting, 200. need not be mutual, 200. assignments, 316. rule as to avoidance of, 316-346. defined, 208. what is consideration, 209. by corporation, 119. WAGES, preference in New York, 392^. WAIVER of verification, 167. amendment of 41st rule, 167 «. defendant may verify answer, 167. of defect of parties, 133. WARRANTOR as creditor, 89. WARRANTY, implied from indorsement, 446a. WEAKNESS OF MIND will not avoid contract, 462. WHAT CANNOT BE REACHED, 50a. WHOLE ESTATE, conveyance of, 231. WIDOW, as complainant, 121. dower of, 30, 2,S, 61, 70, 299. when cannot sue in chancery, 121. when not entitled to annul transfer, 121. WIFE, assignment of policy by, 23, 298-315. See Husband and Wife. crops on lands of, 27. fraud upon, form of procedure, 70. as creditor, 90, 122. when claim should be rejected, 300 n. services by, to husband, 218. husband may act as agent for, 303. proof of fraud against, 212. advances by, defense, 222. separate property of, 304. transfers affecting dower, 315. money judgment against, 180. WILL, right of creditors to oppose, 127. WILLIAMS V. THORN, its doctrine approved, 46, 360. WISCONSIN, right of personal representatives, 112. WITNESS, competency of party as, 269. competency of wife as, -^13. Jie/erencesl INDEX. \ an ia sections. 7^9 WITNESS— ^^/////;«^,/. party as, 281. cross-examination of, 281. to overcome answer, 159. WORD "disposed" construed, 12. " fraud," use of in pleading, 141. . WORDS "hinder, delay, or defraud," 11. discussed, 11. intent to do either sufficient, 11. not synonymous, 11. WRITTEN INSTRUMENT, difficulty of proving fraudulent, 6. WRONG, suspicion of, not sufficient to maintain suit, 5. WRONGFUL EFFECT, must accompany wrongful purpose, 107. Whole Number of Pages, S$^. 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