6

a conveyance appears to have been made for the purpose of putting the property out of the reach of the grantor's creditors,1 or as a means of dictating a settlement to them,2 it is presumptively fraudulent, and his creditors, or his assignee in bankruptcy or insolvency, may appropriate it by regular process of law. So, a voluntary conveyance made in anticipation of becoming indebted and for the purpose of avoiding payment is fraudulent, and may be impeached by any creditor, although the grantor was solvent at the date of the conveyance; 5 and conveyances by a man to his wife, shown by the evidence to be a mere sham and subterfuge and designed to defeat his creditors, are invalid against them. The general rule is that any conveyance, whether directly or indirectly made and of whatever form, is voidable by the grantor's creditors, if it was in fact made to defraud them;7 and any act of the debtor by which his true title and ownership of property are concealed from the creditor, in order to prevent it from being seized on legal process, is a fraudulent concealment of such property.8 Such a fraudulent conveyance or concealment is absolutely null against creditors; and they may enforce their legal remedies against the property as if the title had not been embarrassed by the fraudulent act, or they may resort to the assistance of 305; 8 Sawyer 357; Doak v. Runyan, 33 Mich. 75; Williams v. Osborn, 95 Ind. 347; Williamson v. Wachenheim, 58 Iowa 277.

1 Hudgins v. Kemp, 20 Howard 45; Fuller v. Ives, 6 McLean, C. C., 478; Iles v. Cox, 83 Ind. 577; Russell v. Dyer, 33 N. H. 186; Beers v. Botsford, 13 Conn. 146. 2 May v. Tyler, 62 Miss. 500; Hooper v. Hills, 9 Pick. 435; Mobile Bank v. Harris, 6 La. An. 811.

3 Edwards v. Entwhistle, 2 Mackey 43; Odiorne v. Bacon, 6 Cush. 185; Holmes v. Barbin, 15 La. An. 553.

Hershy v. Latham, 42 Ark. 305; Lewis v. Lanphere, 79 Ill. 187; Alden v. Gibson, 63 N. H. 12; Newburn v. Woods, 52 Mich. 610; Getzler v. Saroni, 18 Ill. 511.

5 Morrill v. Kilner, 113 Ill. 318; Churchill v. Wells, 7 Coldw. 364; Case v. Phelps, 39 N. Y. 164.

Platt v. Schreyer, 25 Fed. Rep. 83; Union Trust Co. v. Fisher, Id. 178; Curtis v. Wortsman, Id. 893; May v. Huntington, 66 Ga. 208; Foster v. Knowles, 42 N. J. Eq. 226.

7 Cothran v. Forsyth, 68 Ga. 560; Wise v. Moore, 31 Ga. 148; Davis Sewing Machine Co. v. Dunbar, 29 W. Va. 617; Buck v. Voreis, 89 Ind. 116.

8 O'Neil v. Glover, 5 Gray 144; Owen v. Arvis, 26 N. J. L. 22; Demarest v. Terhune, 18 N. J. Eq. 45; Knight v. Packer, 12 Id. 214; Smit v. People, 15 Mich. 497; Powell v. Matthews, 10 Mo. 49.

Thomason v. Neeley, 50 Miss. 310; Garretson v. Kane, 27 N. J. L. 208; Russell v. Fabyan, 34 N. H. 218; Gould v. Steinberg, 84 Ill. 170; White v. Gaines, 29 La. An. 769; Gaidry v. Lyons, Id. 4.

a court of equity to remove the obstacle if their remedy at law is inadequate.1 If an absolute deed is given in satisfaction of a mortgage which was itself given and taken merely to defeat the mortgagor's creditors, they may avoid both deed and mortgage. Any conveyance or transaction of which the real purpose appears to have been to lock up the property beyond the reach of the grantor's creditors and to procure to himself some benefit from its use or its proceeds presents a case of a secret trust or confidence which is fraudulent as against his creditors. Such a conveyance, made really in trust for the debtor, has been held to be void as to his creditors as a matter of public policy, regardless of the intent of the parties, the law assuming absolutely that under no circumstances can such a transaction be upheld against them; that the creditors of the equitable owner of property have a right to hold it for their payment. So if, in pursuance of an arrangement with a judgment-debtor, a third person purchases the land of the former at an execution-sale, in order to hold it for the debtor's benefit and screen it from his creditors, other creditors may treat the sheriff's conveyance to such third person as invalid against them, and may sell the land under their executions.6 They will not be bound by any estoppel which would prevent the grantor from avoiding his deed. Any sale or transfer made by a person in debt, in order to be regarded as bonâ fide and valid against his creditors, must be made without the reservation of a trust for the grantor, either open or con

1 Hubbard v. Turn, 2 McLean, C. C., 519; Hunt v. Blodgett, 17 Ill. 583; Brown v. Niles, 16 Ill. 385; Merry v. Bostwick, 13 Ill. 398; Barker v. Dayton, 28 Wisc. 367; Pulliam v. Taylor, 50 Miss. 551; Gallman v. Purrie, 47 Miss. 131.

2 Hadley v. Hood, 94 Ind. 119. So if the mortgage has been foreclosed. Walsh v. Carrene, 36 La. An. 199.

8 Lukins v. Aird, 6 Wallace 78; Giddings v. Sears, 115 Mass. 505; Banfield v. Whipple, 14 Allen 13; Coolidge v. Melvin, 42 N. H. 510; Stokes v. Jones, 18 Ala. 734; Tennessee Bank v. Ebbert, 9 Heisk. 153.

4 Catlin v. Currier, 1 Sawyer, C. C., 7; Burton v. Mill, 78 Va. 468; Bentz v. Rockey, 69 Penn. St. 71; Doyle v. Smith, 1 Coldw. 15; Mitchell v. Sawyer, 115 Ill. 650; Clark v. Robbins, 8 Kans. 574.

5 United States v. Griswold, 8 Fed. Rep. 556; Marston v. Marston, 54 Me. 476; M'Lane v. Johnson, 43 Vt. 48; Livermore v. Boutelle, 11 Gray 217; Curtis v. Leavitt, 15 N. Y. 9; Kane v. Roberts, 40 Md. 590; Hunters v. Waite, 3 Grattan 26; Jones v. King, 86 Ill. 225.

6 Woodley v. Hassell, 94 Nor. Car. 157; Forrest v. Camp, 16 Ala. 642.

7 Stokes v. Jones, 21 Ala. 731; Multnomah Railway Co. v. Harris, 13 Oregon 198.

cealed.1 Secret trusts or open agreements to reconvey the granted premises, to allow the grantor to receive the whole or part of the proceeds thereof, to pay certain of his debts, or to do other things for his benefit, will tend to indicate a fraudulent intent as against his creditors.2 Sales, transfers, or assignments of personal property or of choses in action made with a fraudulent intent against creditors are equally invalid against them with conveyances of real estate:3 they are alike utterly void as to creditors except for the protection of bonâ fide purchasers for value. A conditional as well as an absolute sale may likewise be fraudulent and void as against creditors. A judgment and execution or attachment, obtained without real consideration by collusion and designed and used by means of a prior levy to defraud and defeat other creditors, will be invalid as against them. Although the validity of a sale or transfer is determined at the moment of its execution according to the intent of the parties to the transaction, yet both the subsequent disposition of the proceeds and the prior acts of the parties will often be material to show what that intent was.8 A reconveyance to the wife or children of the grantor will throw doubt upon the validity of the original conveyance. If the transactions between the parties lead to the conclusion that there was an intent to defraud creditors,

1 Coolidge v. Melvin, 42 N. H. 510; Towle v. Hoit, 14 Id. 61; Mackason's Appeal, 42 Penn. St. 330; Partridge v. Stokes, 44 How. Pr. 381; Allaire v. Day, 30 N. J. Eq. 231.

2 Gordon v. Reynolds, 114 Ill. 118; Severin v. Rueckerick, 62 Wisc. 1; Smith v. Conkwright, 28 Minn. 23; Platt v. Brown, 16 Pick. 553.

3 Drake v. Rice, 130 Mass. 410; Beckwith v. Burrough, 14 R. I. 366; Cooke v. Cooke, 43 Md. 522; Burton v. Farinhold, 86 Nor. Car. 260; Smit v. People, 15 Mich. 497.

4 Heroy v. Kerr, 2 Abbott N. Y. App. Dec. 359; Dorn v. Bayer, 16 Md. 144; Williams v. Banks, 11 Md. 198; McDowell v. Goldsmith, 6 Md. 319; Hall v. Heydon, 41 Ala. 242; Hathaway v. Brown, 18 Minn. 414; Diefendorf v. Oliver, 8 Kans. 365.

5 Gifford v. Ford, 5 Vt. 532. See Merrill v. Rinker, 1 Baldwin 528; Blood v. Palmer, 11 Maine 414; Ayer v. Bartlett, 6 Pick. 71; Armington v. Houston, 38 Vt. 448; Thompson v. Paret, 94 Penn. St. 275; Ketchum v. Watson, 24 Ill. 592.

6 Palmer v. Martindell, 43 N. J. Eq. 90; Shallcross v. Deats, 43 N. J. L. 177; Matthews v. Warne, 11 Id. 295; Miles v. Lewis, 115 Penn. St. 580; Snyder v. Kunkleman, 3 Pen. & W. 487; Harding v. Harding, 25 Vt. 487; Whipple v. Foot, 2 Johns. 418; Bloomingdale v. Stein, 42 Ohio St. 168.

7 Harden v. Wagner, 22 W. Va. 356; Rose v. Colter, 76 Ind. 590; Weller v. Wayland, 17 Johns. 102.

8 Orven v. Arvis, 26 N. J L. 22; Painter v. Drum, 40 Penn. St. 467.

9 Hatcher v. Crews, 78 Va. 460; Munson v. Arnold, 55 Mich. 134.

the latter may set aside the conveyance as void against them.1 But since every man possesses absolute power over his own property, he may make any disposition of it which does not interfere with the existing rights of others; and such disposition, if it be fair and real, will be valid,2 even, if it be made bonâ fide, though it may have the effect to delay or defeat his creditors. No man's creditors can reasonably complain of his transfer to the real owner thereof of property which, though standing in his name, really and honestly belongs to the grantee, who might in equity have compelled the conveyance.*

The circumstances from which the existence of fraud may be inferred are usually spoken of as badges of fraud, and these it is proposed presently to consider in some detail. A preliminary question, and one upon which there has been great diversity of judicial opinion, is as to the conclusiveness of all or any of these badges, and how far and in what cases a conveyance is to be pronounced fraudulent per se as matter of law, and when the question of the actual existence of a fraudulent intent must be submitted to a jury and determined as a fact. It is believed that the rule now supported by the great weight of authority is that, while there may be some cases in which the form of the conveyance and the stipulations of the contracting parties are so obviously illegal in character and purpose as to make it the duty of the courts to pronounce them fraudulent in law, and wholly ineffectual,5 yet in general, wherever the terms of a contract are by possibility compatible with good faith, and have upon their face the essential elements of a legal contract, the question of fraudulent intent and want of good

1 Smith v. Parker, 41 Me. 452; Bryant v. Mansfield, 22 Me. 360; Bowman v. Houdlette, 18 Me. 245; Arthur v. Commercial Bank, 9 Sm. & M. 394; Bray v. Hussey, 24 Ind. 228; Ruffing v. Tilton, 12 Ind. 259; Pennington v. Clifton, 11 Ind. 162.

2 Sexton v. Wheaton, 8 Wheaton 229; Seymour v. Wilson, 19 N. Y. 417; Campbell v. Colorado Coal Co., 9 Col. 60.

8 True v. Congdon, 44 N. H. 48; Pope v. Wilson, 7 Ala. 690; Davis v. Turner, 4 Grattan 422; Spence v. Dunlap, 6 Lea 457.

4 Breeze v. Brooks, 71 Cal. 169; Erwin v. Holderman, 92 Mo. 333.

5 As in the case of a deed which merely places the legal title in the grantee, leaving the full control and power of disposition in the grantor as equitable owner. Catlin v. Currier, 1 Sawyer, C. C., 7; Bentz v. Rockey, 69 Penn. St. 71; Burton v. Mill, 78 Va. 468; Doyle v. Smith, 1 Coldw. 15; Tennessee Bank v. Ebbert, 9 Heisk. 153; Severin v. Rueckerick, 62 Wisc. 1; Clark v. Robbins, 8 Kansas 574; Smith v. Conkwright, 28 Minn. 23; Harmon v. Hoskins, 56 Miss.

faith must be passed upon as a fact.1 All the supposed badges of fraud arising from the form of the conveyance and the stipulations in favor of the vendor which tend to raise a presumption of fraud are to be considered. But they will be open to explanation, and may be shown to be consistent with honesty of purpose and good faith in the parties to the contract.2 It is the fraudulent intent that avoids the deed; 3 in the absence of such intent, any conveyance which is good against the maker is good against his creditors who have not acquired a lien upon the very property conveyed. There are indeed many cases which hold that the court will as matter of law declare a conveyance which upon its face appears to be for the use of the maker to be absolutely void as against his creditors, just as it would refuse effect to a bond conditioned to do any unlawful act; and it may be admitted that the law will declare any instrument which contains provisions that are not reconcilable with an honest or legal intent to be void upon its face, because no evidence can change its character. But in all other cases where property is transferred with the alleged intent of hindering or defrauding creditors, this intent cannot be conclusively assumed by the law, but must be determined by the jury upon all the circumstances of the case. And this fraud

1 Jarvis v. Banta, 83 Ind. 528; Lockwood v. Harding, 79 Ind. 129; Jenners v. Doe, 9 Ind. 461; Marden v. Babcock, 2 Met. 99; Stewart v. Wilson, 42 Penn. St. 450; Peck v. Carmichael, 9 Yerger 325; Middleton v. Hoff, 15 Mo. 415; Kuykendall v. McDonald, Id. 416; Stewart v. English, 6 Ind. 176; Matthews v. Rice, 31 N. Y. 457; Hooser v. Hunt, 65 Wisc. 71.

2 Stevens v. Robinson, 72 Me. 381; Woodman v. Clay, 59 N. H. 53; Austin v. A. & W. Sprague Co., 14 R. I. 464; Spence v. Dunlap, 6 Lea 457; Creed v. Lancaster Bank, 1 Ohio St. 1; Reich v. Reich, 26 Minn. 97; Dewey, J., in Jones v. Huggeford, 3 Met. 515, 517.

3 Lucas v. Claflin, 76 Va. 269; Stix v. Sadler, 109 Ind. 254; Miller v. Lewis, 4 N. Y. 554; Burgert v. Borchert, 59 Mo. 80; Nicol v. Crittenden, 55 Ga. 497; Stokes v. Jones, 18 Ala. 734; Bogard v. Gardley, 4 Sm. & M. 302; Harris v. Burns, 50 Cal. 140.

Allen v. Cowan, 23 N. Y. 502; Payne v. Stanton, 59 Mo. 158.

5 Lesel v. Glaser, 32 Kans. 546; Armstrong v. Tuttle, 34 Mo. 432; Johnson v. McAllister, 30 Mo. 327; Billingsby v. Bunce, 28 Mo. 547; Stanley v. Bunce, 27 Mo. 269; Zeigler v. Maddox, 26 Mo. 575; Walter v. Wimer, 24 Mo. 63; Robinson v. Robards, 15 Mo. 459.

6 Smith v. Parker, 41 Me. 452; Bryant v. Mansfield, 22 Me. 360; Bowman v. Houdlette, 18 Me. 245; Wise v. Tripp, 13 Me. 9; Blood v. Palmer, 11 Me. 414; Freeman v. Burnham, 36 Conn. 469; Green v. Treiber, 3 Md. 11; Sturdivant v. Davis, 9 Ired. Law 365; Foster v. Woodfin, 11 Id. 339; Johnson v. Thweatt, 18 Ala. 741; Pope v. Wilson, 7 Ala. 690; Chophard v. Bayard, 4 Minn. 533.

Jewell v. Knight, 123 U. S. 426; Smith v. Craft, Id. 436; Norris v. McCanna,