Sec 377

The subject of voidability of fraudulent conveyances is one which can only be treated in outline in such a work as the present. The following points, however, may be specifically noticed: -

1. Intent to defraud is the test of voidability. If the object of a sale be to defraud creditors, no matter what consideration was paid by the purchaser, the sale must be set aside.1.

2. Fraud is to be inferred from all the circumstances of the case.2 For this purpose other acts of fraud, forming part of the same system, are admissible.3 Want of consideration is an important ingredient of proof in such an issue. Supposing a party knows himself to be insolvent, the fact of his parting with valuable property without consideration is naturally to be imputed to a desire to withdraw such property from his creditors' grasp. Hence, as a rule, all voluntary conveyances with intent to hinder creditors are void; and this is the rule prescribed by the statute of Elizabeth, with the proviso that bona fide transfers for a good consideration are not thereby to be avoided. But to bring a transfer under the proviso, it must not merely be for a good consideration; it must also be in good faith.4 Whenever an intention to defraud can be shown,.

Conditions of voidability.

1 Twyne's case, 1 Sm. Lead. Cas. 7th Am. ed. 33 et seq., where there is a full exposition of state legislation down to 1872; Chandler v. Van Roader, 24 How. U. S. 224; Kempner v. Churchill, 8 Wall. 362; Blennerhasset v. Sherman, Sup. Ct. U. S. 1882, 26 Alb. L. J. 116, cited supra, sec 377; Robinson v. Holt, 39 N. H. 557; Bridge v. Eggleston, 14 Mass. 245; Harrison v. Phillips Acad., 12 Mass. 456; Gragg v. Martin, 12 Allen, 498; Wadsworth v. Williams, 100 Mass. 126; Levick v. Brotherline, 74 Penn. St. 149; Harrison v. Jaquess, 29 Ind. 208; Henry v. Hinman, 25 Minn. 199; Thorpe v. Thorpe, 12 S. C. 154.

2 Supra, sec 239; see "Wh. on Ev. sec 33, and cases there cited; Towne v. Fiske, 127 Mass. 125; Blaut v. Gabler, 77 N. Y. 461; Sandlin v. Robbins, 62 Ala. 477; Harman v. Hoskins, 56 Miss. 142.

3 Wh. on Ev. sec 38 et seq.

4 Bispham's Eq. sec 243; and see generally as to inference of fraud, Huntingford v. Massey, 1 F. & F. 690; Lincoln v. Claflin, 7 Wal. 132; Cragin v. Tarr, 32 Me. 55; Knight v. Heath, 23 N. H. 410; Pierce v. Hoffman, 24 Vt. 525; Cook v. Moore, 11 Cush. 216; Stockwell v. Silloway, 113 Mass. 384; Horton v. Weiner, 124 Mass. 92; Cary v. Hotailing, 1 Hill, 311; Booth v. Powers, 56 N. Y. 22; Brown v. Shock, 77 Penn. St. 471; Brinks v. Heise, 84 Penn. St. 246; Battles v. Laudenslager, 84 Penn. St. 446; McAleer v. Hor3ey, 35 Md. 439; Brink v. Black, 77 N. C. 59; Spivey v. Wilson, 31 La. An. 653; King v. Moon, 42 Mo. 551; Williams v. Barnett, 52 Tex. 130.

In Lehman v. Kelly, Sup. Ct. Ala. 1881, we have the following from then an agreement to effect such intention will be held void.1 So far as concerns frauds on creditors, the principle which is adopted in the Roman law, and which was part of the old English common law, was affirmed by the statutes of 50 Edward III. ch. 6, of 3 Henry VII. ch. 4, of 13 Elizabeth, ch. 5, and of 27 Elizabeth, ch. 4, by which gifts and conveyances for the purpose of defrauding creditors were pronounced void. These statutes, recapitulating as they do sound ethical principles as well as rules of the Roman and old English law, have been liberally construed by the English courts. In this country, when not expressly re-enacted, they have been held in force as part of the common law.1

Stone, J.: "In Crawford v. Kirksey, 55 Ala. 282, 293, speaking of sales upon a new consideration, and not in payment of a debt, we, after mature consideration, announced the following proposition: 'If the seller be insolvent, or in failing circumstances, and the purchaser knows, or is in possession of information reasonably calculated to stimulate inquiry, and which, if followed up, would lead to the discovery that the purpose of the seller is to put his property beyond reach, or otherwise to delay, hinder, or defraud his creditors, then a purchase under these circumstances, though full consideration is paid, is invalid as against creditors. But, if the purchase be made without such knowledge and without such information as reasonably to put him on inquiry, he acquires a good title, no matter how fraudulent the intent of the seller.' In Covanhovan v. Hart, 21 Penn. St. 495, Chief Justice Black declared the principle in the following language: '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 assists in executing it, his title is worthless as against creditors, though he may have paid a full price.' Hopkins v. Langton, 30 Wis. 379. It will be seen that under those authorities a sale, such as we are considering, is fraudulent and inoperative, if intended by an insolvent seller to delay, hinder, or defraud his creditors, and that intent be known to the purchaser, or if he be in possession of information reasonably calculated to stimulate inquiry, and which, if followed up, would lead to a discovery of the seller's fraudulent purpose. The underlying morals on which this sound principle rests are, that it is the legal duty of every debtor to keep his property open to the claims of his creditors and to make no effort to secrete it, or to sell it otherwise than for the honest purpose of paying his debts. If he secrete his property, or if he sell it with the intent or purpose of delaying, hindering, or defrauding his creditors - either one of the three purposes stamps his conduct as fraudulent, even if he sells for the full value, and the purchaser, although paying full value, acquires no valid title against the vendor's creditors if he aid him in consummating the fraud. He renders sufficient aid to invalidate his purchase when he knows the seller's fraudulent 'intention in making the sale, or has knowledge of facts and circumstances naturally and justly calculated to awaken suspicion in the mind of a man of ordinary care and prudence of the fraudulent intent of the seller. The cases of Brown v. Force, 7 B. 'Mon. 357, and Brown v. Smith, ib. 361, cannot be followed."