ing goods &c. at high prices to the borrower, when a loan only was the real object. Where goods worth £1000, or sold in shops a little more, were sold to a young necessitous borrower, and his note taken for £2224, he was relieved in equity on paying the £1000, the amount he sold them for, and interest thereon, and his note was discharged. Equity holding also, that the lender did understand how the borrower would sell them in all probability in the lump. In various other ways the inadequacy of the consideration will appear in equity to be the effect of fraud, imposition, undue influence, duress, overreaching, or of mistake, misapprehension, or some other circumstance, evidence of fraud or of mistake. It is obvious, that in each case old age alone is not a sufficient ground to presume imposition, inadequacy of price or consideration must be a matter of calculation and judgment, depending on its circumstances, and so the evidence of the accompanying fraud, imposition, undue influence, mistake, &c. See several cases on this head, Eq. Ca. Abr. 478 to 483; also Newland on Contracts. CH. 32. Art. 13. The renewal of a lease obtained by the lessee for an inade- 1 Vesey jr, quate consideration, set aside on terms submitted to by the 286, Lord answer. And a fraud in the delivery of a lease executed Butler 289, bonâ fide, affects it as much as if used in obtaining the execu- 290.-Ch. tion, delivery making it a lease. And a manufacturer must 226, a. 2. account who obtains by collusion an unfair price. As to inadequacy, see Barret v. Gomeserra, Bunb. 94; Lowther v. Lowther, 13 Ves. jr. 95; Western v. Russel, 3 Ves. & Beam. 187; Butler v. Haskell, 4 Desaus. Ch. R. 687. Bennett v. s. 8, Fane's 4 Munf. 313. § 3. The third kind of fraud above, arising from the cir- 2 Atk. 324, cumstances and condition of the contracting parties. This Wade.-6 Bro. consists mainly in the advantage taken by one party of the P. C. 137.weakness of mind or of the necessities of the other, putting Ch. 32, a. 12, him under the power of the former, see Osmond v. Fitzroy, case-1 P. 2 Vesey 408; 8 Vesey 65. The case of Bennet v. Wade is W. 130.a very strong case, cited in sundry books. So Fane's case; the maker of the deed was very sick, and his mind very weak, though legally compos, and he died in two hours after executing it. Set aside merely because the maker of the deed could not have a mind adequate to the business he was about, and so might the more easily be imposed on, and though it contained a power of revocation. Johnson v. But equity does not set a deed aside merely because the 3 P. W. 130, maker of it is drunk at the time; otherwise, if any advantage in a note, is taken of his situation, or if brought into it by the other Middlecott. party. 1 Vesey 19, Cory v. Cory; 1 Ch. Ca. 202, Rich v. Sydenham. Сн. 32. 1 Vern. 237, 239, Ard glasse v. Muschamp, His necessities. Generally it is not sufficient to invalidate a contract that he who makes it is a distressed man, there must be also an inadequacy of price, or some contrivance, deception, art or cunning used, proving altogether an unfair and fraudulent advantage was taken of his situation at the time of the contract, in order that equity may relieve. 4 Bro. P. C. Same . Fitt. 198, 222. A man may legally make a contract in jail, but it must be having proper assistance and advice, and in a fair manner. And even courts of law will set aside powers of Vesey 635- attorney, signed by one in jail, if there be not an attorney New. on Con. attending on his part of his own procuring, employed by himself, and not procured by the person taking the warrant of attorney. 1 Atk. 409, Nichols v. 368. $ 4. The fourth kind of frauds above, is collected from the nature and circumstances of the transaction, as being an imposition on third persons not parties to the contract, usually creditors, purchasers, and parties in articles of marriage. As to articles of marriage hitherto they have been of too little use in the United States, and probably for some time will be, to deserve must notice at present; and so differently situated are parties in England, that such English articles have but little application here, especially as the English policy to build up or to preserve families and family distinctions, estates tail, estates to the eldest son, &c. enters deeply into such articles there, but not here. 5. As to creditors and purchasers the two countries do not differ materially in their principles or practice. The cases are numerous in law and equity in which contracts are set aside, rescinded, or held void, because fraudulent, made to wrong purchasers and especially creditors. Such cases arise under various heads which respect contracts; but more especially in cases of agreements on the statutes of fraud, as Ch. 11; of Bankruptcies Ch. 18; Ch. 39 of Insolvencies; various parts of this chapter; in cases of Insurance, Ch. 40; of Evidence, Ch. 80, &c.; cases of Rescinding Contracts, Chs. 169, 122 and 139; Ch. 225, 226, Matters in Equity. To all which may here be added a few late cases. 6. As to creditors. Observing that in regard to frauds affecting contracts, I have but occasionally made law and equity distinct parts of this work, because it will be found as to them in a majority of cases law and equity have a concurrent jurisdiction, and as to very many which equity ought to set aside, the law ought not to carry into effect;-hence of the same final result, though in different ways; and hence cases decided in equity are often found under legal heads, and vice versa, as far as contracts are deemed void, for fraud or imposition &c. especially as to creditors and purchasers. CH. 32. Stone v. In regard to creditors the 13 El. is material; in force here as principles of our common law, cited at large Ch. 109, a. 9, (also 27 El.) These acts being in suppression of fraud are construed liberally, Twyne's case, ante. The consideration must be good and the contract bonâ fide, both are essential. Id.; Edwards v. Harben was at law, see ante a. 1, s. 16, a. 3, Bamford v. Baron, id. a. 1, s. 17. One may mortgage land and remain in possession and no evidence of fraud, New. on Grubham. Con. 72; otherwise if his deed be absolute. So if one con- Tarback v Marbury. vey his lands to pay his debts, yet keeps the conveyance, this is fraudulent, 2 Vern. 510; as it gives him the election to set it up or not, as it may suit his purpose; see Cadogan v. Kennet, table of cases as to goods not delivered &c., Haselington v. Gill, Ch. 19, a. 1, s. 2, Jarman v. Woolloton, id. To these cases, as to the wife's separate goods add, the deed 10 Ves. 150. may be fraudulent if the consideration be grossly inadequate, Dewley v. or the wife permit third persons to treat the property in ques- Bayntun. tion as the husband's; this may be evidence, the assignment to her was made to defraud creditors. -6 East 257, 374.-Pr. Ch. §7. Grantor's possession, no fraud, &c. When one abso- New. on Con, lutely sells land or goods, as on the face of his deed, or mort- 285, Bucknal gages goods; and yet remains in possession as owner, the pos- v. Roiston. session is inconsistent with the deed, and fraud is presumed : but the presumption may be repelled, 1. If the modified interest of the vendor under the deed, makes it consistent with it, he keeps possession: 2. If such possession necessarily arise out of the nature of the transaction between the parties, and they have in view an honest purpose. As where the supercargo of a ship, going on a voyage, made a bill of sale of the goods he had on board her, and of the produce thereof, to be made as security to repay monies lent by the vendee; held valid in a suit in equity between him and the vendor's creditor; as the trust of those goods appeared on the face of the bill of sale; the vendor being trusted by the vendee, to sell them to his advantage. It will be observed the trust appeared in the instrument of sale itself, and this appears essential in several other cases. This is the principle of every bottomry, where the mortgagor of the ship or goods, remains in possession for the voyage. 1 Raym. 724. So if A's goods are seized on scire facias, and sold to B, Cole v. Dabona fide, for a valuable consideration; and B allows A to retain vies.-4 Dall. the goods in his possession, on condition he pays B the money as 208.-2 Bos. & P. 59, 60, he shall raise it, by the sale of the goods, this is valid, and not Kidd v. Rawfraudulent: like principle, Bul. N. P. 258; 1 Raym. 286. So linson. where A's goods were taken on execution, B, his brother-in-law, but no creditor, bought them under a bill of sale, and permitted A to continue in possession, in order that he might be able to carry on his business. A afterwards made a bill of sale to the deft., CH. 32. who took possession. Held, B's title was good. The goods Art. 13. were put up to sale, and the sheriff gave the bill of sale: the jury in this case were directed to inquire, " if B had purchased the goods with a view to defeat any execution, by any crediitors of A." Se also Barrow v. Paxton, Ch. 32, a. 4, s 7. Also Lady Lambert's case. Shep. Touch. 67; Stone v. Grubham, Cadogan v. Kennet, and Haselington v. Gill, above. These are all the cases in which possession has been retained by the vendor after conveyance, and that held good against creditors and subsequent purchasers, as affirmed in a note, Bos. & P. 60. On the other side, see not only Edwards v. Harben; Bamford v. Baron; Hamilton v. Russell, &c. above: but also Paget v Perchard, 1 Esp. 205; Wordall v. Smith, 1 Camp. 333, and Rice v. Sargent, and several cases cited in this; Ryall v. Roll, a. 1, s. 11. 1 Atk. 167, Ryall v. Roll. 5 Ves. 387.Gilb. R. 37. 8. A assigns goods to B, with condition, he is not to take possession till forfeited. This is fraudulent, as here is no modified interest in B, or any special purpose, as above, for A's continued possession; such a possession is not consistent with the deed. And Burnet J. in 1 Atk. 167, referring to Ryall v. Roll, a. 1, s. 11, said, "there is no distinction whether the sale be absolute or conditional. Courts of equity and juries are to consider upon the whole evidence, whether the conveyance was made with a view to defraud or not." As to goods, possession is viewed as evidence of ownership; not so as to lands; New. on Con. 377. The mortgagee of goods is viewed as the true owner, and ought to have actual possession ; but then an exception, as of goods at sea &c. See the cases Brown v. Strathcote, Ch. 44, a. 3, s. 6; Rolleston v. Hibbert, Ch. 44, a. 3, s. 7; Gardner v. Dutch, Ch. 171, a. 1, s. 15; Bourne v. Dodson, 1 Atk. 153, 157; 2 Vesey 272; Atkinson v. Maling, Ch. 32, a. 3, s. 3. A bond assigned must be delivered, except legally held by a third person, I Atk. 176; 1 Bro. C. C. 125. But book debts assigned, notice is enough, as they cannot be delivered; 1 Atk. 176; nor can fixtures be; 1 Atk. 172. § 9. A debtor may prefer one or more creditors. See the cases, English, and American. Insolvency, Ch. 39, Estwick v. Cailland. Ch. 32, a. 1, s. 34, and 8 D. & E. 528; 5 D. & E. 528; 5 D. & E. 238: Holdberd v. Anderson, Ch. 32, a. 1, s. 27; 4 East 1; 1 Burr. 478, 481; Linto v. Bartlett, Ch..32, a. 1, s. 33; Divon v. Watts, a. 1; Hague v. Roleston Ch. 168, a. 1, s. 5; Harmon v. Fisher, Ch. 32, a. 1, s. 33; Cowp. 629; See number 10 &c. 10. One insolvent cannot make voluntary conveyances, or New. on Con. 384, 385, 386.-3 Co. 81.-4 Cruise 398, Lush v. Wilkinson.-Stileman v. Ashdown, 2 Atk. 477.-Walker v. Burrows, 1 Atk. 98.-Fryer v. Flood, 1 Bro. C. C. 160.-8 Ves. jr. 195, 200.-Crisp v. Pratt, Cro. Car. 548, 551.-Lilly v. Osborne, 3 P. W. 298. Buying in trust for the insolvent's family, 2 Ch. Ca. 26.-1 P. W. 608; same as a voluntary settlement, 2 Vern. 67, 120, Bush v. Andrews, id. 683.-Fletcher v. Sidley, 2 Vern. 490.-Proctor v. Warren, See Ch. Ca. 78.-2 Ves. 11, Townsend v. Wyndham.-1 Ventr. 194.-1 Atk. person Cн. 32. Art. 13. 115.-2 Atk. 493.-2 Vern. 211.-2 Br. 384, Lush v. Ves. jr. 199. 1 Ves. jr. Wilkinson. 148.-3 Br. C. C. 627. 4 Id. 270.4 Dall. 304, 305.-4 East 207.-8 D. & assignees, v. 2 Vern. 284. Amb. 313. settlement, that is for love and affection. There are many cases to these points, English and American. As 1 Vesey 27; 2 Vesey 11; Amb. 121, Parker v. Proctor &c. ante; reasoning in Cadogan v. Kennett 5 Vesey 387; New. on Con. 383, 390, 387. On the 13th El. it must be proved the making a voluntary conveyance, was indebted at the time, and C. C. 90, 148. so as not to leave enough to pay all his debts, or to make him--5 Vesey jr. self insolvent; 1 Atk. 93; 2 Bro. C. C. 90; 5 Vesey 384. It is well observed that every man must be indebted more or less, even if he pays his bills weekly. Hence the word indebted in the 13th El. must mean something more ; and what better rule can there be, than a voluntary conveyance to a wife or child, which leaves the debtor, making it insolvent, that is, unable to pay his creditors; as then, he must make his voluntary conveyance, knowing all this; so with intent to E. 521, 531, defraud or delay them. If not indebted, natural love and af- Nunn & al. fection alone, is a good consideration against creditors. This Wilsmore, must mean when he remains clearly able to pay them, as then exr-Salk. there is no fraud, no mala fides. The true principle is laid skin. 555down by lord Hardwicke, who said, "if there be a voluntary 1 Atk. 275.conveyance of real estate or chattel interest, by one not in- 3 Ves. 478.debted at the time, though he afterwards becomes indebted, if that conveyance was for a child, and no particular evidence or badge of fraud, to deceive or defraud subsequent creditors, that will be good; but if any marks of fraud, collusion, or intent to deceive subsequent creditors appear, that will make it void." The same principles hold, as to after purchasers, and all acts for the suppression of fraud must be liberally construed; and though the grantor be not in debt, yet if he conveys evidently to cheat subsequent creditors or purchasers and so to defraud them, his case must be within these statutes 13 & 27 El.; but not every voluntary settlement, conveyance, or gift, even by one in debt, can be void, as the richest man must always owe some debts-small family bills, at least. Therefore, it was held in Lush v. Wilkinson, necessary to impeach a settlement on the wife after marriage, under 13 El. the husband must be proved to have been indebted at the time, and to the extent of insolvency. "It must depend on this whether he was in solvent circumstances at the time." Held a voluntary settlement valid, all the creditors, at the time it was made, being satisfied. The bankrupt laws out of the case," a debtor may assign all his effects for the benefit of particular creditors," per Lord Kenyon. He also said “I admit that if this were a voluntary deed, the law says it is fraudulent. It was for a valuable consideration, and not voluntary." And "courts will not weigh the consideration in very nice scales, if it be an honest transaction;"" very small consider |