162 Eastman et al. vs. McAlpin. In Illinois, the possession inconsistent with the deed, is a fraud in law.-43 Law Lib. 47. So in Indiana, no evidence can be admitted to explain a possession, which is inconsistent with the contract.-43 Law Library, 47. And in New Hampshire, though the distinctions taken are somewhat refined, it has been decided, that an agreement subsequent to the sale, that the vendor should retain possession and pay rent, was no sufficient explanation of possession, for it did not disprove (indeed, under circumstances like the present, it may be said to prove) a secret trust.--Coburn vs. Pickering, 3 New Hampshire, 415. In Pennsylvania, the rule is carried to its utmost extent. -Clow and another vs. Woods, 5 Rawle, 275; 43 Law Library, 52. Sergeant & And the vendee's possession must continue; it must not go back to the vendor. -43 Law Library, 53. In Vermont, the principle is carried to the extent, that "no matter how honest. the conveyance may be in point of fact, the law pronounces it fraudulent per se, and void."-43 Law Library, p. 55. And the possession of vendee must be continuing; it must not go back to vendor. And though, in Alabama, the subject is involved in perplexity, and the decisions are contradictory; yet even there, though the consideration were ample, and bona fide paid, and the bill of sale recorded, and notice given to the world, these would not paid, ancient explanations of the possession. And see Hamilton vs. Russel, 1 316, 318. The fact that a price was VS. Franch, 309, 31 proceed upon the presumption, that there was a trust, express o tacit, for the use of the vendor, evidenced by the continued possession.-Smith Henry, 1 Hill's S. C. Rep. 16; 43 Law Library, pp. 30, 44. paid for the property by the vendee, does not vary the principle, except in degree it changes the presumption, according to the Cay the doctrine, and some other cases, from conclusive to prima facie evidence of Jinado but the presumption remains there, and will continue to remain, until The court below committed no error on this point. plaintiffs in error as it could in charging the jury, that the continued postin plas only prima facie evidence of fraud. And though the principle is ofteression Wared in reference to personal property, yet there is no reason in law why it should be so limited. The statute of 13 Elizabeth, c. 5, upon which all these cases pro rebutted by actual proof. It leaned as strongly the fraudulent feoffments," &c., "as well of lands and tene ceed, speaks as well of ments as of goods and chattels," and declares them to be void. There is not the Slightest distinction between lands and goods in this regard, and not the slightest reason why there should be, especially in the State of Georgia, which has by its legislation virtually broken down many of the English distinctions between the two. Schley's Dig. p. 214-15, sec. 1 and 2. And the decisions on this point expressly embrace lands. - Hildreth vs. Sands, 2 John. C. Rep. 46; Bates vs. Graves, 2 Ves. Jr. 293. But it is said-and that forms another branch of this exception-that the answers of the defendants below furnished sufficient evidence to rebut this prima facie presumption, and that the Judge repudiated the evidence, (as it is called,) because he said that it was not responsive to the allegations or interrogatories of this bill. There can be no doubt, we apprehend, that no part of an answer is admissible for the person making it, except when it responds to the bill. What he says in avoidance, he must prove, or it goes for nothing. -Hart vs. Ten Eyck, 2 John. C. Rep. 88, et seq. An examination of the bill and answers will show that the defendants were not interrogated except as to the fact of possession (which they would not have dared to deny ); but as to the agreement under which the vendor so retained possession no question is asked. See the bill. (The defendants are asked to state the agreement concerning the purchases; but they are not asked to state the agreement as to the retention of the possession, but only as to the fact of possession.) Eastman et al. vs. McAlpin. And besides, we have already seen that the great weight of authority is against the opinion that the fact of a re-hiring relieves the case from the legal inference of fraud, even though it be bona fide. Indeed, it is we that ought to complain upon this point. The court, upon very respectable authority, might have told the jury that the possession of the vendor was conclusive evidence, legal evidence of fraud; admitting of no explanation, either by the answers of defendants, though responsive to the allegations and inquiries of the bill, or by any other testimony. And the jury would have been authorized, under the facts of the case as set forth in the answers of the defendants below, to have come to the conclusion that even if the possession of vendor was only prima facie evidence of fraud, that, despite the answers, it was not rebutted. Looking to the inadequacy of compensation of the land-the value of three negroes-the fact that Philbrick, the alleged vendor, remained under the shelter of the same roof, eat off the same table, and was waited on by the same servants-the meagre sum that he paid his alleged vendee for the rent of a building that cost him $8,000-the inadequate hire of the negroes-the fact that Philbrick allowed him all the benefit of the cheap purchase of the lot in railroad bonds and this additional fact that it is admitted in the answers that all this benefit to Philbrick was by compact and agreement-all goes to show that Philbrick, in making this sale to Eastman, did gain a positive benefit, the benefit of keeping the same house at a very cheap rate, and of retaining at a very moderate hire, the same negroes and the same furniture, and that these were benefits that would not have been obtained by him, if a sale had been made to any other; and when we remember that-this was confessedly the last plank of Philbrick's property, and that Eastman was saving it for himself and his friends, at the expense of all the other creditors of Philbrick, we must be blind if we do not see that if it was not expressly agreed, it was at least tacitly implied, that such indulgence and benefit would be granted to him. See Smith vs. Henry, 1 Hill's S. C. Rep. 23. Philbrick The 2d, 3d, 4th and 5th exceptions bring us to the consideration of what is called for brevity the "Act of 1818," and which is found in Prin. Dig., p. 164. Let us read that act carefully, and analyze it; And first, let us ask for what purpose this act was passed-what was the old law-what the mischief it allowed-and what was the remedy? I believe that this is a cardinal rule in the construction of all remedial statutes.-1 Black. Com. top page, 59. 1st. What was the old law-how stood the common law at the making of this act? It allowed preferences to be given by an insolvent man to any creditor he pleased, in total exclusion of other creditors, however meritorious. 2d. What was the mischief? It was, that a man, who had become insolvent and reckless, selected out as his beneficiaries his relations and his friends, by an arbitrary proceeding, withholding frequently, at his own pleasure, from the poor and honest laborer, his slender pittance, which he had earned fairly, and which he was richly entitled to, but which was refused to him by his debtor, because such debtor chose, with the sanction of the law, to pay others whom he liked better, but who were not a bit more meritorious. But the injustice of such a proceeding frequently struck courts of justice, especially courts of equity, whose golden rule is, that "equity is equality," and though the courts could not legislate, yet, as we have seen in the case of Smith and Henry, and as we will see in the case of Goodrich vs. Downs, in 6 Hill's Rep., 439, 440, they strove to confine the unjust rule. 3d. And what was the remedy provided? The good sense of the Georgia Legislature, recognizing the rule that equality is equity, and that a man who was unable to pay his debts, held his remaining property virtually as a trustee for his creditors, proceeded to declare that this practice of selecting particular creditors was contrary to the first principles of equity and justice, and passed the act of 1818 to prevent such selection in future in the State of Georgia. Now the first idea that we have to combat is, that absolute deeds, containing no trust upon their face, are not within the spirit or intent or letter of this law. Eastman et al. vs. McAlpin. We must remember, before we take up this objection, that " it is the business of judges so to construe this act, as to suppress the mischief and advance the remedy."-1 Blackstone's Com. 59. The argument used by our adversary, if we correctly understand it, is, that the deed must be " in trust;" that is, it must appear upon its face that there is a trust. But what do the words " in trust" mean? They mean that if the property is conveyed to a person for the benefit of particular creditors; or, if the effect of the deed or transfer is to prevent an equal distribution of all the effects among the creditors of the insolvent, and to secure it to a few, that that is the trust for the benefit of the particular creditors, and therefore the deed is void. Surely the legislators were not so stupid, and the law is not so impotent, that while they and it condemn the selection of particular creditors in the most unmeasured terms, while they and it declare it to be contrary to the "first princi. ples of equity and justice;" and while the act was passed expressly "to prevent the mischief thereof," yet, if a party wishes to avoid the law, and to do the very thing it condemns, all that he has to do is to leave out the words "in trust" to make an absolute deed, and have the trust secret or apart from the deed, and he and his favored crew may smile at the law in triumph. It would be curious enough if this could be so, but it is not so; and the decisions both of Georgia and South Carolina on this very statute, expressly repudiate such an idea; and they hold the clear and correct doctrine, that if the agreement dehors the deed, or the effect of the deed, whatever its words may be, gives one creditor the preference over another of an insolvent man, the deed is void under the provisions of this act of 1818.-Cumming vs. Fryer, Dudley's Geo. Rep. 182; Railroad Co. vs. Claghorn et al., Speers' Equity Reports, 552, especially 553; Bank of Georgia vs. Schultz, ibid. 556; Chancellor Kent's MS. Opinion. And it is impossible to look at the facts of this case, and say that the effect of the agreement has not been to prefer particular creditors. Have not Eastman and Abbott received payment in full? Have not McAlpin and other creditors received nothing? But then we have to encounter another objection. It is said there were no trusts here, secret or otherwise; that the answers repudiate, expressly, such an idea. So the do, in words, and so they do the fact of insolvency; a fact that was established with such a power and force of testimony, as to be absolutely overwhelming. But when we look a little closer to the facts sworn to, the trusts develope themselves. But first, I call your attention to the fact, that the continued possession of the vendor, unexplained, does of itself raise the presumption of a secret trust for him, which is unrepelled, as we have shown; and the same presumption that would make the deed void, under the statute of Elizabeth, would, with redoubled force apply to this statute, and make the deed void under it-there is a secret trust, and the law declares it for the vendor here. And this is a trust in the property itself. But again, there were actual trusts. It is not necessary that the trust should be in the estate sold. The trust may be in the proceeds of the sale. If a trust is created by the contract of sale, that will bring it within the act of 1818. Who is a trustee ?-2 Story's Equity, p. 374, sec. 1041, p. 379, sec. 1045, p. 544, sec. 1196. Now let us apply this law. We say that there were several trusts here, and that Eastman, the vendee, was trustee. 1st. That out of the proceeds of purchase-money, he would pay off and deliver a note, so that Isaac W. Morrell, the accommodation endorser of S. Philbrick, the vendor, should be relieved. 2d. There was an express trust (it was part of the contract) for the benefit of Mrs. Abbott, a creditor of Philbrick; the very foundation of the contract between Philbrick and Eastman was, that the debt of Mrs. Abbott against Philbrick should be paid out of the purchase-money. 3d. There was an express trust for the children of J. Stone, or for Eastman, the Eastman et al. vs. McAlpin. vendee himself, (and I care not which it was,) for it was also agreed that this debt, due by Philbrick, should be paid out of the purchase-money. And here we may ask, to whom was this debt due by Philbrick, upon the loan of the money of J. Stone's children? Who was the legal owner thereof? Either Eastman or the said children. Phil Eastman was the guardian. He says, in his answer, that "he loaned " brick the money. It was due to him as guardian, to be sure, but still it was due to him. He was responsible to his wards, because the law required him to loan their money out only upon landed security. They had the equitable right, and he the legal. But suppose this be not so, and that this was legally due to J. Stone's children; then Eastman was, by the agreement of purchase, made a trustee for them, to pay their favored debt, in exclusion of other creditors of Philbrick. It seems to be perfectly immaterial to whom this debt was legally due. One thing is very certain, that it was a debt legally due by Philbrick; that it was an antecedent debt; that he was insolvent at the time of this agreement and conveyance; that by the very agreement itself, and certainly by its effect, this debt was paid in full, and other of his creditors were wholly excluded. And whether the agreement went to discharge a debt in full to Eastman himself, as one of the favored creditors, or went to relieve Eastman from his responsibility to his wards, on account of this note, or to relieve Morrell, the accommodation endorser of Philbrick, therefrom, or to pay the children of J. Stone this debt due to them, its extent, its object, and its effect, were to exclude certain creditiors of an insolvent man, and to pay others, chosen by him, in full. And if this can be sanctioned by a court of law, despite the statute, then is the statute a mockery and a delusion-a legal trap to catch the consciences of failing men and greedy creditors! An antecedent debt may be a good consideration in States which allow preferences, because the debt is the same as the money. It is not contrary to the policy; but in Georgia, under the act of 1818, the policy is different; preferences are forbidden. Any act done "by which" such preferences are given, are declared to be fraudulent. Receiving an antecedent debt as payment would be defeating the policy of the act of 1818. But then, it is said, that this very act of 1818, provides that any person in debt, may bona fide and absolutely sell any part, or the whole, of his estate, so that the same be free from any trust for the benefit of the seller, or any person appointed by him. Well, but what do the words bona fide mean? A transaction or sale made in conformity with, and not opposed to any law of force in the State. This very act has just said, that a sale or transfer, by which any creditor of an insolvent man is excluded from his just debts, is contrary to the first principles of equity and justice, and therefore not in good faith. It surely cannot mean, by these words, bona fide, to exempt a transfer or agreement made in the very teeth of this declaration, or to include a transfer whose intent and effect were to exclude certain creditors of an insolvent man, and to prefer certain other creditors, which it declares to be contrary to the first principles of equity and justice! Though it may be a mark of good faith that money has been paid, yet all the money in the world will not constitute an act, done against any law, as an act done bona fide. And besides, the statute says, that the sale spoken of in the proviso, must not only be done bona fide, but that the same must be free from any trust for the benefit of the seller, or any person or persons appointed by him. And that brings us back exactly where we started: for we allege, that the continued possession of vendor raises the legal presumption of a trust for him; and that there were trusts for the benefit of persons appointed by him, viz., Eastman, Morrell, Abbott, and J. Stone's we have tried to show, and think we have shown, both by reason and authority, that whether these trusts are on the face of the deed of transfer, or are shown to exist by other proof; whether the deed be absolute or not, if its effect children. And Eastman et al. us. McAlpin. be to create these benefits and illegal trusts, or if, to use the language of the statute, if the deed of transfer be one "by which any creditor is excluded," it is void. But it is said Eastman purchased for a cash consideration, and that therefore any agreement as to the application of the money could not invalidate these transfers under the act of 1818. Now, I admit, that though a man be insolvent, yet, that notwithstanding the statute of 1818, if there be no liens on his property, he may sell for cash or its equivalent (by which word I mean to exclude an antecedent debt) to any one; so that there be no illegal agreement between the parties, so that there be no trust secret or otherwise, to bring it within the mischief and the remedy of the act of 1818: and this is the true meaning of the proviso in that statute which we have just been considering; and I admit, that if an insolvent man, without any pre-contract to that effect, or any agreement contrary to the spirit of the act of 1818, but after the sale shall have been bona fide made, and without any kind of trust, secret or otherwise, for the vendor or any other person, should direct the vendee to apply certain portions of that purchase-money to third persons, that so far as the purchaser was concerned, that this would be the same thing as if paid to vendor himself. But this is the distinction that I draw, and it must be very obvious and this is the distinction that the court below acted upon-viz: the act of 1818 allows even an insolvent man to sell his property, and receive the cash; because the law presumes always that men will obey the law, and it cannot presume that they will violate it; and therefore, it presumes that the cash derived from this absolute and bona fide sale will be distributed ratably as the law directs. But can this presumption arise, when, by the very contract of sale, it is expressly agreed that the purchase-money, or the larger portion of it, shall not be distributed ratably, but shall be applied to a few of the creditors, in exclusion of the others. -Chancellor Kent's MS. Opinion. Eastman purchased, and Philbrick sold under an express agreement, the very inducement of the sale, that the purchase-money should not be paid to Philbrick, but should go to the payment of certain creditors in full, leaving the other creditors without a dollar. Will the law allow two men to agree to produce an effect which it declares to be contrary to the first principles of equity and justice, and then allow the illegal act to stand, and the unjust bargain to be consummated under its very eyes, and with its aid and sanction? The distinction then is between a purchaser paying the purchase-money as his vendor directs, and without a previous agreement, and understanding to do what is contrary to law, and a purchaser agreeing with a vendor to buy, provided the purchase-money should be applied to a purpose and in a way that the law prohibited. The Court would protect the first purchaser; but it would declare the act of the purchaser, secondly above named, as void, and leave him to reap the consequences of his illegal combination and confederacy. Even if he had paid a full consideration, if he had paid it under an agreement contrary to law, under an agreement to do that which the law calls fraudulent, he stands in no fairer aspect in the eye of the courts than if he had not paid anything.--Lowry vs. Pinson, 2 Bailey, 324; Thomas et al. vs. Jeter et al., 1 Hill, S. C. Rep. 380; Ayres vs. Moore, 2 Stewart Alabama Rep. 336-cited in 43 Law Library, notes to Twyne's case, p. 58. It may be said that this was not a voluntary conveyance-that Eastman was pressing. 1st. The first answer is, that Eastman did not press for these illegal conveyances; he only pressed for the payment of these debts. The offer of the sale of this property for these purposes came from Philbrick; Eastman only accepted these offers. 2d. Eastman, say the counsel opposed to us, was not a creditor of Philbrick; ey insist that the debt he represented as guardian of J. Stone's children, was due em and not to him. We believe it has never been decided, even under the |