CHAPTER XX. PENAL ACTIONS AND CRIMINAL PROSECUTIONS. Section 1. Penalties and actions therefor; nature and extent of liability in general. 2. What constitutes a fraudulent transfer. 3. Persons liable to penalty. 4. Fraudulent intent necessary. 5. Persons entitled to enforce penalty. 6. Conditions precedent to action to enforce. 7. Limitation; jurisdiction and venue; parties. 8. Pleading; defenses; evidence. 9. Criminal prosecutions. 10. Offenses; fraudulent transfers. 11. Preliminary affidavit on application. 12. Indictment. 13. Defenses. 14. Evidence. 15. Trial and review. Section 1. Penalties and actions therefor; nature and extent of liability in general. Statutes have been enacted in many of the states for the more complete discouragement of fraudulent transfers which impose certain penalties upon the guilty participants. The object of such statutes is to afford a remedy to creditors against any one to whom the property of their debtor, no matter in what it consisted, or how situated, has been fraudulently transferred for the purpose, and with the intent on the part of the debtor transferring, and the individual receiving such transfer, of concealing the same, so as "to secure it from creditors and prevent its attachment or seizure on execution." Such statutes are based generally upon the statute of 13 Elizabeth, which provided for a qui tam action. construed by the courts, as penal, 1. See the statutes of the various States. 2. Spaulding v. Fisher, 57 Me. 411. 3. Wilder v. Winne, 6 Cow. (N. They have been variously as remedial,5 and as penal as Y.) 284; Wright v. Eldred, 2 Aik. 4. Brooks v. Clayes, 10 Vt. 37. well as remedial." Such statutes are to receive a liberal construction for the purpose of setting aside a conveyance, but must be construed strictly when they inflict a penalty.' 8 9 § 2. What constitutes a fraudulent transfer.—If a judgment be valid in its inception, though execution be taken out with a view to delay and hinder creditors, and it have that effect, yet it is not fraudulent within the statute for the prevention of frauds, and the plaintiff is not liable to the penalty imposed by the statute. The taking of a negotiable promissory note by the debtor in concealment of a debt due him on account, even if taken to prevent its attachment on trustee process, is not a transfer within a statute providing for a penalty for aiding a debtor in the fraudulent transfer of his property. One is not liable under such a statute, unless the transfer is so far consummated as to be valid. between the parties, and as against all persons, except on the ground of fraud.10 Assisting Assisting a debtor to defeat creditors, by taking the title to realty purchased by the debtor's money and choses in action, subjects the person so taking title to an action under the statute, though the realty, not being in the debtor's name, was not subject to attachment or execution issued against him, since the money and choses in action which were the transaction fraudulently removed out of the reach of creditors were liable to be taken on those writs." The fact that the land fraudulently transferred could not be attached or seized on execution is no defense, since it might have been attached or seized when Pulsifer v. Waterman, 73 Me. 233; Platt v. Jones, 59 Me. 232; Quimby v. Carter, 20 Me. 218. 6. Wing v. Weeks, 88 Me. 115, 33 Atl. 779; Fogg v. Lawry, 71 Me. 215; Herrick v. Osborne, 39 Me. 231. 7. Brooks v. Clayes, 10 Vt. 37. 8. Wilder v. Winne, 6 Cow. (N. Y.) 284. 9. Skowhegan Bank v. Cutler, 49 Me. 315. 10. Skowhegan Bank v. Cutler, 49 Me. 315, in order to hold the transferee of shares of capital stock of a bank liable under the statute, it must appear that the transfer was recorded on the books of the bank. 11. Spaulding v. Fisher, 57 Me. 411. the relation of debtor or creditor was created.12 Under a statute imposing a penalty for being a party to a fraudulent note or judgment, the whole amount of such judgment is forfeited, although but part of the consideration was fraudulent.13 § 3. Persons liable to penalty.-Under a statute which provides that whoever knowingly aids or assists a debtor in the fraudulent transfer or concealment of his property to secure it from creditors, and prevents its attachment or seizure on execution, shall be liable for the penalty prescribed by the statute, a wife, who knowingly receives a conveyance of property purchased by her husband, for the purpose of hindering and delaying creditors, is within the statute.14 It need not be made to appear that a person who knowingly aids a debtor in the fraudulent transfer or concealment of his property derives a benefit therefrom to make him liable to the action of the creditor.15 A conveyance may be invalid, so as to be avoided by the creditors of the grantor, and the parties thereto not liable for the penalty of the statute.16 Where a person takes a conveyance to defraud creditors of the grantor, and pretends publicly to pay for it with money of his own, which in fact the grantor was privately furnishing him for that purpose, an action for the penalty has accrued, without proving that he afterwards justified the same." Where the name of a party is inserted in a transfer as vendee without his knowledge, if he afterwards ratifies it by accepting it, the transfer is perfected, and, if fraudulent, such vendee becomes liable for the penalty under the statute.18 § 4. Fraudulent intent necessary. In a qui tam action, 12. Pulsifer v. Waterman, 73 Me. 233. 13. Webb v. Long, 17 Vt. 587; Wright v. Eldred, 2 Aik. (Vt.) 401. 14. Warner v. Moran, 60 Me. 227; Hart v. Leete, 104 Mo. 315, 15 S. W. 976. Compare Burns v. Brown, 15 Vt. 174. 1 22 20 brought by a creditor against the debtor and his grantee," or against the creditor in a fraudulent judgment,2 or the grantee in a fraudulent conveyance, to recover the statutory penalty for fraudulent conveyances, the plaintiff cannot recover without showing that the conveyance or transfer was made and received with a fraudulent intent, which existed in the minds of both parties; but, where either party is composed of two or more persons, the fact that all such persons did not participate in the corrupt intent will not relieve the rest. If the defendant received the deed in good faith, for the purpose of securing a debt due to him, he would not thereby subject himself to the penalty." If the conveyance of the property was made with fraudulent intent on the part of the grantor, to which the grantee was privy and in which he participated, the grantee is liable for the penalty, notwithstanding he paid a full consideration for the property.25 § 5. Persons entitled to enforce penalty.-The statutory remedy against one who aids in a fraudulent transfer or concealment of a debtor's property is allowed to creditors only." It must appear that the plaintiff was a creditor at the time of the fraudulent transfer or concealment and continued to be such until the commencement of the action." A subsequent creditor cannot maintain an action for the penalty,28 but the right to sue for the penalty accrues immediately upon the making of the fraudulent conveyance, and a subsequent collection or assignment of the debt does not divest the right.29 A surety for a grantor is so far a creditor from the date of his suretyship that 19. Brooks v. Clayes, 10 Vt. 37, the intent is a question of fact. 20. Barnum v. Hackett, 35 Vt. 77. 21. Smith v. Kinne, 19 Vt. 564. 22. Meux v. Howell, 4 East, 1; In re Moroney, 21 L. R. Ir. 27. 23. Barnum v. Hackett, 35 Vt. 77. 24. Smith v. Kinne, 19 Vt. 564. 25. Colgate v. Hill, 20 Vt. 56. 26. Fowler v. Frisbie, 3 Conn. 320; Platt v. Jones, 59 Me. 232; Craig v. Webber, 36 Me. 504. 27. Percival v. Hichborn, 56 Me. 575; Craig v. Webber, 36 Me. 504; Thacher v. Jones, 31 Me. 528. 28. Pullen v. Hutchinson, 25 Me. 249. 29. Forbes v. Davison, 11 Vt. 660. he is a "party aggrieved" by a subsequent fraudulent conveyance of his principal, and his right to recover the penalty given by the statute is perfected by his subsequent payment of the debt.30 A creditor who has commenced an action to recover the penalty provided may by his subsequent conduct waive his right to further prosecute his suit. One entitled to recover against another in tort is not a creditor within the meaning of the statute. 32 33 § 6. Conditions precedent to action.-In order to maintain an action for the statutory penalty against a person for aiding a debtor in the fraudulent transfer or concealment of his property, it is not necessary that the creditor should first have obtained a judgment against his debtor. It is not necessary, in order to maintain an action for the statutory penalty, that the party be first convicted under a provision of the statute making it a misdemeanor for any person to make a conveyance with intent to defraud creditors. The general rule that a party who elects to rescind a sale must tender back to the other party the consideration received, applies to the case of a creditor who has assigned his account against his debtor to a third person in consideration of a sun less than the whole amount due thereon, and who brings an action against such third person under a statute giving a remedy for assisting a debtor "in a fraudulent transfer and concealment of his property. 35 24 § 7. Limitation; jurisdiction and venue; parties. An action of debt for the penalty for a fraudulent conveyance or concealment of his property by a debtor is not within the general statute of limitations,36 or within a statute limiting actions for penalties generally.37 An action to recover the penalty for being 30. Beach v. Boynton, 26 Vt. 725. 35. Percival v. Hichborn, 56 Me. 575. 36. Wilcox v. Fitch, 20 Johns. (N. Y.) 472. 37. Thacher v. Jones, 31 Me. 528; |