innocent creditors of the fraudulent grantee which entitles them to priority as to the property fraudulently conveyed, where such creditors of the grantee have acquired the the first lien." The moral obligation resting upon the grantee holding under a fraudulent transfer is sufficient to support a reconveyance as against his creditors.72

§ 24. Rights and liabilities of grantees as to creditors and subsequent purchasers - As to creditors - As to property and proceeds thereof. The title acquired by a fraudulent grantee although good as against the grantor, will not prevail against the grantor's creditors, but the latter may impeach it as fraudulent and the property or its proceeds is subject to be taken by such creditors, to the extent that it is necessary for the satisfaction

of their claims;74 and this notwithstanding the grantee paid a valuable consideration for the property." In the latter case, if the creditor makes an excessive levy, he is liable to the grantee for damages.76 That the property was originally purchased and paid for by the grantee and the title transferred to his grantor for the purpose of defrauding his creditors, will not sustain the subsequent conveyance to him against an attack upon it by creditors of his grantor." A reconveyance to the fraudulent grantee from a bona fide purchaser to whom he had sold the property places him in no better position than he occupied originally, and he holds the property subject to the right of those who were creditors of the fraudulent grantor at the time of the original conveyance." A court of equity will not enjoin an execution creditor of a husband from proceeding against the wife's real estate where she claimed under a deed executed by the husband to a third person for the purpose of passing title to her, which deed the creditor of the husband alleges to have been fraudulently executed," nor will the court order a sale of the property at the instance of the fraudulent grantee, against the interests of the defrauded creditors, although such creditors have taken no steps to ascertain their rights. fraudulent grantee stands in the grantor's place in respect to cred

Bradt (Ch. App. 1898), 50 S. W. 778, lien to secure grantee's interests inferior to grantor's creditors.

Tex.-Choate v. McIlhenny Co., 71 Tex. 119, 9 S. W. 83.

Va. Fowes v. Rice, 9 Gratt. 568; Graysons v. Richards, 10 Leigh, 57. Can. King v. Keating, 12 Grant Ch. (U. C.) 29.

74. Rousseau v. Blow, 56 Hun (N. Y.), 639, 8 N. Y. Supp. 823; Campbell v. Whitson, 68 Ill. 240, 18 Am. Rep. 553; Eaves v. Williams, 10 Tex. Civ. App. 423, 31 S. W. 86.

More than is sufficient to satisfy the plaintiff's claim should not be directed to be paid by the transferee to the receiver, in an action by a judgment creditor to set aside as

A

fraudulent a transfer of property by the judgment debtor, although there are other creditors. Kaupe v. Bridge, 25 N. Y. Super. Ct. 459.

75. Bigby v. Warnock, 115 Ga. 385, 41 S. E. 622, 57 L. R. A. 754; Biggins v. Lambert, 213 Ill. 625, 73 N. E. 371, 104 Am. St. Rep. 238; Williamson v. Wachenheim, 58 Iowa, 277, 12 N. W. 302.

76. Eaves v. Williams, 10 Tex. Civ. App. 423.

77. Cloud v. Malvin, 108 Iowa, 52. 78. Schultz v. Brown, 3 Ohio Cir. Ct. 609, 2 Ohio Cir. Dec. 353.

79. Mahle v. Kurtz, 9 Pa. Co. Ct. 280.

80. Hayden v. Denslow, 27 Conn. 335.

itors of the grantor and has no equities or rights superior to those possessed by the grantor as against such creditors.81 Property or its proceeds acquired by means of a judgment collusively confessed and entered for the purpose of defrauding creditors and execution issued thereon, may be reached in equity by such creditors,82 although the creditors' judgments were not obtained until after the property seized under the fraudulent judgment had been sold by the sheriff, where by the issuance of executions on their judgments they have acquired a lien on the proceeds of such sale in the hands of the sheriff.83 The fact that the debts for which the judgments were confessed were just ones, owing from the judgment debtor to the judgment creditors, will not exonerate them from refunding any sums acquired by them in the attempt to place the debtor's property beyond the reach of other creditors, for the benefit of the failing debtor. Where property has been conveyed by a debtor in fraud of creditors, the latter may subject the property to the payment of their debts but they cannot take both the property and the consideration therefor.85 In jurisdictions where the conveyance is voidable only, the legal title to property transferred with intent to defraud creditors is in the fraudulent grantee, the intent not appearing on the face of the deed, and the title continues in the grantee, notwithstanding a sale of the property by a creditor on execution against the grantor, until the fraud is exposed and the transfer set aside.86 But the proceeds of the sale in the hands of

81. Kline v. McGuckin, 24 N. J. Eq. 411.

82. Taggart v. Phillips, 5 Del. Ch. 237, the proceeds of sale under such an execution will be applied to satisfy a judgment subsequently obtained by a bona fide creditor; French v. Commercial Nat. Bank, 199 Ill. 213, 65 N. E. 252, aff'g 97 Ill. App. 533; Phelps v. Smith, 116 Ill. 387, 17 N. E. 602. 19 N. E. 156.

83. Kohl v. Sullivan, 140 Pa. St. 35, 21 Atl. 247.

84. Hardt v. Schwab, 72 Hun (N. Y.), 109, 25 N. Y. Supp. 402.

85. Shumaker v. Davidson, 116 Jowa, 569, 87 N. W. 441; Allen v. White, 17 Vt. 69; Allen v. Mower, 17 Vt. 61, where a fraudulent grantee has paid a full consideration for the property a court of equity will not require him to pay the value of the property a second time for the benefit of creditors. See also Change of character of property and following proceeds, chap. IV, § 48, supra.

86. Brasie v. Minneapolis Brewing Co., 87 Minn. 456, 92 N. W. 340, 94 Am. St. Rep. 709, 67 L. R. A. 865.

Trover may be maintained by

the fraudulent grantee may be subjected, and, so far as any portion of the same can be traced into other property purchased or exchanged by him, a court of equity will fasten a trust upon it in favor of the creditors. A fraudulent grantee's title is valid, however, even as against a creditor of the grantor, to the extent that he may contest the validity of a creditor's claim,88 and that he may defend an action against him by showing defects in the proceedings therein.89

§ 25. Right to require resort to other property.-A fraudulent donee or vendee of personalty taken on execution against his vendor cannot object that the sheriff should have resorted to real property of the debtor before taking the personal, since the transfer to him is deemed void as against the creditors of his vendor. But, in a suit by a creditor to set aside an innocent voluntary conveyance, the grantee may set up a subsequent conveyance of other property, made with the express purpose of defrauding creditors, and have that set aside before the creditor is permitted to resort to the property first conveyed, especially in view of a statute providing that creditors may levy executions on property fraudulently conveyed, or sue to subject it.91

the fraudulent grantee against a creditor who takes the property from him without judicial process. Stockbridge v. Crockett, 15 Tex. Civ. App. 69, 38 S. W. 401.

87. Mandeville v. Avery, 124 N. Y. 376, 26 N. E. 951, 21 Am. St. Rep. 678; Bryant v. Young, 21 Ala. 264; Abney v. Kingsland, 10 Ala. 355, 44 Am. Dec. 491, 10 S. W. 816. See also Change in character of property and following proceeds, chap. IV, § 48,

given in the manner prescribed by statute; Rousseau v. Bleau, 8 N. Y. Supp. 823, the judgment against the fraudulent grantee should provide that he be allowed full opportunity to contest all claims not determined in the action.

89. Leonard v. Bryant, 56 Mass. 32, where a creditor of the grantor brings a writ of entry against the grantee, the latter may defend by showing that the levy was void for defects therein.

90. Flanders v. Batten, 50 Hun (N. Y.), 542, 3 N. Y. Supp. 728, aff'd 123 N. Y. 627, 25 N. E. 952.

91. Walker V. Bank of Manchester, 25 Ky. L. Rep. 1950, 79 S. W. 222.

§ 26. Intermingled goods.-Where a vendee fraudulently intermingles the goods purchased by him with his own, with intent to frustrate an attachment or execution by the vendor's creditors, and so intermingles them that the creditors cannot separate them, he must shoulder the consequences of his own wrong and must distinguish his own property so intermingled, or lose it, and the creditors may justify the taking of the whole." But if the intermingling was done innocently but in such manner that the vendee only can distinguish them, and the attaching creditor request the vendee to select his goods, which he refuses to do, this alone will not justify such creditor in taking the vendee's goods with those of the vendor. Where the vendee has sold some of the goods, and with the proceeds purchased others, which he mingled in stock, on proof of fraud, the creditor was entitled to the original goods, and the burden was on the vendee to distinguish them or prove their value, and if he refused to do so, the whole is subject to the creditor's claim." But where the new goods have been innocently mingled inseparably with the stock, the fact that the original purchase was constructively fraudulent does not render the newly purchased goods subject to attachment for a debt of the original vendor.

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§ 27. Increase or product of property generally.-The creditors of the vendor may claim from the vendee the natural in

92. Treat v. Barber, 7 Conn. 275; McDowell v. Rissell, 37 Pa. St. 164; 21 Pick. (Mass.) 298.

93. Treat v. Barber, 7 Conn. 275. 94. French v. Reel, 61 Iowa, 143, 12 N. W. 573, 16 N. W. 55.

95. Capron v. Porter, 43 Conn. 383.

The rule which should govern the master in taking the account must be to charge the defendant the actual value of the goods at the time of the transfer, with interest to the time when the purchaser had paid

some of the debts of his vendor according to an understanding between them at the time of the sale, and upon any balance remaining in the purchaser's hands until the final decree; and that he should receive credit, as if he had already paid the money, for his own notes and acceptances given to other bona fide creditors of his vendor and received in full payment of their debts, previously to his being notified of the filing of the creditor's bill. Steere v. Hoagland, 50 Ill. 377.