creditor by the fraudulent grantee, is held in trust for the benefit of creditors. A fraudulent grantee holds the property in trust for the creditors of the fraudulent grantor, and, like any other trustee, he must preserve it intact for such creditors.24 The property while in his possession may be pursued and subjected to the claims of creditors of the grantor, but a personal judgment in their favor is not authorized.25 If the grantee lessens the value of the property by mortgaging it to a bona fide mortgagee, he is guilty of a breach of duty for which he must answer to the creditors in damages, and the measure of damages is the amount of the incumbrance.26 The grantee will be held to account to the creditor for the money received on the mortgage without regard to the use made of it," where the creditor's judgment was recovered before the mortgage was made by the grantee,28 unless its use inured to the benefit of the creditors of the fraudulent grantor.29 If the fraudulent grantee mortgages the property to an innocent person, it is not necessary in a suit by a creditor of the grantor to order a sale of the land before holding the fraudulent grantee personally liable for the creditor's claim.30 If the fraudulent grantee subsequently disposes of the property or otherwise places it beyond the reach of the creditors of the grantor,

23. Hollister v. Lefevre, 35 Conn. 456.

24. Mason v. Pierron, 69 Wis. 585, 34 N. W. 921.

25. McLean v. Cary, 88 N. Y. 391, the ordinary and usual course of proceeding for the court, upon setting aside the fraudulent transfer, would be to appoint a receiver to dispose of the property and satisfy the creditor's demand; Aspinall v. Jones, 17 Mo. 209; LeGierse v. Kellum, 66 Tex. 242, 18 S. W. 509; Vance Shoe Co. v. Haught, 41 W. Va. 275, 23 S. E. 553.

26. Mason v. Pierron, 69 Wis. 585, 34 N. W. 921, that the mortgage given also covered the fraudulent grantee's homestead is immaterial.

27. Coale v. Moline Plow Co., 134 Ill. 350, 25 N. E. 1016; Hubbell v. Currier, 92 Mass. 333; Mason v. Pierron, supra. Where such a mortgage is transferred to a bona fide purchaser for value, both the mortgagor and the mortgagee who had notice of the fraud are liable for the amount of the mortgage to the grantor's creditors. Hubbell v. Currier, supra.

28. Salt Springs Nat. Bank V. Fancher, 92 Hun (N. Y.), 327, 36 N. Y. Supp. 742.

29. Coale v. Moline Flow Co., 134 Ill. 350, 25 N. E. 1016; Mason v. Pierron, supra.

30. Dilworth v. Curts, 139 Ill. 508, 29 N. E. 861, aff'g 38 Ill. App. 93.

he is directly liable for the property so conveyed and equity will compel him to account for the proceeds thereof," or hold him liable to the creditors of the debtor for the value of the property.” Where the fraudulent grantee is the debtor's wife she will be treated as an involuntary trustee for the existing creditors, and if she conveys the same away to innocent purchasers and retains the proceeds or her separate estate has the benefit thereof, she may be proceeded against personally for the value thereof. A

fraudulent assignee of accounts is chargeable, at the suit of the assignor's creditors, for all money collected by him on such accounts, for all accounts which he might have collected by the use of reasonable diligence, and for those accounts which he fails to produce or account for. Where choses in action have been transferred, the fraudulent vendee must account for the amount thereof, less responsible costs of collection.35 But the creditors of the grantor cannot hold liable the fraudulent grantee, who received property of the debtor, but who has in good faith restored it to the debtor, or loaned it to him," or used it in paying the bona fide debts of the debtor, before the creditors have recovered a judgment against the debtor and fixed their rights by the filing of a bill in equity.

36

38

§ 34. Conveyances in name of third person.-If a conveyance of property is made to one person, and the purchase money is paid by another, a resulting trust is thereby created, and the person who has the legal title will hold the same for the use and benefit of the person paying the money; and, if the transaction was had with the intent of defrauding creditors, the property will be held subject to be taken by the creditors of the person

34. Dilworth v. Curts, 139 Ill. 508, 29 N. E. 861.

35. Muskegon Valley Furniture Co. v. Phillips, 113 Ala. 314, 21 So.

822.

36. N. Y.-Cramer v. Blood, 48 N. Y. 684. See Henderson v. Brooks, 3 Thomp. & C. 445.

Mass.-Rayner V. Whicher, 88 Mass. 292.

N. H.-Gutterson v. Moorse, 58 N. H. 529.

Ohio.-White v. Brocaw, 14 Ohio St. 339; Swift v. Holdridge, 10 Ohio, 230, 36 Am. Dec. 85.

Va.-Norris v. Jones, 93 Va. 176, 24 S. E. 911.

37. Norris v. Jones, 93 Va. 176, 24 S. E. 911.

38. Ala.-Cottingham v. Greeley Barnham Grocery Co., 129 Ala. 200, 30 So. 560, 87 Am. St. Rep. 58, although he is forced to pay the proceeds of the property by means of the process of attachment.

Mass.-Thomas V. Goodwin, 12 8 Mass. 140.

8. D.-Sprague v. Ryan, 11 S. D. 54, 75 N. W. 390.

Wis. Ferguson V. Hillman, 55 Wis. 181, 12 N. W. 389.

39

who paid for the property." In some jurisdictions it is provided by statute that a grant to one person, the consideration for which is paid by another, shall be presumed fraudulent as against existing creditors of the person paying the consideration, and unless a fraudulent intent is disproved, a trust results in favor of such creditors.40 Under the New York statute of uses and trusts no resulting trust arises in such case, unless the consideration was paid at or before the execution of the conveyance, by the person procuring the conveyance." If the grantor makes a purchase with his own money or credit, no subsequent transaction, whether of payment or reinbursement by another, can produce such a trust. But where a note is given for the consideration upon such a conveyance, although it was not delivered until the day after the delivery of the deed, if it appears that the deed was delivered in expectation of receiving the note, and the note was delivered to close the transaction, the two may be regarded as contemporaneous, for the purpose of creating a resulting trust allowed by statute in favor of creditors of a person paying the consideration for a grant to another." Where the purchaser of land causes a conveyance to be made to his wife,

39. Gardiner Bank v. Wheaton, 8 Me. 373; Bobb v. Woodward, 50 Mo. 95; Bridges v. Bidwell, 20 Neb. 185, 29 N. W. 302; Dewey v. Long, 25 Vt. 564. See Purchase of property in name of third person, chap. II, § 5, supra.

40. N. Y.-Niver v. Crane, 98 N. Y. 40 (1 Rev. St., p. 728, §§ 51, 52); McCartney v. Bostwick, 32 N. Y. 53, aff'g 31 Barb. 390; Wood v. Robinson, 22 N. Y. 564; Garfield v. Hatmaker, 15 N. Y. 475; Donovan v. Sheridan, 37 N. Y. Super. Ct. 256; Jackson v. Forrest, 2 Barb. Ch. 576.

Mich. Fairbairn v. Middlemiss, 47 Mich. 372, 11 N. W. 203.

Minn.-Overmire v. Haworth, 48 Minn. 372, 51 N. W. 121, 31 Am. St.

43

Rep. 660 (Gen. St. 1878, §§ 7, 8); Wolford v. Farnham, 47 Minn. 95, 49 N. W. 528; Leonard v. Green, 30 Minn. 496, 16 N. W. 399, 34 Minn. 137, 24 N. W. 915; Foster v. Berkey, 8 Minn. 351.

41. Niver v. Crane, 98 N. Y. 40. 42. Niver v. Crane, 98 N. Y. 40.

43. Kline v. McDonnell, 63 Hun (N. Y.), 177, 16 N. Y. Supp. 649, and where a note is given for the consideration, although it is not paid by the maker, and only a part of it is paid by his personal representative, a trust results as to a creditor of the maker, existing at the time of giving the note, but only in respect of so much of the land as is represented by the amount paid.

45

with an intent to defraud his creditors or to place the property beyond the reach of his then existing creditors, a trust will result in their favor." Where an insolvent invests in the name of his wife, or expends in advancing the value of her separate estate, money which he has acquired by his labor, a resulting trust may arise in her property in favor of his creditors to the extent of the money so invested or expended. But where he is at the same time indebted to the wife, and she is not guilty of actual fraud in the transaction, she cannot be compelled to account to his creditors for the money so advanced until her claim against her husband is satisfied.46 If the husband agrees to pay off a mortgage on the premises as a part of the consideration, the fact that he does not pay it off until after the conveyance does not apportion the trust or make it a trust pro tanto only." If the wife conveys away property impressed with such a trust to innocent purchasers she may, at the election of the receiver, be proceeded against personally for the value thereof.48 Where a grantee, who holds land impressed with a trust in favor of the creditors of

44. N. Y.-Kline

v. McDonnell, supra; Jencks V. Alexander, 11 Paige, 619.

Ark.-Stix v. Chaytor, 55 Ark. 116, 17 S. W. 707. See Hershy V. Latham, 42 Ark. 305.

Ind.-Hanna v. Aebker, 84 Ind. 411, under Rev. St. 1881, §§ 752, 2974, 2975.

Ky.-Adam v. Orear, 3 Ky. L. Rep. 605, under Gen. St., chap. 63, art. 1, 20. See Hinkle v. Gale, 11 Ky. L. Rep. 126, 11 S. W. 664.

Minn.-Chamberlain v. O'Brien, 46 Minn. 80, 48 N. W. 447. See also Minnesota cases cited in note 2, supra.

N. J.-Belford v. Crane, 16 N. J. Eq. 265, 84 Am. Dec. 155.

N. C.-Thurber v. LeRoque, 105 N. C. 301, 11 S. E. 460, where the consideration is furnished in part by

the husband and in part by the wife, the wife holds a share of the land, in proportion to the amount paid by the husband, in trust for his creditors, subject to his claim to a homestead, and the balance for herself absolutely; and it is immaterial what amounts are furnished by each for subsequent improvements.

Ohio. Jaffray v. Weatherby, 12 Ohio Cir. Ct. 205, 5 Ohio Cir Dec. 201; Woodrow v. Sargent, 5 Ohio Dec. 209, 3 Am. L. Rec. 522.

45. Whedon v. Champlin, 59 Barb. (N. Y.) 61.

46. Oliver v. Moore, 26 Ohio St. 298.

47. Leonard v. Green, 34 Minn. 137, 24 N. W. 915.

48. Chamberlain V. O'Brien, 46 Minn. 80, 48 N. W. 447.