94 ered against the grantor before those under which the attaching creditors claim, which has been purchased by the grantee," but not for a debt due from the grantor as to which the grantee stood, before the conveyance, on the footing of creditors generally. Where only a part of the indebtedness is legal the conveyance may be allowed to stand to the extent of the valid indebtedness.95 Where the grantee procures the assignment of an outstanding mortgage, he is entitled to its payment out of the property, if the conveyance to him is set aside as fraudulent, but he is not entitled to hold the entire property under the mortgage, so assigned to him, if it be less than the value of the property." Where an absolute deed received by a creditor in good faith is held to be a mortgage, the creditor should be adjudged to have a lien on the premises for the amount of the debt secured." Where certain conveyances of a debtor are shown to be free from fraud, and to have been made as security, a decree for the sale of the lands thus pledged and for an account, when no redemption is sought, and no payment of the debt secured is offered, cannot be sustained.98 41. Where conveyance is actually fraudulent. Where a conveyance has been made with the actual intent to defraud creditors of the grantor and is fraudulent in fact, it will not be upheld as against creditors even to the extent of the con La.-Wang v. Finnerty, 32 La. Ann. 94. Me.-Augusta Sav. Bank v. Crossman (1886), 7 Atl. 396. N. J.-Merchants' Bldg., etc., Assoc. v. Barber (Ch. 1894), 30 Atl. 865. S. C.-Anderson V. Fuller, 1 McMul. Eq. 27, 36 Am. Dec. 290, where grantee is entitled to a preference in payment as the oldest execution creditor. 93. Brown v. Chubb, 135 N. Y. 174. 94. Lore v. Dierkes, 51 N. Y. Super. Ct. 144, 16 Abb. N. C. 47. 95. Sanford v. Wheeler, 13 Conn. 165, 33 Am. Dec. 389; Byrns v. Shaw, 45 Ill. App. 281. 96. Wells v. White, 142 Mass. 518, 8 N. E. 442. 97. Popfinger v. Yutte, 102 N. Y. 38, 6 N. E. 259, rev'g 49 N. Y. Super. Ct. 312; Lazarus v. Rosenberg, 70 App. Div. (N. Y.) 105, 75 N. Y. Supp. 11. 98. Cole v. Lee, 45 N. J. Eq. 779, 18 Atl. 854. sideration actually paid by the grantee. It is wholly void ab initio and cannot stand to any extent as security or indemnity. The grantee, as a general rule, is regarded as particeps criminis, or a guilty participant in the fraud, and is not entitled to reimbursement, either for purchase money or consideration, or for advances paid, or liabilities incurred, on account of it." The con 99. N. Y.-Hamilton Nat. Bank v. Halsted, 134 N. Y. 520, 31 N. E. 900, 30 Am. St. Rep. 693, aff'g 56 Hun, 530, 9 N. Y. Supp. 852; Baldwin v. Short, 125 N. Y. 553, 26 N. E. 928; Davis v. Leopold, 87 N. Y. 620, conveyance through third person to wife who had knowledge of the fraud; Weiser v. Kling, 38 App. Div. 266, 57 N. Y. Supp. 48, aff'g 5 N. Y. Annot. Cas. 196, 53 N. Y. Supp. 578; Union Nat. Bank v. Warner, 12 Hun, 306; Sands v. Codwise, 4 Johns. 536, 4 Am. Dec. 305. U. S.-Milwaukee, etc., R. Co. v. Soutter, 13 Wall. 517, 20 L. Ed. 543; Lynch v. Burt, 132 Fed. 417, 67 C. C. A. 305; Burt v. Gotzian, 102 Fed. 937, 43 C. C. A. 59; Bean v. Smith, 2 Fed. Cas. No. 1,174, 2 Mason, 252. Ala.-Pritchett v. Jones, 87 Ala. 317, 6 So. 75; Campbell v. Davis, 85 Ala. 56, 4 So. 140; Borland V. Walker, 7 Ala. 269. Ark.-Millington v. Hill, 7 Ark. 301, 1 S. W. 547. Cal.-Burke v. Koch, 75 Cal. 356, 17 Pac. 228; Swinford v. Rogers, 23 Cal. 233; Goodwin v. Hammond, 13 Cal. 168, 73 Am. Dec. 574. Ill.-Biggins v. Lambert, 213 III. 625, 73 N. E. 371, 104 Am. St. Rep. 238; Head v. Harding, 166 Ill. 353, 46 N. W. 890, aff'g 62 Ill. App. 302, advances subsequently made to grantor; Beidler v. Crane, 135 Ill. 92, 25 N. E. 655, 25 Am. St. Rep. 349; Ky.-Wood v. Goff, 70 Ky. 59; Willett v. Froelich, 28 Ky. L. Rep. 798, 90 S. W. 572; Lyons v. Lancaster, 14 S. W. 405. La.-Chaffe v. Gill, 43 La. Ann. 1054, 10 So. 361, under Civ. Code, art. 1977, the purchaser in bad faith will not be entitled to a restitution of the consideration, unless he proves that it inured to the benefit of the creditors, by adding to the amount applicable to the payment of their debts; Bank of Mobile v. Harris, 6 La. Ann. 811; Barker v. Phillips, 11 Rob. 199. See Metropolitan Bank v. Aarons-Mendelsohn Co., 50 La. Ann. 1047, 24 So. 125. Md.-Chatterton v. Mason, 86 Md. 236, 37 Atl. 960, the grantee not entitled to credit for money paid the grantor for counsel fees, nor money paid for the living expenses of the grantor. Mass.-Lamb V. McIntire, 183 Mass. 367, 67 N. E. 320; Holland v. Cruft, 37 Mass. 321. Mich.-Morley Bros. v. Stringer, 133 Mich. 690, 95 N. W. 978; How v. Camp, Walk. 427. veyance will not, as a general rule, be allowed to stand, in such a case, as security even for a bona fide indebtedness of the grantor to the grantee.1 A mortgage which is void as in fraud of creditors, because founded in part upon a pretended debt, will Minn.-Leqve v. Stoppel, 64 Minn. 74, 66 N. W. 208; Byrnes v. Volz, 53 Minn. 110, 54 N. W. 942; Thompson v. Bickford, 19 Minn. 17. Miss.-McLean v. Letchford, 60 Miss. 169, where a conveyance at a sale under a deed of trust was set aside as fraudulent as to creditors, the fraudulent grantee was not entitled to reimbursement for the amount he paid to redeem from the trust deed, though that was a valid encumbrance on the debtor's property; Stovall v. Farmers', etc., Bank, 16 Miss. 305, 47 Am. Dec. 85. Mo.-Allen v. Berry, 50 Mo. 90; Potter v. Stevens, 40 Mo. 229; Lampkin v. Peoples Nat. Bank, 98 Mo. App. 239, 244; McNichols v. Richter, 13 Mo. App. 515. Neb.-Farmers', etc., Nat. Bank v. Mosher (1903), 94 N. W. 1003. N. J.-McCanless v. Smith, 51 N. J. Eq. 505, 25 Atl. 211; Annin v. Annin, 24 N. J. Eq. 184, that a wife, as a voluntary grantee of her husband, has spent large sums of her own money in paying off mortgages on the land and improving it, does not entitle her to invoke the aid of the doctrine of estoppel against an antecedent creditor of the husband who was kept in entire ignorance of the conveyance. See Englebrecht v. Mayer (Ch. 1889), 17 Atl. 1081. N. D.-Daisy Roller Mills v. Ward, 6 N. D. 317, 70 N. W. 271. v. Anderson, 31 Or. Or.-Sabin 487, 49 Pac. 870. Pa.-Kohl v. Sullivan, 140 Pa. St. 35, 21 Atl. 247, money paid to discharge prior liens. 8 C.-Pettus v. Smith, 4 Rich. Eq. 197, where a prior mortgage is paid by the grantee for the purpose of forwarding the fraud, it will not be reimbursed on setting aside the conveyance; Dickinson v. Way, 3 Rich. Eq. 412; Parker v. Holmes, 2 Hill Eq. 95; Miller v. Tollison, Harp. Eq. 145, 14 Am. Dec. 712. Tenn.-Shepherd v. Woodfolk, 78 Tenn. 593; Alley v. Connell, 40 Tenn. 578; Books v. Caughran, 40 Tenn. 464; Brown v. Morristown Co-Operative Stove Co. (Ch. App. 1897), 42 S. W. 161. Va.-Hazelwood v. Forrer, 94 Va. 703, 27 S. E. 507. W. Va.-Timms v. Timms, 54 W. Va. 414, 46 S. E. 141; Webb v. Ingham, 29 W. Va. 389, 1 S. E. 816; Kanawha Valley Bank v. Wilson, 25 W. Va. 242; Livesay v. Beard, 22 W. Va. 585. Wis.-Bank of Commerce V. Fowler, 93 Wis. 241, 67 N. W. 423; Sommermeyer v. Sommermeyer, 89 Wis. 66, 61 N. W. 311; Ferguson v. Hillman, 55 Wis. 181, 12 N. W. 389. 1. N. Y.-Mandeville v. Avery, 124 N. Y. 376, 26 N. E. 951, 21 Am. St. Rep. 678; Woods v. Van Brunt, 6 App. Div. 220, 39 N. Y. Supp. 986; Baldwin v. June, 68 Hun, 284, 22 N. Y. Supp. 852. Ala.-Hall v. Heydon, 41 Ala. 242; Price v. Masterson, 35 Ala. 483. Iowa.-Rosenheim v. Flanders, 114 Iowa, 291, 86 N. W. 293. 2 not be sustained to the extent of the honest debt, as against creditors, although their claims may have been created since the filing of the mortgage, and with knowledge of its existence. A conveyance fraudulent in part will not be allowed to stand as security for a valid claim existing against the grantor at the time of the conveyance and purchased or paid by the grantee,3 or for expenditures made by the grantee to protect his title. These rules are based upon the theory that the rights of the creditors would be impaired by the allowance of such payments. But where all the rights which creditors would have had, had not the conveyance been made are preserved, the court may allow the conveyance to stand as security for the reimbursement of the grantee, for example, for the value of property given in exchange for the property fraudulently conveyed,' or for the value of the separate estate of the wife given in part consideration for the conveyance to the debtor's wife, or for money expended N. H.—Bailey v. Ross, 20 N. H. 302. Wis.-Sommermeyer V. Sommermeyer, 89 Wis. 66, 61 N. W. 311. 2. Levy v. Hamilton, 68 App. Div. (N. Y.) 277, 74 N. Y. Supp. 159. 3. Wood v. Hunt, 38 Barb. (N. Y.) 302; Byrnes v. Volz, 53 Minn. 110, 54 N. W. 942; Thompson v. Bickford, 19 Minn. 17; Phillips v. Chamberlain, 61 Miss. 740; McLean v. Latchford, 60 Miss. 169; Armour Packing Co. v. London, 53 S. C. 539, 31 S. E. 500. 4. Lynch v. Burt, 132 Fed. 417, 67 C. C. A. 305. 5. See cases cited in preceding notes to this section. 6. Bates v. McConnell, 31 Fed. 558; Barrow v. Bailey, 5 Fla. 9; Keuren v. McLaughlin, 19 N. J. Eq. 187, where land is conveyed to secure a bona fide debt, and subsequently the grantor and grantee fraudulently agree that the conveyance shall be 5 absolute, whereby other creditors would be defrauded, the grantee will be allowed to retain his priority to the amount of his bill, after which the property will be subject to the claims of creditors. Where, in an action on a bond given for a larger sum than was due, in order to defraud creditors, such creditors defended as to the amount due under a plea of payment, although the bond was wholly void as to creditors, yet on such plea the obligee is entitled to a verdict for the sum due. Numan v. Kapp, 5 Bin. (Pa.) 73. 7. Baldwin v. June, 68 Hun (N. Y.), 284, 22 N. Y. Supp. 852; Abney v. Kingsland, 10 Ala. 355, 44 Am. Dec. 491. 8. Harder v. Rohn, 43 Ill. App. 365; McKenzie v. Salyer, 19 Ky. L. Rep. 1414, 43 S. W. 450; Hull v. Deering, 80 Md. 424, 31 Atl. 416. 9 10 for the benefit of the property by paying off incumbrances on the property at the time of the conveyance, or other debts against the grantor due at the time of the conveyance. The grantee should be credited with the pro rata share to which creditors whom he has paid would be entitled, if the value of the property conveyed had been distributed among all the creditors."1 § 42. Care of property and expenses in general.-Where a conveyance is set aside as fraudulent as to the grantor's creditors, the grantee, on accounting for the use and occupation of the property conveyed to him and the rents and profits thereof while in his possession, is entitled to credit for such sums as he may in good faith have paid for taxes,12 interest on incumbrances," 9. Hamilton Nat. Bank v. Halsted, 134 N. Y. 520, 31 N. E. 900, 30 Am. St. Rep. 693; Smith v. Grimes, 43 Iowa, 356; Leqve v. Stoppel, 64 Minn. 74, 66 N. W. 208; Costello v. Prospect Brewing Co., 52 N. J. Eq. 557. 10. U. S.-Voorhees v. Blanton, 83 Fed. 234. Ill-Steere v. Hoagland, 50 Ill. 377, he should receive credit for notes and acceptances given to bona fide creditors. Ky.-Diamond Coal Co. v. Carter Dry Goods Co., 20 Ky. L. Rep. 1444, 49 S. W. 438. Md.-Chatterton v. Mason, 86 Md. 236, 37 Atl. 960, payment of claim of attaching creditor. Mass.-Ripley V. Severance, 23 Mass. 474, 17 Am. Dec. 397, where a surety receives property to indemnify him against his liabilities, and principal afterwards conveys to the surety all his right in said property for a consideration grossly inadequate, the transfer and settlement may avoided by creditors, but the surety may deduct from value of the property the amount for which he is be fairly liable, and the value of an annuity for which he is liable may be reduced to ready money, and so deducted. Mich.-How v. Camp, Walk. 427. Wis.-Croker v. Huntzicker, 113 Wis. 181, 88 N. W. 232. 11. Chatterton v. Mason, 86 Md. 236, 37 Atl. 960. 12. N. Y.-Loos v. Wilkinson, 113 N. Y. 485, 21 N. E. 392, 10 Am. St. Rep. 495, 4 L. R. A. 353, rev'g 51 Hun, 74, 55 N. Y. Supp. 410; Brown v. Townsend, 55 Hun, 605, 8 N. Y. Supp. 61. Ala.-Gordon v. Tweedy, 74 Ala. 232, 49 Am. Rep. 813; Potter v. Gracie, 58 Ala. 303, 29 Am. Rep. 748, a voluntary conveyance not tainted with actual fraud. Ky.-Bartram v. Burns, 19 Ky. L. Rep. 1295, 43 S. W. 248, 686. Mass.-Lamb V. McIntire, 183 Mass. 367, 67 N. E. 320. Mich.—How v. Camp, Walk. 427. N. J. Burne v. Partridge, 61 N. J. Eq. 434, 48 Atl. 770. Ohio.-Bomberger v. Turner, 13 Ohio St. 263, 82 Am. Dec. 438. |