53

money paid or advanced by him, on the faith of the title before notice of the fraud.52 But he is not entitled to any protection for advances made after he has notice of the fraud in the conveyance to his grantor, or as to purchase money paid by him after service of summons upon him in an action by a creditor of his vendor's grantor to set aside the conveyance. A purchaser from the grantee in a conveyance to defraud creditors, without notice of the fraud, is nevertheless liable to any of such creditors for any portion of the purchase money remaining unpaid after notice of the fraud," and a court of equity will give such a creditor a lien upon the premises for that amount.56

§ 60. Mortgages and pledges.-A bona fide holder of a mortgage or pledge from a fraudulent grantee, without notice of the fraud, is a bona fide purchaser to the extent of his interest in the mortgaged or pledged property, within the intent of the statutes of frauds, and to that extent his rights are paramount and superior to those of the fraudulent grantor's creditors, who had not acquired a prior lien.57 Such a mortgage is valid as to a subse

52. Paddock v. Fish, 10 Fed. 125; Thames v. Rembert, 63 Ala. 561; Graves v. Winans (N. J. Ch. 1886), 4 Atl. 645; Holmes v. Gardner, 50 Ohio St. 167, 33 N. E. 644, 20 L. R. A. 329. See Dugan v. Vattier, 3 Blackf. (Ind.) 245, 25 Am. Dec. 105.

53. Thames v. Rembert, supra. 54. Hamlin v. Wright, 26 Wis. 50. 55. Dowell v. Applegate, 7 Fed. 881; Tappan v. Harbison, 43 Ark. 84; Vance Shoe Co. v. Haught, 41 W. Va. 275, 23 S. E. 553.

56. Dowell v. Applegate, supra. 57. N. Y.-Murphy v. Moore, 23 Hun, 95; Ledyard v. Butler, 9 Paige, 132, 37 Am. Dec. 379.

U. S.-Freiburg v. Dreyfus, 135 U. S. 478, 10 Sup. Ct. 716, 34 L. Ed. 206.

Ill.-Bradley v. Luce, 99 Ill. 234; Fox v. Peck, 45 Ill. App. 239.

Mass.-Carroll v. Hayward, 124 Mass. 120; Hubbell v. Currier, 92 Mass. 333; Curtis v. Riddle, 89 Mass. 185.

Mich.-Farrand v. Caton, 69 Mich. 235, 37 N. W. 199.

Minn.-Noblet v. St. John, 29 Minn. 180, 12 N. W. 527.

Mo.-Block v. Chase, 15 Mo. 344; Lee v. Wilkins, 79 Mo. App. 159.

N. H.-Lewis v. Dudley, 70 N. H. 594, 49 Atl. 572.

N. J.-Danbury v. Robinson, 14 N. J. Eq. 213, 82 Am. Dec. 244.

N. C.-Potts v. Blackwell, 56 N. C. 449.

Ohio.-Holmes v. Gardner, 50 Ohio St. 167, 33 N. E. 644, 20 L. R. A. 329;

quent judgment creditor,58 is a lien paramount to that of a subsequent judgment against the fraudulent grantor and a sheriff's deed issued thereunder,59 and is valid as against attaching creditors of the original grantor, whose attachments issued subsequent to the execution and recording of the mortgage. 60 Such a mortgagee may purchase for his own benefit an outstanding title which is paramount to the fraudulent grantor's title.61 Where a suit brought by creditors to have the pledge set aside attacks only the reality of the pledge, the fact that the pledgee pays the balance of the loan pending such suit, before it is amended so as to attack the original fraudulent conveyance, does not affect his rights.6 The retention of possession by the grantor will not charge tho mortgagee with notice of the fraud, nor will he be affected by notice of levies made upon the property subsequent to the conveyance.

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§ 61. Creditors of grantee.-A fraudulent conveyance being voidable only at the election of the grantor's creditors, and vesting in the grantee a leviable title, judgment creditors of a fraudulent grantee, who extended credit to the latter upon the strength of his ownership of the property, with no knowledge that any one

Shorten v. Drake, 38 Ohio St. 76, rev'g 8 Ohio Dec. 184, 6 Wkly. L. Bul. 202.

58. Quinnipiac Brewing Co. v. Fitzgibbons, 73 Conn. 191, 47 Atl.

128.

59. Clapp v. Saunders, 75 Iowa, 634, 36 N. W. 655.

60. McLeod v. O'Neill, 15 Ky. L. Rep. 152, 22 S. W. 220.

61. Gjeniess v. Fladeland, 27 Minn. 320, 7 N. W. 355.

62. Freiburg v. Dreyfus, 135 U. S. 478, 10 Sup. Ct. 716, 34 L. Ed. 205.

63. Shorten v. Drake, 38 Ohio St. 76.

A house built upon the land of another, with his consent, is per

sonal property. If the owner of the house sells it to the owner of the land, it thereby becomes a part of the realty, and although such sale is made with fraudulent intent, yet a subsequent mortgage of the land by the owner to an innocent third person, with covenants of warranty, will prevent a creditor of the fraudulent vendor from establishing a title to the house as personal property, by an intervening attachment and a subsequent levy and sale upon execution, so as to enable him, after purchasing it at the sheriff's sale, to maintain an action of tort against the fraudulent vendee for the conversion of it. Curtis v. Riddle, 89 Mass. 185.

claimed that the conveyance to him was in fraud of creditors, and who subjected the property to the payment of their claims before proceedings by the creditors of the fraudulent grantor to rescind the conveyance, are entitled to priority over the latter, and the proceeds of the property obtained by the creditors of the fraudulent grantee on execution sale cannot be reached by the latter." But creditors of the fraudulent grantor, who obtained judgments after the conveyance, gain a superior lien to that of a subsequent mortgagee of the grantee, whose mortgage is merely a further security, and who does not show that he took the mortgage without notice of the fraud.65 Until the creditors of a fraudulent grantee, however, have acquired a lien upon the property, they have no right or claim to the property superior to that of the grantor's creditors."

66

62. Purchaser from bona fide grantee.-A debtor may dispose of his property with the intent to defraud his creditors, and yet give a good title to one who pays value, and has no knowledge of, and does not participate in, the fraud; and the latter may accordingly confer a good title even upon one who knew of the fraud, but did not participate in it." The rule is well established that a purchaser from a bona fide grantee without notice takes a good title, as against the original grantor's creditors or execution

64. Standard Nat. Bank v. Garfield Nat. Bank, 70 App. Div. (N. Y.) 46, 75 N. Y. Supp. 28; Applegate v. Applegate, 107 Iowa, 312, 78 N. W. 34; Stockton v. Craddick, 4 La. Ann. 282; Giggs v. Chase, 10 Mass. 125; Parker v. Freeman, 2 Tenn. Ch. 612. Compare Winslow v. Stewart, 7 Ky. L. Rep. 368.

In New Jersey it is held, however, that a judgment creditor of a fraudulent grantee is not a purchaser within the statute of frauds (Revision, p. 447, § 15), and that he acquires no title or lien prior to that

of the judgment creditors of the grantor whose debts existed at the time of the fraudulent conveyance. Richardson v. Gerli (N. J. Ch. 1903), 54 Atl. 438; Couse v. Columbia Powder Mfg. Co. (N. J. Ch. 1895), 33 Atl. 297.

65. Manhattan Co. v. Evertson, 6 Paige (N. Y.), 457.

66. Davis v. Graves, 29 Barb. (N. Y.) 480. See Haymaker's Appeal, 53 Pa. St. 306. See also Creditors of grantee, chap. XIV, § 23, supra.

67. N. Y.—Adelberg v. Horowitz, 32 App. Div. 408, 52 N. Y. Supp. 1125.

purchasers, whether or not he had notice that the conveyance to his grantor was for the purpose of defrauding the creditors of the original grantor. This rule applies to the voluntary holder of a title from a bona fide grantee," and also whether the purchaser had paid any or an inadequate consideration for the property, or paid only a part in cash and gave his notes secured on the property for the balance," and where the conveyance was intended as a mortgage between the parties." 72 The rule also applies to a purchaser from a bona fide mortgagee of the fraudulent grantee, and a purchaser under the mortgage title is not affected by the pendency of a suit to set aside the conveyance for fraud."

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§ 63. Original grantor claiming under bona fide purchaser from grantee. The principle that one without notice can convey to one with notice, as set forth in the preceding section, is subject to an exception, where the transfer is back to him who is found

68. N. Y.-Adelberg v. Horowitz, supra.

Conn.-Walp v. Mooar, 76 Conn. 515, 57 Atl. 277.

Dak.-Young v. Harris, 4 Dak. 367, 32 N. W. 97.

Ga.-Colquitt v. Thomas, 8 Ga. 258. Ind.-Arnold v. Smith, 80 Ind. 417; Studabaker v. Langard, 79 Ind. 320; Evans v. Nealis, 69 Ind. 148; Hampson v. Fall, 64 Ind. 382.

Iowa.-Mast v. Henry, 65 Iowa, 193, 21 N. W. 559.

La.-Burg v. Rivera, 105 La. 144, 29 So. 482.

Me.-Davis v. Tibbetts, 39 Me. 279. Minn.-Mix v. Ege, 67 Minn. 116, 69 N. W. 703.

Mo.-Craig v. Zimmerman, 87 Mo. 475, 56 Am. Rep. 466; Crow v. Andrews, 24 Mo. App. 159.

38.

Nev.-Allison v. Hagan, 12 Nev.

Tex.-Bergen v. Producers' Marble Co., 72 Tex. 53, 11 S. W. 1027; San

ger v. Thomasson (Civ. App. 1898), 44 S. W. 408, such a purchaser may recover for the conversion of the property, although he may know that the prior sale was made by the seller to defraud his creditors.

69. Savage v. Dowd, 54 Miss. 728. Compare Shaw v. Tracy, 83 Mo. 224, a voluntary deed with fraudulent intent is void as to the beneficiary in a subsequent trust deed with notice, though the first grantee had no knowledge of the grantor's fraudulent intent.

70. Casey v. Leggett, 125 Cal. 664, 58 Pac. 264.

71. Freeman v. Pullen, 130 Ala. 653, 31 So. 451; Burg v. Rivera, 105 La. 144, 29 So. 482.

72. Casey v. Leggett, supra.

73. Bradley v. Luce, 99 Ill. 234; Noblet v. St. John, 29 Minn. 180, 12 N. W. 527.

74. Bradley v. Luce, 99 Ill. 234.

guilty of the wrong in selling or permitting a sale to an innocent purchaser, so that, where the property again vests in such wrongdoer, the original equities reattach to it in his hands.75 Where a debtor conveys property under circumstances which render the conveyance either actually or constructively fraudulent as to his creditors, and his grantee subsequently conveys the premises to a bona fide purchaser for value, and the latter reconveys to the original grantee, the latter occupies no better position than he did originally, and holds the property subject to the rights of those who were creditors of the fraudulent grantor at the time of the original conveyance.76

64. Rights and liabilities as to purchasers from original grantor. The title of a bona fide purchaser from a fraudulent grantee is good as against a subsequent grantee of the original grantor with notice," or as against a prior pretended contract of sale between the fraudulent grantor and a third person, although he had notice of it.78 A bona fide transferee of a fraudulent mortgage has a prior lien to that of a prior mortgagee whose mortgage was recorded after the record of the fraudulent mortgage, although prior to its transfer to him." The title of a bona fide purchaser from a fraudulent grantee for value without notice of the fraud, after a creditor of the fraudulent grantor has obtained a judgment against him, but before the land was sold on an execution issued on such judgment, is to be preferred to that of the purchaser under the execution of the creditor of the fraudulent grantor. 80

75. Bourquin v. Bourquin, 120 Ga. 115, 47 S. E. 639.

76. Conn.-Birge v. Nock, 34 Conn. 156.

38.

Nev.-Allison v. Hagan, 12 Nev.

Ohio. Schultz v. Brown, 3 Ohio Cir. Ct. 609, 2 Ohio Cir. Dec. 353.

Or.-Perkins v. McCullough, 31 Or. 69, 49 Pac. 861.

77. Aiken v. Bruen, 21 Ind. 137. 78. Poling v. Williams, 44 W. Va. 69, 46 S. E. 704.

79. Clark v. Forbes, 9 Neb. 476, 4 N. W. 58.

80. Young v. Lathrop, 67 N. C. 63, 12 Am. Rep. 603.