88

shows the grantor's fraudulent intent and the purchaser then shows a valuable consideration, the burden of proof again shifts to the attacking creditor to prove that the purchaser had knowledge or notice of the fraud at the time of paying the consideration. When a mortgage is taken for more than is due from one known to be insolvent, it is incumbent on the mortgagee to show that it was executed in good faith, and to satisfactorily explain why the excess was thus secured.89 If the conveyance is attacked by a subsequent creditor, the burden of proving fraudulent intent towards subsequent creditors by showing that it was made in contemplation of future indebtedness is on such subsequent creditor, even though the conveyance is from hus

90

Cincinnati Tobacco Warehouse Co. V. Matthews, 24 Ky. L. Rep. 2445, 74 S. W. 242; Livesley v. Heise (Or. 1906), 85 Pac. 509; Houston, etc., R. Co. v. Shirley, 89 Tex. 95, 31 S. W. 291; Dodd v. Gaines, 82 Tex. 429, 18 S. W. 618; Blubaugh v. Loomis, 48 W. Va. 666, 37 S. E. 794; Dent v. Pickens, 46 W. Va. 378, 33 S. E. 303.

88. N. Y.-Starin v. Kelly, 88 N. Y. 418; Bailey v. Fransioli, 101 App. Div. 140, 91 N. Y. Supp. 852.

U. S.-Bamberger v. Schoolfield, 160 U. S. 149, 16 Sup. Ct. 225, 40 L. Ed. 374.

Ala. Jordan v. Collins, 107 Ala. 572, 18 So. 137; Moog v. Farley, 79 Ala. 246.

Mich.-Beurmann v. Van Buren, 44
Mich. 496, 7 N. W. 67.
Mo.-Peters-Miller Shoe Co. V.
Casebeer, 53 Mo. App. 640.
N. C.-Feimester v. McRorie, 34 N.
C. 287.

Ter.-Martin Brown Co. v. Cooper, 82 Tex. 242, 17 S. W. 1051; Tillman v. Heller, 78 Tex. 597, 14 S. W. 700, 22 Am. St. Rep. 77, 11 L. R. A. 628;

Talcott v. Rose (Civ. App. 1901), 64
S. W. 1009.

89. Ark.-Henry v. Harrell, 57 Ark. 569, 22 S. W. 433.

Ind. T.-Daugherty v. Bogy, 3 Ind. T. 197, 53 S. W. 542.

Iowa.-Carson v. Byers, 67 Iowa, 606, 25 N. W. 826; Lombard v. Dows, 66 Iowa, 243, 23 N. W. 649.

La.-Worrell v. Vickers, 30 La. Ann. 202.

Minn.-Heim v. Chapel, 62 Minn. 338, 64 N. W. 825.

N. J.-Demarest v. Terhune, 18 N. J. Eq. 532.

90. N. Y.-Todd v. Nelson, 109 N. Y. 316, 16 N. E. 360; Loeschigk v. Addison, 4 Abb. Prac. N. S. 219; U. S. Bank v. Housman, 6 Paige, 526.

Ala.-Stoutz v. Huger, 107 Ala. 248, 18 So. 126.

Cal.-Bush, etc., Co. v. Halbing, 134 Cal. 676, 66 Pac. 967.

Conn.-State v. Martin, 77 Conn. 142, 58 Atl. 745.

Ill.-Lamont v. Regan, 96 Ill. App.

359.

Ky.-O'Kane v. Vinnedge, 108 Ky. 34, 55 S. W. 711, 21 Ky. L. Rep. 1551.

band to wife.91 A subsequent creditor has the burden of proving actual fraud, where he seeks to impress a trust for his benefit on property conveyed to one person on consideration paid by another.92

§ 11. Retention of possession.-In a contest with creditors who seek to set aside as fraudulent a sale by the debtor, which was not followed by a change of possession, the burden of showing good faith is on the grantee or defendant.93 The burden of

showing payment of a valuable consideration is also on the grantee or defendant.94 But one purchasing property from a mortgagee and taking possession after forfeiture of the condition of the mortgage, at a time when no creditor of the mortgagor had secured a judgment against him, is not bound in the first instance to explain the possession of the mortgagor prior to breach of the mortgage, but the burden is on the mortgagor's creditor to show that the mortgage was fraudulent.95 To sustain a conveyance by a husband, when insolvent, to his wife, of his business, which he subsequently carries on ostensibly in his own name, the wife, as against creditors of the husband, must show that the transaction was fair and honest.96 Where the evidence tends to show a concurrent possession by the judg ment debtor and the alleged purchaser, the burden of rebutting the presumption of fraud arising therefrom, rests upon the purchaser. One claiming title to personal property under a sale, unaccompanied by delivery and change of possession, is not, however, required by the statute of frauds as against the creditors of the vendor, in addition to good faith, to show a valid excuse for leaving the property in the vendor's possession.98

§ 12. Reservations and trust for grantor.-In an action attacking a sale made by an insolvent debtor in payment of an

502; Maney v. Killough, 15 Tenn.

440.

Tex.-Mills v. Walton, 19 Tex. 271. Va.-Curd v. Miller, 7 Gratt. 185. W. Va.-Colston v. Miller, 55 W. Va. 490, 47 S. E. 268; Curtin v. Isaacsen, 36 W. Va. 391, 15 S. E. 171.

Wis.-Kayser v. Hartnett, 67 Wis. 250, 30 N. W. 363; Williams v. Porter, 41 Wis. 422. But see Griswold v. Nichols, 117 Wis. 267, 94 N. W. 33.

94. N. Y.-Groat v. Rees, 20 Barb. 26; Randall v. Parker, 3 Sandf. 69. Fla.-Neal v. Gregory, 19 Fla. 356.

Me.-Hartshorn v. Eames, 31 Me. 93.
Mo.-State v. Smith, 31 Mo. 566.
W. Va.-Bartlett v. Cleavenger, 35
W. Va. 719, 14 S. E. 273.

Wis.-Griswold V. Nichols, 126
Wis. 401, 105 N. W. 815.
95. Talman v. Smith, 39 Barb. (N.
Y.) 390.

96. Manning v. Carruthers, 83 Md. 1, 34 Atl. 254.

97. Jones v. O'Brien, 36 N. Y. Super. Ct. 58.

98. Mitchell v. West, 55 N. Y. 107; Hanford v. Artcher, 4 Hill (N. Y.), 271.

indebtedness, the purchaser having offered evidence tending to show a bona fide indebtedness not materially less than the reasonable value of the property, the burden is shifted to the creditor to prove that a benefit was reserved to the debtor by the transaction. On the contrary it has been held that where an insolvent makes a sale of his property for the purpose of preferring certain of his creditors, it is incumbent on him to show that the sale was bona fide, and not on any secret trust.1

99

§ 13. Intent to defraud subsequent purchasers.-Where a conveyance has been made and there has been no change of possession, the burden is on those claiming under the conveyance as against a subsequent purchaser, to show that the transfer was made in good faith for a sufficient consideration and without any intent to defraud subsequent purchasers. A subsequent sale, by a person who has made a voluntary conveyance or settlement, to a purchaser without notice, is presumptive evidence of fraud, which throws on those claiming under such conveyance or settlement the burden of proving that it was made bona fide and without fraudulent intent.3

§ 14. Good faith of purchasers from grantee.-Where property is conveyed in fraud of creditors, and by the grantee to a third person the burden in the first instance is upon the one who alleges that the conveyance was fraudulent to prove that the purchaser from the fraudulent grantee was not a purchaser in good faith. But when the fraudulent character of the original

99. Bamberger v. Schoolfield, 160 U. S. 149, 16 Sup. Ct. 225, 40 L. Ed. 374; Morrow v. Campbell, 118 Ala. 330, 24 So. 852; Cook v. Thornton, 109 Ala. 523, 20 So. 14; Roswald v. Hobbie, 85 Ala. 73, 4 So. 177, 7 Am. St. Rep. 23.

1. Stanton v. Green, 34 Miss. 576. 2. Groat v. Rees, 20 Barb. (N. Y.)

26; Brown v. Wilmerding, 12 N. Y. Super. Ct. 220.

3. Brown v. Burke, 22 Ga. 574; Enders v. Williams, 58 Ky. 346; Cooke v. Kell, 13 Md. 469; Footman v. Pendergrass, 3 Rich. Eq. (S. C.) 33.

4. Maddox v. Reynolds, 69 Ark. 541, 64 S. W. 266; Thornton v. Hook, 36 Cal. 223; Saunders v. Lee, 101 N. C. 3, 7 S. E. 590.

transaction has been shown, the burden of proof is on the purchaser claiming title under a grantee whose title is fraudulent to show that he was a bona fide purchaser for value without notice of the fraud.5 A creditor taking a mortgage on real estate from a grantee of his debtor to secure his debt with knowledge that the land was conveyed to defraud creditors has the burden, as against other creditors existing at the time of the fraudulent conveyance, of showing the existence of his debt before such con

veyance.

15. Presumption from failure to testify or produce evidence. -The failure of the parties to the transaction, in actions to set aside fraudulent conveyances, to appear and testify in denial of a charge of fraud as to the circumstances under which the transaction was made, being peculiarly within their own knowledge, and to explain suspicious matters relating thereto, or to produce documentary evidence in their possession, raises a presumption that they refrain from testifying because the truth would not aid their contention and affords strong evidence of the fraud. An unfavorable inference is created from the failure to call a disinterested person, available as a witness to show good faith in the transaction. But failure of one party to call

5. Colo.-Harrington v. Johnson, 7 Colo. App. 483, 44 Pac. 368.

Ga.-Kelly v. Simmons, 73 Ga. 716. Iowa.-Rush v. Mitchell, 71 Iowa, 333, 32 N. W. 367; Throckmorton v. Rider, 42 Iowa, 84.

Mich.-Durrell v. Richardson, 119 Mich. 592, 78 N. W. 650; Schaible v. Ardner, 98 Mich. 70, 56 N. W. 1105. Or.-McLeod v. Lloyd, 43 Or. 260, 71 Pac. 795, 74 Pac. 491.

Wis.-Horton v. Dewey, 53 Wis. 410, 10 N. W. 599.

6. Rilling v. Schultze, 95 Tex. 372, 67 S. W. 401.

7. U. S.-Alexander v. Todd, 1 Fed. Cas. No. 175, 1 Bond, 175.

8

Ill.-Schumacher v. Bell, 164 Ill. 181, 45 N. E. 428.

Md.-Downs v. Miller, 95 Md. 602, 53 Atl. 445; Dawson v. Waltemeyer, 91 Md. 328, 46 Atl. 994.

Mo.-Connecticut Mut. L. Ins. Co. v. Smith, 117 Mo. 261, 22 So. 623, 38 Am. St. Rep. 656.

S. D.-Smith v. Tosini, 1 S. D. 632, 48 N. W. 299.

8. National Bank of Republic v. Hobbs, 118 Fed. 626; Carter v. Richardson, 22 Ky. L. Rep. 1204, 60 S. W. 397.

9. Fowler v. Hendry, 7 U. C. C. P. 350.