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Entered according to Act of Congress, in the year 1879, by
G. I. JONES AND COMPANY, In the office of the Librarian of Congress, at Washington.
SOUTHERN LAW REVIEW
Vol. IV, N. S.]
St. Louis, April, 1878.
1. EFFECT OF EXEMPTION LAWS ON FRAUDU
In considering the effect of exemption laws upon the rights of creditors, and of the parties to a conveyance that would otherwise be fraudulent, it is necessary to keep in mind the diverse provisions of these laws themselves; for decisions that are apparently in conflict, upon careful examination, may not unfrequently be found to differ because they are based upon different statutes. Such acts may be roughly divided into three classes, viz.: first, those that exempt certain property absolutely and unconditionally; second, those which exempt certain property only conditionally—as, for instance, while the debtor resides thereon, or uses it for a certain purpose; third, those which allow an exemption only when some positive act is done by the debtor-as, for instance, when he claims it. There are various minor provisions which are not embraced in this classification, the effect of which will have to be considered in each case that is affected thereby; but, in a general way, a careful attention to the diverse influence of these three classes will be found to explain many of the apparent inconsistencies in the decisions.
The first question which will be considered is whether or not a debtor, being possessed of certain money or property which is not exempt from execution, has a right to convert it into property that is so exempt, with the express intent thereby to defeat the claims of his creditors. In the nega
tive it may be said that such an act is a fraud, and that no statute ought to be so construed as to cover or protect fraud. Those who advance this argument take a moral ground, contending that every statute must be construed according to the intent of the Legislature; that the Legislature could never have intended to aid a covinous transaction; that, therefore, an exception should be grafted on the plain and direct terms of a statute. On the other hand, it may be said that what constitutes fraud is a question of law; that this law may be modified by the Legislature in the same way as any other law; that, when the Legislature permits a certain thing from motives of public policy, this cannot be declared to be a fraud by the courts. An examination of the cases will show that these conflicting arguments have led to an apparent conflict in the decisions. In Riddell v. Shirley' the plaintiff, who brought an action of replevin to recover certain property which had been taken under an attachment, proved his title by the production of a bill of sale. The defendant proved that the grantor, being insolvent, had sold the property with the intent to discharge a debt secured by a mortgage on his homestead, and that the plaintiff was aware of the intent. The question was whether such a bill of sale was fraudulent. The court said: “This was, certainly, a transaction calculated to hinder, delay, or defraud creditors. Although the law secures the homestead from executions arising from ordinary indebtedness, it is yet made chargeable for debts by the act of the parties interested in its preservation, and, in some cases, by operation of law. Where such cases exist, it would seem to be only fair that the homestead should remain answerable for the debts charged upon it, and not, after becoming a source of credit, be relieved intentionally by the disposition of all the other property of the debtor, leaving nothing for the satisfaction of the other creditors. Such a sale, except to a creditor in payment of his debt alone, and free from knowledge of, or collusion with, the object of the debtor, must be considered a fraud in fact and
15 Cal. 488.