ajDrnell Ham &tl(nnl BJihrarg CorMll University Library KF 821.B59 gj The law ot fraud :and »he p|;oeed«J«^^^^ 3 1924 018 822 597 Cornell University Library The original of tiiis book is in tine Cornell University Library. There are no known copyright restrictions in the United States on the use of the text. http://www.archive.org/details/cu31924018822597 THE LAW 6r FRAUD AKD THE PROGEDURE PERTAINING TO THE REDRESS THEREOF MELVILLE M. BIGELOW" ^Oonso\«>'^ ^ -%^ ■^ AUTHOR OB" " THE LAW OF EBTOPPBl/' ETC. BOSTON LITTLE, BROWN, AND COMPANY 1877 (B^/^^^ o. Entered according to Act of Congress, in the year 1877, by MELVILLE M. BIGELOW, In the Office of the Librarian of Congress, at Washington. Cambridge : Press of John Wilson ^ Son. ATTORNEY & ' \V I COUNSELOR at LAW , PEEFACE. What shall be said of a treatise on the Law of Fraud which makes no mention of Chandelor v. Lopus 1 With those who pass by the preface, the author lays himself open to the charge of being ignorant of the forties juris ; though it is possible that they who turn the leaves of the text under a pressure of anxiety for the endangered rights of clients may suspect that the omission was in- tentional, and not regret it. The truth is, Chandelor n. Lopus — and this case is taken as an illustration of a class — has had its day. So long as authorities were few, and the law remained in an unsettled state, that case served a purpose, — not the best purpose possible, but a useful purpose. It was one of the few decisions upon an important point ; and it was cited and discussed because it was one of the few author- ities, and because the law was not well settled. But the case was imperfectly reported, and for that reason was never perfectly understood; and the courts at last found it useless to struggle longer with it. Within the past twenty-five years, the law has become well settled upon the subject of this famous case ; and the decisions are generally reported in an intelligible form. Chandelor v. Lopus has a secure place in the modern history of the English law ; but, for the purposes of an accurate state- ment of the existing law, the question of the point de- IV PBEPACB. cided by it may well be left to the judges and writers of the past, or relegated to the antiquarian. Tempting as was the history of so venerable a branch of law, the limits which the author assigned for his work precluded all unnecessary departures from his design of presenting an orderly view of the existing Law of Fraud. Indeed, it was soon found that to attempt to treat the subject properly, in all its features, within the limits of a single volume of convenient size, would be vain ; and the result was that the criminal law of fraud was left altogether untouched, and the statutory law concerning fraud on creditors and purchasers presented simply in the language of the Legislatures, without note or com- ment. Whatever may have been the author's original desire, the eliminations suggested are not now regretted. The criminal and statutory branches of the subject have been often and ably treated by others. Besides, criminal law would hardly be looked for in a book treating of the civil jurisprudence of fraud ; and, as to the statutory law concerning fraud on creditors and purchasers, each State of the Union, with a few exceptions, has a code of its own, interpreted by independent tribunals, and en- forced by distinct and diverse penalties and modes of procedure. With deference to the views of others who have attempted to present a harmonious view of the statutes of the different States, the author is satisfied that such efforts are both unsatisfactory and dangerous. The de- cisions of the Courts of New York concerning the inter- pretation of an ambiguous statute of that State — that is, concerning the intention of the Legislature of that State in the passage of the act — cannot be safe authority in another State, even upon a question of the meaning of a PEBFAOB. V statute framed in the very same words. The Legislature of New York meant one thing by the language used, and the Legislature of another State may have meant something else. And so the courts of each State may have declared, and rightly. To say, therefore, that the decisions are in conflict is incorrect, and to attempt to deduce "the true rule of law" as applicable to both States is vicious. The case differs widely from decisions concerning the common law. The common law is generally based, or supposed to be based, on reason, and there may be a true conflict of authority between the decisions of courts of different States concerning its principles ; and as this implies that one, or both, or all of the divergent decisions may be wrong, it is proper and important to endeavor to find the true principle. The acts of the Legislature, on the other hand, are dogmatic declarations of law for the particular State ; and, when their meaning is called in question, the courts of that State must give a final interpretation of it. The exposition of the common law (when not involving the meaning of a written instrument) is an exposition of principles : the interpretation of statutory law is the interpretation of intention. The decision in the latter case may be wrong, as well as in the former ; but the fact that different constructions are put upon similar language by courts of different States is no evidence of erroneous interpretation. The author's main purpose, therefore, of presenting the whole body of the law relating to fraud in its civil aspects, has been carried out. The common-law doc- trines of the subject have been examined with the greatest care, and stated in the clearest language at the author's command. The statutory law, so far as it re- VI PREFACE. lates to fraud on creditors or purchasers, follows, with appropriate citations of judicial authority (taken from the statute hooks) as to the construction placed upon the language used. It was deemed unimportant to state the rulings of the courts upon the precise meaning of the statutes. Nor was it thought best to pi'esent other statutes than those referred to ; since the rest were gen- erally found to be mere legislative statements of what had been presented as common-law doctrine in the pre- ceding portion of the book, or were special rules of procedure. In considering the common-law doctrines of fraud, both the substantive law and the principles of proce- dure have been stated. Following established divisions, the substantive law has been divided into actual and presumptive or constructive fraud ; the former consist- ing of three chapters, and the latter of two. The chapters relating to actual fraud treat, iirst, of deceit as the type of all fraud, and, secondly, of frauds not nec- essarily turning upon the doctrines of deceit ; and this second class has been divided into special instances of frauds in pais and frauds upon the administration of the law. The doctrines of presumptive or constructive fraud are presented in two chapters, the first of which treats of confidential relations, and the second of notice. The consideration of the adjective part of the law carries the subject of procedure, through all of its stages from jurisdiction to damages. The law, however, cannot be laid out with square and compass, upon mathematical lines, and it will occasion- ally be found that the topics of one head are presented in their natural place, and again in other places where the connection of subjects required further mention of them. PREFACE. VU The labor performed in the conscientious preparation of a law book is not a thing to be contemplated with unmixed pleasure ; but there is one part of it which brings a satisfaction great enough to cover, for the moment, all discouragements and vexations, and that is in writing the last line and reading the last page of proof. The one is now done ; the other will shortly follow. Boston, November 14, 1877. NOTE. The following corrections should be made : — Change "hence," the last word of line 4, p. 99, to " and." Change " agent," the last word of line 6, p. 110, to " principal." To note 4, p. 114, add " Contra, Burden v. Sheridan, 36 Iowa, 125," — a case sustaining the author's view. Change " by," in line 2, p. 43a, to " from." Change " And," the first word of the last sentence but one on p. 448, to " But." CONTENTS. PAQB Cases Cited xvii Introduction Ivii PAET I. SUBSTANTIVE LAW OF FRAUD. I. ACTUAL FRAUD. CHAPTER I. Deceit 3 § 1. Introductory 3 I § 2. Of the Nature of the Eepresentation, including Conceal- ment 4 § 3. Of the Wrongdoer's Knowledge of the Falsity of the Representation 56 § 4. Of the Ignorance of the Complaining Party, and his Belief in the Truth of the Representation 64 § 5. Of the Intention that the Representation should be Acted upon 82 § 6. Of Acting upon the Representation 85 CHAPTER II. Special Featjds in Pais 92 § 1. Introductory 92 § 2. Of Frauds between Husband and Wife 92 § 3. Of Confusion of Goods 97 X CONTENTS. PAGE § 4. Of Alteration of Written Instruments 98 § 5. Of Resulting Trusts 107 § 6. Of Wills 120 § 7. Of Bills and Notes 128 § 8. Of Fraud on Powers 132 § 9. Of Inadequacy of Consideration 136 § 10. Of Public Sales 141 § 11. Of Partnership 146 § 12. Of Sureties 150 § 13. Of Corporations 151 § 14. Of Illiterate, Weak-minded, and Drunken Persons . . 155 § 15. Of Dell* ery of Deeds 156 § 16. Of Possession of Title-Deeds 157 § 17. Of Lien of Innkeeper or Carrier 158 § 18. Of Suppression or Destruction of Writings . . . . 168 § 19. Of Releasing Judgment 159 § 20. Of Repeal of Usury Laws 159 § 21. Of Surprise 160 § 22. Of Acts of Third Persons 161 CHAPTER IIL Frauds on the Administration op the Law .... 165 §1. Of Attachments, Abuse of Process, &c 165 § 2. Of Domicil 168 § 3. Of Sales and Knowledge of Intended Fraud .... 169 § 4. Of Judgments and Awards 170 CHAPTER IV. Waiver and Confirmation 184 n. PRESUMPTIVE OR CONSTRUCTIVE FRAUD. CHAPTER V. Confidential Relations and the Like 190 § 1. Introductory 190 § 2. Of Attorney and Client . 192 § 3. Of Principal and Agent 222 CONTENTS. XI PAGE § 4. Of Partners 232 § 5. Of Trustees 236 § 6. Of Guardian and Ward 250 § 7. Of Executors and Administrators 254 § 8. Of Mortgagor and Mortgagee 259 § 9. Of Parent and Child 261 § 10. Of Physician and Patient 266 § 11. Of Draftsman of Will taking Benefit 267 § 12. Of Engagement to Marry 271 § 13. Of Illegal Marriages or Relations 271 § 14. Of Spiritual Advisers 272 § 15. Of Volunteers 272 § 16. Of Cotenants. Tenants for Life 273 § 17. Of Joint Purchasers 274 § 18. Of Expectant Heirs 274 § 19. Of Sailors 278 § 20. Of Aged Persons 278 § 21. Of Illiterate, Weak-minded, and Drunken Persons . . 279 CHAPTER VI. Notice 288 § 1. Of Putting One on Inquiry 288 § 2. Of Lis Pendens 300 § 3. Of Registration of Instruments 302 § 4. Of Purchasers without Value 307 § 5. Of Principal and Agent, Client and Attorney, &c. . . 315 PAKT II. ADJECTIVE LAW OF FRAUD. PROCEDURE AND INCIDENTS THEREOF. CHAPTER VII. JURISBICTION 321 XU CONTENTS. CHAPTER VIII. PAGE Who mat Allege Fkaud 336 § 1. Introductory 336 § 2. Of Damage to Person not Intended 336 § 3. Of being Particeps Criminis 337 § 4. Of the Personal Nature of Fraud 346 § 5. Of Suits by Personal Representatives 349 § 6. Of Suits, by Distributees 351 § 7. Of Suits by Assignees 351 § 8. Of Suits by Stockholders on Behalf of Corporations . 351. § 9. Of Suits by Partners and Joint Contractors .... 352 § 10. Of Contribution 353 § 11. Of Infant's Suit by Next Friend . . . ' 353 CHAPTER IX. Against whom Fraud mat be Alleged 355 § 1. Of the Wrongdoer 355 § 2. Of Infants 355 § 3. Of Married Women 358 § 4. Of Agency 361 § 5. Of Partners 371 § 6. Of Conspirators and the Like 378 § 7. Of Cotrustees 379 § 8. Of Coexecutors or Administrators 379 § 9. Of Codistributees 383 CHAPTER X. Defences to Specific Pebpoemance 384 § 1. Introductory 384 § 2. Of the Statute of Frauds. Parol Agreements. Part Performance 385 § 3. Of Terms of Decree. Discretion of Court .... 390 § 4. Of Wills. Promise to Testator as to Disposition of Property 392 § 5. Of Taking Advantage of Weak-minded or Illiterate Persons 392 § 6. Of Inadequacy or Over-valuation 393 § 7. Of Family Arrangements 395 CONTENTS. Xlll PAGE § 8. Of Innocent Lessees 395 § 9. Of Mistake 396 § 10. Of the Illegality of Contracts 397 § 11. Of Direct Fraud 397 § 12. Of Acts of Agents 398 CHAPTER XL Rescission 400 § 1. Introductory 400 § 2. Of Damage 400 § 3. How and for what Rescission is allowed 401 § 4. Of Compensation instead of Rescission 407 § 5. Of Tender of Performance or Return of Consideration, 408 § 6. Of Waiver of Right to Rescind 424 CHAPTER XII. Cross-actions and New Tbials 428 CHAPTER XIII. Estoppel in Pais 488 CHAPTER XIV. Laches and Statutes of Limitation 441 CHAPTER XV. Pleading 450 § 1. Of the Allegation of Fraud 450 § 2. Of the Denial of Fraud 454 § 3. Of Demurrer 456 CHAPTER XVI. Practice 458 § 1. Of Parties 458 § 2. Of the Form of Remedy 460 § 3. Of Discovery 464 § 4. Of Charges of Actual Fraud 465 XIV CONTENTS. PAQB § 5. Of the Denial of Fraud 467 § 6. Of Amendment 467 § 7. Of Law and Fact 468 § 8. Of Verdicts Contrary to Evidence 470 § 9. Of Fraud on Dower Rights 470 § 10. Of Survivorship of Actions 471 § 11. Of Submission to Judgment . ^ 471 CHAPTER XVII. Evidence 472 § 1. Of Courts of Law and Qourts of Equity 472 § 2. Of Fraud in Law and Fraud in Fact 474 § 3. Of Preponderating Evidence 474 § 4. Of Circumstantial Evidence 476 § 5. Of Evidence of Other Frauds 478 § 6. Of Evidence of Conspirators and Joint Trespassers . 483 § 7. Of Declarations of Defendant or his Predecessor . . 485 § 8. Of Parol Evidence 487 § 9. Of Variance. Allegata et Prohata 490 § 1 0. Of the Burden of Proof 493 § 11. Of Evidence in Rebuttal 497 ■§ 12. Of Criminating One's Self 498 § 13. Of Privileged Communications 499 § 14. Of Failure of Proof of Fraud 500 § 15. Of Fraud on Testators 500. CHAPTER XVHL Damages 506 STATUTES. FRAUD ON CREDITORS AND PURCHASERS. England 517 United States 529 Alabama 535 CONTENTS. XV FAon Arkansas 537 California 539 Colorado 543 Connecticut 546 Delaware 547 Florida 549 Georgia 553 Illinois 656 Indiana 559 Kentuckt 563 Maine ' 565 Maryland 567 Massachusetts 569 Michigan • . . 576 Minnesota 582 Mississippi 587 Missouri ■ 589 Nebraska 594 New Jersey 598 New York 601 North Carolina 607 Ohio 610 Oregon 613 Pennsylvania 616 Rhode Island 619 South Carolina 620 Tennessee 623 Texas 626 Vermont 628 Virginia and West Virginia 629 Wisconsin 632 Index 639 CASES CITED. PAGE Abbott V. Allen 68 V. Howard 62 V. Patch 507 V. Sworder 140 Abbotts V. Barry 403 Abell V. Howe 317 Abingdon v. Butler 157, 226, 391 Abraham v. Wilkins 120 Acer V. Westcott 288 Acker v. Campbell 403 Ackley v. Dygert 357 Adair v. Adair 199, 268, 501 Adams v. Adams 136 V. CulUard 169, 170 V. Davidson 602 V. Kyerson 287 V. Stevens 288 Adler v. Fenton 331 Adlum V. Yard 616 ^tna Ins. Co., In re 24 V. Church 230 V. Johnson 475 V. Olmstead 370 ^tna Life Ins. Co. v. Prance 63 Ager V. Duncan 341, 342 Agra Bank v. Barry 303 Aiken v. Blaisdell 169 Ainslie v. Medlicott 24 Akerley v. Vilas 442, 443 Alder v. Barbour 101 Aldoborough v. Fije 276 Aldrich v. Earle 574 V. TTarren 479 V. Wilcox 465 fPAQE Alexander v. Beresford 20, 91 V. Dennis 22 V. Dunn 431 V. Tarns 109 Alger V. Thompson 431 Allen, In re 303 u. Aldrich 162 V. Brown 553 u. Hart 61 V. Hartfield 379, 403 V. McClellan 176 u. McPherson 822, 334 V. Morris 300 Allertou v. AUerton 417 Alley V. Connell 623 V. Dechamps 885 i;. Dewey 474, 475 AUin V. Millison 21, 408 Almy V. Piatt 168 V. Eeed 497 Alsworth V. Corditz 172 Alwood V. Mansfield 201, 208 American Ins. Co. u. Oakley 325 Anderson v. Anderson 178 V. Costello 455 V. George 436 V. Hill 14 V. Maltby 148, 374 V. Roberts 495 Andrews . Fellows 431 Mayo V. Carrington 276 Mead v. Bunn 67, 87 V. Munson 76 V. Orrery 381 Meader v. Norton 445 Meadowcroft v. Huguenin 174 Meadows v. Duchess of Kingston 384 Mechanics' Bank v. Lynn 159 Mecliler v. Phoenix Ins. Co. S70 Medbury v. Watson 17, 18, 378 Medlieott v. O'Donnell 206, 396 Medsker v. Swaney 260 Meek v. Perry 199, 257 Meiley v. Butler 487 Meller v. Wilson 610 Melville v. Brown 168 Memphis v. Dean 861, 552 Memphis & C. R. R. Co. .;. Neigh- bors 443, 464 Merchants' Ins. Co., In re 530 Mercier v. Hemme 306 V. Lewis 466, 491 Merriara v. Boston & R. Co. 358 V. SewaU 574 Merrill v. Nary 487 Merrittu. Brown 117, 118, 119, 388, 389 Merry v. Freeman 850 Mestaer v. Gillespie 127 Metcalf V. Munson 573 V. Pulvertoft 300 Methodist Chapel Corporation v. Herrick 489 Metterk v. Hagan 630 Metzger, In re 531 Meyer v. Amidon 318 V. CuUen 481 Michael v. Michael 281 V. Mutual Ins. Co. 371 Michared v. Girod 447 Michigan Cent R. Co. u. Dunham 410 V. Phillips 308 Michigan v. Phoenix Bank 177, 463 Michoud V. Girod 288, 255 u. Harris 256 Mickles v. Thayer 183 Middleton v. Middleton 169 V. Onslow 842 xl CASES CITED. Middleton v. Pollock 461 Mooney v. Miller 17, 18, 19 Miller v. Bradford 804 Moore v. Bowman 97,98 V. Cook 160 V. Cains 7 V. Craig 282 V. Livingston 604 V. Estill 611 V. MoNamara 300 V. Fraley 495 V. Maudelbaum 223 V. Helm 297 V. New York 96 o: Price 372 V. Pearce 196, 201, 207 V. Richardson 375 V. Reed 156 V. Stetson 535 V. Stone 231 Miller's Appeal 184 Morehead v. Eades 19 Mill River Ass. v. Claflin ,674 V. Hunt 145 MUlican v. Millican 258, 264, 278, 503 V. Parkersburg Bank 99 V. Thorndike 27 Moreland v. Atchison 73 Miles V. Ervin 193 ,203 Morgan v. Evans 204 1^. Wheeler 245 248 ,442 o. Higgins 204, 207 Mills V. Black 168 V. Skiddy 60 ... Mills 207 Morphett v. Jones 386 Milne v. Henry 474 Morrill v. Blackman 37 Miltenberger v. Morrison 349 Morris v. Clarkson 239 Miner v. Bradley 413 V. PhilUber 286 V. Medbury 61 Morrison v. Kock 11 Mitchell V. Jones 139 u. Lods 400 V. McDougall 31 V. Marsh 294 V. Moore 415 V. PhilUber 589 V. Morse 416 V. Tennessee Ins. Co 38 V. Stiles 617 Mors V. Bambridge 212 V. Thomas 122 Morse v. Brackett 413, 420 V. Williams 254 V. Dearborn 492 V. Worden 37 V. Hutchins 508, 509 V. Zimmerman 31 V. Royal 187, 193, 224 Mixer's Case 363 Morton v. Grenada Academy 456 Mizner v. Kussell 5 Moseley v. Buck 223, 229 Mohawk Bank v. Corey 131 Mott V. Harrington 193 Moir V. Brown 604 V. Henderson 213 Molony v. Kernan 223 Mountain v. Bennet 122 286, 393 Monroe v. Cutter 462 Mount Vernon Bank v. Stone 466 Montague v. Adams 452 Morrow v. Allison 173 Montgomery v. Hunt 540 Mountz V. Brough 501 V. Kirksay 535 Mowson V. Stock 342 V. Pickering 187 ,416 Moxon V. Payne 185, 490 V. Shockey 466 ,491 Mulford V. Bowen 256 V. Tipton ' 452 Mulhallen v. Marum 223 Montecute v. Maxwell 118 Mullen V. Wilson 617 Montesquieu v. Sandys 193 196 ,201 MuUer v. Eno 608 Moody V. Blake 308 Mullet V. Mason 507 V. Burton 331 Mulvary v. Dillon 242 K. Fry 350 Mundy v. Forster 506 V. Walters 342 V. Mundy 471 CASES CITED. xli Munson v. Atwood 475 New Albany R. Co. v. Slaughter 153 V. Hallowell 446 New London Inst. v. Prescott 154 V. Nichols 75 New York & N. H. R. Co. t, Murdock, In re 532 Schuyler 90 Murphy v. Hubert 118 ,617 Newcomb w. Presbey 105 V. O'Shea 223 Newell V. Gregg , 289 Murray v. Ballou 300 V. Mayberry 99 V. Burtis 603 Newhouse v. Godwin 268 V. Fox 590 Newkirk v. State 431 Mussina v. Goldthwaite 452 Newby v. Rogers 559 Mutual Benefit Life Ins. Co. t Newman, In re 582 Cannon 62 Newman v. Paine 193 Mutual Benefit "Life Ins. Co. V Newsom v. Jackson 26 Robertson 62 Nexsen v. Nexsen 199 Mutual Life Ins. Co. v. Dake 304 Nichols V. Holmes 328 Myddleton v. Kenyou 395 V. McEven 604 Myers v. O'Hanlon 125 V. Moody v. Patton V. Pinner 59 844 87 N. Nicholson v. Halsey V. Jacobs 415 297 Nance, v. Lary 77 ». Leavitt 604 Nantes v. Corrock 286 V. Ward 624 Napier v. Elam 306 Niven v. Belknapp 440 Nathan v. Giles 312 Noble V. The Northern Illinois 343 National Bank v. Kirby 289 Nolder v. Hawkins 854 National Exchange Co. v. Drew 90 Noonan v. Lee 450 National Ins. Co. v. Minch 816 Norman v. Sylvester 59 National Security Bank v. Gush- Norris v. Le Neve 248 man 369 V. Norris 844 NeafEer v. Pardue 623 V. Wait 867 Neal V. Potter 502 North Baltimore Assoc, v. Cadwell 244 V. Stone 141 Northcott V. Casper 192 Neally v. Ambrose 498 Norton v. Rilly 286 V. Greenough 488 Noyes v. Horr 304 Nebblet v. Macfarland 409 411 V. Loeb 175 Needham, In re 530 V. Loring 58 Neil V. Cummings 19 Nudd V. Hamblin 446 NeUisu. Clarke 344 Nugent V. Gifford 381 Nelson v. Stocker 856 Nutter V. Harris 559 V. Worrall 489 Nye V. Merri4m 513 Nelthorp v. Pennyman 208 209 Nesbitt V. Berridge 218 V. Lockman 196 0. V. Frederick 242 261 Nesmith v. Clinton Ins. Co. 434 Oakey v. Wilcox 101 Neustadt v. Joel 168 O'Bannon, In re 581 Neville v. Wilkinson 24, 340 Oberlauder v. Spies 318 New Albany R. Co. v. Fields 78, 153 Obert V. Obert 256 ,447 xlii O'Brien v. Chamberlin V. Hilburn V. Lewis Ocean Ins. Co. v. Fields Ochsenkehl v. Jeffers O'Donnell ;;. Segar Ogden V. Larabee Ogilrie v. Jeaffreson 292, 295, 296 V. Eice 9 Oldacker v. Lavender 147 Oldham v. Litchford 127 Oliver, Ex parte 338 V. Chapman 470 V. Court • 288, 513 V. Eaton 578 V. Moore 612 V. Oliver 114 V. Pratt 315 O'Neil V. Murray 502 Oppenheimer v. United States Exp. Co. 42 Orange Co. Bank v. Orange 41 Orchard v. Hughes 131 Organ v. Allison 107 Oriental Bank v. Haekins 497 Ormonde v. Hutchinson 193 Ormrod v. Huth 57 Osborn v. Graham 257 V. Moss 344 Osbrey v. Bury 242 Osgood V. King 153 Oswald V. McGehee 67, 69 Otis V. Sill 603 Cutwater v. Dodge 603 Overdeer v. "Wiley 128 Overton v. Bannister 357 V. Tracey 113 Owen V. Foulkes 208, 209, 210 Owing's Case 284 Oyster v. Shedd 168 Packard v. Pratt 450, 492, 493 Paddock v. Strobridge 34, 36 Page I'. Parker 18, 19, 378, 491 V. Smith 565 V. Stubbs 211 CASES CITED. 540 Pahlman v. Taylor 101 358 Paine v. Hall 127 193, 194 u. Lake Erie R. Co. 189 175 V. Meller 274 490 V. Van Notte 433 477 Palmer v. Neave 24 244 V. Wheeler 136 Panama v. Tel. Co. v. India Rubber Co. 404 Parkham v. Randolph 68 Parkhurst v. Lowten 240 V. Sumner 174, 175 Parke v. Leewright • 389 Parker v. Brooke , 243 u. Crittenden 546 V. Lockman 496 V. McKenna 500 V. Marquis 284 V. Niekerson 238 V. Ramsbottom 374 V. StaUings 129 Parkman v. Welch 467 Parks V. Evansville R. Co. 411 Parmelee v. Cameron 277 Parnell v. Tyler 218 Parr v. Jewell 466 Parrott v. Parrott 477 Partridge v. Clarke 159 V. Messer 344 V. IJsborne 446 Paske V. OUat 122, 199 Pasley v. Freeman 23, 27, 83, 84, 85 Passmore v. Eldridge 617 Pate V. Baker 630 Patent Bolt Co., In re 530 Baton V. Westervelt 604 Patrick v. Ford 624 Pattee v. Pelton 65 Patten v. England 30 V. Guiney 26 Patton V. Allison 267 V. Stewart 443 V. Taylor 450 Paul V. Fulton 312 Payne v. Avery 215 o. Burton 537 o. Hook 460 Peabody v. Flint 459 Peacock v. Evans 206, 276 CA SES CITED. xllll Peak, Ex parte 148 Pickering v. Pickering 450, 452, 466 Pearce v. Brooks 170 V. Vowles 247 V. Olney 178 179 Pickard v. McCormick 20, 60, 73 PearsoU v. Chapin 184, 185, 415, V. Sears 858, 867, 438 461 Pickett V. Baum 814 Pearson v. Benson 204 I'. Logan 161 o. Howe 491 Pierce v. Brassfield 466 V. Morgan 61 V. Gibson 659 Peek V. Billiard 444 445 V. Hoffman 480 V. Carmlchael 623 V. Wood 372, 485 V. Gary 121 Pierson v. Manning 576, 580 Pedrick v. Porter 12 Pigott's Case 75,99 Peek V. Gurney 90 Pike V. Pay 26, 479 Peigne v. Sutcliffe 355 Pilling V. Otis 634 Pelliam v. Moreland 172 Pince V, Beatty 215 Pember v. Mathers 114 Pine V. Rickert 604 Pemberton v. Pemberton 821 ,590 Pinkard v. Woods 257, 297 V. Staples 452 Pipher v. Lodge 448 Pendarvis v. Gray 402 Pitcher v. Eigby 213 Penn v. Whitehead, 627 V. Smith 409 Pennell v. Deffell 313 Pitman v. Gaty 294 People !). Holbrook 488 Pitt V. Jackson 136 V. Logan Co. 153 Place V. Minster 484 Pepper v. Carter 590 Flank v. Sherraerhom 604 Percival v. Highborn 413 ,461 Planter's Bank v. Homberger 219 Perkins r. Knight 432 Plenderleath v. Eraser 193 V. Scott 285 Plummer v. Kappler 391 Perley v. Balch 416 Poilon V. Martin 196, 214, 218 Perens v. Johnson 147 Poindexter v. Waddy 436 Perrine v. Marine Ins. Co. 470 Polhill V. Watts 85 Perry v. McHenry 110 Pomroy v. Parmlee 165 V. Meadaworaft 174 Pool V. Chase 162 Perry's Trusts 238 Poor V. Washburn 419 Peter v. Beverley 380 Porter v. Peckham 216 V. Wright 10 258 Fortington v. Egglington 286 Pettigrew v. Chellis 491 Portman v. Middleton 507 Pettijohn v. Williams 380 Portsmouth v. Portsmouth 93 Pettinard v. Frescott 248 Post, In re 196 Pfiffner v. Krappel 171 V. Shirley 455 Phelps V. Quinn 69 Potter V. Titcomb 411 V. Wait 90 337 Pow V. Davis 58 Philbrook v. Delano 118 Powell V. Boring 554 Philbrooks v. McEven 560 V. Bradlee 87 Philips V. Green 325 V. Cobb 285 Philipsburg Bank v. Palmer 435 u. Conant 157 Philipson v. Egremont 174 175 o. Thompson 294 Phillips V. Potter 327 V. Waters 131 Phipper v. Stickney 142 143 ii. Woodworth 443 Pickering v. Dawson 35 Powers V. Hale 20, 393, 394 xliv CASES CITED. Pread v. Hull 471 Rankin v. Clarkeblll 479 Pratt V. Cox 629 V, Harper 590 V. Philbrook 425 V. Porter 231 V. Weyman 448 Rapp V. Latham 372 Presby v. Parker 367 Rathbone, In re 631 Prentiss v. Russ 488 Rathbun v. Plattner 604 Prescott V. Hawkins 307 315 Ratcliffe v. Barnard 303 Preston v. Grand Collier Dock Co. 152 Rawlins v. Desborough 470 o. Jones 617 V. Wickham 147 Price V. Dewhurst 171 Rawls v. American Life Ins. Co. 38 V. Evans 245 Ray V. Bank of Kentucky 362 363 V. Furmau 409 Rea«. Missouri 474, 475, 478 V. Hewett 336 Read v. Hatch 471 V. Junkin 484 495 V. Howe 255 V. Keyes 59 Reamer's Appeal 616 V. Martin 307 Eedington v. Roberts 77 V. Mazange 536 Redlich v. Doll 101 Prideaux v. Lonsdale 53 Reece v. Pressey 122 Pritohard v. Ovey 274 Reed v. Minell 445 Proctor V. McCall 47, 48 1 Reel V. Reel 501 V. Robinson 219 Regli V. McClure 540 Proudtoot V. Wightman 393 394 Eeid V. Flippin 21 Prouty V. Roberts 129 V. Stanley 201 ,226 Provis V. Reed 501 Relf K. Rapp 42 Pryce v. Security Ins. Co. 475 Remick v. Bank of ChilUcothe 610 Puffer V. Smith 80 Respass v. Zorn 165 Pulsford V. Richards 61 Kespublioa v. Hevice 95 Purcell V. Macnamara 218 Reubens v. Joel 168 Purdy V. BuUard 400 Revell V. Harvey 252 253 Putnam v. Sulliyan 76,80 V. Hassey 393 Reynell v. Sprye 446 Reynolds v. Crook 535 Q. V. French V. Vance 25 96 Quarles v. Lacy 360 V. Vilas 632 Quinton v. Frith 253 Rex V. Burdett V. Gray V. JoUiffe 435 435 435 E. V. Willie Rhode V. Alley 481 31 Eamsbottom v. Parker 274 Rhodes v. Bate 191, 196, 201, 202 ,223 Eamsdell v. Kdgartou 343 344 V. Cook 262 Band v. Webber 413 Ribon V. Railroad Co. 458 Randall v. Cook 603 Rice V. Barrett 59 V. Hazelton 86 V. Coolidge 460 V. Irvington 245 V. Dwight Manuf. Co. 81 V. Russell 242 ,243 Richardson v. Marine Ins. Co. 370 Eandell v. Trimen 58 V. Richardson 601 Rankin v. Blackwell 481 V. Schirtz 75 Eiohardson v. Williamson CASES 68 CITED. Eosenfeld, In re 631 Eichart v. Castator 344 Rosevelt v. Fulton 61 Richmond v. Heapy 852, 372 Eoss V. Drinkard 76 Eicketts v. Montgomery 247 Rosshorough v. Boise 126 Eiddell v. Johnson 199 Rothschild v. Brockman 223 V. Shirley 540 Rowland v. Coleman 553 Eiley v. Eiley 451 f. Sullivan 286 Eing V. Burns 226 Eowley v. Bigelow 37, 308, 410, 480 Ringgold V. Stone 257 V. Eowley 132 i: Wagoner 537 Eudd V. Jones ' 182 Eisch V. Von Lillienthal 88 Ruddle II. Ben 629 Eison V. Heddens •584 Rushworth's Case 242 V. Knapp 533 Russell V. Austwick 232 Eitchie v. Holbrooke 432 V. Branham 73 Eives V. Lawrence 112 V. Clark 332 Eobb V. Halsey 129 V. Jackson 119, 127 Eoberts v. Travick 502 V. Kearney 554 Eobertson v. Clarkson 69 V. Lasher 604 V. Cole 93, 94, 95 V. Little 832 V. Robertson 114 V. Eanson 289 Robins o. Decatur 398 V. Eussell 282 Eoblnson v. Aldridge 374 V. Southard 259 V. Hutchinson 501 Eutherford v. Ruff 886 V. Proctor 217 V. Williams 85 ». Eobarts 589 Eyan v. Ashton 220 V. Smith .248, 250 0. Brant 420 V. Wall 146 V. Daly 540 Bockafellow v. Newcomb 271 V. Dix 115 Eockford Ins. Co. v. Nelson 370 Eyckman v. Wilmerding 604 Rockford E. Co. v. Shunick 75 Eyder v. Hathaway » 97 Eocks V. Doe 562 Eodman v. Thalheimer 37 Eoger V. Simmonds 388, 389 S. Eogers v. Batchelor 375 V. Gwinn 172, 178, 179 Sadler, Ex parte 342 V. Hall 484 V. Collins 99 V. Higgins 85, 282 B. Eobinson 442 V. Hook 448 Safford v. Grount 89 v. Lockett 226 Sailor v. Hertzog 294 B. Place 73 Salem Eubber Co. v. Adams 66 17. Poston 101 Salmon v. Cutts 222 V. Simmons 117, 118 V. Eogers 590 Eohrback v. Germania Ins. Co. 871 Sample v. Barnes 170 Eoman v. Mall 339 Samuel v. Marshall 287, 351 Eoot V. Reynolds 628 Samy ». King 409 Eose V. Burgers 631 Sanborn v. Benedict 34 V. Hurley 13 V. Osgood 410 V. Myratt 193 Sanderson :;. Glass 192 Eoseman v. Canovan 69 V. Walker 238 xlvi CASES CITED. Sandford v. Norris Sands v. Codwise 0. Hughes Sanford v. Huxford , Alexander 61, Saratoga & S. B. Co. v. Boss Sargent v. Boberts Saunderson v. Glass Saufley v. Jackson Saunders v. Hatterman Sauntry v. Dunlap Savage v. Jackson Savary v. King Savery v. King V. Sypher Sawyer v. Prickett Say V. Banwick Schettler v. Brunettes Schmidt v. Heywood Schofield V, Blind Scholefield v. Templer Schuchardt v. Allen Schultz's Appeal Schuylkill Co. v. Copley Schwartz v. Saunders Schweitzer v. Tracy 37, Scofleld Co. V. State Scott V. Edes V. Gamble c/. Scott V. Schufeldt V. Umbarger Seaman v. Fonnereau Seeby v. Price Segrare v. Kirvan Seldon v. Myers Seligman v. Kalkman Selma B. Co. o. Anderson Selsey v. Ehoades Senhouse v. Earle Sepalino v. Twitty Seeright v. Fletcher Seton V. Slade Seving v. Gale Sewall V. Baxter Seymour v. Briggs V. Delancy 393 ii. Wilson 604 115 420 296 165 292, 293, 446 187 487 421 264 67 634 11 212 196 196 12 393 638 118 475 348 453 112 80 358 308, 812 317 585 256 24 93,94 255, 814 40 282 198 281 37 71,72 223 243 98 74 385 22 489 632 Sexton V. Sexton Shaeffer w. Sleade Shearer v. Shearer Shakle v. Baker Shande's Case Shannon v. Bradstreet Sharp V. Caldwell 232 10 456 12 431 396 350 Sharpe ». Foy 293, 316, 359, 361 Shartel's Appeal 248 Shautz V. Brown 618 Shaw V. First Methodist Soc. 103 • V. Spencer 296, 297 Shay V. Norton 116 Shedden's Case 172 Shell V. Stein 304 Shepardson v. Green 632 Sheppards v. Turpin 029 Sherley v. Billings 362 Sherman v. Eollberg 102 Shine v. Gough 396 Shipp V. Suggett 102 Shirts V. Overjohn 79 Shufelt V. Pease 308 Shumway v. Butter 98 V. Stillman 178 Sibley v. Beard 554 Sidney v. Banger 208 209, 210 Sidensparker v. Sidensparker 174, 175 Sides V. Hilleary 128 Sigler V. Knox Co. Bank 611 Sieveking v. Litzler 21 Sillymau v. King 495 Simar v. Canaday 97 Simons v. Great Western R." Co. 155 Simmons v. Cuttreer 128 u. Vulcan Oil Co. 248 Simms v. Richardson 315 Simpler v. Lord 265 Sims V. Bice 74,75 V. Ferrill 10, 554 Single V. Phelps 632 Singleton v. Kennedy 32 Skelton v. Flanagan 132 Skinner, Ex parte 140 V. Flint 477, 480 Skipwith V. Cunningham 629 Skowhegan Bank v. Farrar 565 Slade V. Little 26 CASES CITED. xlvii Slaughter v. Gerson V. Huling Sloan V. Kane Small V. Attwood I/. Boudinot V. Jones V. Small V. Smith Smalley v. Hale SmaUwood's Case Smart v. Walter Smith V. Abbott V. Acker V. ^tna Life Ins. Co. V. Asher V. Beatty V. Bank of Mobile V. Blake V. Braine 66,87 406 93 828 450, 462 142 125 131 477 444 591 ■173 608 476 604 281 815 831 180 V. Brotherline 211, 215, 217 V. CampbeU 185 V. Cash Ins. Co. 870 V. Countryman 32, 33, 67 V. Fenner 126 V. Gibbs 12 V. Graves 482 V. Harrison 472 V. Hines 96, 550 V. Hobbs 344 «. Holyoke 416, 417 V. Jackson 294 V. Keen 172 V, Lewis 468 V. McGowan 105 V. Mclver 325 V. Mace 99 V. Mitchel 554 V. Nelson 176 V. New York Life Ins. Co. 475 17. Osborn 311 V. Richards 67 V. Sac Co. 180 V. Sanborn 98 V. Smith 410 „. Thompson 208, 209, 214 V. Townsend 227 V. Wright 110 Snedacker v. Moore 390 Snell V. Mitchel 891 Snell V. Moses 429 Snodgrass v. Andrews 850 Snyder ». Christ 617 V. Mutual Life Ins. Co. 6 V. Sponable 818 Sofer V. Stephens 402 Soggins V. Heard 116 Somers v. Richard 498 Somes V, Brewer 162, 410 Sooy V. State 865 Sorrell v. Carpenter 300 South Carolina R. Co. v. Moore 182 Southern Ins. Co. o. Lanier 551 Southern Life Ins. Co. v. William- sou 477 Southwark Bank v. Cross 102 Southworth v. Smith 416 Spalding v. Hedges 67 Sparks v. State Bank 562 Spaulding v. Knight 60, 89 V. Strang 604 Speer v. Bid well 181, 182 Spedding v. Neville 58 Spence v. Union Ins. Co. 97 Spenceley v. De Willock 484 Spencer v. Handley 348 V. Vigneau 178 Spering's Appeal 250 Spies V. Boyd 602 Spiudler v. Atkinson 308 Spofford V. Weston 806 Sprague v. Duel 281 Spurgeon v. Collier 261 Spurgin v. Traub 75 Squire v. Horder 118 Stacy V. Ross 165, 415 Stafford v. Stafford 618 Stancell v. Kenan 120 Stansfield v. Habergham 241 Stapelton v. Stapelton 395 Staples V. Smith 481 Starkweather v. Benjamin 67, 69 Starr v. Bennett 73 V. Starr 610 •7. Strong 811 u. Torrey 415, 447 V. Vanderheyden 193 State V. Berg 107 V. Ford Co. 154 xlviii CASES CITED. State V. Halloway 10 Strode v. Blackburn 296 V. Little 172 Strong V. Downing 333 V. Mclntyre 168 V. Hines 477 State Bank v. Hamilton 62 Stuart V. Blum 184, 343 States V. Smith 437 V. Iglehart 349 Statham v. Ferguson 254 Stubbs «. Houston 120 Staton V. Pitman 630 Studwell V. Shafter 356 St Aubin v. Smart 376 Stultz V. Shaefle 123 Stebbins v. Peck 27 Sturge V. Starr 47,48 Steele v. Lowry 610 Sturtevant v. Jaques 247 Stein V. Valkenhuysen 165 Stryker v. Vanderbilt 326 Steinman v. Magnus 342 Sudley V. HaU 435 St. George v. Wake 50 Suter V. Matthews 332 Stephen v. Beall 246 Sutterthwaite v. Mutual Ins. Co. 371 Stephens, Ex parte 461 Suydara w. Moore 90 Sternburg v. Bowman 343, 344 Swan V. Scott 345 Stevens v. Buffalo E. Co. 605 Sweat V. Eogers 483 V. Fisher 603 Sweets V. Plunket 478 V. Lloyd 101 Swert V. Southcote. 307 Stewart v. Burlington E. Co. 433 Swezey v. Collins 466 V. Emerson 37,38 Swift V. Hart 603 V. Levy 376 i;. Holdbridge 610 V. Mather 228 V. Jewsbury 363 V. Nelson 308 V. Mass. Life Ins. Co. 470 V. Severance 144 V. Winterbotham 337 Stickland v. Aldridge 127 Swimm v. Bush 69 Stiles V. Cooper 396 Swink'w. Snodgrass 350 V. White 378 Sydnon v. Boberts 495 Still V. Wilson 168 Symes v. Hughes 170 Stine V. Shark 489 Symmons v. Pain 43 St. John V. St. John 339 Stockton V. Ford 208, 211 Stokeman v. fiawson 357 T. Stoker v. Clarke 243 Stone V. Covell 62 Tallmadge v. Sill 610 V. Dickinson 377 Tally V. Smith 285 V. Henderson 167 Tanes v. Bullitt 618 V. Lawman 172 Tannahill v. Tuttle 579 xi. Stone 98 Tapp V. Lee 25,88 Stonebreaker ;;. Kerr 560 Tappan v. Evans 167 Stoolfoos V. Jenkins 356 Tarleton v. Shingler 100 Storer v. EUis 105 Tate V. Liggal 629 Stoughton V. Lynch 233 ' 456 V. Williamson 218 Stovell V. Northern Bank Tattersall v. Groote 147 Stover V. Wood 19 Taylor v. Ashton 61 Stow V. Bozeman 16 V. Atchison 75 Strady v. State 483 V. Beale 631 Strathmore v. Bowes 49, 50, 51 V. Boardman 216 Straus V. Herman 654 V. Bowers 170 CASES CITED. xlix Taylor v. Guest 85 Tift V. Barton 604 V. Harding 646 Tifft V. Munson 304 V. King 826 Tillinghast v. Champlin 465 V. Knox 228 Tippecanoe Co. v. Reynold ! 249, V. Leith 62 250 u. Luther 116 Tisdale v. Bailey 52 u. Pugh 62,53 Titus V. Great Western Turnp. 369 V. Robinson 480 Tobey v. McAllister 22 V. Kooliford 278 Tobin V. Shaw 496 V. Taylor 166 268, 264 Toby V. Reed 546 Taylour v. Rochfort 186 Todd «. Bank of Kentucky 101 Teakle v. Bailey 223 Tompkins v. Tompkins 267 Tee V. Ferrie 119 Tomson v. Judge 193, 196 Teft V. Stewart 832 Tong V. Martin 414 Temple v. Hooker 273 V. Marvin 453 Tenant v. Rumfield 562 Toof V. Martin 633, 534 Tenny v. Poor 569 Tooras V. Conset 261 Terry, In re 533 Topham v. Portland 133, 136 V. Tuttle 80,81 Towne v. Wiley 356 Thom V. Bigland 57,83 Townsend v. Bogart 376 Thomas v. Barton 443 0. Stangroom 397 V. Chapman 443 Tracey v. Sackett 283 V. Coultas 406, 408 Tracy v. Herrick 182 V. Gaines 631 V. Tallmadge 169 V. Goodwin 575 Traders Bank v. Campbell 533 V. Kennedy 295 Trammel v. Swan 150 V. MeCann 62 Tremper v. Barton 610 V. McCormiok 116, 120 Trevelyan v. Charter 223 Thomson v. Thomson 397 Tribe v. Tribe 122 Thompson v. Cartwright 293 Trice v. Cockran 453 V. Harrison 24, 364 Trigg V. Taylor 103 V. Lee 308 Tripp V. County Commis. 435 V. Rose 37 Trockmorton v. Rider 495 V. Shannon 476 Trotter v. Smith 201, 208 V. Shepler 508 Truebody v. Jacobson 468 V. Simpson 357 Truit V. Lee 25,83 v. Stone 571 Truitt V. CaldweU 584 o. TJpdegrafE 501 V. Ludwig 616 V. White 113 Tuck V. Buckley 252 Thomburgh v. Hand 540 V. Downing 14, 19, 64 Thoroughgood's Case 155 Tucker v. Moreland 353 Thorpe v. Beavans 308 Tuckwell V. Lambert 847 Thouvenin v. Rodriguea 172 Tully V. Harloe 541 Thurston v. Blanchard 419, 461 Tune V. Rector 402 Thurtell v. Beaumont 475 Tupper V. Phipps 128 Tibeau v. Tibeau 889 Tuttle V. Brown 508 Tiernan v. Thurman 289 Tweddell v. Tweddell 261, 395 Tiffany v. Boatman's Inst. 534 Twining v. Morrice 397 V. Lucas 534 Tyler, In re 582 OASES CITED. Tyrrell v. Bank of London 193, 212 Tyson v. Booth 478 U. United Soc. v. Underwood 363 United States v. Hint 171, 172 V. Mertz 486 Unity Joint Stock Assoc, v. King 357 Uppington v. Bulleu 207 Upton V. Raiford 469 V. Tribilcook 9, 21, 22, 443, 444 V. Vail 25 Upahaw v. Debow 67, 68, 423 Uzzle V. Wood 113 Veazie v. Williams Venable v. Levick Venezuela By. Co. v. Kish Vennard v. McConnell Vernol v. Vemol Vernon v. Bethell V. Kirk Verplank v. Mercantile Ins. Villa V. Rodriguez Visher v. Webster Vogle V. Lathrop V. Ripper Vorhees v. Bonesteel V. Seymour Vose V. Eagle Life Co. Vrooman v. Phelps Vulliamy v. Noble W. Co. 145, 411 373 25 571 187 261 270 250 259 100 533 104 450 175 62 326 461 Vale V. Butler 480 Valentine v. Stewart 210 Wade }. Green 624 Vallett V. Barker 130 V. Pettibone 208, 211 Van Armringe v. Morton 813 V. Withington 99, 163 Bracklin v. Fonda 35 Wadsworth v. Haven 604 Buskirk v. Warren 603 V. WiUiams 574 Cleef V. Fleet 403 Wager v. Hall 533 Cortlandt v. UnderhiU 182 Wagner v. Freshl 376 Duzen v. Howe 103 Wailes V. Cooper 315 Epps V. Harrison 18,19 Wakeman v. Dalley 318 Heusen v RadcUff 605 V. Hazleton 259 Keuren v. Central Ry. Co. 296 Walbum v. Babbitt 533, 534 Meter v. Jones 265 Waldo V. Chicago R. Co. 72 Orman v. MerUl 293 Walkei V. Ebert 80 Pell V. Veghte 380 V.Hill 388 Toll V. Southeastern Ry Co. 43 V. Hunter 435 Vane v. Dungaunon 133 V. Klock 109 V. Vane 444, 445 V. Locke 118 Vanderhoof v. City Bank 533 V. McConico - 624 Vanderveer v. Mason 174 V. McCoy 286 Vanscoyoc v. Kimler 365 V. Mobile & Ohio R. Co. 14, Varrick v. Briggs 301 159 Vasquez v. Richardson 256 V. Osgood 227 Vattier v. Hinde 315 V. Smith 193, 194 , 196, 197, V. Hude 314 199 Vaughan v. Vanderstegen 858, 859, V. Walker 435, 448 361 V. Wynne 624 Vaughn v. Dotson 435 Wall V. Grove 223 Veale v. Warner 180 Wallace v. Brown 887, 388 CASES CITED. 11 "Wallace v. Harmstad 496 Webb V. Claverden 821 V. Harris 500 V. Eogers 372 V. Eelsall 852 u. Eorke 261 V. McVey 282 Weber v. Donnelly 169 V. Wallace 262 V. Weetling 138 V. Wren 508 Webster v. Bailey 69 Waller v. Armistead 253 V. Hunger 169 Wallwyn v. Lee 296 Weed V. Bentley • 22 Walmesley v. Booth 191, 219 V. Davis 554 Walsh V. Hall 67 V. Page 460, 461 Walsham v. Stainton 378 Weeks v. Downing 477 Walter v. Hastings 100 Weidler v. Farmers' Bank 365 Wannell v. Kem 71 Weir V. Fitzgerald 120 Wanzer v. Bright 165 , 166, 171 Well V. Thornagh 883 V. De Baum 4, 30, 118, 177, Wellborn v. Tiller 494 463 Welles V. Cole 631 Ward V. Allen 103, 105 V. Middleton 193 V. Ayre 97 Wellesley v. Morrington 134 Warde v. Dixon 133 Wellington v. Small 86, 381 Wardell v. Howell 131 Wells V. Cook 347 Waring V. Macrath 395 V. Girling 342, 343 V. Smith 104 V. Gurney 165, 166 Warner, In re 530 V. Polk 305 u. Witacker 314 V. Waterhouse 85 Warren v. Carey 333 Welsh, In re 123, 272 V. Lee 536 Wentz V. Morrison 508 V. Lynch 129 West V. Anderson 401 V. Swett 288 V. Crawfordville Turnpike Co. 72 Warrington v. Earle 100 V. Moore 356 Wartembergh v. Spiegel 282 Western Bank v. Addie 863, 409 Washington Bank v. Lewis 369 Western Transportation Co. V. Washington Ins. Co. v. Wilson 475 Newhall 41 Washington Life Ins. Co. v. Haney 63 Waterman v. Seeley 111 V. Whitney 501, 502 V. Vose 100 Waters Heather Co. v. Smith 479, 480 Waterson v. Waterson 199 Watkins v. Corsall 228 V. Beck 289 Watson V. Atwood 68 a. Hempsworth Eosp. 140 V. Phelps 315 V. Walker 431 Watt's Appeal 869 Watt V. Scofield 289 Watton V. Toone 256 Way V. Cutting 444, 445 Weaver v. Carpenter 442 Wetherell v. Spencer 579 Whaley v. Small 804 Wheelden v. Lowell 406 Wheeler v. Eice 374 V. Sage 234 V. Willard 208 Wheelock v. Freeman 49, 99 Wheelwright v. Jackson 342 Whitaker v. Bond 142 V. Brown 373 „. Garnett 489 Whitbread v. Jordan 303 White V. Carpenter 109, 110 V. Cole 603 V. Concord E. Co. 509 V. Fitzpatrick 635 V. Graves 162 lii CASES CITED. White V. Hurs 99 V. Madison 58 V. St. Barbe 136 V. Sawyer 363, 368, 376 V. Small 284, 286 V. "Walker 650 V. Watkins 389 *v. Whealey 216 Whittemore v. Cowell 323 V. South Boston Mass. Co. 508 Whitesides v. Northern Bank of Kentucky 101 Whiting V. Hill 64 V. Johnson 616 Whitney v. Allaire 16, 415 V. Eoberts 406 V. Snyder 76 Whittier v. Frye 99 V. Varney 479 Whittiflgham v. Burgoyne 339 Whittington v. Doe 554 u. Wright 357 Wicker v. Hoppock 143 Wier V. Still 93 Wirst V. Garman 281 Wiggin V. Day 37, 480 V. Boston & A. E. Co. 42 Wiggins V. Armstrong 168 Wight ».- Shelby E. Co. 71 Wightman v. Western Ins. Co. 476 Wilbur V. Flood 416 Wilcox I). Iowa Univ. 472 Wilcoxen v. Annesley 559 V. Morgan 545 Wilde V. Armsby 106 V. Gibson 316 Wilder v. De Con 20, 70, 498 V. Fordey 604 Wiley V. Howard 333 V. Knight 535 Wilkinson v. Stafford 242 Willard v. Rice 98 William v. Sturtevant 468 Williams, Ex parte 148 V. Avery 535 V. Bacon 166 V. Baker 81, 162 V. Beazley 38, 34 Williams v. Brown 168 V. Carle 50 V. Coggeshall 571 V. Goude 123 V. Hartshorn 469 u. Hill 494 V. Ketchum 419 u. McCormlck 388 V. Maul 535 V. Mitchell 332 V. Piggott 213 V. Presbyterian Soc. 444, 446 V. Eobins 450 V. Smith 559 V. Spurr 32, 33 Williamson v. Allison 453 V. Goodwyn 630 Willis V. Valette 288, 289, 316 Wilson, Ex parte 348 V. Beadle 624 V. City Bank 538 V. Convay Fire Ins. Co. 378 V. Eggleston 111 V. Forsyth 604 V. Green 337 V. Greenwood 233 I/. Harris 107 V. Joy 445 V. Lott 550 V. Moore 379 V. Moran 199 V. Eobertson 602 V. Watts 118 V. Williams 373 Wilt V. Welch 355 Wimer v. Pritchartt 840 Winn V. Barrett 350 Winchell v. Carey 27 Wineland v. Coonce 591 Winsor ;;. Lombard 34 Winter v. Bandel 88 V. Bullock 554 Wise V. Harden 213 V. Wilcox ^ 26 Wiseley v. Findlay 825 Wiswall V. Hall 16 Whiter v. Brooks 47 Wolcott V. Heath 34 Wolford V. Herrington 114 CASES CITED. liii Wood V. Downs 198 Wright V. Howe 268 V. Goodrich 326, 829 V. Maxwell 659 V. Lowry 603, 606 V. Snow 357 V. North 401 V. Vanderplank 263 V. Pindall 156 V. Walker 801 V. Robins 611 u. Wood 294 V. Steele 99, 102 Wrigley v. Swainson 50 V. Vance 355, 856 Wyche v. Macklin 826 327 Woodbury v. Eobin 492 Wyman v. Rae 488 Woodhouse v. Meredith 223, 239 Wynne, In re 630 Woodman v. Freeman 832 Wyse V. Lambert 218 Woodruff «. Garner 61 V. Philipps 529 Woodson V. Pool 690 Wooton i;. Hinkle 141 Y. Woodward v. Solomon 664 V. Thacher 508 Yates, Ex parte 102 V. Wilcox 560 Yeates v. Prior 6,402 ,425 Woodworth v. Paige 288, 289 Yeomans v. Brown 569 Woodyer v. Great Western R. Co. 507 York Building Co. v. MacKenzie 228 Wooley V. Campbell 97 York V. Gregg 31 Woollam V. Hearn 390 York & M. Ry. v. Hudson 238, 248, Worcester v. Eaton 344 250 Wormley v. Moffet 327 Yost V. Shaffer 402 V. Wormley 135 Young V. Bradley 808 Wormald v. Maitland 303 V. Edwards 474 ,475 Worsley v. Scarborough 301 V. Grote 103 Worthy v. Caddell 312 V. Hopkins 68 Wortman v. Skinner 256 u. Young 488 Wren v. Kirton 225 Wrench v. Murray 269 Wright V. Arnold 858 Z. V. Frilley 530, 533 V. Hancock 629 Zerba v. Miller 476 V. Hardy 475 2eigler v. Maddox 690 INTRODUCTION. INTRODUCTION. The substantive law of fraud is divided into two branches, actual and constructive or presumptive fraud. Actual fraud is fraud in fact, involving turpitude : constructive or presump- tive fraud is fraud in law. In the former, therefore, the essential elements of fraud in the sense of dolus malus must be present ; while it is consistent with the existence of the latter that such elements should be wanting. In the case of a charge of actual fraud, it devolves upon the complaining party to prove the elements referred to ; and these will vary with the nature of the wrong alleged to have been committed. These elements, however, need not be proved, in all cases, by express evidence directed to the pre- cise purpose of establishing them. The proof of one fact will often establish another. Proof, for example, that A sold to B a horse through misrepresentations of the animal's sound- ness, known by him (A) to be false, will establish an inten- tion on the part of the seller to deceive the purchaser. This is not, therefore, a case of presumptive fraud, except in so far as it comes within the general rule that a man is presumed to know and intend the consequences of his own acts ; under which rule all the legal eifects of a man's conduct are pre- sumptive. This, it is sufficient to say, is not the kind of presumption which is meant by the term " presumptive " or " constructive " fraudi Fraud in the above example is as Iviii INTEODTJCTION. truly proved as it is by express evidence of an intent to deceive in cases in which the action of the plaintiff, and the defendant's knowledge of the falsity of his statements, do not prove the bad intent ; as in actions for false representations concerning the solvency of a third person.^ It follows that the term " presumptive" or " constructive " fraud has no reference to inferences of fact, drawn from the proof of other facts, when those inferences establish, prima facie, the existence of actual fraud (^dolus malus). Such fraud is fraud in fact, and is to be found by the jury in cases at law, and by the chancellor, acting as a quad juror, in cases in equity. Constructive or presumptive fraud is an inference of law, not to the effect that an actual fraud has, in the absence of explanation, been clearly proved, but either that, judging men as very fallible beings, and likely to yield to strong temptation, it is probable that fraud was committed ; or that the existence of certain things in the relation or con- duct of parties begets a probability of actual knowledge of fraud, or what will lead to fraud, on the part of the person complained of. In the latter case, the presumption may be conclusive, and thus preclude the party from showing that the inference of fraud is false ; as in certain cases of construc- tive notice.^ But the fraud thus fixed is still presumptive only, and in reality may not have existed. There are many subjects in which the doctrines of both actual and constructive fraud may arise. In all cases of con- structive fraud, there may also be actual fraud ; and in most if not in all cases of actual fraud, the doctrines of construc- tive fraud may arise. The two branches must, therefore, frequently be considered side by side ; and sometimes, on the other hand, a single subject must be divided and examined in 1 See post, pp. 82, 83. 2 gee post, p. 288 et seq. INTRODUCTION. lix widely separate positions under each of the heads of fraud. For example, dealings with illiterate, weak-minded, or drunken persons are looked upon by the courts with great suspicion, and fraud is very easily — indeed, generally — presumed ; and this fact requires the presentation of that subject under the head of constructive fraud. But actual fraud may also be committed upon such persons ; and hence the subject must also be presented under the head of actual fraud. The sub- ject of trusts must be divided, and part of it presented under the one and part under the other head. Transactions, for example, between express trustees and their eestuis que trust, such as gifts or sales in the interest of the former, are pre- sumed to have been effected by undue influence ; and? this branch of the subject belongs, therefore, to constructive fraud. But when money is put by A into the hands of B, for the purchase by the latter on behalf of the former of a piece of land, and B makes the purchase, but (contrary to the agree- ment) takes the title in his own name, he has been guilty of gross dishonesty of conduct toward A, for which the law treats him as a trustee. Such a case is a case of actual fraud, and must be treated under that head : and so of other cases. So much has been deemed important as an introduction to the consideration of the substantive law of fraud, and as an explanation of the basis of the division and subdivision of the subject. It is not necessary to make any preliminary obser- vations concerning procedure, the subject of Part II. PART I. SUBSTANTIVE LAW OF FRAUD. I. ACTUAL FRAUD, n. PRESUMPTIVE OR CONSTRUCTIVE FRAUD. PAET I. SUBSTANTIVE LAW OF FRAUD. I. ACTUAL FEAXJD. CHAPTER I. DECEIT. § 1. Inteodtjctoey. Deceit is the type of fraud, and demands therefore the first and the chief place in a work on the Law of Fraud. All fraud, in the proper sense of that term, is accompanied by, and indeed worked out through, deception. But the decep- tion by which actionable or redressible fraud is effected makes an extensive and somewhat artificial branch of law, and de- mands, for the purposes of the present work at least, a minute and detailed examination ; and to such we now proceed. It is a general rule of law that, in order to obtain redress or relief from the injurious consequences of deceit, it is necessary for the complaining party to prove that his ad- versary has made a false representation of material facts; that he made it with knowledge of its falsity ; that the complaining party was ignorant of its falsity, and believed it to be true ; that it was made with intent that it should be acted upon ; and that it was acted upon by the com- plaining party to his damage. But, like all general rules, this proposition needs both illustration and explanation. Aside from the situations in which it is strictly true, and these are not many, it must in several particulars be qualified 4 ACTtTAL FRAUD. [CHAP. I. by rules of law quite as important as the main proposition itself. We propose now to examine the proposition in its several parts, in the order above indicated, and to present such illustrations and explanations of it as may serve to enforce the precise meaning and limits of the doctrine. § 2. Of the Nature of the Representation, includ- ing- Concealment. First, then, we have to consider the nature of the repre- sentation itself, and to ascertain what sort of representation is necessary (assuming the other elements present) in order to entitle the complaining party to redress or relief against the alleged wrong-doer. The representation need not be in words.^ There is no distinction between frauds which are effected by acts alone and frauds which are effected by words.^ For example, if one procure the indorsement of a party to a note or bill, in order to effect a sale of it, the act is equivalent to an affir- mation that such party is competent to indorse ; and, if he be not, the person procuring his signature is liable to the purchaser of the paper.^ Upon the same principle, in order to obtain a decree of nullity of marriage from a woman on the ground of fraudulent representations on her part that she was chaste, when in fact she was with child by another man at the time of the marriage, it is not necessary to prove any express representations by the woman.* It is sufficient to prove that the acts and conduct of the party were such 1 Lobdell V. Baker, 1 Met. 193 ; Mizner v. Kussell, 29 Mich. 229 ; Lee ». Jones, 17 Com. B. n. s. 482 ; s. c. 14 Com. B. n. s. 386. ^ Marsh v. Wilson, Busb. 143. ' Lobdell V. Baker, 1 Met. 193. * Donovan v. Donovan, 9 Allen, 140. See Reynolds v. Reynolds, 5 Allen, 605. § 2.] DECEIT. 5 that a reasonably cautious and prudent person might be misled or deceived as to the existence of a particular fact which formed the basis or contributed an essential ingredient to the contract, and that such acts and conduct were designed and adapted to create a false impression and belief in the mind of the other party. ^ Again, where actual language is used, no one can evade the force of the impression which he knows another has received from his words and conduct, and which he meant him to receive, by resorting to the literal meaning of his language alone. Every one is responsible for the belief he intentionally creates, whether by words or otherwise, and will be precluded from profiting, for example, by any uncon- scionable use of an obligation which has been thus wrongfully obtained.^ To constitute a fraudulent misrepresentation, it is not nec- essary that statements should be made in terms expressly affirming the existence of some untrue fact. If the alleged misrepresentation be made by one party in such terms as would naturally lead the other party to suppose the existence of such state of facts, and if it be so made designedly and fi'audulenj^, it is as much a fraudulent misrepresentation as if the stdltement of untrue facts were made in express terms.^ Language, further, is to be interpreted in the sense in which it would generally be understood by persons familiar with its particular use, unless some different intention be manifested. Thus, a vendor representing land offered for sale by him along the Mississippi River as high bottom land, free from overflow, must be understood as meaning that the land is such as is free from all except extraordinary overflow, according to the natural meaning attached to such terms in relation to Mississippi or other bottom lands, by those accus- 1 Donovan v. Donovan, supra, Bigelow, C. J. 2 Mizner v. Kussell, 29 Mich. 229. See Fisher v. Meister, 24 Mich. 447. » Lee V. Jones, 17 Com. B. n. s. 482 ; s. c. 14 Com. B. n. s. 386. 6 ACTUAL FRAUD. [CHAP. I. tomed to speak of them ; unless, by the particular language used in connection with these terms, a different meaning would be more natural.^ And, in determiiiing whether the vendor misrepresented the character of such land, the condition of the land at the time of the contract is to be considered. Subse- quent changes in its condition, produced by change of current, cut-off, or otherwise, are not to be regarded ; nor the state of overflow at any time, or under any circumstances, subsequent to the execution of the contract, only so far as the same may tend to show what the elevation of the land truly was when the contract was made.^ A party to a written contract may perpetrate a fraud upon the opposite party as well by false and fraudulent repre- sentations of the meaning of words used in the contract as in any other way. And if such words are material to a proper understanding of the agreement, and the other party, being ignorant of their true meaning, relies and acts upon such representation to his injury, he will have a good defence to an action upon the contract.* The allegation of only part of the truth, with a view to deceiving the other party, and inducing him to act dif- ferently than he otherwise would do, is a fraud^for which the contract may be repudiated, or an action foi'"'damages maintained.* Thus, the defendant in the case first cited, being desirous of purchasing certain stock of the plaintiff, of the value of which he knew she was ignorant, told her, for the purpose of misleading her and inducing her to sell the stock at less than its value, of a fact calcu- lated to depreciate the value of the stock ; but he omitted to disclose other facts within his knowledge which would have given her correct information of such value, and by 1 Yeates v. Prior, 6 Eng. (Ark.) 58. " lb. 8 Calkins k.' State, 13 Wis. 389. * Mallory v. Leach, 35 Vt. 156; Snyder v. Mutual Life Ins. Co., 4 Big. 424. § 2.] DECEIT. 7 this course he succeeded in obtaining the stock at much less than it was worth. There was evidence also tending to show a relation of confidence between the parties.^ It was accord- ingly held that the conduct of the defendant was fraudulent, entitling the plaintiff to damages for the loss sustained. Hence, a fortiori, a representation that a party is owner of certain buildings is false, if they belong to his wife, and he have only a revocable license to use them.'^ And the effect of a partial misrepresentation is not to alter or modify a transaction pro tanto, but to destroy it entirely, and to operate as a personal bar to the party who practised it.^ This is true, at least, where the aid of equity is invoked to obtain the specific performance of a contract.* If it were otherwise, — if a contract in such case were only to be altered pro tanto, — there would be great encouragement for fraud. If not found out, the party would gain his object ; and, if detected, he would have the benefit of the contract in the same manner as if he had prac- tised no deception. The Court of Chancery has therefore settled the requirement that he must come into court with perfect propriety of conduct. If he does not, that alone is a sufficient answer to him.^ Further, the misrepresentation must be material; and it is material if the transaction might not have taken place without it. This, however, does not mean that the particular misrepresentation complained of must have been the sole inducement to the plaintiff's action. The rule simply means that the particular representation in question must have been necessary, even with other induce- ments, to cause the party to act as he did. And whether the ' Qumre if this were material in sueh a case 1 2 Moore v. Cains, 116 Mass. 396. 8 Clermont v.. Tasburgh, 1 Jac. & W. 112. * lb. ; Cadman v. Homer, 18 Ves. 10. ' Clermont v. Tasburgh, supra. 8 ACTTJAL FRAUD. [CHAP. I. representation were in this sense material is a question for the jury.i Whether the misrepresentation of a fact supposed at the time to be material, but which afterwards turns out to be immaterial, can be set up by the party to whom it was made, is a question of some interest. It would seem that it could ; since a party's rights and duties are in general to be judged of, and properly so, by the motives operating at the time of the transaction. However, it has recently been decided that where, in the sale of a patent right, the vendor represented that a certain contrivance of the invention was one of great utility, when in fact it after- wards proved to be worthless, without, however, affecting in any way the general utility of the invention, the mis- representation was not such an one as would entitle the purchaser to set aside the sale. But the court observed that there was no evidence that the purchaser was at all influenced by the misrepresentation referred to.^ It would seem to be no answer to an allegation of this kind, in a suit ex contractu^ that the article was just as good as it would have been had the representation been true ; for though this would show that no damage had been suffered, and hence that an action for deceit could not be maintained, the purchaser still is en- titled to what he contracted for. He may have regarded the fact as of the essence of his purchase ; and that should be sufficient to enable him to return the property, and de- mand back the consideration. In the next place, the matter misrepresented must, in general, be fact as distinguished from law. A represen- tation of what the law will or will not permit "to be done is a matter upon which the party to whom it is made cannot safely rely. If he does so, he cannot ask the courts to relieve him from the consequences. The truth 1 McAleer v. Horsey, 35 Md. 439. 2 Percival v. Harger, 40 Iowa, 286. § 2.] DECEIT. 9 or falsehood of such a representation is matter of law which all parties are bound to know.^ Hence, a stockholder in a corporation cannot be relieved of his connection with the concern on the ground that he was misinformed as to the legal effect of his contract.^ Nor can a defendant, who could not by contract lawfully relieve himself from liability as a stoclcholder, accomplish that result by proof that it was fraud- ulently represented to him that he could so relieve himself.^ And this rule prevails in equity as well as at common law.* It is not, however, universally true that a misrepresen- tation of the law is not binding upon the party who made it. Thus, where a party, knowing that a promis- sory note was barred by limitation, stated to the repre- sentative of the maker that the note was unpaid and valid in law, and obtained a bond from such representative in con- sideration of an agreement to provide for part of the note, it was decided that the facts stated were a good defence to an action on the bond.^ Where one who has had superior means of information pro- fesses a superior knowledge of the law, and thereby obtains an unconscionable advantage of another who is ignorant, and has not been in a situation to become informed, the injured party in justice is as much eijtitled to relief as if the misrepresentation had been concerning matter of fact. And this principle has been applied to the case of an immigrant, who, having just arrived from abroad, meets an old citizen who professes familiarity with the land titles of the country, and proposes to sell him land, to which, he 1 Fish V. Clelland, 33 111. 243 ; Upton v. Tribilcock, 91 U. S. 45, 50; Grant v. Grant, 56 Maine, 573 ; Martin v. Wharton, 38 Ala. 637. 2 Upton V. Tribilcock, supra. « lb. ; Ogilvie v. Knox Ins. Co., 22 How. 380. * Upton V. Tribilcock. 6 Brown v. Rice, 26 Gratt. 467. 10 ACTUAi PBAUD. [CHAP. I. assures the immigrant, he has a perfectly good title ; though the statement in reality was a misrepresentation of law.^ In transactions between parties in confidential relations towards each other, even innocent misrepresentations of the law may be fatal. Thus, where trust and confidence were reposed by a widowed sister in-law in her brother- in-law, and the former was led to believe that her title to certain' property was invalid, and in this belief sold it to the latter at a low price, it was held that she could avoid the sale, though the misrepresftitation was made in good faith.^ So, too, if a party to a contract place a known trust and confidence in the other party in respect of a mixed ques- tion of law and Jact, and the latter purposely mislead him, equity will grant relief.^ Where the purchaser of a note, knowing the ignorance of the seller, induced the latter to sign a guaranty that it was "good," upon the representation that the legal effect of that term was simply that the note was genuine and un- paid, the deluded party was held entitled to relief as against the purchaser.* But a misrepresentation as to the legal effect of a guaranty, in a matter of mere judgment equally open to the inquiries of both parties, does not constitute a fraud, unless some peculiar fiduciary relation exists between the parties, of which one knowingly avails himself to mislead the other by such misrepresentation, or knowingly takes advantage of the other's ignorance of law.* The misrepresentation complained of should also be clear 1 Moreland v. Atchison, 19 Tex. 303. 2 Sims V. Ferrill, 45 Ga. 585. 8 Peter v. Wright, 6 Ind. 183 ; Shaeffer v. Sleade, 7 Blackf . 178 ; State V. Holloway, 8 Blackf. 45 ; Cooke v. Nathan, 16 Barb. 842 ; 1 Story, Equity, §§ 130-133. * Cooke V. Nathan, 16 Barb. 342. See Hirschfield v. London Ry. Co., Law R. 2 Q. B. Div. 1. See, however, Lewis v. Jones, 4 Barn. & C. 506 ; Edwards v. Brown, 1 Cromp. & J. 307. 5 Townsend v. Cowles, 31 Ala. 428 ; Cowles v, Townsend, 37 Ala. 77. § 2.] DECEIT. 11 and certain, otherwise the party to whom it is made will not be justified in acting upon it. Thus, a vendor, about to sell a tract of land, pointed out to the purchaser the probable western boundary ; the boundary having no marks to designate it, but being an open line, and its definite position not certainly known. Upon a survey of the line after the purchase, it was found further east than repre- sented, and twenty-five acres were cut off which the pur- chaser supposed he was buying ; without, however, diminish- ing in the result the number of acres contracted for, or their quality. It was held that the misrepresentation was not of a character to justify a rescission of the contract. ^ It might have been otherwise, had the misrepresentation materially affected the subject of the purchase ; ^ for in such case, though an action for deceit could not have been maintained, the contract would have failed for want of identity between the prem- ises as actually existing and those agreed upon. A representation in regard to the existence of prior incum- brances to a party about to take a mortgage of premises, " that there was none, so far as he [the mortgagor] knew," is not a distinct statement of fact. The import of the language simply is, that the mortgagor did not know whether there was a prior incumbrance or not ; and this is enough to put the mortgagee upon inquiry to ascertain the fact for himself.^ So, too, a mere statement that an- other is " a fine man, and the owner of a considerable estate and able to do well," is not such a representation of solvency as may safely be acted upon.* It follows also from this rule, requiring the representa- tion to be certain and definite, that it must relate to a present or past state of facts.® Relief as for deceit cannot 1 Halls V. Thompson, 1 Smedes & M. 443. = lb. « Bristol V. Braidwood, 28 Mich. 191. * Savage e. Jackson, 19 Ga. 305. ' Gage V. Lewis, 68 111. 604 ; Morrison v. Kock, 32 Wis. 254 ; Hazlett 12 ACTUAL FRAUD. [CHAP. I. be obtained for the non-performance of a promise/ or of other statements looking to the future.^ Even equity will not relieve against misrepresentations of facts yet to come into existence ; representations based upon general knowledge, information, and judgment, as distinguished from representations which, from knowledge peculiarly his own, a party may certainly know whether they are true or false.® The above doctrine, however, proceeds upon the supposi- tion that the statement is an expression of an honest intention ; and, such being the case, it is to be received with the understanding that the party making it may change his mind. But if the statement were not an honest one ; if the party had no such intention at the time of the statement as he expressed ; if in this sense it were fraudulently made, the injured party will be entitled to relief.* Relief is sometimes given in equity on the ground of fraud, for a failure to observe the implied understanding of the parties to the sale of a good will.^ But, if the right of redress rest upon the ground that the action is a breach of one of the implied terms of the contract of sale, it is clear that the application of the term " fraud " to the act of the defendant is not accurate. The " fraud upon the agree- ment " is simply a breach of the terms of the contract of sale. It is extremely doubtful if such an act would sup- port an action of deceit. If, however, instead of being a V. Barge, 22 Iowa, 535 ; State v. Prather, 44 Ind. 287 ; Fouty v. Fouty, 34 Ind. 433 ; Hartsville Univ. v. Hamilton, lb. 506 ; Long v. Wood- man, 58 Maine, 49 ; Pedrick ». Porter, 5 Allen, 324. 1 Jordan v. Money, 5 H. L. Cas. 185; Citizens' Bank v. First National Bank, Law R. 6 H. L. 352, 360 ; Long v. Woodman, 58 Maine, 49. 2 Pedrick ». Porter, 5 Allen, 324. » Sawyer v. Prickett, 19 Wall. 146. * Kimball v. JEtna Ins. Co., 9 Allen, 540. 5 Shackle v. Baker, 14 Ves. 468 ; Harrison v. Gardner, 2 Madd. 198 ; Cruttwell V. Lye, 17 Ves. 346 ; Smith v. Gibbs, 44 N. H. 335. § 2.] BECEIT. 13 mere breach of an implied undertaking, it should appear that, when the defendant made the supposed representation that he would not set up a rival business within the limits under- stood, he had no intention of keeping the same, proof of such fact would be a fraud. ^ Statements as to the operation and utility of an invention must, in most cases, be mere matter of opinion ; upon which, therefore, a purchaser cannot safely rely. Thus, in a recent case,^ the defendant to a suit upon a note given for the purchase of a patent right pleaded as follows : That the plaintiff exhibited to him a model of the inven- tion (a machine), and " claimed " that the machine, when properly constructed, would cut a ditch for draining pur- poses ; that the defendant had no means of knowing whether it would do so or not ; that, relying upon such representa- tions, he made the purchase and executed the note ; that, when the machine was duly constructed, it failed to pro- duce the result and was of no value ; and that this was known to the plaintiff at the time of the sale. On demurrer, it was held that the plea was not an answer to the suit.* But the purchaser of a patent may rely upon the representations of the vendor as to what is covered by the patent ; and, if there should be no patent for a material part of that which is exhibited by the vendor as an invention, the purchaser is entitled to relief.* In general, equity will set aside conveyances of property on the ground of misrepresentation, only where the mis- representation relates to the quantity, quality, or situation of the property, or the pecuniary responsibility of the pur- chaser, or something of that nature. But the courts do not limit themselves by set rules or precise definitions, par- 1 See Kimball ». .Sltna Ins. Co., 9 Allen, 540. 2 Hunter v. McLaughlin, 43 Ind. 38. 8 See Kemodle v. Hunt, 4 Blackf . 57 ; Gatling v. Newell, 9 Ind. 572. * Rose V. Hurley, 39 Ind. 77.;; 14 ACTUAL FEATJD. [CHAP. I. ticularly in matters of fraud. Fraud is so multiform as to admit of no such rules or definitions ; and hence equity leaves the way open to punish frauds, and redress wrongs perpetrated by means of them, in whatever form they may appear. A misrepresentation producing confusion and terror of mind, unsettling the judgment, and depriving the party of the reasoning faculty, so that he cannot think or act deliberately or with knowledge and calmness ; a misrepre- ' sentation made to produce such an effect on the mind, with intent to take advantage thereby, is one which equity wiU consider and redress in a suit to set aside a conveyance.^ Representations made by an agent of a railroad company in regard to the value of a donation of land made to the com- pany, and in regard to the amount of assets of the company, and their ability to complete the road within a specified time, and the probable cost and profits of the road, though false and exaggerated, and intended to induce persons to subscribe for stock in the company, are but expressions of opinion. Subscribers for stock have no right to rely upon them ; and, if they do, they cannot set them up as ground for avoiding the contract of subscription .^ So, too, advertise- ments of the sale of town lots, in which the prospective and present advantages of the town are set forth, and vague, general representations in relation to the value of the lots, will not, though false, be deemed fraudulent, so as to jus- tify a court in granting rescission of contracts of sale made by reason of such representations.^ A bill was filed in a recent case* to set aside the pur- chase of an interest in a certain mine in Utah, and for the cancellation of a note given for the price, on the ground of fraudulent misrepresentations of the quality and 1 Knelkamp v. Kidding, 31 Wis. 503, Dixon, C. J. 2 Walker v. Mobile & 0. R. Co., 34 Miss. 245. » Anderson o. Hill, 12 Smfdes & M. 679. * Tuck V. Downing, 76 111. 71. § 2.] DECEIT. 15 prospects of the mine. It appeared that the vendor went East to make sales of shares, and upon his representa- tions procured capitalists to appoint a committee to go and investigate, the purchaser acting with the rest in the appoint- ment. The committee reported that the representations were true ; and the vendor made extravagant declarations of the prospects of the mine, but made no warranty aside from the nature of such representations. It was considered that such declarations could only be regarded as the expression of an opinion of a matter concerning which the committee could, and were bound to, judge for themselves ; and the sale was accordingly decided to be valid. A buyer, in general, is not liable for misrepresenting a seller's chance of obtaining a good price for his prop- erty ; but, if there be any peculiar relation between the parties implying or leading to confidence, the contrary is true.^ Thus, in the case cited, the president of an in- surance company, professing a desire to aid a stockholder in selling his stock, advised and effected a sale thereof at a price below the market value. He caused the transfer to be made to a third person, whom the stockholder supposed to be the purchaser, but who really took it for the president, and afterwards transferred it to him. It was accordingly held that the president was liable to the stockholder for the difference between the price for which the stock was sold and its real value. An action cannot be maintained by the seller of his share in a trade against the buyer for persuading him to sell it at a certain price, by representing that certain partners whose names he would not disclose were to be joint purchasers, and that they would give no more than the particular sum ; though in truth they had authorized the defendant to purchase it on the best terms he could, and though the defendant charged them with a higher price than he gave.^ ' Fisher v. Budlong, 10 R. I. 525. 2 Vernon v. Keys, i Taunt. 488. 16 ACTUAL FRAUD. [CHAP. I. A person can rely upon the representations of another as to the location and nature of land about to be bought by him, lying at a distance from the parties ; and it is not necessary that he should have in the deed a war- ranty upon the point.^ And the same has been held true where the false representations related to the value of the land, the purchaser having been prevented from going to see the land by the strong assurances of the vendor that that was unnecessary.^ The honest expression of opinion, however, by the vendor as to the location of one of the boundary lines, even though erroneous, is not such a misrepresentation as constitutes a fraud on the purchaser, and is not available to him in abate- ment of the purchase-money.^ But where the quantity of land is the inducement to a purchase, and there is fraud on the part of the vendor, the transaction is vitiated, and the purchaser may proceed to set aside the sale.* Thus, the vendor of a forty-acre tract of land, well knowing the location of the corners and lines, represented one of the lines so to run as to embrace nine or ten acres of cleared land, when in truth it contained much less, — the difference of value between the land pointed out and that conveyed amounting to almost one-third the purchase-money. Upon discotering the mistake, the purchaser proposed to the vendor to rescind the contract, or to be allowed to retain the land and be allowed a deduction for the purchase-money, or leave the matter to arbitration ; which several propositions were re- jected. It was decided that these facts showed a fraudulent misrepresentation, and entitled the purchaser to a rescission of the contract.® 1 Maggart v. Freeman, 27 Ind. 531. " Harris v. MoMurray, 23 Ind. 9. » Stow V. Bozeman, 29 Ala. 397. * Hill V. Brower, 76 N. C. 124 ; Whitney v. Allaire, 1 Comst. 305 ; Clark V. Baird, 9 N. Y. 183 ; Wiswall u. Hall, 3 Paige, 313 j Kelly v. Allen, 34 Ala. 663. 6 Elliott V. Boaz, 9 Ala. 772. § 2.] DECEIT. 17 If a tract of land be sold upon a representation that it contains a certain number of acres, and there be a deficiency in quantity, the purchaser is entitled to an abatement of the purchase-money for so much as the quantity falls short of the representation.^ If the purchaser prefer to keep the land actually conveyed rather than to rescind, he is not entitled in any event to claim an abatement of more than the value of the land not conveyed.^ The purchaser of a flouring mill, unacquainted with milling, may rely upon the positive and unqualified representations of the vendor that the mill is capable of grinding a specific number of bushels of wheat per hour ; and, if the represen- tations be false and fraudulent, the vendor is liable for the deceit.^ So, too, if positive and unqualified representations be made that the foundation of a sluiceway connected with a mill is firmly laid upon the sand rock, the same may be relied upon by a person purchasing the mill property and appurtenances.* These are matters of fact, capable of posi- tive knowledge by the vendor.^ In Massachusetts and Maine, and perhaps elsewhere, it is held that misrepresentations as to what an article cost, or what it has been sold for, or of offers made for it, are not the subject of an action.^ A statement, moreover, that certain lands had large deposits of oil, and were of great value for manufacturing oil, has in Maine been held to be a mere statement of opinion.'^ But a false and fraudulent statement ^ Cox V. Reynolds, 7 Ind. 257 ; Cravens o. Kiser, 4 Ind. 512 ; Howk V. Pollard, 6 Blackf . 108 ; Earl v. Bryan, Phill. Eq. (N. C.) 278 ; Cul- lum V. Branch Bank, 4 Ala. 21. a lb. ; Hill V. Buckley, 17 Ves. 394. » Faribault v. Sater, 13 Minn. 223. " lb. » lb. " Medbury». Watson, 6 Met. 246, 260; Hfemmer ». Cooper, 8 Allen, 334; Manning v. Albee, 11 Allen, 622; Mooneyu. Miller, 102 Mass. 220; Cooper 17. Lovering, 106 Mass. 79; Long v. Woodman, 58 Maine, 52; Martin v. Jordan, 60 Maine, 531 ; Holbrook v. Connor, lb. 578 ; Bishop V. Small, 63 Maine, 12. ' Holbrook v. Connor, supra, two judges dissenting. 18 ACTTTAIi FEATJD. " [CHAP. I. of the amount of hay cut upon a farm the previous year has, in the latter State and in New Hampshire, heen held good ground for an action of deceit.^ It would doubtless be other- wise as to representations of the amount of hay or wood to he cut on a farm .2 It is not, then, every false affirmation by the vendor of property that will give the purchaser an action, even though he may be deceived by it. If the buyer of goods trust to representations which were not calculated to impose upon a man of ordinary sagacity, or if he neglect to use means of inquiry directly before his eyes and pointed out to him,® he cannot recover. Hence, no action will lie, as a general rule, for a false affirmation by the vendor of property concerning the value of it, since it would be folly in the purchaser to rely upon statements as to value from that source.* Besides, value is generally matter of opinion merely, upon which men will widely differ. Possibly, also, an action will not lie for a false affirmation that a person bid a particular sum for the property, though the vendee was thereby induced to purchase, and was deceived as to the value of the property.^ It is considered as to such cases that the mere false affir- mation, though knowingly and intentionally made, is not enough. The purchaser, it is said, should show that some deceit was practised " for the purpose of putting him off his guard." 8 It should rather be said that some deceit should 1 Martin v. Jordan, 60 Maine, 531 ; Coon v. Atwell, 46 N. H. 510. See Irving v. Thomas, 18 Maine, 418. 2 Mooney v. Miller, 102 Mass. 217. 8 A plaintiff's claim in deceit is not repelled by mere evidence that the means of inquiry were open to him. David v. Park, 103 Mass. 501. See post, § 4. * Harvey ». Young, Yelv. 20; Davis v. Meeker, 5 Johns. 354; Med- bury V. Watson, 6 Met. 246; Noetting v. Wright, 72 111. 390. 6 Page V. Parker, 43 N. H. 363; Van Epps v. Harrison, 5 Hill, 63, 69, dicta, and stated in a dissenting opinion in the latter case. ^ Van Epps v. Harrison and Page v. Parker, supra. See Simar v. Cannaday, 58 N. Y. 298, holding that statements of value with intent § 2.] DECEIT. 19 be shown tending to put the purchaser, as a man of ordinary intelligence, off his guard. A false affirmation of value, knowingly made, is always made for the purpose of putting the purchaser off his guard ; but the proper question is, Should it have had that effect? While it has been stated in cases just cited that no action can be maintained for a false affirmation, that a person bid a particular sum for property, a distinction is suggested in the same cases, founded on early decisions, as to false statements of the annual rental of property. A false representation, for example, that propertj' to be sold was rented for j£42 per annum, when the rent was much less than that, whereby the plaintiff was deceived and induced to pay a high price for the purchase, was considered actionable.^ So, too, it was held, in one of the cases under consideration,^ that a fraudulent representation that a piece of property cost the vendor 132,000, when in fact it cost him but 116,000, was ground for art action in deceit.^ There is ground, therefore, for doubting the correctness of the proposition that an action cannot be maintained for a false representation of a sum bid for the property in question. Nor is it clear that an action will not lie, at least in equity, under some circumstances for to deceive are actionable. To the same effect, Cruess v. Fessler, 39 Cal. 336 ; GifEord v. Caryill, 29 Cal. 589 ; Davis v. Jackson, 22 Ind. 233, of invoice value; Neil v. Cummings, 75 111. 170; Bradley v. Bosley, 1 Barb. Ch. 125. If a person be deceived in an exchange of lands as to the value of the property for which he exchanges, he has an equitable lien on his late estate for the deficiency in value. Bradley v. Bosley, supra. * Page V. Parker, supra, citing Elkins v. Kesham, 1 Lev. 102 ; Lysney V. Selby, 2 Ld. Raym. 1118 ; 8. c. 1 Salk. 214 ; Dobell v. Stevens, 3 Barn. & C. 623; Bowring ». Stevens, 2 Car. & P. 337. '^ Van Epps v. Harrison, 5 Hill, 63. ' See also Green v. Bryant, 2 Kelly, 67 ; Morehead ». Eades, 3 Bush, 121 ; McFadden v. Robinson, 35 Ind. 24 ; Mo Aleer v. Horsey, 35 Md. 439, to the same effect. Contra, Tuck v. Downing, 76 111. 71 ; Banta v. Palmer, 47 111. 99; Cooper ». Lovering, 106 Mass. 77; Hemmer». Cooper, 8 Allen, 334; Manning v. Albee, 11 Allen, 520 ; Mooney v. Miller, 102 Mass. 217. 20 ACTUAL FRATTD. [CHAP. I. a false aifirmation purely of value. It has been held, indeed, in New Hampshire, that where it was alleged that a party in negotiation with another had expressed his ignorance con- cerning the value of certain stock offered him by the owner, and declined to take it for that very reason, whereupon he was told that it was valuable, and was thereby induced to buy it, the allegation of ignorance of the value of the stock was material, and must be proved by the party making it, else the statement of the owner of the stock would not be an actionable misrepresentation.^ And the language of the court indicates clearly that, if the statement of the purchaser had been shown to be true, the vendor would have been liable.^ So, too, representations of value made by an expert, as to a matter of which the purchaser is ignorant, may afford ground of action, if false.^ It should be added that specific performance of a contract for the sale of land will not be en- forced, when there is any misrepresentation of the condition or value of the property.* 1 Lawton ».. Kittredge, 30 N. H. 500. ' " It is not," said the court, " that a representation of the quality or value of a thing sold' must always follow an objection or inquiry on the part of the purchaser, in order to charge the vendor, if untrue ; for the cases show the contrary [no cases, however, are mentioned], and there would be no reason in such a rule. But it is necessary for the party complaining of the deceit to prove that the language was used with an intent that it should be believed ; that it was spoken, not for the purpose of suggesting a rumor, a general impression, or the speaker's private opinion on a subject as to which the listener had precisely the same means of information, but in the way of assurance, and for the express object of making a representation." ' Picard v. McCormick, 11 Mich. 68; Kost v. Bender, 25 Mich. 515. See McGar v. Williams, 26 Ala. 467. * Powers V. Hale, 25 N. H. 145. See further Stover v. Wood, 11 C. E. Green, 417, where a vendor of stock was held liable for false representa- tions of its value; Alexander v. Beresford, 27 Miss. 147; Bryan v. Hitchcock, 43 Mo. 527. A fraudulent assertion that a mistake has been made in an inventory of goods, making the valuation less than it really was, is not a mere false representation of value. Wilder v. DeCou, 18 Minn. 470. § 2.] DECEIT. 21 False representations of the elements of fact going to make up value certainly should afford ground for an ac- tion of deceit, or of defence to an action upon the contract of purchase or of subscription. Aside from the cases above mentioned, this is clearly the rule as to the too common case of false representations made in prospectuses of com- panies and corporations.^ The same has been held of rep- resentations concerning the age of a horse,^ the number of feet of lumber a saw-mill can cut in a day,^ and of the number of subscribers there are to a newspaper offered for sale,* and of the extent of sales of a patented article, in connection with the statements of agents in letters concerning the same ; ^ and this, too, in a State in which it has been con- ceded that mere representations of value, such as the market value of a commodity, are not actionable.® It must be ad- mitted, however, that the law upon this subject of misrepre- sentations of the value of property, is in great confusion. Representations by the agent of a corporation that the stock of the company is not assessable beyond a certain per- centage of its value constitute no defence to an action against the holder of the stock to enforce payment of the entire amount subscribed, where he has failed to use due diligence to ascertain the truth or falsity of such representations.'^ Nor does the word " non-assessable " upon the certificate of stock cancel or impair the obligation to pay the amount due upon 1 Campbell ». Fleming, 1 Ad. & E. 40; Bagshaw «. Seymour, 4 Com. B. N. s. 873; Bedford o. Bagshaw, 4 Hurl. & N. 538; Clarke u. Dickson, 6 Com. B. N. s. 453 ; Bradley ». Poole, 98 Mass. 169; Bigelow's L. C. Torts, 25 el seq. 2 Reid V. Flippin, 47 Ga. 273. » Sieveking o. Litzler, 31 Ind. 13. < Harvey ». Smith, 17 Ind. 272. « AUin v. Millison, 72 111. 201. 6 Cronk v. Cole, 10 Ind. 485. See Foley ». Cowgill, 5 Blackf . 18. The Roman law concerning the efiect of puffing one's wares was thus stated : " Ea quse commendaudi causa, in venditionibus dicuntur, si palam appareant, venditorem non obligant, veluti, si dicat servum speci- osum, domum bene sedificatam." — Digest, Lib. 18, tit. 1, § 43. ' Upton V. Tribilcock, 91 U. S. 45. 22 ACTUAL FBAUD. [CHAP. I. the shares, created by the acceptance and holding of such certificate. Its legal effect, at most, is a stipulation against liability from further assessment or taxation after the en- tire subscription of one hundred per cent, shall have been paid.^ In an action against a surety upon a bond given by one partner to another, to indemnify the latter against the partner- ship liabilities, false and fraudulent representations as to the amount of these liabilities, made to the surety to induce him to sign the bond, will (where equitable defences are pleadable at law) constitute a good defence.^ So, if a debtor procure a composition of his debts with his creditors, by means of false representations as to the amount of his property, the composition is not binding, and a creditor may recover the whole of his debt.' So, again, if a party be induced to become surety of another for part of a sum for which the debtor has compromised with his creditors, upon the false representation by the debtor and creditors that such part is in full, the surety cannot be held on his agreement.* It is also held that the vendor of land, having a lien for the purchase-money, does not lose his lien by taking other securi- ties, if such securities are worthless, and known to be so by the purchaser, and the vendor took them upon his representa- tion that thej' were good.^ So, if one get possession of the property of another, by falsely and fraudulently representing to him that a promissory note" given in exchange for the prop- erty was good and would be paid, when the holder knew it was worthless, he is not entitled to notice of non-payment.^ So, too, where one sells property for paper which is repre- sented to be good, but which is worthless, and known to be so by the holder, the injured party may treat the contract as a 1 Upton ». Tribilcock, 91 U. S. 45. ^ Fishburn v. Jones, 37 Ind. 119. « Seving b. Gale, 28 Ind. 486. ■ Weed c. Bentley, 6 Hill, 56. « Tobey v. McAlister, 9 Wis. 463. * Alexander v. Dennis, 9 Porter (Ala.), 174. ^ § 2.] DECEIT. 23 nullity, and bring trover for the property, or an action of deceit, where the measure of damages will be the injury sus- tained in consequence of the fraud.^ In this connection, it is proper to consider the subject of false representations concerning the pecuniary standing of parties. It has been held for nearly a century that a person may render himself liable for a false representation of the solvency of another (the other elements of deceit being pres- ent), notwithstanding a very urgent objection by some of the judges that such a representation was, in its nature, nothing more than an expression of opinion.^ Such representations must certainly be very definite, and certain to carry any lia- bility with them.* Hence, where, in answer to inquiries as to the circumstances and credit of a third person, the party ques- tioned merely says that ' " he should be willing to give the person in question credit for any thing he wanted," this state- ment will not be sufficient to render the party making it answerable as for a fraudulent misrepresentation, though he knew that the person concerning whom the inquiry was made had previously been discharged under an insolvency act. There is a material difference between a man's stating that he himself is ready to give credit to another, and that such other person is fit to be trusted generall3\* A representation, how- ever, that a note is " good," is sufficiently certain to render ^ Alexander i7. Dennis, 9 Porter (Ala.), 174. ^ Pasley v. Freeman, 3 T. R. 51. A further objection urged in later cases, that, if the false representations were oral, it would come within the intent of the Statute of Frauds, though generally repudiated by thfe courts (Bigelow's L. C. Torts, 39, 40), has been quite generally accepted by the Legislatures, and a special enactment passed requiring such repre- sentations to be in writing. See Browne, St. Frauds, App. The statute requiring that representations of credit should be in writing has no application to the case of an indorsement of a note pro- cured by the misrepresentation of the indorsee as to the solvency of the maker. Lenheim ». Fay, 27 Mich. 70. ' Haycraft v. Creasy, 2 East, 92 ; Gainsford v. Blachford, 7 Price, 549. *lb. 24 ACTUAL FEATTD. [CHAP. I, the party liable, if the maker of the note is not responsible and does not pay it.^ Where a marriage has taken place on the faith of repre- sentations made by a third person as to the circumstances of one of the parties to the marriage, such third person must make good his representations, even at the suit of a particeps criminis.^ Thus, if a creditor suppress the fact of his debt, in order to promote a marriage, he will not be permitted to set it up even against the person in whose favor and at whose instance he made the suppression.^ And, upon a similar prin- ciple, if one of the parties contracting for marriage be placed ostensibly in one situation by the articles, but in another and a worse situation by private agreement, the latter agreement cannot be enforced.* When a person has been induced to take shares in a joint stock companj' by misrepresentation, either by the directors or by their officer as to the effect of taking the shares and as to the solvency and position of the company, the contract is voidable at the option of the holder of the shares.* In order to make a misrepresentation concerning solvency ground for an action, it is said that there should be some indication in the representation or its circumstances of the extent to which the credit may go. If the representation do not point with reasonable certainty to the amount or bounds of the expected credit, it is thought that it ought not to serve as a foundation for any credit at all. In such case, a reasonable man would not act upon it.^ But this is a local doctrine. . 1 Weeks v. Burton, 7 Vt. 67. 2 Neville v. Wilkinpn, 1 Brown, C. C. 546 ; De Manneville v. Cromp- ton, 1 Ves. & B. 356 ; Thompson v. Harrison, 1 Cox, 346 ; Ainslie v. Medlycott, 9 Ves. 21. * Dalbiao v. Dalbiao, 16 Ves. 125 ; Neville v. Wilkinson, supra ; Esta- brook V. Scott, 3 Ves. 461. * Palmer v. Neave, 11 Ves. 167; Scott v. Scott, 1 Cox, 378. « In re iEtna Ins. Co., Law R. 7 Irish Eq. 264. « Glover v. Townsend, 30 Ga. 90 ; Hopkins v. Cooper, 28 Ga. 392. § 2.] DECEIT. 25 It has been said also that an action cannot be sustained for false and fraudulent representations made by the defendant in respect of his own pecuniary responsibility and circumstances, whereby the plaintiff was induced to sell him property on credit.^ The court, in the case referred to, considered the rule of liability for misrepresentations of pecuniary standing to apply only to cases in which the statements had been made by a stranger to the contract made under the influence of "the fraud. It was, however, held, in an earlier case in the same court, that if a debtor, by false and fraudulent representations as to his pecuniary situation, induce his creditor to deliver to him his promissory note upon payment of part only of what is due, the creditor may, upon discovering the fraud, recover the balance of his debt in an action on the note.^ Indeed, the doctrine of the above decision is difficult to understand. The matter of one's own solvency is a fact as capable of actual knowledge as any other, and there is no good reason for holding a representation concerning it to be of less effect than a representation concerning the solvency of a third person. The authorities generally are also opposed to the doctrine referred. "We shall presently find it well-settled law that a purchaser of goods, for example, may be guilty of such fraud, by falsely representing himself to be solvent, as to enable the vendor to rescind the sale and retake the goods.* In the case of a false representation of the solvency of an- other, it is not necessary for the injured party first to bring an action against the party intrusted, before he can sue the party guilty of the false representation.* 1 Dyer v. Tilton, 23 Vt. 313. » Reynolds v. French, 8 Vt. 85. ' Post, p. 37, and cases there cited. * Kidney v. Stoddard, 7 Met. 252. The following are further cases on the subject of representations of solvency : Tapp v. Lee, 3 Bos. & P. 367 ; Eyre v. Dunsford, 1 East, 318; Hamar v. Alexander, 2 Bos. & P. N. R. 241 ; Evans v. Bicknell, 6 Ves. 174 ; Clifford v. Brooke, 18 Ves. 131 ; Venezuela Ry. Co. v. Kisch, Law R. 2 H. L. 99 ; Hutchinson v. Bell, 1 Taunt. 558 ; Upton v. Vail, 6 Johns. 181 ; Wise v. Wilcox, 1 Day, 26 ACTUAL PKAUD. [CHAP. I. It is hot universally true that a party is not bound to make goad an expression of opinion. If such opinion be fraudu- lently expressed, the party giving it will be bound by it; ^ as where a party puts forth, in the form of opinion, that concerning which he has positive knowledge at variance with such expres- sion, to one supposing the opinion to be honest and acting upon it.^ Thus, in the case first cited, the plaintiff, suing for the price of cattle sold the defendant, had expressed an opinion that the cattle would weigh 900 lbs. and upwards per head ; and the defendant had bought them upon this statement. But it appeared that the plaintiff had already weighed the cattle, and had found that their average weight was considerably less than 900 lbs. It was accordingly held that the defendant was entitled to recoup against the purchase price the damage sus- tained by him through the plaintiff's fraud. And it was considered that the case was not affected by the fact that immediately after the purchase the defendant had weighed the cattle and ascertained their true average weight ; inas- much as he did not at that time know that the plaintiff had himself weighed the cattle, but supposed that he had given an honest expression of opinion on the subject. Under such circumstances, the defendant was not bound to tender the cattle back to the vendor. Whether the false representation must in all cases be made upon a secular day, in order that the injured party may obtain relief, is not clear. The question must be decided upon the interpretation to be given to the Sunday law statutes of the different States. It is clear, however, that if the effect of the statement were to draw the injured party into a relation of 22 ; Ewins v. Calhoun, 7 Vt. 79 ; Newsom v. Jackson, 26 Ga. 241 ; Slade V. Little, 20 Ga. 371 ; Patten v. Gurney, 17 Mass. 182. ^ But this proposition, as applied to statements of the value of prop- erty, must be taken in connection with what has just been said supra. ' Birdsey v. Butterfield, 34 Wis. 52. So held even in Massachusetts. Pike V. Fay, 101 Mass. 134. § 2.] DECEIT. 27 contract with the alleged wrong-doer, and the object of the complaint be to obtain a release from the engagement or sale, the courts will not listen to the demand. But if a sale be effected on Sunday upon false representations made the day before, and the purchaser on Monday promise to pay for the property, he will be bound.^ It matters not whether a party who has made a false state- ment was under any obligation to speak or not. Though under no duty to speak, if he will speak, he must declare the truth, and not be guilty of making a fraudulent misrepresen- tation.2 Where an agreement has been made, and a term vested thereunder in a party, and he has been let into possession, the estate has so far passed that it cannot be defeated by a collateral fraud committed in making the agreement. The remedy for such a wrong is to sue for damages, not for the property itself. Thus, where a person obtained a lease of premises upon the false representation that he intended to carry on there the business of a perfumer, when he in fact intended to turn the premises into a brothel, and actually did so, it was held that the term had effectually passed, and that the lessor had no right to turn out the tenant ; and, having forcibly done so, the latter was restored by ejectment to pos- session.^ But the case must be distinguished where an action is brought upon the lease for rent. In such a case, it is a good defence that the lease was induced by false representations on the part of the plaintiff"; and this, too, though possession was taken under the lease, provided the same was surrendered directly upon discovery of the fraud.* The foregoing presentation of the law relating to the ' Winchell v. Carey, 115 Mass. 560. See Stebbins v. Peck, 8 Gray, 553 ; Hall v. Corcoran, 107 Mass. 251 ; Cranson v. Goss, lb. 439. " Kelly V. Kogers, 21 Minn. 146, 152 ; Pasley v. Freeman, 3 T. R. 51. 8 Feret v. Hill, 15 Com. B. 207. * Millikeu v. Thorndike, 103 Mass. 382 ; Irving v. Thomas, 18 Maine, 418. 28 , , ACTUAL PEATJD. [CHAP. I. nature of actionable misrepresentations supposes that the representation was made to or for the complaining party. But there is another class of cases, with several branches, in which the situation is different. A representation may be made of a man or of his property, to his injury, as well as to him; and, though the exact relation of such cases to the gen- eral law of deceit has not been so accurately defined as might be desired, we have endeavored to show in another work, by a somewhat critical examination of the authorities, that this class of cases stands, in reality, upon the same footing as the class above considered. ^ False representations of a person may consist either (1) in disparaging his ' credit, or the title to his property, or his property itself, or (2) in attempts to personate him or his badge of business. We have already considered the case of misrepresentations of credit made to the complaining party ; ^ and in principle there is no difference between such a case and the situation of the party himself whose pecuniary repu- tation may have been injured by the false representation. If he have suffered an actual damage, he wiU be entitled to redress. If the misrepresentation relate to the plaintiff's title to property or to the quality of his property itself, the wrong done is termed slander of title ; if it be an attempt to per- sonate him or the reputation of his goods in business, it will commonly be the case of an infringement of his trade-mark.^ 1 Bigelow's L. C. Torts, 54-59, 69-72. 2 Ante, pp. 23-25. " An infringement of a patent is not an attempt to obtain the benefit of another's reputation in business, but to make and vend the very same article, to do which an exclusive right has been given another. There is no attempt to deceive any one in the infringement of a patent ; and the same is measurably true of infringements of copyrights. These subjects therefore do not belong to the law of deceit ; nor do they belong properly to any branch of the law of fraud. An invasion of a patent or a copyright is a simple invasion of a right of property, and is no more a fraud than is a trespass upon real estate. Indeed, the jurisdiction of § 2.] DECEIT. 29 We cannot, however, treat at length of these subjects here "without going over ground ah'eady occupied in our work on Torts ; and we must therefore omit further reference to them. The subject of warranty is so closely connected with that of fraudulent representations that it is proper to make some reference to it here. Indeed, a warranty in one aspect is but a species of representation. A warranty is simply a strong representation, so strong indeed that it is wholly unnecessary to prove, in the case of an action for a breach of it, that the statement (or representation) warranted true was false to the knowledge of the warrantor. In technical language, it is not necessary in such an action to prove the scienter. Aside from this, there is no difference from the standpoint from which we are now taking our observation between the action of deceit and the action for a breach of warranty. When, therefore, the complaining party's case is strong enough to establish a warranty, the preferable course for him is to sue in contract for the breach, since he will thus escape all danger from questions relating to the scienter. A simple affirmation of soundness does not constitute a warranty, unless it be so intended and understood when made.^ But, to constitute a warranty in the sale of personal property, it is not necessary that the word " warrant " should be used. It is sufficient if the language used import an undertaking on the part of the seller that the chattel is what he represents it to be.^ For an auctioneer, about to sell a drove of sheep, to say, " Here is a nice lot of young, sound sheep," is not a warranty of their soundness, if the statement were reasonably supposed to be true.^ Nor would it afford equity as to statutory trade-marks is treated as resting on grounds of property, and not on fraud. Leather Cloth Co. r. American Leather Cloth Co., 4 DeG., J. & S. 137; Hall v. Barrows, Ih. 15ff. 1 Lindsay v. Davis, 30 Mo. 406. 2 Callanan v. Brown, 31 Iowa, 333 ; 1 Parsons, Contracts, 579, 580 (5th ed.). » McGrew v. Forsythe, 31 Iowa, 179. 30 ACTUAL FEATJD. [CHAP. I. ground for an action in deceit. But the rule would perhaps be different for either species of liability, if the statement were made without reasonable ground. It would then be fraudulent.^ The rule that a general warranty does not extend to visible defects does not apply when the vendor uses arts to conceal, and succeeds in concealing, such defects.^ In the absence of warranty or actual fraud, the conveyance of property by one whose interest is merely that of a tenant will not entitle the grantee to relief against such grantor.^ Indeed, it is held in Alabama that fraud as to the title to land is not a good defence at law to a note given for the purchase- money of land, when the purchaser has accepted from the vendor a deed with covenants of warranty.* Fraud committed by a vendor in the sale of land, through the concealment of an incumbrance, created by himself, by means of which the purchaser is evicted, is relievable in equity by restraining the collection of the purchase-money to the extent of the injury, or by an entire rescission of the contract, although the incumbrance is of record, and the conveyance is with warranty, covering incumbrances generally. The fact that a covenant covering CAdctiou was entered into by the vendor will not prevent the purchaser from insisting on the fraud, in order to rescind the contract.^ Before eviction, however, in the absence of fraud, the remedy of the purchaser, so far as it relates to questions of title, must be found in an action upon the covenants of his deed.^ 1 Post, pp. 62, 63. 2 Chadsey v. Green, 24 Conn. 562. 8 Hastings v. O'Donnell, 40 Cal. 148. * Patton V. England, 15 Ala. 69. But see post, p. 68. ^ CuUum V. Branch Bank, 4 Ala. 21. Deceit is maintainable without an eviction, in case of fraud. Post, p. 68. ' The doctrine as to eviction has, of course, no application to ihe case of an action for fraud not relating to the title to the land; such, for example, as false representations of the condition and quality of the soil. § 2.] DECEIT. 31 A purchaser of land who has received a deed with only a special, limited warranty may show, in defence of an action for the purchase price, or in a suit for rescission, that a fraud has been practised upon him with respect to the title. When, indeed, a purchaser of land accepts a quit-claim deed, or a deed with special warranty, he will ordinarily be presumed to have acted upon his own judgment and knowledge of the title, being put upon his guard in this particular. But it is held that when, in the negotiations preliminary to the execu- tion of the contract, the purchaser stipulates for a perfect title, but is afterwards induced by the fraudulent misrepre- sentations of the vendor to accept a quit-claim or special warranty deed, in the belief that he is thereby acquiring a perfect title, he will be permitted to allege the deceit, and will be relieved.^ Next, as to concealment. We have said that the represen- tation may consist in conduct as well as in words, and that relief may be granted in cases arising out of acts, even though no language were employed to deceive. It does not follow that fraud, in contemplation of the law, can be established out of pure passive concealment. Concealment may be of two kinds, and confusion sometimes arises from overlooking the fact. To tell half the truth only is to conceal the other half; but concealment of this kind is simply false statement, and differs in no respect, as we have already seen,^ from the case of false representation above considered. Concealment of this kind we can then dismiss, as a subject already illus- trated. But concealment may be of another kind : it may consist in mere silence ; and this we have yet to treat of. However, we shall also find it necessary, or at least important, to consider in the same connection concealments in which something of active misconduct appears. ' Rhode V. Alley, 27 Tex. 443; Mitchell v. Zimmermau, 4 Tex. 75; York V. Gregg, 9 Tex. 85 ; Hays v. Bonner, 14 Tex. 629. " Ante, p. 6. 82 ACTTJAIi FEAUD, [CHAP. I. The general proposition of law upon this point is that mere passive concealment, when not promoted by any active misconduct misleading the complaining party, is not fraudu- lent, and hence is not a subject of redress on grounds of fraud.^ The buyer of goods is not bound to communicate intelli- gence of external circumstances which might ijifluence the price of the commodity, and is exclusively within his knowl- edge.^ Thus, it was held in the case cited that the purchaser of a quantity of tobacco was not bound to communicate to the vendor news of peace, which would have materially affected the price of the commodity. Bat each party, it was decided, must take care not to do or say any thing tending to impose upon the other.^ ' So, too, by the general law, mere silence on the part of the vendor of goods with respect to a latent defect therein of which the purchaser is ignorant, will not be ground for avoiding the sale ; but the slightest active conduct tending to mislead the buyer should be permitted to go to the jury as evidence of fraud.* The putting up of goods, for example, in such a way as to make them present a fair exterior and to conceal defects within, is fraudulent.^ " It is held, however, in Missouri, that if a person sell prop- erty having a latent defect of which he is aware, but which he fails to disclose to the purchaser, knowing that the latter is acting upon the supposition that no such defect exists, he is guilty of fraud ; and the fraud may be pleaded as a defence to an action for the price of the property.® 1 Laidlaw v. Organ, 2 Wheat. 178 ; Hanson v. Edgerly, 29 N. H. 343 ; Smith V. Countrj'man, 30 N. Y. 655; Kintzing v. McElrath, 5 Barr, 467; Fisher v. Budlong, 10 R. I. 525, 527 ; Hadley v. Clinton Importing Co., 13 Ohio St. 502; Williams v. Spurr, 24 Mich. 335; Law ». Grant, 37 Wis. 548; Mitchell v. McDougall, 62 111. 498; Frenzel v. Miller, 37 Ind. 1. 2 Laidlaw v. Organ, 2 Wheat. 178. » lb. * See Hadley u. Clinton Importing Co., 13 Ohio St. 502. « Singleton v. Kennedy, 9 B. Mon. 225. « Cecil V. Spurger, 32 Mo. 462; McAdams v. Gates, 24 Mo. 223; Bar- row V. Alexander, 27 Mo. 530. § 2.] DECEIT. 33 So, too, it has been said in Mississippi that in cases of latent defect, where the sale is for a full price, the seller is bound to disclose such defect if known to him, espe- cially when the disclosure may so far influence the pur- chaser as to induce him to decline the purchase.^ This observation was, however, obiter, and unnecessary to the decision of the case. The rule by which a party to a sale of property is not bound to disclose all the circumstances within his knowl- edge which might affect the value of the property applies as well in favor of the purchaser as of the vendor.^ The rule excusing parties from making disclosure in sales of personalty applies equally in sales of real estate. A person, for example, who knows that there is a mine in the land of another, of which the latter is ignorant, may nevertheless buy it, without disclosing the existence of the mine.^ But, if the purchaser do any thing to mislead the vendor, it is a fraud, and the sale is not binding.* There- fore, though a vendor of land, effecting a sale at an ex- travagant price, knew that the estimate of the value of the land formed by the purchaser was based upon his belief in the ability of a certain person to detect mineral veins by walking over the surface of the land, and though the vendor himself fix a high valuation upon the land by reason of such supposed condition of the soil, this alone will not relieve the purchaser from payment of the agreed price. The con- tract price is binding in the absence of any false representa- tions or acts of the vendor tending to cause or strengthen the false opinion upon which the purchaser acted.^ It is not a fraud for a party to make a professed sale of 1 Patterson v. Kirkland, 34 Miss. 423, 431. 2 Laidlaw v. Organ, 2 Wheat. 178; Kintzing v. MoElrath, 5 Barr, 467 ; Smith v. Countryman, 30 N. Y. 655, 670, 681 ; Fisher v. Budlong, 10 R. I. 525, 527. " Harris v. Tyson, 24 Penn. St. 347 ; Williams v. Spurr, 24 Mich. 335. Contra, Williams v. Beazley, 2 J. J. Marsh. 578. * lb. 6 Law V. Grant, 37 Wis. 548. 3 34 ACTUAL PEATJD. [CHAP. I. property, as a lot of hogs, in proesenti, to be thereafter deliv- ered, without owning the subject of the contract, if he make no representation of having it.^ It will be proper for him in such a case to purchase the property on the market, and the purchaser will be bound by his contract. But it will be otherwise if, at the time of making' the contract, he falsely represent that he has the property on hand.^ It is not a fraud for a party to remain silent. as to the correctness of an opinion expressed by a stranger to the contract at the time parties are contracting, though such opinion may influence the other party to the contract to his prejudice.^ In regard to those incidents of a sale which materially affect the quality and value of articles sold for a special purpose, the rule excusing non-disclosure does not prevail. Not only will no positive misrepresentation in such cases be permitted, but there is also a degree of negative deceit which the recent cases do not countenance. But negative deceit, like positive, must be practised in such a manner and upon such a subject as to be calculated to mislead and impose upon a person of ordinary sagacity. And in general the guilty party must know at the time that the other party is misled, and must intend that he shall be misled, to the unjust advantage of the former.* This negative deceit has more commonly been reached in the English courts by engrafting successive exceptions to the general rule of warranty, by way of implied warranties ; as in regard to provisions bought for consumption, that they are wholesome. So, too, in regard to manufactured articles pur- 1 Bales !). Weddle, 14 Ind. 349 j Sanborn v. Benedict, 78 111. 309; Wolcott u. Heath, lb. 433. 2 Bales V. Weddle, supra. ' Williams o. Beazley, 3 J. J. Marsh. 577. < Paddock v. Strobridge, 29 Vt. 470, 477, Redfleld, C. J. Silence as to a known defect in an article sold for a specific purpose is equivalent to fraud. Van Bracklin ». Fonda, 12 Johns. 468; Emerson u. Brigham, 10 Mass. 197^ Winsor v. Lombard, 18 Pick. 57, 62. And this is equally- true where the vendor has endeavored to remove the defect, and supposes that he has succeeded. French v. Viniug, 102 Mass. 132. § 2.] DECEIT. 35 chased for a particular use known at the time to the vendor, it is held that there is an implied warranty that they are fit for such use, though nothing is said to the effect that the articles are fit for the use for which they were purchased. So, too, of articles contracted to be delivered in future for any specified use, and cases where the la"w implies a warranty that articles sold are of a merchantable quality. These cases are only exceptions, founded upon certain flagrant indications of fraud and deceit, which do not exist in ordinary cases. Following out this idea, it appears to be settled law in Westminster Hall that there is an implied warranty on the part of the seller that the article sold is what it appears to be, so far as the vendor knows ; in other words, that a defect in the article which changes its essential character, and renders it wholly unfit for the purpose for which it is purchased, will justify the purchaser in rescinding the sale or bringing suit for damages, at his election. It seems to be there con- sidered that secret defects in the article sold, materially affect- ing its value, which the vendor supposes the purchaser would regard as an impossible barrier to the contract, must be dis- closed, or the contract is not binding. To have this effect, the defect must be known to the vendor and wholly unknown to the purchaser ; and there must be no external or sensible indication calculated to excite suspicion in ordinary observers. It must be of such a character as clearly to have formed an impassable barrier to the contract, and so understood by the seller at the time. Such a case is not what the law considers as a latent defect. There is no sound distinction between such a case and one where the party uses some device to mis- lead the other party in regard to a defect which he might otherwise have discovered, or where he makes a positive mis- representation of a fact, with knowledge. But, if in any case the vendor sell " with all faults," this is equivalent to putting the purchaser upon his guard, and he buys at his own risk.^ 1 lb.; Baglehole v. Walters, 3 Campb. 154; Pickering v. Dawson, 4 Taunt. 779 ; 2 Kent, Com. 482. 36 ACTUAL FRAUD. [CHAP. I. There are other cases of negative deceit, fatal to contracts effected through it. Thus, where the defendant induced the plaintiff to accept an insolvent tenant in his stead, knowing his insolvency and not disclosing it to the plaintiff, it was considered that the mere fact of the defendant's offering such person to take his own place was equivalent to a representa- tion of his solvency.^ And in another case it was held that suffering one to buy goods under a wrong impression as' to their quality in an essential particular was a fraud, though the seller did nothing to induce the misapprehension.^ So, too, if in the sale of a horse there be an internal and secret malady of a fatal character, of which there are no external indica- tions, but of which the vendor is aware, and of which he knows that the purchaser is wholly ignorant, such malady rendering the animal of no value, while the sale is for the apparent value, and the vendor understanding that he could not effect the sale if the true condition of the horse were known to the purchaser, the seller is guilty of an actionable fraud.^ A person who negotiates commercial paper payable to bearer, or under the blank indorsement of another warrants that he has no knowledge of any facts which prove the paper to be worthless, on account of the failure of parties, or of a previous payment, or otherwise to have become void or de- funct. Any concealment of this nature, it is said, would be a manifest fraud.* The mere fact that the buyer of property is to his own knowledge insolvent at the time of his purchase is not ground for relief to the vendor. But it is otherwise, if the purchaser 1 Bruce v. Ruler, 2 Man. & R. 3. 2 Hill V. Gray, 1 Stark. 434. ' Paddock v. Strobridge, 29 Vt. 470, containing a lucid opinion by Chief Justice Redfield, from which the substance of the above considera- tion of negative deceit is taken. * Brown v. Montgomery, 20 N. Y. 287, 292 ; Story, Promissory Notes, § 118. § 2.] DECEIT. 3T actively mislead the vendor ; ^ especially if he make any false statements as to his financial condition.^ And the purchaser's knowledge of his own insolvency at the time is proper evi- dence, in connection with other facts, to support the change of fraud.* But the mere non-disclosure of his own insolvency by the purchaser of goods does not amount to fraud ; nor will a consciousness in him of his inability to pay for the property amount to fraud, if the purchase be made in good faith, and without a design not to pay for them.* Nor does the mere fact that a person knows that he can no longer con- tinue business, or that his property is liable to be attacked at any moment by his creditors, necessarily imply a knowledge of his insolvency.^ By the general current of authority upon this subject, a debt is created by fraud where one, intending not to pay for property, induces the owner to sell it to him on credit by falsely representing or causing the owner to believe that he intends to pay for it,^ or by falsely concealing the intent not to pay.'^ Mere insolvency cannot be treated as fraud. There must be a fraudulent intent.^ 1 Bell V. Ellis, 33 Cal. 620, overruling Seligman v. Kalkman, 8 Cal. 207. ' Schweizer v. Tracy, 76 111. 345. « Rodman «. Thalheimer, 75 Penn. St. 232. * Redington v. Roberts, 25 Vt. 686 ; Irving v. Motley, 7 Bing. 543; Cross V. Peters, 1 Greenl. 376 ; Lupiu v. Marie, 6 Wend. 83 ; Rowley v. Bigelow, 12 Pick. 307. s MorriU v. Blackman, 42 Conn. 324. 6 Stewart ». Emerson, 52 N. H. 301; Hovey v. Grant, lb. 569; Dow V. Sanborn, 3 Allen, 181; Rowley v. Bigelow, 12 Pick. 307; Thompson V. Rose, 16 Conn. 71; Bidault v. Wales, 19 Mo. 36; s. c. 20 Mo. 546 Ash V. Putnam, 1 Hill, 302. See Nichols v. Pinner, 18 N. Y. 295 Mitchell V. Worden, 20 Barb. 253; Powell v. Bradlee, 9 Gill & J. 220 Wiggin V. Day, 9 Gray, 97 ; Jordan v. Osgood, 109 Mass. 457. ' Stewarts. Emerson, 52 N. H. 301 ; Hovey v. Grant, lb. 569; Con- yers v. Ennis, 2 Mason, 236, 239; Buckley v- Artcher, 21 Barb. 585; Durell V. Haley, 1 Paige, 492 ; Hall v. Naylor, 18 N. Y. 588. Contra, Smith V. Smith, 21 Penn. St. 367; Brackentoss v. Speicher, 31 Penn. St. 324; Bell v. Ellis, 33 Cal. 620, 630. 8 McCracken v. Cholwell, 8 N. Y. 133 ; Nichols v. Pinner, 18 N. Y. 295; Hennequin v. Naylor, 24 N. Y. 139; Patton v. Campbell, 70 111. 72. 38 ACTUAL FRAUD. [CHAP. I. In Pennsylvania, however, it has been decided by a majority of the court that a purchaser's concealment of his insolvency and of his intent not to pay, without any fraudulent overt act or artifice, intended and fitted to deceive the vendor, is not fraudulent.^ And in California it has been doubted whether the concealment of an intent not to pay is fraud- ulent.^ In Missouri, it is held that, if the intent be not preconceived, it is not fraudulent so as to avoid the sale.^ It has, however, very recently been laid down by the Supreme Court of the United States as established by the weight of authority that a party not intending to pay, who induces the owner of goods to sell to him goods on credit by fraudulently concealing his insolvency and his intent not to pay for the property, is guilty of an act entitling the vendor, if no innocent third party has acquired an interest in them, to disaffirm the contract and recover the goods.* But in some cases a distinction, .apparently sound, is taken between an intent never to pay for the goods and an intent not to pay for them at the time agreed upon, the latter case not being considered fraudulent.^ Failure to disclose that about which no inquiry is made is not, generally speaking, fraudulent,^ unless agreed to be so, 1 Smith V. Smith, and Brackentoss v. Speicher, supra. See Kline v. Baker, 99 Mass. 253. 2 Bell V. Ellis, supra. 8 Bidault V. Wales, 19 Mo. 36. * Donaldson v. Farwell, 93 U. S. 631 ; Byrd v. Hall, 2 Keyes, 647; John- son V. Monell, lb. 655; Noble a. Adams, 7 Taunt. 59; Kilby v. Wilson, Kyan & M. 178; Bristol v. Wilsmore, 1 Barn. & C. 513; Stewart v. Emer- son, 52 N. H. 301; Bidault v. Wales, 19 Mo. 36; 8. c. 20 Mo. 546. « Bidault V. Wales, 20 Mo. 546; Noble v. Adams, 7 Taunt. 59. 8 Rawls V. American Life Ins. Co., 27 N. Y. 282; s. c. 1 Big. 558; Morrison v. Tennessee Ins. Co., 18 Mo. 262; Hill v. Lafayette Ins. Co., 2 Mich. 476 ; Hartford Ins. Co. v. Harmer, 2 Ohio St. 452 ; Laidlaw v. Liverpool Ins. Co., 13 Grant Ch. (Up. Can.) 377; Clark ». Manufac- turers' Ins. Co., 2 Woodb. & M. 472; s. c. 8 How. 235; Keith v. Globe Ins. Co., 52 111. 518. The proposition, as the cases cited indicate, relates particularly to insurance. § 2.] DECEIT. 39 or unless the fact be of a glaring character.^ If, for instance, a policy of life insurance should not make it a cause of for- feiture for the insured to die for crime at the bands of the law, and a person under sentence of death were to procure and forward an application answering every question truly, and the insurer should take a risk upon his life, not knowing that he was then under sentence of death, the insurer would not be bound by accepting the application and granting a policy.'^ So, if a person, knowing that a conflagration was raging in the vicinity of his property, were to apply for in- surance to an underwriter not aware of the fact, and obtain a policy, the contract would doubtless be invalid as against the latter. Upon this point, the law of insurance seems to be at variance with the law of sales in similar cases. The moral as- pect of a non-disclosure by the purchaser of property of facts unknown to the vendor, which greatly enhance its value, as the existence of a mine in land to be sold, is quite as objection- able as the non-disclosure to an underwriter of the above facts; but, as we have seen, the seller is without remedy in such a case. The only exception, perhaps, to this rule is found in the doctrine of concealment in marine insurance. It is well- settled law that a marine policy is not binding if the assured or his agent fail to disclose any material fact, whether by design or not, and whether an inquiry is made such as would elicit the fact or not.^ The duty devolves upon the ap- plicant for such insurance to disclose to the underwriter everything he knows respecting the proposed adventure, and he cannot safely exercise his own judgment as to the mate- riality of any part of the information he may possess. If he should not disclose the whole, and what is kept back should 1 Bufe V. Turner, 6 Taunt. 338. ^ Cheever u. Union Life Ins. Co., 4 Am. Law Rec. 155; s. c. 5 Big. 458, Yaple, J. ' See Hartford Ins. Co. v. Harraer, 2 Ohio St. 452, where the whole law of concealment in insurance is considered. 40 ACTTTAL PKATJD. [CHAP. I. appear to the court to be material, the policy will not be valid, though the concealment was without fraudulent inten- tion, and arose merely from error of judgment.^ A material fact in this connection is one which, if com- municated to the opposite party, would induce him either to refrain altogether from the contract, or not to enter it on the same terms.^ The duty of disclosure is not one merely bind- ing upon the applicant : it is mutual. The marine under- writer as well as the applicant is bound to disclose all circumstances peculiarly within his knowledge in any degree affecting the risk ; and therefore, if at the time of subscribing the policy he know that the ship has arrived in safety at its destination, the contract is void as against the insured, and the premiums may be recovered back.^ It is the duty of the assured, as we have said, to communi- cate to the underwriter all the intelligence he has that may affect the mind of the underwriter as to either of the two follow- ing points: 1st, whether he will take the risk at all ; and, 2dly, at what premium he will take it. And this is a duty attach- ing at the time of effecting the insurance, and not in the least dependent upon subsequent events ; for the effect of a con- cealment on the policy is determined not by its eventual relation to the nature of the risk, but with reference to its immediate influence upon the judgment of the underwriter. Hence, though the intelligence concealed turn out to be wholly unfounded, or the loss to arise from a cause totally unconnected with the fact concealed, the policy is void.* If a carrier has given general notice that he will not be liable above a certain sum, unless the value of articles shipped is made known to him at the time of their delivery to him, and a premium for insurance paid, such notice, if brought 1 Arnould, Marine Insurance, 512 (4th Eng. ed.). 2 Arnould, p. 509. s lb. 511. ■* lb.; Seaman v. Fonnereau, 2 Strange, 1182; Lynch v. Hamilton, 3 Taunt. 37; s. c. 14 East, 494, in error. § 2.] DECEIT. 41 home to the knowledge of the owner (and courts will gener- ally infer such knowledge from the publication of the notice), is as effectual in qualifying the acceptance of the goods as a special agreement ; and the owner must, at his peril, disclose the value of the goods and pay the premium. In such a case, the carrier is not bound to make inquiry ; and if the owner omit to make known the value, and do not therefore pay the premium at the time of delivery to the carrier, the carrier is liable only to the amount mentioned in his notice, or not at all, according to the terms of the notice, if that be a proper part of the contract.^ It has very lately been laid down that, in cases of valid limitation of a carrier's liability to a specified amount, it is so important for the shipper to disclose the value of his goods that, if such value exceed the amount specified, silence alone on the part of the shipper, as to the value of the goods, is a fraud in law, discharging the carrier from liability for loss of the same occasioned by his negligence ; and this, too, though no inquiry were made as to the value of the goods, and no artifice employed by the shipper to deceive the carrier.^ Where, however, no limit is placed upon the carrier's liability, the shipper is not bound to disclose the value of the goods, unless he is asked thereof by the carrier.^ The latter at the same time has a right to make inquiry, and is entitled to a true answer ; otherwise, he will not be liable for a loss caused by negligence.* He would in any case be liable for losses caused intentionally. Thus, it is held to be no excuse for the conversion by a carrier of the property of a consignee that the consignor fraudulently misstated the weight of the goods, and that the consignee knew that the bill of lading 1 Orange Co. Bank ». Orange, 9 Wend. 115 ; Oppenheimer v. United States Exp. Co., 69 El. 62 ; Western Transp. Co. v. Newhall, 24 111. 466. 2 Maguire v. Dinsmore, 62 N. Y. 35. ' lb. * lb. ; Crouch v. London Ry. Co., 14 Com. B. 255. See Batson », Donovan, 4 Barn. & Aid. 21. 42 ACTUAL FRAUD. [CHAP. I. stated the weight at less than it was, and did not notify the carrier thereof.^ A distinction founded in justice exists between the effect of those notices by carriers which seek to discharge them from duties which the law has annexed to their employment, and those which are designed simply to insure good faith and fair dealing on the part of the consignor. In the former case, notice alone is not effectual : the consignor must assent to the restriction. In the latter case, notice alone, if brought to the knowledge of the shipper, will be sufQcient.- It is held that, independently of express stipulation, a con- signor of goods cannot recover for the loss of valuable goods by the carrier, where, in order to secure their carriage at a low rate, he fails to inform the carrier of their value. ^ In a recent case,* a shipper delivered to a carrier for transportation a bundle having the appearance of bedding only, when in fact it contained within the bedding valuable clothing, such as a silk dress, a brocha shawl, and furs, of the value of $200. This was not disclosed to the shipper, and the bundle was sent at a low freight. The goods having been lost, it was held that the carrier was liable for the value only of what was properly to be treated as bedding. By the rules of the common law, there are but two excep- tions to the liability of a common carrier: first, the act of God ; secondly, that of the king's enemies. Many and persistent attempts, however, have been made by common carriers to add to these exceptions, and with varying success. It is conceded that a special contract with the shipper, prop- erly entered into, may limit the carrier's liability ; but such a 1 Wiggin V. Boston & A. R. Co., 120 Mass. 201. = Oppenheimer v. United States Exp. Co., 69 111. 62. ' Oppenheimer v. United States Exp. Co., 69 IlL 62 ; Chicago & A. R. Co. V. Shea, 66 111. 471. See Relf v. Rapp, 3 Watts & S. 21; HoUis- ter V. Nowlen, 19 Wend. 234 ; Cole v. Goodwin, lb. 251 ; Chicago & A. R. Co. V. Thompson, 19 111. 578. * Chicago & A. R. Co. v. Shea, supra. § 2.] DECEIT. 43 contract must be fair and open, to the terms of which it may reasonably be presumed the shipper's attention has been called, and his full assent obtained. The receipt, for exam- ple, by the consignor in person of a bill of lading in which the carrier stipulates against liability by fire or perils of the sea, without objection made by the consignor, constitutes in the absence of fraud a special contract, binding upon the consignor, whether he reads it or not.^ But no binding contract is made out by the mere delivery of a card to a passenger by an express messenger, in exchange for his bag- gage checks, which contains limitations in fine print, not read by the passenger.^ The object of such limitations is not honest, and the artifice by which the attempt is made to fix them upon the unwilling traveller will not succeed. ConBent cannot be obtained by fraud. The chief difficulty, however, has been found in consid- ering the effect to be given to notices of the carrier not expressly entering into the contract of shipment. The English courts formerly allowed a serious innovation in this particular upon the old common-law doctrine ; but the interests of the public required a return to the former posi- tion, and the Carrier's Act was passed by which the steps taken by the courts were mostly retraced.* Great reluctance has always been felt in this country to introduce special limi- tations to the rigorous liability of common carriers. The courts have considered that the interests of the public demand that the carrier should be held to a strict accountability in view of the trust reposed in him and the opportunities for fraud and collusion afforded by his position. Exemption from or even restriction of liability, without express assent of the 1 Grace v. Adams, 100 Mass. 505 ; King ». Woodbridge, 34 Vt. 571 ; Boorman v. American Exp. Co., 21 Wis. 152; Cincinnati B. Co. ». Pon- tius, 19 Ohio St. 222; Symonds v. Pain, 6 Hurl. & N. 709 ; Van Toll v. South-eastern Ry. Co., 12 C. B. n. s. 75. ' Blossom V. Dodd, 43 N. Y. 264. » See 2 Story, Contracts, §§ 950, 951 (5th ed.). 44 ACTUAL FRAUD. [CHAP. I. shipper, is not admitted in this country.^ In order to make a mere notice in any case binding upon the carrier, knowledge of it must be brought home to the shipper, and doubtless in such a way as to show that it has not operated as an imposi- tion upon him. The mere fact that such a notice is exposed to view in the office of the carrier, or is published in a news- paper, or circulated in handbills, is not sufficient to charge the shipper. The carrier must show actual knowledge. It may be that the consignor cannot read, or that, though he can read, and in fact saw various notices upon the walls of the carrier's office, he did not read them, having no intimation that they concerned him. In such case, he is not bound. A fortiori, if there be any artifice on the part of the carrier, as if the limitations of liability be printed in very small letters, so as not to attract attention, while the advantages of carriage are conspicuously set forth, the object of the carrier will not be permitted to succeed."^ Where a person is induced to enter into a suretyship on a false representation of the state of circumstances, or where there are circumstances connected with the transaction which are purposely concealed by the creditor, the surety cannot be held liable. But the concealment must be a concealment of facts, which it was the duty of the person charged with it to reveal. If there was no duty incumbent upon him to reveal the particular circumstances, the surety cannot complain.^ It is not necessary that a creditor should disclose to a surety obligor every material circumstance of the situation. A surety is in general a friend of the principal debtor, acting at his request, and not at the requ^t of the creditor ; and it may be assumed that in ordinary cases the surety obtains from the principal all the information which he requires. At 1 2 Story, Contracts, § 952 (5th ed.) ; Judson v. Western R. Corp., 6 Allen, 486 ; Hollister v. Nowlen, 19 Wend. 234. 2 Butler V. Heane, 2 Campb. 415 ; 2 Story, Contracts, § 956. 8 Greenfield v. Edwards, 2 DeG., J. & S. 582. § 2.] DECEIT. 45 the same time, when the creditor describes to the proposed surety the transaction proposed to be guaranteed, that de- scription amounts to a representation, or at least is evidence of a representation, that there is notiiing in the transaction that might not naturally be expected to take place between the parties to a transaction such as that described. And if a representation to this effect be made to the intended surety by one who knows that there is something not naturally to be expected to take place between the parties to the transac- tion, and that this is unknown to the person to whom he makes the representation, and that, if it were known to him, he would not enter into the contract of suretyship, this is evidence of such a fraudulent representation as will discharge the surety.^ Thus, in the case cited, a surety for the faithful conduct of another alleged that the creditor had concealed from him the fact that the subject of the obligation was already heavily in debt to the obligee ; and this was held upon the above principles a good defence to an action upon the obligation. A creditor is not bound without inquiry to disclose to a surety that the principal debtor is indebted to him beyond the amount of the security signed by the surety. Thus, where a creditor received from his debtor the latter's promis- sorj' note, payable to a third party who indorsed the same as surety, in part payment of his demand, and the debtor's indi- vidual claim for the balance, it was decided that the creditor was not bound to communicate the existence of the latter security, unless inquiry was made.^ On the other hand, persons proposing to become sureties to a corporation for the good conduct and fidelity of an officer to whose custody its moneys and other valuables are to be in- trusted have a right to be treated with the utmost good faith. 1 Lee V. Jones, 17 Com. B., n. s. 482, per Blackburn, J., affirming s. c. 14 Com. B. K. 8. 386. 2 Booth V. Storrs, 75 111. 438. 46 ACTUAL FEATJD. [CHAP. I. If the directors are aware of secret facts materially affecting the risk to be assumed by a person about to become a surety, such person is entitled to a disclosure of the facts ; and, if such disclosure be not made, the surety will not be liable.* And this is true not only where the facts are actually known to the directors, but also where by the proper discharge of their duty they would be known. Thus, in the case just cited, it appeared that the cashier of a bank, who had never executed a bond, had been guilty of fraud and embezzlement of the funds of the bank, the discovery of which might have been effected by the exercise of slight diligence on the part of the directors. They, however, published (in accordance with law) a statement of the condition of the bank, from which it appeared that its affairs were being prudently and honestly managed, and from which the public had the right to believe that the cashier was trustworthy. Afterwards, persons who had seen this report became sureties upon the official bond of the cashier ; but, when sued thereon, it was decided that they had the right to believe that the directors, before publishing the statement, had made an investigation of the condition of the bank, and, being misled by the misrepresentations in the published statement, they were not liable. He is guilty of a fraud who secretly changes a state of affairs, and then, without revealing this fact, procures another to do an act into which the true state of affairs enters as a motive. Thus, if a creditor, knowing that his debtor is in failing circumstances, obtains from him, for part of his claim, a mortgage substantially covering all of his property, and gets the debtor to obtain the indorsement of another person for another part, without revealing the fact of the mortgage, this is a fraud upon the indorser, and discharges him from liability.^ An action on the case is maintainable by a woman against 1 Graves v. Lebanon Bank, 10 Bush, 23. 2 Lancaster Co. Bank v. Albright, 21 Penn. St. 228. § 2.] DKCEIT. 47 a man for his deceit, whereby she is induced to contract a "void marriage with him ; ' as where he has a wife living at the time, and the fact is concealed from the plaintiff.^ There is some doubt, however, whether the right of action survives against the representative of the wrongdoer.^ Under the statutes of Maine, it is held that the action survives. In Pennsylvania, on the other hand, it has been held that the action does not survive ; and the decision was based both upon common-law doctrine and upon the statute relating to actions against personal representatives.* It is clear, indeed, upon common-law principles, that if the woman knew, before the man's death, that he had a wife living, or was put upon inquiry as to the fact, and failed to institute suit in his lifetime, she could not maintain an action against his representative. But, upon the analogy of principles governing the operation of the Statute of Limitations, it may well be doubted if the same rule would prevail, even at common law, where the ex- istence of the facts and consequent right of action were actively concealed by the wrongdoer throughout his lifetime. The common law has never been so unequal as to deprive a person of redress for wrongs the existence of which has by artifice, misrepresentation, or other fraud been concealed by the wrongdoer. And, further, it is to be remembered that the common-law doctrine of the non-survivorship of certain classes of actions appears to have been founded upon the long since (for the most part) abandoned notion that the heir or other party entitled to the succession is in some sort a pur- chaser of the estate for value.^ Had the later position of such party been admitted and recognized in the early English law, the doctrine of non-survivorship could not have arisen. 1 Blossom V. Barret, 37 N. Y. 434. ' Withee v. Brooks, 65 Maine, 14. See Proctor v. McCall, 2 Bail. 298-; Sturge v. Starr, 2 Mylne & K. 195. » lb. * Grim v. Carr, 31 Penn. St. 533. ^ How much the rule of primogeniture had to do with the origina- tion of this principle is an interesting question. 43 . ACTUAL FEATJD. [CHAP. I. It certainly should not now be extended to eases as to whicli it is extremely doubtful if it ever was applicable. It is to be observed in this connection that a deed is not invalidated against an innocent purchaser by the fraud of one of the grantors, if he have only a nominal interest in the prop- erty. The other grantors, though the fraud was perpetrated upon them and without their knowledge, cannot defeat the object of the deed, the grantee being innocent.^ In the case cited, a man already married went through the ceremony of a marriage with Gr. W., and afterwards joined with her in executing to the plaintiff an assignment of a life interest owned by her in a trust-fund. The plaintiff filed a bill against the trustee and G. W., the object of which was to obtain the benefit of this assignment. He was an innocent purchaser for value, and G. W. was not aware of the fraud that had been practised upon herself when the assignment was executed. The bill was sustained, though the assumed husband of G. W. was not a party to the suit. The case, however, would have been different, had the defendant purchased with notice.^ No one is permitted to take advantage of a deed, which he has fraudulently induced another to execute, that the former may commit an offence against morality, to the injury or loss of the party by whom the deed is executed,^ Thus, where a married wojnan obtains a separation deed from her husband, with pecuniary allowance, for the purpose of enabling her the more effectually to carry on an adulterous intercourse with another, a court of equity will, on the petition of the husband, decree that the deed be delivered up to be can- celled.* And proof of subsequent adultery with a person with whom the wife had had sexual intercourse before mar- riage, and had continued on terms of improper intimacy after- wards, seems to be sufiBcient evidence that such a deed 1 Sturge V. Starr, 2 Mylne & K. 195. 2 Proctor V. MoCall, 2 Bail. 298. 8 Evans v. Carrington, 2 DeG., P. & J. 481. * lb. § 2.] DECEIT. 49 was obtained for the fraudulent purpose of promoting the adultery.! But such a deed will not be set aside for adultery previously committed ; nor will a marriage settle- ment be annulled on the ground that the wife has concealed from her husband the fact of previous incontinence, though he allege that he would not have married her, had he known it.^ The case may, however, be difiPerent where there is proof that an unchaste woman conspired with others, by fraudulent misrepresentations, to marry herself as a virgin.* If a legacy be given to a person under a particular char- acter which he has falsely assumed, and which alone can be supposed to be the motive of the bounty, the legacy fails. Thus, where a legacy was given by a woman to a man in the character of her husband, whom she supposed and described as such, but who at the time of the marriage ceremony with her had a wife living, the Court of Chancery held him not entitled to the bounty.* It was, however, thought that the rule would be different where, from circumstances not mov- ing from the legatee himself, the description was inapplicable ; as where a testator gives a legacy to a child from motives of affection, supposing it to be his own when it is not, and he has been imposed upon in that respect. The burdens to which a husband becomes liable upon mar- riage are, at common law, the consideration for his marital rights in the wife's property ; and hence fraud may be com- mitted upon him in respect of such rights, as by a secret voluntary conveyance of her real estate. But a conveyance by a woman, as well as by a man, even the moment before marriage, is prima fade valid. The burden of impeaching its validity rests upon the husband, if he object to it.^ 1 Evans v. Carrington, 2 DeG., F. & J. 481. 2 lb. » lb. * Kennell v. Abbott, 4 Ves. 802. 6 Strathmore v. Bowes, 1 Ves. Jr. 22, 38. 50 ACTITAIi FEATTD. [CHAP. I. Antenuptial settlements made by an intended wife are held vcadable in England by the husband after marriage, provided it appear (1) that intermarriage was in the contemplation of the parties at the time ; (2) that the woman executed the settlement in contemplation of the future marriage ; (3) that she concealed it from her intended husband. If these facts be proved, the cases have established the principle that such a settlement cannot stand against the marital right of the husband.^ And the same doctrine prevails at common law in this country.^ The husband therefore cannot avoid the wife's settlement where, before the marriage, he had suffi- ciently early notice that it was intended to settle the wife's property, if nothing afterwards passed to justify a belief on the husband's part that, at the time of the marriage, no set- tlement had been made.^ In applying the principle upon which conveyances made by the intended wife, pending a treaty for marriage, are avoided on the ground of fraud upon the marital right, equity will take into consideration any meritorious object of such convey- ances, and the situation of the intended husband in point of pecuniary means.* As to antenuptial conveyances by a woman after a treaty of marriage, Mr. Justice Buller consid- ered that they were not invalid merely because the /erne did not disclose the transaction to her intended husband. He said that in most of the cases the husband had actually made some settlement or provision on the wife, in the expectation of being admitted to the enjoyment of the property conveyed. In the case referred to, the husband had not only not made any provision for his wife, but avowed his intention not to do so. Relief was therefore denied him ; and, upon a rehearing 1 Goddard v. Snow, 1 Russ. 485 ; Strathmore v. Bowes, 2 Cox, 28 ; 8. 0. 2 Brown, C. C. 345. 2 Baker v. Jordan, 73 N. C. 145 ; Williams v. Carle, 2 Stockt. 543 ; Duncan's Appeal, 43 Penn. St. 67 ; Jordan v. Black, Meigs, 142. » Wrigley B. Swainson, 3 DeG. & S. 458. * St. George v. Wake, 1 Mylne & K. 610. § 2.] DECEIT. 51 before the Lord Chancellor, the decision of Mr. Justice Buller was affirmed.^ lu the same case, the learned judge last named said that the result of the cases as to conveyances by women not previously married, or by a widow without children, was, that if the wife were guilty of any fraud, professing to the husband that there was nothing to interfere with his rights, any deed executed by her in prejudice of such representation was void. But this was considered to be the extent of the cases. The mere non-disclosure of an antenuptial conveyance would not of itself render the transaction impeachable by the husband ; nor, when provision was made by a widow for the children of a former marriage, would the deed be invalid. Though a settlement, then, by an intended wife be volun- tary, and not disclosed to the intended husband, it is not therefore necessarily fraudulent. The courts will consider the nature of the provision, the situation of the husband in point of pecuniary means, and any other facts which tend to show that no fraud was intended. The equity which arises in cases of this nature depends upon the peculiar circumstances of each case, as bearing upon the question whether the facts do or do not amount to fraud upon the intended husband.^ It is held in North Carolina, contrary to the English doc- 1 Strathmore v. Bowes, 2 Cox, 28. Several of the old cases were doubted or explained by him. Carleton v. Dorset, 2 Vem. 17 ; Edmunds ». Bennington, cited in that case ; Howard v. Hooker, 2 Ch. Cas. 31. Mr. Justice Buller thought the circumstances of the marriage worthy of consideration also. " It is clear," said he, " that, down to the 16th Jan- uary, Lady Strathmore meant to marry Mr. Grey [a third person]. The deed complained of was executed on the 10th. Mr. Bowes was a perfect stranger to Lady Strathmore till the 16th, and it is rather material to consider how he became acquainted with her. A sham duel is fought between Mr. Bowes and another gentleman, in which Mr. Bowes is sup- posed to be asserting the honor of Lady Strathmore. In consequence of this, she pays attention to him, which ends in a marriage on the next day. He who begins with such a stratagem is not entitled to much favor either in law or in equity." 2 Gregory v. Winston, 23 Gratt. 102. 62 ACTUAI, FRAITD. [CHAP. I. trine, that, if a ■widow during a treaty for a second marriage convey her property secretly and with intent to deceive her intended husband, he can avoid the conveyance, though it be made to children of the widow by her former husband, and they be innocent of the fraud.' In order to establish the husband's right to have, an ante- nuptial conveyance of the wife set aside, as in fraud of his marital rights, it is not necessary that he should prove actual deception ; for deception will be inferred, if, after the com- mencement of a treaty of marriage, the wife should have attempted to dispose of her property without the knowledge of her intended husband.^ It is not a valid objection, it. seems, to the husband's claim against the validity of such an antenuptial conveyance of the wife, that he was ignorant until after the marriage that the wife owned the particular property.^ Lord Eldon, indeed, once made the observation that, in the absence of any repre- sentation by the wife as to her ownership of specific property, no implied contract existed on the part of the lady, during the treaty for marriage, that her property as it existed at the commencement of the treaty should in no way be diminished.* But this probably merely shows that in Lord Eldon's opinion not every alienation of the wife's property during the treaty can be regarded as fraudulent, where the husband is ignorant of the transaction; which is certainly true, as we have seen. The observation is not to be understood as going to the extent of upholding cases in which every farthing of the wife's property has, without the husband's knowledge of the extent of the wife's estate, been withdrawn from him. Lord Eldon is thought to mean simply this : that, there being no 1 Tisdale v. Bailey, 6 Ired. Eq. 358 ; Goodsou v. Whitfield 5 Ired. 163 ; Logan v. Simmons, 3 Ired. Eq. 487. 2 Taylor v. Pugh, 1 Hare, 608. 8 Taylor v. Pugh, 1 Hare, 608, 613. * De ManneTille v. Crompton, 1 Ves. & B. 354. § 2.] DECEIT. 68 implied contract on the part of the lady that her property should not be in any way diminished, it is for the courts to determine whether, having regard to the condition in life of the parties, and the other circumstances of the case, a trans- action complained of by the husband should be treated as fraudulent or not. And it was conceded that where the hus- band had by his conduct rendered retirement from the treaty of marriage impracticable, as where he had induced her to cohabit with him before the marriage, he would not be per- mitted to object to the antenuptial conveyances of the wife.^ 1 Wigram, V. C, in Taylor w. Pugh,su;jra. " Several circumstances," said this learned judge, " would certainly appear to have been sometimes thought material as negativing the imputed fraud ; such as the poverty of the husband, the fact that he had made no settlement on the wife, the reasonable character of the settlement, as in the case of a settlement upon the children of a former marriage, and the ignorance of the hus- band that his wife possessed the property. Upon these, I am not called upon to say more than that I am glad to find other grounds upon which to decide the present case. I could not give my individual consent to the sufficiency of any of the reasons I have mentioned. The poverty of the husband, the absence of any settlement upon the wife, the reasonable manner in which she desires to deal with her property, may be very material considerations for the guidance of the parties in determining in what manner the wife's fortune should be settled ; but why they should constitute a reason for concealing the arrangement from the husband I cannot comprehend. It might be very proper to bring these considera- tions to the attention of the intended husband. He might be told that the lady has a certain fortune, but, regard being had to the claims upon her and to his circumstances, the settlement ought to be made in a particular way^ and upon this statement, if he does/iot approve of the proposed settlement, the marriage contract may be determined. But I cannot comprehend the reasoning which says that any one of the reasons suggested is a sufficient ground for practising concealment upon the hus- band, or treats such concealment as immaterial. So, also, with respect to the ignorance of the husband of the property of the wife : that, no doubt, materially lessens his disappointment at finding the wife's fortune has been withdrawn from his control ; but the equity is not founded upon his disappointment, for, if that were so, it would follow that his ignorance of the existence of the property would always be an answer, however that ignorance was produced. The equity would never arise where the wife had contrived to conceal her property from the husband ; but this is not 64 ACTtTAL FEATJD. [CHAP. I. A secret settlement made by a woman pending a treaty for marriage is not necessarily void in a court of law, though liable to be set aside in equity ; since on the marriage the, husband does not take (under the statute of 27 Eliz.) as a purchaser.^ It is clear that an obligation .founded on a valuable consid- eration, executed by a woman pending a treaty of marriage, cannot be set aside merely because it is concealed from the husband.'^ But the transaction must be accomplished bona fide : if the wife meditate a fraud, and the other party be aware of the fact, the obligation will be void as against the husband.^ If a marriage settlement be set aside on the ground that it is a fraud upon the inchoate marital rights of the husband, or that it was obtained from the wife by undue influeucei the person at whose suggestion the settlement was made, especially (though this appears to be unnecessary)*. If he be so, for the cases clearly show that practised concealment by the wife will be treated as a fraud on the husband. . . . But, without calling any one of these reasons to the aid of my judgment, there is one fact which de- termines me in refusing the relief which the husband asks in this suit ; and it is that the husband before the marriage put it out of the power of the wife effectually to make any stipulation for the settlement of her property. By his conduct towards her, retirement from the marriage was on her part impossible! She must have submitted to a marriage with her seducer, even although he should have insisted on receiving and spending the whole of her fortune. The only way in which a woman can insist upon a settlement is by making it a part of the marriage treaty that her property shall be settled. The husband, by bringing the intended wife to his house, and inducing her to cohabit with him before the marriage, deprived her of the power to protect herself, and thereby precluded him- self from telling this court with any effect that his wife had committed a fraud upon him, because she has taken the precaution to have her property secured to herself and her children." 1 Doe d. Richards v. Lewis, 11 Com. B. 1035. 2 Blanchet v. Foster, 2 Ves. Sr. 264 ; Gregory v. Winston, 23 Gratt. 102, 123. ' Gregory v. Winston, supra. * Harvey v. Mount, 8 Beav. 439 ; Baker v. Loader, Law R. 16 Eq. 49. § 2.] DECEIT. 55 guilty of actual misconduct aside from suggesting the settle- ment, and defend the suit, may be ordered with the defendant to pay the costs.^ The rule at common law as to conveyances of the property of a woman or the giving of securities by her without value during the treaty for marriage, and without notice to the intended husband, is said to rest upon the peculiar right which a husband has in his wife's property. A wife has, it is held in Ireland, no similar equity to have a conveyance or security of the intended husband set aside on the ground of fraud upon her marital rights.^ But circumstances may change this rule. In the case just cited, it appeared that upon the subsequent marriage of a son the father agreed to give up to him a farm and stock, in consideration of the wife's fortune being paid to the father ; it being then stated that the intended husband was not indebted to any extent. A deed was drawn up and executed in pursuance of this agree- ment ; and on the same day the intended husband gave his father a promissory note for £200. Upon the death of the son, it was held that this security could not be enforced against his estate, since, coupled with the statement that the son was not indebted to any extent, it was a fraud both upon the intended wife and upon her father, who had given the fortune. An antenuptial conveyance by the intended husband for the purpose of defeating his intended wife of dower is invalid by statute in North Carolina.^ And in Kentucky it is held that for the husband before marriage to convey the whole or a valuable portion of his property without the knowledge of his intended wife is a fraud on her rights, even when the property 1 Prideaux v. Lonsdale, 4 GifE. 159; s. c. 1 DeG., J. & S. 433 ; Har- vey V. Mount, 8 Beav. 489 ; Baker v. Loader, Law R. 16 Eq. 49 ; In re Clark, Law R. 4 Ch. Div. 515. See also Hugenin v. Baseley, 14 Ves. 273; Bridgman v. Green, 2 Ves. Sr. 627 ; Beadles v. Burch, 10 Sim. 332. 2 McKeogh V. McKeogh, Law R. 4 Irish Eq. 338. » Littleton v. Littleton, 1 Dev. & B. 327. 66 ACTTTAL FRAUD. [CHAP. I. is given to children by a former marriage ; ^ the consideration being love and affection.^ The question of the right of a husband to defeat his wife's prospective interest in his real or personal property by a postnuptial conveyance does not depend upon the w^ife's knowledge of the transaction. The knowledge of a wife does not imply consent. Such conveyances, then, are good or bad, when not assented to by the wife, regardless of the question whether they were made secretly or openly. We therefore reserve the consideration of such cases for another and more appropriate place. Wherever there is a special relation of confidence between the parties, the duty to communicate all facts of interest to the party whose situation prevents him from possessing full knowledge of the facts necessary to intelligent action is imperative. Any concealment in such a case, whether in- tentional or not, will be fatal ; and the burden rests upon the party in the superior situation to show that full communica- tion of the facts was made. This branch of our subject must be reserved for full consideration in the chapter on Confiden- tial Relations.* § 3. Op the Wrongdoer's Knowledge of the Falsity OF THE Representation. We have now considered the nature of the representation necessary to relief on the ground of deceit. The next in order of the elements of such relief is that of the knowledge 1 Leach v. Duvall, 8 Bush, 201, on authority of McAfee v. Ferguson, 9 B. Mon. 475, the case of an antenuptial conveyance by the wife. Petty V. Petty, 4 B. Mon. 216, however, is a direct authority for Leach v. Duvall; and in that case it was held that the wife was entitled to relief in the life-' time of the husband. 2 See also Smith v. Smith, 2 Halst. Ch. 515. * Ch. V. See also the chapter on Specific Performance, Ch. X. § 3.J DECEIT. 57 on the part of the alleged wrongdoer of the falsity of the representation. Generally speaking, an honest statement of fact, believed to be true by the party making it, though made with a view to being acted upon, and justifying action upon it from the standpoint of the conduct of the prudent man, will not, upon turning out to be false, create a liability for damages against the party making it ; nor will it afford the complaining party ground for relief from any contract which he may have made with the supposed wrongdoer under the inducement of such a misrepresentaion, so far at least as such relief is demanded •on the ground of fraud. Fraud is not established, and redress or relief will not in general be granted, without proof that the party who made the false representation knew at the time that it was false.^ The law raises no presumption of knowledge from the mere fact that the representation is false.^ There are, however, many cases in which the law does raise a presumption of the party's knowledge concerning the facts of which he has made a false representation ; or, more correctly speaking, there are many cases in which the law holds the party, from his special situation, bound to know of the truth of his representations. Such cases we have now to present. They may mostly be embraced under the general proposition, that a man is supposed and required to know all matters pertaining to his own business. If a person make a false representation of such a matter, he will not be allowed, as against an innocent man who has suffered by reason of 1 Collins V. Evans, 5 Q. B. 820, 826; Ormrod v. Huth, 14 Mees. & W. 651, 664; Behn v. Kemble, 7 Cora. B. n. b. 260; Barley ii. Walford, 9 Q. B. 197, 208; Thorn v. Bigland, 8 Ex. 725; Childers v. Wooler, 2 El. & E. 287; Mahurin v. Harding, 28 N. H. 128; Evertson v. Miles, 6 Johns. 138; Casew. Boughton, 11 Wend. 106, 108; Carley v. Wilkins, 6 Barb. 557; Edick v. Crim, 10 Barb. 445. 2 lb.; Bamett v. Stanton, 2 Ala. 181; McDonald v. Trafton, 15 Maine, 225. 58 ACTUAL I-KAUD. [CHAP. I. such false representation, to say that he made it honestly, believing it to be true. One of the most common illustrations of this proposition is to be found in the case of express or implied representations of agency. It is settled law that if a person, however hon- estly, assume to act for another in respect of a matter over which he has no authority, he renders himself liable, not merely to his principal, but to the person whom he has thus deceived. This action is sometimes said to be based upon a breach of warranty of authority, and sometimes upon deceit : in either form of action, the injured party is entitled to recover against the supposed agent, to the extent of the damage sustained.^ It has accordingly been decided that, in an action against a telegraph company for delivering a message never sent, and alleging that the defendants falsely represented that they were authorized to deliver such a message, and thereby caused the plaintiff to suffer damage, it is not necessary to allege that it was false, to the knowledge of the defendant. Such an action was considered as in the nature of a false warranty against one professing to act as agent, and repre- senting that he has an authority which he has not.^ While, however, a person professing to be an agent, gen- erally speaking, is liable in deceit in case be does not possess 1 Collin V. Wright, 8 El. & B. 647; Randell v. Trimen, 18 Com. B. 786; Cherry v. Colonial Bank, Law R. 3 P. C. 24; Pow v. Davis, 1 Best & S. 220; Spedding i-. Nevill, Law R. 4 Com. P. 212; Godwin v. Fran- cis, Law R. 5 Com. P. 295; Richardson v. Williamson, Law R. 6 Q. B. 276; White v. Madison, 26 N. Y. 117, 124; Jefts v. York, 4 Cush. 371; Bartlett v. Tucker, 104 Mass. 336; Johnson v. Smith, 21 Conn. 627 ; McCnrdy v. Rogers, 21 Wis. 197, 202. It is held in Maine that the proper remedy is by an action of deceit. Noyes v. Loring, 55 Maine, 408. It is, however, held in New York that an action ex delicto for deceit can be maintained though an express warranty was made, if deceit can be proved. Indiana R. Co. v. Tyng, 63 N. Y. 653. " May V. Western Union Tel. Co., 112 Mass. 90. See Jefts v. York, 10 Cush. 392; Bartlett v. Tucker, 104 Mass. 336. § 3.] DECEIT. 69 the authority professed, still, if he honestly and fully disclose all the facts touching the supposed authority under which he acts, he is not liable.-^ So, too, if the party act as a public officer, and in that capacity act honestly as to his powers, he ■wiU not be personally liable.^ And, if his authority to act be defined by public statute, all who contract with him will be presumed to know the extent of his authority, and no one can allege his ignorance as a ground for charging him with acting in excess of his authority, unless he knowingly mislead such peraon.^ There is a difference between an agent's situation towards his principal and towards third persons. The latter can hold him liable as for a fraudulent representation of his authority, when the former could not. Mere proof, for example, that an agent has exceeded his authority, to the damage of his principal, will not render him liable to the principal in an action for fraud.* In such a case as this, it seems necessary to prove actual fraud in the agent. This doctrine of the liability of a party who falsely repre- sents the extent of his authority to act for another applies still more strongly to the case of a person professing to be a partner in a mercantile or other firm. Thus, it has recently been held that one who, by representing himself to be a part- ner in a firm, induces another to give credit to the supposed partnership, is liable to him as a partner, whether actually a partner or not.* And this is of course entirely immaterial of any supposed relation to the firm, making the party, in the mind of the wrongdoer, a partner in the firm. Upon the same principle, one who professes to be an expert in any particular, and thus competent to give advice in mat- 1 Newman v. Sylvester, 42 Ind. 106. 2 lb.; Belknap v. Reinhart, 2 Wend. 375; Hodgson v. Dexter, 1 Cranch, 345; Nichols v. Moody, 22 Barb. 611. ' Newman v. Sylvester, supra. * Price V. Keyes, 62 N. Y. 378. ' Bice V. Barrett, 116 Mass. 312. 60 ACTUAL FRAUD. [CHAP. I. ters pertaining to his art, is liable as for deceit or false war- ranty in case he make any false statements of substance to another, intending that the same should be acted upon, though he believed them to be true. Thus, one who, during negotia- tions for the sale of lands, professes to have peculiar scientific knowledge as to the probability of the value of the lands for the production of oil, and falsely represents such value, renders himself liable to the purchaser if he rely thereon and is deceived.^ So, too, if a party make a representation of facts of which he assumes to have a definite knowledge^ superior to that of the party to whom he makes it, or as to which the latter is entirely ignorant, though the same may not relate to the party's own business, he will be liable as for a fraud.2 The facts, however, in such case should be sus- ceptible of actual knowledge.* Nor need the scienter be proved against one in possession of land who professes to be familiar with its quality,* unless indeed the purchaser have equal means of knowledge. A director of a corporation who knowingly issues or sanc- tions the issue of a prospectus containing false and fraudulent representations of the condition of the company, which are likely to deceive the public, is personally liable therefor.^ But the mere fact that a trustee allows his name and credit to be used to bolster the stock of a corporation which after- wards turns out to be worthless, does not make him liable to persons investing in reliance thereon. Knowledge of the condition of the concern must be proved against him.^ It has often been laid down that if a party innocently and 1 Kost't). Bender, 25 Mich. 515; Pickard v. McCormick, 11 Mich. 68. See also McGar ». Williams, 26 Ala. 467; Eaton v. Winnie, 20 Mich. 156. 2 See Indiana R. Co. v. Tyng, 63 N. Y. 653; Hazard v. Irwin, 18 Pick. 95; Fisher v. Mellen, 103 Mass. 503. ° Litchfield v. Hutchinson, 117 Mass. 195; Spaulding v. Knight, 116 Mass. 148. * Goodwin v. Robinson, 30 Ark. 535. « Morgan ». Skiddy, 62 N. Y. 319. See Eaglesfield v. Londonderry, Law R. 4 Ch. Div. 693. * » Morgan «. Skiddy, supra. § 3.] DECEIT. 61 by mistake misrepresent a material fact, upon which another is induced to act, it affords as good a ground for relief for fraud as a wilfully false assertion.^ And the same rule is laid down by Mr. Justice Story, the ground being that the misrepresentation operates as a surprise and imposition upon the other party.* This doctrine has sometimes also, though rarely, been applied at common law. But it is apprehended that the proposition is true only of relief sought on grounds of mistake,^ or cases in which the party making the misrepresenta- tion was bound to know the truth of the matter ; as where the facts were peculiarly within his own knowledge, and not so within the knowledge of the complaining party.* If the party made the representation, not knowing whether it was true or false, he cannot be considered as innocent ; since a positive assertion of fact is by plain implication an assertion of knowledge concerning such fact. Hence, if the party have no knowledge about it, he has asserted for true what he knows to be false.^ Such cases as this, tBen (and they are 1 Smith V. Richards, 13 Peters, 26 ; Allen ». Hart, 72 HI. 104 | Lewis ». McLemore, 9 Yerg. 206; Converse v. Blumrich, 14 Mich. 109, 123 Rosevelt o. Fulton, 2 Cowen, 139; Miner «. Medbury, 6 Wis. 295 Pearson v. Morgan, 2 Brown, C. C. 385; McKenon v. Taylor, 3 Cranch 270; Davis v. Heard, 44 Miss. 50, 58 ; Rimer ». Dugan, 39 Miss. 477 Glasscock v. Minor, 11 Mo. 655 ; Pulsford v. Richards, 17 Beav. 94-96 Sankey v. Alexander, Law R. 9 Irish Ch. 259, 296. 2 1 Story, Equity, § 193, and note. ' Such as would amount to a misconception of the real subject of the contract. In such cases, rescission will be granted, but on the ground of the failure of the contract, not on the ground of fraud. Story, Equity, § 142. * As in the case of a misrepresentation, honestly made, of one's author- ity to act for another, above noticed. s Evans v. Edmunds, 13 Com. B. 777, 788 ; Beatty v. Ebury, Law R. 7 H. L. 102 ; Haycraft v. Creasy, 2 East, 92 ; Taylor y. Ashton, 11 Mees. & W. 401 ; Lobdell v. Baker, 1 Met. 193, 201 ; Bennett v. Judson, 21 N. Y. 138; Thomas v. McCann, 4 B. Mon. 802 ; Woodruff v. Garner, 27 Ind. 4 ; Stone v. Covell, 29 Mich. 359 ; Converse v. Blumrich, 14 Mich. 109 ; Eaton v. Winnie, 20 Mich. 158 ; Foard v. McComb, 12 Bush, 723. It is no defence to an action for positive misrepresentations that the de- 62 ACTUAL PKATJD. [CHAP. I, numerous), do not sustain the broad doctrine under considera- tion. But the case last put is to be distinguished from cases in which a positive statement is made, in the belief that it is true, such belief being based upon information which would justify it. If under such circumstances the information upon which the representation is based should turn out incorrect, there clearly could be no liability in deceit ; ^ and, if a> bill for rescission were based upon an allegation of fraud, it is im- possible to understand how it could be maintained.^ The facts would not justify a finding of actual fraud; and the doctrine of constructive fraud has no application to such a case. This, however, is not to say that relief might not be had in cases of contract ; but relief in such case must proceed upon the ground that the minds of the parties have not met upon the subject of the contract, and not upon the ground of fraud.2 On the other hand, if a man make a positive repre- fendant had no personal knowledge of the facts, but made the statements upon the information of others. He should have so stated when he made them. Fisher v. Mellen, 103 Mass. 503. 1 Taylor v. Leith, 26 Ohio St. 428 ; Bird ». Forceman, 62 111. 212 ; Botsford o. Wilson, 75 111. 182 ; State Bank v. Hamilton, 2 Ind. 457 ; Brooks V. Hamilton, 15 Minn. 26 ; Faribault v. Sater, 13 Minn. 223, 231. But Bird v. Forceman, supra, went too far in holding a contract binding which had been effected through mistake. " Botsford V. Wilson, 75 111. 132. ' Brooks V. Hamilton, 15 Minn. 26, a case deserving of special men- tion; Rawle, Covenants, 573, note, 4th ed.; 2 Kent's Com. 471; 1 Story, Equity, § 142. It has sometimes been supposed, in cases arising on insurance pol- icies, that a misrepresentation or a failure to mention a fact about which inquiry is made must be known to be false, in order to defeat the contract. Fitch v. American Life Ins. Co., 5 Big. 316; Mutual Bene- fit Life Ins. Co. v. Robertson, 59 111. 123 ; s. c. 5 Big. 25, and note. But both principle and the weight of authority are opposed to this view. Campbell v. New England Life Ins. Co., 98 Mass. 381; s. c. 1 Big. 229; Mutual Benefit Life Ins. Co. v. Cannon, 48 Ind. 264; s. c. 5 Big. 122 ; Baker v. Home Life Ins. Co., 4 Thomp. & C. 582; s. c. 5 Big. 297; Duckett V. Williams, 2 Cromp. & M. 348; s. c. 3 Big. 8; Vose v. Eagle Life Ins. Co., 6 Cush. 42; s. c. 1 Big. 161; Abbott v. Howard, 3 Big. § 3.] DECEIT. 63 sentation of fact, believing it to be true, without having any information or any adequate information upon which to base it, as where he acts upon mere rumor, he then acts, to his own knowledge, falsely, for the reason above suggested, — that a positive assertion implies actual knowledge. This view of the subject will reconcile all of the cases in their result,^ and will, it is believed, furnish the true ground of decision. By way of summary, the doctrine may be put thus : Deceit or an action for relief in equity can be maintained (other ele- ments being present) : (1) for a false representation, known by the party making it to be false ; (2) for a false representation, not believed to be either true or false ; (3) for a false repre- sentation, believed to be true, but the truth of which he was bound to know ; (4) for a false representation, believed to be true, but upon inadequate grounds, such as rumors. In the same cases, a plea of such facts will be a good defence to an action ex contractu by the party making the false repre- sentation. (5) Deceit cannot be maintained for a false repre- sentation, believed to be true, which is based on adequate information ; nor will a plea of fraud, or a bill asking for re- lief for fraud, be supported by such evidence. But a plea 294; Button v. Waterloo Life Assur. Co., 1 Fost. & F. 735; 8. c. 3 Big. 199. See Jeffries v. Economical Life Ins. Co., 22 Wall. 47; s. c. 5 Big. 572; .(Etna Life Ins. Co. v. France, 91 U. S. 510; 8. c. 5 Big. 587; Holabird v. Atlantic Ins. Co., 2 Dill. 166; s. c. 4 Big. 181; Mao- donald v. Law Life Ins. Co., Law R. 9 Q. B. 328; s. c. 4 Big. 609. If the misrepresentation, though innocent and honest, be such as to affect the risk, making it different from the one actually existing, the contract fails by reason of the fact that there is no such risk as the one assured. The language of the policy, however, may be such as to require the statements to be fraudulently untrue in order to avoid the contract. Washington Life Ins. Co. v. Haney, 10 Kans. 525; s. c. 4 Big. 69. ^ Unless there be cases which hold that deceit can be maintained for a false aflBrmation of fact, believed on just information to be true. If there be such cases, they are not trustworthy authorities. See Brooks v. Hamilton, 15 Minn. 26; Faribault v. Sater, 13 Minn. 223, 231; Rawle, Covenants, 573, note, 4th ed. 64 ACTtTAL PEAtTD. [CHAP. I. that no contract was consummated, or a bill for relief based upon the same ground, will be sustained by the evidence. There is another situation deserving of mention in this connection. Where an action is brought against a party who is bound to indemnify the plaintiff for an act done by the defendant's authority upon a false representation made by him, as in the case of an action by a sherifiE against an attorney who has required him to levy upon certain goods as the property of a judgment debtor when they were not his property ; or to take the body of such a person as being the one intended in a writ, when he was not the person intended, — in these cases, it is not necessary for the plaintiff to prove that the defendant knew that his statement was false.^ But the action in such cases is for indemnification, and not for deceit. § 4. Of the Ignorance of the Complaining Paett, and HIS Belief in the Teuth of the Repeesentation. We have next in order to consider the rule that requires the party complaining of the deceit to have been ignorant of the truth of the matter concerning which the representation was made, and to believe that the representation was true. In general, both of these situations must be true of him ; he must be ignorant of the true state of facts, and may trust in the representation of them as made by the alleged wrong- doer. He must be deceived ; and if he have notice or knowledge of the truth, or if without notice or knowledge thereof he act upon independent information, and not in a belief of the truth of the wrorigdoer's representation, he is in the one case not deceived at all,^ and in the other is not de- 1 Humphries v. Pratt, 5 Bligb, n. s. 154 ; Collins «. Evans, 5 Q. B. 820. 2 Hagee v. Grossman, 31 Ind. 223; Tuck v. Downing, 76 111. 71 ; Halls V. Thompson, 1 Smedes & M. 448; Whiting v. Hill, 23 Mich. 399. § 4.] DECEIT, 65 ceived by the person of whom he complains. And the burden of proof in these particulars rests upon the party making complaint.^ Should a purchaser of property choose to make investiga- tion of his own as to the truth of representations made by the vendor, he is not merely barred from alleging the express misrepresentations of the vendor. In such a case, it will not be allowed him to saj' that, besides making false representations, the vendor concealed facts of importance to the purchaser, provided he did nothing to prevent the purchaser from mak- ing as ample an investigation as he cliose.^ Thus, where the vendor of a large tract of land represented the estate to con- tain only fifty or sixty acres of untillable soil, and the pur- chaser, before the sale, examined all of the land more than once, it was held that he could have no relief upon subse- quently discovering that the estate contained three hundred acres unfit for cultivation.^ If a person believe at first that representations made to him are untrue, but afterwards come to believe them to be true by the assurances of the party making them, can he claim relief in case he act upon the representations to his injury? It would seem that he could. If, however, notwith- standing he acts upon them, he still believe them to be false, the contrary will clearly be true.* But as there are many cases in which the alleged wrong- doer, though in fact ignorant that he had made a false repre- 1 It has recently been held in Vermont that it is not incumbent upon a plaintifi suing for deceit in a sale, to allege want of knowledge in himself of that which made the sale fraudulent, — in that case, a lien upon the property sold. Patee v. Pelton, 48 Vt. 182. But this was a case in which there was held to be a warranty of title ; and in such eases it may be that there is a presumption of the purchaser's ignorance of the defect. This, however, is not clear. 2 Halls V. Thompson, 1 Smedes & M. 443. s lb. * Bowman v. Carithers, 40 Ind. 90. 6 66 ACTUAL FEAUD. [CHAP. X. sentation, and supposing the same to be true, is bound to know the facts, and is liable for his conduct, so there are many eases in which the party complaining of the alleged deceit, though actually ignorant of the true state of facts, and supposing the representation to be true, is considered by the law as fixed with knowledge of the facts, and is not allowed to complain of the deceit. These cases we are now to consider. The first case we have to notice under this element of the law of deceit is that in which the party, having the means at hand of informing himself of the truth of the matter in question, refuses or fails to make inquiry concerning the same. Thus, it is laid down as a broad proposition of law that if the means of knowledge be at hand and equally available to both parties, and the subject of the transaction be open to the inspection of both alike, the injured party must avaU himself of such means, if he would be heard to say that he was deceived by the representations of the other party,^ unless there was a warranty of the facts. Hence, if the quality of goods bought be open to the observation of the buyer, and he have equal means of testing them, he cannot (in the absence of a warranty) set up their inferiority in an action for the price of them,^ or bring an action for damages on such ground.^ Nor can the purchaser of property complain that he was deceived in the quality of it, where it appears that he viewed it as far as he chose, but omitted to make full investi- gation,* the omission not being caused by the vendor. Upon a not dissimilar ground, it is held that a divorce will not be granted a man from his wife on the ground that she falsely stated to him before the marriage that she was not pregnant, if he himself had already had sexual intercourse with her, though her pregnancy was by another man, and the 1 Slaughter v. Gerson, 13 Wall. 379. 2 Brown v. Leach, 107 Mass. 364. » Salem Rubber Co. v. Adams, 28 Pick. 256. * Buck V. McCaughtry, 5 T. B. Mon. 221. § 4.J DECEIT. 67 child a bastard.^ The complaining party is put upon notice in such a case. In another case, it appeared that a manufacturing estab- lishment about to be sold by a trustee was represented by him to have a water power of about' fifteen feet fall. The fall in fact was considerably less ; but the purchaser had for many years been one of the owners of the property, and had united with the other owners in a deed conveying the prop- erty, and describing it as having about fifteen feet of water power. He had ample means of knowing the truth, and it was accordingly considered that he could not have relied upon the trustee's representation .^ Every contracting party not in actual fault has a right, however, to rely upon the express statement of an existing fact, the truth of which is known to the contracting party who made it, and unknown to the party to whom it is made, when such statement is the basis of a miitual engagement. He is under no obligation to investigate and verify the state- ment, to the truth of which the other party to the contract, with full means of knowledge, has deliberately pledged his faith.^ Indeed, the law goes further than this. It is well 1 Crehore v. Crehore, 97 Mass. 330. See Foss v. Foss, 12 Allen, 26. 2 Ely V. Stewart, 2 Md. 408. « Mead v. Bunn, 32 N. Y. 275, 280, Porter, J. ; McClellan «. Scott, 24 Wis. 81, 87: Upshaw v. Debow, 7 Bush, 442; Walsh v. Hall, 66 N. C. 233 ; Hale ». Philbrick, 42 Iowa, 81 ; Oswald v. McGehee, 28 Miss. 340 ; Spalding v. Hedges, 2 Barr, 240 ; Starkweather v. Benjamin, 32 Mich. 305. Contra in North Carolina, Lytle v. Bird, 3 Jones, 222 ; Fields v. Rouse, lb. 72 ; Fagan v. Newsom, 1 Dev. 20; Saunders v. Hatterman, 2 Ired. 32. A surety upon a bond given by a deputy to a sheriff (the plaintiff) , applied to the plaintiff for a release as a favor, and, in order to induce the plaintiff to give it, falsely and fraudulently made certain representations concerning the performance of the conditions of the bond, and at the same time stated that he had made inquiries on the subject of the official liability of the deputy at the offices of certain attorneys, and had there learned that the facts were as he had stated. It was held that to a plea of the release, in an action upon the bond, the sheriff could reply the 68 ACTUAL FEAtTD. [CHAP. I. settled that a party may act upon the express representation of another, though the means of information be fully open to him.^ The purchaser of land, for example, is entitled to relief against the vendor foV fraudulent misrepresentations as to title, even though the existence of the title complained of as making the representations false was on record at the time of the purchase.^ And this, too, though there has been no evic- tion of the purchaser. In the case of fraud, it is not neces- sary for a purchaser of land to rely upon the covenants of his deed ; and hence an eviction is not necessary in order to the recovery of substantial damages.* Upon the same principle, the buyer of a patent may main- tain an action against the seller for false representations as to what was covered by the patent, or what was not covered by an earlier patent, though he might have ascertained the truth by searching the records of the patent office.* Where one induces another to abstain from seeking infor- mation, mere concealment of material facts may become fraudulent. And relief will not be refused in such a case, merely because a sharp business man might not have been deceived. Where a person practises arts designed to over- reach another, and the latter, without fault or unreasonable above facts ; and it was not necessary for him to ascertain the truth of the surety's statements. Nor was the sheriff in such a case presumed to know the defaults of his deputy. Hoitt v. Holcomb, 32 N. H. 185. 1 Matlock V. Todd, 19 Ind. 130. ^ Farham v. Randolph, 6 How. (Miss.) 435 ; Eiefer o. Rogers, 19 Minn. 32; Upshaw v. Debow, 7 Bush, 442; Young v. Hopkins, 6 Marsh. 23; Campbell v. Whittingham, 5 J. J. Marsh. 96; Bailey ». Smock, 61 Mo. 213; Holland v. Anderson, 38 Mo. 55; Claggett v.. Crall, 12 Kans. 393. 8 lb.; Gilpin v. Smith, 11 Smedes & M. 109; Abbot v. Allen, 2 Johns. Ch. 522 ; Edwards v. McLeary, Coop. 308; Coke, Litt. 384, note 332 ; 2 Kent, Com. 470. * David V. Park, 103 Mass. 501 ; Brown v. Castles, 11 Cush. 348 ; Manning «. Albee, 11 Allen, 520 ; s. c. 14 Allen, 7 ; Watson v. Atwood, 25 Conn. 313. § 4.J DECEIT. 69 neglect, is defrauded, redress will not be denied.^ Nor is the rule different where the vendor suggests examination to the purchaser, but in such a way as to indicate that such a stpp would be quite unnecessary. If, for example, the vendor should suggest that the purchaser should go and look at the property, " as their judgments might not agree, and if not satisfied the vendor would pay his expenses, but if satisfied the purchaser should himself pay them," it is held that such a proposal asserts by implication the exercise by the vendor of an intelligent judgment upon the subject, tends to dissuade from inquiry, and renders him liable, if the statements prove false, even though he believed them to be true.* So, too, though a purchaser may on close inspection detect a vice in the property sold, still, if the vendor make representations upon which the purchaser relies, refraining for this reason from close inspection, the sale may be avoided.^ So, if a party make a false and fraudulent explanation of a visible defect in property to be sold by him, he is liable as well as if he had made a false and fraudulent statement concerning the latent condition of the property.* And the same principle prevails, though the party making the false explanation was ignorant of its falsity, if he assumed to know the nature of the defects.^ And in general, where a -party put upon notice is actually misled and" induced not to prosecute investigation by the opposite party, he will be entitled to relief.^ The maxim caveat emptor does not apply when the vendor of prop- 1 Swimm v. Bush, 23 Mich. 99 ; Starkweather v. Benjamin, 32 Mich. 805; Oswald v. MoGehee, 28 Miss. 340 ; Roseman v. Canovan, 43 Cal. 111. 2 Wehster v. Bailey, 31 Mich. 36. ' Oswald i>. McGehee, 28 Miss. 340; Baker v. Seahorn, 1 Swan, 54. It was said in Baker v. Seahorn that if the vendor of a horse merely suggest a douht as to the goodness of the animal's eyes, knowing that they are defective, this is as much a fraud as if he had been silent. ^ Gant V. Shelton, 8 B. Mon. 423. ^ Phelps V. Quinn, 1 Bush, 375; Robertson v. Clarkson, 9 B. Mon. 507. ° Roseman v. Canovan, 43 Cal. 111. 70 ACTUAL PEATJD. [CHAP. I. erty resorts to any artifice to put the purchaser off his guard.^ Accepting and paying for goods upon delivery will not bar the purchaser from relief, though the goods were open to his inspection at the time, if such acceptance and payment were procured by fraudulent artifices on the part of the vendor. Thus, where the defendants, manufacturers and vendors of tobacco, had fraudulently used damaged tobacco in the manu- facture, and had fraudulently used boxes of green lumber, and while the tobacco was being manufactured they exhibited to the plaintiff from time to time, in order to mislead him, speci- mens of tobacco as of the kind they were supplying him, when in fact they were making a different and inferior kind, it was held, notwithstanding acceptance and payment, the plaintiff was entitled to recover damages for the loss sustained.''' However, if a party assert that he relied upon the state- ment of another, instead of using the means of information at his hands, the burden of proof is upon him to establish the statement. For, where persons can see for themselves if they choose to look, it is a presumption of law that they do look and ascertain the fact for themselves ; and this presumption must be overcome, if they would prevail. But proof that a party is diverted from looking for himself, by the intentional act or conduct of the opposite party, will rebut the presump- tion ; for how, it has well been asked, can one who has been diverted from looking for himself be said to refuse to look? 3 Even though a party sell at the risk of the purchaser, he will not be permitted to practise fraud upon him. Thus, it has been held that where a party, during a negotiation for the sale of property, stated that the other contracting party must take the property at his own risk, such statement would not 1 Biggs V. Perkins, 75 N. C. 397 ; Baker v. Seahom, 1 Swan, 54. 2 McAvoy V. Wright, 25 Ind. 22. 8 Wilder v. De Cou, 18 Minn. 470, 480 ; Bailey v. Smock, 61 Mo. 213. § 4.] DECEIT. 71 exonerate the party from liability for a deceitful suppression of the truth or for the suggestion of a falsehood.^ Where the parties do not stand upon an equal footing, the objection to a plea or claim of false representations, that the party to whom they were made was negligent in not making inquiry or examination, will not be allowed.^ This rule of law rests upon the just and salutary ground that the injured party in such a case is in the power, to a greater or less ex- tent, of the wrongdoer, so as to be more easily imposed upon than if he were standing at arm's length, and acting upon an equal footing with him. The injured party is doubtless bound to know the state of his own business, and the facts relating to his own property, just as truly as is the wrongdoer. This subject, however, need not be enlarged upon here, as it has been presented with sufficient fulness in treating of the similar position of the wrongdoer.^ It may, however, be observed that a director of a corporation is not bound to know the true condition of the company, though he has usually attended the business meet- ings ; and he may obtain relief from the purchase of stock of the corporation made through the fraudulent representations of the company's cashier.* A subscriber to the stock of a corporation, who resists pay- ment or assessment on the ground that he was deceived by the false and fraudulent representations of the corporation's agent in giving his subscription, will not escape liability, it is held, if such representations relate to matters controlled by the charter of the company ; the same showing that the agent had no authority to make such representations.* In ^ George.!;. Johnson, 6 Humph. 36. 2 Wannell v. Kern, 57 Mo. 478. ' See supra, pp. 57-60. * Lefever v. Lefever, 30 N. Y. 27. 6 Selma R. Co. v. Anderson, 51 Miss. 829; Wight ». Shelby R. Co., 16 B. Men. 4; Andrews v. Ohio & M. R. Co., 14 111. 169; Irvin v. Turn- pike Co., 2 Penn. 466; Ellison v. MobUe & 0. R. Co., 36 Miss. 572. 72 ACTUAL PEATTD. [CHAP. I. other words, the subscriber is bound, under this rule, to examine the company's charter, and cannot safely rely upon the representations of its agents, except in matters (within the scope of his authority) as to which the charter is silent. As to matters not controlled by the charter, false and fraud- ulent representations within the general limitations of the doctrine of deceit, will vitiate contracts or afford a ground of action as in other cases. ^ A distinction has been laid down in New York between a statement of fact concerning matters the knowledge of which is general and easily attained, and matters the knowledge of which is rare and exceptional. As to the former, it is said that it may reasonably be expected to have been intended that the person to whom they have been made should under- stand their character. Evidence of a positive assertion in such a case is sufficient, and it is not necessary for the injured party to prove that the person making the statement knew it to be false. As to the other class of facts, the knowledge of the same being unusual, statements concerning them will usually be understood as amounting only to an expression of the candid conviction of the party. They are to be under- stood as expressions of opinion or judgment rather than as absolute representations of fact. In other words, though statements of this kind be made in positive form, they are to be treated as prima fade honest and proper, and express evidence of knowledge of their falsity must be given.^ But the soundness of this distinction may be doubted. It is not recognized in other cases ; and the difficulty in the way of its application must make it too often impracticable. A few widely separate facts might be thus divided, such, for exam- 1 Selma R. Co. v. Anderson, supra; Waldo v. Chicago R. Co., 14 Wis. 625; Crump v. United States Mining Co., 7 Gratt. 352; West v. Crawfordsville Tump. Co., 19 Ind. 242; Crossman v. Penrose Bridge Co., 26 Penn. 69. 2 Marsh v. Falker, 40 N. Y. 562, 567. § 4.] DECEIT. 73 pie, as representations concerning the kind or amount of timber upon a piece of land, and representations concerning matters of science or skill ; but the largest number of cases by far would be found difficult of classification, and opinions ■would greatly and justly differ upon the correctness of any classification that could be made. And no case could be a precedent for another, unless the subject of the statements ■were identical. But, even as to those cases in which the rule might be of ready application, there certainly is no sound reason for holding that a positive statement of fact relating to a matter within the knowledge of but few persons should be placed upon a better footing than a statement of fact relating to matters within the knowledge of many. The presumption, if any were proper, should favor the latter ; for, if the state- ment relate to a matter with which most persons have some familiarity, it may be considered that the party who made it ■was speaking of facts of common observation merely, and hence should not be bound without proof of actual fraud. If, on the other hand, a man of science or skill make an assertion of fact in his special department of knowledge, his learning will give him the ear of the people, and his word will be received where that of others would be distrusted. And this is the doctrine of express authority. ^ A person in the full possession of all his faculties, and able to read, is bound to know and understand the contents of an instrument executed by him or in his possession as a party to it,^ unless indeed it contain technical or foreign terms, and he has been misled as to their meaning by the opposite party. Such a person therefore cannot say that he did not read an instrument conferring rights upon him which 1 Kost.u. Bender, 25 Mich, 515; Picard v. McCormick, 11 Mich. 68; McGar v. ■Williams, 26 Ala. 467 ; Moreland v. Atchison, 19 Tex. 303, 2 Rogers v. Place, 35 Ind. 577; New Albany R. Co. v. Fields, 10 Ind. 187; Russell v. Branham, 8 Blackf. 277; Clem v. Newcastle R. Co., 9 Ind. 488; Starr v. Bennett, 5 Hill, 303. 74 ACTXJAL PEAUD. [CHAP. I. he is seeking to enforce, and that the other party falsely stated its terms.^ If a man execute a solemn instrument, by which he con- veys an interest, and sign on the back a receipt for money, he cannot affect not to know what he was doing ; and it is not enough for him afterwards to say that he thought it was only a form. That merely amounts to saying that a misrepresentation was made to him, under which he executed a deed ; and still the deed may have been exactly what he intended to execute, though he intended that it should be used for a totally different purpose. But this does not affect the deed. The fraud of the person who used the deed does not make it less the deed of the person who executed it.^ A person who cannot read should require a contract about to be signed by him to be read to him ; and, if he do not, he cannot in principle complain that the contents of the writing were falsely stated to him, at least where the mis- representation was not made by the opposite party to the contract.* But it has been held that one who could only read with great difficulty might rely upon the statements of the agent of the opposite party as to such of the contents of a printed instrument as were in very small type.* It is doubtless the practice in such cases merely to explain the contents ; but it may be doubted if due diligence does not require of the party that he should insist upon having the contract read at length. Then, if there be fraud, he will clearly be entitled to redress. In the case just referred to, it is observed that if a contract- ing party (able to read only with difficulty) may not rely upon the representations of the party with whom he contracts as to 1 lb. ; Bacon v. Markley, 46 Ind. 116; Seeright v. Fletcher, 6 Blackf. 380; Hawkins v. Hawkins, 50 Cal. 558. '^ Hunter v. Walters, Law R. 7 Ex. 75, Lord Hatherley. s Craig o. Hobbs, 44 Ind. 363. * Keller!). Equitable Ins. Co., 28 Ind. 170. See also Sims v. Bice, 67 m. 88. § 4.] DECEIT. 75 the contents of a written instrument, but must examine the instrument for himself, it is at the same time implied that the party who represents the contents of the instrument shall not by his own act have rendered such examination of more than ordinary difficulty. This remark would be very decisive, if the only alternative for stating the contents were an exami- nation by the complaining party himself; but that is not the case. The most natural course for a person regardful of his own rights would be to require the opposite party to read the instrument slowly and carefully, rather than to attempt the difficult task of reading it himself or to risk the danger neces- sarily involved in an attempt to state the contents of the paper, — a danger greatly increased, if the instrument be lengthy or complicated.^ And the force of these remarks will be still more apparent if the complaining party, instead of being ignorant and illiterate, and hence naturally more ready to accept a statement of the contents, should be a blind person, in the possession of the intelligence generally manifested by such people. It would hardly b.e excusable in a blind man of intelligence to accept a statement of the contents of a writing in which he is interested. He should require it to be read. Cases of this sort, however, are to be distinguished from those in which a person is by trick or artiiSce caused to sign a different instrument from that to which -he intended to give his signature, as where one paper is surreptitiously substi- tuted for another. The doctrine as to the necessity of read- ing or having read the paper signed has no ajpplication to such a case. Even a negotiable promissory note in the hands of a bona fide indorsee for value is void, when the defendant's signature has been thus obtained.^ 1 Post,^. 78. SeeLouchheimw. Gill, 17Ind. 139; Sims u. Bice, 67111. 88; Taylor v. Atchison, 54 111. 196, the last-named case being directly in point. See also Hawkins v. Hawkins, 50 Cal. 558 ; Rockford R. Co. v. Shunick, 65 111. 223; Spurgin v. Traub, lb. 170; Pigot's Case, 11 Coke, 27; Estes v. Fur- long, 59 111. 298; Richardson ». Schirtz, lb. 313 ; Leach v. Nichols, 55 111. 273. ^ Munson v. Nichols, 62 111. 111. Secus, if the defendant has been 76 ACTUAL FRAUD. [CHAP. I. The rule in this class of cases appears to be based upon the negligence of the party signing the instrument in question. It may be found however, as matter of fact or as matter of law, that the signer, though perfectly able to read the writ- ing, was not guilty of negligence in failing to read it ; and, if this should be the case, there is strong authority for the posi- tion that the signer may not be bound even in favor of a hona fide purchaser for value.^ Thus, in the case first cited, it appeared that the defendant, a man far advanced in years, was induced to put his name upon the back of a bill of exchange, by the fraudulent representation of the acceptor that he was signing a guaranty. The defendant did not see the face of the bill at all ; and it appeared that, at the sug- gestion of the same party who had made this false statement of the contents of the paper, he had previously signed a guar- anty for the same amount and for the same object, upon which he had not been involved in any loss. The jury were instructed that if the indorsement was obtained upon a fraud- ulent representation that the contract was a guaranty, and the defendant signed it without knowing that it was a bill, and under the belief that it was a guaranty, and if the defend- ant was not guilty of any negligence in so signing the paper, he was entitled to a verdict. The jury found for the defend- ant ; and, upon a motion for a new trial, the instruction was held correct. The verdict was, however, set aside, upon the guilty of any negligence. Mead v. Munson, 60 111. 49. See also Rich- ardson V. Schirtz, 59 111. 313; Elliott v. Levings, 54 111. 213; Clarke v. Johnson, lb. 296. 1 Foster v. Mackinnon, Law R. 4 C. P. 704; Gibbs v. Linabury, 22 Mich. 479; Whitney «. Snyder, 2 Lans. 477; Chapman ». Rose, 56 N. Y. 137 ; Kellogg V. Steiner, 29 Wis. 626. See also Patnam w. Sullivan, 4 Mass. 45; Ross v. Drinkard, 35 Ala. 434. It has been held in Missouri that, where the signature of the maker of a note has been obtained by false representations of the object of the contract, the paper will be void even in the hands of a bona fide holder for value. Corby w. Waddle, 57 Mo. 452 ; Briggs v. Ewart, 51 Mo. 245 ; Martin u. Smylee, 55 Mo. 577. But this may well be doubted. § 4.] DECEIT. 77 ■ ground that the evidence in respect of the negligence of the defendant was such as to call for further investigation. The ground taken for sustaining the instruction was, that the defendant never intended to sign the contract in question, or any such contract. He never intended to put his name to any instrument that then was, or thereafter might become, negotiable. He was deceived not merely as to the legal effect, but as to the actual contents of the instrument. And this is in substance the ratio decidendi in most of the cases above cited. Further than this, and with the distinct limita- tion that there was no negligence on the part of the person giving his signature, it would be unsafe to go. The principle of the above case would perhaps apply to the validity of a negotiable note, where the signature of the maker was given to a printed form or blank having the appearance of an order for a particular article, but which is afterwards so filled up as to constitute it (in form) a promissory note. Such an instrument would not perhaps be valid even in the hands of a hona fide indorsee for value.^ This is probably the extent of the exemption. If the blank were such in appearance that it might as readily be converted into a promissory note as into another contract, it is apprehended that a party signing it should be held liable to a hona fide indorsee for value, not- withstanding any fraudulent misrepresentations as to the object of the paper; unless, indeed, the circumstances were such that he was prevented, without negligence of his own, from reading the instrument by the opposite party, or was by him caused to relax his diligence and scrutiny.^ 1 Compare Kellogg ». Steiner, 29 Wis. 626. A forlion, a person can- not be made liable in any way by another's writing a contract over, or in connection with, his blank signature upon a fly-leaf, or in an autograph album, or upon a loose sheet or piece of paper. Caulkins v. Whisler, 29 Iowa, 495; Nance v. Lary, 5 Ala. 370. 2 Gibbs V. Linabury, 22 Mich. 479 ; Chapman v. Rose, 56 N. Y. 137 ; Shirts V. Overjohn, 60 Mo. 305; McDonald v. Muscatine Bank, 27 Ind. 319. ti ACTUAL FRAUD. [CHAP. I. The presumption of negligence against a person able to read the instrument, in not doing so, is clearly strong enough to justify a verdict for the indorsee ; ^ and it must therefore devolve upon him to satisfj'' the court or jury that his conduct was perfectly free from fault. If it appear that a party's signature to an instrument was obtained (without negligence on his part) by any fraudulent artifice in the shifting and substitution of one paper not intended to be signed, for another to which the party sup- posed he was giving his signature, he will not be liable even to a bona fide purchaser for value. Such a case is in sub- stance a forgery, and the rule requiring a person to see to the contents of the instrument signed has no application.^ And the same rule prevails where, without any negligence on the part of the signer, or delivery by him, a paper is obtained by theft or other fraud from his premises without the intervention of any one standing in a relation of trust or confidence to such party.* But the rule is probably otherwise as to bank-bills.* If, then, there be an intention to execute, accept, or indorse a negotiable note or bill, and the act be accompanied with a delivery thereof, actual or implied, or if without such inten- tion there be negligence in the execution, acceptance, or indorsement, followed by a delivery, actual or implied, the party so giving his signature will be liable to a bona fide holder for value. But there must be a contract, and this can arise only from intention or negligence." If both of these are 1 Douglass 17. Matting, 29 Iowa, 498; Shirts v. Overjohn, 60 Mo. 305; Chapman v. Rose, 56 N. Y. 137; McDonald u. Muscatine Bank, 27 Ind. 319. ^ Nance u. Lary, 5 Ala. 370; Gibbsu. Linabury, 22 Mich. 479;an(e, p. 75. ^ Burson v. Huntington, 21 Mich. 415, denying Shipley v. Carroll, 45 111. 285, and Gould v. Segee, 5 Duer, 266 ; also dicta in Marston v. Allen, 8 Mees. & W. 494, and in Ingham v. Primrose, 7 Com. B. n. s. 82. The Wisconsin cases certainly go too far in support of the defendant. Chipman V. Tucker, 38 Wis. 43; Roberts v. McGrath, lb. 52; Roberts v. Wood, lb. 60. In these cases, the paper was put into circulation by a custodian. * Burson v. Huntington, supra; Worcester Bank v. Dorchester Bank, 10 Cush. 488. ^ In the absence of assent, negligence cannot in strictness generate a § 4,] DECEIT. 79 wanting, there can be no liability ; and the samb is true if either is wanting, unless there be an actual or implied delivery. Under this principle, that intention to execute, accept, or in- dorse some note or bill, or negligence in respect of such act, fol- lowed by delivery, is necessary, wiU be embraced all that class of cases where a party has given his signature to an incomplete negotiable bill or note for the use of another ; and the cases are in strict accord with the above principle, establishing the rule that, notwithstanding a fraudulent breach of confidence in the party intrusted with the signature, the signer will be liable to a bona fide holder for value, at least to the extent of the outlay made by the latter in the purchase of the bill or note.^ The above considerations, so far as they relate to signa- tures given to completed contracts upon a misrepresentation of their contents, proceed upon the ground that the party so giving his signature was able to read the written instrument before him. Different considerations prevail in cases in which the party was ignorant and unable to read the writing at all, or able to read it only with difficulty. The party in such a case stands in a dependent situation, and has a right to consider his liability to depend as well upon the good faith of the party for whom he signs as upon his own exercise of care. Or more accurately, such a party can insist upon a higher approach to perfect honesty in the other party (the human law is powerless to compel perfect honesty), and can himself be contract, but in such a case as this the consequences of a contract may ■well be visited upon the negligent party. He would be liable in tort, it should seem, and to the same extent, if the contractual liability were not held to arise. I Michigan Bank v. Eldred, 9 Wall. 544; FuUerton v. Sturgis, 4 Ohio St. 529 ; Huntingdon v. Branch Bank, 3 Ala. 186; Orriok v. Colston, 7 Gratt. 189; Russell v. Langstaffe, 2 Doug. 514; Van Duzer v. Howe, 21 N. Y. 531 ; Bigelow, Estoppel, 394 (2d ed.). See Swan v. North British Co., 2 Hurlst. & C. 175 (Ex. Ch.), intimating that the estoppel arising from executing instruments containing blanks is confined to negotiable instruments, and does not apply to deeds. 80 ACTUAL PBAtTD. [CHAP. I. excused for exercising a lower degree of diligence or care than the person who stands upon an equal footing with the wrongdoer. The difference is perhaps only one of degree, since even an unlettered man may be negligent; and, if negli- gent, there is no sufficient reason for preferring him to an honest purchaser for value. At all events, it is clear that if such a person, without negligence of his own, be induced to sign a negotiable bUl or note by reason of a false reading of the contents of the instruments, he cannot be held liable even to a bona fide indorsee for value.^ Not to read a deed to a party, in the rough draft before the execution, or in the engrossment at the time of execution, has been held in England to be a badge of fraud.* The duty of reading an instrument may be cast by stat- ute upon the maker thereof or upon an officer of the law ; and when this is the case it would seem that the opposite party could rely thereon, without himself reading it, or call- ing upon a friend or agent to do so in case of his inability.^ If the party entitled to the reading should be a foreigner, not well acquainted with the language of the instrument, he should insist upon a translation ; and the failure to do so would be evidence of negligence on his part, which, however, might be rebutted doubtliess by showing that he had been imposed upon by reason of his own ignorance. The duty of reading an instrument to the opposite party may also be assumed, even when not required by law, by the party drafting it ; and it would seem that one who assumes such a duty should be required to perform it honestly, and that the opposite party might safely rely upon the reading. 1 Walker v. Ebert, 29 Wis. 196; Puffer v. Smith, 57 111. 537; Whitney V. Snyder, 2 Lans. 477; Chapman v. Rose, 56 N. Y. 137; Putnam v. Sulli- van, 4 Mass. 45. See Schuylkill Co. v. Copley, 67 Penn. St. 386; Foster V. Mackiunou, Law B. 4 Com. P. 704 ; 1 Daniel, Neg. Instruments, §§ 848, 849. 2 Bennet v. Vade, 2 Atk. 324, 327. « See Terry v. Tuttle, 24 Mich. 206, 211. § 4.J DECEIT. 81 This, we apprehend, will clearly be the case when there exists any inequality or confidence between the parties, and the party reading stands in the superior position. In the absence of such a duty in the opposite party to read, or of fraud, one cannot allege that he did not agree to the terms of a written contract to which he is a party.^ The omission to read a portion of a deed may be as fatal, where such duty of reading devolves upon or is assumed by one of the parties to a written contract, as the misreading of it. This will be the case whenever the effect of the omis- sion is to mislead. Thus, where a lady supposed that she was executing a mortgage to A, when in fact the name of B was inserted, and the agent of the mortgagor (who assumed the duty of reading the deed to the mortgagor) omitted to read the name of the mortgagee, the court, while deciding the case upon other grounds, were inclined to the clearly sound opinion that the omission rendered the deed invalid.^ However, it would seem that the mere omission to read parts of the instrument well understood (this being the reason for not reading them) could not be fatal. In a suit to set aside a deed made by a person unable to read, for misrepresentation of its contents, its purport, and effect, the burden of proof is upon the defendant. In such a case, it is part of the necessary proo'f of the execution of the deed to show that it was read, or its contents made known to the grantor. But an acknowledgment before an officer according to law is equivalent to proof that the grantor had knowledge of the contents, if such acknowl- edgment certify that the officer made known the contents to the grantor.^ Besides the above situations in which the complaining 1 Grace v. Adams, 100 Mass. 505 ; Rice v. Dwight Manuf. Co., 2 Cush. 80, 87. 2 Terry v. Tattle, 24 Mich. 206. » Hyer o. Little, 5 C. E. Green, 443. See Pool v. Chase, 46 Tex. 207 ; Williams v. Baker, 71 Perm. St. 476, 6 82 ACTTTAL FRAUD. [CHAP, I. party is precluded or not from alleging that he was ignorant of the truth of the matter concerning which the represen- tation was made, there is another class of cases, fully con- sidered in another place, to which allusion should here be made. This class of cases is that of misrepresentations of the law. Generally speaking, a party is bound to know the law, and cannot allege that he has been deceived by a false statement thereof ; but there are important qualifications to this rule, and reference should be made to the examination of this subject elsewhere.^ § 5. Op the Intention that the Repeesbntation SHOULD BE acted UPON. As to the rule which requires the party complaining of deceit to prove that the opposite party intended his repre- sentation to be acted upon, it is to be observed that, while the rule is probably inflexible, its force appears chiefly in cases hi which the deceit was practised with reference to a negotiation with a third person, and not with the party of whom the complaint is made. In cases of this kind, an example of which is found in false representations to the complaining party of the solvency of a third person, it is plain that the transaction with the third person, though shown to have been caused by the false representation in question, affords no evidence of an intention in the party complained of that the representation should be acted upon by the party. It would be perfectly consistent with mere evidence that the plaintiff (using this term generically) acted upon the defendant's knowingly false representation in a transaction with a third person, to the plaintiff's injury ; that the defendant, notwithstanding his knowledge of the falsity of his representation, and his consequent moral culpability, ^ Ante, pp. 8-10. § 5.] DECEIT. 83 did not know that the plaintiff was about to act upon his representation. And this would be equally true, though it appeared that the defendant had not volunteered his state- ments, but had made them only upon inquiry by the plaintiff; for the plaintiff might have made the inquiry out of pure curiosity, or indeed out of a mere general interest in the affairs of the third person. Proof of aU these facts would therefore be insufficient to show that the defendant had intended to injure the plaintiff. The representation might still have been a mere idle falsehood, albeit told knowingly and with actual malice. In such a case, the person who had been slandered in his character, profession, or occupation might maintain an action of slander against the party utter- ing the language, or an action of slander of title (so called), if false representations of the state of his property had been made to his actual damage ; but no right of action would accrue to any bystander who might have acted upon the representation (for example, by breaking a bargain then negotiating with the third person) to his own injury. It follows, therefore, that where a party complains of false representations, whereby he was caused to suffer damage in a transaction with some third person, it devolves upon him to give express' evidence that the alleged wrongdoer intended that he should act upon the misrepresentation ; and that it is not enough to prove that the misrepresentation was made with knowledge of its falsity.-* The existence of such a class of cases as this has been recognized for nearly a hundred years.^ And from the first case in which it is clearly enunciated,^ it has been settled law ^ Though this proposition has not been distinctly reasoned out in the cases, it is supported by Pasley v. Freeman, 3 T. R. 51; s. c. Bigelow's L. C. Torts, 1, and note, 36; Thorn v. Bigland, 8 Ex. 725, 731; Tapp v. Lee, 3 Bos. & P. 367; Foster v. Charles, 6 Bing. 396; 7 Bing. 105 ; and, indeed, by all of the authorities in which such a situation was presented. 2 It dates from Pasley «. Freeman, 3 T. R. 51 a. d. 1789. ' Pasley v. Freeman. 84 ACTUAL FEATTD. [CHAP. I. that it is not necessary that the misrepresentation complained of should have been made with a corrupt motive of personal gain on the part of the person making the representation, in order to entitle the opposite party to relief.^ Where, however, the effect of the false representation was to bring the plaintiff into a business transaction with the party himself who made the representation, the case is quite different. Proof of such a fact shows at once the intent of the defendant to induce the plaintiff to act upon the repre- sentation ; and it follows that express evidence of an intention to this effect is unnecessary. This is the meaning of the cases which hold it not incumbent upon the plaintiff in deceit (and it should be observed that the rule is the same of any party, plaintiff or defendant, who complains of deceit), after proof of the other elements of redress, to give express evidence of an intent to deceive. We proceed to illustrate the subject from the authorities. Where, for example, evidence is given that a defendant, in the sale of a horse, knowingly made false representations to the plaintiff concerning the animal, and that the plaintiff has been induced thereby to buy the horse, the jury are bound to find that the defendant made the representations with intent to induce the plaintiff to buy the horse ; and the plaintiff cannot be required to give any further evidence of such intent of the defendant.^ Again, if a party sell a horse as sound, knowing that he is not sound, the existence of an intent to defraud is proved ; and this is equally true where the vendor knew that the horse was sick at the time of the sale, but did not know what was the matter with him. Selling the horse as sound under such circumstances, it is not neces- sary to give other evidence of an intent to defraud.^ And, 1 Pasley v. Freeman, 3 T. R. 51; Foster v. Charles, 6 Bing. 396; s. c. 7 Bing. 105; Hubbell v. Meigs, 50 N. Y. 480. 2 Collins V. Denison, 12 Met. 549. v " Johnson, v. Wallower, 15 Minn. 474 ; s. c. 18 Minn. 288; Lindsay V. Davis, 30 Mo. 406. § 6.] DECEIT. 85 in general, where the facts themselves show that the wrong- doer intended the fraud, evidence of want of such intention is inadmissible.^ It is important to observe that in one branch at least of this class of cases it is not necessary that it should appear that the party complained of should have intended to injure the other. We have already seen that a person honestly professing to have authority to act in behalf of another is liable as for fraud for the damages sustained, if he have not the authority.^ And in such cases it is obvious that the representation may have been made for the benefit of the complaining party.^ § 6. Op Acting upon the Rbpeesentation. It is fundamental that the representation should have been acted upon by the complaining party to his injury.* General fraudulent conduct or dishonesty of purpose, or a mere gen- eral purpose to deceive, will not afford ground of action or defence unless connected with the particular transaction complained of, and shown to be the very ground upon which the party acted and upon which the transaction took place. ^ And this is as true in equity as at law.® In accordance with the rule that fraud unaccompanied by damage is not actionable, it has very lately been held that an action for inducing the payee of a negotiable note to indorse it in blank upon its transfer, by false and fraudulent repre- sentations, cannot be sustained before actual payment of the 1 Dulaney v. Rogers, 64 Mo. 201. 2 Ante, pp. 58, 59. » See also Polhill v. Walter, 3 Barn. & Ad. 114. * Pasley v. Freeman, 3 T. R. 51; Wells v. Waterhouse, 22 Maine, 131; Branham v. Record, 42 Ind. 181; Rogers v. Higgins, 57 111. 244; Lind- sey V. Lindsey, 34 Miss. 432 ; Taylor v. Guest, 58 N. Y. 262. 6 Rutherford v. Williams, 42 Mo. 18; Attwood v. Small, 6 Clark & F. 447. ' Rogers v. Higgins, 57 111. 244. 86 ACTUAL FRAUD. [CHAP. I. instrument by such indorser.^ But it is held that a party who has been induced to subscribe to the stock of an insol- vent corporation, and to give his bond and mortgage to secure the payment of his subscription, has been damnified, though his subscription has not in fact been paid.^ A person who is prevented from effecting an attachment upon property by the fraudulent representations of the owner or his agent is considered to have suffered no legal damage thereby, though subsequently another creditor attach the whole property and sell it upon execution to satisfy his own debt.^ The person thus deceived, having' acquired no right in the property, cannot lose any by reason of the deceit. The most that can be said, it has been observed, is that the party intended to attach the property, and that this intention has been frustrated.* And it could not be certainly known that this intention would have been carried out.^ Of course, however, the case would be different where a party has been induced by false representations to abandon an attachment actually made.^ So, too, it is laid down that no action can be maintained for fraudulently preventing one from obtaining an expected gratuity from a testator.' Again, where a person falsely represents that he has authority to lease a store to the plaintiff, and proceeds to grant him a verbal lease for two years, no action will lie for the fraud, since the lease was void, and hence no legal damage had been sustained.® Every contracting party has a right to rely upon the express statement of an existing fact, the truth of which is 1 Freeman v. Venner, 120 Mass. 424. ^ Hubbard v. Briggs, 31 N. Y. 518. The distinction between this and the preceding case (Freeman v. Venner, 120 Mass. 424) seems to be that in the former nothing but a conditional liability had been incurred, ■whUe in the latter an actual present estate had been conveyed. 3 Bradley v. Fuller, 118 Mass. 239; Lamb v. Stone, 11 Pick. 527; Wellington v. Small, 3 Cush. 145; Kan^all v. Hazelton, 12 Allen, 412. * Lamb v. Stone and Bradley v. FuUer, supra. 6 Bradley v. Fuller. « lb. ' Hutchins v. Hutchins, 7 Hill, 104. 8 Dung V. Parker, 52 N. Y. 494. § 6.] DECEIT. 87 - known, or presumed to be known, by the opposite party, and not known to him to whom it was made, as the basis of an engagement.' A vendor of property may, for example, put upon the purchaser tlie responsibility of informing him cor- rectly as to the market value of the property, or any other* fact known to him which affects its value, and if the pur- chaser answer untruly, in positive terms, the purchase may be avoided.2 The rule requiring a party to act upon the false representa- tions prevails where the complaining party does not rely upon the misrepresentation, but seeks from other quarters means of verification of the statements made, and acts upon the information thus obtained. He cannot afterwards allege that he has been deceived by the party who originally made the false representations.^ Thus, in the case first cited, which involved the validity of a contract for the purchase of a steamboat, it appeared that previously to the execution of the contract, and with a view to examining the vessel, the defendant went from Baltimore to New York, taking with him his son, who subsequently became captain of the boat, and two ship-carpenters, and a square to measure her draught of water. Every opportunity was afforded him to examine the vessel ; and a thorough examination was made. It was considered under these circumstances that the defendant could not set up the false representations of the vendor by way of impeaching the sale. The case, however, would doubtless be otherwise if the complaining party were pre- vented, in the course of his independent examination, from ascertaining the truth by the fraud of the other party. The fact that he had made an examination of his own under such circumstances would not preclude him from alleging the fraudulent representations.* 1 Mead v. Bunn, 32 N. Y. 275. 2 Smith V. Countryman, 30 N. Y. 655. See ante, pp. 17-21. 8 Slaughter v. Gerson, 14 Wall. 379; Attwood v. Small, 6 Clark & F. 282. ^ See fost, P- 88. 88 ACTUAL FRAUD. [CHAP. I. Though a party to whom a false representation has been made attempt to ascertain for himself the truth of the matter, still, if he be prevented from accomplishing the purpose, though not by the other party, and act in fact upon the mis- representation, the party making it is bound to make it good. Thus, in a recent case,^ the plaintiff, negotiating for the pur- chase of a farm from the defendant, went upon the premises to verify for himself the statements made by the defendant as to the nature of the soil. The depth of snow on the ground prevented him from doing so ; and the statements previously made were there repeated by the defendant. The plaintiff purchased the farm, relying upon the defendant's representa- tions ; which having proved false, it was held that equity would rescind the contract. The misrepresentation must have been made at the time of or only shortly before the action taken and complained of : if made afterwards, it could not have influenced the party's conduct, and can afford, therefore, no ground for relief.^ Hence, a purchaser who does not act upon the representations of the vendor cannot afterwards claim the benefit of them.^ It is not necessary to prove that the plaintiff relied solely upon the defendant's representations. It is sufficient if the representations were relied upon by the plaintiff as consti- tuting one of the substantial inducements to his action.* It is indeed sometimes said that the false representations must have been such that without them the transaction complained of would not have taken place. But it has well been said it is not possible for any man, in the aggregate of inducements which led to the transaction, to determine whether the result would have been attained with some of the inducements wanting. Nor should the guilty party be permitted to allege 1 Risch V. Von Lillienthal, 34 Wis. 250. 2 Fogg V. Pew, 10 Gray, 409. ' Lindsey v. Lindsey, 34 Miss. 432. * James v. Hodsden, 47 Vt. 127; Winter v. Bandel, 30 Ark. 362. See Cabot V. Christie, 42 Vt. 121. § 6.] DECEIT. 89 in excuse that the innocent party might have acted as he did, if less deceit had been practised upon him. If a man resort to unlawful means and accomplish an unlawful purpose, the law will not stop to measure such inducements. If, for example, a party, induced by the several false and fraudulent declarations of two persons, different in time and character, purchase worthless property, it would not do to say that be- cause the trade might not have been made if only one false- hood had been uttered, and the purchase not wholly induced by either, the party injured is without redress. If a fraud be accomplished, and the unlawful acts of the defendant con- tributed thereto, he is answerable. The fraudulent acts of the defendant must indeed have worked an injury ; but if the wrong have been done, and the defendant have been a party to its commission, " the court will not apportion the penalties of guilt among offenders, nor divide spoil among highwaymen." ^ Hence, if B conspire with A to defraud C, by inducing the latter to loan money to A upon the security of a forged note, the fact that C, in making the loan, relied also upon other securities, and upon verbal representations made by B of the ability of A to repay the loan, will not prevent his recovering from B, in an action for the conspiracy, if C relied upon the forged note as well.^ It is enough, then, that the representa- tions materially influenced the conduct of the plaintiff, though (being combined with other motives) they were not the sole or even predominant inducement to the party's action.^ Concerning the question who may act upon the representa- tion, it may be answered that not only may the representation be intended for a particular individual alone (in which case he alone is entitled to act upon it), but it may be intended ^ Redfield, J., in James v. Hodsden, supra. 2 Spaulding v. Knight, 116 Mass. 148. It is no defence to such an action that the person so obtaining the money intended to pay it at the time. lb. 8 Safford v. Grout, 120 Mass. 20; Matthews v. BUss, 22 Pick. 48. 90 ACTUAL FEATJD. [CHAP. I. for several or for many, or for any one of a particular class. In such a case as this, any one who comes properly within the number or class intended by the party making the repre- sentation will be entitled to relief or redress against him by acting upon the misrepresentation to his damage.^ Thus, where directors of a company put forth a prospectus contain- ing false representations for the purpose of selling shares of stock, the false representations are deemed to have been made to all who read the prospectus and become purchasers from the company in reliance upon the statements there made.2 But the purchaser of shares in the market, upon the faith of a pros- pectus which he has not received from those who are answer- able for it, cannot by acting upon it so connect himself with them as to render them liable to him for the misrepresentation contained in it, as if it had been addressed to himself person- ally.3 Upon the same principle, where a representation was made to the plaintiff's father with the view to being acted upon by the plaintiff, it was decided that by acting upon it the plaintiff had acquired a right of redress.* So, also, a party may make 1 Swift e. Winterbotham, Law R. 8 Q. B. 244 ; Barry v. Croskey, 2 Johns. & H. 21 ; Bedford v. Bagshaw, 4 Hurl. & N. 548 ; Bagshaw v. Seymour, 29 Law J. Ex. 62, note ; Gerhard v. Bates, 2 El. & B. 476; Clarke v. Dickson, 6 Com. B. n. s. 453 ; Ca?eux v. Mali, 25 Barb. 583 ; National Exchange Co. v. Drew, 2 Maoq. 108 j Peek v. Gurney, Law R. 6 H. L. 377. 2 See the cases just cited. ' Peek V. Gurney, Law R. 6 H. L. 877, overruling upon this point Bedford v. Bagshaw and Bagshaw v. Seymour, supra. It is held, however, in New York, that a corporation is liable for the fraudulent overissue of stock, not only to the person to whom the over- issue is made, but also to any subsequent iona fide purchaser thereof. Such acts are done with intent to defraud any and all purchasers, the perpetrators well knowing that every person into whose hands the false certificates of stock should come by fair purchase might be injured. New York & N. H. R. Co. v. Schuyler, 34 N. Y. 80; Phelps v. Wait, 30 N. Y. 78 ; Suydam ». Moore, 8 Barb. 358 ; BrufE v. Mali, 86 N. Y. 200. And the action may be maintained jointly or separately against the agent who committed the fraud. Phelps v. Wait, supra; Suydam v. Moore, supra. * Langridge v. Levy, 2 Mees. & W. 519; s. c. 4 Mees. & W. 337. § 6.] ' DECEIT. 91 inquiry, where such is the custom, through his banker (instead of personally) concerning the standing of a third person ; and it is no objection to a claim for redress for a fraudulent answer given to the plaintiff's banker that the misrepresentation was not made to the plaintiff.^ Statements made to a witness in the presence of the pur- chaser of property in relation to the property are, it is held, of the same effect as if made to the purchaser.^ But a vendor of property sold at auction is not bound by representations made by him privately to some of the bidders, and not heard by the purchaser.* Where a letter is written, marked " confidential," concern- ing the pecuniary standing of a party, it is for the jury to say whether it was intended for the exclusive perusal of the per- son addressed.* It is also for the jury to say, on a thorough examination of letters of this kind, and the facts and circum- stances connected with them, whether they were calculated to inspire, and did inspire, a false confidence in the pecuniaiy responsibility of the party to which the writer knew he was not entitled.^ 1 Swift V. Winterbotham, Law R. 8 Q. B. 244. 2 Alexander v. Beresford, 27 Miss. 747. ' Lindsey v. Lindsey, 34 Miss. 432. * lasigi V. Brown, 17 How. 183. ^ lb. 92 ACTUAL FRATTD. [CHAP. II. CHAPTER II. SPECIAL FRAUDS IK PAIS. § 1. Intkodtjctort. We have in the preceding chapter considered in detail the typical case of fraud. All fraud, properly speaking, involves something of deceit. A truly fraudulent act cannot be com- mitted without the practice of deception ; though a few classes of cases have come to be treated under the head of fraud, to the accomplishment of which wrong no deception is neces- sary ; such, for example, as conveyances of debtors made to hinder or delay their creditors (a statutory subject not con- sidered in this, work), and convej'ances by husbands in fraud of the rights of their wives. But there are also many classes of cases in which indeed the general element of deception is present and necessary, in which, however, deception plays no special part, the decision of the case turning upon the answer to other questions. These cases have no further connection with each other than is indicated by this fact. We have now to consider them ; and have divided them into two separate chapters, according as they are frauds in pais (that is, frauds not arising in the administration of justice), or frauds upon the administration of the law. § 2. Of Frauds between Husband and "Wipe.^ The statutory grounds of divorce, though not specifying fraud, do not exclude it. A series of cases has settled the 1 Deceit by the 'wife is mainly considered in the preceding chapter. See pp. 4, 5, 49-56, 66. Husband's deceit, pp. 47, 48. § 2.] SPECIAL FRAITDS IN PAIS. 93 rule that (apart from statutory enactment to the contrary), if a marriage be brought about by fraud, the injured party may go into equity and obtain a decree of nullity ; and this is true whether the fraud was committed by the other party ^ to the marriage or by third persons.* Fraud, however, may not always be established by proof of false representations believed to be true, more than it is in the case of actions of deceit. Thus, if a stranger were to present himself to a woman (especially to a widow) of mature years for marriage, representing himself to be a man of respectability and good standing in his own community, and propose marriage at once, and should finally, though after several refusals at short intervals on the ground of his being a stranger, be ac- cepted, the courts would be slow to grant the lady a decree of nullity ; though it should turn out that she had been united to a jail bird of the worst character.^ The court would have great pity for the woman in such a misfortune, but not the regard for suffering which would be extended perhaps to a young girl, inexperienced in the world. As to what will be sufficient to constitute fraud for which nullity will be granted, the following are examples : In a case in New York, it appeared that the parties were white persons, and that the defendant had previously charged the plaintiff with being the father of her bastard child. The 1 Scott V. Shufeldt, 5 Paige, 43 ; Ferlat v. Gojon, Hopk. 478 ; Burtis V. Burtia, lb. 557, 568; Robertson v. Cole, 12 Tex. 356. See also Wier V. Still, 31 Iowa, 107, where it was considered that the fraud was not made out. 2 Keyes v. Keyes, 22 N. H. 553 ; Sloan v. Kane, 10 How. Pr. 66 ; Harford v. Morris, 2 Hagg. Con. 423 ; Portsmouth v. Portsmouth, 1 Hagg. Ecc. 355 ; Hull v. Hull, 15 Jur. 710 ; 8. c. 5 Eng. Law & E. 589. It is held, however, in Delaware, that neither imbecility of mind nor in- toxication at the time of the marriage, accompanied with circumstances of fraud, combination, or circumvention on the part of the friends of the wife to induce the husband to marry her, will give the courts jurisdiction to divorce the parties. Elzey v. Elzey, 1 Houst. 308. » Wier V. Still, 31 Iowa, 107. 94 ACTUAL PBATJD. [CHAP. II. plaintiff thereupon, believing the child to be his, had married the defendant to obtain his discharge from proceedings in bastardy. Subsequently, he ascertained the fact that the child was a mulatto, and that the defendant knew the fact when at the time she swore it to be 'his; she having already been delivered and having seen the child. The plaintiff was granted a decree of nullity.^ The same was held in TexaS^ of a case where it appeared that the plaintiff, was but eighteen years old ; that the parents had not given their consent to her marriage ; that the marriage license required by law had been procured by fraudulent representations and false swear- ing by the defendant ; and that the plaintiff immediately upon learning these facts repudiated the ceremony, and refused to cohabit with the defendant.^ In a case in New Hampshire, it appeared that friends of the defendant, with whom she was living, had by artifice procured the plaintiff to marry her, knowing that she was insane, and the plaintiff being kept in ignorance of the fact. A separation was granted him.^ The same was granted in England by reason of a forcible or fraud- ulent abduction of a ward of tender age by h«r guardian.* So, too, where a marriage was effected under clandestine circum- stances, from which fraud and circumvention were inferred, between a person of weak and deranged mind and the daughter of his trustee and solicitor, who had great influence over him.^ And again a decree was granted the plaintiff, where it appeared that the ceremony was procured at the instigation of the parents of the defendant, and that the plain- tiff was but fourteen years of age at the time, and was under their custody and control.^ Other cases further illustrating 1 Scott V. Shufeldt, 5 Paige, 43. « Robertson v. Cole, 12 Tex. 356. 8 Keyes v. Keyes, 22 N. H. 553. < Harford v. Moms, 2 Hagg. Con. 423. ^ Portsmouth v. Portsmouth, 1 Hagg. Eco. 355. ' Hull V. Hull, 15 Jur. 710; 8. c. 5 Eng. Law & E. 589. § 2.] SPECIAL FRAUDS IN PAIS. 95 the meaning of the term " fraud " in this connection are cited in the note.^ A distinction is sometimes suggested between cases of suits for nullity instituted before the marriage has been consummated by cohabitation, and the contrary ; ^ but in principle it cannot be material whether the suit is brought before or after co- habitation, provided cohabitation was terminated as soon as the fraud was discovered, except perhaps in case of pregnancy or long lapse of time.^ The fact that the wrongdoer has suc- ceeded in gratifying passion, instead of making the situation permanent, should only aggravate his offence, and afford still stronger ground for obtaining a decree of separation. It matters not how fraudulent may be the motives prompt- ing the parties to marry, or whai may be the consequences resulting from such marriage as affecting third persons : if the marriage be in compliance with the forms of law, and with the consent of the parties, they being capable of contracting marriage, no court has power, upon the application of a third person, either to dissolve the bonds of matrimony or to relieve against any of the consequences which result'-from the mar- riage.* A gift whereby a husband actually and openly divests him- self of his property, and of the enjoyment of it in his lifetime, in favor of children and others, making, according to the circumstances of his family, a just and reasonable present provision for persons having meritorious claims, and not with a view to defeat or diminish his wife's dower, is not invalid as being in fraud of her dower rights. The intent to defeat the widow must exist and operate at the time the conveyance 1 Jolly V. McGregor, 3 Wils. & S. 85; Clark v. Field, 13 Vt. 460; Kespublica v. Hevice, 3 Wheel. C. C. 505 ; Dalrymple v. Dalrymple, 2 Hagg. Con. 54, 104; s. c. 4 Eng. Ecc. 485. " See Bishop, Marriage and Div., § 166. ' Cohabitation after knowledge would, of course, be evidence of assent to the fraud. See Robertson v. Cole, 12 Tex. 356, 365. * McKinney v. Clarke, 2 Swan, 321. 96 ACTXTAL FRAUD. [CHAP. II. is made.^ To make gifts of real estate to children fraudulent against a widow's right of dower, there must be a specific intent to defraud in the making of sueh grants. Reasonable advancements to children by a former wife are not fraud- ulent.2 Indeed, it is held by many authorities that a husband may sell or give away his personal property, even with the avowed purpose of preventing his wife from acquiring an interest therein upon his death.^ But such a sale or gift must be bona fide and perfected. If the transfer by the husband be a mere device or contrivance by which the husband, not part- ing with the absolute dominion over the property during his life, seeks at his death to deny his widow her rights under the law in such property, then it is invalid and ineffectual as to her, so long as the property remains in the hands of the donee or grantee, or in a purchaser with notice.* And if the fraudulent donee or grantee has parted with the property to an innocent purchaser for value, the widow may proceed against the vendor for the proceeds of the sale. But a deed of trust, it is held in Virginia, if it be not revocable by the grantor, will not be treated as a will in disguise, by reason that all the grantor's personal estate is thereby conveyed, and that he reserves to himself the possession and control of the property during his life.^ It has been decided in New York, notwithstanding some dicta to the contrary ,8 that as between a wife and any other 1 Reynolds v. Vance, 1 Heisk. 344 ; Mcintosh v. Ladd, 1 Humph. 459 ; Littleton v. Littleton, 1 Dev. & B. 330. '• Mcintosh V. Ladd, 1 Humph. 459. » Smith V. Hines, 10 Fla. 258; Ford v. Ford, 4 Ala. 145; Griffith ». Griffith, 4 Har. & McH. 101 ; Coomes v. Clements, 4 Har. & J . 481 ; Holmes V. Holmes, 3 Paige, 363; Hays v. Heni7, 1 Md. Ch. 337; Stone v. Stone, 18 Mo. 390; Davis v. Davis, 5 Mo. 183. See also Cameron v. Cameron, 10 Smedes & M. 398. * Smith V. Hines, supra. ' Lightfoot V. Colgin, 5 Munf. 42. • « Moore v. New York, 8 N. Y. 110. § 3.] SPECIAL FEATTDS DT PAIS. 97 than the state, or its delegates or agents exercising the right of eminent domain, an inchoate right of dower in lands is a subsisting and valuable interest, for the protection of which she may resort to the courts.^ And it has accordingly been held that, where a party had become the purchaser of dowable land by means of fraud, a right of action for such fraud was given, not only to the husband, but also to the wife, for the damages sustained by her in the loss of her inchoate right of dower.2 § 3. Of Confusion of Goods. The person whose property another has fraudulently min- gled with his own has the right to take possession of the whole mass, for the purpose of separating and securing, or of disposing of, the portion belonging to himself.^ By the rule of the Roman law, this was the extent of the injured party's rights. He was entitled to retain the whole or the proceeds in case of a sale, only upon making satisfaction for the value of the other party's share. The English law and the law of America go further, and give the entire property in such cases, without any account, to him whose property was origi- nally invaded.* But, to produce such a result, the interming- ling must be something more than intentional : it must be wrongful or fraudulent.^ And the rule itself applies only to cases in which a separation is impossible or difficult. If the 1 Simar v. Cannaday, 53 N. T. 298. ' lb. And it was held that the husband and, wife might sue jointly for their respective damages. 8 Stephenson v. Little, 11 Mich. 433; Wooley v. Campbell, 8 Vroom, 163; Ward v. Ayre, Croke Jac. 366; Ryder v. Hathaway, 21 Pick. 298; Buckley v. Gross, 3 Best & S. 566 ; 2 Kent, Com. 365 ; 2 Black. Com. 405. ^ Hart V. Ten Eyck, 2 Johns. Ch. 62 ; 2 Kent, Cora. 364. ^ Ryder o. Hathaway, 21 Pick. 298 ; Spence v. Union Ins. Co. , Law R. 3 C. P. 427^ 437 ; Moore v. Bowman, 47 N. H. 494, 502 ; Hasseltine V. Stockwell, 30 Maine, 237; Bryant v. Ware, lb. 295; Stephenson o. Little, 10 Mich. 433, 441. 7 98 ACTXJAL FKAT7D, [CHAP. H. goods can be easily distinguished and separated, as in the case of a mixture of articles of furniture,^ no change of property takes place. So, too, if the articles, being alike, are of equal value, the injured party takes his given quantity, and not the whole. If, however, the articles be of different value or quality, and the original value be not distinguishable, the injured party takes the whole. It is for the party guilty of the fraud to distinguish his own property satisfactorily or lose it. The courts will not identify his property for him.^ So, too, one who mingles the funds of another in his hands, put there to be loaned for the owner in the owner's name, and loans the same with his own money in his own name, com- mits a fraud in law, and in case of loss is bound to make the sum good to the injured party, though no actual fraud was intended.^ § 4. Of Alteration of Wkittek Instkuments. Where there has been an alteration or suppression of instru- ments which might have thrown light upon a suit, every thing will be presumed against the party by whom or bj"^ whose agent such alteration or suppression has been practised ; and every presumption will be made in favor of the prima fade rights of the other party.* In accordance with this principle, * It is not necessarily evidence of a fraudulent intermingling of goods that a person occupying premises with another, upon which hoth have goods, refuses to designate to an officer (seeking to attach the latter's goods) which are his and which are not. Davis v. Stone, 120 Mass. 228. See Shumway v. Rutter, 8 Pick. 443, 448; Smith v. Sanborn, 6 Gray, 134. 2 2 Kent, Com. 365; Hart v. Ten Eyck, 2 Johns. Ch. 108; The Odin, 1 Ch. Rob. 248; Brackenridge v. Holland, 2 Blaokf. 377; Willard u. Rice, 11 Met. 493; Beach w. Schmultz, 20 111. 185; Moore w. Bowman, 47 N. H. 494, 501. « Cock V. Van Elten, 12 Minn. 522. * Bowles V. Stewart, 1 Sohoales & L. 222; Eyton v. Eyton, 1 Brown Pari. Cas. 153; Hampden ». Hampden, lb. 252; Sepalino v. Twitty, Gas. in Ch. 76. § 4.] . SPECIAL FKAXJDS IN PAIS. 99 if a written agreement, whether under seal or not, be altered in a material part by the person claiming under it, he can neither recover upon the altered instrument nor avail himself of the true original form of the instrument.^ Hence, a vendor of property, who has fraudulently and materially altered a promissory note given him for the price thereof, cannot resort to the original consideration, whether the note was received in payment or not.^ But, further, if a bill or note be complete, any alteration in a material part, without the consent of the parties to it, renders it invalid even in the hands of an innocent holder for value.^ The fact that an altered note has been restored by the use of chemicals to its original form and amount, in the presence and without objection of the maker, does not revive its val- idity ; and the maker may plead the alteration in bar of all liability on the note, even against a lona fide indorsee, since the note sued upon in such a case is not the note which the plaintiff purchased.* As to what constitutes such a material al- teration of the instrument, the cases furnish many illustrations. The addition of a promise to pay interest to a bill or note by a party thereto, without the consent of the acceptor or maker, renders the instrument invalid even in the hands of a lona fide holder for value ; and there can be no recovery against the acceptor or maker, even for the amount of the paper as originally executed.^ And it is not material that the altera- 1 Pigot's Case, 11 Coke, 27; Newell v. Mayberry, 3 Leigh, 250. " Smith V. Mace, 44 N. H. 553; Martindale v. FoUett, 1 N. H. 95; Wheelock ». Freeman, 13 Pick. 164; Arrison v. Hamstead, 2 Barr, 101; White V. Huss, 32 Ala. 430; Whittier ». Frye, 10 Mo. 348. s Wade V. Withington, 1 Allen, 561 ; Citizens' Bank v. Richmond, 121 Mass. 110 ; Holmes v. Trumper, 22 Mich. 427 ; Bank of Newark v. Crawford, 2 Houst. 282; Sudler v. Collins, lb. 538; Woolfolk v. Bank of America, 10 Bush, 504, 517 ; Morehead v. Parkersburg Bank; 5 W. Va. 74 ; Burchfleld v. Moore, 3 El. & B. 683. * Citizens' Bank «. Richmond, 121 Mass. 110, citing Fay v. Smith, 1 Allen, 477, 479; Belknap v. National Bank, 100 Mass. 376; Draper ». Wood, 112 Mass. 315; Wood v. Steele, 6 Wall. 80. s Holmes v. Trumper, 22 Mich. 427. ■100 ACTUAL PEATJD. [CHAP. II. tion consisted merely in filling a blank left for the rate of interest, if the sum inserted be larger than the paper would otherwise have carried.^ If the payee of a note without authority insert in it the ■words " to bear legal interest," this is a fraudulent alteration as to parties who signed" it before the act, and no recovery can be had against them ; and in an action against a surety it has been held that the subsequent erasure of such words will not revive the contract.^ The defendant's liability having once been discharged, it could not be revived without his consent. So, too, an alteration of the date of a bill made after ac- ceptance avoids the contract,^ even as to a hona fide holder for value.* If, however, there be proof that the alteration was made with the assent of the acceptor, or of a subsequent assent by him, the bill will be good as to him, though invalid as to all other non-assenting parties.^ Nor will it avoid the instrument to correct a mistake in the date.^ The effect of adding a place of payment to a bill of ex- change payable generally, or at a different place from that added after acceptance, has been the subject of diverse rulings in England. In several of the earlier cases, it was ''- Holmes v. Trumper, 22 Mich. 427. The instrument is complete not- withstanding the fact that it may end with the words " with interest at." The last word is to be disregarded in such a case; or, at all events, it authorizes the insertion only of the implied rate of interest. lb. See Warrington v. Early, 2 El. & B. 7^3; Waterman v. Vose, 43 Maine, 504. The cases of Visher v. Webster, 8 Cal. 109, and Fisher e. Dennis, 6 Cal. 577, were somewhat doubted in Holmes"». Trumper. "^ Loohnave v. Emmerson, 11 Bush, 69. ' Langton v. Lazarus, 5 Mees. & W. 629 ; Bowman v. Nicholl, 5 T. R. 537 ; Bathe v. Taylor, 15 East, 412 ; Kennedy o. Lancaster Bank, 18 Penn. -St. 347. * Master v. Miller, 4 T. R. 320; s. c. 2 H. Bl. 141; 5 T. R. 637 in Ex. Ch. 5 Paton V. Winter, 1 Taunt. 420; Tarleton v. Shingler, 7 Com. B. 812. See Walter v. Hastings, 2 Chit. 121; s. c. 4 Campb. 223. 8 Brutt V. Picard, Ryan & M. 37. § 4.J SPECIAL PEATTDS IN PAIS. held that such an alteration was not material.^ Later author- ities, however, are opposed to this view ; ^ and it is now held in that country that such an alteration destroys the bill even in the hands of a subsequent indorsee for value, without notice of the fact.* It is also settled law in this country that if the holder of a bill of exchange alter the general acceptance thereof by the addition of a place of payment, the instru- ment is vitiated as to all parties not consenting to the altera- tion.* But if an accommodation indorser deliver an accepted bill to the acceptor to enable him to raise money by its nego- tiation, and the acceptor change a general into a qualified acceptance by designating a particular place of payment, the indorser will still be liable to an innocent holder for value.* So, too, if the maker of a note have express or implied authority to consent for the other parties, as where they are his partners, and the whole transaction is firm business, the case will be different.® It is held that the owner of a note or bill payable " at " , with a blank for the place of payment, has authority to supply the name of such a place ; and, though this is done contrary to the agreement of the parties, the paper, if negoti- able, is good in the hands of a bona fide holder for value. It has been held that the alteration of a contract which wiU 1 Jacobs V. Hart, 6 Maule & S. 142; Stevens v. Lloyd, Moody & M. 292. 2 Cowie V. Halsall, 4 Barn. & Aid. 197; Calvert v. Baker, 4 Mees. & W. 417; Burchfleld v. Moore, 3 El. & B. 683. If the alteration be made ■vdth the consent of the acceptor, he of course cannot afterwards object. Walter v. Cubley, 2 Cromp. & M. 151; s. C. 4 Tyrwh. 87. ' Burchfleld v. Moore, supra. * Whitesides v. Northern Bank of Kentucky, 10 Bush, 501; Oakey V. Wilcox, 3 How. (Miss.) 330; Alden ». Barbour, 3 Ind. 414; Pahlman V. Taylor, 75 111. 629. « Todd V. Bank of Kentucky, 3 Bush, 626 ; Rogers ». Poston, 1 Met. (Ky.) 643 ; Whitesides v. Northern Bank of Ky., supra. Pahlman v. Taylor, 75 111. 629. ' EedHch v. Doll, 54 N. Y. 234. 102 ACTUAL FEAUD. [CHAP. Jl. vitiate the agreement need not prejudice the party sought to be charged. An erasure of a seal, for example, after the name of a surety, will operate to discharge the surety. The reason is that the identity of the instrument is thereby ob- scured ; and the substitution of another in its place might be possible, if the rule were not rigidly inforced.^ It has accord- ingly been decided that, if the holder of a note add the name of another party to a note as surety, he cannot recover thereon against the other parties.^ But it is held in England that an addition of a signature to a note in the nature of an indorsement, though put upon the face of the instrument, does not invalidate it.^ If a note signed by several, in which it is declared that " I promise to pay " be so altered by the payee without the consent of the parties as to read " We promise to pay," it is rendered invalid.* So, also, it is a good defence to a note originally made payable to order that it was subsequently altered and made payable to bearer.^ Recovery can be had on a promissory note as originally drawn, the original form being clear, notwithstanding an alteration, if the alteration were not fraudulent, and the rights of other parties have not intervened. But if the alter- ation be made fraudulently or with an illegal intent, or if any party has become interested in it or affected by it since the alteration, the party who has changed it loses his right to claim upon the original form of the instrument.® 1 Organ v. Allison, 9 Chicago L. N. 250 i 1 Greenleaf, Evidence, § 565. See Crockett v. Thomason, 5 Sneed, 345 ; Blair v. Bank of Ten- nessee, 11 Humph. 84 ; Wood v. Steele, 6 Wall. 80. " Shipp V. Suggett, 9 B. Mon. 5 ; Bower v. Briggs, 20 Ind. 139. 3 Ex parte Yates, 2 DeG. & J. 191. * Humphreys v. Guillow, 13 N. H. 3S5; Southwark Bank v. Gross, 35 Penn. St. 80. ' See Sherman i>. RoUberg, 11 Cal. 38. In this case, however, there ■was a further defence of payment with constructive notice to the plaintiff. » Kountz V. Kennedy, 63 Penn. St. 187. § 4.] SPECIAL FBAXJDS IN PAIS. 103 When blanks are left in a bill or note, the party affixing his signature to such paper must suffer the loss, if his confi- dence should be violated and the blanks fraudulently filled.^ So, too, if the paper has been so negligently drawn as by the leaving of spaces unfilled that alteratibns can be made with- out exciting suspicion, the loss must fall upon the party guilty of the negligence ; ^ though of course the party committing the fraud would be liable both civilly and criminally. A subsequent holder for value without notice can recover upon a negotiable instrument, notwithstanding an alteration of the same by a prior party, fraudulently made, if the alter- ation be immaterial ; ^ though as against the wrongdoer the rule is otherwise.* It has recently been held that the tearing off a condition veritten below a negotiable promissory note, on the same piece of paper, and referring to the note, was such an alter- ation of the whole contract as to render the note void in the hands of a bona fide holder for value.^ Aside, however, from the two cases cited, the authorities do not support this proposition ; and the subject deserves further consideration. As against the party who committed the act, or subsequent holders with notice, it is quite proper to treat the act as vitiating the note.* Further than this it is dangerous to go. In regard to the fraudulent alteration of written instru- ments, a distinction has been taken between the effect of the act upon an executory and upon an executed contract. In the former case, the contract becomes null ; in the latter case, 1 Johnson v. Blasdale, 1 Smedes & M. 20; Clopton v. Elkin, 49 Miss. 95; Van Duzen v. Howe, 21 N. Y. 531 ; Ward v. AUen, 2 Met. 53 ; Bigelow, Estoppel, 394 (2d ed.), and cases cited. 2 Young V. Grote, 4 Bing. 253 ; Trigg v. Taylor, 27 Mo. 547 ; Wool- folk V. Bank of America, 10 Bush, 504, 517. .' Commonwealth v. Emigrant Sav. Bank, 98 Mass. 12. < lb. ; 1 Greenl. Evidence, § 568. 6 Gerrish v. Glines, 56 N. H. 9 ; Benedict v. Cowden, 49 N. Y. 396. • See Shaw v. First Meth. See, 8 Met. 223; Barnard v. Gushing, 4 Met. 230; Makepeace ». HaiTard College, 10 Pijk. 298; Fletcheru. Blodgett, 16 Vt. 28 ; Johnson v. Heagan, 23 Maine, 329. lOi ACTTJAL FKAT7D. [CHAP. H. at least in conveyances of real estate, the rule is otherwise. By the execution of the deed of grant, the property passes and vests in the grantee ; ^nd the destruction of the deed does not defeat the estate.^ Hence a mortgagee may foreclose a mortgage, notwithstanding the fact that since the execution of the deed he has fraudulently added the signature of the grantor's v>rife in token of her relinquishment of dower.^ But the contrary of this doctrine has been held in Illinois and New York.^ And it has been held in Vermont that, if a lessee fraudulently alter his lease in a material part subsequently to its execution, he thereby destroys all his future rights under the lease, either to retain possession of the premises or to preclude the lessor from re-entering upon them.* In order to render an instrument void on account of a material alteration, it is not necessary for all purposes to prove that the alteration was made with a fraudulent intent. The alteration after execution, without consent of the other party, avoids the instrument. It is only of moment to show that the alteration was done fraudulently, when there is a claim to a right of resort to the original indebtedness. If in such a case it appear that the instrument was fraudulently altered in a material particular, there can be no recovery either upon the instrument itself or upon the original debt for which it was given.^ v Where the alteration of a writing is of such a character as to entirely defeat its operation for any purpose, as in the case of the erasure of the signature and seal to a deed, so that, admitting all to be true that appears upon the instrument, when produced it would be void in law, it should be explained to the court in the first instance, before being permitted to go 1 Kendall «. Kendall, 12 Allen, 92 ; Hatch v. Hatch, 9 Mass. 307 ; Cheesman u. Whittemore, 23 Pick. 231; 1 Greenl. Evidence, § 568. " Kendall v. Kendall, supra. 8 Vogle V. Ripper, 84 111. 100 ; Waring v. Smith, 2 Barb. Ch. 135. * Bliss V. McTntyre, 18 Vt. 466. 6 Booth V. Powers, 56 N. Y. 22. § 4.] SPECIAL FRAUDS IN PAIS. 105 to the jury. In other cases, the instrument should be given in evidence, and go to the jury upon proof of its execution, notwithstanding the alteration ; leaving the parties to such explanation and denial as may be offered.^ As to the time when an alteration of an instrument was made, it is material to know whether it was made before or after its execution by the party sought to be charged. Only in the latter case can the alteration defeat a recovery upon it, unless the defendant was blind or illiterate, and the alteration was made after reading.^ And in any case the alteration, to affect the validity of the instrument, must be material.^ In several of the States, it is held that there is a presumption, in the absence of evidence tending to show the facts, that the alteration was made before the execution of the instru- ment.* Elsewhere, it is held in the like case that the pre- sumption is that the alteration was made at the time of the execution.^ In New York, it is considered that where nothing appears but the fact of an erasure or interlineation in a mate- rial part of the instrument, of which no notice is taken at the time of the execution of the instrument, it is a suspicious circumstance, requiring explanation from the party producing it ; and it is for the jury to say whether the explanation is satisfactory,^ though by one of the cases this is not sufficient to exclude the instrument when offered in evidence.' In Massachusetts, it is held that there is no presumption either way as to the time when the alteration was made, but that 1 Storer ». Ellis, 6 Ind. 152. See Newcomb v. Presbrey, 8 Met. 406. * It is no defence to the acceptor of a bill against a bona fide holder for value that the same was fraudulently altered before the acoeptaBoe. Ward V. Allen, 2 Met. 53. 8 Bumham v. Ayer, 35 N. H. 354 ; Cole v. HiUs, 44 N. H. 227. * Goooh V. Bryant, 1 Shep. 390. 6 Beaman v. Russell, 20 Vt. 205. ' Jackson v. Osborn, 2 Wend. 559; Jackson v. Jacoby, 9 Cowen, 125; Herrick ». Malin, 22 Wend. 388. ' Smith V. McGowan, 3 Barb. 404. 106 ACTTJAL PEATTD. [CHAP. n. the burden of proof is on the plaintiff offering the paper to show that it was altered before the execution and delivery of instrument. The alteration may be such as to raise an infer- ence that it preceded delivery, or slight evidence will be received to show such fact.^ It is held in Connecticut that the burden of accounting for an erasure or alteration is not necessarily upon the party producing the instrument. Each case, it is said, must depend upon its own circumstances.^ In New Hampshire, it is said to be the proper rule, in regard to the alteration of a written contract, that the instrument, with all the circumstances of its nature and history, the appearance of the alteration, the possible or probable motives to the alteration, or against such act, on the part of all per- sons connected with it or in whose possession it may have been, and the effect of the alteration upon the rights and obligations of the parties respectively, ought to be submitted to the jury ; who should find from all these facts whether the alteration was made before or after its execution, and conse- quently whether it rendered the instrument invalid or not. Whether the handwriting of the alteration is the same with that of the body of the instrument, whether it is the same with that of the signature, whether the ink is the same or different, whether from the appearance the body of the instrument and the alteration were made at the same or at a different time, whether the party claiming or the party sought to be charged is to be benefited by it, whether the alteration was made before or after its execution, and if after by whom and for what purpose, — these are all questions for the con- sideration of the jury.^ Upon the usual proof of the execution of the instrument, it should, under this practice, be admitted in evidence, without reference to the character of any altera- tion upon it, leaving all testimony relating to such alteration 1 Ely w. Ely, 6 Gray, 439; Wilde v. Armsby, 6 Cush. 314. * Hayden v. Goodnow, 40 Conn. 164; Bailey v. Taylor, 11 Conn. 541. » Cole V. Hills, 44 N. H. 227, 234. § 5.] SPECIAL FRAUDS IN PAIS. 107 to be given to the jury with proper instructions upon the facts.^ But if the jury cannot satisfactorily find when the alteration was made upon such facts, or if there be an entire absence of evidence and of circumstances, both in the instru- ment and in the evidence aliunde, from which an inference can be legitimately drawn as to the time when the altera- tion was made (an improbable condition of things), then, according to the rule in New Hampshire, the presumption arises that the alteration was made after the execution of the instrument.* An alteration of a written instrument by a stranger, with- out the privity of a party interested, is a mere spoliation, and does not affect the rights or liabilities of the parties.^ That a portion of an indorsement signed by the defendant is written in different ink and handwriting from the rest does not afford sufficient evidence of a fraudulent alteration to require the plaintiff to explain the same.* Nor is a mere disfigurement or blot upon a writing, the result of accident, a material alteration.^ A contract may be evidenced by several writings, each constituting part of the whole undertaking ; and, where this is the case, the material alteration of any of the writings, without consent, avoids the whole.® §5. Of Resulting Teusts. Equity will relieve against a fraudulent purchase by con- verting the purchaser guilty of the fraud into a trustee for 1 Cole V. mils, 44 N. H. 227, 234; Beaman v. KusseU, 20 Vt. 205; Bailey v. Taylor, 11 Conn. 531. 2 Cole V. Hills, supra ; Hills v. Barnes, 11 N. H. 395 ; Bumham v. Ayer, 35 N. H. 354. » State V. Berg, 50 Ind. 496 ; Cochran v. Nebeker, 48 Ind. 459 ; 1 Greenl. Evidence, § 566. * Wilson V. Harris, 35 Iowa, 507 ; Jones v. Ireland, 4 Iowa, 63 ; Auld V. Fleming, 7 Iowa, 143. 6 Organ v. Allison, 9 Chicago L. N. 250 (Sup. Court, Tenn ,1877). • Meyer v. Huncke, 55 N. Y. 412. 108 A0TT7AL rKAUD. [CHAP. Xl. the person injured.^ Thus, one who procures and puts on record a deed of land in fraud of the rights of a prior grantee whose deed is not recorded becomes a trustee of the legal title for him. And if such titley after a transfer to an inno- cent purchaser, revests in such fraudulent grantee, the trust reattaches.^ "Where one person advances the purchase-money for land, and a deed is taken in the name of another, a resulting trust is created by operation of law in favor of the party advancing the purchase-money, and parol evidence may be received to prove these facts ; which, when established, take the case out of the operation of the Statute of Frauds.* In accordance with this principle, a bill to set aside a conveyance obtained from a third person, or to compel the defendant to convey the title acquired from such third person, will be upheld where it ap- pears that the title acquired by the defendant was in fraud of the plaintiff's rights and contrary to the duty owed to the plaintiff by the defendant. Thus, in the case cited,* the de- fendant had assigned to the plaintiff for value a contract for the purchase of land from a railroad company. Subsequently, by false representations that he had not parted with his rights under this contract, the defendant obtained a conveyance of the land from the railroad company. The plaintiff now filed a bill prapng that this conveyance be set aside, or that the defendant be compelled to convey to him ; and on demurrer the bill was sustained. The ground of the doctrine of resulting trusts in the pur- chase of real property is that the party in whose favor such trust arises has paid his money for the property in question, and an attempt is made to defraud him of the fruits of it. If, therefore, the party who sets up a resulting trust made no 1 Jenokes v. Cook, 9 R. I. 520. s Troy City Bank v. Wilcox, 24 Wis. 671. » Hays V. Hollis, 8 Gill, 357, and cases cited infra, passim. * Blakeslee v. Starring, 34 Wis. 538. § 6.] SPECIAL FEAXTDS IN PAIS. 109 paj'ment, he cannot be permitted to show by parol evidence that the purchase was made for his benefit or on his account. Nor would a subsequent advance of money to the purchaser, after the purchase is complete, alter the case.^ But it is sug- gested that the case may be different when a verbal agree- ment is clearly proved between two persons to make a joint purchase, though no part of the price be actually paid at the , time by him whose name is not in the articles or deed, but subsequent payment of his share is made. In such case, it is possible that the fulfilment of the bargain will cause relation back to the original agreement, and raise a trust.^ Of course, no resulting trust can arise where there is no agreement or understanding between the person effecting the purchase and him whose money is used that the purchase is to be made for the latter ; and a fortiori where such pur- chaser uses part of his own money in the transaction.* In order to raise a resulting trust, the principal's money must have been used at the time of the purchase.* After the legal title has been conveyed to one who agreed to buy for another, the application of the latter's money to pay notes for the purchase-money creates no resulting trust in favor of the other. The trust must attach, if ever, at the time of the con- veyance ; for it is the money which has gone to the vendor as the inducement for the title with which he parts that creates the equity in favor of him who advances it.^ The payment of money on the part of him who claims the existence of a trust is not necessary. If he be already en- titled to a conveyance and employ another to procure it for him, and such person takes it in his own name, he will be 1 Botsford V. Burr, 2 Johns. Ch. 405; Nizon's Appeal, 63 Penn. St. 279. ^ Nixon's Appeal, supra. ' Coppage v. Barnett, 34 Miss. 621. * HoUida v. Shoop, 4 Md. 465. ' McCarroll v. Alexander, 48 Miss. 128 ; White v. Carpenter, 2 Paige, Ch. 238 ; Botsford v. Burr, 2 Johns. Ch. 405 ; Alexander v. Tarns, 13 lU. 325; Walter v. Klock, 55 lU. 362. 110 ACTUAL FEAUD. [CHAP. H. treated as trustee for the other. Thus, where a person entitled to soldiers' bounty land employed the defendants' grantor to obtain the warrant for him, and he procured the land to be located in his own name, he was considered as holding in trust for the person employing him.^ If only part of the purchase-money be paid by the agent, there will result a trust only pro tanto? Property conveyed to one, in consideration of funds belonging jointly to himself and another, is held in trust for the latter to the extent of his part of the funds.^ The doctrine that a resulting trust may arise upon pay- ment of part of the purchase price prevails only where the part-payment was made for some specific part or distinct interest in the estate ; that is, for a specific share, as a ten- ancy in common, or a joint-tenancy of one-half, one-quarter, or other particular fraction of the whole ; or for a particular interest, as a life estate or tenanc}' for years, or remainder in the whole. A general contribution of a sum of money toward the entire purchase is not sufficient.* A trust will result in favor of one for whom the actual purchaser agreed to buy and hold, though the money paid for the land was loaned by the trustee to the cestui que trust for the purpose of the purchase. And, upon a dispute between the two as to whose money was used in effecting the pur- chase, the cestui que trust may show by parol that though the money, or part of it, was paid over to the grantor by the grantee, the sum so paid was paid on a loan for the alleged cestui que trust.^ 1 Smith V. Wright, 49 111. 403. 2 Cecil Bank v. Snively, 23 Md. 261 ; Case v. Codding, 38 Gal. 191 ; Buck V. Swazey, 35 Maine, 41. ^ Buck v. Swazey, supra. * McGowan v. McGowan, 14 Gray, 119 ; Buck v. Warren, lb. 122, note ; Crop v. Norton, 2 Atk. 74 ; Sayre v. Townsends, 15 Wend. 647 ; White V. Carpenter, 2 Paige, 217 ; Perry v. McHenry, 13 111. 227; Baker V. Vining, 30 Maine, 121. The case of Jenkins v. Eldridge, 3 Story, 181, was doubted and distinguished. 6 McDonough K. O'Niel, 113 Mass. 92 ; Kendall u. Mann, 11 Allen, § 5.] SPECIAL PEATTDS IN PAIS. Ill While proof of payment of money as between strangers will generally suffice to raise a presumption that a trust was intended, no such presumption arises where the title is taken in the name of a wife or child ; and this principle extends to cases where, without legal relationship, the person paying the money stands, or assumes to stand, in loco parentis to the grantee. The presumption in such a case is that, in paying for the land to be granted to the child so situated, the grant is intended as a donation or as an advancement ; ^ and the burden will rest upon the person seeking to establish the trust to overcome the presumption in favor of the legal title.^ A wife, contributing of her own means to the purchase of land by her husband, who takes the title in his own name, she not insisting upon any agreement for repayment, or the convey- ance of any interest in the land to her, will, however, upon her husband's death, be conclusively presumed to have intended the amount of her contribution as a gift to her husband.^ If a person hold out inducements to another whose estate is largely encumbered that he will furnish the means for him to redeem, and thereby prevent him from looking elsewhere, and in the mean time purchase such incumbrances himself and cut off the redemption, he will not be allowed to retain his advantage.* So, too, if a party whose property is sold under a right of redemption within a certain time be prevented from redeeming within the time by the fraud and artifice of the purchaser, a court of equity will permit him to redeem.® 15 ; Blodgett v. Hildreth, 103 Mass. 4S1 ; Jackson v. Stevens, 108 Mass. 94. See Burleigh v. White, 64 Maine, 23. 1 Waterman ». Seeley, 28 Mich. 77. ^ Cotton u. Wood, 25 Iowa, 43; Livingston ». Livingston, 2 Johns. Ch. 540; Guthrie v. Gardner, 19 Wend. 414; 2 Story, Equity, § 1203. " Campbell v. Campbell, 21 Mich. 438. * Wilson 0. Eggleston, 27 Mich. 257. See Laing v. McKee, 13 Mich. 124. ' Guinn v. Locke, 1 Head, 110. 112 ACTUAL FRAUD. [CHAP. n. Upon a similar principle, when a sale under a mortgage or deed of trust made to secure payment of a debt is effected by the creditor's lulling the debtor into security through a prom- ise not to sell without first making demand, equity will set aside the sale as against the creditor and purchasers with notice, and permit the debtor to redeem.^ So, likewise, a resulting trust arises in favor of a lady whom a relative offers to attend at a public sale, where he fails to do so, but informs other relatives of the lady that he will attend and bid for her, and then bids in the property for himself. And, if the lady offer to comply with the terms of the sale, he will be bound to convey to her.^ A resulting trust will not arise where the effect would be to accomplish a violation of law. Thus, if A cannot by law acquire title to certain property, the law will not raise a trust in his favor if he put money into the hands of B with which to buy the property in the latter's name, which B does so buy.^ The aut^prities relating to secret trusts in favor of charities have established the rule that if an absolute estate be devised, but upon a secret trust assented to by the devisee, either expressly or impliedly, by knowledge and silence before the death of the testator, a court of equity will fasten a trust upon him upon the ground of fraud ; and consequently the Statute of Mortmain (where the testator dies within the period limited by that statute) will avoid the devise, if the trust be in favor of a charity. But if the devisee have no part in the devise, and no knowledge of it until after the death of the testator, there is no ground upon which equity can fasten such a trust upon him, even though, after it comes to his knowledge, he should express an intention of conforming to the wishes of the testator.* 1 Clarkson v. Creely, 40 Mo. 114; s. c. 35 Mo. 95. 2 Rives V. Lawrence, 41 Ga. 283. 8 Alsworth V. Cordtz, 31 Miss. 32. * Schultz's Appeal, 80 Penn. St. 396. " Equity raises a trust for the § 5.] SPECIAL iri^ATJDS IN PAIS. 113 A bill charging that the defendant, by false representations and other fraudulent means, had prevailed upon a party to convey to him a valuable copper mine, which party had by parol, to the defendant's knowledge, agreed to convey it to the plaintiff, cannot, it is held, be maintained.' The parol agreement was invalid by the Statute of Frauds ; and hence the defendant had not interfered with any of the plaintiff's rights. But it may be doubted if a right of action does not accrue against a party who fraudulently prevents a third party from carrying out with the plaintiff an agreement which was not binding upon him. It is clear that no one but a creditor has a right to interfere with another's bestowing a gratuity upon a party .^ The trust will follow the estate into the hands of all pur- chasers with notice, and of volunteers. A father having made a voluntary gift to his daughter afterwards sought to defeat the same, and to this end had the property levied upon and sold for his debts. It was bought in by his agent, and under the father's direction was conveyed to other chil- dren of his. Such children were declared trustees for the daughter.^ A resulting trust, further, will survive against an heir of the trustee, and the heir may be compelled to convey.* It has been laid down in Pennsylvania that if one of two contracting parties insist upon a certain stipulation, and desire it to be made part of the written agreement, and the other, by his promise to conform to it as if inserted in the written agreement, prevent its insertion, this is a fraud, and chancery will enforce the agreement as if the stipulation had been inserted.^ On the other hand, it has been held in the purpose of preventing a fraud upon the statute precisely upon the same conditions as a trust is raised to prevent a fraud upou an individual." lb. p. 403, opinion of auditor, adopted by the court. 1 Lee V. McKenzie, 3 Jones, Eq. 232. » Bigelow's L. C. Torts, 303. 8 Uzzle V. Wood, 1 Jones, Eq. 226. * Brown v. Uwelley, 45 Maine, 52. 6 Overton v. Tracey, 14 Serg. & R. 326; Thompson v. White, 1 Dall. 8 114 ACTUAL FBATJD, [CHAP. H. same State that, where there is nothing more in the transac- tion than is implied from the violation of a parol agreement, equity will not decree the purchaser a trustee.^ It is said in explanation of these latter cases that the element was want- ing in them of a promise at the time to execute a declaration of trust in writing, upon the faith of which promise the main contract was made.^ We must then understand the court of Pennsylvania as holding that the breach of a parol promise made contemporaneously with the execution of a contract of which it is intended to be part, and to which it is a principal inducement, is a fraud, justifying a court of equity in de- creeing a specific execution of such oral agreement under the Statute of Frauds. The rule in England appears to go quite as far. Thus, it has there been held that where a deed (purporting to have been executed for a valuable consideration) was made on the faith of an oral promise that the grantee should hold the land for the grautor, a trust arose thereby, which would be en- forced in equity.^ So, too, it is there held that if an agent, instructed to buy land for his principal, purchase in his own name for himself, equity will compel a conveyance to the principal, though the engagement between the agent and his principal was verbal.* But it is otherwise if a conveyance has already been executed by the vendor to the agent.^ The 424 ; Christ v. Diffenbach, 1 Serg. & R. 464 ; Oliver v. Oliver, 4 Rawle, 144 ; Kobertson v. Robertson, 9 Watts, 34 ; Wolford v. Herrington, 74 Penn. St. 311. 1 Jackman v. Ringland, 4 Watts & S. 149 ; Barnet v. Dougherty, 32 Penn. St. 371. 2 Wolford V. Herjington, 74 Penn. St. 311, 315. See further Sei- christ's Appeal, 66 Penu. St. 237; Beagle v. Wentz, 55 Penn. St. 374; Hoge V. Hoge, 1 Watts, 163 ; Lingenfelter v. Richey, 58 Penn. St. 485. 8 Haigh V. Kaye, Law R. 7 Ch. 473 ; Childers v. Childers, 4 DeG. & J. 482 ; Davies v. Otty, 35 Beav. 208. * Heard ». Pilley, Law R. 4 Ch. 548. 6 lb. ; Bartlett v. Pickersgill, 4 East, 577, note. See Pember v. Mathers, 1 Brown C. C. 54 ; Clarke v. Grant, 14 Ves. 519, 524. § 5.] SPECIAL FRAUDS IN PAIS. 115 distinction taken is between executed and executory contracts between the agent and the vendor, — a distinction not easily- understood. If the conduct of the agent be fraudulent in the one case (so as to take the agreement out of the statute), it is equally so in the other ; since it consists in the same action, with the additional wrong, in the second case, of consummat- ing the bargain with the vendor. There is strong authority for the position that, if the princi- pal or employer were already interested in the "land bought in the name of the agent, the former shall be entitled to the benefit of the latter's purchase, if such be the agreement, even though the agent furnish the entire purchase-money. Such a case stands upon as good a footing as the case of a purchase by the agent of land for himself out of money fur- nished by the principal, when the principal had no previous interest in the premises. In either case, a different rule would permit the agent to make use of his employer's property, in order to get a title to property with little or no outlay of his own. In the one case, the agent would be permitted to seize upon and retain to his own use the property (that is, the equitable interest, which might be very large) of his principal against the latter's will ; in the other case, he merely converts the principal's money voluntarily placed in his hands. The former is certainly none the less a fraud than the latter. Accordingly, we find it laid down in New York that if a pur- chaser under a foreclosure sale undertake to purchase for the benefit of the mortgagor, and thus acquire the title at a price greatly below its value, he will be deemed the trustee of the party for whom he has undertaken the purcliase ; and, on tender to him of the purchase price paid and interest, he will be compelled to convey the property to the mortgagor, though the undertaking to purchase was verbal.^ 1 Ryan v. Dox, 34 N. Y. 307; Brown v. Lynch, 1 Paige, 147; Sand- ford V. Norris, 4 Abb. App. Cas. 144 ; Levy v. Brush, 45 N. Y. 589, 596 ; Glass V. Hulbert, 102 Mass. 24, 39 ; Church v. Kidd, 8 Hun, 254, 265. 116 ACTUAL FRAUD. [CHAP. H. It has also been held by most of the courts of this country that parol evidence is admissible to show that an absolute conveyance was in reality intended as a security for a sum of money loaned or other obligation incurred or due at the time the deed was executed ; and that equity will compel the grantee to respect this intention, and to reconvey the premises upon tender of the amount of the debt.^ And this is true whether the omission was by fraud on the part of the grantee, or by de- sign, upon confidence reposed by the grantor in the grantee ; ^ though this position has not been accepted by some of our courts,^ and, so far as it may be looked upon as the generally established law, should probably be treated as an admitted (though not very intelligible) exception to the rule concern- ing the exclusion of parol evidence varying the terms of a written contract, rather than as an exception to the opera- tion of the Statute of Frauds. For the breach of a parol agreement to reconvey premises (granted absolutely) upon payment of the debt thus secured is as much a fraud as See, further, Carr v. Carr, 52 N. Y. 251 ; Cipperly v. Cipperly, 4 Thomp. & C. 342 ; Soggins ». Heard, 31 Miss. 426. 1 Hodges V. Tennessee Ins. Co., 8 N. Y. 416; Despond v. Walbridge, 15 N. Y. 374; Taylor ». Luther, 2 Sum. 228; 4 Kent, 143. 2 Taylor v. Luther, 2 Sum. 228. ' It is held in several of the States that in order to convert a purchaser ■who takes a deed absolute on its face into a trustee for another, and to convert the conveyance into a mere security for money loaned or advanced, it must be alleged and proved that the clause of redemption was omitted by reason of ignorance, mistake, fraud, or undue advantage ; and the intention must be established by facts dehors the conveyance, ■which are inconsistent ■with an absolute conveyance. Glisson v. Hill, 2 Jones, Eq. 256. Brothers v. Herrill, lb. 209 ; Cook v. Gudger, lb. 172 ; Lowell u. Barrett, Busb. Eq. 50; Brown v. Carson, lb. 272; Clement v. Clement, 1 Jones, Eq. 184 ; Briggs v. Morris, lb. 193 ; Lamb v. Pigford, lb. 195; Taylor v. Taylor, lb. 246; Thomas v. MoCormick, 9 Dana, 108; Franklin v. Roberts, 2 Ired. Eq. 560 ; Kelly v. Bryan, 6 Ired. Eq. 283, See Shay v. Norton, 48 111. 100 ; Kent i;. Lasley, 24 Wis. 654. An abso- lute bill of sale of goods cannot at law be shown to have been intended as a mortgage or other security. Harper v. Ross, 10 Allen, 332. Secus, of a bill of parcels, lb. ; Hildreth v. O'Brien, lb. 104. § 5.J SPECIAL FRATXDS IN PAIS. 117 exists in the case of a refusal by an agent to convey to his principal whose money he has used in the purchase, or where the agent has bought under a foreclosure for the benefit of a mortgagor.^ The latter case especially is like the case under consideration. To refuse relief to the party claiming the equitable right to the property would be to allow the grantee, against his express promise, to confiscate the grantor's property. This is the only element of fraud in any of the cases against agents. Aside from cases of the above character, where the party claiming the existence of the trust had an interest cognizable by a court of equity or of law, prior to the parol engagement, we apprehend that the true rule is, that the mere breach of a parol agreement cannot be regarded as a fraud so as to take the case out of the statute.^ If the rule were otherwise, and were then to be carried to its legitimate result, one of the vicious consequences would be that the salutary rule against the admission of parol evidence to vary the terms of a writ- ten contract would in a great measure be overturned. Fraud in one of the parties to a contract is everywhere recognized as a ground for opening the terms of a written agreement to parol proof, even when not wholly defeating the existence or binding force of the contract. Bat, under the above rule, it would only be necessary for one of the parties to prove the existence of a contemporaneous parol agreement which was one of the inducements to the written contract, and the breach of such parol agreement, to make out a case of fraud sufficient to overturn or modify the written contract. The unsoundness of the proposition itself, in the presence of the rule as to parol evidence, is apparent upon a moment's reflection. Evidence of fraud opens the terms of a written contract to the proof (in the case under consideration) of a parol contemporaneous agreement which has been broken by 1 Compare Glass v. Hulbert, 102 Mass. 24, 39. 2 Rogers v. Simmons, 55 111. 76 ; Merritt v. Brown, 6 C. E. Green, 401. 118 ACTUAL FEAtTD. [CHAP. H. the opposite party ; or, in other words, evidence of this parol agreement is only admissible upon proof of fraud. But, to prove this fraud, this parol undertaking and its breach are alone offered in evidence. That is, the very thing to be proved is offered in evidence as the means of establishing its own admissibility as evidence.^ This view is sustained by the most of our authorities.^ Indeed, few if any, when carefully examined, will be found, apart from the dicta of the judges, to be opposed to it. A deed in common form, containing a declaration of the use to the grantee and his heirs in the habendum, will conclude the parties, and exclude evidence of any resulting trust to the grantor.^ And the authorities generally are equally clear that, in cases in which parol evidence would not be excluded to prove the oral agreement (as where there has been no con- ' " It is not enough," says Mr. Hare, in 2 Lead. Cas. in Eq. 1015 (4th Am. ed.), " that the complainant -was induced to change his position for the worse by a promise which has not been fulfilled. It must appear that the promise was used as a means of imposition or deceit. If the case taken as a whole is one of fraud, the promise may be received in evidence as one of the steps by which the fraud was accomplished. But, until the fraud appears, there is no room for the admission of the promise. To deduce the fraud from the contract, and then give effect to the contract on the score of fraud, is obviously reasoning in a vicious circle ; or, as the rule has been stated in Maryland, the parol evidence must show that the contract had its inception in the fraudulent con- trivance of the party against whom the relief is sought, and not merely that he is making an unjust use of the contract to keep an advantage obtained through the reliance of the opposite party on his good faith and fair dealing. Lamborn v. Watson, 6 Har. & J. 252; Wilson v. Watts, 9 Md. 461." See, further, Montecute v. Maxwell, 1 P. Wms. 618; Mc- Donald I). May, 1 Rich. Eq. 91; Schmitt o. Heywood, 2 Rich. Eq. 162; Johnson v. La Motte, 6 Rich. Eq. 356. " Blodgett V. Hildreth, 103 Mass. 484; Walker v. Locke, 5 Cush. 90. ' Blodgett V. Hildreth, supra; Squire v. Horder, 1 Paige, 494; Phil- brook V. Delano, 29 Maine, 410; Farrington v. Barr, 36 N. H. 86; Graves v. Graves, 29 N. H. 129 ; Rogers v. Simmons, 55 111. 76 ; Merritt V. Brown, 6 C. E. Green, 401. The 7th section of the English Statute of Frauds as to trusts was not in force in Pennsylvania when Murphy ». Hubert, 7 Barr, 420, was decided. § 5. J SPECIAL FKATJDS IN PAIS. 119 veyance between the parties to the alleged trust), the fraud which will give jurisdiction to compel a performance of the parol trust must consist in something more than a mere breach of the parol undertaking in question.^ Where a gift or bequest to a volunteer is procured through a promise to hold the premises in whole or in part for a third person whom the giver desires to benefit, a trust will arise ex malefido, if the promise be not fulfilled.^ But the grantee or devisee is charged with the trust not by reason merely of the oral promise, but because of the fact that by means of such promise he has induced the transfer of the property to himself.^ That a devisee taking property upon a parol promise to hold for the benefit of a third person may be compelled, at the suit of such third person, to convey the intended interest, is clear.* A more difficult question arises where with such devisee there is associated another devisee, who claims that he had no knowledge or intimation at the time of the execu- tion of the will, or before the death of the testator, of such intended trust. Parol evidence, however, though amounting to no more than strong inference of knowledge of the trust, has been held admissible in a case in which the will had been advised and drawn upon the suggestion of the other devisee, who fully admitted the trust.^ The case does not go to the extent of allowing evidence of a trust as to the refusing devisee, where there was no evidence of hia knowledge of the alleged intention of the testator. It might well be doubted if evidence could be received in such a case. The act of the 1 Merritt v. Brown, 6 C. E. Green, 401; Marshman ». Conklin, lb. 546 ; Rogers v. Simmons, 55 111. 76, and cases above cited. 2 Russell V. Jackson, 10 Hare, 206; Tee v. Ferris, 2 Kay & J. 357; Jones V. Badley, Law R. 3 Ch. 862; McCormick v. Grogan, Law R 4 H. L. 82; Glass v. Hulbert, 102 Mass. 24; Gaither v. Gaither, 3 Md. Oh. 158; Hooker v. Axford, 33 Mich. 453; 2 Lead. Gas. in Eq. 978 (4th Am. ed.); Cipperly v. Cipperly, 4 Thomp. & C. 342. s Glass V. Hulbert, 102 Mass. 24, 89. * Hooker v. Axford, 38 Mich. 453 ; post, pp. 126, 127. « lb. 120 ACTUAL FEAUD. [CHAP. n. devisee in claiming to hold the property, notwithstanding the admission of his co-devisee, would not be a fraud. Fraud in such cases arises only when the devisee has consented to hold in trust; such consent being presumed to be the reason for omitting the declaration of trust from the wiU. § 6. Op Wills. Any person possessed of capacity sufficient to enable him to attend to his ordinary business is capable of making a valid will.^ Mere weakness of understanding, indeed, if not ex- cessive,^ will not be sufficient of itself to invalidate a will. If the testator be capable of comprehending the nature of the dispositions made, he has the testamentary capacity .^ It is not necessary that the testator should possess a knowledge sufficient for the transaction of general business : the ability to comprehend the ordinary routine of his own business is all at most that can be required.* Indeed, if the testator under- stand fully what he is doing when making his will, — that is, when he executes it, and (if such be the fact) that he has a family, and the relations in which he stands to it in fact and in law, that he has property and that he knows of what it consists, — it is said that he can make a will.® It is even held that long-continued habits of drunkenness do not raise the presumption of incompetency in a testator ; ® and that a will made by an habitual drunkard, who is under the influence of 1 Ford V. Ford, 7 Humph. 92; Coleman v. Robertson, 17 Ala. 84. " Capacity to make a will may accompany a great degree of mental imbecility. Daniel v. Daniel, 39 Penn. St. 192. 8 Dornick v. Reichenback, 10 Serg. & R. 84; Elliott's Will, 2 J. J. Marsh. 340; Weir v. Fitzgerald, 2 Bradf. 42; Abraham v. Wilkins, 17 Ark. 292. * Kinne v. Kinne, 9 Conn. 102; Stubbsi;. Houston, 33 Ala. 555. ' Cordrey v. Cordrey, 1 Houst. 269. See also Stancell v. Kenan, 33 Ga. 56. 6 Gardner v. Gardner, 22 Wend. 526. § 6.] SPECIAL FRAUDS IN PAIS. 121 intoxicating liquor at the time of its execution, is not void, unless he is under such a degree of excitement as to vitiate his judgment.^ Indeed, it is held in New York that mere weakness of mind in a testator will not avoid his will, unless there is a total want of understanding.* And it is laid down in Kentucky that it is not necessary that a testator should have such strength of mind as would be necessary to enable him to traffic with and mortgage his property.^ In Vermont and South Carolina, it is held that there need not be as high intellectual power in a testator as is necessary for a person making a contract ; * while in Maryland, on the other hand, it is declared by statute that a person who has not the ca- pacity to make a contract cannot make a will.® But this sub- ject need not be further pursued. It involves the construction of various and diverse statutes, and is introduced here as merely introductory to what follows. When it has been proved that a will has been executed with due solemnities by a person of competent understanding, and apparently a free agent, the burden of proving that it was executed under undue influence rests upon the party who alleges it ; ^ or at least he must show facts from which the court would be justified in treating the circumstances attend- ing the bounty as suspicious. Further, in order to set aside the will of a person of sound mind, it is not sufficient to show that the circumstances attending its execution are con- sistent with the hypothesis that it was obtained by undue influence. It must be shown that they are inconsistent with a contrary hypothesis.^ A will obtained by fraud is invalid ; and fraud in this con- 1 Peck V. Gary, 27 N. Y. 9. But see Nussear v. Arnold, 13 Serg. & R. 323. 2 Blanchard v. Nestle, 3 Denio, 37. » Howard v. Coke, 7 B. Mon. 655. « Converse v. Converse, 21 Vt. 168; Kirkwood v. Gordon, 7 Rich. 474. 6 Davis I). Calvert, 5 Gill & J. 269. « Boyse v. Rossborough, 6 H. L. Cas. 2, 49. ' lb. p. 51. 122 ACTUAL FEAUD. [CHAP. H. nection is used both in the sense of deceit, whether of words or of artifice, and of undue influence. With regard to what deceit is necessary to annul a testament, the question is left to the judgment of the court upon comparing the deceit with the capacity or understanding of the testator.^ Thus, on an issue to try the validity of a will impeached on the ground of imposition upon and imbecility of the testator, evidence was admitted of the false representations of the principal devisee as to the character of the wife of another who was equally entitled by relationship to the testator's bounty.^ Fraud and imposition upon weakness are sufficient ground for setting aside a will,- whether of real or of personal prop- erty.^ As to imposition, it is laid down that though a man may have a mind of sufficient soundness and discretion to manage his own affairs in general, still, if such a dominion or influence be obtained over him as to prevent his exercising that discretion in the making a will, he cannot be considered as having such a disposing mind as will give it effect.* In cases of weakness of mind arising from the near approach of death or otherwise, strong evidence may be required that the contents of the will were known to the testator executing the will at such time," and that the execution was his spon- taneous act.® A suspicion is justly entertained of a will con- ferring large benefits on the person by whom or by whose agent it was prepared,' or of a will in favor of a medical at- tendant in whose house the testator resided.^ But it seems that such suspicion goes no further than to necessitate some- 1 1 Wms. Executors, 38 (2d Am. ed.). 2 Dietrick v. Dietrick, 5 Serg. & R. 207. 8 1 Jarman, Wills, 30 (3d Eng. ed.). * Mountain v. Bennett, 1 Cox, 855 ; Jarman, ut supra. 8 Mitchell V. Thomas, 6 Moore, P. C. 137 ; s. c. 12 Jur. 967 ; Durnell V. Corfield, 8 Jur. 915. But see Reece v. Pressey, 2 Jur. n. s. 380. 6 Tribe v. Tribe, 13 Jur. 793. . ' Paske V. Ollat, 2 PhilUm. 323; Burling v. Loveland, 2 Curt. 225; Baker v. Batt, 2 Moore, P. C. 317. 8 Jones V. Godrich, 5 Moore, P. C. 16. § 6.] SPECIAL FRAUDS IN PAIS. 123 what stricter proof as to the testator's capacity, though not as to his knowledge of the contents of the will.^ Where, however, the capacity of the testator is duly proved, he will be presumed cognizant of the contents of the will.^ Proof of previous instructions corresponding with the con- tents of the will, or a complete recognition of every part of it, as the free act of the decedent, is, it is held, indispensa- ble in every case of diminished mental power, accompanied by suspicious circumstances as to the origin and execution of the instrument. Mere acknowledgment of the will is not sufficient : it must appear to be the result of the decedent's own suggestions, free from any influence.^ With regard to the matter of control and undue influence, a manifest distinction exists between them. Control is more easily capable of a description approaching to a definition, because it necessarily imports something of the nature of duress or fear. On the question of undue influence, especially in the case of a wife, very little of exact statement is to be found in the books, or could be expected to be found. Some accepted dicta, however, are given by the courts. For ex- ample, it has been observed that importunity, in its correct legal acceptation, must be in such a degree as to take away from the testator his free agency ; * and, again, that the influ- ence to vitiate an act must amount to force and coercion, destroying free agency.^ In still another case, it has been said that undue influence, in order to render a will void, must be an influence which can justly be described by a person looking at the matter judicially to have caused the execution of a paper pretending to express a testator's mind, which 1 1 Jarman, Wills, 30 (3d Eng. ed.) ; Barry v. Butlin, 2 Moore, P. C. ■480. 2 Browning v. Budd, 6 Moore, P. C. 435. 8 In re Welsh, 1 Redf. 238. * Kinleside v. Harrison, 2 Phillim. 551. « Williams v. Goude, 1 Hagg. 577; Huddlestone v. Armstrong, 1 Moore, P. C. 478. See Stulz v. SchaefSe, 16 Jur. 909. 124 ACTUAL FBAUD. [CHAP. H. really did not express his mind, but expressed something else, — something which he did not really mean.^ It is observed by the Lord Chancellor, in the case just cited, that in a popular sense we often speak of a person exercising undue influence over another, when the influence certainly is not of a nature which would invalidate a will. And he illustrates his meaning thus : A young man is often led into dissipation by following the example of a companion of riper years, to whom he looks up, and who leads him to consider habits of dissipation as venial and perhaps even creditable. The companion is then correctly said to exercise an undue influence. But if in these circumstances the young man, in- fluenced by his regard for the person who had thus led him astray, were to make a wUl and leave him every thing he possessed, such a will certainly could not be impeached on the ground of undue influence. Nor would the case be altered merely because the companion had urged, or even importuned, the young man so to dispose of his property ; provided, only, that in making such a will the young man was really carry- ing into effect his own intention, formed without either co- ercion or fraud.^ The difficulties of defining the point at which influence exerted over the mind of a testator becomes so pressing as to be properly described as undue are greatly enhanced when the question is one between husband and wife. It is both difficult to inquire, and impolitic to permit inquiry, into all that may have passed in this intimate relation. But the diffi- culty is one of fact. The criterion for determining the ques- tion of influence is doubtless the same as in other cases ; and it has been laid down in a case of this kind by the House of Lords that influence, to be undue within the meaning of any, 1 Boyse v. Rossborough, 6 H. L. Cas. 2, 34. 2 6 H. L. Cas. 48. But the burden of proof as to the fairness of the will would, in such case, probably be upon the party claiming the bounty. § 6.] SPECIAL FEAUDS IN PAIS. 125 rule of law which would make it sufficient to vitiate a will, must be an influence exercised either by coercion or by fraud. And, as to the latter (with which this work is alone con- cerned), it was observed that if a wife, by falsehood, raise prejudices in the mind of her husband against those who would be the natural objects of his bounty, and by contrivance keep him from intercourse with his relatives, to the end that these impressions which she knows he had thus formed to their disadvantage may never be removed, such contrivance may perhaps be equivalent to positive fraud, and may render invalid any will executed under false impressions thus kept alive.^ A will cannot be set aside on account of any persuasions or representations of the testator's wife, while the testator is at the point of death, to induce him to make a more liberal provision than he is disposed to make, though it should appear that such persuasions had prevailed upon him to comply with her wishes ; proVided it appear that the testator was of sound mind, and was not imposed upon by false representations, and that the provision made for the wife is not greatly dis- proportionate to that of others near of kin, and unreasonable.^ It is not indeed, in any case, unlawful for a person, by honest intercession and persuasion, to procure a will in favor of him- self or of another person. Nor is it unlawful to induce the testator to grant the bounty by fair and flattering speeches. Persuasion, if not accompanied by fraud, may be employed to influence the dispositions in a will, and does not amount to undue influence in the legal sense of that term.* To invalidate a will on the ground of fraud and undue influence, it must be shown that such were practised with respect to the will itself, or so contemporaneously with the will or connected with it as by almost necessary presumption 1 Boyse v. Rossborough, 6 H. L. Cas. 2, 48, 49. 2 Lide V. Lide, 2 Brev. 403. See Small v. Small, 4 Greenl. 220. » Calvert ». Davis, 5 Gill & J. 301. 126 ACTTJAL FEAIJD. [CHAP. II. to affect it. Other frauds committed against a testator are only evidence to raise suspicion against any act done under the superintendence or by the interference of those commit- ting it.^ But this principle must not be carried too far; Where a jury see that, at and near the time when the will sought to be impeached was executed, the alleged testator was, in other important transactions, so under the influence of the person benefited by the will that, as to him, he was not a free agent, but was acting under undue control, the circumstances may be such as fairly to warrant the conclusion, even in the absence of evidence bearing directly on the exe- cution of the will, that in regard to that also the same undue influence was exercised.^ The alteration of a pecuniary legacy in a will, whether by a stranger or by a legatee, will not avoid the will as to other bequests.* Nor will fraud or undue influence in procuring one legacy invalidate other legacies which are of the free will of the testator ; * but if the fraud or undue influence affect the whole will, though practised by but one legatee, the whole is void.^ A prohibition in a will against questioning the acts and decisions of the executors on penalty of forfeiture of the devise will not prevent the devisee from impeaching the exe- cutors' conduct for fraud and collusion.^ Should a testator be induced to omit the insertion in his will of a formal provision for any intended object of his bounty upon the faith of assurances given by the heir or any other person whose interest would be affected by the insertion of such a bequest in the will, that the testator's wishes and intention shall be executed as punctually and 1 Jones V. Godrich, 5 Moore, P. C. 16, 40. 2 Boyse v. Rossborough, 6 H. L. Cas. 2, 51; Rossborough v. Boyse, 3 Irish Ch. 489, 510. 8 Smith V. Fenner, 1 Gall. 170. * Florey v. Florey, 24 Ala. 241. 6 ib. 6 Lee V. Colston, 5 T. B. Mou. 246. § 6.] SPECIAL FKAtTDS IN PAIS. 127 fully as if the bequest were formally made, this promise will raise a trust, which, though not available at law, will be enforced in equity, on the ground that a breach of it would be a fraud.^ And an engagement of the kind referred to may be entered into not only by words, but by silent assent to such a proposed undertaking.^ Of course, the case will be much stronger if the insertion of the provision be prevented by physical interference on the part of an interested person.^ Besides the foregoing cases of actual fraud arising from deceit or undue influence, there are other cases in which, from the peculiar circumstances under which the will was executed, a presumption of fraud arises, or at least a sus- picion of unfairness or imposition sufficiently strong as matter of law to require the party claiming the bounty to prove the perfect fairness of 'the transaction and the freedom of action of the testator. Such a case occurs where a will is written or procured to be written by a person benefited by its provisions. Such circumstance is sufficient to excite close scrutiny, and to require strict proof of volition and capacity in the testator. However, the only effect of such a situation is to require the draftsman to make such proof of volition and capacity. But this subject belongs more properly to another division of our work, to wit, to Con- structive or Presumptive Fraud ; and the reader is referred to the chapter on Confidential Relations* for a further con- sideration of the subject and a citation of the authorities. And the same chapter should be consulted for other ques- 1 Russell V. Jackson, 10 Hare, 206; Jones v. Badley, Law R. 3 Ch. 362; McCormick v. Grogan, Law R. 4 H. L. 82; Chamberlain v. Agar, 2 Ves. &B. 262; Mestaer v. Gillespie, 11 Ves. 638; Sticklaud ». Aldridge, 9 Ves. 519; Barrow «. Greenough, 3 Ves. 154; Chamberlaine v. Cham- berlaine, 2 Freem. 34; Oldham v. Litchford, lb. 285; Glass v. Hulbert, 102 Mass. 24; Hooker v. Axford, 33 Mich. 453 ; ante, p. 119. 2 Byrn v. Godfrey, 4 Ves. 10; Paine v. Hall, 18 Ves. 475. 8 Dixon V. Olminus, 1 Cox, 414. * Ch. V. 128 ACTUAL FRAUD. [CHAP. n. tions arising as to beneficiaries in relations of confidence with the testator. Equity has no jurisdiction to set aside the probate of a will.^ But it has been held that a will which has been fraudulently destroyed or suppressed may be set up in chancery.^ § 7. Of Bills and Notes. In general, fraud in obtaining a bill of exchange or a promis- sory note will render the instrument invalid as between the parties to the fraud ; or, more correctly, the innocent party can set up the fraud as against the party who committed it upon him.* But, if there be a sufficient consideration to sup- port the contract, the mere fact of fraud committed by the payee in obtaining it, where the case "is such that the fraud can work no injury to the defendant, will not be ground for refusing to pay.* It has accordingly been held to be no de- fence to an action against the maker of a note that the plain- tiff obtained the note from the defendant, for a debt already due, by false and fraudulent promises to supply him with goods for a specified future time.^ As in other cases, fraud in obtaining a bill or note is a personal defence given the injured party alone : other parties cannot avail themselves of it, unless it go to the extent, as in case of a forged signature, of showing that the plaintiff has no title to the instrument. It is therefore no defence to an 1 Broderiok's "Will, 21 Wall. 503. 2 Buchanan v. Matlock, 8 Humph. 390; Tapper v. Phipps, 3 Atk. 360. Contra, Myers ». O'Hanlon, 13 Rich. 196. This subject will be found more fully presented in the chapter on Jurisdiction, Ch. VII. 8 Barber v. Kerr, 3 Barb. 149; Sides e. Hilleary, 6 Har. & J. 86; Simmons v. Cutreer, 12 Smedes k M. 584; Fisk v. Collins, 9 Mo. 137; Price r. Lewis, 17 Penn. St. 51. See Marion Co. v. Clark, 94 U. S. 278. * Austell V. Kice, 5 Ga. 472. ' Overdeer v. Wiley, 30 Ala. 709. § 7.] SPECIAL PEATTDS EST PAIS. 129 action upon a promissory note by an indorsee against the maker that the note was obtained from the payee by means of fraudulent representations, of which the indorsee had knowl- edge when he received the note. Payment to the plaintiff in such a case is a good discharge to the defendant.^ So, too, it is no defence to an action by the indorsee against the maker of a note that the plaintiff procured the indorsement of the payee by undue influence when he was of unsound mind and incapable of making a valid indorsement, if the payee or his legal representatives have never disaffirmed it.^ Such an act, though fraudulent as to the payee, does not ren- der the instrument absolutely void ; and the indorsee has a title to the note until the indorsement is legally annulled. Nor is it a defence to the maker of a negotiable note that the plaintiff took it overdue, after it had been obtained by a fraud committed by one indorser against another.^ On the other hand, a party sued upon a note or bill cannot set up in defence the fraud practised upon him by a third person, though the latter be also a party to the instrument, if the plaintiff, being a holder for value, had no knowledge or notice of the fraud when he took the instrument ; unless, as in the above case, the fraud be of such a character as to show that no title to the paper could ever have passed to the plaintiff.* For example, it is no defence to a surety on a note that the principal debtor obtained his signature by fraud, if the payee was ignorant of such fact when he took the note.^ As against an indorsee of a bill of exchange or a promissory note, it is not a defence (as we have seen) for the acceptor or maker that the instrument was obtained from the defendant by fraud, not going to the very existence of, the contract. A plea of such fact, however, is not without some effect. The 1 Prouty 0. Roberts, 6 Cush. 19. '^ Carrier v. Sears, 4 Allen, 336. 8 Parker v. Stallings, Phill. (N. Car.) 590. * A fortiori, where the defendant himself was particeps criminis. Warren v. Lynch, 5 Johns. 239. 6 Robb V. Halsey, 11 Smedes & M. 140. 9 130 ACTTJAL FEATJD. [CHAP. II. presumptions of law, indeed, are all in favor of the right of action of the holder, when there is no circumstance of suspicion upon the face of the paper. But a plea that the instrument was obtained from the defendant by fraud, or that it was fraudulently put into circulation, puts the plaintiff to proof that he took the paper for value and without notice of the fraud ; 1 or at least that some holder before him did so. Fraud, however, may in some cases go to the existence of the contract ; and a plea of fraud of this kind — that is, of such fraud as shows that no contract was in reality ever made by the defendant, and not merely that a voidable contract was executed by him — will of course bar all right of recovery by any person, even a bona fide indorsee for value. There is a difficulty, however, in determining what state of facts will constitute a fraud of this kind. We have elsewhere con- sidered the subject.^ The general result of the authorities may be thus stated : Where the evidence shows that, without negligence on the part of the defendant, he was imposed upon by the fraudulent representations or artifice of another party to the papfer, as to the contents of the instrument which he was signing, and the defendant signed it without knowing that it was a bill or note, and under the belief thus caused that it was an instrument of a different purport ; ^ or where, having signed the instrument with knowledge of its character, he has never made any de- livery of it, but it has been obtained from his premises by theft or other fraud not participated in by any one in whom he has reposed a trust or confidence,* — in either of these ' Bailey v. Bidwell, 13 Mees. & W. 73 ; Hall v. Featherstone, 3 H. & N. 284; Smith v. Braine, 16 Q. B. 244; Harvey v. Towers, 6 Ex. 656; s. c. 15 Jur. 544; Smith v. Sac Co., 11 Wall. 139 ; Kesson v. Stanherry, 3 Ohio St. 156; Vallett ». Parker, 6 Wend. 615; Hamilton v. Marks, 63 Mo. 167; Carrier v. Cameron, 31 Mich. 373. ^ jinte, pp. 75-80. 8 Foster v. Mackinnon, Law R. 4 Com. P. 704; Gibbs v. Linabury, 22 Mich. 479; Chapman v. Rose, 56 N. Y. 137. * Ante, pp. 76-78; Burson v. Huntington, 21 Mich. 415. § 7.] SPECIAL FEAUDS IN PAIS. 131 cases there can be no recovery against him by any person. If, however, he were in either case guilty of any negligence, the effect of the fraud practised upon him will be overturned, and he will be liable to a bona fide indorsee for value .^ If a bill or note given for accommodation be fraudulently diverted by the party accommodated from the purpose for which it was agreed the paper should be used, this is prima facie a defence to an action against the accommodation party. But such defence may be rebutted by evidence that the plaintiff took the paper for value and without notice of the fraud,^ or that he took it from some prior holder, who was a lona fide indorsee for value. The fraudulent diversion, notice of which will preclude a plaintiff's right of recovery against an accommodation party, must be one which can be reasonably presumed to be mate- rial ; such a one as it is reasonable to presume might not have been assented to by the defendant. The mere fact that it was used, to the knowledge of the plaintiff, in some slightly different manner from that contemplated, will not be a good defence. Thus, where the defendant accommodation party indorsed a note for the purpose of being discounted at a bank, and upon the refusal of the bank to take the note it was discounted by the plaintiff with notice of these facts, it was held that he was entitled to recover.** The fact that bank-notes were fraudulently issued, and were void at law, is no defence per se to a suit to collect the debt constituted by giving such notfes to the defendant as a loan of money. It may appear that the notes were actually current at the time the defendant received them, that they had not proved worthless in his hands, and that he was not bound to take them back from the persons to whom he had passed them ; and in such a case the defendant will be liable.* 1 See the above cases and the fuller discussion, pp. 75-80. 2 Small V. Smith, 1 Denlo, 583; Wardell v. Howell, 9 Wend. 170. ' Powell V. Waters, 17 Johns. 176. See Mohawk Bank v. Corey, 1 Hill, ' 513 ; Wardell v. Howell, supra. * Orchard v. Hughes, 1 Wall. 73. 132 ACTUAL PBAUD. [CHAP. H. § 8. Op Feaxjd on Powebs. A fraud upon a power must be committed either on the donor of the power or on the objects of it. It is committed on the former when a power to create a burden on the estate in settlement is used for a purpose not intended. It is com- mitted on the latter when a power to control the devolution of the estate is used to give a benefit to some one not an object of it.^ But of course when all the objects on whom alone such fraud can be committed concur in or confirm the transaction, and no imposition or undue influence is used in the matter, the fraud is waived.''' If the donee of a power appoint the fund to one of the subjects named in the power, upon an understanding that the appointee will lend the fund to the donee, the appoint- ment is bad, though the fund was to be loaned on good security.^ ,In such case, the party entitled in default of appointment obtains the fund.* An appointment made with the object of giving an exclu- sive advantage to the appointor is invalid ; but, if the object of the appointment be to secure a benefit for all the objects of the power, the appointment is good, though the appointor may to some extent participate in such benefit.^ Thus, in the case cited, it was urged that certain appointments (made by a tenant for life acting under a power given by a marriage settlement), the object of which was to effect building leases, were for the benefit of the appointor, and therefore, not being authorized by the settlement, were invalid. But the Master of the Rolls considered that this principle should give 1 Rowley v. Rowley, Kay, 258; Skelton v. Flanagan, Law R. 1 Irish Eq. 362, 369. 2 Skelton v. Flanagan, supra. 8 Arnold v. Hardwick, 7 Sim. 343. *< lb. ' In re Huish's Charity, Law R. 10 Eq. 5. § 8.] SPECIAL FEATJDS IN PAIS. 133 way, where, as in this case, the benefits of the appointment extended tp parties in interest. The building leases had, indeed, benefited the tenant for life ; but they had also bene- fited the other interested parties in the improved value of the property, which they would lose if the appointment were declared void. To hold otherwise would be to strain a rule intended to benefit the objects of the power to a rigid exact- ness, which would inflict manifest injury to them.^ It is not necessary that an appointment under a power should be directed (contrary to the intent of the power) to the exclusive benefit of the appointor, in order to make it invalid. Where the donee exercises a power of appointment in favor of one of several objects of the power with a view to the benefit of a stranger, the appointment is considered fraudulent ; and this, too, though the appointee be ignorant of the fraud, and though the motive of, the donee be not morally wrong.^ In the case cited, a married woman having a power to appoint a fund (of which she was to receive the income during her life) among her children, appointed the whole fund at her death to her eldest daughter. The object of this was that the daughter should, out of the fund, bene- fit her father. The daughter was not informed of her mother's intention until after the mother's death ; but the appointment was held invalid.* ^ See McQueen v. Farquhar, 11 Ves. 467; Cockcroft ». Sutcliffe, 25 Law J. Ch. 313; Topham v. Portland, 1 DeG., J. & S. 517; s. c. 11 H. L. Gas. 32, Law R. 5 Ch. 40; Vane ». Dungannon, 2 Schoales & L. 118; Warde v. Dixon, 28 Law J. Ch. 315; Cooper v. Cooper, Law R. 8 Eq. 312; 8. c. Law R. 5 Ch. 203; Jn re Marsden's Trust, 4 Drew. 594. '^ In re Marsden's Trust, 4 Drew. 594. ^ " In some of the cases which have been cited," said the court, " there has been a direct bargain between the donee of the power and the person in whose favor it is exercised, under which the donee of the power was himself to derive a benefit; and certainly there has been nothing of that kind in this case. In my opinion, however, it is not necessary that the appointee should be privy to the transaction, because the design to defeat the purpose for which the power was created will stand just the same, 134 ACTUAL PEATTD. [CHAP. U. The same general principles which are applicable to discre- tionary trusts in general are applicable to this particular speci'es of discretionary trust. Unless it can be shown that the trustee having the discretion exercises the trust corruptly or improperly, or in a manner which is for the purpose not of carrying into effect the trust, but of defeating the purpose of the trust, the courts will not control or interfere with the exercise of the discretion. Though there be a sus- picion that the trust has been exercised in a particular man- ner and from a motive which, if proved, would be held fatal, still, if there be nothing but suspicion (though this would be occasion for jealous investigation), and nothing amounting to a judicial inference or conviction from the facts, the courts will not act upon it. On the other hand, if it can be proved to the satisfaction of the court that the power has been exer- cised either corruptly, or for a purpose which would defeat rather than carry into effect the object of the trust, the courts will not permit such an exercise of the power to prevail.^ If real estate be conveyed by a husband to a trustee, for the sole and separate use of the grantor's wife, with power to sell and convey, the proceeds of sale to be reinvested as the wife may direct, it is the duty of both the trustee and the purchaser, in the event of a sale, to see that the fund is paid over to the former, and reinvested by hitn for the benefit of the wife. If, in violation of the terms of the trust, the whether the appointee was aware of it or not; and the case of Wellesley V. Morrington, 2 Kay & J. 148, shows that it is not necessary, in order to bring the case within the scope of the jurisdiction in which this court acts, that the appointee should be aware of the intentions of the appoint- ment, or of its being actually made. Neither is it necessary that the object should be the personal benefit of the donee of the power. If the design of the donee in exercising the power is to confer a benefit, not upon himself actually, but upon some other person not being an object of the power, that motive just as much interferes with and defeats the pur- pose for which the trust was created, as if it had been for the personal benefit of the donee himself." I In re Marsden's Trust, 4 Drew. 594, 599. § 8.] SPECIAL FKAUDS IN PAIS. 135 purchaser contract with the husband, pay him the purchase- money, and then, though upon authority of the wife, receive a conveyance from the trustee, the transaction is a fraud upon the power, and upon the wife's application it will be set aside.^ But the case would be otherwise where the purchaser had no notice of tlie breach of trust.^ If a parent, having a power of appointment amongst his children, purchase the share of one child, it would be a plain fraud for him to attempt, by the exercise of his power, to entitle himself to more than the share which that child would have taken in default of appointment.^ It would be equally fraudulent if a father were to appoint to a child who was deceased, intestate and without issue, or who, though living, was an infant in a hopeless state of health.* Such an ap- pointment would in reality be an appointment to the father himself. Where the legal estate is outstanding in trustees, a bill by a purchaser for valuable consideration and without notice, under a fraudulent appointment of property in settlement, will be dismissed as against the persons who, in default of a valid appointment, are entitled. The payment of a money consideration cannot make a stranger become the object of a power created in favor of children. He can only claim under a good appointment. An appointment, at first impeachable as voluntary, may indeed be sustained by a consideration ex post facto; as,' for instance, where the subject of appoint- ment is purchased for a valuable consideration from the appointee. But that is only where a valuable consideration was all that was wanting to make the appointment good ah initio.^ Where there has been fraud in the concoction of a 1 Cardwell i. Cheatham, 2 Head, 14. See Wormley v. Wormley, 8 Wheat. 421; Champlin v. Height, 10 Paige, 274; s. c. 7 Hill, 245. ^ Cardwell v. Cheatham, supra. 8 Smith V. Camelford, 2 Ves. Jr. 714. * McQueen v. Farquhar, 11 Ves. 479; Hinchinbroke ». Seymour, 1 Brown C. C. 395. ' George v. Milbank, 9 Ves. 190. 136 ACTUAL PKAUD. [CHAP. n. bargain, payment of money cannot make an appointment in pursuance of such bargain fair, though the appointment may cease to be voluntary.^ But though, under circumstances similar to those above stated, the whole transaction is void, there is a distinct class of cases in which the execution of powers is void only in part ; as where a parent, having power to appoint amongst children only, appoints (without their consent^) a part to grandchildren. This is a fraud only to the extent in which it deprives the true objects of the power of the benefit in- tended for them by the party creating the power ; the execu- tion of which, therefore, is held void only for the excess.^ And, in general, the rule, that where an appointment is made for a bad purpose, the bad purpose affects the whole instru- ment, does not apply to cases in which the evidence enables the court to distinguish what is attributable to an authorized from what is attributable to an unauthorized purpose.* § 9. Op Inadbqtjacy op Consideration. It is established law that when parties understand fully what they are doing, and there is no fiduciary relation between them, mere inadequacy of price will not suflBce to impeach a sale, though there be also the absence of profes- sional assistance. And the mere circumstance that one of the parties is in poverty and distress, and the other wealthy, will not take a case out of this rule.^ He who, standing in 1 Daubeny w. Coekburn, 1 Meriv. 626; Cadogan v. Keunett, Cowp. 434; 2 Hovenden, Fraud, 222. "> White V. St. Barbe, 1 Ves. & B. 399. •* Adams v. Adams, 2 Cowp. 651 ; Pitt v. Jackson, 2 Brown C. C. 51; Bristow V. Warde, 2 Ves. Jr. 350; Palmer v. Wheeler, 2 Ball. & B. 28; Crompe v. Barrow, 4 Ves. 685. * Topham v. Portland, 1 DeG., J. & S. 517. 5 Harrison v. Guest, 1 DeG., M. & G. 424; s. c. 8 H. L. Cas. 481 ; § 9.] SPECIAL FBATJDS IN PAIS. 137 an independent relation, would impeach a sale for fraud, must establish the fact that the transaction is invalidated by some of the elements, the presence of which renders what is in form a contract inoperative in equity. The term "fraud," however, in such case, is not to be understood in its popular sense. In the sense in which it is understood in equity, it comprises the use of undue influence and unfair means. But while inadequacy of consideration and the absence of profes- sional advice, added to the presence of distress, do not come within this extended signification of fraud, they are all mate- rial facts, and may exist to such an extent in connection with other facts as to be proof of fraud.^ In the case cited, a pur- chase deed was set aside under the following circumstances : The vendor received as a consideration for the sale less than half the value of the property. He was a person of reckless and improvident habits, greatly embarrassed, indebted to the purchaser, and to some extent dependent upon him. He had acted without professional advice ; and there was evidence of management and contrivance on the part of the purchaser in procuring the vendor's signature to the contract of sale, and of his having depreciated the title and having deterred others from purchasing, though he was himself aware of counsel's favorable opinion as to the title, and did not inform the ven- dor of the fact. If there be such inadequacy as to show that the person whom it affects did not understand the bargain he was mak- ing, or was so oppressed that he was glad to make it, knowing its inadequacy, this will show a command over him which may amount to fraud.^ It is held in Pennsylvania that gross inadequacy, though sufficient to shock the judgment of the court, is insufficient Knight V. Majoribaiiks, 11 Beav. 322 ; 8. c. 11 Macn. & G. 10 ; Butler V. Miller, Law R. 1 Irish Eq. 195, 210. 1 Butler V. Miller, Law K. 1 Irish Eq. 195, 210. 2 Heathcote v. Paignon, 2 Brown, C. 0. 167. 138 ACTUAL PKATJD. [CHAP. H. ground of itself to set aside an executed contract between par- ties standing on an equality, though it might be otherwise of an executory contract.' The general language of the authorities, however, is that inadequacy so great as to shock the conscience will suffice to avoid any contract. This, how- ever, must be admitted to be a very uncertain standard of relief. We add several illustrations of the subject from the decisions of the courts. A bid of f 100 at a fair public sale for property worth f 1,500, but upon which there were liens amounting to $800, is not, of itself, so grossly inadequate as to show fraud.^ But where property worth |12,000 was bid off at judicial sale for |400, it was held that such inadequacy, of itself, afforded strong ^ Davidson v. Little, 22 Penn. St. 245. " Such gross inadequacy as there was in this case," said Black, C. J., " is very well calculated to fix upon the transaction a serious suspicion of its fairness. It is contrary to all our usual experience that a man should part with his property at five per cent, of its value, unless he was excessively weak or ignorant, or under the influence of some deception. But if the vendor was thoroughly acquainted with every fact which it was necessary for him to know; if he was twenty-one years of age and of sound mind ; if there were no circumstances which gave the vendee an improper control over him, amounting to mental imprisonment; if, in short, the vendee behaved honestly, and the vendor was able to act like a free man, with his eyes open, then the one had a right to sell, and the other to buy, on any terms they saw proper to agree upon. The law will never interfere between the parties themselves to set aside an honest contract which they have voluntarily made. When creditors complain, the case is totally difierent. . . . The court should have charged the jury that, if there was no actual fraud committed by the vendee, the conveyance could not be disturbed; that the inadequacy of the price, gross as it was, could be regarded only as evidence of fraud; that, this being the case of an executed contract, the inadequacy is not sufficient to prove the fraud without some additional evidence ; that all the facts connected with the transaction must be con- sidered together ; and, if by this means it should appear to be honest, the verdict ought to be for the vendee." The decision expressly excepts similar transactions with expectant heirs, and doubtless would except all cases where the parties do not stand upon an equality. 2 Weber v. Weethng, 3 C. E. Green, 441. § 9.] SPECIAL FEATJDS IN PAIS. 139 ground for equitable relief.^ So, too, it has been held that the sale of property worth $800 for $200 is not evidence of fraud.2 The fact that at sheriff's sale a lot of land sold for f 5, and another lot for $10, is not evidence of fraud, when the value of the land is not stated.^ The agreement, however, of a county to sell and transfer stock to the amount of $20,000 in a railroad company for $2, is held to be unconscionable and fraudulent per se, there being no evidence of an intention to make a gift of the stock.* Where, in a suit for partition, a sale of lands worth $1,500, in which infants were interested, was directed, and an agent was directed to be present at the sale to see that the property was not sacrificed, and owing to his (accidental) failure to attend the land was sold for $50, it was held that the sale should be set aside .^ Where a sale is set aside for inadequacy, or for any other matter which renders it fraudulent by construction of law only, the courts act upon the principle of redemption, and the conveyance will stand as a security for principal and interest.® In the case of a charity estate, the security of rent is the first object to be regarded ; and hence the inadequacy of the rent reserved in such cases is less indicative of fraud than in almost any other situation. Thus, a tenant, though he may appear to be in possession of a lease of charity estates at a very low rent with reference to the value of the property, will not be turned out, if he have acted fairly and honestly. There must be some evidence or a presumption of collusion or improper conduct as ground for so dealing with him. If, for example, the tenant happen to be a relative of the trustee who granted the lease, this will be a circumstance justly cal- 1 Hodgson V. Farrell, 2 McCarter, 88. There is perhaps a distinction between private and judicial sales upon this matter of inadequacy, the latter being involuntary. 2 Feigley v. Feigley, 7 Md. 537. » Foster v. Pugh, 12 Smedes & M. 416. * Macoupin Co. v. People, 58 111. 191 ; Madison Co. v. People, lb. 456. 6 Mitchell V. Jones, 50 Mo. 438. « 1 Story, Equity, § 344. 140 ACTUAL FRAUD. [CHAP. H. culated to excite suspicion.^ And when the undervalue is considerable, and not accounted for by circumstances render- ing the terms substantially reasonable, a lease of charity estates may be set aside upon the mere ground of undervalue.^ If a lease of charity estates for ninety-nine years be obtained, it is incumbent upon the lessee w^ho takes a term of that dura- tion to show such a consideration as will make it a proper lease ; since such a letting would be out of the ordinary course of provident management. Nor can trustees make a lease with covenants for perpetual renewal unless a considera- tion be received equivalent to the value of the inheritance, which by such a lease is virtually alienated.^ Upon principles adopted for the purpose of guarding against possible fraud, one of the governors of a charity cannot become a lessee of the lands which, as governor, it was his duty to let to the greatest possible advantage. It will be no suffi- cient justification of such a transaction to show that there was no inadequacy or other circumstance of suspicion imput- able to the lessee or the other governors.* A person who with his eyes open purchases property at a price greatly exceeding its value cannot obtain relief in equity on that ground.^ But, when the purchase at such price is a mere condition to the obtaining a loan, equity may grant relief.^ 1 Exparte Skinner, 2 Meriv. 457; Attorney-Gen. v. Backhouse, 17 Ves. 291; Attorney-Gen. v. Mawgood, 18 Ves. 315; 2 Hovenden, Fraud, 326. 2 Attorney-Gen. o. Cross, 3 Meriv. 541 ; Attorney-Gen. v. Gore, Barnard, 152; s. c. 9 Mod. 229. ' Attorney-Gen. v. Brooke, 18 Ves. 326 ; Attorney-Gen. v. Wilson, lb. 519; Attorney-Gen. -v. Owen, 10 Ves. 560; Attorney-Gen. v. Green, 6 Ves. 452; Attorney-Gen. «. Warren, 1 Wils. C. C. 412 ; s. o. 2 Swanst. 304; Watson v. Henapsworth Hospital, 14 Ves. 333; 2 Hovenden, 326. * Attorney-Gen. v. Clarendon, 17 Ves. 500. 6 Abbott V. Sworder, 4 DeG. & S. 448. « Marshall b. Billingsly, 7 Ind. 250 ; CoUett v. Preston, 15 Eng. L. & E. 101 ; Lawley v. Hooper, 3 Atk. 278. § 10.] SPECIAL FEATJDS IN PAIS. 141 § 10. Op Public Sales. Public sales may be invalidated either for fraudulent com- binations or artifices among the bidders to obtain the property on sale at a price within certain limits, or for fraudulent acts and artifices of the vendbr to advance the price. In the former case, the vendor is the sufferer, and he alone can com- plain of the wrong ; in the latter case, the purchaser is the sufferer, and objection must come from him. A sale effected by such means is void even at law ; and a deed executed in pursuance of it conveys no title.^ In accordance with this principle, a partition sale will be set aside where the evidence shows any collusion or contriv- ance to enable the purchaser to obtain the land at a price below its value.^ Thus, where it appeared that at such a sale the bidders, for the purpose of obtaining the property at a sacrifice, agreed that one should become the purchaser and the others refrain from bidding in consideration of sharing the benefits of the purchase, the sale was annulled.^ So, too, a combination between a commissioner appointed by court to sell property, whereby the commissioner becomes a partner with others in the purchase of the property sold by him, is fraudulent ; and the commissioner and his partners are liable for the profits realized by them from the transaction.* Where lands of a decedent are sold by an officer of court, and part of the distributees combine and agree not to bid against each other, and they prevent competition at the sale by promising to divide the fruits of their purchase with others intending to bid, if they will not bid, and thus become pur- chasers of the land at a price far below its value, the case 1 Den d. Smith u. Greenlee, 2 Dev. 126. " Neal V. Stone, 20 Mo. 294; Wooton o. Hinkle, lb. 290. ' Wooton V. Hinkle, supra. * Chatham v. Pointer, 1 Bush, 423. 142 ACTUAL PBATTD. [CHAP. H. affords sufficient ground for a refusal by the court to confirm the sale.i So, also, if a bidder at auction' offer to one propos- ing to bid that, if he will desist, the former will divide the property with him, this is a fraud upon the vendor.^ So where the parties agreed that if the defendant would not bid upon a note against the plaintiff at an auction sale thereof, the plaintiff would discharge a demand against the defendant, the agreement was considered void, and the demand held enforceable.^ When a purchaser bids off property at a public sale, the fact that a combination existed to prevent certain lands from being sold to other bidders, to which he was not a party, and of which he was ignorant, will not invalidate his purchase.* Parties may purchase jointly at public sales, if all be open and fair. A combination of interests is not necessarily cor- rupt. It is the end to be accomplished which determines whether a combination is lawful or otherwise. If it be to depress the price of the- property by artifice, the purchase will be void ; if it be to raise money for payment, or to divide the property for the accommodation of the purchasers, it will be valid.* Agreements, therefore, concerning biddings at public sales are not fer se illegal. Whether they are invalid or not depends upon the intention by which the parties are governed, and the object sought to be accomplished. If the object be fair, if there be no indirection or purpose to prevent the competi- tion of bidders, and such is not the necessary effect of the ' Swofford V. Garmon, 51 Miss. 348. 2 Whitaker v. Bond, 63 N. C. 290. ' Gardiner v. Morse, 25 Maine, 140. * Case V. Dean, 16 Mich. 12. « Small V. Jones, 1 Watts & S. 128; Breslin v. Brown, 24 Ohio St. 565 ; Phippen v. Stickney, 8 Met. 388 ; Den d. Smith v. Greenlee, 2 Dev. 126; McMinn v. Phipps, 3 Sneed, 196; James v. Fulcrod, 5 Tex. 512. But see Atcheson v. Mallon, 43 N. Y. 147. § 10.] SPECIAL FRAUDS IN PAIS. 148 arrangement, the agreement will be sustained.^ In the case cited, there was an agreement that the defendants in error should procure judgments against certain parties, levy on their property, expose the same to sale, and that the plaintiff in error should bid the amount of the judgments for it. The agreement did not declare that the other party should not bid ; and it was sustained. In another case,^ there was an agreement between two persons that one of them only should bid, and that, after buying the property, he should sell part of it to the other upon such terms as the witnesses to the agreement should decide to be just and reasonable. This agreement was upheld. It was agreed in another case ^ that a party should bid a certain amount for a steamboat, about to be sold under a mortgage, and transfer to the mortgagor an undivided interest of one-third, upon his paying a correspond- ing amount of the purchase-money. The contract was held valid. In still another case,* an agreement was made between a senior and a junior mortgagee. The former agreed to bid the amount of his debt for a specific part of the mortgaged property ; and this bargain was held a proper one. So, also, a simple agreement between two or more persons, each of whom wished to purchase a part only of certain land offered at a chancery sale, that they would purchase the whole jointly, and afterwards make division among themselves, does not constitute such a combination to stifle the biddings as will vitiate the sale.* It is not necessary that the restraint upon competition should be effected by the bidders. If the auctioneer fraudu- lently prevent competition, the sale is equallj'^ invalid. Thus, where an auctioneer, on seeing a party approach, who, as he 1 Wicker v. Hoppock, 6 Wall. 94. ' Phippiu V. Stickney, 3 Met. 384. 8 Bame v. Drew, 4 Denio, 290. * Garrett v. Moss, 20 111. 549. 5 McMlnn v. Phipps, 3 Sneed, 196. See Den d. Smith v. Greenlee, 2 Dev. 126. 144 ACTUAL FRAUD. [CHAP. H. knew, was likely to bid, knocked down the premises before such party could bid, the sale was set aside.^ But if the auctioneer give all buyers a fair chance to. purchase, only refusing to assure the title to the property, his own purchase is not fraudulent, however inadequate the price.^ From considerations of public policy, courts are strongly inclined to uphold judicial sales ; but these considerations will not induce them to sustain them, when they have been conducted with bad faith. Hence, if a purchaser at execu- tion sale falsely appeal to the benevolence of the bidders by \ giving out that he is buying for the benefit of the debtor or his family, this will be a circumstance which, with other slight /evidence, may be sufficient to justify a court in setting aside ^the sale as fraudulent. And the same result will follow when the representations are made privately, and persons are "^thereby kept away who otherwise would have attended the "isale for the purpose of bidding.^ A scheme was entered into by the widow and the adminis- trator of a decedent to procure a foreclosure sale of the intes- tate's lands, at which the administrator was to buy them in at an inadequate price by giving out at the sale that he was purchasing for the widow, thus dissuading others from bid- ding. Under th'ese circumstances, the administrator purchased the lands at sheriff's sale, and agreed to convey them to the widow for the price at which they were struck off to him. On his refusal to do so, the widow and the intestate's only child filed a bill to redeem ; and it was held that the widow was barred by her participation in the fraud. But, as to the child, the administrator was decreed a t^-ustee for her.* If it appear that no one was influenced by the false repre- 1 Jackson u. Crafts, 18 Johns. 110. 2 Brotherline v. Swires, 48 Penn. St. 68. 8 Stewart v. Severance, 43 Mo. 322. See McNew v. Booth, 42 Mo. 189. * Johns V. Norris, 12 C. E. Green, 485; s. c. 7 C. E. Green, 103. § lO.J SPECIAL FEAUDS IN PAIS. 145 sentations of a bidder that he was bidding in the interest of the owner and his family, or that only the attorney for the execution plaintiff was so influenced, and it do not appear that he would have bid more than the amount of the debt, a sale for the amount of the debt will be valid.^ The employment of a puffer at an auction sale is a fraud upon the bidders ; and equity will set aside the contract,^ or direct a bond, given by a bidder for property bought under such circumstances, to be delivered up.^ But evidence that the plaintiff requested the defendant to bid on the property as an under-bidder, and told her that she would not be bound to take the property, but might take it if her husband desired, does not show any fraud practised upon third persons, or any illegal contract between the plaintiff and the defendant.* A purchaser of land is not entitled to relief because the price was run up by the apparent competition of a person in reality insolvent and unable to comply with the terms of the sale, who bid upon the known special desire of the purchaser.^ Nor is it any objection to a sale of mortgaged property, that the mortgagee bid and ran up the price to a high figure, pro- vided it appear that the auctioneer gave distinct notice at the sale that the parties were at liberty to bid.^ If property be advertised to be sold without reserve, such advertisement excludes any interference, direct or indirect, by the vendor, which can under any possible circumstances affect the right of the highest bidder, whatever be the amount of his bid, to be declared the purchaser. And any evasion of that duty on the part of the vendor will disentitle him to 1 Gilbert v. Carter, 10 Ind. 16. 2 Veazie v. Williams, 8 How. 134; McDowell v. Simms, 6 Ired. Eq. 278; Morehead v. Hunt, 1 Dev. Eq. 34. 8 Woods V. Hall, lb. 411. * Faucett v. Currier, 115 Mass. 20. ' Williams v. Bradley, 7 Heisk. 54. 6 Dimmock v. Hallett, Law R. 2 Ch. 21. 10 146 ACTUAL FEAITD. [CHAP. n. the aid of equity to enforce the sale.^ Thus, where the vendor, previously to the sale of a life interest, advertised to be without reserve, entered into a private agreement with another person that the latter should bid a certain sum at the auction, and be the purchaser at that sum unless a higher sum were bid, a bill by the vendor for specific performance against another who had been declared the purchaser at the auction, though for a much higher price, was dismissed.^ § 11. Oi" Paetnbeship. An appropriation of partnership assets by one partner without the assent of his copartners, in satisfaction or for security of his private debt, is presumed to be fraudulent as against the other members of the firm, and may be set aside by them. The presumption of fraud, however, is not always conclusive, and may sometimes be rebutted.^ In the case cited, the sole acting member of a dissolved partnership, having full power to dispose of its property and to pay its debts, became himself a creditor of the firm by advancing ■ his own funds in payment of its debts, and then in good faith, and with no intention to defraud the firm, disposed of the partnership property to an amount less than the sum due himself in satisfaction of a debt due from himself to a third person ; and this person received the same in good faith, supposing that the sale was authorized by the firm. It was held that this disposition of the property could not be avoided by another member of the firm, as it appeared that all of the outside debts of the firm had been paid or secured, and that there was nothing due to such other member from the firm. A person dealing with a firm through a member of it, and having no actual knowledge, suspicion, or cause of suspicion, 1 Robinson v. Wall, 2 Phill. Ch. (Eng.) 372. 2 lb. 8 Corwin v. Suydam, 24 Ohio St. 209. § 11 .J SPECIAL FKATJDS IN PAIS. 147 of any fraud practised upon the partnership in the transac- tion, may hold the firm upon any contract thereby entered into on behalf of the partnership. The agency of the part- ner in such a case cannot be disputed.^ Courts of equity will grant relief- where a partnership has been entered into by one partner under circumstances of fraud or gross misrepresentation by the others. In such cases, equity will not only decree the partnership to be void, but will also interpose and restore the injured party to his original rights and property as far as practicable.^ On the other hand, equity will also grant relief where a retiring partner has been induced to sell his interest to his copartners at an inadequate consideration, in consequence of the fraud- ulent concealment and misrepresentation of the condition of the firm property by one of the firm whose special and peculiar business it is to know the state of such property.^ Equity will not grant the dissolution of a partnership for every trivial violation of duty by one of the partners ; but where there is gross misconduct, such as abuse of known authority, or gross want of good faith, such as must, if con- tinued, be disastrous to the interests of the other partners, equity will interfere and grant a dissolution.* To justify such extraordinary interposition, however, the court always requires strong and clear evidence of positive or meditated abuse. It is not enough to show that there is a temptation to such misconduct, abuse, or bad faith : there must be an unequivocal demonstration by overt acts or gross departure from duty that the danger is imminent, or that the injury 1 Blodgett V. Weed, 119 Mass. 215. 2 Story, Partnership, § 232 ; Fogg v. Johnson, 27 Ala. 432; Tattersall V. Groote, 2 Bos. & P. 131; Oldaker v. Lavender, 6 Sim. 239; Jones v. Yates, 9 Bam. & C. 532 ; RawUus v. Wickham, 3 DeG. & J. 304. 8 Maddeford v. Austwick, 1 Sim. 89; Perens v. Johnson, 3 Smale & G. 419. * Story, Partnership, § 287; Story, Equity, § 673; 3 Kent, Com. 60, 61. 148. ACTTJAIi FEAXTD. [CHAP. H. is already done.^ For minor acts of misconduct, equity will ordinarily go no further than to grant an injunction against the partner.^ Though a fraudulently concerted commission of bankruptcy will not be supported, it is not necessary that the sole motive for issuing it should be the distribution of the bankrupt's estate among his creditors. There may be other legitimate grounds upon which it may be supported ; for instance, it may not only be prudent, but it may also be perfectly consistent with good faith, to get the bankrupt partner out of the part- nership, which might otherwise be ruined by his misconduct. And if this appear to have been, hona fide, the object of the commission, it cannot be vitiated thereby. To do this, it is not enough that there has been a bye-motive for taking out the commission, if there has been no fraud.^ If two partners enter into a contract for the purpose of defrauding their joint creditors, the one permitting the other to withdraw money out of reach of the creditors, such a con- tract is void as to such creditors.* But the mere fact that at the time when it was determined to dissolve a partnership both partners knew that the joint effects were insufficient to pay the joint debts will not, of itself, be enough to invalidate a dissolution of the firm, if honestly made ; though it be one of the terms of the dissolution that the retiring partner shall receive a premium for relinquishing his share in the business. If there be no actual fraud in the case, it is competent to partners to make such a bargain, however advantageous or disadvantageous it may be to either party .^ A retiring ostensible partner who conceals his withdrawal, and allows the remaining members of the firm to contract in 1 Story, Partnership, § 287; Story, Equity, § 673; 3 Kent, Com. 60, 61. 2 lb. 8 Ex parte Wilbeam, Buck, 461 ; 2 Hovenden, Fraud, 160. * Anderson v. Maltby, 2 Ves. Jr. 255. ' Ex parte Peak, 1 Madd. 354. § ll.J SPECIAL PEAUDS IN PAIS. 149 his name, is guilty of a fraud upon persons who may in igno- rance of the withdrawal still give credit to. the firm on the faith of the continuance of the old partnership.^ Such a retiring partner will moreover be liable to creditors of the firm as it existed before the change (they dealing in igno- rance), notwithstanding any private arrangement between the partners relative to his liability. The fact of his having been a partner may have been the. chief inducement to dealing with the firm ; and parties may well suppose that the firm remains unchanged until notice is given to the contrary. And this principle will apply equally to persons dealing for the first time with the firm after the partner's withdrawal, if he allow the remaining members to continue to hold him out to the world as a partner.^ A retiring ostensible partner should then give notice of his withdrawal to his old customers, and as to new ones be careful that he is no longer held out as a member of the firm ; though of course, if the new customers have notice of his withdrawal, they cannot claim that he has committed a fraud upon them by the act of his (late) partners in keeping his name among those of the firm. And, if such person be a dormant partner, he need not give notice of his withdrawal, because, having never been held out as a partner, credit cannot be supposed to have been given to him.^ A partner who has been recognized as such bj' his associates cannot be deprived of participation in the profits of the con- cern, because the funds which he carried into the partnership, as his equal contribution to the capital stock, had been pro- cured by a gross fraud, perpetrated by him on one of his copartners in another and distinct partnership.* It is no defence to an action for breach of a contract to form a part- nership with the plaintiff that the plaintiff had defrauded a 1 Buffalo Bank v. Howard, 35 N. Y. 500. 2 2 Story, Contracts, § 313 (5th ed.). 8 lb. * Ingraham v. Foster, 31 Ala. 123. « 150 ACTUAIi FEAUD. [CHAP. U. previous partner, and that the circumstances of the affair had been concealed from the defendant.^ § 12. Op Sueeties.2 If a person be induced to become surety in a contract in which his principal and the obligee, without the surety's knowledge, adopt terms and conditions of an illegal nature and prejudicial to the surety's interests, the surety is entitled to a discharge ; and relief will not be refused on the ground that the principal has allowed the matter to stand. This seems to be true, though there was no combination or col- lusion against the interests of the surety.' Whether the rule would apply, however, to a mere personal fraud prac- tised upon the principal by the obligee, which the former had seen fit to overlook or waive, is matter of doubt.* An agreement between a creditor and principal debtor that the former shall not notify the surety of the default of the latter is not a fraud upon the surety.^ A surety in a promissory note may avoid the same as against the payee, on the ground that the payee induced him to sign through deception.* And in order to enable the sureties on a note to'avoid their contract on the ground that the note was obtained by fraud, it is not necessary that the principal should have joined in the fraud.'^ But it is held that the fact that a person was ind uced to become a surety upon a recognizance by fraudulent representations does not affect his liability to a conusee not a party to the fraud.^ 1 Andrewes v. Garstin, 10 Com. B. n. s. 444. ^ As to certain questions of deceit, see ante, pp. 22, 44-46, 67, note. 8 Denison v. Gibson, 24 Mich. 187. * lb. p. 202. ^ Grover v. Hoppock, 2 Dutch. 191. 6 Tramraell ». Swan, 25 Tex. 473. ' Clopton V. Elkin, 49 Miss. 95. ' Martin v. Campbell, 120 Mass. 126. § 13.] SPECIAL FRAUDS IN PAIS. 151 While an agreement with a principal debtor, whereby the nature of his contract is changed without the consent of the surety, will in general operate to discharge the latter, the principle requires that such an agreement shall be valid. If, for example, a new agreement were to be substituted for the old upon a representation by the debtor that the signature of the surety to the contract offered as a substitute is genu- ine, when in fact it is a forgery, the creditor, on discovering the fraud, may repudiate the new contract and maintain an action against the surety upon the original agreement.^ So, too, a release given by the obligee of a bond to the principal obligor, if obtained by fraud, will not discharge a surety in the bond. And, in an action against such surety, evidence of the principal's fraud upon the plaintiff is admissible, though the surety was not privy to the fraud.* If a sheriff after taking a forthcoming bond prevent the suretj- in such bond from deliyering the goods on the day named, a court of equity on a bill exhibited by the surety wUl require the sheriff and all parties concerned to answer a charge of fraud and combination, and, whether fraud be established or not, will perpetual^ enjoin a judgment against the surety upon the bond as unconscionable against him. The plaintiff in that judgment will be left to his remedy against the sheriff; and the sheriff, if innocent, to his remedy against the parties indemnifying him, if there be any.^ § 13. Op Corporations.* A majority of the corporators have no right to exercise the control over the corporate management which legitimately belongs to them, for the purpose of appropriating the corpo- 1 Kincaid v. Yates, 63 Mo. 45. 2 Gordon v, McCarty, 3 Whart. 407. « Lusk V. Ramsay, 3 Munf . 417. * As to deceit, see ante, pp. 9, 14, 21, 24, 60, 71, 72, 90. 152 ACTUAL PEATJD. [CHAP. H. rate property or its avails or income to themselves or to any of the shareholders, to the exclusion or prejudice of the others. And if any such unfair advantage have been obtained by fraud or abuse of the trust confided to them as officers or agents of the corporation, it is not in the power of a majority to ratify or condone the fraud and breach of trust, so far as it affects the rights of the others, without reasonable restitution. This is not only true as to formal transactions, such as assess- ments of capital or dividends of income,^ but also as to indi- rect appropriations of the common property, profits, or means of profit, to their own benefit by any portion of the corpora- tors, in fraud of their associates. No act of the majority can purge such fraud. If it were otherwise, the minority would be without the means of protection or redress against ine- quality and injustice.^ If the charter of a corporation provide that stockholders only shall be elected directors, persons having no interest in the stock, but fraudulently and coUusively receiving the transfer of a share to qualify them, are not eligible ; and the stockholders combining in such fraud have no power to con- fer upon them authority to do corporate acts. And such fraud and combination will prevent those participating in it from claiming any protection under its provisions to escape personal responsibility.^ So, also, if the directors of a railway ^ Preston v. Grand Collier Dock Co., 11 Sim. 327; Hodgkinson v. National Ins. Co., 26 Beav. 473. 2 Wells, J., in Brewer v. Boston Theatre, 104 Mass. 378, 395; Gre- gory V. Patohell, 33 Beav. 595 ; Atwool v. Merryweather, Law R. 5 Eq. 464, note. 8 Bartholomew v. Bentley, 1 Ohio St. 37; s. c. 15 Ohio, 666. " A valid act of incorporation," said the court, in 15 Ohio, "or an invalid and pretended right to exercise corporate functions, is alike powerless to secure the guilty from the consequences of their fraudulent conduct where it has been knowingly resorted to as the mere means of chicane and imposition, and used to facilitate the work of deception and injury. ... If the defendants, with the design to defraud the public generally, have knowingly combined together, and held forth false and deceptive § 13.] SPECIAL PKAUDS IN PAIS. 153 company give away certificates of stock, a major part of the whole issue, to contractors building the road, for the purpose of giving them a controlling influence in the election of officers and in the management of the road, equity will declare the gift void, especially if part of the directors are interested in the contract with the contractors.^ The officers of a corporation are chargeable with fraud, if they receive in payment for stock property at a valuation known to be in excess of its real worth, and thereon issue paid-up certificates of stock. But such a fraud is greatly aggravated when the officers deal with themselves as stock- holders, and accept such a conveyance in payment of their own stock.^ Private arrangements between an agent of a corporation procuring subscriptions of stock, by which peculiar privileges or exemptions from payment are accorded to certain sub- scribei-s, are a fraud upon the other subscribers ; and it is held that they cannot be set up in defence to an action upon the subscription.^ But it has been decided that the condition of a subscription paper by which a signer bound himself to pay $500, providing $5,500 more should be raised in C, is not per- formed unless the amount is subscribed in good faith or is actually paid by residents of C. The condition is not peiv formed by subscriptions to that amount of responsible resi- dents of C, if it was understood between the payee and any of the subscribers that they should pay nothing, and that colors, and done acts which are wrong, and have thereby injured the plaintiff, they must make him whole by responding to the full extent of that injury; and they cannot place between him and justice with any success the charter of the German Bank of Wooster, whether it be valid or void, forfeited or in esse. Neither a good nor a bad thing may be falsely used for purposes of deception, and made a scapegoat for responsibility." 1 Oilman R. Co. v. Kelly, 77 111. 426; People ». Logan Co., 63 Dl. 374. 2 Osgood V. King, 42 Iowa, 478. 8 New Albany R. Co. v. Fields, 10 Ind. 187; New Albany R. Co. v. Slaughter, lb. 218. 154 ACTUAL FBAtTD. [CHAP. D. understanding has been carried out ; though the payee might have compelled them to pay the whole amount of their sub- scriptions.^ So, too, it appears to be considered in Missis- sippi that if an agent for procuring subscriptions of stock to a corporation obtain a party's signature by means of a colorable signature already given by a well-known and influential citizen, stated by the agent to be well acquainted with such matters, he can avoid his contract of subscription. The sub- scription, however, will be binding upon him, if he were not induced to give it by such colorable subscription.^ If a corporation secure subscriptions of stock, to be binding only when a suificient sum shall be subscribed to secure the completion of a certain work, the directors have no right to pass a resolution that the subscriptions are sufficient for the purpose, when they are obviously not so. Such action would be evidence of fraud, and the subscribers would not be liable for payment of the stock.* The members of the governing body of a corporation are the agents of the corporation ; and if they exercise their functions for the purpose of injuring its interests, and im- properly alienating its property, they are personally liable for any loss caused thereby.* Fraud in the organization of a municipal corporation is ground for annulling the franchise.^ But the charter of a corporation cannot be declared void in a collateral proceeding, and evidence of fraud in the procurement of the charter is therefore inadmissible in a suit by the corporation against an individual.^ Nor can fraud be collaterally shown in order to avoid an act of a municipal body.' 1 New London Inst. v. Prescott, 40 N. H. 330. 2 Walker v. Mobile & O. R. Co., 34 Miss. 245. » Cass V. Pittsburgh Ry. Co., 80 Penn. St. 31. * Attorney-Gen. v. Wilson, Craig & P. 1. 6 State V. Ford Co., 12 Kans. 441. « Duke V. Cahawla Nav. Co., 16 Ala. 372. ' Jersey City & B. R. Co, v. Jersey City & H. R. Co., 5 C. E. Green, 61. § 14.] SPECIAL PEATJDS IN PAIS. 155 § 14. Of Illitebate, Weak-minded, and Drunken Persons. If an illiterate man execute a deed which is falsely read to him, or the sense declared to be different from the truth, it does not bind him. Nor does it bind him, if the false read- ing be by a stranger any more than if it be by the party to whom the deed is given. So, too, though it be by a friend of him who executes it, and without covin.^ The same is true of an instrument signed by a blind man, if falsely read to him.^ So, too, if a deed be falsely read to a grantor weak- minded or too infirm to read it himself, or if the contents be untruly stated to him, it may be avoided at law. But, if he be simply misinformed as to its legal effect, it must stand at law ; and the party's remedy is in equity, where the deed can be corrected.^ Equity will set aside a conveyance made to a person while intoxicated, if advantage be taken of his situation by another to sell him property at a price greatly exceeding its value, and no time be allowed the purchaser to become sober before the bargain is closed.* Indeed, where the facts show that the plaintiff, an intemperate man, with his faculties much im- paired, has been the victim of a gross imposition in the pur- chase of goods, equity will grant relief, though it is not clear that at the time of the purchase the plaintiff was absolutely drunk.^ 1 Thoroughgood's Case, 2 Coke, 9b ; Simons v. Great Western Ky. Co., 2 C. B. N. 8. 620, 624, Willes, J. ; Stacy v. Ross, 27 Tex. 3. See ante, pp. 73-81. 2 2 KoUe's Ab. 28, 1. 20 ; Willes, J., ui supra. 8 Eaton V. Eaton, 8 Vroom, 108. Chancery will correct a written instrument where through the fraud of the opposite party it does not conform to the intention of the parties. Goodell V. Field, 15 Vt. 448. * Hotchkiss V. Fortson, 7 Yerg. 67. ^ Freeman v. Dwiggins, 2 Jones, Eq. 162. 156 ACTUAL FRAUD. [CHAP. H. There may also be such contrivance or management of one party to dra\i? another into drink, and then to take advantage of his intoxication, as will justify the interposition of equity on the ground of fraud, even when the drunkenness is not so great as to wholly deprive the party of his power of reason and will.^ Indeed, we shall hereafter see that all transactions with illiterate, weak-minded, and drunken persons to their dis- advantage, are looked upon with suspicion by the courts ; and the burden of proof rests upon the opposite party, if he wiU establish the fairness of the same.^ A deed obtained from a drunken man by fraud and imposition may, however, be sub- sequently ratified by him and thereby made binding ; as where, after becoming sober, he gives a bond or other instru- ment in pursuance of the one obtained by fraud.^ In transactions connected with the transfer of property, the non-intervention of a disinterested third party or inde- pendent professional adviser, when the donor, from age, weak- ness or other disabling circumstance, is likely to be imposed upon, or the statement of a consideration when there was none, or great improvidence in the transfer, will be circum- stances which furnish a probable, though not always a cer- tain, test of undue influence.* § 15. Op Delivbey of Deeds. A deed stolen from the grantor, or the delivery of which is obtained from him by fraud, without, his knowledge, con- sent, or acquiescence, and without negligence on his part, does not pass the title to the property embraced in it, even as against a subsequent purchaser for value, without notice.^ 1 Mansfield v. Watson, 2 Iowa, 111 ; Wood v. Pindall, Wright, 507 ; 1 Story, Equity, § 231. 2 Chapter V. § 21. ' Moore v. Reed, 2 Ired. Eq. 580. * CadwaUader v. West, 48 Mo. 483. ' Fisher v. Beokwith, 30 Wis. 55; Everts v. Agnes, 4 Wis. 343; s. c. 6 Wis. 453. See Burson v. Huntington, 21 Mich. 415. § 16.] SPECIAL FEAITDS IN PAIS. 157 Fraud in obtaining deliverj' of a deed the execution of which was obtained bona fide affects it as much as if practised to obtain the execution.^ And a similar rule prevails as to the delivery of a negotiable promissory note. If the instru- ment were obtained without negligence in the maker, under the circumstances above stated, the title to it cannot be passed so as to bind the maker.^ And the same doctrine prevails where a deed, or a note and mortgage, deposited in escrow, are afterwards purloined from the depositary, before the terms of the deposit have been complied with.^ If a gi-antor, upon making his conveyance, fraudulently retain possession of the deed, when it was the intention of the parties that there should be a delivery, such facts wiU be deemed to constitute a delivery, even for the purposes of an action at law for possession of the land.* But the intention to deliver is essential. Hence, where a deed was executed by the grantor when the grantee was not present and did not know of the transaction, and the grantor caused it to be recorded, and then took it away and retained possession of it, it was held that this was not sufi&cient evidence of a delivery. The grantee should have shown further an intention to deliver.^ § 16. Op Possession op Title-Deeds. In the absence of registration, a prior encumbrancer of an estate can be postponed to a later, on the ground that he has left the title-deeds in the possession of the mortgagor only where the possession of the title-deeds is legally incident to the estate of the first encumbrancer. The possession of title- 1 Abingdon v. Butler, 1 Ves. Jr. 206. ^ Burson v. Huntington, 21 Mich. 415. As to the effect of negligence on the part of the maker, see the same case; also ante, pp. 76-78. 8 lb. ; Andrews v. Thayer, 30 Wis. 228; Powell ». Conant, 33 Mich. 896. ■ * See Hayes v. Davis, 18 N. H. 600. « lb. 158 ACTUAL PEAUD. [CHAP. H. deeds as between the trustees of an estate and an annuitant to whom they have charged the estate for a term of years is not a legal incident to the estate of the annuitant ; and it follows that he will not be postponed to a later encumbrancer who, through the fraud of the trustees, loaned money on a mortgage of the estate, finding the title-deeds in possession of the trustees.^ § 17. Of Lien of Innkeepee oe Caeeiee. By the acceptance of a draft from a guest, in payment of board and lodging, and thereupon relinquishing possession of the goods of the guest, an innkeeper probably loses his lien, supposing no fraud to have been practised upon him. But, if the draft be accepted under fraudulent representations, the innkeeper will not be deemed to have lost his lien upon the goods of the guest.^ Nor does a common carrier lose his lien upon goods for their carriage by delivering them to the con- signee, if the delivery was obtained by fraud. In such a case, the carrier may disaffirm the delivery, and sue the consignee in replevin.^ § 18. Of Suppebssion oe Desteuction of Weitings. If an heir suppress a deed or will of his ancestor, in order to prevent another party, as a grantee or devisee, from obtain- ing the estate vested in him thereby, equity will grant relief upon due proof by other evidence, and perpetuate the posses- sion and enjoyment of the estate in such grantee or devisee.* And in general, where the contents of a suppressed or de- stroyed instrument are satisfactorily proved, the party will, 1 Harper v. Faulder, 4 Madd. 129. " Manning v. Hollenbeck, 27 Wis. 202. 8 Bigelow V. Heaton, 6 Hill, 43. * 1 Story, Equity, § 254. § 20.] SPECIAL FRAUDS IN PAIS. 159 in equity at least, receive the same benefit that he would otherwise have received.^ In Pennsylvania, indeed, it is held that an obligee of a bond, from which a clause was omitted by the fraud of the obligor, can sue upon the same as if the clause had been inserted.^ But this is perhaps to be explained upon the system of law there in vogue of blending law and equity in the same court. Equity will consider that as done which should have been done ; and hence, if a man be fraudulently prevented from doing an act, equity will treat the act as performed.^ § 19. Of Releasing Judgment. A judgment creditor who has been fraudulently induced to release his judgment for an unavailable security may pro- ceed to enforce the judgment, unless the judgment debtor will remove the obstacle to the enforcement of the security.* Thus, in the case cited, a judgment creditor agreed with his debtor to resort for payment to a fund created by a deed of trust, which, without the knowledge of the creditor, con- tained a limitation of time for parties to come in, which time had expired. The creditor now proceeded upon his judg- ment ; and it was held that he could not be enjoined from so doing, unless the debtor would so modify the terms of the deed of trust as to let him in. § 20. Of Eepeal of Usury Laws. The repeal of the usury laws does not affect the power of a court of equity to review and set aside usurious transactions 1 1 Story, Equity, § 254. ' Partridge v. Clarke, 4 Barr, 166. 8 Middleton v. Middleton, 1 Jac. & W. 94. * Mechanics' Bank v. Lynn, 1 Peters, 376. 160 ACTUAL FKAtTD. [CHAP. H. when they are founded in fraud. Upon thjs principle, a series of deeds, charging sums advanced by a money-lender with exorbitant interest on the borrower's estates, which were ample security, were sought to be set aside. The deeds con- tained unusual clauses, such as clauses authorizing a sale without notice, and empowering the lender to pay off existing charges, which bore a low interest, and to charge 20 per cent, thereon, and others of a like character. The bill was upheld ; the court being of the opinion that the clauses were in- troduced by the fraud of the money-lender without the knowledge of the borrower, who was unprotected by proper professional advice.^ § 21. Op Surprise. Cases of surprise are to be classed under the head of fraud. These are cases in which an undue advantage is taken of a person under circumstances which mislead, confuse, or dis- turb the just result of his judgment. But it is not every surprise which will render a man's act invalid ; since a man may be said to be surprised in every action which is not done with so much discretion as it ought "to be.^ The surprise here referred to must be accompanied with fraud and circumven- tion, or at least with such circumstances as demonstrate that the party had no opportunity to use suitable deliberation, or that there was some sinister influence or management to mis- lead him. If proper time is not allowed to the party, if he is importunately pressed, if those in whom he places confidence make use of strong persuasion, if he is not fully aware of the consequences and is suddenly drawn in to act, if he is not permitted to consult disinterested friends or counsel before he 1 Howley v. Cook, Law R. 8 Irish Eq. 570. See Miller v. Cook, Law K. 10 Eq. 641; Croft v. Graham, 2 DeG., J. & S. 160. ' 1 Fonblaaque, Equity, bk. 1, c. 2, § 8. § 22.] SPECIAL FRAUDS IN PAIS. 161 is called upon to' act in circumstances of sudden emergency : in these and the like cases in which he has been caused to suffer loss or to make an unequal bargain, relief will be granted.^ Thus, in an English case, a deed was set aside on the ground of surprise ; the evidence showing that it had been obtained for an inadequate consideration from persons in low circumstances, who were unaware of their right until the very time of the conveyance. No misrepresentation or fraud was proved ; but the Master of the Rolls considered the case one of surprise. The plaintiff, he observed, had not had sufficient time to act with caution ; and therefore, though there was no actual fraud, there was something like fraud, in that an undue advantage had been taken of his situation .^ § 22. Of Acts of Thied Persons. A contract can seldom be avoided by either party thereto for fraud, unless the fraud was committed by the other party, or by his authorized agent or servant. If committed by a third person, it cannot ordinarily be alleged in defence of an action upon the contract.^ Thus, a sheriff in obtaining a forthcoming bond against a debtor whose property is levied upon is not considered for such purpose as the agent of the creditor to whom the bond is payable, and his (the sheriff's) fraud in obtaining the bond is not imputable to the obligee.* A contractor cannot allege that he was drawn into the contract by the fraud of a third person, or even by that of a 1 1 Story, Equity, § 251 ; Evans v. Llewellyn, 1 Cox, 439; s. c. 2 Brown, C. C. 150 ; Irnham v. Child, 1 Brown, C. C. 92 ; Townshend v. Stan- groom, 6 Ves. 338 ; Pickett v. Loggon, 14 Ves. 215. 2 Evans ». Llewellyn, 1 Cox, 333. " Gordon v. Jefiery, 2 Leigh," 410. * lb. But, in giving notice on the forthcoming bond, the sherifE acts as agent of the creditor, and the creditor is bound by any fraudulent conduct of the sheriff in that matter. lb. 11 162 ACTUAL PEAUD. [CHAP. II. co-contractor on the same side of the undertaking with him- self, unless such party be the agent of the contractee. He can complain of fraud only when practised by the opposite party. It is accordingly held in Indiana that, where a person is in- duced by the false representations of a judgment defendant to become replevin bail, he is stUl bound ; but that it is other- wise, if the misrepresentations be made by the judgment plaintiff, or by any one properly acting for him.^ Upon the same principle, a person who voluntarily executes a deed, though induced to do so by fraud, can avoid it only as against the party who exercised the unlawful influence, or against one who took title under the deed with participation in or notice of the fraud, and not against one who took a title apparently good from those having capacity to convey.^ Hence, a married woman whose acknowledgment to a release of dower or to a conveyance has been properly taken cannot afterwards allege against the grantee that her signature was procured by fraud or undue influence on the part of her husband, unless she can show that the grantee participated in the same.^ It seems, however, that fraud practised by a cestui que trust will avoid a sale honestly made by the trustee.* If goods be furnished to a wife while living apart from her husband, under circumstances that might not make the hus- band liable, but the husband afterwards take the goods home and agree to pay for them, he will be bound by his promise, though he may have been induced to make it by the decep- tion of his wife. But the case will be otherwise, if the vendor participated with the wife in the fraud.^ Where, however, a third person has had an interest in the contract, he may, while in such a position, have committed 1 Lepper i'. Nuttman, 35 Ind. 384; Harshman v. Paxson, 16 Ind. 512; Burge, Suretyship, 218. 2 White V. Graves, 107 Mass. 325; Somes v. Brewer, 2 Pick. 184. " White V. Graves, supra ; Pool v. Chase, 46 Tex. 207; Williams «. Baker, 71 Penn. St. 476 ; See Loudon v. Blythe, 16 Penn. St. 532. * Cheshire v. Booe, 1 Dev. Eq. 22. » Allen v. Aldrich, 29 N. H. 63. § 22.] SPECIAL FRAUDS IN PAIS. 163 a fraud of such a character as to render the contract wholly void, so that no action can afterwards be maintained thereon by any one. Thus, if the payee of a negotiable bill or note were to make a material alteration of the same without the consent of the other parties, the instrument would be ren- dered absolutely void as to all parties except such payee, even against a bona fide indorsee for value. ^ Where a certificate as to the completion and character of work, necessary to entitle the party performing the work to pay, is withheld by collusion between the person by whom it is to be given and the employer, the party may still recover for the materials furnished and labor done.^ But it is con- sidered necessary in such cases to prove that the refusal to give the certificate was grossly and palpably perverse, oppres- sive, and unjust ; so much so that the inference of bad faith would at once arise when the facts were known. Having stipulated to submit to the decision of a skUled arbiter the question whether his work conforms to the contract, the party cannot in general substitute the judgment of a jury on that question.^ And the refusal must be shown to have been the wrongful or fraudulent act of the defendant or opposite party to the contract as well as of the superintendent or other party whose certificate is to be obtained.* If the certificate of a third person agreed upon to examine and report upon the plaintiff's work, and the sum due therefor, be fraudulently made out, the plaintiff is not bound ; and he may recover for the real value of his work.^ A creditor, it is held, is not responsible for communications between the debtor and his surety, unless he has himself been 1 Wade ». Withington, 1 Allen, 561; ante, p. 99. ' Bannister v. Petty, 35 Wis. 215. See Hudson v. McCartney, 33 Wis. 331. 8 Hudson V. McCartney, supra ; Baasen v. Baehr, 7 Wis. 521. * Clarke v. Watson, 18 Com. B. n. s. 278 ; Batterbury v. Vyse, 2 Hurl. & C. 42. 6 Baltimore & O. R. Co. v. Polly, 14 Gratt. 447. 164 ACTUAL PEATJD. [CHAP. H. guilty of some fraudulent practice, or unless he has author- ized the communication. The fact, for example, that the surety may be falsely told by the debtor that a note indorsed by the latter would be taken in full satisfaction of the cred- itor's claim, will not release the surety from his indorsement, unless the creditor had knowledge of the statement, and did not deny it.^ 1 Booth V. Storrs, 75 lU. 438. § l.J ON ADMCnSTEATIOK OF LAW. 165 CHAPTER III. FRAUDS ON THE ADMINISTRATION OF THE LAW. HAVXffG now considered frauds arising in pais, we come next to the consideration of frauds upon the administration of the law. § 1. Of Attachmekts, Abttsb of Pbocess, &c. It is established by the authorities that a valid and lawful act cannot be accomphshed by any unlawful means, such as the use of fraud; and, whenever such unlawful means are resorted to, the law will interfere and afford some suitable remedy, according to the nature of the case, to the party injured.^ The authority of a sheriff, for example, is given upon condition that it shall not be colorably used to effect an unlawful purpose. The law will operate retrospectively to defeat all acts thus done under color of lawful authority; and, a fortiori, will it operate prospectively to prevent the acquisition of any lawful rights by the abuse of an authority given for useful and beneficial purposes.^ Thus, it would be dangerous to allow rights to be acquired by an attachment procured through violence or fraud. ^ Hence, if upon pre- tence of search for stolen goods, but in reality for the purpose of levying an attachment upon goods, an officer open a trunk 1 Ilsley V. Nichols, 12 Pick. 270 ; Wells v. Gumey, 8 Barn. & C. 769 ; Pomroy v. Parmlee, 9 Iowa, 140 ; Respass v. Zorn, 42 Ga. 389 ; Graham V. Warner, 3 Dana, 148 ; Wanzer v. Bright, 52 111. 35; Stein v. Valken- huysen, El., B. & E. 65. See Lehman v. Shackelford, 50 Ala. 437. But it is said that no act can be in fraud of the law, when the act is in- tended and calculated to carry out the law. Sanford v. Huxford, 32 Mich. 313. 2 Ilsley V. Nichols, supra. ' lb. ; and other cases, supra. 166 ACTUAL PEAUD. [CHAP. m. any levy upon the contents for such purpose will be void.^ So, too, if a person should be arrested on Sunday under crim- inal process, and held until Monday, that he might then be arrested on civil process, he would be entitled to a discharge.^ Indeed, jurisdiction of the person obtained by fraud, as by entic- ing a party to come within the limits of a particular jurisdic- tion on false pretences, is, if followed by damage, actionable,^ and judgment thereunder is invalid.* The fraudulent antedating of an atbachment is void as to innocent parties suffering by reason of it. Thus, if a person procure an attachment upon real estate to be antedated, so that it falsely appears of record as prior to a conveyance made by the owner to a third person, and such third person, not knowing that the attachment was antedated, pay the creditor, for the purpose of dislodging it, the amount which the attachment purported to secure, he may recover back the same, though the money was paid to the defendant by the hand of his debtor without any disclosure that he was pay- ing it as the agent of the plaintiff.^ A collusive attachment cannot confer any right as against a subsequent lona fide attachment. Thus, a member of a firm in failing circumstances made a firm-note to his sister for a personal debt of his own to her, a debt barred by the Statute of Limitations, and procured her to sue the firm upon it, and attach the firm property. The brother advanced the costs of suit, and had the property bid off in her name ; and it was clear that the whole scheme was collusive, the firm owing the lady nothing. It was accordingly held that the attachment could not stand as against an attachment subse- quently made by hona fide creditors of the firm.® But collu- 1 Pomroy «. Parmlee, 9 Iowa, 140. 2 Wells V. Gurney, 8 Barn. & C. 789. 8 Wanzer v. Bright, 52 HI. 35 ; Stein v. Valkenhuysen, El., B. & E. 65 ; Williams v. Bacon, 10 Wend. 636 ; Snelling v. Watrous, 2 Paige, 314; Carpenter v. Spooner, 2 Sandf . 717; Leaver v. Robinson, 3 Duer, 622. * Post, p. 171. « Handly v. Call, 30 Maine, 9. 6 Briody V. Conro, 42 Cal. 135. § l.J ON ADMINISTEATION Or LAW. 167 sion between a garnishee and the plaintiff in the garnishment process, in order to secure to the latter his claim against the principal debtor, is not a fraud upon such debtor, and con- stitutes no valid reason for vacating the garnishment proceed- ings. The law compels the garnishee to make payment to the plaintiff in that process ; and it matters not that he may be anxious to do so.^ So, too, one about to pay money due from himself may inform those to whom his creditor is in- debted, and aid them in attaching it after it shall be paid and become the property of his creditor. Such a proceeding is neither a fraud nor a legal wrong.^ It is a disputed question whether equity will exert its juris- diction, in favor of an attaching plaintiff,^ to set aside a fraud- ulent transfer of property by the defendant, executed before judgment, or enjoin any disposition which he may then choose to make of it. Some of the courts have held that a plain- tiff who has attached the property of another upon whom he has a claim has a suflQcient lien thereon to entitle him to file a bill in equity to remove an incumbrance or obstruction to a levy or sale, placed upon the property by fraud on the part of the defendant.* Other courts of equal respectability have denied the existence of such rights, and have refused altogether to exert any such jurisdiction before judgment. They have held that a plaintiff could not restrain or question the disposition of the defendant's property until he had com- pleted his title at law by judgment and execution. And the jeason given is this : that, until the plaintiff has established his title and recovered judgment, it does not appear that he has any right to interfere with any disposition of property which the defendant may make ; that, although he may have 1 Barber o. Walker, 26 Wis. 44. " Root v. Ross, 29 Vt. 488. 8 The oases are generally those of creditors' attachments, but they doubtless apply equally to attachments by plaintiffs suing ex delicto. * Tappan v. Evans, 11 N. H. 311 ; Kittredge v. Emerson, 15 N. H. 227; Stone i>. Henderson, 26 N. H. 506; Hunt v. Field, 1 Stockt. Ch. 36 168 ACTtTAL PEATJD. [CHAP. HI. commenced an attachment suit and levied upon property, still the justice and extent of his claim are yet to be settled by judicial investigation ; that he may never recover judgment, and, if he should not, his interference with the exercise of the defendant's rights would be unwarranted and oppressive ; that, when he has recovered judgment and exhausted his legal remedies, he may then invoke the power of a court of equity to remove any embarrassment which may exist in the collec- tion of his debt ; but, until he has done this, he has no concern with the defendant's frauds, or ground for controlling him in the exercise of the power of alienation.^ A pardon from the executive procured by fraud is invalid.^ And this is true, though it appear that the prisoner had nothing to do with the fraud.^ § 2. Of Domicil. A dwelling-house is a protection from arrest upon civil process to the occupant, his children, and domestic servants, and to all who have for the time being a legal residence in the house.* But a residence obtained by fraud affords no protection. Thus, where the plaintiff removed to another town from that of her real residence to the house of her son- in-law, in order to avoid the payment of taxes, it was held that the collector might lawfully open the outer door to make an arrest.^ 1 Almy V. Piatt, 16 Wis. 169, per Cole, J., where, however, the point was not decided ; Wiggins v. Ai-mstrong, 2 Johns. Ch. 144 ; Brinkerhoff V. Brown, 4 Johns. Ch. 671 ; Williams v. Brown, lb. 681 ; McDermott v. Strong, lb. 687 ; Day v. Washburn, 24 How. 352 ; Dodge v. Griswold, 8 N. H. 425 ; Neustadt v. Joel, 2 Duer, 530 ; Reubens v. Joel, 3 Kern. 488 ; Melville v. Brown, 1 Harrison, 349 ; Mills v. Black, 80 Bosw. 550. 2 Dominick v. Bowdoin, 44 Ga. 357 ; Commonwealth v. Ahl, 43 Penn. St. 210; State v. Mclntyre, 1 Jones, 61. » lb. * Foster's C. L. 320; 2 Hale, P. C. 117; Oyster v. Shed, 13 Mass. 520; Still V. Wilson, Wright, 505. ' Gordon v. Chfford, 28 N. H. 402. § 3.J ON ADMINISTRATION OF LA"W. 169 In several of the States, statutes have been passed, provid- ing in effect that where a party removes to another State or country for the purpose of getting such a residence there as to enable him or her to sue for a divorce, no decree granting divorce in such State shall be binding ; and these statutes have often been enforced. ^ § 3. Of Sales and Knowledge of Intended Fraud. Mere knowledge on the part of a vendor of goods that the purchaser intends to make a fraudulent or illegal use of them, as in contravention of a statute, will not bar him from recovering the price of the goods from such purchaser.^ It would, however, be otherwise, if the vendor, besides having such knowledge, sold the goods with reference to the fraudu- lent or illegal purpose, and to enable the purchaser to effect it.^ Thus, if a vendor should forward prohibited goods to the purchaser in a disguised form, erasing marks upon the casks, and packing the goods in an unusual manner to avoid detec- tion, or should do any other unlawful act in aid of the unlawful purpose, his conduct would be a fraud upon the law, and the courts would not aid him in recovering the price of the goods.* In accordance with the above rule of law, a sale of lottery tickets, effected in one State where such sale is lawful to a citizen of another State where the sale is unlawful, is a valid transaction, though the seller knew that the purchaser bought for the purpose of illegal sale in the latter State.^ But 1 See Cooley, Const. Lim. 400, 401 (3d ed.). 2 Webber v. Donnelly, 33 Mich. 469; Tracy v. Talmage, 14 N. Y. 162; Hill V. Spear, 50 N. H. 253. 3 Webster v. Hunger, 8 Gray, 584; Mclntyre v. Parks, 3 Met. 207; Aiken v. Blaisdell, 41 Vt. 655. See Ely v. Webster, 102 Mass. 304 ; Adams v. Coulliard, lb. 167. ' lb. 6 Mclntyre v. Parks, 3 Met. 207 ; Adams v. Coulliard, 102 Mass. 167. 170 ACTUAL FEATJD. [CHAP. HI. it is otherwise if the sale be made in the State in which such transactions are forbidden.^ And if a party having delivered goods or paid money to another for an illegal and fraudulent purpose subsequently, before the rights of others intervene, repudiate the transaction, he can recover the goods or their value or the money from the bailee. Such an action is not founded upon the illegal agreement.^ But, if the agreement has been executed, the action cannot be maintained.^ § 4. Of Judgments and Awards. It is well-established law that a judgment may during the term or (in the absence of statute) afterwards be set aside for certain kinds' of fraud. But this does not mean that the merits of a question involving a fraud put in issue in the case can be reopened in equity or by motion (except for a new trial) after the rendition of the judgment, so as to retrj' the matter of fraud. Such a proceeding is not allowed.* The fraud referred to must consist either in facts relating to the manner of obtaining jurisdiction of. the cause, to the mode of conducting the trial, or to the concoction of the judgment, or in facts not actually or necessarily in issue at the former trial.^ 1 Adams v. CouUiard, supra; Cannan v. Bryce, 3 Barn. & Aid. 179; Pearce v. Brooks, Law R. 1 Ex. 213. 2 Taylor v. Bowers, Law R. 1 Q. B. Div. 291; Symes v. Hughes, Law R. 9 Eq. 475. An action for money had and received will lie at common law against a person who has received the proceeds of a lottery ticket which he had fraudulently caused to be drawn as a prize. Catts v. Phalen, 2 How. 376. ^ Taylor v. Bowers, supra; Hastelow u. Jackson, 2 Barn. & C. 221; Bone V. Eckless, 5 Hurl. & N. 925. * Sample v. Barnes, 14 How. 70; Emerson v. Ddall, 13 Vt. 477; Atkinsons v. Allen, 12 Vt. 619. ^ " The frauds for which courts of equity will interfere to set aside or stay the enforcement of a judgment of a court, having juris- § 4.] ON ABMINISTEATION OP LAW. 171 In regard to the manner of obtaining jurisdiction of an action, it is held that if a judgment be obtained in a cause, jurisdiction of which was acquired by the fraud of the pre- vailing party, the fact may be collaterally shown.^ Thus, if a person residing in one jurisdiction be induced under false pretences or representations to go into another for the real purpose of getting service of process upon him, the jurisdic- tion and the judgment rendered thereunder will be deemed to have been fraudulently obtained ; and such fact will be a sufficient ground for proceedings to set aside the judgment, or, if it were rendered in another State or country, for denying its validity in a collateral action brought to enforce it.^ In the case of a foreign proceeding, no mode of vacating the judgment would exist ; but an injunction against proceeding to enforce it,^ or a plea of the fraud in obtaining the jurisdic- tion in a suit to enforce the judgment, would be allowed, or an action could be maintained for the fraud by which juris- diction was acquired.* diction of the subject-matter and the parties, must consist of extrinsic collateral acts not involved in the consideration of the merits. They must be acts by ■which the successful party has prevented his adversary from presenting the merits of his case, or by which the jurisdiction of the court has been imposed upon." Field, J., in United States v. Flint, U. S. Circ. Court, Cal. Sept. 1876. " It is true that a decree may be avoided, by showing that it was obtained by fraud. But this must be fraud in its concoction [2 Story, Equity, § 1575], such as corruption of the court, collusion between the parties, or other circumstances which would establish that what seemed a decree was in fact no decree ; that it was fabula, non judicium." Hoffman, J., in s. c. This, it should be observed, was said of an attempt to open the merits of a former decision, which had there been necessarily passed upon. The court nowhere speak of anterior fraud in obtaining the claim sued upon, when such fraud was not actually or necessarily in issue at the trial. See the consideration of this subject further on in the present chapter. 1 Dunlap V. Cody, 31 Iowa, 260. See ante, p. 166. 2 Dunlap V. Cody, 31 Iowa, 260. So of the effect of fraudently ob- taining service of a cross-petition. Pfiffner v. Krapfel, 28 Iowa, 27. 8 See Price v. Dewhurst, 8 Sim. 279. * Wanzer v. Bright, 52 111. 35. See, hjwever, Luokenbach v. Ander- 172 ACTUAL PEATJD. [CHAP. HI. If through the instrumentality of one party to an action, the witnesses of his adversary be forcibly and illegally de- tained, or bribed to disobey its subpoena, or if the testimony of his adversary be secreted or purloined,^ or if the citation to him be given under such circumstances as to defeat its purpose, a fraud is committed for which relief will be granted in equity, if it produce injury to the innocent party .^ So, if the litigation be collusive, if the parties be fictitious, if real parties affected be falsely stated to be before the court, the judgment may be set aside, or its enforcement restrained.^ Fraud may also be shown in equity for the purpose of impeaching and vacating a judgment, if not also in a collateral action,* where the fraud consists in deceit practised upon the court in which the former suit was tried ; the injured party being absent, and having no notice of the acts resorted to. For example, obtaining judgment in violation of an agreement between the parties, and without the knowledge of the oppo- site party, is ground for relief in equity.^ And this is true, son, 47 Penn. St. 123, where it is held that the justice of the claim thus sued upon must also be denied. 1 Shedden Case, 1 Maoq. 535. 2 United States v. Flint, U. S. Giro. Court, Cal. Sept., 1876, Field, J. 8 lb. * Of course, if evidence of fraud, going to the very existence of the judgment, appear upon its face, the judgment may be impeached for such fact in a collateral suit at law as well as in equity. Mason v. Messenger, 17 Iowa, 261, 274. But it is considered in some of the States that, if such fraud do not appear upon the face of the record, it cannot be shown in a collateral action. The remedy is by suit to vacate the judgment, lb.; Kelley v. Mize, 8 Sneed, 59. Contra, Jackson v. Summerville, 13 Penn. St. 359; Edgell v. Sigerson, 20 Mo. 494; Hall v. Hamlin, 2 Watts, 354; State v. Little, 1 N. H. 257; Smith v. Keen, 26 Maine, 411; Thouve- nin V. Kodriques, 24 Tex. 46a; Hartman v. Ogborn, 54 Penn. St. 120. 5 Ochsenbein v. Papelier, Law R. 8 Ch. 695 (case of a foreign judg- ment); Johnson v. Muversaw, 30 Ind. 435; Stone v. Lewman, 28 Ind. 97 ; Jarmin v. Saunders, 64 N. Car. 367 ; Chambers v. Chambers, 28 Conn. 552 ; Holland v. Trotter, 22 Gratt. 136 ; Broaddus v. Broaddus, 8 Dana, 536; Pelham v. Moreland, 6 Eng. 442; Hibbard v. Eastman, 47 N. H. 507; Rogers v. Gwinn, 21 Iowa, 58; Dobson u. Pearce, 12 N. Y. 165. § 4.J OK ADMINISTRATION OF LAW. 173 though the agreement was made on the Sabbath.^ A judg- ment, however, cannot be collaterally impeached because false testimony was given in the case, unless it be on the ground of fraudulent practices in procuring it by the party in whose favor it was rendered.^ Nor can a cross-action be maintained for damages by a judgment obtained by fraud and perjury, when the suit involves an impeachment of the judgment.^ So, also, while a judgment remains unreversed, the defendant against whom it was obtained cannot, it is held, maintain an action for conspiracy against the plaintiff, his officers, or attor- ney, where the question of fraud was tried in the former action.* But it has been held that, in an action upon a judg- ment obtained against several defendants, one of them may show that the judgment was obtained by conspiracy between the plaintiff and the other defendants.^ In regard to fraud in the concoction of a judgment, if a party's own counsel should prove false to him, and by collu- sion with counsel for the other side, or perhaps by materially violating his instructions, to the knowledge of the opposite party, and has then consented to the judgment in question, these facts would afford ground for vacating the judgment. And, if the judgment were rendered in a foreign court, such facts would doubtless be admissible in defence to an action 1 Blakesley v. Johnson, 13 Wis. 530. 2 Fisk V. Miller, 20 Tex. 579; Hartman v. Ogborn, 54 Penn. St. 120. See Field v. Flanders, 40 111. 470 ; Billing v. Murray, 6 Ind. 324. A decree of the probate court, rendered on the final settlement of an administrator's account, will be opened and set aside in equity, at the instance of non-resident distributees who had no actual notice of the proceedings, on proof that the administrator claimed and was allowed credit for a payment which he must have known he had never made. Morrow v. Allison, 39 Ala. 70. 8 Demeritt v. Lyford, 27 N. H. 541; Hillsborough v. Nichols, 46 N. PI. 379; Dunlap v. Glidden, 31 Maine, 435; Smith v. Abbott, 40 Maine, 442. * Smith V. Abbott, 40 Maine, 442; Demeritt v. Lyford, 27 N. H. 541. * Spencer v. Vigneaux, 20 Cal. 442. 174: ACTUAL FEAUD. [CHAP. HI. upon the judgment. So, too, where a trustee in violation of duty to his cestui que trust, or a guardian in Tiolation of his duty to his ward, or several of the parties to a cause in viola- tion of the rights of their fellows on the same side, should consent to a collusive judgment : in all of these and the like cases, it is apprehended that the facts would constitute a ground for vacating the judgment, and, at least in the case of a foreign judgment, of coUaterallj' impeaching the same.^ Cases of this kind are more common where the fraud is sought to be practised upon a third person. It is often laid down in general terms that third persons are not bound by judgments, not being parties to them, and may impeach them for fraud.2 Lord Chief Justice Grey long since laid it down that in civil suits all strangers might falsify for covin either fines or real or feigned recoveries, and even a recovery by a just title, if collusion were practised to prevent a fair defence ;, and this whether the covin were apparent upon the record, as in not assigning or not demanding the view, or by suffering judgment by confession or default, or extrinsic, as in not pleading a release, collateral security, or other matter of advantage.^ This doctrine as to strangers whose right or title is directly affected by the judgment has been uniformly followed.* 1 See Bigelow, Estoppel, 169 (2d ed.); Ochsenbein v. PapeKer, Law R. 8 Ch. 695. ^ De Armond v. Adams, 25 Ind. 455 ; Callahan v. Griswold, 9 Mo. 775; Vanderveere v. Mason, 4 Zab. 818; Humphries v. Bartec, 10 Smedes &M. 282; Annett v. Terry, 35 N. Y. 256; Great Falls Co. v. Worster, 45 N. H. 110; Atkinson v. Allen, 12 Vt. 619; Sidensparker v. Siden- sparker, 52 Maine, 481 ; Philipson v. Egremont, 6 Q. B. 587; Parkhurst v. Sumner, 23 Vt. 538. 8 Duchess of Kingston's Case, Bigelow, Estoppel, 134 .(2d ed.). * Perry!). Meadowcroft, 10 Beav. 122; Meadoworoft v. Huguenin, 4 Moore, P. C. 386 ; Bandon v. Becher, 3 Clark & F. 479 ; Gaines «. ReLf, 12 How. 472; Hall v. Hamlin, 2 Watts, 354; Dougherty's Estate, 9 Watts & S. 189; Thompson's Appeal, 57 Penn. St. 175; Bigelow, Es- toppel, 135-137 (2d ed.). § 4.] ON ADMINISTKATION OF LAW. 175 But this rule needs some explanation. Third persons are bound by judgments inter alios, and, it is apprehended, cannot allege that they were obtained by fraud or collusion, except in so far as they have at the time of the judgment a legal right to insist upon its fairness. The fact that they have no present right of this kind, or a present right that is only remotely and indirectly affected by the judgment, will not enable them to attack it for the fraud. But third persons who have a present interest either in the amount of the judgment, or in the property concerned, are permitted to complain that the judgment was concocted in fraud of their rights. For example, judgment creditors may attack a judg-. ment where it is a fraud upon them, as where there has been collusion between the debtor and the creditor ; but they cannot object to it merely because it is a fraud upon the debtor.^ They can attack the judgment for collusion, but not for matter of defence, original or subsequent.^ That is a matter of defence personal to the debtor.^ Under the like circum- stances, a surety can allege that a judgment against the prin- cipal debtor, now sought to be enforced against him (the surety), was obtained by collusion between the principal debtor and his creditor, in fraud of the surety.* Concealment of facts which, had they been known, would have prevented a judgment, affords grovind for relief ; ^ and that, too, even after the term in which the judgment was 1 Thompson's Appeal, 57 Penn. St. 175. ^ Lewis V. Rogers, 16 Penn. St. 18. ' Sidensparker v. Sidensparker, 52 Maine, 481; Candee v. Lord, 2 Comst. 269 ; Voorhees v. Seymour, 26 Barb. 569, 585. « Annett v. Terry, 35 N. Y. 256; Great Falls Co. v. Worster, 45 N. H. 110; Parkhurst v. Sumner, 23 Vt. 538. See further, as to the right of third persons to allege fraud in obtaining the judgment, De Armond v. Adams, 25 Ind. 455; Vanderveere v. Mason, 4 Zab. 818; Humphries v. Bartec, 10 Smedes & M. 282; Philipson v. Egremont, 6 Q. B. 587; Bandon «. Becher, 3 Clark & F. 479. ^ Fish V. Lane, 2 Hayw. 342; Noyes v. Loeb, 24 La. An. 48; Ocean Ins. Co. V. Fields, 2 Story, 59. 176 ACTtTAL FEAXJD. [CHAP. IH. rendered.! Mere suspicion of fraud, however, in obtaining a judgment is not sufficient ground for annulling a judgment, if the facts were known during the trial, or might have been known by the exercise of reasonable diligence.^ The distinction between fraud as a ground of impeaching a judgment and fraud not such ground lies in the consideration whether the fraud were such as to render the judgment void (that is, liable to be treated by the injured party as a nullity ^), or such as to render it merely voidable (that is, erroneous, or as being based upon a verdict contrary to evidence). The existence of fraud of the first kind, whether it consist in the preliminary steps necessary to obtaining jurisdiction of the cause, or in the subsequent proceedings down to the rendition of the judgment, is good ground for relief in equitj'', and, according to some cases, may be pleaded in an action upon the judgment at law. Fraud of the second kind is not available in equity or at law, except by motion for a new trial or in arrest of judgment, or by writ of error or appeal. On the other hand, fraud is always a ground of action where the proof of it does not necessarily involve an impeach- ment of the previous judgment. But, if the object of the proceeding be to impeach the validity of the judgment, the remedy must be sought in equity. And even then it is not clear that jurisdiction will be assumed, unless the fraud were unknown to the complaining party at the time the judgment was rendered, or soon enough thereafter to enable him to 1 Edson V. Edson, 108 Mass. 590; Allen v. McClellan, 12 Penn. St. 328; Jennison v. Haire, 29 Mich. 207. 2 Smith V. Nelson, 62 N. Y. 286. ' A judgment is a judicial determination of a cause agitated between real parties, upon which a real interest has been settled. In order to make a judgment, there must be a real interest, a real argument (if there be any argument at all), a real prosecution' of the suit, a real defence (if any), and a real decision. The absence of any of these makes the judg- ment a nullity as to innocent parties, as was laid down in the House of Lords in Bandou v. Becher, 3 Clark & F. 479. § 5.] ON ADMINISTEATION OP LAW. 177 open the judgment by motion in the court in which it was rendered. The only safe course, therefore, in such cases is to bring a cross action at law or in equity, according to the nature of the remedy sought, accepting the judgment as bind- ing, but claiming damages for the fraud by which the claim put in judgment was obtained. Recovery of judgment upon a' contract, if fraud be not pleaded, is no bar to an action for the deceit practised to induce the plaintiff to make it. And this principle not only permits a cross action by the defrauded party after judgment upon the contract by the wrongdoer (in the absence of a plea of fraud), but it permits the injured party to sue upon the contract, and then to sue for the fraud by which that contract was obtained.^ The plaintiff in such a case has simply affirmed the contract (which, as the innocent party, he may do), and brought suit for the fraud by which he was induced to enter into it. If in the second suit he were to seek a recovery of specific goods sold under the contract after judgment upon the contract for their value, the case would probably be different. It would be an answer to the second action, that the first suit had been an affirmance of the sale.^ But the case put is not a repudi- ation of the sale.^ The two actions are therefore consistent with each other ; they are distinct, and may both be the sub- ject of an action.* It has been laid down in New York, upon thorough con- sideration, that money received by one party from another by means of a judgment or other judicial proceeding, which was obtained through fraud, falsehood, and imposition of the suc- cessful party upon the tribunal by which it was adjudged, where the money so recovered was paid before the discovery of the fraud by the party paying it, can be recovered by the thus defrauded party .^ So, likewise, if an attachment of I Wanzer v. DeBaun, 1 E. D. Smith, 261. , ^ ib. a Jb. 4 jb. 6 Michigan v. Phoenix Bank, 33 N. Y. 9, 25 ; Cadaval v. Collins, 4 Ad. & E. 858. 12 178 ACTUAL PEAUD. [CHAF. HI. property be obtained by fraud, and the property, after judg- ment, bought by the creditor on execution, the debtor can maintain an action of deceit against the creditor, but not trover.i Judgments of courts of foreign powers, whether in rem or in personam, may be impeached for fraud ; that is, it may be shown that the judgment was obtained by fraud or collusion. This does not mean, however, at least in a collateral proceed- ing, that the injured party may show that the judgment was obtained by the production of false testimony. Parties are probably allowed to impeach foreign judgments only in the particulars in which the privilege is granted as to the domestic judgments. Aside from the above case, it would seem that the plea of fraud must be directed to the mode of obtaining the jurisdiction, or to the concoction of the judgment. And even as to the plea of fraud in obtaining the jurisdiction, it is held necessary to show further that the claim itself is in- valid. ^ The rule in this country as to the right to impeach for fraud a judgment rendered in a sister State has never been fully settled. Some of the courts have asserted that the right exists,^ while others have denied its existence.* The apparent conHict in these cases may be partly reconciled in the fact that several of the cases which assert the right of impeach- ment for fraud were proceedings in equity ; and most of the authorities admit that the plea of fraud is good in equity.^ Thus, it has been held in several cases that equity will enjoin 1 Whitaker v. Merrill, 28 Barb. 526. 2 Luckenback v. Anderson, 47 Penn. St. 123. a Holt V. AUoway, 2 Blackf. 108; Borden v. Fitch, 15 Johns. 121; Andrews v. Montgomery, 19 Johns. 162; Shumway v. Stillman, 4 Cowen, 292 ; Pearce v. Olney, 20 Conn. 544 ; Engel v. Scheuerman, 40 Ga. 206 ; Rogers v. Gwinn, 21 Iowa, 58. See Dobson v. Pearce, 12 N. Y. 156. * Anderson v. Anderson, 8 Ohio, 108; Bicknell v. Field, 8 Paige, 440; Christmas v. Russell, 5 Wall. 290. See Bigelow, Estoppel, 214-217 (2d ed.). ' Conira, Bicknell u. Field, «i«pra. § 5.] ON ADMINISTRATION OP LAW. 179 proceedings upon a judgment rendered in a sister State, if it was obtained by fraud.^ The question has never been fully determined by the Su- preme Court of the United States ; and to this court alone can we look for a settlement of the same, since it involves the construction of the constitutional provision and act of Congress concerning the effect of judgments of the sister States.^ As a question of equity, the subject has not appeared in that court. In its legal aspect, the court have lately expressed the opinion that fraud is not a valid ground for impeaching a judgment rendered in a sister State ; ^ and this is probably a final decision of the question, so far as it goes. It may be doubted, however, if this case goes anj'^ further than to decide that fraud cannot be alleged at law where the facts show that the judgment is voidable only. It would be to put the judg- ments of the courts of a sister State above those of the do- mestic courts to hold that the allegation of fraud is inadmissi- ble even where the facts pleaded show that the judgment was actually void. We apprehend that the Supreme Court of the United States would not refuse to allow the allegation of fraud in either of the three following cases : first, where the jurisdiction of the court was obtained by fraud, and the claim sued upon was palpably without foundation ; * secondly, where the judgment itself or some material step leading to it was concocted in fraud ; and, thirdly, where the allegation is not attended with any impeachment of the judgment, as where the injured party, accepting the judgment as binding, sues for damages for the fraud by which the opposite party obtained the claim passed into judgment.® An award not made a rule of court cannot be set aside for 1 Pearce v. Olney, 20 Conn. 544 ; Engel b. Scheuerman, 40 Ga. 206 ; Rogers v. Gwinn, 21 Iowa, 58. See Dobson v. Pearce, 12 N. Y. 156. Contra, Bicknell ». Field, supra. 2 See Bigelow, Estoppel, 179, 180 (2d ed.). 3 Christmas ». Russell, 5 Wall. 290. * Luckenback v. Anderson, 47 Peun. St. 123. 6 Wanzer v. De Baun, 1 E. D. Smith, 261 ; anie, p. 177. 180 ACTUAL FEAUD. [CHAP. IH. fraud in a court of law. The only remedy is by bill in equity. This is true, however gross the misconduct or even corruption of a party or of the arbitrator.^ The reason of this is that in such cases there is no ground upon which a court of law can entertain jurisdiction for such purpose.^ It is equally true that, after an award under a rule of court has been entered as the judgment of the court, it cannot be set aside at common law for fraud except under a practice applicable to judgments generally. The fraud should have been alleged before the award became the judgment of the court, or before the close of the term. At that time, the court would have vacated the award on motion of the injured party, or upon plea of the facts in opposition to a motion by the opposite party to have the award entered as the judgment of the court.^ Afterwards the remedy is by bill in equity.* It follows that in cases of awards of this kind (under a rule of court), if an action be brought upon the arbitration bond for non-performance of the award, or in an action upon the award itself, the defendant cannot, in the absence of statute, plead fraud on the part of the plaintiff or of the arbitrator in defence to the action.^ For, the award having become a judgment of court, to allow such a plea would be to allow the parly to impeach a judgment in a collateral action ; at least, if the plea were a plea in bar of the right of action, and not in the nature of a cross-claim to damages by reason of the fraud. In principle, it would seem doubtful therefore if the same rule would apply to awards neither made under a rule of court nor entered as judgments thereof. The award in such a case is but an ordinary contract,® simple or special accord- i Fletcher v. Hubbard, 43 N. H. 58; Veale v. Warner, 1 Wms. Saund. 327 c ; Greenhill v. Church, 3 Rep. in Ch. 49 ; Russell, Awards, 50 (4th ed.). 2 Russell, ut supra. ' Morse, Awards, 611. * See Emerson v. Udall, 13 Vt. 477. 6 Morse, Awards, 542, citing many cases. ' Russell, Awards, 50 (4th ed.). § 5.] ON ADMINISTRATION OV LAW. 181 ing to its form ; and it should seem that, when sued upon, it should be subject to the same kinds of defence as may be made in other cases of contract. And so it has been decided, even in a case in which the submission was upon agreement that there should be no appeal.^ It would seem on principle that, whether the award has become a judgment of court or not, an action can be brought by the injured party for the fraud whereby the claim upon which the award was based was obtained, provided no issue as to such fraud were raised in the arbitration ; since such a proceeding does not impeach the award. In such a case, the party adopts the award, but seeks damages for the original fraud of the plaintiff in the award. The case is precisely like the common one of a party drawn into a contract by fraud accepting the bargain, and then suing for the fraud.^ Whether such a cross action can be maintained for perjured evidence introduced by the opposite party does not appear to have been decided. If the award was made under a rule of court and has passed into judgment, it is at least very doubtful if such an action could be maintained. The authorities con- cerning ordinary judgments are opposed to such actions.* Nor is it clear that equity will set aside an award of this kind on such grounds, if the award has become a judgment of court ; * though, liefore the award has been adopted by the court, equity would doubtless entertain a bill to set it aside for perjury of the opposite party's witnesses. And, a fortiori, would this be true of an award out of court. This, indeed, would seem to be the preferable mode of proceeding for such a case, instead of bringing a cross action. A common law or statutory award, subject to the foregoing qualifications, is assailable for corruption or misbehavior of the arbitrators, notwithstanding that the parties may have 1 Speer v. Bidwell, 44 Penn. St. 23. 2 Ante, p. 177. ^ Ante, p. 173. * Emerson v. Udall, 13 Vt. 477. 182 ACTtTAL FKATJD. [CHAP. HI. agreed that there shall be no appeal.^ And the same would doubtless be true in respect of fraud in the opposite party- alone ; for it cannot be presumed that the agreement against exceptions or appeal was intended to cover any fraudulent practice that might be resorted to. Such an agreement merely bars the parties from setting up mistakes of law or of fact by the arbitrators.^ As to what constitutes evidence of fraud or corruption, no general rule can be laid down : each case must be judged by its own facts. However, it is held that the fact that the dam- ages assessed are much larger than a court would probably give, and that they are divided very disproportion ably and to appearance arbitrarily between two defendants, will not constitute evidence of fraud or improper conduct in the arbitrator ; at least, not so decisively alone as to be ground for setting aside the award.^ But, if the amount of damages assessed be grossly extravagant, it seems that the award may be treated as fraudulent.* Strong evidence is required to impeach a result on which the arbitrators heard the parties and exercised their judgment, if there was no actual concealment of facts. Something more is necessary than a mere showing by an accountant that the statement of account presented to the arbitrators by the opposite party was, for example, in a form not according to the rules of book-keeping, when it is apparent that the state- ment as made out could not have misled, if compared with other papers in the case, to which it must be presumed that all the parties looked for information.^ 1 Speer v. Bidwell, 44 Penn. St. 23. s lb. ; McCahan ». Reamey, 33 Penn. St. 535. ' Burchell ». Marsh, 17 How. 344. Avery excessive award maybe considered erroneous, however. South Carolina R. Co. v. Moore, 28 Ga. 898. . * Van Cortlandt v. Underbill, 17 Johns. 405 ; Rudd v. Jones, 4 Dana, 229; Tracy v. Herrick, 25 N. H. 381; In re Hall, 2 Man. & G. 847; Morse, Awards, 539. ' Beam v. Macomber, 33 Mioh. 127. § 5.J ON ADMINISTRATION OP LAW. 183 Where an award is procured by false and fraudulent pre- tences and testimony, equity will restrain the collection of the award, where the complainant could not make a success- ful defence in a court of law ; and the fact that the award was confirmed by the Circuit and Supreme Courts will not pre- vent equity from enjoining the collection of the judgment.' The whole award, however, need not be disturbed where the fraud complained of can be discriminated and settled by itself.2 In some cases, if not in all, arbitrators may open and retry a judgment or decree upon the matter submitted to them, if they find that it was obtained by artifice, trick, or other fraud- ulent practice. Thus, it has been held that if the plaintiff in a suit in equity has been induced by fraud to settle the same, and his bill has thereupon been dismissed without an entry that it was without prejudice, and if then, without applying to the court for a correction of the decree, an agree- ment is made to submit to arbitration " all claims, whether in law or in equity, existing between the parties," the arbitrators may receive evidence that the settlement was obtained by fraud, and proceed to retry the subject-matter of the equity suit.* 1 Chambers v. Cook, 42 Ala. 171. ^ Champion». Wenham, Ambl. 245 ; Beam t>. Macomber, 33 Mich. 127. » Mickles v. Thayer, 14 Allen, 114. 184 ACTUAL PEAUD. [CHAP. IV. CHAPTER IV. WAIVER AND CONFIRMATION. It is well established that if a party, with koowledge that a fraud has been perpetrated upon him in a particular transac- tion, confirm the transaction by making new agreements or engagements respecting it, or by retaining and using the subject of it after knowledge,^ or otherwise recognize it as binding, he thereby waives the right to treat it as invalid, and abandons his right to rescind if it be a case of contract, or to redress if it be a tort not attended with a contract with the wrongdoer.^ If the fraud result in a contract, perform- ance of the same, after discovering that it was fraudulently obtained by the opposite party, does not preclude a person from suing for da"mages on account of the fraud.^ The in- jured party may retain the benefits of the contract, confirm its validity, and still recover damages for the fraud by which he was induced to make it ; * or he may recoup any damages which he has sustained, if the opposite party sue him for money due on the contract, or for other failure to perform it.6 A contract tainted with fraud, being merely voidable, may be confirmed or ratified without a new contract founded upon a new consideration,® unless the fraud be committed upon a third person. In such a case, the parties to the wrong cannot 1 Dunks V. Fuller, 32 Mich. 242. 2 Edwards v. Roberts, 7 Smedes & M. 544. » Parker v. Marquis, 64 Mo. 38. See Chap. XVI. § 2. * lb. 8 Goodwin v. Robinson, 30 Ark. 535. • Pearsoll v. Chapin, 44 Penn. St. 9, overruling Miller's Appeal, 30 Penn. St. 478, and, it seems, Stuart v. Blum, 28 Penn. St. 225. CHAP, rv.] WAIVER AND CONFIRMATION. 185 in any way ratify it so as to make it binding upon the person intended to be defrauded.^ In order to show a valid confirmation of a contract tainted with fraud against one of the parties, very strong facts must be proved, particularly that he had full knowledge of the truth .2 Fraud cannot be condoned, unless there be full knowledge of the facts and of the rights arising out of those facts, and the parties are at arm's length.* The confirmation, for example, of a bond obtained by undue influence, the ratifying act being made under pressure (though not duress), and in ignorance that the original obligation was not valid in law, is not binding.* To constitute a binding confirmation in such a case, it is necessary that there should be knowledge of the invalidity of the obligation ; and, though this be a matter of law, the court will not presume it.^ So, where a person agrees to give up his claim to property in favor of another, such renunciation of right will not be supported if, at the time of making it, he' was ignorant of his legal rights and of the value of the property renounced, especially if the party with whom he dealt possessed and kept back from him better information on the subject.^ The compromise of a matter founded in fraud, without knowledge of the commission of such wrong, is not binding, though the injured party may have had suspicions of the fraud, if his suspicion were not founded upon facts or upon investigation.' In general, the compromise of a doubtful right is valid, especially where a cause is ended by it ; and where a plain- tiff is fully apprised of his rights, and understands what he is doing, he may compound a demand on what terms he will. 1 Pearsoll v. Chapin, supra. " Juniata Bank v. Brown, 5 Serg. & R. 226. » Moxon V. Payne, Law R. 8 Ch. 881. * Kempson v. Ashbee, Law R. 10 Ch. 15. ' lb. « McCarthy v. Decaix, 2 Russ. & M. 614. ' Baker v. Spencer, 47 N. Y. 562. 186 ACTUAL FRAUD. [CHAP. IV. Nor will inequality be sufficient ground for setting aside the transaction. But, as follows from what has just been said, the compromise itself must have been fairly obtained. Fraud- ulent compromises, it has been strongly said, should be broken through, though made over and over again. It was accord- ingly held in a case before Lord Hardwicke that the confir- mation of an unconscionable purchase of a seaman's prize- money would be set aside, the confirmation being no more just than the purchase.^ So, where a contract is clearly fraudulent by reason of misrepresentation, a second contract annulling the first, made while under the influence of such misrepresentation, and a repetition thereof, is a continu- ation and not a confirmation or condonation of the first fraud. ^ In order to make the receipt of the consideration of a sale operate as a waiver of the right to rescind the same for fraud, it must clearly appear that, at the time the consideration was received, the vendor was free from the influence and control of the fraudulent acts, and that the act set up as a waiver was knowingly done by the vendor or by some one specifically authorized by him. The mere receipt of money from his general agent, paid to the agent by the wrongdoer, is not sufficient, unless it appear that the vendor knew he was thereby accepting the money of the purchaser upon the con- tract.® A compromise of fraud, however, is good, though the party was compelled to consent to it by a strong pressure of pecuniary difficulty.* To have effect as a confirmation of a contract obtained by fraud, a subsequent transaction must appear to have been entered into with that intention, or that portion of it alleged to .be a confirmation must have been with such intention, 1 Taylour v. Rochfort, 2 Ves. 281. 2 Davis V. Henry, 4 W. Va. 571. . 8 McLean v. Clark, 47 Ga. 24. * Craig t). Bradley, 27 Mich. 353. CHAP. rV.] -WAIVER AND CONFIRMATION. 187 where the party confirming was not under the influence of the previous transaction.^ Where a confirmation of fraud is relied on as a defence to a suit for relief from a fraud clearly established, the confirmation must stand upon the clearest evidence.^ The confirming act must be so disconnected with the previous transaction as to leave the defrauded party the complete power of determining, as upon an original act, whether he will do it or not.^ The parties must be at arm's length and stand on equal terms.* No one except a purchaser for value, without notice, cau hold an interest obtained through the fraud of another, any more than he could if the fraud were committed by himself. By receiving and retaining a benefit procured by the fraud of another, he is bound by that fraud.^ It follows that, after a party has obtained- knowledge that he has been led into an execut(Jry contract for the purchase of property by false representations made by the vendor, he cannot accept of a conveyance of the property without waiving the fraud.® Hence, he cannot then set up the fraud in defence to an action for the purchase-money.^ So, where a party, with full knowledge of the alleged fraudulent circumstances, recog- nizes or confirms a contract made in his name by an agent, he cannot afterwards, when sued upon the contract, set up the fraud or want of authority in that agent.® A fraudulent act should in certain cases be repudiated by the subject of it prpmptly upon its discovery, if ever. A party, for example, who has paid money in pursuance of a 1 Montgomery v. Pickering, 116 Mass. 227. 2 lb. ; Morse v. Royal, 12 Ves. 355, 373. » lb. < Moxon V. Payne, Law R. 8 Ch. 881. 6 Bowers v. Johnson, 10 Smedes & M. 169; Cobb v. Hatfield, 46 N. Y. 533. • Vernol v. Vernol, 63 N. Y. 45; Saratoga & S. R. Co. v. Row, 24 Wend. 74. ' Vernol v. Vernol, supra. 8 McGowen v. Garrard, 2' Stewart (Ala.), 479; Fitzsimmons v. Joslia, 21 Vt. 129. 188 ACTUAL FRAUD. [CHAP. IV. contract for a speculative purpose cannot recover the money on the ground that he was led into such contract and pay- ment by fraud, where, after discovering the fraud, he has continued to claim and exercise his rights under the contract until the enterprise has proved unsuccessful.^ But this rule proceeds on the principle of protecting the rights of others, which may have intervened ; and mere delay in repudiating a fraud, where no such rights have been acquired, will not bar an action for the fraud, or preclude a defence to a con- tract obtained by fraud. There must be something more than mere delay in repudiating fraud, even in the case of a sub- sisting contract. There must be something equivalent to & ratification of the contract after discovery of the fraud ; and this may be either by acts of express recognition of its bind- ing force, or by allowing the other party to proceed upon it and change his position, or by the intervention of the rights and interests of third innocent persons. But such facts as these merely preclude the injured party from repudiating the contract : he may still bring an action for the damage sus- tained by being drawn into the contract,^ even though the contract has passed into judgment,^ unless he has compro- mised his claim.* A failure by an underwriter to return premiums after dis- covering that the contract of insurance was obtained through fraud is not a ratification of the undertaking. The under- writer cannot be compelled to return the premiums paid in such cases.^ A waiver or confirmation of fraud can of course be made only by the injured party, or by his duly authorized agent. An agent, however, can never ratify a fraud of his own. 1 Grannis v. Hooker, 31 Wis. 474. " Ante, p. 184. « Wanzer «. De Baun, 1 E. D. Smith, 261 ; ante, p. 177. ♦ Ante, pp. 185, 186. i ' Harris v. Equitable Life Assur. See, 6 Thomp. & C. 108; s. c. 5 Big. 342. CHAP. IV.] •WAIVEE AND CONFIRMATION. 189 Hence, an arrangement made by persons who are directors of a railroad company with a contractor, by which such persons are to share in the profits of the contract for the construction of the road, can only be confirmed by the stockholders.^ If a party who has been induced by the fraud of another to give him a security (upon a false representation of indebted- ness, for example) bring an action on the case for the fraud so practised upon him, he will be allowed to recover the value of the security. But the plaintiff thereby affirms the validity, it is said, of the security, and cannot afterwards contest his liability thereon.^ J Paine v. Lake Erie R. Co., 31 Ind. 283. 2 Fenemore v. United States, 3 Dall. 357. 190 PKESTTMPTIVE OK CONSTRUCTIVE FBATJD. [CH. V. II. PRESUMPTIVE OR CONSTRUCTIVE FRAUD. CHAPTER V. CONFIDENTIAL RELATIONS AND THE LIKE. § 1. Intkodtjctory. In the preceding chapters, we haye had under consideration the subject of Actual Fraud, as to which we have seen, some- times by direct statement and at other times by plain infer- ence, that it is universally necessary for the party bringing forward the allegation of such a wrong to support his charge by express evidence. We' come now to a branch of fraud of a quite different type. Instead of finding the burden of proof resting upon the complaining party, we shall hereafter find the law, upon the appearance of certain relations between the parties, termed relations of confidence, raising a presiimption of fraud, — a presumption that the transaction brought to the notice of the court was effected through fraud or (what is the same thing in law) undue influence by the opposite party, by reason of his occupying a position affording him peculiar opportunities for taking advantage of the complaining party. Having special facilities for committing fraud upon the party whose interests have been intrusted to him, the law, looking to the frailty of human nature, requires the party in the superior situation to show that his action has been honest and honorable. A confidential relation arises wherever a continuous trust is reposed in the skill or integrity of another, or the property or pecuniary interest, in whole or in part, or the bodily custody § 1.] CONFIDENTIAL KELATIONS. 191 of one person, is placed in charge of another. For the pro- tection of the former, the law raises a presumption that any transaction between such parties has been effected through undue and illegal means by the latter, — that the party in the superior position has used that position to the injury of the party in the inferior situation ; and this presumption must be overcome, if the transaction be impeached, before the superior party in the confidential situation can succeed. It is a well-established principle of equity that persons standing in a confidential relation towards others cannot hold benefits which those others may have conferred upon them, unless they can show to the satisfaction of the court that the persons by whom the benefits have been conferred had competent and independent advice, or at least a full dis- closure from themselves of all facts affecting the bounty. Nor does the age or capacity of the person conferring the benefit, or the nature of the benefit conferred, affect the prin- ciple. Age and capacity are considerations which may be of great importance in cases in which the principle does not apply ; but they are of little, if of any importance, in cases in which the principle is not applicable.^ And, as to the nature of the benefit, the injury to the party by whom the benefit is conferred cannot depend upon its nature.^ This principle, however, admits, it is thought, of some limitation. It cannot be said that a mere trifling gift to a person standing in a confidential relation, or a mere trifling liability incurred in favor of such a person, ought to stand in the same position as would the gift of a man's whole property, or a liability involving it. In such cases of mere trifling bene- fits, equity will not interfere to set them aside, upon the mere fact of the proof of a confidential relation and the absence of proof of competent and independent advice. Before the court would undo such a benefit, it would require proof of mala fides or of undue exercise of influence.^ 1 Rhodes v. Bate, Law K. 1 Ch. 252. ^ jb. s it., Turner, L. J. 192 PRESUMPTIVE OR CONSTRTJCTIVE PEATJD. [CH. V. The relief granted in these cases of confidential relations stands upon a general principle, applying to all the variety of relations in which dominion may be exercised by one person over another.^ And, when a confidential relation is once established between parties either by act of law br by agree- ment, the rights incident to. that relation continue until the relation terminates ; and time wiU not operate as a bar during the existence of such relation.^ § 2. Of Attorney and Client. The relation of attorney to client is one of close confidence, and at the same time one in which the attorney stands at a great advantage. For this reason, courts of equity often interpose to declare transactions void which in other relations would be held unobjectionable. By the law both of England and of America, a gratuity, or a security for a gratuity, given during the pendency of a suit, and with reference to the litigation, will seldom be upheld ; and, if services have been actually rendered, the security or gift will be valid in most cases only in so far as just services have been the considera- tion for it ; and a fortiori if the client be a person of weak mind. Thus, in a case before Lord Hardwicke, a bill was filed to set aside a deed by which the plaintiff's wife, while separated from her husband, had made an absolute convey- ance to the defendant, a solicitor, of .£1,000. The considera- tion expressed in the deed was for services done and favors shown. It appeared also that the woman was of weak mind. Lord Hardwicke decreed that the deed should stand as a security only for such sum as was justly due the defendant.^ 1 Huguenin ». Baseley, 14 Ves. 273, 285 ; Dent v. Bennett, 4 Mylne & C. 269, 277. 2 Blount V. Robeson, 3 Jones, Eq. 73 ; Northcott v. Casper, 6 Ired. Eq. 303. * Sanderson v. Glass, 2 Atk. 296. See also Walmesley v. Booth, lb. § 2.] CONFIDENTIAL EELATIONS. 193 The same doctrine has been held in much more recent cases.^ In the case first cited, a question arose as to the validity of a conveyance of real estate to the defendant, a solicitor by the plaintiff's intestate, his client. It appeared that the defendant was the son of one for whom the client had for many years entertained feelings of great regard and respect, and that after the father's death the client had induced the defendant to commence practice as a solicitor, with promises of support and patronage from himself. Under these circumstances, and entertaining personal regard for the defendant, the client had conveyed to him the land in ques- tion by a deed, on its face a purchase-deed, the consideration of which was recited to be the payment of £100. The real value of the property was £1,200. The defendant produced evidence to show that no money passed ; that the transaction was not intended to be a purchase, but was intended as a gift for his services and for affection. The defendant had pre- pared the deed, and the client had had no other advice. The deed was set aside, many authorities being cited to support the decision.^ In another recent case, a claim was preferred by a solicitor against the estate of his client, deceased, for a sum of money alleged to have been advanced to the client on loan. In fact, 27 ; Newman v. Payne, 2 "Ves. Jr. 199 ; Plenderleath v. Fraser, 3 Ves. & B. 174 ; Wood v. Downs, 18 Ves. 20 ; Rose v. Mynatt, 7 Yerg. 30 Berrien v. McLean, Hofi. Ch. 420 ; Miles v. Ervin, 1 McCord, Ch. 5:24 Bibb V. Smith, 1 Dana, 580 ; Starr v. Vanderheyden, 9 Johns. 253 Mott V. Harrington, 12 Vt. 199. 1 Tyrrell v. Bank of London, 10 H. L. Cas. 26 ; Tomson v. Judge, 3 Drew. 306 ; Holmes's Estate, 3 Giff. 337 ; O'Brien v. Lewis, 4 GifP. 221; Walker v. Smith, 29 Beav. 394; and see American cases cited in preceding note. 2 Holman v. Loynes, 18 Jur. 839; Welles v. Middleton, 1 Cox, 112; Hatch V. Hatch, 9 Ves. 292 ; Morse v. Royal, 12 Ves. 371 ; Ormonde v. Hutchinson, 13 Ves. 47; Wood v. Downes, 18 Ves. 127; Montesquieu V. Sandys, 18 Ves. 302. Lord Eldon's ruling in Harris v. Tremenheere, 15 Ves. 34, was doubted, and said to be iticonsistent with other decisions here cited of the learned chancellor. 13 194 PEESTTMPTIVB OR CONSTETJCTIVE PEATJD. [CH. V. the money formed the proceeds of a bond debt due to the testator, and received by the solicitor at the client's direction ; the solicitor alleging that his client had given the same to him by an agreement prepared by the solicitor, at the client's expense, which, however, contained no recital of intended bounty, and that the money had been then loaned to the client. The claim was refused. The court said that such a transaction was very unusual ; and, considering that it was a transaction between solicitor and client, that circumstance created a great difficulty in the way of the claim. The law of the court was well established ; and the principle was that the relation of solicitor and client was one of such high confi- dence on the part of the client that the solicitor was considered to have an amount of influence over the mind and action of his client, which, while that influence remained, rendered it almost impossible that the gift should prevail.^ A fortiori, in the absence of clear evidence of circumstances sufficient to remove the pressure of influence presumed to exist over the client, a mere parol direction by a client to his solicitor to retain, as a present, money of the former afterwards to come into the hands of the latter, cannot amount to such a gift or act of bounty as cannot be set as'ide.^ Relief may be afforded even when the plaintiff claims as a mere volunteer under the client. Thus, in an Irish case, it appeared that the plaintiff was a daughter of the defendant's client, and that she was entitled to a moiety under a provision by her father, charging certain real estate for the benefit of children by a previous marriage, (of whom the plaintiff was one) ; provided later conveyances to the defendant of the same premises, annulling the charge, were void. The court found that these conveyances were made by the plaintiff's father while in prison for debt ; that the defendant was his solicitor at the time; and that there was no consideration for 1 Holmes's Estate, 3 Gifi. 337. ^ O'Brien v. Lewis, 4 GifE. 221. § 2.] CONFIDENTIAL KELATIONS. 195 the same at the time when they were made. They were ac- cordingly set aside ; the court saying that the plaintiff was in as good a position as an heir-at-law, and that nothing was more common than for the court to afford relief to an heir-at- law against frauds committed upon his ancestor.^ In another case, a gift by a client was declared invalid at the instance of a residuary legatee of the client.^ The relationship, however, creates no absolute incapacity on the part of the attorney to receive a gratuity from his client. He may not only receive a gift made without refer- ence to a particular litigation or to particular services, as an expression of affection or admiration merely, but he may also receive a valid gift made in view of special pending or pro- spective services. As to past legal services, there neVer has been any doubt that the client can bind himself by a gratuity to his attorney. In cases of this kind, the relationship in hac re for which the gift was made having terminated, the attorney stands in the same position which any other person regarded as a benefactor would occupy ; and the transaction w.ill stand or fall upon the general doctrines of law pertaining to gifts. As we have stated, a client may make an irrevocable gift to his attorney with referehce to particular services, pending or pros- pective ; but this is true only in cases where it is made to appear that the attorney has divested himself of the advantage of his position, and put himself, with reference to the gratuity, on the footing of a third person. He must have disclosed every fact within his knowledge with regard to the property given him which might have an influence upon the client, and have abstained from bringing to bear any pressure for the bestow- ment of the gratuity. He must have put the client at arm's length. But, if facts of this nature appear, the client's act will be binding.^ 1 Falkner v. O'Brien, 2 Ball & B. 214. 2 Walker v. Smith, 29 Beav. 394. ^ See cases, infra. 196 PRESUMPTIVE OR CONSTRTJCTIVB FRAUD. [CH. T. The mere existence of the relation of attorney and client raises a presumption against the validity of the gratuity ; and the burden of proof is upon the attorney to show the total absence of any pressure, unfairness, or concealment on his part. He must show by express evidence that the act pro- ceeded from the free volition and desire of the client. It is not incumbent upon the client in the first instance to prove the exercise of undue influence or other impropriety by the at- torney.^ The learned commentator on equity jurisprudence, after stating that the burden of establishing the perfect fair- ness, adequacy, and equity of the transaction is thrown upon the attorney, adds that this proceeds upon the ground that he who bargains in a matter of advantage with a person who places" confidence in him is bound to show that a reasonable use of that confidence has been made ; ^ quoting a familiar remark of Lord Eldon in a case of sale by the client to his attorney.^ 1 Tomson v. Judge, 3 Drew. 306 ; Holmes's Estate, 3 GifE. 337 ; Walker v. Smith, 29 Beav. 394 ; Nesbit v. Lockman, 34 N. Y. 167 ; Jen- nings V. McConnell, 17 111. 148. So, too, in the case of sales, whioh, according to Tomson v. Judge, are not so strong against the attorney, because the parties there are more at arm's length. Gibson v. Jeyes, 6 Ves. 266; Montesquieu v. Sandys, 18 Ves. 302; Bellew v. Russell, 1 Ball & B. 104, 107 ; Harris v. Tremenheere, 15 Ves. 34, 39 ; Cane v. Allen, 2 Dow, 289, 299 ; Edwards v. Meyrick, 2 Hare, 60 ; Hesse v. Briant, 6 DeG., M. & G. 623; Savery v. King, 5 H. L. Cas. 627; Barnard w. Hun- ter, 2 Jur. N. 8. 1213 ; Rhodes v. Bate, L. R. 1 Gh. 252 ; Moore v. Prance, 9 Hare, 299 ; Hawley v. Cramer, 4 Cowen, 717 ; Evans v. Ellis, 5 Denio, 640 ; Howell v. Ransom, 11 Paige, 538 ; In re Post, 3 Edw. Ch. 369 ; Kisling v. Shaw, 33 Cal. 425 ; Poillon v. Martin, 1 Sandf . Ch. 569 ; Haight V. Moore, 37 N. Y. Superior, 161 ; McMahan v. Smith, 6 Heisk. 107 ; Brock v. Barnes, 40 Barb. 521 ; Condit v. Blackwell, 7 C. E, Green, 481 ; Harper v. Perry, 28 Iowa, 57 ; Dunn v. Record, 63 Maine, 17 ; Savery v. Sypher, 8 Wall, 157. 2 gtory, Equity, § 311. ' Gibson v. Jeyes, 6 Ves. 266, 278. It is a corollary to the above presumption against the attorney, that the attorney cannot rely on the securities given him by the client to prove the existence of a debt due by the latter. He must, irrespective of such securities, prove the debt for which they were given. Lawless v. Mansfield, 1 Dru. & War. 557. § 2.] CONFIDEKTIAL RELATIONS. 197 The presumption of influence, however, may sometimes be rebutted by circumstances short of the total dissolution of the relation of solicitor and client. That relation is only regarded as creating the influence ; and, if evidence is given of circum- stances which remove all effect of the influence, there will remain no incapacity on the part of the solicitor to become the object of the client's bounty, and to be the recipient of a gift, valid both at law and in equity.^ The burden of proof, how- ever, always rests upon the recipient of the bounty to show that a gift was intended to be made ; ^ and also, as the cases above stated, and others ^ show, that it was made without undue influence. Whatever the rebutting evidence is, it is said that the tes- timony of the recipient himself should not be considered, but the gift should be established by separate and independent evidence. No such evidence being adduced in the case re- ferred to, a gift inter vivos was' held void ; though there was no express evidence of undue influence. It was said that if the client had called in a third person, who had no interest in the matter, and had said that he had made the particular gift to the solicitor for the solicitor's own benefit, or for the benefit of himself and family, the transaction would have been upheld.* The question, moreover, whether undue influence is to be inferred from the nature of the transaction, as well as the question whether the transaction itself is contrary to the policy of the law, is a question of law, and should not be sent to a jury. It seems that testamentary provisions in favor of a man's solicitor stand upon somewhat more favorable ground than gifts inter vivos. lu a case in the English Court of Appeal in 1 Holmes's Estate, 3 Gife. 337. 2 Walker v. Smith, 29 Beav. 394. 8 Hoghton V. Hoghton, 15 Beav. 275, 298; Cooke v. Lamotte, lb. 234; Gibson v. Jeyes, 6 Ves. 266. " Hoghton V. Hoghton, 15 Beav. 278, 298. ' Casborne v. Barsham, 2 Beav. 76. 198 PEESUMPTrVE OK CONSTRUCTIVE FBAUD. [CH. V. Chancery, it appeared that a testator had made a provision in his will in favor of his solicitor to the extent of £1,000, by vi^hich he wished to confirm a gift he had already made to him. There was evidence that before signing the will, which had been drawn by the client, a third person, an old friend of the testator, had attended and read over the will, and had then asked if the disposition of property was such as he wished ; to which he replied that it was, and that he would have done more for his solicitor, if the latter would have permitted. The provision was upheld. The Lord Justice Turner said that there was a great distinction between the jurisdiction of the Court of Chancery, as applied to contracts and as applied to testamentary dispositions. In the case of a written contract, chancery could, direct the instrument to be delivered up to be cancelled, but it had no such jurisdiction with respect to a will. When a will was tendered for pro- bate, a court of competent jurisdiction decided whether the document expressed the will and intention of the testator; and, if any fraud affecting the will or intention of the testator could be proved in the Ecclesiastical Court, that court could rectify the instrument, and take out of it the particular clause to which the objection applied.^ In a somewhat later case, however, the Master of the Rolls expressed the opinion that gifts of legacies do not stand upon any different principle from gifts inter vivos. He observed at the same time that in all cases of legacies where the testa- tor or testatrix has the will clearly read over and explained, and gives directions to prepare it, and has it executed in the presence of the required number of witnesses, there is the best and most conclusive evidence that the testator intended the bounty to the legatee. And the question then arose whether the influence exercised by the legatee were such that the testator could not fairly be considered to have been 1 Hindsoh ». Weatherill, 5 DeG., M. & G. 301, distinguishing Segrave ». Kirwan, 1 Beatt. 157. § 2.] COKFIDENTIAL BELATIONS. 199 a free agent, by being under any undue influence of the person to whom the legacy was made. He according^ pro- ceeded to consider the question whether undue influence had in fact been used in the case before the court ; his conclusion being that the legacy was free from any such taint. ^ A bequest in favor of an attorney who writes a will is not necessarily void.^ The onus probandi, indeed, lies in every case upon the party propounding a will. He must satisfy the conscience of the court that the instrument propounded is the last will of a free and competent testator. And, if a party writes or prepares a will under which he takes a ben- efit, that is a circumstance which ought generally to excite the suspicion of the court, and calls upon it to be vigilant and zealous in examining the evidence in support of the instrument; in favor of which it ought not to pronounce, unless the suspicion is removed, and the court satisfied that the paper propounded does express the true will of the de- ceased.^ But the most that has been required in such cases is satisfactory evidence that the testator was of sound mind and clearly understood the contents of the will, and was at the time under no restraint. No case has gone so far as to overthrow a will duly executed, where it was shown that the party executing it was of sound mind and clearly understood its contents, though it was drawn by the person taking the estate.* Thus, in a case just cited,^ it appeared that one 1 Walker v. Smith, 29 Beav. 394. 2 Riddell v. Johnson, 26 Gratt. 152 ; Billinghurst ». Vickers, 1 Phill. 187 ; Paske v. Ollatt, 2 Phill. 323 ; Barry v. Butlin, 1 Curt. Ecc. 637 ; Baker v. Batt, 2 Moore, P. C. 317 ; Hitchins v. Wood, lb. 355, 436 ; Wil- son V. Moran, 3 Brad. 172 ; Crispell v. Dubois, 4 Barb. 393 ; Cramer v. Crumbaugh, 3 Md. 491 ; Watterson v. Watterson, 1 Head, 1 ; Adair v. Adair, 30 Ga. 104; Nexsen v. Nexsen, 3 Abb. App. Dec. 360. The cases of Meek v. Perry, 36 Miss. 256, and Garvin v. Williams, 44 Mo. 465, are explained in Riddell v. Johnson, supra. ' Barry v. Butlin, supra, per Parke, B.; Riddell v. Johnson, supra. * Wilson V. Moran, supra; Riddell v. Johnson. See post, § 12. * Riddell v. Johnson. 200 PRESUMPTIVE OE CONSTKUCTIVE FEAUD. [CH. V. Johnson had died an unmarried man, with a large property, including a considerable sum in bonds. Bocock had been his counsel for years, and the deceased had for him a strong attachment. In February, 1867, Bocock wrote Johnson's will, by which he gave the most of his real estate to certain ille- gitimate children. He did not at this time dispose of the bonds, which were and remained in the hands of Bocock. In the summer following, Johnson requested Bocock to draw a codicil to his will ; and by this codicil he gave to Bocock all that remained of the bonds after the payment of certain debts and expenses. Johnson had a number of next of kin, among them two sisters, to none of whom he gave any thing. It appeared that the testator was perfectly competent to make a will; that he dictated the bequest in favor of Bocock, without any suggestion from Bocock or from any one else ; that the codicil was read to him, and that he clearly under- stood it, and intended that it should stand as written ; and further that he had been on bad terms with his family for years, and had more than once expressed his determination not to leave any part of his estate to any of them. It was accordingly held that the beqttest to Bocock must stand. While the courts will scrutinize more closely the circum- stances under which a gift has been made by a client to his attorney, than in the case of a sale, the rules of law govern- ing these classes of transactions appear to be the same, ex- cept in so far as a gift differs in nature from a sale. The presumptions in both cases are against the attorney, and they are of the same character. In the case of a gift, as we have seen, the attorney, by reason- of his position, rests under the opprobrious presumption of having exercised undue influence and of having suppressed facts concerning the property which should have been disclosed to the client; and, in order to maintain the validity of the gift, he must remove the effect of this presumption. The authorities about to be considered show that the same is true of sales by the client to his attorney; § 2.] CONProENTIAL BELATIONS. 201 and, further, that these presumptions are not removed by recitals of the client in a deed of conveyance.^ And pur- chasers from the attorney with notice of his fiduciary relation towards the property stand in the same situation as the attor- ney himself.^ Sales and contracts between attorney and client will of course be upheld, where the attorney was not, to use the ex- pression of the books, attorney in hac re, and derived no in- formation from the client. In other words, a sale by a client to his attorney will be upheld, when the circumstances are not such as to put the latter under the duty of advising the former.^ But even this rule is to be taken with- caution. Thus, in a case just cited,* the relation of attorney and client was held to continue, notwithstanding the attorney had not acted as such for the client for more than a year previously to the purchase in question, though he had prepared the purchase agreement and charged for the same. The sale in this case was set aside on the ground that the consideration, an an- nuity, ought to have been considerably greater by reason of the intemperate habits of the client and vendor, though he had acted under the advice of an auctioneer, had named the price, and pressed the attorney to purchase.^ The princi- ple of this case seems to require the annulling of purchases 1 Post, p. 204 ; Moore v. Prance, 9 Hare, 299. 2 Trotter v. Smith, 59 111. 240; Alwood v. Mansfield, lb. 496. ' Montesquieu e. Sandys, 18 Ves. 302 ; Edwards v. Meyrick, 2 Hare, 60 ; Holman v. Loynes, 18 Jur. 839 ; s. c. 4 DeG., M. & G. 270. See Jones V. Thomas, 2 Younge & C. 498 ; Hunter v. Atkins, 3 Mylne & K. 113 ; Howell v. Baker, 4 Johns. Ch. 118 ; Devinney v. Norris, 8 Watts, 814 ; 1 Story, Equity, § 313. Holman v. Loynes, supra. 5 See also Gibbs ». Daniel, 4 Giff. 1 ; Carter v. Palmer, 8 Clark & F. 657 ; Galbraith v. Elder, 8 Watts, 81 ; Reid v. Stanley, 6 Watts & S. 326; Hockenbury v. Carlisle, 5 Watts & S. 348. Where this confidential relation is once proved to exist, the courts will presume its continuance, unless there be clear evidence of its determination. Ehodes v. Bate, Law R. 1 Ch. 252. 202 PKESUMPTIVE OR CONSTRUCTIVE FRAUD. [CH. V. made to the disadvantage of the client, so long as it may be assumed that the attorney stands in a situation in which he is likely to be called upon for advice by the vendor. If the situation have so far changed that the vendor has employed another attorney intermediate the last transaction with the purchaser and the sale in question, and has not employed the purchaser since, it would appear that in most cases they would now be considered as strangers to each other. But even such a change of situation would not always be conclu- sive : a man may have two attorneys, and the purchaser may still stand fro hae vice in a confidential relation to the vendor. And it is certain that where the relation of attorney and client has once existed, and a fortiori where to any extent it is still in active exercise, the circumstances must clearly show either that that relation does not subsist in respect of the subject of the sale, or, if it does subsist, that the purchaser has given the vendor the same information and advice that he would have given him in a transaction between the client and a third person,' and that upon the information pos- 1 Cane ». Allen, 2 Dow, 289 ; Gibson ». Jeyes, 6 Ves. 266, 278; Ed- wards t). Meyriok, 2 Hare, 60 ; Rhodes v. Bate, supra. In Gibson v. Jeyes, Lord Eldon said: " With respect to the case of the attorney, I have no difficulty in saying Jeyes might have dealt for this annuity. But he had two ways of proceeding, which this court must have held it quite incumbent upon him, dealing with this lady [who was aged and of weak mind] to attend to. If she proposed to him to buy it, he would have done well to have said to her that Gibson would give more than any one else ; that it was his interest to do so ; that he would secure it upon real estate ; that it was more fit for her to deal with her relation than her attorney ; and the transaction would have a better appearance in the world. It was natural enough that she should answer she would not deal with Gibson, but would consider herself only and her own comforts, according to Benyon's advice to her. Then it would have been right for the defendant to have declined it. Suppose she had insisted that he should be the person : it would he too much for the court to proceed upon delicacies such as these, and to say, he should not permit himself to contract with her. Therefore, I say, he might contract : but then he should have said, if he was to deal with her for this, she must get another attorney to advise her as to the value ; or, if she would not, then out of § 2.] CONFIDENTIAL EBLATIONS. 208 sessed by him at the time he has paid a fair price for the property .1 The courts of this country will not annul a sale by a client to his attorney by reason merely of the existence of a confi- dential relation between the parties, nor even where, added to this, it is proved that undue influence was exercised by the attorney ; provided it appear that the client received an ade- quate consideration in the transaction. -Courts of equity will not interfere in favor of the client, in cases in which no damage was sustained by hiih by reason of the transaction .^ The general doctrine that fraud without damage gives no ground of action either at law or in equity ^ limits the rights of the client. The relation of attorney and client difPers in this respect from that of trustee and cestui que trust. Trans-: actions between these latter may, it is said, be set aside at will by the beneficiary.* But between attorney and client that state of circumstances this clear duty results from the rule of this court, and throws upon him the whole onus of the case, — that, if he will mix with the character of attorney that of vendor, he shall, if the pro- priety of the contract comes in question, manifest that he has given her all that reasonable advice against himself that he would have given her against a third person. It is asked. Where is that rule to be found? I answer, in that great rule of the court that he who bargains in matter of advantage with a person placing confidence in him is bound to show that a reasonable use has been made of that confidence ; a rule applying to trustees, attorneys, or any one else." There is, however, no positive rule of law requiring the intervention of another attorney in cases of dealings between attorney and client. Cutts V. Salmon, 21 Law J. Ch. 750 ; Jones ». Price, 20 Law T. 49 And even the actual intervention of another attorney who, with the knowledge of the purchaser, neglects or fails to properly discharge his duty, is not sufficient to support a purchase by an attorney from his cUent. Gibbs v. Daniel, 4 GifE. 1. 1 Edwards v. Meyrick, supra. 2 Kisling V. Shaw, 33 Cal. 425 ; Hawley v. Cramer, 4 Cowen, 717 ; Miles V. Ervin, 1 McCord, Ch. 524; post, p. 205. See Edwards v. Mey- rick, 2 Hare, 60, 71. The English rule in bankruptcy appears to be different. See post, p. 209. 8 Story, Equity, § 203. " lb. § 311. 204 PRESTJMPTIVB OR CONSTETJCTIVE rEATJD. [CH. V. mere inadequacy of consideration, though not so gross as to show fraud, will suffice to obtain the intervention of equity, on behalf of the client.^ The burden of proving the ade- quacy of the consideration is, further, upon the attorney ; since he is bound to prove the general fairness of the transac- tion.^ The statement of consideration in a conveyance be- tween such parties is not enough to support the deed, even where no evidence is produced against it.^ If none of these circumstances exist, the sale will be up- held, even though it appear that the purchase was one of speculation on the part of the attorney, and by the develop- ment of other facts turned out aftenvards to have been greatly to his advantage. Thus, in one of the cases above cited,* it appeared that a sale of mineral lands had been made by a client to his attorney for a fair price according to the existing state of things ; the transaction being also free from undue influence or of concealment of facts. A railroad which was in contemplation at the time of the sale was afterwards constructed through the neighborhood, enhancing the value of the minerals ; but the court upheld the transaction.^ Per- haps had the fact of the intended construction of the railroad 1 Holman v. Loynes, 18 Jur. 839 ; s. c. 4 DeG., M. & G. 270. ^ Ante, p. 200; Champion v. Rigby, Taml. 421 ; a. c. 9 Law J. Ch. 211; De Rose v. Fay, 4 Edw. Ch. 40. But this doctrine concerning the burden of proof does not apply to cases where the soUcitor or attorney is in the hostile attitude of an urgent creditor. Johnson v. Fesemeyer, 3 DeG. & J. 13. Or, generally, where it appears that he had put his client at arm's length before the transac- tion was effected. See Pearson v. Benson , 28 Beav. 599. ' Gresley v. Mousley, 3 DeG., F. & J. 433. See Morgan v. Higgins, 1 Giif. 270, 280 ; Moore v. Prance, 9 Hare, 299 ; Morgan v. Lewes, 4 Dow, 46 ; Morgau v. Evans, 3 Clark & F. 195 ; Lawless v. Mansfield, 1 Drew. & War. 557. * Edwards v. Meyrick. * It is proper to state that there was some question whether the attorney were such in hac re; but the court proceeded upon the view that he was, or rather that it mattered not whether he was or not. § 2.] CONFIDENTIAL RELATIONS. 205 through the neighborhood been known only to the attorney, and not disclosed by him to the vendor, the result would have been different ; though the opinion of the court throws doubt even upon that position.^ The prospect of a railroad, however, 1 Shadwell, V. C, in giving judgment, said: "The material fact upon which any question of value is raised is this, — that it is proved, and indeed admitted, that the estate is worth more than £2,100 at the present time ; and I think I mayjadd that it became worth much more very soon after the purchase was made. But to what do the parties attribute this? The whole of the evidence shows that, up to the time of the purchase, the formation of a railroad had never been taken into ac- count in the valuation of estates in that district ; and that sales and pur- chases were made with reference only to the surface value. The purchase was made in February, J.825. In May, 1825, a bill for making a railroad through that part of the country received the royal assent ; an4, in conse- quence of the railroad being made, there arose a probability of coal being worked at a period less remote than there was previously reason to antici- pate ; and therefore coal speculators would give a higher price for .the property than they otherwise would have done. The question then comes to this : whether I could, as against the defendant, hold that the relation in which he stood as the plaintiff's attorney, in the suits I have referred to, imposed on him the obligation to prove that he gave the plaintifE notice that a railroad might be made, and that by possibility there might be an opportunity for working the coal under the land with advantage, and that, if it was woi-ked, the land would be of greater value ; the whole of these considerations being purely of a speculatory character. Now, certainly, looking at the relation in which these parties stood, I have no ground for supposing that this would be more likely to be present in the mind of Meyrick than of any other person. He had nothing to do vvdth these farms. The advantage to be derived from the proposed under- taking was a point as much open to one party as to the other, and was a merely speculative result, the communication of which I think I ought not now to require the defendant to prove, unless in fact the land had at that time become of an improved value, owing to that circumstance. This, however, would be in the knowledge of the plaintifE ; and he has not suggested any such case. The fact relating to the railroad is not to be found in the pleadings: it comes out casually in the evidence that a railroad bill was at that time in contemplation ; and then an argument is raised upon an assumption that Meyrick knew it, and took advantage of that knowledge. It is true that the onus lies on the defendant to show that the treaty was fairly conducted ; but I do not think that in this case I can reasonably hold the possibility of a speculative and consequential advantage of this kind to fall within those circumstances which an attor- 206 PRESUMPTIVE OR CONSTKTJCTIVE FEATJD. [CH. V. had gone no further than to reach the point of legislative con- templation. No bill had as yet passed. Had the bill been passed and a company formed and actually about to begin work, it would probably have been considered necessary for the attorney to advise his client on the point, at least if the matter was not notorious. There is some intimation in a case before Lord Eldon ^ that, where the claim of the client proceeds solely on the ground of inadequacy of price, the inadequacy should be so gross as to shock the conscience, or the transaction will be upheld. Such, he said, had been stated by Lord Thurlow to be the law ; and, though he (Lord Eldon) considered it loose enough, he thought that courts of equity had felt bound by it, and occa- sionally fiad acted upon it. But this doctrine appears to have been departed from in the later authorities,^ and it is probably to be confined to cases of non-confidential transactions. In order to set aside a purchase at an undervalue, made by an agent from his principal, it is not necessary that fraud, in the broad sense of the term, should be proved.^ Part of the evidence necessary in such case is, in other words, supplied by presumption from the relationship of the parties ; and hence the case is often called one of constructive fraud. The nature and extent of the consideration are matters, ney is bound to prove he disoloaed to his client. I cannot on this part of the case, from any thing which is before me, form any conclusion whether this possible improvement ought or ought not to have been in the mind of any person dealing with the property. Considering, as I do, that the court is bound to watch strictly transactions between attorney and client, 1 do not think that this court is bound to allow a contingent advantage, which may or may not have been in the contemplation of the parties at the time, to afford ground for imputing fraud or improper concealment to the attorney, because he does not prove that he communicated it to his client." 1 Gibson v. Jeyes, 6 Ves. 266, 273. 2 Holman v. Loynes, 18 Jur. 839; s. c. 4 DeG., M. & G. 270. Compare also Peacock v. Evans, 16 Ves. 612 ; Lowther v. Lowther, 13 Ves. 95. s Medlioott v. O'Donnel, 1 Ball & B. 156, 163. § 2.] CONFIDENTIAL EELATIONS. 207 however, in respect of which the courts exercise a watchful interest over the client ; ^ though it would be extremely diffi- cult to draw any line by which to express the limits of the law in this particular. Doubtless, if the property have a definite market value, or a value capable of definite ascertainment,^ and the purchase be effected at a price so much belOw it as to show that the client has suffered an actual, and not a mere possible loss, the transaction will be avoidable. But if the property have no certain value, or if its value be estimated differently by competent and disinterested persons, and the amount paid be equal to some though not to the highest esti- mates, and the court cannot certainly say that the client has lost money by the transaction, it would seem that the purchase would be valid. Even in a case like this, however, if it should appear that another party had been willing to give more for the property than the attorney gave, and that this fact was known to the attorney and not disclosed to the client, the sale could be set aside, upon principles already stated. And, if the value were known by the attorney to be placed by any respectable person at a higher figure than the sum about to be accepted from him, his proper course would be to disclose the fact.^ Upon similar principles to those pervading the authorities above considered, attorneys rest under at least a prima fade incapacity to purchase, adversely, the property of their 1 De Rose v. Fay, 3 Edw. Ch. 369 ; 8. c. 4 Edw. Ch. 40. 2 As in the case of an annuity or a life insurance policy. See Holman V. Loynes, supra. It is held in Ireland that the mere (intentional) mis- statement of the consideration will be suflficient to avoid a conveyance by a client to his attorney. Uppington v. BuUen, 2 Dru. & War. 184. Even in the absence of evidence to show the recital untrue, the statement of the consideration will not be accepted as true, or the conveyance upheld, ■without further proof. Gresley v. Mousley, 3 DeG., F. & ,J. 433. See Morgan v. Higgins, 1 GifE. 270, 280; Moore v. Prance, 9 Hare, 299. ^ Compare the high standard of morality held necessary by Lord Eldon in Gibson ». Jeyes, ante, pp. 202, 203. As to the nature and extent of the consideration, see, further. Mills v. Mills, 26 Conn. 213. 208 PRESUMPTIVE OR CONSTRUCTIVE ERAXJD. [CH. V. clients, at judicial sales. The position of an attorney in the management of a litigation is considered as inconsistent with such a right of purchase.^ If an attorney do so purchase, at least if the price paid by him be inadequate, the act will be considered as done in trust for the client, or the sale will be set aside on equitable terms upon proper application of the client.^ Even after the confirmation of a judicial purchase made by the attorney (acting under an assumed name), the •Court of Equity will open the transaction, and order the property to be offered again at the price agreed to be paid by the attorney. But, in case no higher bid is made, the purchase by the attorney will be held binding.^ The proper course for the attorney in such cases is to obtain the consent of court to bid.4 Whether this incapacity of the attorney to purchase, at judicial sales, without the client's consent,® be absolute or merely prima facie is not quite clear. Lord Chancellor Thur- low has said that " no attorney can be permitted to buy in things in the course of litigation, of which litigation he has the management."* But the case in which this was laid down 1 Hall'B. Hallet, 1 Cox, 134; Ex parte Hughes, 6 Ves. 617; Ex parte James, 8 Ves. 337; Howell v. Baker, 4 Johns. Ch. 118; Smith v. Thomp- son, 7 B. Mon. 305; Foreman v. Hunt, 3 Dana, 614; Howell «. Mc- Creery, 7 Dana, 388; Busey v. Hardin, 2 B. Mon. 407; Hawley i>. Cramer, 4 Cowen, 717; Leisenring v. Black, 5 Watts, 303 ; Byers v. Suget, 19 How. 303; Cowan v. Barrett, 18 Mo. 257; Wheeler «. Willard, 44 Vt. 640; Alwood y. Mansfield, 59 111. 496; Trotter v. Smith, lb. 240; Stockton v. Ford, 11 How. 246 ; Wade v. Pettibone, 11 Ohio, 57. 2 See cases just cited. But an attorney engaged merely to prevent the condemnation of land on execution is held not barred from purchasing the land for himself at sheriff's sale. Devinney v. Norris, 8 Watts, 314. ' Sidney v. Ranger, 13 Sim. 118 ; Owen v. Foulkes, 6 Ves. 630, note. * Sidney v. Ranger ; Nelthorpe v. Pennyman, 14 Ves. 517. ^ We are not now speaking of purchases directly from the client, and the like oases, in which assent is implied, but of purchases from third persons, or at judicial sales, adversely to the client, and without his consent. We have seen that the former case presents no absolute in- capacity against the attorney. » Hall V. Hallet, 1 Cox, 134, 140. § 2.] CONFIDBNTIAIi RELATIONS. 209 was one of great inadequacy of consideration, — a fact pre- vailing, it may be observed, in all of the American cases. Later, Lord Eldon appears to have so ruled of a purchase " perfectly fair, the solicitor bidding openly in the presence of very respectable persons concerned for mortgagees and creditors, and declaring it was for himself." ^ This case was soon followed by another in which the same great judge said that " the purchase is not permitted in any case, however honest the circumstances ; the general interests of justice requiring it to be destroj^ed in every instance, as no court is equal to the examination and ascertainment of the truth in much the greater number of cases." ^ The question was also suggested by a case before Chancellor Kent, but no opinion was expressed.^ The court of Kentucky seem to regard the incapacity as absolute, though the case referred to was one of inadequacy of consideration ; and the court therefore add : " Particularly ought a purchase under such circumstances to be regarded invalid, when it results in a sacrifice of the prop- erty." * Chancellor Walworth has given the subject elaborate examination ; and his opinion is that the incapacity is not absolute. The English cases, admitted to be opposed to this view, were distinguished as being rulings in bankruptcy.* Other cases were also distinguished.^ 1 Owen V. Foulkes, 6 Ves. 630, note, and other cases there hriefly stated. See Sidny v. Ranger, 12 Sim. 118. But see In re Bloye, 1 Macn. & G. 488, 494. ^ Ex parte James, 8 Ves. 337, 346. 8 Howell V. Baker, 4 Johns. Ch. 118. 4 Smith 0. Thompson, 7 B. Mon. 305, 309. 5 A fact alluded to by Chancellor Kent also, in Howell o. Baker. The language of Enghsh cases not in bankruptcy implies that the in- capacity is not absolute. In re Bloye, 1 Macn. & G. 488, 494. ^ Beardaley t). Root, 11 Johns. 464; Nelthorp v. Pennyman, 14 Ves. 517. A purchase by an attorney at sheriff's sale, under an execution of which he has control, has been said to be " in the twilight between legal fraud and fairness, and will be deemed fraudulent or in trust for the parties concerned in the sale upon slight additional facts." Jones v. Martin, 26 Tex. 57 ; Howell v. McCreery, 7 Dana, 388. It is held in England that, if a solicitor purchase his client's property at ^ 14 210 PEEStTMPTlVE OK CONSTETTCTIYB FRAUD. [CH. V. The learned Chancellor laid down the following rule : An attorney Avhile retaining that character may contract with his principal, where the principal is acting in his own right, and not as agent or trustee for another ; or he may purchase at public auction or private sale in cases where his client is interested in the proceeds of such sale, provided the purchase is made with the knowledge and consent of the client. But in all cases where the relation of attorney and client exists, referable in any manner to the subject of the purchase, whether such purchase be made by the attorney on his own account or as agent or for the benefit of others, the purchaser must be subject to the onus of making it fully manifest that no advantage has been taken of the client. But, even testing the case before the court by this rule, the transaction was not upheld ; the purchase having been made at a great undervalue.^ There appear to be no American cases opposed to this doctrine ; but there are no express decisions of the point ex- cept the above ruling of Chancellor Walworth. There can be little objection to regarding the incapacity as only prima facie, under the restrictions laid down by the learned Chan- cellor. The burden of proof, however, is upon the attorney ; and if, on the facts, the court be not " equal to the ascertain- ment of the truth," as Lord Eldon has stated to be generally the case, the burden is not sustained, and the client must prevail. But if the facts clearly bring the case within the principle of Chancellor Walworth, the law should be with the auction sale in a fictitious name, the sale will be opened for further bids ; the solicitor's purchase to stand, if no higher bid be obtained. Sidny v. Ranger, 12 Sim. 118; Owen v. Foulkes, 6 Ves. 630, note. See Ex parte Lacey, lb. 625. , 1 The Supreme Court of California have (^obiter) also said: " Even in the case of a purchase of the suit by the attorney, the client may set it aside at his pleasure, unless the attorney show by clear and conclusive proof that no advantage was taken, that every thing was explained to the client, and that the price was fair and reasonable." Valentine v. Stew- art, 15 Cal. 387, 401. § 2.] CONFIDENTIAL RELATIONS. 211 attorney. It is not a promising matter for him, however ; and he can rarely succeed. The situation of an attorney also disables him from pur- chasing an outstanding title to property claimed by the client, either from the State or from a third person, and holding the property adversely to the client.^ The nature of the inca- pacity in such cases is probably like that above noticed, except that the sum paid for the outstanding title, where the whole transaction is fair towards the client, and is effected with his full consent, is perhaps not material. If the client, upon full knowledge of the facts, request his attorney to buy in the outstanding title for his own benefit (as in a case where he intends to give or sell the property to the attorney), and the attorney act thereupon, it would seem that the client would be bound.2 But such cases are probably more rare than those above considered, and should be very narrowly scrutinized. The presumptions must be strongly against them. Fraud will not be imputed in the purchase of property by a party's attorney, at a sale under execution in favor of his client, when the latter has announced his inability to pay the costs and taxes, and has instructed his attorney to bid it off in his own name in order to reimburse himself for advances of money and costs.^ The same principle operates against the attorney in the pur- chase of equitable interests or ehoses in action (such as judg- ments and notes*) of the client, and of property levied upon in execution against the client's debtor.^ The client may, if he elect 1 Galbraith w.' Elder, 8 Watts, 81; Hockenbury v. Carlisle, 5 Watts & S. 348; Cleavinger u. Keimar, 3 Watts & S. 486; Heury v. Raiman, 25 Penn. St. 354; Smith v. Brotherline, 62 Penn. 461; Case u. Carroll, 35 N. Y. 385; Harper v. Perry, 28 Iowa, 57 ; Davis v. Smith, 43 Vt. 269; Hatch V. Fogerty, 10 Abb. Pr. n. s. 147. ^ See Hatch v. Fogerty, supra. The language of Galbraith v. Elder also implies this. Compare Wade v. Pettibone, 11 Ohio, 57. 8 Page V. Stubbs, 39 Iowa, 537. * Stockton V. Ford, 11 How. 246 ; Jones ». Thomas, 2 Younge & C. 498. 6 Wade V. Pettibone, 11 Ohio, 57. 212 PEESTJMPTITE OK CONSTETTCTrVE FRAUD. [CH. V. within a reasonable time,^ and, before the rights of innocent third persons liave intervened, treat all such transactions as effected in his interest and for his benefit. But this privilege of the client is attended also with certain limitations in favor of the attorney. The law will not permit the client to take the benefit of a purchase made by an attorney without reim- bursing the latter to the extent of the sum paid in making the purchase,^ including probably interest. And it has also been held that where an attorney, in the exercise of a diligence beyond that required of him against a debtor of his client, has realized a fund due himself out of the debtor, he is not bound to apply it to his client's claim against the common debtor.^ Similar rules of law apply to the ease of property sold to the client, either directly by the attorney as owner, or by a third person through the influence of the attorney. In cases of the latter kind, the attorney must make a full disclosure to his client of any interest he may have in the property, on pain of losing the same or becoming a trustee for his client, accord- ing to the nature of the case.* In the case just cited, it ap- peared that the defendant, as solicitor, had had a private ar- rangement with R., by which he was to receive from him a share in certain property then belonging to R., and to share in the profit to be obtained in any sale of the same. In his character of solicitor, the defendant had acted for the* plain- ' As to the effect of lapse of time in cases of transactions between attorney and client, see Gresley v. Mousley, 4 DeG. & J. 78. " During the continuance of the relation, the same weight ought not to be given to the lapse of time as is justly due to itwhen no such relation exists." lb., per Lord Justice Turner. See s. c. 3 DeG., F. & J. 433; Lyddon v. Moss, 4 DeG. & J. 104; Clanricarde v. Henning, 30 Beav. 175; Blagrave V. Routh, 8 DeG., M. & G. 620; Moss v. Bainbrigge, 6 DeG., M. & G. 292 ; Macdonald v. Macdonald, 1 Bligh, 315 ; Savery v. King, 5 H. L. Cas. 627. 2 Davis V. Smith, 43 Vt. 269; Giddings v. Eastman, 5 Paige, 561. » Cox ». Sullivan, 7 Ga. 144. * Tyrrell v. Bank of London, 10 H. L. Cas. 26. § 2.] CONFIDENTIAL RELATIONS. 213 tiffs in the purchase of a large portion of that property, with- out communicating to them the fact that he had an interest in it. It was held by the House of Lords that the defendant was to be treated as a trustee for his clients, in respect of his share of the property so purchased.^ In like manner, where a security has been obtained by the attorney from his client, either for the payment of fees or to indemnify him for acts done on behalf of the client, the nature, purposes, and consideration ^ of the security will be narrowly scrutinized.^ The attorney will not be permitted to make any undue gain out of it, or to use it in any way to the disadvantage of the client, further than is necessarily implied in making it available for the object for which it was given. When that object is accomplished, the security must be sur- rendered.* A fortiori, where a bond of indemnity has been obtained by the attornej'^ to save him harmless from acts for which the client was in no way responsible, though performed in the prosecution of business for the client, the Court of Chancery will decree that the bond be given up to be can- celled.* And even where a security improperly obtained has ^ Per Lord Westbury : " A solicitor shall not in any way whatever, in respect of the subject of any transaction in the relations between him and his client, make gain to himself at the expense of his client, beyond the amount of the just and fair professional remuneration to which he is entitled." ^ The attorney must prove the consideration. Jones v. Thomas, 2 Younge & C. 498. However, it is held that a confession of judgment by a client to his attorney, if made fairly and with fuU knowledge of all circumstances, cannot be avoided on the mere ground that the value of the consideration is not equal to the amount of the judgment. Wise i). Harden, 5 S. Car. 325. ' See Jones v. Roberts, 9 Beav. 419. It is said that a solicitor cannot, under any circumstances, take security from his client as to future costs. Kerr, Fraud, 167 (Am. ed.) ; Jones v. Tripp, Jac. 322 ; WilUams v. Piggott, lb. 598; Boothe v. Creswicke, 13 Law J. Ch. 217 ; Coleman v. Mellersh, 2 Macn. & G. 309. See Pitcher ». Rigby, 9 Price, 79. * See Ford v. Harrington, 16 N. Y. 285; Mott v. Henderson, 12 Vt. 199. « Gray v. Emmons, 7 Mich. 533. 214 PBESITMPTIVE OE CONSTRUCTIVE EEATJD. [CH. V. been assigned by the client to another person without notice of the inequitable character of the original transaction, the latter will be compelled to surrender to the client the secu- rity.^ So, if the security contain unusual stipulations, to the great disadvantage of the client, they cannot be enforced.^ It is held that an attorney is not at liberty to deal with his client for a security for debt due to him by a third person, without giving to his client all the information he possesses connected with his demand, and informing him of the nature of the security.^ In the case cited, a solicitor took from his client a security executed by him on a sum of money charged upon the estate of the principal debtor, for the recovery of which the client was then prosecuting a suit in equity, and did not disclose to him the circumstances known by him to be connected with that estate, or that he (the solicitor) had other demands affecting it. Having afterwards filed a bill to enforce the security against his client, the bill was dismissed with costs. An attorney, moreover, who will contract with his client during the pendency of litigation, must not only not be guilty of undue influence and false representations, but is bound to advise his client of the falsity of any misrepresentations (con- cerning the contract) made to the client by others, to the knowledge of the attorney.* There are many other cases in which chancery will interfere for the protection of the client, without requiring proof of actual fraud. Thus, where the attorney has assigned bonds and mortgages to his client, as security for money loaned, 1 Poillon V. Martin, 1 Sandf. Ch. 569. 2 Cowdry v. Day, 1 GifE. 816. ' Higgins V. Joyce, 2 Jones & L. 282. The duty of disclosure of the legal aspects of transactions between attorney and client is so strong that sales and contracts will be set aside for the non-disclosure of legal con- sequences of which the attorney claims to have been ignorant. Bulkley V. Wilford, 2 Clark & F. 102 ; s. c. 8 Bligh, n. s. 111. See ante, pp. 9, 10. * Smith V. Thompson, 7 B. Mon. 305. § 2.] CONFIDENTIAL RELATIONS. 215 without putting him on his guard as to the character of the securities, and especially where he recommends them as good, he will be compelled to take back the securities and repay with interest the money loaned, if any of the securities turn out worthless. And this, too, however upright may have been his conduct in the matter.^ Releases and compromises obtained from clients in respect of services rendered probably stand upon a different footing from gifts, sales, and the like. An attorney is entitled, ^r«ma facie, to paj-ment for services rendered ; and a release or compromise, especially if under seal, is evidence of services rendered and also of the value of such services. While there- fore the Court of Chancery will readily listen to charges of unfairness, exorbitance, or fraud, preferred by clients against their attorneys,^ it would seem that the burden of impeach- ing the validity of snch transactions would be upon the client. The presumptions must be on the side of the attorney. It is not essential to the creation of the relation of attorney and client that the attorney should be employed iu a litiga- tion. It is enough that he is engaged professionally, to exer- cise his skill or to give his advice as a lawyer. Hence an attorney, who is employed and consulted as such to draw a deed, or to make application for an original title to land, becomes thereby, in hao re, the attorney of the party so engaging him, so as to be precluded, for example, as we have seen, from buying in for his own use any outstanding title to the property about which he was employed,^ and from buying from the client except upon terms of scrupulous fairness.* So, too, the mere obtaining by an attorney of a power of attorney to collect a judgment, under an agreement by which the collector was to have a large share of the proceeds of the 1 Lewis ». J. A., 4 Edw. Ch. 599. 2 Barry c. Whitney, 3 Sandf . 696 ; Strange v. Brennan, 15 Law J. Ch. 389 ; Pince v. Beattie, 32 Law J. Ch. 734. s Smith V. Brotherline, 62 Penn. St. 461 ; ante, pp. 208-210. * Payne v. Avery, 21 Mich. 524. 216 PEEStTMPTIVE OR CONSTRUCTIVE PEATJD. [CH. V. judgment, is said to be sufficient to bring the parties within the relation of attorney and client, and to enable the latter to avoid the contract in case of a suppression of facts.^ But a mere proposition by a former attorney, who had not recently been employed professionally by the person to whom it was made, the proposition being rejected, does not renew the relation of attorney and client.^ So the mere consulting of legal counsel, and directing him to prepare a conveyance, which, however, is not done, owing to a failure of the negotia- tion with the intended grantee, will not prevent the attorney from purchasing adversely to the party who employed him, provided he acquired no information from him relative to the property.^ Nor, as we have seen, will the actual existence of a limited relationship of attorney and client prevent the attorney from acting adversely (in the legal sense of that term) to the client in matters beyond the limits of such re- lationship, where he has derived no information from the client.* Where an attorney is employed to collect a claim secured by mortgage, his relation to his client ceases after foreclosing the mortgage and, under his client's directions, bidding off the land at the sale thereunder. If afterwards the same land should be put up for sale, as for non-payment of taxes, the attorney may purchase, provided he has not been further retained by the client. And his retention of the deed exe- cuted by the sheriff under the foreclosure sale, to secure his fees, would not be a continuance of the relation of attorney and client.^ Similar rules appear to apply to cases in which the attorney has improperly obtained a grant to a third person, out of 1 White V. Whaley, 3 Lans. 327. 2 Taylor v. Boardman, 24 Mich. 287. 8 Porter v. Pectham, 44 Cal. 204. < Devinney ». Norris, 8 Watts, 314; ante, pp. 195, 201, 202. ^ Baker v. Davis, 35 Iowa, 184. § 2.] CONFIDENTIAL BELATIONS. 217 which the former is to derive a benefit. If the grant be greatly to the disadvantage of the client, it seems that it may be set aside as to both the grantee and the attorney. This will clearly be the case if the grantee participate in the improper conduct of the attorney.^ An attorney in a cause cannot, by purchasing the interest of the opposite party, acquire a right against his client that he can enforce by judicial proceedings against him ; and the client may treat the purchase as made for himself.^ In the case first cited, it appeared that, while the plaintiff was acting as the defendant's solicitor and legal adviser in a foreclosure suit in favor of the defendant against one Putnam, the plain- tiff purchased of Putnam his interest in the premises, and then tendered the defendant the amount due, with costs, in the foreclosure suit. The defendant declined to receive the same, and claimed the benefit of the purchase, offering to pay the plaintiff what he had paid to Putnam. The plaintiff then brought the present suit in chancery, praying for an order on the defendant to convey the premises to the plaintiff upon payment of the sum tendered. The court, however, held that the defendant was entitled to the benefit of the plaintiffs purchase by paying him the amount which the plaintiff paid. , The same principles which govern transactions between attorney and client apply between persons who stand in a similar relation to litigation, though the relation be not in strictness that of attorney and client. Thus, a party who acts as the confidential adviser of a litigant, though not an attorney-at-law, is bound to the same circumspection of con- duct in his transactions with the litigant, and acts under the same limitations as if he were actually his attorney. Gifts and sales to him will be voidable under the same circum- stances that would render them invalid in cases of attorney 1 Robinson v. Proctor, 35 Beav. 329. 2 Davis V. Smith, 43 Vt. 269 ; Smith v. Brotherline, 62 Penn. St. 461. 218 PEESUMPTIVB OK C0NSTUT7CTIVE FRAUD. [CH. V. and client.^ The same is true of one who has constituted himself the legal adviser of another,^ or has offered legal ad- vice,* and also of a clerk of an attorney who has gained the confidence of a client of his employer.* Where, however, the relation between the parties to a transaction was that of friendship only, though the one habitually relied on the ad- vice of the other, and employed him in some sort of business, it is for those who impugn the transaction to prove that an undue advantage was taken of the influence arising out of this transaction.^ The principle of all these cases is a plain one. The doc- trine is that in respect of acts done pending litigation or other matters involving legal advice, or in expectation thereof, the Court of Chancery will protect the client from unfortunate contracts or gratuities, obtained by undue influence, suppres- sion of facts, or the failure to give such advice as would be given by a disinterested attorney in the matter. The rule bears against transactions made with reference to present or future legal business alike. If the transaction be intended as compensation for legal services, or for security of the same, the court, as we have seen, will see that the compensation is a reasonable one.^ If it be intended as a gratuity, it will only be upheld upon affirmative proof on the part of the attorney • Buffalow V. Bufialow, 2 Dev. & B. Eq. 241 ; Purcell v. Macnamara, 14 Ves. 91 ; McCabe v. Hussey, 2 Dow & C. 440; s. c. 5 BUgh, n. s. 715; Carter v. Palmer, 8 Clark & F. 657, 707; Brown v. Kennedy, 33 Beav. 133. " Tate V. Williamson, Law R. 1 Eq. 528; s. c. Law R. 2 Ch. 65. See Wyse V. Lambert, 16 Irish Ch. 379. ' Davis V. Abraham,. 5 Week. R. 465. * Hobday v. Peters, 28 Beav. 349; Nesbitt v. Berridge, 32 Beav. 284; Parnell v. Tyler, 2 Law J. Ch. 195; Poillon v. Martin, 1 Sandf. Ch. 569 ; 'Kerr, Fraud, 171 (Am. ed.). 5 Hunter v. Atkins, Coop. temp. Brough. 464. " The rule therefore does not preclude the attorney from contracting in advance as to the value of his services, or even receiving his entire fee in advance. It simply requires that the sum shall be a reasonable one, when so paid or contracted for. § 2.] CONFIDENTIAL EELATIONS. 219 or quasi attorney that the parties stood in the position of strangers ; that is, that the attorney had so far divested him- self, pro hae vice, of the advantage of his position as to leave the client upon an equal footing with himself. But after the litigation or other legal business has been completed, the parties are considered as standing, with refer- ence to such past business, in the situation of strangers ; or, to use the common expression of the books, they are now supposed to be at arm's length. The client may now make such disposition of his property in favor of his attorney, whether by way of gratuity or of a measure of compensation for services at their agreed value, as he will ; ^ and the trans- action will be subject to impeachment only as other trans- actions between persons not in confidential relations are impeachable. And, even in cases in which the principle under consideration might have been invoked, the right to set aside the transaction may become barred by acquiescence after the relation of attorney and client has come to an end, especially if there be great delay in bringing suit.'^ In a contest between an attorney and his client with regard to counsel fees, it is held that the burden rests upon the attorney to show that the contract for his services was free from all fraud, undue influence, and exorbitancy of demand.^ And, if an attorney having special information concerning the condition of an estate propose to heirs to undertake a settle- ment of it, he is bound to divulge his knowledge, so that the heirs may be able to agree intelligently upon the value of his services. If he does not, such an agreement as to his fees, if they are large and the services rendered are slight, will be presumptively fraudulent ; and it will be incumbent upon the 1 Walmesley v. Booth, 2 Atk. 27. 2 Lyddon v. Moss, 4 DeG. & J. 104; Champion v. Eigby, Taml. 421; s. c. 9 Law J. Ch. 211. See Proctor v. Robinson, 35 Beav. 329. ' McMahan v. Smith,. 6 Heisk. 167 ; Planters' Bank v. Hornberger, 4 Cold. 578. 220 PRESUMPTIVE OR CONSTRUCTIVE FRAUD. [CH. V. attorney to remove the presumption to entitle him to recover the sum agreed upon.^ Thus, in the case cited, it appeared that one Ashton had died, leaving an estate in Iowa of the value of 112,000, and a wife and children in Illinois. After his death, one of the plaintiffs, who resided in the same county in Iowa with Ashton, went to Illinois, and entered into a contract with the heirs-at-law, whereby the plaintiffs were to receive twenty-iive per cent, of the value of the estate for effecting a settlement of it. No litigation was involved in the undertaking, and the debts were small; and it was accordingly held, in the absence of satisfactory explanation from the plaintiffs, that the contract was not binding upon the heirs.^ ■■ While an attorney is not permitted to acquire his client's property in bad faith, still the attempt of the latter to de- fraud him of reasonable compensation will authorize the at- torney to sever the relation between them, and act for his own protection. Thus, where a client refused for four years to pay his attorney for services and to reimburse him for ex- penses incurred in an action to foreclose a mortgage, and the mortgaged land was afterwards purchased by the attorney at a tax-sale, the client having been informed of the sale and failing to pay the amount thus advanced, it was held that the client would not be permitted, seven years afterwards, to set aside the tax-sale.^ Accounts between attorney and client stand upon different grounds from those between parttes treating at arm's length. That which between others would be a conclusive settlement is not so between them. Settlement and payment of a bill, even though a long period may since have elapsed, is not con- clusive, and will not bar an examination of the fairness of the demand. If the settlement were made during the pendency 1 Ryan ». Ashton, 42 Iowa, 365. 2 See Greenfield's Estate, 14 Penn. St. 489. ' Eckrote v. Myers, 41 Iowa, 324. § 2.] CONFIDENTIAL EELATIONS. 221 of the suit, the client must have been in some degree under the control of the attorney, and a settlement under such circumstances may be opened.^ Should an attorney advise a bill to be filed for the adminis- tration of the assets of a testator whose sole executor he is, and continue to act as the attorney of the plaintiff in such suit, but, abusing the confidence reposed in him, neglect for an unreasonable length of time to put in his answer to the bill filed upon his own recommendation, such conduct would be considered strong evidence of a scheme to retain in his own hands the personal estate of his testator. Equity will not permit such an abuse of its practice ; and, on motion, the party will be ordered to file his answer within a time stated, or stand committed.^ An agreement between the counsel of parties who have submitted their claims to reference, that the arbitrators shall have no instructions in writing, is very like a fraud, and re- lief might be had even at law. But the fact that the award was prepared by the counsel for one of the parties is no ground of itself for setting aside the award.^ For, though Lord Eldon has declared that a general rule forbidding a solicitor by himself or his partner to be emploj'cd on both sides would be extremely beneficial, still it has not been deemed convenient to put an end to the practice. And the reasons for its continuance are strong ; for, if every creditor or legatee were bound to employ a different solicitor, the costs would eat up the estate.* It is, however, clear that whenever a person intrusted to act as attorney for all parties abuses the confidence placed in him, this is a fraud which gives ample ground for the interference of equity.^ ' Crossley v. Parker, 1 Jac. & W. 462; Aubrey u. Popkin, 1 Dick. 404; Langstaffe v. Taylor, 14 Ves. 263; Lewes w. Morgan, 5 Price, 56. 2 Mootham v. Hale, 3 "Ves. & B. 92. * Featherstone ». Cooper, 9 Ves. 68. * Dyott V. Anderton, 3 Ves. & B. 178. ' Costigan v. Hastier, 2 Schoales & L. 165; 1 Hovenden, Fraud, 49. 222 PEESUMPirVB oe constetjctive peatjd. [ch. t. In the case of a contract by an attorney to purchase his client's property, a confirmation which shall entitle the at- torney to a specific performance of the contract must be strong and plain, and with full knowledge of the infirmity of the contract. And this' is the case even where the property, the subject of the contract, being one of many lots to be sold at auction, the buyer (the attorney), openly became a bidder, in competition with others, and had the particular property knocked down to him in the usual manner; provided, of course, he was concerned in the auction professionally, as attorney of the vendor. And even in such a case, in order to afPect the vendor with the usual consequences of acquies- cence or confirmation, it is necessary to show that, when act- ing in the manner alleged against him, he was free from the attorney's influence, and aware of every thing affecting his interest.^ It need scarcely be said that the right of the client against his attorney, in cases such as we have been considering, is a personal one only, pertaining exclusively to the client, and to his assignees and representatives. Other persons cannot take advantage of it, even though the case be one of clear fraud upon the rights of the client ; ^ except, indeed, in cases of conveyances obtained in fraud of creditors or purchasers under the statutes of Elizabeth. § 3. Of Principal and Agent. Agents also occupy a relation of trust, with peculiar oppor- tunities for fraud upon their principals ; and the rules of law, in respect of transactions between them concerning the inter- est in trust, are in some particulars more unfavorable to the 1 Salmon v. Cutts, 4 DeG. & S. 125. ' Marshall v. Joy, 17 Vt. 546; Leach v. Fowler, 22 Ark. 143; Cowan I!. Barret, 18 Mo. 257. § 3,J CONFIDENTIAL RELATIONS. 223 agent than the rules relating to attorney and client are to the attorney. There is, however, no rule prohibiting an agent from deal- ing with his principal in respect of the trust. At the same time, the presumptions of law, as in the case of the dealings of an attorney with his client, are against him. If an agent seek to uphold a transaction between himself and his prin- cipal, or a principal to avoid a transaction between himself and his agent, the burden is upon the agent to show tliat he gave to his principal the same advice in the matter as an independent disinterested adviser would have done ; and that he made a full disclosure of all he knew respectmg the prop- erty, and that the principal knew with whom he was dealing, and made no objection, and finally that the consideration was fair and just.^ The position of an agent differs from that of an attorney, in that it appears to be unnecessary that the principal should have suffered injury from the agent's action, or would suffer injury if the transaction were upheld.^ In the case first cited, Lord ^ Kerr, Fraud, 173 (Am. ed.); York Buildings Co. v. Mackenzie, 3 Pat. (Scotch App.) 378; Lowther v. Lowther, 13 Ves. 95, 103; Wattu. Grove, 2 Schoales & L. 492; Woodhouse v. Meredith, 1 Jac. & W. 204; Selsey V. Rhoades, 2 Sim. & S. 41; s. c. 1 Bligh, n. s. 1; Cane v. Allen, 2 Dow, 294; Rothschild v. Brockman, 2 Dow & C. 188; s. c. 5 Bligh, n. s. 165; Barker v. Harrison,^ Colly. 546; Molony i;. Kernan, 2 Dru. & War. 31; Trevelyan v. Charter, 4 Law J. Ch. 209; 8. c. 11 Clark & F. 714, 732; Mulhallen ». Marum, 3 Dru. & War. 317; Murphy v. O'Shea, 2 Jones & L. 422, 425; Clarke v. Tipping, 9 Beav. 284; Bloye's Trust, 1 Macn. & G. 488; Lewis v. Hillman, 3 H. L. Cas. 607; Rhodes v. Bate, Law R. 1 Ch. 252; Farnham v. Brooks, 9 Pick. 212; Dobson v. Racey, 8 N. Y. 216; Bank of Orleans o. Torrey, 9 Paige, 649 ; s. c. 7 Hill, 260; Corn- stock V. Comstock, 57 Barb. 453; Fisher's Appeal, 34 Penn. 29; Brooke V. Berry, 2 Gill, 83; Moseley v. Buck, 3 Munf. 232; Teakle v. Bailey, 2 Brock. 43; Moore v. Maudelbaum, 8 Mich. 433; Taylor v. Knox, 1 Dana, 391; s. c. 5 Dana, 466; Casey v. Casey, 14 lU. 112. The clerk of a vendor's broker, having access to correspondence, is, like the broker himself, disabled from purchasing of the broker's em- ployer without full disclosure. Gardner v. Ogden, 22 N. Y. 327. 2 Murphy v. O'Shea, 2 Jones & L. 422, 425; Gillett v. Peppercorn, 3 Beav. 78. 224 PEESTJMPTIVB OK CONSTETJCTIVE FEATJD. [CH. V. Chancellor Sugden observed, of the right to impeach a sale of lands to one's agent, that it was perfectly well settled that it is not necessary to prove under value. A principal selling to his agent was entitled to set aside the sale upon equitable grounds, whatever may have been the price obtained for the property. In the case next cited, the court held a transaction of the agent void on grounds of public policy, without entering into the question of fairness of price. " It is not necessary," said the court, " to show that fraud was intended, or that loss afterwards took place in consequence of these transactions." Subject to a strict and jealous investigation in equity, an agent may buy from his principal, if the latter, being fully informed who is the proposed purchaser, and laboring under no influence or deception on the part of the agent, be willing to sell to him.^ But an agent cannot be permitted to act clandestinely, setting up a nominal purchaser, and dealing with his own principal in the name of that person. The principal would be thus thrown off his guard. Instead of a person acting solely with a view to his (the principal's) inter- est, the agent would, be practically contracting with himself, and fixing the price which he is himself to pay. To call such a transaction a contract, it has well been said, would be an abuse of terms. To a contract there must be two parties.^ Lord Thurlow, indeed, as the writer just referred to has pointed out, seems to have been clearly of opinion that a person em- ployed to sell could not, under any circumstances, be per- mitted to buy ; and that a purchase by such person could not be supported, though it was made with the knowledge of the party selling.^ Except under the restrictions above mentioned, an agent is also prohibited from selling property which he has bought, 1 Morse v. Royal, 12 Ves. 373; Gibson v. Jeyes, 6 Ves. 277. ' 1 Hovenden, Fraud, 147. s Crowe v. Bullard, 3 Brown C. C. 120. § 3. J CONFIDENTIAL RELATIONS. 225 under instructions, for his principal. The clearest evidence of consent is necessary to support such a transaction.^ Upon these principles, it is considered that, if a person make himself an actual principal in transactions in which he is ostensibly concerned as a broker, he can maintain no suit either at law or in equity in respect of those transactions. A broker is the agent of the buyer or of the seller or of both, and is bound to exercise his skill in favor of those who, for that sole purpose, have confidentially employed him ; and, if he were allowed to introduce himself as a principal, his duty and his interest would be set in decided opposition.^ And not only where an agent employed to sell property becomes himself the real purchaser, will equity charge him (under the above restrictions) with the value of the estate ; but, also, whenever such agent, from corrupt or doubtful motives, has let part of his employer's estate at a rent less than he could have obtained from a responsible tenant, the agent is himself liable in his lifetime, and his estate is liable after his death. As to the latter situation, it is to be observed that, though at common law actions sounding in damages (except trover) generally die with the wrongdoer, the ground of jurisdiction in equity is debt.^ Though, in general, mere inadequacy of price will not vitiate a sale, still, if the purchaser be the agent of the ven- dor, the adequacy of the consideration will be more jealously scrutinized. Such a purchaser must at least show, with indis- putable clearness, that he furnished his employer with all the knowledge which he himself possessed,* or which he might by due diligence have acquired, as to the value of the sub- ject of sale.^ For, in order to set aside a purchase at an 1 Massey v. Davies, 2 Ves. Jr. 321 ; Attorney-General v. Cochrane, Wightw. 14. 2 Lowther v. Lowther, 13 Ves. 103; Wren v. Kirton, 8 Ves. 502; Ex parte Dyster, 1 Meriv. 172; s. c. 2 Rose, 355 ; 1 Hovenden, Fraud, 147. s 4 Ves. 416, 418. * Lowther «. Lowther, 13 Ves. 103. s Wren ». Kirton, 8 Ves. 502; Ex parte James, 8 Ves. 347. 15 226 PEESXJMPTIVE 05 CONSTRUCTIVB FRAUD. [CH. V. undervalue by an agent from his employer, it is not necessary that actual fraud should be proved.^ An agent who discovers a defect in the title to his prin- cipal's land, in the course of his agency relating thereto, can- not avail himself of the discovery to acquire a title against his principal.^ So, an agent employed to sell a reversionary legacy is not permitted to become the purchaser thereof for himself. And nothing will amount to a confirmation of such a transaction until the vendor is fully apprised that he might be relieved against the transaction, if he should choose to im- peach it.' Where an agent for the care of land has fraudulently taken a tax-deed of the property, under which deed he is in posses- sion, the principal may either sue in equity for relief from the fraud, as by asking a conveyance of the title, or he may maintain ejectment, relying on the agent's fraud as ground for estopping him to set up his tax-title.* If a lease be obtained from the steward or other agent of the lessor by means of any misrepresentation, whereby the lessee, even innocently on his part, gains an advantage over the lessor, the lease cannot stand. And, if it be proved that the agent was cognizant of the real facts, he will be answer- able to his principal for any loss sustained in consequence of the concealment of that which it was his duty to communi- cate to his employer.^ If a stranger enter into a fraudulent bargain with a servant, acting on behalf of his master ; or if a servant by collusion take greater profits than belong to his office, he cannot in either case resist an account of the gains made by such fraud.^ And when a factor, instead of charging factorage upon pur- 1 Medlicott ». O'Donnell, 1 Ball & B. 165. 2 Rogers v. Lockett, 28 Ark. 290 ,■ Ringo v. Burns, 10 Peters, 279. 8 Crowe V. Ballard, 2 Cox, 258. • McMahon v. McGraw, 26 Wis. 614. 6 Abingdon v. Butler, 1 Ves.' Jr. 208. • East India Co. v. Henchman, Tb. 289. § 3.] CONFIDENTIAL EELATIONS. 227 chases made for his employers, deals with them as a merchant, and charges mercantile profits, that is a fraud, upon which a court of equity will decree an account. Or if such factor or broker be also a manufacturer, though he might by a rigid, adverse bargain demand what price he thought fit for his goods, yet if, by taking advantage of his character of factor or broker, and of the confidence reposed in him as such, he obtain a price he ought not to have had, that, also, is good ground for an account.^ If an agent sell property to his principal as the property of a third person, when in fact it belongs to the agent, the prin- cipal will be entitled to rescind the contract.^ So, too, the concealment by a broker employed to effect a sale of property of the fact that he is himself interested in the property will be fatal to any claim by him for services rendered his employer, in case his own interest in the property, in connection with the terms of sale fixed by the employer, were such as to ren- der a sale by him under such concealment inconsistent with his duty to his principal.^ But, when the terms of sale as fixed by the principal are such that the concealment of the broker's interest cannot operate adversely to the rights of the former, the rule is otherwise.* Thus, where the defend- ant employed the plaintiff to sell certain land, agreeing to pay him for his services all that he could obtain over thirty-five cents per foot, it was considered that the plaintiff's failure to disclose the fact to the defendant that he was interested in the land as owner or part-owner was immaterial, since it could not operate to the prejudice of the defendant's rights in the matter.^ A broker who engages for a commission to find a purchaser 1 East India Co. v. Keighley, 4 Madd. 35. 2 Ely 0. Hanford, 65 111. 267. " Durgin v. Somera, 117 Mass. 55; Smith v. Townsend, 109 Mass. 500. Farnsworth ». Hemmer,' 1 Allen, 494; Walker v. Osgood, 98 Mass. 348. * Durgin v. Somers, supra. ' lb. 228 PRESUMPTIVE OR CONSTRUCTIVE FRAUD. [CH. V. of property at a price to be agreed upon between such pur- chaser and the vendor, and then becomes himself the purchaser in part, the vendor accepting him as such, may recover the commission upon clear proof that such was the agreement ; ^ and the fact that in effecting the sale the broker has acted in fraud of his co-purchaser, will not affect his right to the com- mission as between himself and the vendor.^ One who conceals from a party who has employed him to effect a particular transaction the fact that be is the agent of the other party to the transaction cannot, it is held, recover from the deceived employer the value of his services.^ And a similar principle applies where the party transacting busi- ness for another effects a sale for himself and his employer, according to the direction of the latter, but conceals from him the fact that he is acting in the negotiation of the business as agent of the vendor. The agent will not be allowed to retain any advantage gained over his co-vendee.* Thus, in the case cited, the vendor of land employed the defendant to sell certain land, agreeing to give him as commission all that he should get for the propertj'^ above $6,000. The defendant thereupon procured the plaintiff to become a joint purchaser of the land with himself, concealing from him the fact that he was acting as the vendor's agent, and inducing the vendor to demand and the defendant to agree to pay 18,000 for the property. A joint purchase was accordingly made, and the vendor conveyed to the plaintiff a three-fourths interest in the land, and one-fourth interest to the defendant. The plaintiff paid |6,000 for his share ; and the defendant pretended to him that he had paid |2,000 for his. In fact, he received that sum back from the vendor, according to the agreement. 1 Stewart v. Mather, 32 Wis. 344. 2 Hardy v. Stonebraker, 81 Wis. 540; Grant v. Hardy, 83 Wis. 668. ' Meyer v. Hanchett, 39 Wis. 419 ; Cleveland R. Co. v. Pattison, 15 Ind. 70; Watkins v. Corsall, 1 E. D. Smith, 65; Dunlap v. Richards, 2 E. D. Smith, 181. * Grant v. Hardy, 33 Wis. 668. § 3.] CONFIDENTIAL RELATIONS. 229 Subsequently, the plaintiff bought the defendant's one-fourth interest, paying #2,100 for the same. .Having afterwards discovered the nature of the transaction between the defend- ant and the former owner of the land, the plaintiff brought suit against the defendant to recover the amount paid to him for his fourth interest ; and the actioa was held maintainable. An agent cannot purchase from his principal so as to bind the latter, where he conceals the fact that a higher price could have been obtained for the property.^ Thus, where agents conspiring against their principal represented that certain lands of which they had the management were worth but $20 per acre, and thereby obtained a conveyance of the same from the principal at that price, and then sold the land for $50 per acre, it was held that they were to be treated as trustees for the principal, and that he was entitled to the difference between the two prices.^ If there be collusion between the agent and the purchaser, the property can be recovered from the latter.^ If an agent employed to purchase an estate become the purchaser for himself, equity will treat him as a trustee for his principal.* Hence, an agent cannot use for his own ben- efit, and against his principal, information obtained in investi- gating a title for his principal.^ In considering whether an agent can be allowed the benefit of any voluntary settlement obtained from his employer before the connection between them was absolutely dissolved, it will be necessary to ascertain clearly not only that such settlement was the pure, uninfluenced, and well-understood act of the employer's mind, and that he executed the gift with that full knowledge of all its effects and consequences which it was the agent's duty to communicate ; but a further question will 1 Moseley v. Buck, 2 Munf. 232. ^ Hunter ». Hunter, 50 Mo. 445. * Mann v. Best, 62 Mo. 491 ; Louguemare v. Busby, 56 Mo. 540. , * Lees V. Nuttall, 1 Russ. & M. 53. 6 Reid V. Stanley, 6 Watts & S. 369. 230 PEESUMPTIVE OE CONSTEUOTITE FKATJD. [CH. V. arise, how that intention was produced, with reference to which the pecuniary circumstances and transactions between the parties must be attended to.^ It is no fraud on the principal for the agent to receive to his own use gratuities for incidental benefits derived from services rendered by the agent for his principal, where neither the principal nor the agent had any claim for the amount so received.^ It matters not that a party for whom another has been acting in promoting a transaction, in which both are to become part- ners, obtains a good bargain from the agency of the other in the matter. If the party managing the transaction has secretly obtained an undue advantage, he will not be permitted to retain it. This principle was recently enunciated in an Eng- lish case. Four out of five persons who had agreed to purchase a mine and to sell it to a company for their joint benefit were deceived by the fifth in the course of effecting the purchase. The latter represented that the owners would not sell the property for less than a certain sum, while at the same time he obtained an agreement from the owners that, on perfecting the sale at such sum, he should be allowed a bonus equal to nearly one-quarter of the purchase price. The purchase was effected accordingly, and two out of the original five joined in forming a company for the purchase of the mine, and in fact bought it, at a considerable advance over the price understood to have been paid to the original owners. The nature of that transaction, however, having been discovered, it was held that the agreement for the bonus was fraudulent and void, not only as against the other four original purchasers, but also as against the company ; and this, too, though it appeared that the mine was cheap at the price paid by the company. It was observed that the company had a right to the best bargain which the two original parties, acting as a committee of man- 1 Hugenin v. Baseley, 14 Ves. 300; 1 Hovenden, Fraud, 153. 2 .aitna Ins. Co. v. Church, 21 Ohio St. 492. § 3.j CONFIDENTIAL RELATIONS. 231 agement, would have been in a position, dealing fairly, to give them, had they known the facts.^ An agent may, after the termination of his agency, purchase his late principal's property at tax-sale,^ provided he do not take undue advantage of his knowledge acquired while agent. The rule of law forbidding the abuse of confidence applies as strongly against those who have gratuitously or officiously undertaken the management of another's property as to those who are retained or appointed for that purpose and paid for it.3 Hence, if a person of his own will become a gratuitous agent of another to negotiate a sale of stock, and then receive compensation from a purchaser as a reward for acting in his behalf and procuring a sale for less than the purchaser would have paid, the agent becomes liable to the vendor for the loss sustained by the breach of confidence.* The rule that an agent cannot make himself an adveree party to his principal while the agency continues applies only to such agents as are relied upon for counsel and direc- tion, whose employment is a trust as well as a service. It does not apply to those who are merely employed as instru- ments in the performance of some appointed service.^ Thus, it does not apply to a person who, claiming an equitable in- terest in property by an assignment from the father of certain infants, brings a suit in the name of the infants, styling him- self their next friend.® 1 Beck V. Kantoro-wicz, 3 Kay & J. 230. 2 Moore v. Stone, 40 lo-wa, 259. 8 Rankin v. Porter, 7 Watts, 390; Coggs v. Barnard, 2 Ld. Raym. 900; Doorman v. Jenkins, 2 Ad. & E. 256; Hunsaker v. Sturgis, 29 Cal. 142. ■* Hunsaker v. Sturgis, supra. ^ Deep River Mining Co. v. Fox, 4 Ired. Eq. 61. « Michael v. Michael, lb. 349. 232 PBEStJMPTIVE OR CONSTETJCTIVE FEATJD. [CH. V. § 4. Op Paetneks.1 It is the duty of partners towards each other to refrain from all concealment in the transaction of the partnership business. If a partner be guilty of any such concealment and derive a benefit therefrom, he wiU be treated in equity as a trustee for the fifm, and compelled to account to his copartners.'^ This principle will prohibit all clandestine bargains by one partner for his own exclusive benefit, made in contemplation of establishing a partnership with other persons.^ So each partner is bound to refrain (in the absence of consent by his copartners) from engaging in any other business or specula- tion which will deprive the partnership of a portion of the skill, industry, diligence, or capital which he is bound to em- ploy therein. In other words, he is not at liberty to deal on his own private account in any matter or business which is obviously at variance with his primary duty to the partner- ship. The object of this prohibitory rule is to withdraw from each partner the temptation to bestow more attention, and to exercise a sharper sagacity in respect to his own purchases and sales and negotiations than he does in respect to the con- cerns of the partnership, in the same or in a conflicting line of business.* Hence, if one partner should secretly carry on another trade, or the same trade, for his own advantage, es- pecially if actually rather than presumably to the injury of the partnership interests, or should divert the capital or funds of the partnership to such secret or sinister purposes, he will be compelled to account in equity for all the profits made 1 As to frauds on third persons, see ante, pp. 146-150. * Story, Partnership, § 172; Russell v. Austwick, 1 Sim. 52; Madde- ford V. Austwick, lb. 89; Sexton v. Sexton, 9 Gratt. 204; Hopkins v. Watt, 13 m. 298. ' Fawcett v. Whitehouse, 1 Russ. & M. 132, 148; Hichens v. Congreve, 4Russ. 562; Story, § 174. * Story, § 177; 3 Kent, Com. 51. § 4.J CONFIDENTIAL RELATIONS. 233 thereby.^ So, if one partner should purchase articles on his own private account in some special trade and business in which the partnership was engaged, the purchase being to the injury of the partnership, he would be held to account in equity for his profits.^ In cases of this sort, equity will even restrain the partner from carrying on any such trade or busi- ness without the consent of his copartners.^ Equity will not permit parties bound to each other by ex- press or implied agreement for promoting an undertaking for their common benefit to engage in another enterprise which necessarily gives them an interest directly adverse to their original undertaking. But, if it merely appear that such other enterprise offers a temptation to betray the first, this affords no ground for an injunction.* One partner cannot treat pri- vately and behind the backs of his copartners for a lease of the premises, where the joint trade is carried on for his own individual benefit. A lease obtained in his own name will be held a trust for the partnership.^ A partner cannot make a secret profit out of dealings with the firm. He cannot, for example, supply the firm with goods which he has himself bought for his own use at a lower price, without informing his partners of the facts ; ^ unless, indeed, his own purchase was made long before, without any intention of selling at a profit to the firm, the firm having knowledge of his ownership of the property when they bought it. It is considered no fraud in one member of a partnership, 1 Story, § 178; Long v. Majestre, 1 Johns. Ch. 305; Stoughton v. Lynch, lb. 467, 470; Glassington v. Thwaites, 1 Sim. & S. 124, 133; Burton v. Wookey, 6 Madd. 367; Look v. Leynam, 4 Irish Ch. 188; Eng- land V. Curling, 8 Beav. 129; Herriek v. Ames, 8 Bosw. 115. ^ Burton v. Wookey, supra. ' Glassington v. Thwaites, supra. * Glassington v'. Thwaites, 1 Sim. & S. 133. 6 Featherstonhaugh v. Fenwiok, 17 Ves. 311; Wilson ». Greenwood, 1 Wils. C. C. 236. « Bently v. Craven, 18 Beav. 75; Getty v. Devlin, 54 N. Y. 403. 234 PEESTJMPTIVB OB CONSTRUCTIVE PEATJD. [CH. V. intrusted by the firm with business outside of the operations of the firm as such, to enter into an arrangement with a stranger by which the partner shall derive a special benefit from the outside transaction, not shared by the other partners, if they, too, have been guilty of fraud.^ Thus, in the case cited, a firm engaged in the general produce business held a mortgage on real estate, which real estate the firm were de- sirous of purchasing under the mortgage. The business of so acquiring this property was intrusted to one of the part- ners ; and he made an arrangement with a third person, with- out the knowledge of his partners, by which such third person should buy the property, giving him, the partner, an interest in it. The mortgage debt having been fully paid into the firm account, it was determined that the partner thus managing the matter was not liable to account to the other members of the firm in respect of the benefit obtained by him in his private arrangement with the third person ; inasmuch as it appeared that the other partners had been guilty of fraudu- lent conduct in relation to the property under mortgage, having engaged in a scheme to depreciate its value and to deceive other creditors. Partners are presumed to have equal access to and knowl- edge of the books and business of the firm ; and, in the ab- sence of any evidence contrary to this presumption, they stand upon an equal footing in inter-alienations of their respective interests. Hence, in the case of such a sale, it will not be permitted one of the parties to say that the value of his in- terest was misrepresented by the other. And it has even been held in such a case that the fact that the purchaser bought the vendor's interest through a third person, concealing the real nature of the purchase, was not necessarily a fraud.' 1 Wheeler v. Sage, 1 Wall. 518. 2 Geddes's Appeal, 80 Penn. St. 442. ' lb. "That such a concealment," it was said, "-was not a fraud ^er se, as is assumed in this assignment of error, is easily demonstrated. Of § 4.] CONFIDENTIAL RELATIONS. 235 A partner ip business, intending to purchase the interest of his copartner, must, where he (the former) has had the management of the business or the keeping of the accounts, make a full disclosure of the extent and situation of the busi- ness ; otherwise, the purchase will be liable to impe^.chment by the copartner. Thus, it appeared in an English case that a partner, who had superintended exclusively the accounts of the business, agreed to purchase his copartner's share therein for a sum which he knew from accounts in his possession was inadequate. The transaction was set aside on the ground that the purchaser had concealed the state of these accounts.^ If one party agree to unite with two others in the purchase of land, each to furnish one-third the purchase-money, and such party to conduct the negotiations and buy the land for the least possible price, he assumes a position of trust towards his associates, and is bound to exercise the utmost good faith what importance was it to the plaintiff who the purchaser was, provided he obtained his price or the value of his interest? It is a very common thing in real estate, and perhaps other transactions for the purchaser to conceal his name from the vendor, and negotiate through or in the name of another party. The reasons for this are obvious, and such course of dealing has never been held to be fraudulent. It is true there might be a case in which such concealment might be some evidence of fraud. But it would only be so in its relation to other facts, as to which it formed a connecting link in a chain of evidence to establish a fraud, where a fraud in fact had been committed. In this case, we have the fact in proof, that the relations between the plaintiff and his partners were not of the most amicable kind. This circumstance may have induced the latter to con- ceal their real purpose. It is said that, if the plaintiff had known who , the actual purchasers were, it would have put him upon his guard, and perhaps induced him to demand a higher price for his interest. This, if true, raises no equity. The argument, to be worth anything, must go the extent of supposing that the plaintiff would have used the information for the purpose of exacting a greater price than his interest was worth. For, if he got its value, how was he injured? It is possible the defendants had this in view in withholding the information from him. They had a right to buy upon as good terms as they could, provided they did no wrong to the plaintiff." 1 Maddeford v. Austwick, 1 Sim. 89. 236 PEBSUMPTIVB OB CONSTETJCTIVE FRAUD. [CH. V. towards them, and share with them all the profits of the bar- gain. He will not be permitted to conceal the actual price to be paid, and make a private profit thereon.^ § 5. Of Tetjstebs. It is the duty of trustees to see that their cestuis que trust are properly advised as to their rights. Where, for instance, trustees, in order to support a release, rely on the ground that their cestuis que trust were advised by an independent solicitor, it lies on them to show that the cestuis que trust did authorize an independent solicitor to act for them.^ The case cited well illustrates the principle. Two ladies entitled to a trust fund, which had been improperly lent by the trustees to J. A. (who stood towards the ladies in loco parentis'), were induced by J. A., soon after they came of age, to execute releases to the trustees, taking from him a security for the money, which security was known to be worthless. No direct communica- tion took place between the ladies and the trustees, nor did the trustees render any account to them ; but the ladies were represented in the transaction by G., a solicitor, who was known to the trustees to have been for years the confidential adviser of J. A., and the transaction was conducted by G. and J. A.'s solicitors. G. was never in fact authorized by the ladies to act for them, but was nominated by J. A. The ladies did not at the time consider him to be acting -for them. The Court of Chancery decided that under these circumstances the trustees could not avail themselves of the releases. The determination of the question whether necessary infor- mation'was given to a cestui que trust to enable him or his advisers to form a proper judgment of the condition of the estate, and decide whether such a release is valid, renders it 1 King V. Wise, 43 Cal. 629. 2 Lloyd V. Attwood, 3 DeG. & J. 614. § 5.] CONFIDENTIAL RELATIONS. 237 necessary to examine the circumstances connected with it, such as the conduct and the acts of the parties before its exe- cution, though occurring during the minority of the cestui que trust. Thus, where two releases were executed by the cestui que trust, one before and one twelve days after he had reached majority, and the necessary information was conveyed at the time of the first release, and a proper^examination made by the advisers of the minor as to the condition of the trust fund, such facts were considered as the operating causes for the second release.^ A trustee may buy from the cestui que trust, provided there is a distinct and clear contract, ascertained to be such after a jealous and scrupulous examination of all the circumstances, that the cestui que trust intended that the trustee should buy ; and that there is no fraud or concealment or advantage taken by the trustee in respect of information acquired by him in his fiduciary position.^ It is not necessary to show that a trustee who has purchased the trust property has made any profit or obtained any ad- vantage thereby. But it is said that the sale will be supported, if found to be beneficial to the trust estate. This, however, was said of a purchase made under authority of court.* A trustee or agent cannot generally, as intimated, unite in himself the opposite characters of buyer and seller. And, if he do so, the cestui que trust dr principal, unless, upon the fullest knowledge of all the facts, he elect to confirm the act of the trustee or agent, may repudiate it, or he may charge the profits 1 Forbes v. Forbes, 5 Gill, 29. ^ Coles V, Trecothick, 9 Ves. 234, 247. In this case, Lord Eldon said: ' ' I admit it is a difficult case to make out wherever it is contended that the exception prevails." He then explains Fox v. Mackreth, 2 Brown, C. C. 400, as consistent with the exception. ' Fawcett v. Fawcett, 1 Bush, 511. Even when the court authorizes, and the cestui que trust consents to a purchase by the trustee, it is said that the sale will be looked upon with suspicion. lb. When a trustee takes a benefit under his own abuse of the trust, a fraudulent purpose will be presumed. Harrison v. Smith, 2 Heisk. 230. « 238 PEESHMPTIVB OE CONSTEUCTIVE FEATJD. [CH. V. made by the trustee or agent with an implied trust for his benefit.! g^t; the rule that a trustee cannot act in the double capacity of seller and buyer of the trust property does not neces- sarily apply to all dealings with the person for whom he holds it and towards whom he bears the relation of trustee. He may purchase the property of such person ; and if the whole trans- action, and the qjrcumstances under which it took place, were fair and open, and no advantage was taken by him over the cestui que trust, whether by positive concealment, mis- representation, or omitting to state any important fact, and no undue influence was exercised, and the cestui que trust understood what he was doing, the contract will not be set aside because of the fiduciary relation of the parties.^ ^, A trustee may come to an agreement with his cestui que trust that, with reference to a proposed contract of purchase, they shall no longer stand in the present trust relation. And if the trustee prove that, through the medium of such an agreement, he had previously to the purchase clearly, dis- tinctly, and honestly removed himself from the position of trustee, his purchase may be sustained.^ But, though the authorities concede that a man may put off the confidential character of trustee, it may frequently be difficult to deter- mine • if he have done so effectually ; * and this fact will be investigated with jealousy. So, though the connection may have been dissolved, still the trustee cannot use against the interests of the cestui que trust any information derived by him while in the trust relation, unless such information has been fully imparted to the cestui que trust.^ But though a 1 Parker v. Nickerson, 112 Mass. 195; Michoud v. Girod, 4 How. 503; Gillett V. Peppercorne, 3 Beav. 78 ; York & M. Ry. v. Hudson, 16 Beav. 485; Bentley v. Craven, 18 Beav. 75; Kimber v. Barber, taw R. 8 Ch. 56. 2 Brown v. Cowell, 116 Mass. 461; Farnarn v. Brooks, 9 Pick. 212, 231 ; Perry, Trusts, § 195. ' Sanderson v. Walker, 13 Ves. 601; Downes v. Grazebrook, 3 Meriv. 208. * Ex parte Bennett, 10 Ves. 394. 6 Ex parte Lacey, 6 Ves. 626; Coles v. Trecothick, 9 Ves. 248; Oliver V. Court, 8 Price, 161, 164. § 5.] CONFIDENTIAL RELATIONS. 239 trustee may purchase from his cestui que trust, where the latter is fully informed, and is not pressed by any undue influence, still the trustee must purchase openly for himself. He cannot set up a nominal purchaser, and deal with his cestui que trust in the name of another person.^ When trustees depart from that rule of conduct which their duty prescribes, neither they nor those who claim under them with notice can sustain an interest derived from their breach of trust. Nor are the cestuis que trust called upon in such cases to prove actual injury, in order to enable them to set aside the transaction.^ But the cestuis que trust may, with fuU knowledge of the facts, when under no legal disability or undue influence, confirm such acts and debar themselves from future objection, though of course they cannot control the rights of others. If, for instance, the cestuis que trust be ten- ants for life, they cannot by their confirmation conclude the interests of those in remainder.^ If a person accept the office of trustee of a mai^riage settle- ment by which property is intended to be secured for the separate use of the wife, with remainder to the survivor, but subject to a power of joint appointment reserved to them in the settlement, any private agreement between the husband and the trustee that the property should be held liable to make good the engagements of the husband with the trustee would be fraudulent against the other parties to the settle- ment. The trustee would be bound to carry the appointment into execution, without himself setting up or allowing any one else to set up any thing to defeat it.* And where a cred- itor of the husband, by suppressing the fact that he is a creditor, procures himself to be appointed one of the wife's trustees, with a view of obtaining payment out of the wife's 1 Woodhouse v. Meredith, 1 Jac. & W. 222. 2 1 Hovenden, Fraud, 484. ' lb. ; Bowes v. East London Waterworks, 3 Madd. 383. * Morris v. Clarkson, 1 Jac. & W. 111. 240 PKESTJMPTIVB OR CONSTETJCTIVE FRAUD. [CH. V. separate property, equity will not permit him to reap the fruits of his imposition by reverting to his character, and setting up the debt which he had suppressed.^ If the trustees of a marriage settlement, empowering them to advance to thfe husband a sum of money upon receiving a written consent of the wife, attested by witnesses, take upon themselves to advance the money without such consent, they cannot justify this breach of trust by alleging a subsequent approval of the wife. For the actual advance of the money to the husband, who perhaps may be unable to return it, would create an unfair pressure upon the judgment of the wife, giving to her subsequent assent a very different char- acter from the free consent required by the settlement.^ It is a fundamental rule of law that no one can be com- pelled to answer questions having a tendency to convict him- self of a criminal offence. If therefore it be alleged by bill in equity that a trustee has sold a living belonging to his cestui que trust, the trustee may demur to any discovery that would tend to fix him with. simony, since this is a crime. But if the object of inquiry be to prove payment of money, it is proper, though the effect of the answer may be to prove simony ; for no considerations will induce the court to declare that a trustee may so deal with the trust property as to be at liberty to state what he has done only to a limited extent, and compel the cestui que trust to rest satisfied with imperfect imformation concerning his property interests.^ Leases of charity estates for an unreasonable term, without an adequate consideration, are invalid ; * a fortiori, if they contain a covenant for perpetual rfenewal.^ In all such cases, fraud is inferred ; and the lessee is held to be a trustee. So, if a corporation, acting as trustee of a charity, demise part of 1 Dalbiac e. Dalbiao, 16 Ves. 121. " Bateman v. Davies, 3 Madd. 99. 8 Parkhurst v. Lowten, 2 Swanst. 211, 215. ^ Attorney-General v. Moses, 2 Madd. 308. 5 Attorney- General v. Brooke, 18 Ves. 326. § 5.] CONFIDENTIAL RELATIONS. 241 the charity estate to one of their own body at a lower annual rent than might have been obtained from another responsible tenant, it would be impossible for the lessee to support such a lease, if he were aware of the circumstances under which it was executed.^ When a sale is made under a trust or devise for payment of debts generally, without a specification of the debts in a sched- ule, the purchaser is not bound to see to the application of the money. But, if ^here be a specification of debts, the purchaser must look to the application of the money. ^ Where trustees join coUusively with a remainder-man in putting the tenant for life of the trust estate out of possession, and before the tenant for life is restored to his rights some of the occupiers of the land become insolvent, the trustees will be decreed to make good, not merely what the tenant for life would under the circumstances actually have received, had his possession been uninterrupted, but all he is entitled by his contracts of lease to receive.^ If, on the other hand, trustees to preserve contingent remainders collude with the tenant for life, and permit him to commit waste in fraud of those in re- mainder, the trustees will be liable for such misconduct.* It would in ordinary cases be a fraud in mere trustees appointed to preserve contingent remainders to concur in the destruction of the very interests, the protection of which was the object of their appointment ; ^ but where they join in the destruction of contingent remainders without any fraudulent motive in fact, after the first tenant in tail has attained the age of twenty-one years, this may be in furtherance of such a fair and reasonable family arrangement as equity, even if it hesitated to direct the act, would not deem a culpable breach 1 Ex parte Greenhouse, 1 Madd. 109. ^ 1 Hovenden, Fraud, 490. =■ Kaye v. Powell, 1 Ves. Jr. 408. * Garth v. Cotton, 3 Atk. 753 ; Stansfleld v. Habergham, 10 Ves. 278. 5 Mansell v. Mansell, 2 P. Wma. 680; Biscoe v. Perkins, 1 Ves. & B. 491. 16 242 PEESTJMPTIVE OK CONSTEUCTIVE PEATJD. [CH. V. of trust.i A fortiori, where the trustee is not merely such, but is also tenant for life of the estate, he will not be deemed guilty of a breach of trust in joining with a remainder-man in tail to bar the entail ; for the policy of the law favors the free alienation of property.^ Courts of equity look with special jealousy upon the con- duct of trustees where infants are the cestuis que trust. And where a person has the management of two estates, in one of which he is interested personally apfl in the other as trustee, he will not be allowed to refer an engagement into which he has entered to one account or the other, as he may think fit, after he has seen the probability of its turning out advantage- ously or otherwise. If he has once embarked the infant's property, though no part of such trust money has been laid out, the trustee cannot abandon the contract on the part of the infant and take it on his own behalf. For any profits made, he must account: whether he must answer for any loss or not will depend upon his authority so to employ the trust funds, and the diligence and honesty with which he has conducted the transaction.^ A general rule obtains in respect of trustees of every de- scription, and of tenants for life, namely, that if, from being in possession, they have and improve an opportunity of re- newing a leasehold interest, such renewal will be treated as a graft upon the old lease.* They must not obtain a reversion- ary interest for their own use only ; ^ but whatever advantages they obtain by such means they must hold in trust.^ And purchasers with notice of course stand in the same situation, 1 Moody V. Walters, 16 Ves. 307, 310, 311. 2 Osbrey v. Bury, 1 Ball & B. 58. ' 1 Hovenden, Fraud, 481 ; Wilkinson v. Stafford, 1 Ves. Jr. 42. * Mulvany v. Dillon, 1 Ball & B. 419; James v. Dean, 15 Ves. 240. 5 Pickerijig v. Vowles, 1 Brown, C. C. 198; Randall v. Russell, 3 Meriv. 196. 6 Nesbitt V. Tredennick, 1 Ball & B. 46 ; Rushworth's Case, 2 Freem. 13. § 5.] CONFIDENTIAL RELATIONS. 243 if relief be sought against them without laches.^ Still, where there has been no contrivance in fraud of those who were .interested in the old lease, and where such old lease and all the trusts relating to it are absolutely determined, and there is neither any remnant of the old lease, nor any tenant right of renewal upon which a new lease can be considered a graft, then the party who was trustee is quoad hoe no longer in that situation. The fiduciary relation is terminated for want of an object ; the trust as to this subject has expired ; and there is no ground for excluding the quondam trustee from becoming a purchaser of the property for his own bene- fit.2 And where a trustee, even during the existence of a trust as to the leasehold interest, purchases the reversion in fee, though it may be objected that by this means he debars the cestui que trust of a fair chance of a renewal, yet this fact alone is not of sufficient importance to convert the purchase of the inheritance into a mere graft upon the leasehold interest.^ Upon similar principles, though it would be highly im- proper for an attorney to avail himself of information which he obtained as trustee for tenants for life or years to procure fi-om the right heir a conveyance of the reversion in fee for his own benefit, still, desirous as equity might be to consider him a trustee only, it would not be warranted in doing so in favor of tenants for life who took nothing in the inheritance.* Where a trustee in abuse of his trust has converted the trust property to his own use, the cestui que trust has the option to take the original or the substituted property. And, if either has passed into the hands of a bona fide purchaser without notice, he may take its value in money. If the trust property come back into the hands of the trustee, that fact does not affect the rights of the cestui que trust. The prin- 1 Parker v. Brooke, 9 Ves. 587; Senhouse v. Earle, Amb. 288; Cord- well V. Mackrill, 2 Eden, 347. 2 Stokes V. Clarke, Colles, P. C. 193. ' Randall v. Kussell, 3 Meriv. 197; Hardman v. Johnson, lb. 352. * Norris v. Le Neve, 3 Atk. 38. 244 PRESUMPTIVE OE CONSTEUCTIVE rBATJD. [CH. V. ciple is, that the wrongdoer shall derive no benefit from his own wrong. The entire profits belong to the cestui que trust; and equity will so mould and apply the remedy as to give them to him.i It is an inflexible rule that, when a trustee buys at his own sale, the cestui que trust may treat the sale as a nullity, though the trustee paid a fair price, not because there is, but because there is likely to be, fraud,^ a reason founded of course upon the peculiar relation of the parties. Thus, it has been held that, where shares of stock, standing in the name of a trustee, were assessed by an act of the Legislature and put up at auction for non-payment, and struck off to the trustee, the sale was invalid, and the trustee liable in trover for the value of the shares at the time of the sale and the dividends he had received thereon, with interest, less the amount of the assess- ments and expenses of sale.^ And this rule, invalidating purchases by trustees at their own sales, applies as well where the sale is made under a decree of court as where it is made by himself.* And a trustee is not only forbidden to purchase for himself, but he cannot buy as agent for another person.® However, if the trustee, in buying, acted without moral turpitude, equity may protect him so far as to give him a lien upon the property for any advances of a reasonable kind which he may have made.^ And, if the trustee put improve- ments upon the trust property which he has purchased, he 1 May V. Le Claire, 11 Wall. 217, 236. If there be actual fraud in the trustee in the execution of the trust, the cestui que trust can recover of him without an ofier to reimburse the trustee for moneys which he has expended. MoKennan v. Pry, 6 Watts, 137. 2 Brothers v. Brothers, 7 Ired. Eq[. 150. See Freeman v. Harwood, 49 Maine, 195. ' Freeman v. Harwood, 49 Maine, 195. < Ogden V. Larrabee, 57 111. 889. 8 North Baltimore Assoc, v. Caldwell, 25 Md. 420 j Lewin, Trusts, 377, note. 6 Mulford V. Minoh, 3 Stockt. Ch. 16. § 5.] CONFIDENTIAL RELATIONS. 245 will be allowed therefor upon a resale ; provided the premises bring more than the sum agreed to be paid by the trustee.^ It is held in Mississippi that the right of a cestui que trust to avoid a purchase by the trustee at his own sale does not apply to the same extent as to sales made directly between the trustee and the cestui que trust. A trustee may, it is there held, purchase the trust property directly from the cestui que trust, or from third persons by his consent. But such transactions are there, as elsewhere, viewed with great suspicion ; and, if attacked, it is incumbent upon the trustee to show that the sale was fair and just in all respects, and consummated on his part with the most abundant good faith ; and that the cestui que trust had all the information concern- ing the property possessed by the trustee.^ Where the title to which a trust or mortgage attaches fails absolutely, the trustee or mortgagee, in the absence of fraud or unfair dealing or unfair advantage arising out of the rela- tion sustained to the cestui que trust or mortgagor, may pur- chase and hold for his own benefit an adverse title. The prohibition is not applicable, where there is no title whatever in the party occupying the subordinate position.* If a trustee purchase the trust property at his own sale, and claim to hold the same against the cestui que trust, on the ground of acquiescence, it devolves upon him to show notice to the cestui que trust, and distinct information to him before the alleged acquiescence began. The sale being prima facie fraudulent, the purchaser must be able to prove sufficient to overcome the presumption.* Mere notice cannot be enough ; for it does not follow in logic or in any uniform or usual course of events that a cestui que trust, having notice of a purchase by his trustee, had sufficient information from the trustee to justify him in making the purchase. 1 Mason ». Martin, 4 Md. 124. " Jones v. Smith, 33 Miss. 215. » Price ». Evans, 26 Mo. 30. < Miles V. Wheeler, 43 111. 124 ; Randall v. Irvington, 10 Ves. 427. 246 PEESUMPTIVE OK CONSTKTJCTIVE FRAUD. [CH. V. The transaction, however, may often be established by long acquiescence in the purchase, in the absence of actual fraud. Thus, an attorney who sells bonds of his client at public sale, and buys them in himself at their full value at the time, cannot, after twelve years' acquiescence by the client, be called to account for them as a trustee.^ If the cestui que trust, being under no disability, lie by for a considerable time, with full knowledge of the purchase by the trustee, or do not within a reasonable time after his dis- ability is removed seek to set aside the sale, or to treat the trustee as a purchaser for his benefit, it will be considered a case of acquiescence in the sale, and the trustee will not be disturbed.^ Though equity will enforce the utmost good faith on the part of a trustee, and vigilantly watch any acquisition by him in his individual character of property which has ever been the subject of his trust, yet, when he has sold the property to another, and the sale has been judicially confirmed after opposition by the cestui que trust, the fact that thirteen years afterwards he bought the property from the person to whom he sold it does not of necessity vitiate the transaction. The question in such a case becomes one of actual fraud. Where, therefore, on a bill charging fraud in a sale, the answer denies it in the fullest manner, alleging a purchase bona fide and for full value, and that, when the trustee made the sale to the person from whom he has since bought it, the present pur- chase by himself was not thought of, equity will not pro- nounce the purchase fraudulent.^ The fact even that property was sold by a trustee for a sum less than half its value, and was shortly afterwards sold back to him by the purchaser for the same amount, is not of itself sufficient to fix on the trustee the charge of having committed 1 Marsh v. Whitmore, 21 WaU. 178. 2 Mason v. Martin, 4 Md. 124. s Stephen v. Beall, 22 WaU. 329. § 5.J CONFIDENTIAL EELATIONS. 247 a fraud. To establish such a fact, there should be proof of an understanding between the trustee and the bidder at or prior to the sale.^ To render the ratification of a purchase made by a trustee of trust property for himself effective and binding, the eestui que trust, being sui juris, must at the time of the ratification be fully aware of every material fact, and his act of ratifica- tion must be an independent, substantive act ; and he must not only be aware of the facts, but apprised of the law as to how these facts would be dealt with, if brought before a court of equity.'^ An application by the eestui que trust to be allowed to par- ticipate in the purchase, which is refused, is not such an acquiescence in the sale to the trustee as to make the sale valid.^ As to the taking of accounts between a trustee and his cestui que trust, the general rule to be gathered from the cases is, that where there has been great laches on the part of the cestui que trust (supposing him to have been sui juris), and the trustee has not been guilty of positive fraud, the account will be taken only from the commencement of the suit. But where there has been no laches in seeking the account, or where the parties are not sui juris, or where the ti'ustee is 1 Boehlert v. McBride, 48 Mo. 505. ' Cumberland Coal Co. v. Sherman, 20 Md. 134. " The doctrine of a court of chancery," say the court, quoting from Lammott v. Bowley, 6 Har. & J. 526, "is not, as has been contended, that equity will not administer relief in cases of mistake of law, upon the principle that every man is bound to know the law. It is not intended to say that the plea of ignorantia legis would in all instances be available in civil cases (in criminal it never can be), because some legal propositions are so plain and familiar even to ordinary minds that it would be doing violence to probability to impute ignorance in such cases ; but it is only meant to say that where the legal principle is confessedly doubtful, and one about which ignorance may well be supposed to exist, a person acting under a misapprehension of the law in such a case shall not forfeit his legal rights by reason of such mistake." « EJcketts V. Montgomery, 15 Md. 46. 248 PRESUMPTIVE OR CONSTRUCTIVE FRAUD. [CH. V. chargeable with fraud, the account will be carried back to the time when the fraudulent possession began.^ A release obtained by executors and trustees from the cestuis que trust for less than the amount due from them is invalid, especially if the beneficiaries reside in another State.^ So, too, releases from cestuis que trust to their trustees, with- out a settlement of the trust account, are looked upon with jealousy by the courts.* One to whom certain property has been conveyed by his debtor in trust for others is not precluded from purchasing or levying upon other property of the debtor, for his own personal benefit.* Besides those who are trustees eo nomine, there are others who occupy that position. The officers and directors of a corporate body, for example, are trustees of the stockholders, and cannot, without being guilty of fraud, secure to them- selves advantages not common to the latter.^ Thus, where a corporation instructed its officers to effect a loan of money, and they, in violation of their duty, proceeded to secure per- sonal claims of their own against the company, they were held guilty of a fraudulent breach of trust, and the transaction was declared void as against the stockholders.^ 1 Miles V. Wheeler, 43 lU. 123 ; Bowes v. East London Waterworks, 3 Madd. 875; Drummond v. St. Albans, 5 Ves. 432; Pettinard v. Pres- cott, 7 Ves. 541 ; Dormer ». Fortesoue, 3 Atk. 130. 2 Bixler v. Kunkle, 17 Serg. & R. 298. 8 Shartel's Appeal, 64 Penn. St. 25. * Eldridge v. Smith, 34 Vt. 484. ' Jackson v. Ludeling, 20 Wall. 616; Simmons ». Vulcan Oil Co., 61 Penn. St. 202; Koehler v. Black River Iron Co., 2 Black, 715; Charitable Corp. v. Sutton, 2 Atk. 404; Robinson v. Smith, 3 Paige, 222; Hodges v. New England Screw Co., 1 R. I. 321; York & N. M. Ry. Co. V. Hudson, 19 Eng. L. & E. 361. ° Koehler v. Black River Iron Co., supra. " In executing this mort- gage," said the court, " and thereby securing to themselves advantages which were not common to all the stockholders, they were guilty of an unauthorized act, and violated a plain principle of equity applicable to trustees. The directors are the trustees or managing partners, and the § 5.] CONFIDENTIAL EELATIONS. 249 While, however, the officers of a corporation cannot make a personal profit out of the business of the company, still, as in other cases of fiduciary relations, transactions for the individual benefit of the directors are supported where the fiduciary relation has ceased before the particular transaction, or where it was entered into with the consent of the stock- holders, or where by acquiescence they have precluded themselves from objecting.^ A director of a company is not in the position of a trustee of his shares for the general body of shareholders, and under ordinary circumstances he may deal with them as freely as any other shareholder, provided he does not part with his qualification. But he is a trustee of his power of making calls for the general body of shareholders, and must not use it for his own benefit, without regard to their interests.^ It has been held in Indiana that the relation existing between the president of a railroad corporation and a non- official stockholder is not such as to require a disclosure of facts in transactions in the corporation stock between such persons.^ In the case cited, the president of a railroad company, who was also one of its directors, having knowledge by reason of his official position that the true value of the stock of the company was very largely in excess of its nomi- nal market value, purchased at much less than its real worth the stock of a non-official stockholder, who was ignorant of the company's financial condition, and of facts giving an extraordinary value to the stock, without disclosing to the seller the facts and circumstances within his knowledge as to stockholders are the cestuis que trust, and have a joint interest in all the property and effects of the corporation ; and no injury that the stock- holders may sustain by a fraudulent breach of trust can, upon the general principles of equity, be suffered to pass ■without a remedy." AngeU & Ames, Corporations, § 312. 1 Ashhurst's Appeal, 60 Penn. St. 290. 2 Gilbert's Case, Law R. 5 Ch. 559. * Tippecanoe Co. v. Reynolds, 44 Ind. 509. 250 PEESXTMPTIVB OK CONSTETJCTIVE PKATJD. [CH. V. its true value. It was held that in the absence of actual fraud the sale was valid. It was considered that such a case did not disclose a relation of trustee and cestui que trust. But the decision was not unanimous, and the subject is worthy of further consideration. The court were possibly correct in holding that the president of the company was not, in strict- ness, a trustee towards the vendor ; ^ but it is quite another thing to say that no relation of confidence and trust existed between the parties. And that is all that is necessary to require disclosure.^ But this decision is not to be understood as in any way impugning the well-established doctrine, that the duties of corporate officers require them to forego all personal interests except in so far as their personal interests are the same as the interests of the corporation. The authori- ties upon this point were commented upon and conceded to be correct.^ § 6. Op Guaediak and Ward. Property transactions between guardian and ward, with the exception of gifts or bequests by a guardian to his ward, are prima facie fraudulent as against the guardian ; but the guardian is entitled to show, if he can by the clearest proof, that he dealt with the ward exactly as with a stranger, taking no advantage of his influence over him, or of his superior 1 See Spering's Appeal, 71 Penn. St. 11, 20 ; Bliss v. Matteson, 45 N. Y. 22 ; Bedford R. Co. v. Bowser, 48 Penn. St. 29 ; Koehler v. Black River Co., 2 Black, 715. 2 To the same effect as Tippecanoe Co. v. Reynolds, supra, see Car- penter V. Danforth, 52 Barb. 581. * Robinson v. Smith, 3 Paige, 222; Verplank v. Mercantile Ins. Co., 1 Edw. Ch. 84; Cumberland Coal Co. v. Sherman, 30 Barb. 553; Butts V. Woods, 38 Barb. 181 ; Hodges v. New England Screw Co., 1 R. I. 312 ; European Ry. Co. v. Poor, 59 Maine, 277 ; York Ry. Co. v. Hud- son, 19 Eng. L. & E. 361 ; Great Luxembourg Ry. Co. v. Maguay, 25 Beav. 586; Ex parte Bennett, 18 Beav. 339. § 6.] CONFIDENTIAL RELATIONS. 251 knowledge in relation to the subject-matter of the transaction, and that the ward's act was the result of his own volition and upon full deliberation ^ and legal advice. A guardian has the power to sell his ward's personal estate, but he has no right to use his power for his individual benefit. If he appropriate his ward's property, or the proceeds of a sale of it, to pay his own debt, he commits a fraud on the ward.^ But the fraud of the guardian will not of itself invalidate the transaction. If a guardian dispose of his ward's property as his own (the guardian's) to an innocent purchaser without notice, actual or constructive, such purchaser is not affected by the fraud.* A guardian who has fraudulently converted stock of his ward will be held to account at the highest price reached by the stock after the conversion.* And, on the other hand, improvements put by a guardian upon land fraudulently pur- chased from his ward need not be paid for by the ward.^ In the absence of actual fraud, however, the case would proba- bly be otherwise. The principle of law which protects wards in transactions with their guardians extends to the execution of a will by a ward in favor of his guardian ; and hence a testament made by a ward in favor of his guardian will be held void, unless the legal presumption of undue influence is rebutted by proof.^ The same principles apply to cases of acknowledgment of debts. Thus, in an English case it appeared that the plain- tiff had married while a minor, and had thereby placed him- self in a position of great embarrassment. The defendant, an attorney, made him considerable advances of money, but did not appear to have acted for him in any professional capac- 1 Meek v. Perry, 36 Miss. 190. 2 Hunter v. Lawrence, 11 Gratt. 111. « lb. * Lamb's Appeal, 58 Penn. St. 142. 6 Eberts v. Eberts, 55 Penn. St. 110. 6 Meek v. Perry, 36 Miss. 190. 252 PRESUMPTIVE OB CONSTETJCTIVB EEATJD. [CH. V. ity. Two months after coming of age, the plaintiff signed an acknowledgment, stating, as the defendant alleged (but this was disputed) that he was indebted to the defendant above £1,300. The court treated the case as one of guardian and ward, and held that he could not be permitted to conclude the plaintiff by an acknowledgment, signed by him within a short time after coming of age, and without the intervention of any friend or adviser.^ The jurisdiction of equity will be exercised to restrain an action at law upon a negotiable security obtained by a guardian from his ward while under the influence, though absolved from the connection, of the confidential relation. In an English case, it appeared that a lady, two years and a half after she came of age, had at the request of her late guardian, with whom she was still living, indorsed a promissory note, made in his favor. The paper came into the defendant's hands for value, but with notice of the circumstances. Upon a bill filed by the young lady, the defendants were restrained from suing her at law upon her indorsement.^ When a man acts as guardian, or trustee in the nature of guardian, for an infant, the courts are extremely watchful to prevent such person taking any advantage, immediately upon the attaining majority by his ward or cestui que trust,^ and also at the time of settling accounts or delivering up the trust, because an undue advantage may then be easily taken. The occasion would give an opportunity, either by flattery or by force, to take such an advantage ; and therefore the rule of 1 Revett V. Harvey, 1 Sim. & S. 502. Of course, a mere acknowledg- ment of debt -would not be conclusive in any case, unless under seal; but in this case the defendant alleged that the instrument was signed after a regular settlement of accounts and delivery of vouchers, and there was no suggestion of mistake. " Maitland v. Backhouse, 16 Sim. 58. See Maitland v. Irving, 15 Sim. 437. 8 Tuck V. Buckley, 43 Iowa, 415. § 6.] CONFIDENTIAL EELATIONS. 253 the courts is to treat the situation as one coming under the head of pubho utility, like the case of bonds obtained from young heirs, and rewards given an attorney pending a cause. Gifts under such circumstances are not in general permitted to stand, though perhaps in the particular case there may not have been any actual unfairness. Still such bounties by wards just come of age are not universally invalid. A ward in such a situation may bind himself by a gift to his guardian ; as where, being actually in possession of an estate, and fully sui juris, he makes a gift by way of reward for care and trouble, with his eyes open.^ A person entering upon the estate of an infant, whether the infant had been in possession or not, will be fixed with a fiduciary relation as to the infant : first, whenever he is the natural guardian of the infant ; secondly, when he is so con- nected by relationship or otherwise with the infant as to im- pose upon him a duty to protect, or at least not to prejudice, the infant's rights ; or, thirdly, where he takes possession with knowledge or express notice of the infant's rights.^ One who occupies such a position towards an infant comes, it should seem, within the general prohibition against treating by way of contract or purchase with reference to the infant's estate. Deeds of release and acquittance as well as of gift, made by a ward to his guardian, or to a person who has borne the part of a guardian, shortly after the ward's arrival at majority, but before the delivery of the ward's estate and without a settlement of accounts, are considered void, without proof of actual fraud.2 So, too, if a guardian buy property from his ward at a greatly inadequate price, shortly after the ward arrives at majority, the sale wUl be set aside at the suit of the ward.* But undue influence will not be presumed to exist on 1 Hylton V. Hylton, 2 VeB. 548. ^ Quinton v. Frith, Law R. 2 Irish Eq. 396. See also Eevett v. Harvey, 1 Sim. & S, 502. » Waller v. Armistead, 2 Leigh, 11. * Eberts v. Eberts, 55 Penn. St. 110. 254 PBESUMPTIVE OR CONSTBTJCTITE FKATJD. [CH. V. the part of a guardian over his former ward in a settlement between them made more than three years after the ward has attained his majority.-^ The settlements and allowances of a guardian in a Probate Court, in the matter of his guardianship, have the force, it has been said, of judgments, and can be set aside only upon proof that they were procured by fraud.^ And it is not a fraud for the guardian to give his individual note for the maintenance of the ward, and then to obtain an allowance therefor in the settlement.^ § 7. Of Executors and Administeatoks. Executors and administrators also come under the general designation of parties holding confidential relations to others, and the general principles already stated apply to them. In a recent case,* a widow had yielded the right of administration upon her husband's estate to the husbands of children by a former marriage of the deceased. Between the widow and these children and their husbands the most affectionate rela- tions existed. The husbands had in their hands or within their control personal property of the deceased amounting to sixty thousand dollars or more, to one-third of which the widow was entitled absolutely by law. She had, in fact, great confidence in the men, as she evinced by renouncing her right to the administration of her husband's estate in their favor. Soon after the qualification of the administrators, a deed was executed between all the parties above-named, whereby they agreed to abide by the terms of a defective will made by the deceased in the disposition of his estate. The effect of this 1 Kittredge v. Betton, 14 N. H. 401. 2 Brent v. Grace, 30 Mo. 253; Mitchell v. Williams, 27 Mo. 399. ' Brent v. Grace, supra. * Statham v. Ferguson, 25 Gratt. 28. § 7.] CONFIDENTIAL KELATIONS. 255 arrangement was the giving up, on the part of the widow, of some 125,000. Upon the evidence in the case, it was con- sidered that, in the situation of the parties, undue influence had been exerted on the widow, and that she was not suffi- ciently informed of the value of the estate or of her rights ; and therefore, though no actual fraud had been practised, the deed was set aside. As we have elsewhere seen, in considering the duties of agents, a person cannot legally purchase, on his own account, that which his duty requires him to sell on account of another; nor can he purchase, on account of another, that which he sells on his own account. He cannot unite the opposite characters of buyer and seller. And this rule applies to purchases by executors at open sale, though they were em- powered by the will to sell the estate of their testator for the benefit of heirs and legatees, of whom they themselves were part.^ And an administrator can no more buy the estate of the deceased through a third person acting on his behalf than he can do so directly." Thus, where property sold at an administrator's sale is purchased by his attorney and his brother, and he (the administrator) afterwards negotiates sales of the same, deriving profits thereby, equity will set aside the original purchase, unless the property has since passed into the hands of innocent third persons.^ The rule which restrains executors and administrators, and persons in situations of trust generally, from buying the prop- erty under their charge, does not go so far as to prevent them from baying the property from one who has purchased the same for value and in good faith. Provided there be no con- nivance or collusion between such parties, the executor or trustee may treat for the purchase, and acquire the title to the property immediately after it is sold from the estate in ' Michoud V. Girod, 4 How. 503. 2 Scott 17. Umbarger, 41 Cal. 410. ' Kead v. Howe, 39 Iowa, 553. 256 PRESUMPTIVE OK CONSTRUCTIVE FRAUD. [CH. V. trust.^ But the fact that a purchaser at an administrator's sale was a man of no pecuniary means, that on the same day on which the administrator conveyed the property to him he reconveyed it to the administrator, is sufficient proof, in the absence of an adequate explanation, that the first purchase was made for the benefit of the administrator ; and the trans- action may be avoided by the parties in interest.^ If an executor, ignorant of the rules of the Court of Chancery, openly purchase assets of his testator with the full approbation of the parties interested, he will not be held answerable, after a considerable lapse of time, for the profit he has made, provided he has purchased honestly. But, if it appear that the purchase was made with a fraudulent inten- tion, the rule wiU be enforced. The purchase will be set aside, and the executor required to account for the accumu- lations.^ A purchase by an administrator of one of the distributees, shortly after the distributee became of age, of all his interest in his father's estate, the administrator having rendered no inventory of the estate or stated an account, and the purchase being made at a grossly inadequate price, will be considered fraudulent and voidable at the election of the distributee, if application is made for that purpose within a reasonable time afterwards, or within reasonable time after obtaining knowledge of the fraud.* Fraud, however, in an administrator's sale, will not be presumed from the mere fact that the purchaser afterwards conveyed the property to the administrator. Actual fraud should be proved in such a case.® A purchase of bonds from an executor at a discount of eighteen per cent., with knowledge that the condition of the 1 Wortman v. Skinner, 1 Beasl. 358. 2 Obert V. Obert, 2 Stockt. 98. See Scott v. Gamble, 1 Stockt. 235; Mulford V. Bowen, lb. 797; Michoud «. Harris, 4 How. 563. 8 Whatton v. Toone, 5 Madd. 54. * Johnson v. Johnson, 5 Ala. 90. ' Vasquez v. Kicharu'son, 19 Mo. 96. § 7.] CONFIDENTIAL BBLATIONS. 257 estate does not require the sale, is a fraud on the p9,rt of the purchaser, though he may not know that the bonds do not amount to more than the executor's interest (as one of the legatees) in the estate. And in such a case, where the executor has not paid to the other legatees their portion of the estate, such purchaser may be compelled to repay the money to them.^ So, too, if the sureties of the executor have been compelled to pay the amount to the legatees, they may recover over from the purchaser.^ If an administrator charge himself in settlement with the appraised value of the estate, while the sale-bill returned by him shows that the amount for which the property sold ex- ceeded its appraised value ; or if he apply the money of the estate to the purchase of property in his own name and right, equity will open the settlement for fraud.^ And the same is true where such a party, in his trust capacity, collects notes due and drawing interest, without charging himself with such interest, though there be no evidence of positive fraud.* A party who voluntarily interferes with and manages an estate in behalf of heirs as their representative, and as such 1 Pinckard v. Woods, 8 Gratt. 140. " It is the duty of an executor," said the court, " not to sell, but to collect the debts due to the estate of his testator, including those arising out of sales of goods made by the executor in the course of his administration ; and, if he sells such debts at a price below their value, he thereby commits a devastavit, unless he makes it appear that such sale was manifestly required by the interests of the estate. And this he can never do without showing in the first . place that the proceeds thereof have been applied to the purposes of the estate. The appropriation by the executor of the proceeds of such a sale to his own individual uses presents the case of a fraudulent breach of trust on his part, for which, of course, he is personally liable to creditors legatees, and others injuriously afEected by such improper diversion of the assets. And the purchaser himself, so acquiring such debt at a profit, if he has reason to believe at the time that the same belongs to the estate, and is so disposed of by the executor for his individual uses, thereby concurs in such fraudulent breach of trust by the executor, and therefore incurs the like liability." 2 lb. s Osborne v. Graham, 30 Ark. 66. * Kinggold v. Stone, 20 Ark. 526. 17 258 PEESUMPTIVE OR CONSTBUCTIYB FEATJD. [CH. V. acquires information to which a stranger would not have access, stands in the situation of an administrator or executor duly appointed. And, in treating with the heirs for the pur- chase of the estate, he is bound to disclose every matter which it is important they should know, or the sale will be invalid, unless such disclosure is distinctly waived.^ It has been doubted whether a gift will be looked upon with such suspicion as to cast the burden of proving fairness upon the donee, where the situation of the donee was merely that of a person transacting the business of the donor as administratrix of the estate of the donor's husband, and of attending to her out-of-doors affairs generally. If, however, the situation were to be deemed that of an agency, subject to the severest scrutiny of the law, there was nothing in the evidence to cast the slightest suspicion upon the transaction ; and it was accordingly upheld.^ When an executor's purchase at his own sale is set aside, the executor will not be held to take the property at what it was worth upon the estimate of witnesses. The property will be put up for sale again ; but, if more cannot be obtained for it than the executor was to pay, his purchase will be confirmed.^ A court of equity will not assist in carrying into effect compositions of claims by executors or administrators, unless A 1 Casey v. Casey, 14 III. 112. 2 Millican v. Millican, 24 Tex. 426, 451. See Hunter v. Atkins, 3 Mylne & K. 113. In Millican v. Millican, the court say: " The agency which existed in this case was such as every widowed mother, who is under the necessity of administering upon her deceased hushand's estate, would be likely to intrust to a son, if she have one competent to transact the busi- ness; and it will scarcely be contended that in every such case the per- formance of so reasonable a service and duty on his part will disqualify the son from receiving a gratuity from his mother, or from becoming the object of her bounty equally with others who have not rendered such ser- vices. Undue influence is not to be inferred as the legal consequence of such an agency." ' Bailey v. Kobinsons, 1 Gratt. 4. § 8.] CONFIDENTIAL RELATIONS. 259 the party praying it will first disclose all the circumstances of the case, that the court may see that there has been no fraud, and that every thing was fair.i § 8. Of Mortgagor and Mortgagee. The law upon the subject of the right to redeem mortgaged property, where the mortgagor has conveyed to the mortgagee the equity of redemption, is well settled. It is characterized by a jealous and salutary policy. Principles are applie4 almost as stern as those which govern where a sale by a cestui que trust to his trustee is drawn in question. To give validity to such a sale by a mortgagor, it must be shown that the conduct of the mortgagee was in all things fair and frank, and that he paid for the property what it was worth. He must hold out no delusive hopes ; he must exercise no undue influence ; he must take no advantage of the fears or poverty of the other party. Any indirection or obliquity of conduct is fatal to his title. Every doubt will be resolved against him. The fact that the mortgagor may have knowingly surrendered and never intended to reclaim is of no consequence. If there be vice in the transaction, the law, while it will secure to the mortgagee his debt with interest, will compel him to give back that which he has taken with unclean hands.^ A sale under a , power in a mortgage will be set aside upon proof of the slightest fraud or unfair conduct.^ This, how- ever, does not mean that countervailing evidence is not to 1 Clay V. Williams, 2 Munf . 105. " Villa V. Rodriguez, 12 Wall. 323, 339, per Swayne, J. ; Morris v. Nixon, 1 How. 118; Russell v. Southard, 12 How. 139; Wakeman v. Hazleton, 3 Barb. Ch. 148; Holmes v. Grant, 8 Paige, 245; 4 Kent, Com. 143. ^ Burr V. Borden, 61 lU. 389; not, however, as was inaccurately stated in Longwith v. Butler, 3 Gilm. 42, upon the slightest proof of fraud or unfair conduct. lb. 260 PEESXmPTIVE OK CONSTEtrCTIVE FEAITD. [CH. V. be taken into account. The whole evidence must be fairly weighed. The sale will not be set aside upon slight proof of unfairness, if met by preponderating evidence on the other side.^ A mortgagee under a power of sale is a trustee in law; he is also a cestui que trust, and his interest as such may absorb the whole estate. It is pledged to him for his protection ; and his security might be greatly impaired or even sacrificed at such sale, if he were not permitted under any circumstances to become a purchaser. It has been accordingly held that where -the mortgagor was privy to the sale, assented to it, and to the acquisition of title by the mortgagee, and con- curred in that result after it was reached, and there was nq suspicion of fraudulent practice, the sale to the mortgagee would stand.2 It has been held in Texas that a mortgagee with a power of sale may purchase at his own sale through a third party, and that such sale is not subject to impeachment in the absence of proof of unfairness, attempt to stifle com- petition, or other fraudulent acts.^ So, too, it has been held in New York that a mortgagee, holding a power of attorney from the mortgagor, may sell and convey through a third party to himself, provided he act therein with the knowledge and concurrence of the mortgagor.* A mortgagee selling under a power of attorney, and a mortgagee acting under a power of sale incorporated in the mortgage, stand upon the same footing. In the latter case, the mortgage deed itself is treated, for this purpose, as a power of attorney.^ In deciding upon transactions between mortgagor and mort- gagee, equity wiU jealously examine whether the latter has taken advantage of the necessities of the former. When the loan has been coupled with or followed by any other transac- tion beneficial to the lender, the inequality of the situations ' Burr V. Borden, 61 111. 389. " Medsker v. Swaney, 45 Mo. 273. ° Howards v. Davis, 6 Tex. 174. *^Dobson V. Racy, 4 Seld. 216. See Ives v. Ashley, 97 Mass. 198. « Medsker v. Swahey, 45 Mo. 273, 277. § 9.] CONPIDBNTIAIi RELATIONS. 261 of the parties will be evidence that the dealing was produced by the influence derived from the mortgage. And on this ground it will be set aside as fraudulent.^ Thus, sales of equities of redemption may be set aside whenever, by the influence which the incumbrance gives him, a mortgagee has purchased for less than others would have given, and there has been any evidence of misconduct on his part in obtaining the purchase.^ However, when mortgaged premises are to be sold under orders in bankruptcy against the mortgagor, the mortgagee may, by application to the court, obtain permission to become purchaser, if he prove to be the highest bidder at the sale.3 If the mortgagee of leasehold premises obtain a renewal, either by being in possession or by clandestine conduct towards the mortgagor, the renewal lease will be treated as a graft upon the old one ; and the mortgagee will not be allowed to retain it for his own benefit, but will hold it in trust.* § 9. Of Paeent and Child. In respect of bounties by children in favor of their parents. Lord Eldon has said that the Court of Chancery will not look on such transactions in the light of reversionary bargains, but wiU regard them as family arrangements, with a reason- able degree of jealousy, and will not look into all the motives and feelings which might actuate the parties in entering into such arrangements.^ This principle has been reasserted in later cases. Lord St. Leonards, after quoting the above 1 Webb V. Rorke, 2 Schoales & L. 673 ; Spurgeon v. Collier, 1 Eden, 59; Vernon v. Bethell, 2 Eden, 113; Tooms v. Conset, 3 Atk. 261; 2 Hovenden, Fraud, 180. 2 Gubbins v. Creed, 2 Schoales & L. 221. ' Ex parte Duncane, Buck, 18; Ex parte Hammond, lb. 465. < Nesbitt ». Tredennick, 1 Ball & B. 46. 6 TweddeU v. Tweddell, 1 T. R. 1. 262 PEESTJMPTIVE OE CONSTETJCTIVE FEAUD. [CH. V. language, has said that if it could be shown on the whole that the son understood what he was doing, and that the case was one of family arrangement, he would be most un- willing to look narrowly into the consideration.^ And both of these statements have been cited with approval in a recent case.^ This was the case of a bounty by a son, entitled in re- mainder to real estate expectant on the lives of his mother and father, by whom he had been educated and maintained. A few days after he attained majority, the son, in order to re- lieve his parents (who had mortgaged their life interest as a security for moneys borrowed and partly expended in improv- ing the property) from keeping on foot certain life insurance policies, executed a deed, charging the inheritance with the mortgage debt. He subsequently filed a bill to have the deed set aside on the ground of fraud, which was disproved, and of undue influence ; but the bill was dismissed with costs. It was considered that the benefit conferred upon the inheri- tance would support the deed.^ Whether it would have been 1 Wallace v. Wallace, 2 Dru. & War. 470. See also Rhodes v. Cook, 2 Sim. & S. 489. 2 Baker v. Bradley, 2 Smale & G. 531, 559. 8 "It was argued, indeed," said the court, "that a judicious friend would have advised the plaintiff that it was useless to attempt to relieve his father by joining in the security, and that his better course was to preserve unincumbered his reversionary estate. But, to justify the pro- priety and wisdom of any such advice, it will be necessary to show some other scheme of life and of intermediate subsistence for the plaintiff during the life of the father and mother. But no such scheme has been shown. Upon a fair view of the whole transaction, there seems nothing unfair, nothing unreasonable in it as a family arrangement, even if the money expended by the father on the estate was not a sufficient consideration. That the plaintiff perfectly understood the transaction is proved by vari- ous circumstances. . . . Looking at this case with that reasonable de- gree of jealousy required in the investigation of all such transactions, it would seem that the previous expenditure by the father for the improve- ment of the estate, and the advantages which were likely to accrue to the plaintiff in point of position and future prospects in his profession [sur- veying] by his concurring to preserve the family establishment, are con- siderations enough to support the securities given in September, 1848, as § 9.] CONFIDENTIAL EELATIONS. 263 supported in the absence of such a consideration does not appear. In cases of gifts to a parent by a child shortly after the child attains majority, the courts look with jealousy upon the transaction ; and the more especially when the parent has, during the minority of the child, been guardian of his prop- erty, and in receipt of the rents of a considerable estate. The burden of proof rests upon the parent to show (and he should show plainly) that the gift was made, not in conse- quence of representations on his part, but by the spontaneous act of the child, and that the child had full knowledge of the nature of the deed by which the gift was effected, and of his own position and rights in reference to the property.^ A gift by a child just come of age to his father or mother is not, however, per se voidable ; nor, it is held in this country, is it prima facie voidable. The true interpretation of the cases on this subject is said to be to the effect that there must be some ingredient of undue influence exercised by the parent, operating upon the fears or hopes of the child ; thus showing reasonable ground to presume that the act was not perfectly free and voluntary on the part of the child.^ But the natu- ral and just influence which a parent has over a child renders it peculiarly important for courts of justice to watch over and protect the interests of the latter. And therefore all contracts and conveyances whereby benefits are secured by children to their parents are objects of jealousy ; and if they be not entered into with scrupulous good faith, and are not a reasonable family arrangement. It has, indeed, been said on behalf of the plaintiff that this is the case of a father urged, by the threat of a creditor, to exercise his parental influence to induce his son to do what was wholly to his detriment. But it is impossible, on a fair view of the facts, to consider that some advantage did not accrue to the son, and that the expenditure of the father an the estate was not a valuable con- sideration." 1 Wright V. Vanderplank, 2 Kay & J. 1; s. c. 8 DeG., M. & G. 133. 2 Taylor v. Taylor, 8 How. 183, 201; Jenkins v. Pye, 12 Peters, 241. 264 PEESTJMPTIVE OR CONSTEXJCTIVE PEAUD. [CH. V. reasonable under the circumstances, they will be set aside, unless third persons have acquired an interest under them.^ Hence, where a deed of gift was made by a female child just of age, and living with her parents, to a trustee for the benefit of one of those parents, and was executed under the influence of misrepresentations by the parents, and contained false re- citals, the instrument was ordered to be set aside and the property to be reconveyed to the grantor.^ The influence which a child may exert over a parent by acts of filial duty and obedience is not undue influ- ence. That influence is proper which one person gains over another by acts of pure kindness and attention, and by cor- rect conduct. In the case of a gift from a child to a parent, ^ndue influence may be inferred from the relation itself, but never where the gift is from the parent to the child. In the former case, it may be inferred that the donation proceeded from the exercise of parental authority. It is natural that the known wishes of a parent should be strongly felt by a child accustomed from infancy to implicit confidence and obedience, even after the child has attained majority ; to the extent of afl'ecting the child's freedom of will, especially if he continue to reside with the parent and to look to him or her for protection and support. But, where the gift is from the parent to the child, there is no such inference. A parent does not yield obedience to the child further than affection or duty prompts ; and it is in accordance with the promptings of nature that parents should make gifts to their children.^ Notwithstanding the favor with which family settlements are regarded, they seem to stand upon no peculiar footing, when effected under the influence of one in whom a special confidence, from his familiarity and connection with the estate, is placed. Thus, it has been laid down that where a father 1 1 Story, Equity, § 309. = Taylor v. Taylor, 8 How. 183. = Millioan v. Millican, 24 Tex. 426, 446; Saufley v. Jackson, 16 Tex. 579. § 9.] CONFIDENTIAL RELATIONS. 265 devises an estate to a son and daughters, the son, knowing its value, and the daughters not knowing it, should be scrupu- lously careful to apprise them, when entering upon a treaty with them for a different settlement of the estate, of its value, of their rights, and of every circumstance necessary to enable them to treat upon terms of perfect equality with him. Any positive concealment or misrepresentation on his part, calcu- lated to put them at a disadvantage, will, it is clear, be suffi- cient ground for annulling the settlement.^ There is no such relation of confidence between a grantor and his son, or grandson, or son-in-law, as to raise a presump- tion of fraud in the case of deed granting to such persons a bounty, though the instrument were executed without the aid of legal counsel but eight days before the grantor's death, and while he was confined to his bed by sickness.^ The principles applicable to gifts by children to their parents apply where the natural position of the parties has become reversed, and the child has become the guardian of his aged or infirm parent.^ Thus, it has been held that a son, the principal legatee of an infirm mother, who was generally under his influence, must produce the most satisfactory evi- dence of the good faith of his conduct.* If no undue or improper means be used by a son to procure a voluntary deed from his father, the mere fact that the father regarded him with more favor than another child, and that the deeds were executed when the father was in some 1 Hewitt V. Crane, 2 Halst. Ch. 159 ; Van Meter v. Jpnes, 2 Green's Ch. 520. 2 Beanland v. Bradley, 2 Smale & G. 339. " There is no rule of this court," said Stuart, V. C., " which prohibits a man by a voluntary deed from bestowing a benefit upon his son, or his grandson, or his son-in-law, even though only a few days before his death. To provide for his children or grandchildren is, or may be, a necessary duty; and, where a father dis - charges that duty, this court will not presume fraud. If fraud is alleged, it must be proved in the ordinary way." 3 Highberger v. Stiffler, 21 Md. 352. * Simpler v. Lord, 28 Ga. 52. As to evidence to rebut the presump- tion against the legatee, see Glover v. Hayden, 4 Gush. 580. 266 PKESUMPTIVB OE CONSTEXJCTIVE PEAtTD. [CH. V. degree intoxicated, but not enough to be insensible of what he was doing, will not be sufficient to set aside the gift.^ A son employed by his father to procure a deed making a certain disposition of his property thereby assumes a fiduciary relation towards his father. Hence where a son so employed procured a deed to himself and a brother, in exclusion of the other heirs, the father being at the time aged, infirm, and in a distressed state of mind, though capable of making a deed, and there being indications that the father had been im- posed upon, the sons were held to strict proof of the fairness of the transaction.^ There is no such relation of trust and confidence existing between a son-in-law and his mother-in-law, by force of the mere relationship, that in dealings between them the latter should be supposed to act upon the presumption that there would be no concealment of facts from her.^ § 10. Of Physician and Patient. On the principle of correcting abuse of confidence, equity will also look with favor on the claim of a patient against his medical attendant in respect of relief from gifts made to him. Rehef has been granted against the liability of the maker of a promissory note, taken by his medical attendant (who had rendered no account) from a poor patient on the occasion of an accession of fortune for an amount beyond what was due for his services on the most extravagant scale of charges.* So, too, an agreement obtained by a physician or surgeon from a deceased patient will be set aside, if the court be satisfied 1 Belcher v. Belcher, 10 Yerg. 121. 2 Martin v. Martin, 1 Heisk. 644. « Fish V. Cleland, 33 111. 238; Cleland v. Fish, 43 111. 282. " Bellage v. Southee, 9 Hare, 534. " Why," said the court, " was the amount of the debt which was due from the poor man to be altered, because his position in life was about to be changed ? And why was the alteration to be made without any account being rendered or any explana- tion being offered? It is said that he intended to be liberal, and that this § ll.J COKTIDENTIAL RELATIONS. 267 that the patient never did agree to, or intend to direct, what in the agreement he was represented as agreeing to and directing ; and if his signature must have been obtained by- fraud, or under such circumstances as render it the duty of the court to protect the patient and his estate from prejudice. And the relief stands upon the general principle applicable to all the variety of relations in which dominion may be exercised by one person over another.^ The mere fact, however, that a vendor was afflicted with a chronic disease, and that the purchaser was his family physi- cian, will not be sufficient to raise a presumption of fraud in the sale against the purchaser.^ § 11. Of Dkaftsmak of Will taking Benefit. Besides the foregoing cases, there are others in which (from the peculiar circumstances under which an instrument, espe- cially a will, is executed) a presumption of fraud arises, or at least a suspicion of unfairness or imposition sufficiently strong as matter of law to require the party claiming the bounty to prove the perfect fairness of the transaction and the freedom of action of the giver. Such a case occurs where a will is written or procured to be written by a person benefited by its provisions, or by one standing in the relation of attorney or counsel, who is benefited by its provisions. Such a circumstance is sufficient to excite close scrutiny, and to require strict proof of volition and capacity.^ There is, court would not prevent him from being so ; and no doubt it would not, if such were his intention. But intention imports knowledge, and liber- ality imports the absence of influence ; and I see no evidence in this case either of knowledge or of the absence of influence. And, where a gift is set up between parties standing in a confidential relation, the onus of establishing it by proof rests upon the party who has received the gift." 1 Dent V. Bennett, 4 Myhie & C. 269. a Doggett V. Lane, 12 Mo. 215. 8 Breed c. Pratt, 18 Pick. 115; Coffin v. Coffin, 23 N. Y. 9; Clark v. Fisher, 1 Paige, 171; Duffield v. Kobeson, 2 Harr. (Del.) 384; .Tompkins V. Tompkins, 1 Bailey, 92 ; Patton v. Allison, 7 Humph. 320; Crispell ». 268 PEBSUMPTIVB OR CONSTETTCTIVB PKAUD. [CH. V. however, no necessary incompatibility between the positions of acting as a draftsman of a will and of receiving a benefit under its provisions. The only effect of occupying both positions is to require the party to show the volition and capa- city of the testator.^ The presumption against the validity of the bequest will, however, be still stronger if the disposi- tion be different from the previously expressed intention of the testator .2 It follows from the statement of this proposition (to wit, that the writing a will or the procuring it to be written by a beneficiary under it raises a suspicion against his right to the bounty) that the rule is independent of any allegation as to the capacity and volition of the testator by the party contest- ing the testament. In fact, however, most of the cases upon this subject are cases in which there was asserted to be more or less weakness of mind in the testator. But this cannot affect the correctness of the proposition. Parties do not gen- erally contest the validity of a will without some allegation of the incapacity of the testator or of fraud practised upon him, and some attempt to support the allegation by proof. If, however, it were insisted, even without such allegation, that a beneficiary who had written the will should make clear proof of the capacity and volition of the testator, the court, it is apprehended, would require it. On the other hand, it is not conclusive against the validity Dubois, 4 Barb. 393; Beall v. Mann, 5 Ga. 456; Adair v. Adair, 30 Ga. 102; Newhouse v. Godwin, 17 Barb. 236; Darling «. Loveland, 2 Curteis, 225 ; Greville v. Tylee, 7 Moore, P. C. 320; Baker v. Batt, 2 Moore, P. C. 317; Dodge «. Meech, 1 Hagg. 612 ; Shelford, Lunacy, 317-334; 1 Jarman, Wills, 42 (4th Am. ed.). But see Wright v. Howe, 7 Jones, Eq. 412. 1 Shelford, Lunacy, 319; Davis v. Rogers, 1 Houst. 44. 2 Lee V. Dill, 11 Abb. Pr. 214. A will written for a testator in extremis by one who takes under it is not ipso facto invalid. Downey v. Murphey, 1 Dev. & B. 82. If the draftsman of a will be one of the nearest relations of the testator, the fact that he is made executor will not in ordinary oases raise a presumption of fraud ; nor will the case be difierent, if a small legacy and a contingent remainder be given him and several other rela- tions in the same degree. CofiSn v. CofSn, 23 N. Y. 9. § ll.J CONFIDENTIAL RELATIONS. 269 of the bounty to the draftsman of the will that the testator was at the time of executing the testament a person of weak mind.i Thus, in the case first cited, it appeared that the testator was a person of slender capacity, of retiring disposi- tion, indolent habits, addicted to drinking, singular in his appearance, frivolous, and even childish at times in his amuse- ments and occupations. However, there was no evidence to show that he was insane, or that he lacked the capacity to make a will. Indeed, it was not disputed on the one side that he was of testamentary capacity, or on the other that he was of weak mind. The court accordingly declared that, even admitting that the weakness went to the extent claimed by the party contesting the will, the only consequence was to add to the suspicion against the draftsman and beneficiary (a solicitor), who was to take no less than a fourth of the estate, the legatees taking the rest to the exclusion of the testator's family, and to call upon the court to watch the proof of the will itself with increased jealousy and suspicion.^ Hence, it is laid down that the increased strictness of scrutiny and proof required in cases where the person by whom, or by whose procurement or direction, a will is drawn, receives a benefit from it, and in cases of doubtful capacity (and increased scrutiny states the whole difference between such and other cases, since the party propounding a will must in all cases establish it, and some scrutiny is always necessary), is only such as to give full and entire satisfaction to the court or jury that the testator was not imposed upon, and that he knew what he was doing, and the dispositions he was making, when he executed the will.^ 1 Barry v. Butlin, 1 Curteis, 637; Harvey v. Anderson, 12 Ga. 69; Boyd V. Boyd, 3 Hill (S. Car.), 341. ^ See also Chambers v. Wood, 1 Jarman, Wills, 45 (4th Am. ed.) ; Wrench v. Murray, 3 Curteis, 623 ; Crispell v. Dubois, 4 Barb. 393; Hill D. Barge, 12 Ala. 687. 3 Duffield V. Robeson, 2 Harr. (Del.) 384, 385; Davis v. Rogers, 1 Houst. 44; Barry v. Butlin, 1 Curteis, 637; Durnell v. Corfield, 1 Robt. Ecc. 61, 63. 270 PEBSXJMPTIVB OE CONSTRTTCTrVE I-EATJD. [CH. V. The doctrine, as declared by a distinguished judge,^ is that proof of the knowledge of the contents of the will may be given in any form ; that the degree of proof -required depends upon the circumstances of each case ; that, in the case of per- fect capacity, knowledge of contents may be presumed, but when the capacity is weakened, and the benefit to the drawer of the will is large, the presumption is weaker and the sus- picion stronger. The proof in such case must be more stringent, and the court must be satisfied of the knowledge of the con- tents beyond the proof of execution by the testator. And then the nature of the instrument is to be considered, — its simplicity or complexity. In cases of suspicion, therefore, the proof is to be in proportion to the degree of suspicion ; and the greater the loss of capacity, the more stringent wUl be the court to require adequate proof of knowledge of the contents of the testament. It is not necessary in ordinary cases, then, in order to estab- lish the will, that the person claiming under it should prove that it was read over to the testator in the presence of the attesting or other witnesses.^ The law presumes in general that the will was read over by or to the testator. But if evi- dence be given that the testator was blind, or from any cause unable to read, or if a reasonable ground is laid for believing that it was not read to him, or that fraud or imposition of any kind was practised upon the testator, it is incumbent upon those who would support the will to meet such proof by evidence, and to satisfy the jury either that the will was read or that the contents were known to the testator.^ 1 Dr. Lushington in Darnell v. Corfield, 1 Robt. Ecc. 51, 63. 2 Harrison v. Rowan, 3 Wash. C. C. 580, 584,. 8 Day V. Day, 2 Green, Ch. 549. See Gerrish v. Nason, 22 Maine, 438; Harding v. Harding, 18 Penn. St. 340; Clifton v. Murray, 7 Ga. 564; Vernon v. Kirk, 30 Penn. St. 218. §§ 12, 13.] CONTIDENTIAIi KBLATIONS. 271 § 12. Op Engagement to Marry. Undue influence may be exercised under the intimate rela- tion created by an engagement to marry. Thus, if a woman give a man land upon a promise of marriage, and he then refuse to marry her and continue to hold the land, this is a fraud for which the law will give the woman proper relief.^ So, on the other hand, if a man should, after much solicitation and hesitancy, convey land without adequate pecuniary con- sideration to a woman who had promised to marry him, and who had thereby gained great influence over him, her refusal to marry him would afford him ground for rescinding the conveyance.^ § 13. Of Illegal Marriages or Relations. In England, the marriage of a widower with the sister of his deceased wife is not la,wful ; and a conveyance obtained without full consideration by a widower so marrying, without advice to the sister-in-law as to the character of the act and of her legal status, is voidable at the suit of the latter. And the burden of proof is upoti the widower to show that, at the time of entering into the transaction, she was fully, fairly, and truly thus informed.^ This principle is probably applica- ble to such transactions in all cases of illegal marriage. The existence of an unlawful relation between the testator and the object of his bounty at the time of the execution of the will is considered sufficient to raise a presumption of un- due influence against the beneficiary, at least where there are natural objects of his bounty who are thus pushed aside.* 1 3 Black. Com. 174. « Rockafellow v. Newcomb, 67 111. 186. » Coulson V. Allison, 2 DeG., J. & F. 521. Dean v. Negley, 41 Penn. St. 312. 272 pbestjmptive oe constkt70tivb fbaud. [ch. v. § 14. Of Spieitual Advisees. The relation of spiritual adviser, where the person holding it procures a will to be drawn and superintends its execution, by which a church in which he is interested is benefited, raises sufficient for a presumption of undue influence.^ It is also to be observed that one who prevails over another through spiritualistic means to obtain a gift of property may be com- pelled to restore or make good the property so obtained.^ In the case cited, a widow of advanced years was induced by the defendant, acting, as a spiritual medium, to adopt him as her son, to transfer to him a large amount of property, to make her will in his favor, and to settle upon him a large reversion- ary interest. Having afterwards instituted a suit to set aside these gifts, it was held that the relation existing between the parties implied the exercise of dominion by the defendant over her mind ; and the latter having failed to show that the gifts were the pure, voluntary, and well-understood acts of the plaintifP, she was entitled to judgment. The burden of proof rests upon the defendant in such cases, just as in those of attorney and client, guardian and ward, and the like.^ § 15. Of -Voluntbees. A person cannot take advantage of circumstances arising from a project communicated to him by another, to secure a benefit from the action of the person making the communica- tion, to the exclusion of such person ; especially if he advised the latter to take the course pursued.* Thus, in the case cited, a creditor having knowledge that part of the real estate 1 In re Welsh, 1 Redf . 238. 2 Lyon V. Home, Law E. 6 Eq. 655. ' lb. * Buswell V. Ddvis, 10 N. H. 413. § 16.] COKFIDENTIAL RELATIONS. 273 of his debtor was mortgaged, apparently to its full value, was informed by another creditor that he proposed to effect an arrangement by which that mortgage should be removed, and one taken to himself. The former advised the latter to effect the arrangement ; and after the arrangement had been made • and the first mortgage discharged, but before the new one was executed, levied an attachment upon the land to secure himself. It was held on a bill filed by the injured creditor that the attachment was fraudulent. A levy under such cir- cumstances, it was well observed, was not a fair exercise of superior diligence.^ If a party voluntarily undertake to aid another in obtaining possession of his property in the hands of third persons, he thereby assumes a relation of confidence towards the party whom he proposes to assist ; and if he take advantage of this relation, and by deception or improper influence induce him to part Avith his property without an adequate consideration, equity will afford redress.^ And it would seem on principle , that the presumption of law would be against the volunteer and in favor of the other party, so as to cast the burden upon the former of establishing the fairness of the transaction ; but the case cited does not support this position. This point, however, was not considered by the court. § 16. Op Cotenants. Tenants pok Life. Tenants in common of property, not jointly engaged in making purchases and sales, do not stand in a relation of trust and confidence towards each other with reference to the common property ; and they may deal with each other for the purchase of the entire ownership thereof, as if they 1 Beckett v. Cordley, 1 Brown, C. C. 357 ; Temple v. Hooker, 6 Vt. 240 ; Jackson v. Burgott, 10 Johns. 461 ; Chickering v. Lovejoy, 13 3. 51. 2 Harkness v. Fraser, 12 Fla. 336. 18 274 PEESTJMPTIVB OB CONSTETJCTIVE PEATJD. [CH. V. were owners of separate property.^ Thus, a tenant in com- mon of a vessel, in contracting with his cotenant for the purchase of his share at a certain price, is under no legal obli- gation to disclose that a third person had previously agreed with him to purchase the whole of the vessel at a higher rate.^ So, too, the purchase of an estate in remainder or reversion by a tenant for life, though open to objection, is not to be impeached on general principles.^ § 17. Of Joint Pttechasees. Joint purchasers of property stand in such a relation to each other that one of them will not be permitted to acquire a secret advantage over the others in the purchase.* And the same is true of joint owners of property.^ Hence, if a person .procure another to enter into a contract for the purchase of property at a price which the former says he can obtain it for, when in fact he has the refusal of it at a considerably less price, it is a fraud upon the latter, and such wrongdoer can- not compel him to carry out the agreement.^ § 18. Of Expectant Heies. Generally speaking, a contract cannot be avoided on the ground that advantage has been taken of distress, when the advantage, if any, depended upon subsequent contingencies, the result of which must have been equally uncertain to each party at the time of the contract.^ The case of an expectant heir, dealing for his expectancy during his father's life, is an 1 Matthews v. Bliss, 22 Pick. 48. 2 ji^, 8 Lloyd V. Johues, 9 Ves. 37. * Willink V. Vanderveer, 1 Barb. 599. ^ lb. 6 Barry v. Bennett, 45 Cal. 80. See King v. Wise, 43 Cal. 629. ' Ramsbottom v. Parker, 6 Madd. 6; Paine v. Meller, 6 Ves. 352; Pritchard v. Ovey, 1 Jac. & W- 403 ; Eevell v. Hussey, 2 Ball & B. 287 ; Gowland v. DeFaria, 17 Ves. 25 ; 1 Hovenden, Fraud, 497. § 18.] CONFIDENTIAL RELATIONS. 275 exception. To that class of persons equity has extended a degree of protection approaching nearly to fixing an incapa- city to bind themselves by any contract.^ And though the sale of a reversion by an expectant heir may be supported, still, if it appear that the vendor is a young man, desirous of raising money on post obit obligations, payable at his father's death, and the sale is to take place at auction without proper safeguards for the protection of the young man's interests, he will be considered as in the power of those who deal with him. A sale by auction, under such circumstances, would not afford fair evidence of the market price of the property.^ And where the dealing is substantially for the expectation of an heir, a colorable disguise of the character of the bargain, such as including a small present possession, will not avail the purchaser.^ Relief in these cases will be given on grounds of inadequacy. In an English case, it appeared that a reversionary interest, worth at least £1,900, was bought for £1,700. The rever- sioner was a man under twenty-three years of age, somewhat straightened in circumstances, and very desirous of obtaining money ; but there was no evidence of fraud. The sale was, however, set aside. It has been said by an eminent English judge that it is incumbent upon those who have dealt with an expectant heir relative to his reversionary interest to make good the bargain by showing that a full and adequate consideration was paid.* And, though some doubt was once suggested as to the cor- rectness of this principle,^ it appears to express the established 1 Chesterfield v. Janssen, 2 Ves. 125, 157. See Peacock v. Evans, 16 Ves. 514 ; Marsack v. Reeves, 6 Madd. 109 ; Gwyune v. Heaton, 1 Brown, C. C. 9. 2 Fox V. Wright, 6 Madd. 112' ' Davis V. Marlborough, 2 Swanst. 154. * Sir William Grant, in Gowland v. De Faria, 17 Ves. 24. 5 Sir Knight Bruce in the course of the argument in Edwards v. Browne, 2 Coll. C. C. 100, 104 ; Sir John Leach in Hinkaman v. Smith, 3 Russ. 433, 435. 276 PKBSTJMPTIVB OR COKSTETJCTIVE FRAUD. [CH. V. rule of equity.^ But by this rule is meant, not the valuation which may be set upon the interest by actuaries on the tables of mortality, but the fair market price at the time of dealing.^ The rule itself has recently been changed by statute in Eng- land; and it is now provided in that country that no purchase made bona fide, and without fraud or unfair dealing, of any reversionary interest in real or personal property, shall be opened or set aside merely on the ground of undervalue.^ The common-law rule still prevails, generally, in America.* •The application of this rule is not prevented either by the fact that the transaction was a charge and not a sale, or that the expectant heir was a person of mature age, or that he perfectly understood the nature and extent of the transaction. Nor is it necessary for the heir to show that he was in pecu- niary distress at the time. That fact is assumed from the circumstance of his having dealt with another upon such a footing ; and the assumption that the person advancing the money has possibly taken advantage of that distress is the reason why the courts throw upon him the burden of proving that the bargain was reasonable." When, however, the trans- action is set aside for mere inadequacy, the proof failing to disclose actual fraud, the conveyance will be decreed to stand as a security for the money paid, and interest. The suit in such case is considered as in the nature of a bill of redemption ; and the vendor is charged with the costs of the suit.*^ 1 Aldoborough ». Trye, 7 Clark & F. 436, and notes, Am. ed. 2 lb. To this extent Gowland v. De Faria was overruled. 8 31 Vict. ch. 4. 4 1 Story, Equity, §§ 336 et seq. ; 1 Lead. Cas. in Equity, 580 (3d Am. ed."). It is, however, held in Virginia that where there is no actual fraud, and no fiduciary relation between the purchaser of a reversionary interest and his vendor, mere inadequacy of consideration is not sufficient to avoid a sale; unless, indeed, it be so great as to shock the moral sense. Mayo v. Carrington, 19 Gratt. 74; Cribbins v. Markwood, 13 Gratt. 495. 15 Bromley v. Smith, 26 Beav. 644. 6 Bawtree v. Watson, 3 Mylne & K. 339. See 1 Story, Equity, § 344. § 18.] CONFIDENTIAL RELATIONS. 277 It is held in England that the doctrines of equity, as to the relief of expectant heirs from unconscionable bargains, have not been affected by the repeal of the usury laws, or by the alteration of the law as to sales of reversionary interests. The changes of the law in these particulars have not altered the onus prohandi in those cases, which, according to Lord Hardwicke, raise a presumption of fraud " from the circum- stances or conditions of the parties contracting, — weakness on one side, usury on the other, or extortion, or advantage taken of that weakness." ^ Fraud in such cases does not mean deceit or circumvention : it means an unconscientious use of the power arising out of such circumstances and conditions. And, when the relative position of the parties is such as prima facie to raise this presumption, the transaction cannot stand, unless the person claiming the benefit of it is able to repel the presumption by contrary evidence, proving it to have been in point of fact fair, just, and reasonable.^ Where an expectant heir, under pecuniary pressure, mort- gages his reversionary estate to obtain an advance of money or credit for a purchase of goods, and the party in present possession of the property so mortgaged stands in loco parentis to such heir, and approves of the transaction, the heir cannot afterwards obtain a rescission of the mortgage.^ The sale of a legacy which has become absolute and fixed, the amount and time of payment of which have become cer- tain, is not the sale of an expectancy or reversionary interest within the rule which protects young heirs or reversioners from the- consequences of "catching bargains." And this is equally true, though the vendor of the legacy be shown to be a reckless, dissipated, and weak-minded man, provided no actual fraud or undue influence be practised upon him.* 1 Aylesford ». Morris, Law R. 8 Ch. 484, citing Chesterfield v. Jans- sen, 2 Ves. Sr. 125. ^ Aylesford v. Morris, supra, Lord Selborne. 8 King V. Hamlet, 2 Mylne & K. 456 ; affirmed, 3 Clark & F. 218. < Parmelee v. Cameron, 41 N. Y. 392. 278 PEESTJMPTIVE OE CONSTRUCTIVE EEATXD. [CH. V. § 19. Op Sailoes. The courts treat with great indulgence the rights and interests of common sailors in the mercantile and naval ser- vice, considering them as standing upon the same footing with young heirs and expectants.^ The contracts of seamen are watched with great jealousy, and will generally be set aside vsjhenever any inequality appears in the bargain or any undue advantage has been taken.^ § 20. Of Aged Peesons. In an English case, a deed of gift was set aside where one of the donees had married the niece of the donor, it appear- ing that the donor had entire trust and confidence in the donees, that she was eighty-four years old, and nearly blind, and that she was dependent upon their kindness and assist- ance. It was considered that they stood in a relation to her which so much exposed her to their influence that they could not maintain the transaction without showing that the act was the result of her own free will, and had been effected by the intervention of some indifferent person.^ Old age alone, however, in the donor of a gift, is not a ground for presuming imposition or undue influence. It is merely a circumstance which may be taken into consideration in deciding upon the fairness of a transaction, where there is other evidence tending to show imposition.* 1 How V. Weldon, 2 Ves. 516, 518; Taylor v. Rochford, 2 lb. 281. See Chesterfield v. Janssen, lb. 137. 2 1 Story, EoLuity, § 332. " Griffiths V. Robins, 3 Madd. 191. * Millican v. Millicau, 24 Tex. 426, 449 ; Lewis v. Pead, 1 Ves. Jr. 19, note. See also Ellis v. Mathews, 19 Tex. 390; post, pp. 279-287. § 21.] CONFIDENTIAL RELATIONS. 279 § 21. Op Illiterate, Weak-minded, and Drunken Peesons.1 Though evidence of mere undervalue, except where the undervalue is very gross, will not afford ground for inter- ference with a completed purchase, still, where the seller is an illiterate person, unable to judge of the precautions to be taken in selling, or of the mode of sale, or of the mode of securing the price when not paid down, and acts without professional advice, these circumstances, added to inade- quacy of price, will afford such person ground in equity for relief.^ Thus, in a recent case,* certain real estate 1 As to actual fraud on such persons, see ante, pp. 74, 75, 155, 156. 2 Clark V. Malpas, 4 DeG., F. & J. 401. "The seller," said Lord Justice Bruce, " was a man in humble life, imperfectly educated, and unable of himself to judge of the precautions to be taken in selling, or of the mode of sale, or of the mode of securing the price which was not at once paid down. He was helpless in the matter, without advice, without protection. Now, in the transactions only one solicitor was employed, and, though the evidence may be conflicting, I am perfectly satisfied, •without meaning any reflections on Mr. Cooper, that if Mr. Cooper was not the solicitor of the purchaser alone in the matter, he was more the solicitor of the purchaser than of the seller. The bargain was not an ordinary one; it was to sell these cottages, forming the whole of the seller's property, in consideration of a weekly annuity for his life, and a dwelling to be provided for him, and a sum of £100 to be paid after his death, with power to him to require £10 of it to be paid in his lifetime. The seller was made to convey absolutely at once, with- out taking any security for the annuity, for the dweUing-house, or for the £100. A title was not shown, perhaps a marketable title could not be shown, nor any title without expense, but that did not justify making the seller enter into absolute covenants for title which on eviction would render him liable to repay the whole purchase money. For the annuity he had only the personal liability of the purchaser, probably a substan- tial person, but who might die at any moment or fall into adverse circum- stances. He might sell the property, and then fail or die, and from what source was then the annuity to come ? The same observations apply to the £10 and £100. So that not only was there completion at an iindervalue, which alone might be nothing, but there was completion under circum- stances of gross imprudence, on terms on which the seller ought not to have 8 Baker v. Monk, 4 DeG., J. & S. 388. 280 PKESUMPTIVE OE CONSTKUCTIVE PBAUD. [CH.'V. had been sold by an elderly, uneducated woman in humble life to a person far above her in station. The agreement was made without the intervention of any one acting on her behalf; and, it appearing that the consideration paid was inadequate, the sale was set aside, though there was no evidence of fraud on the part of the purchaser. It was said that the purchaser and vendor were in such relative positions as that, according to established principles of equity, it lay on the purchaser to show affirmatively that the price given represented the true value of the estate.^ But slight circumstances will be sufficient, such perhaps as the refusal of the complainant to employ counsel may suffice, to overturn the presumption of fraud.^ So, too, it is held that proof that the grantor in a deed was a very ignorant and illiterate man, and could not read writing, and that the deed was not read to him, is not, it is said, sufficient to avoid the deed, unless he requested that it be read to him.^ However, it is held that a person dealing with an illiterate person, unable to read or write, and taking from him a prom- been allowed to complete. It does not appear that Cooper called atten- tion to any of these considerations. No counterpart or copy of the convey- ance was kept for the seller: he was left helpless. If he had been bred to the law, if he had had the advantages of education, the case might have stood differently." 1 " Here is a transaction," said Turner, L. J., "between an old woman (and I will say no more than that) , said to be a very shrewd old woman, but still an old woman dealing with a person far superior to her in position, there being no advice given to her and no assistance rendered to her in the course of the treaty for the purchase and agreement for the sale of the fee-simple of the property for an annuity of 9s. a week, to last during the life of this old lady, who could know no more about what the pecuniary value of that annuity was than any person whom you might meet walking along the streets at the time. I think there was that dis- tinction between the parties which rendered it incumbent on the appel- lant to throw further protection around this lady before he made the bargain with her." 2 See Harrison v. Guest, 6 DeG., M. & G. 424. * Hallenbeok v. Dewitt, 2 Johns. 404. See Jackson v. Croy, 12 Johns. 427. § 21.] CONFIDENTIAL BELATIONS. 281 issory note for the payment of money, and also a deed for property in trust to secure the payment, is bound to show, when he seeks to enforce his securities, that they or the material parts of them were read and fully explained to the party before they were executed, and that he fully understood their meaning and effect.^ But, if this be shown, evidence is not admissible to prove that the contract agreed upon was different from that which was reduced to writing. To make such evidence admissible, it must be proved that the party was deceived and misled as to the contents of the written instrument.^ If a weak-minded person is, notwithstanding his weakness, compos mentis, he can make a valid sale of his property, so far as his own capacity is concerned.* That is implied in being compos. And, if he can make a valid sale of his property, he can make a valid gift of it ; for there is no authority of law for requiring greater strength of mind for the latter act than for the former. Mental capacity admitted for the exercise of one class of acts, ex contractu in character, and the capacity for all classes of such acts follows. But evidence that the injured party is a person of weak understanding puts him in a position more favorable than the position of one of perfectly sound understanding, in that such a person is more easily circumvented. If, then, it appear that the weak-minded per- son has parted with property at an inadequate price, it is natural to suppose that he has been cheated ; and the law accordingly raises a presumption of fraud against the party who has obtained the advantage.* But this presumption cannot be a conclusive one, since the injured party has the capacity to make a sale or a gift ; and there may be a good and substantial reason for the sale at the inadequate price, a reason perfectly consistent with the highest honor and good 1 Selden v. Myers, 20 How. 506. ^ lb. 8 Smith V. Beatty, 2 Ired. Eq. 456 ; Sprague v. Duel, Clarke, 90. * Wiest V. Garman, 4 Houst. 119, 140. 282 PEESTJMPTIVE OE CONSTEUCTIVE FEATTD. [CH. V. faith on the part of the purchaser. It is the purchaser's duty, however, to show that such a reason existed, and to completely remove the suspicion resting upon him. So of a gift, except that, instead of receiving an inadequate consideration, the grantor receives none at all. But the presumption can hardly be stronger in his favor than in the case of a sale ; at all events, it cannot be conclusive. The fact may be that the recipient was a most worthy object of the grantor's bounty, and that he may not only not have used any improper means to obtain it, but he may not have used any means at all, and may not even have known that the grantor had any intention of making it until after the act was done. In such cases, the gift should be allowed to stand. There would be no more propriety in setting aside such transactions as the above (either the sale or the gift) than there would be if the party were perfectly sound of mind. Having the capacity, and his weakness not having been imposed upon, he indeed stands in precisely the situation of other men.* It is, however, distinctly laid down that one who deals in property matters with an aged and feeble person is bound to prove the fairness of the transactions.^ Hence it is declared that though a contract made by a man of sound mind and fair understanding may not be set aside merely because it is a rash, improvident, or hard bargain, still, if the same con- tract be made with a person of weak understanding, there arises an inference that it was obtained by fraud or undue influence.^ A fortiori is this true if the defendant occupied an actual confidential relation to the complainant.* 1 See Russell u. Russell, 4 Dana, 40, 43, which implies that such transactions may he binding ; Harris w. Wamsley, 41 Iowa, 671 ; Galpin V. Wilson, 40 Iowa, 90, which implies that a weak-minded person, if not imposed upon, may bind himself as surety for another ; Darnell v. Row- land, 35 Ind. 342; Wallace ». McVey, 6 Ind. 300; Rogers i>. Higgins, 56 111. 244 ; Lindsey v. Lindsey, 50 111. 79 ; Miller v. Craig, 38 111. 109. '^ Wartemberg v. Spiegel, 31 Mich. 400. » Ellis V. Mathews, 19 Tex. 390. * Seeby v. Price, 14 Mich. 541. § 21.] CONFIDENTIAL RELATIONS. 283 Equity will set aside a contract for the sale of I'leal estate and a conveyance thereunder, where it appears that the capacity for business on the part of the grantor has been greatly weakened by trouble and distress of mind, and the price was grossly inadequate. In such a case, the grantee will be liable for timber taken by him from the premises, and for the rental value thereof during possession. But the rental value may be diminished by circumstances arising after the sale and not under the control of the purchaser, sucli as the prevalence of a freshet which destroj^ed the fences of the land.i A confession of judgment and release of equity will be supported, though made by a man of weak understanding, in the habit of making improvident bargains, and addicted to in- toxication, and embarrassed in circumstances, and though such confession was induced by the plaintiff's giving him time to pay the money; provided no other influence was ex- erted, and no fraud committed in obtaining the confession, and the confession was deliberately made, whether by the defendant personally or by virtue of a power of attorney deliberately and voluntarily executed by him.^ It may therefore be laid down in general that the acts and contracts of weak-minded persons will be held invalid in equity, if the nature of Jhe act or contract justify the conclu- sion either that the party through undue influence has not exercised a deliberate judgment, or that he has been imposed upon, circumvented, or overreached by cunning or artifice. Where inadequacy of consideration or undue influence is joined to imbecilitj'^ or weakness of mind arising from old age, sickness, intemperance, or other cause, equity will set aside the transaction at the suit of the injured party.^ What is that degree of mental imbecility which may be 1 Perkins v. Scott, 2^ Iowa, 237. 2 Mason v. Williams, 3 Munf. 126. » Tracey v. Sackett, 1 Ohio St. 54. 284 PEBSTJMPTrVB OK CONSTETJCTIVE FEATJD. [CH. V. taken into account as one of the elements necessary for relief is often a difficult matter to decide. No definite rule of law can be laid down. A set of examples has been given by the Court of Chancery of Marj'land,^ of which the following may be mentioned : It has been laid down in general terms that it is fraudulent to obtain a deed by the exercise of undue in- fluence over a man whose mind had ceased to be a safe guide of his actions,^ or from a nian who was of small understand- ing, and not able to manage the lands which had descended to him.^ A woman who could read and write, and had taught a child to read, was still held to be a person of weak under- standing.* So, too, it was in another case considered no proof of sanity that a person could repeat scraps of Latin and read classic authors, because what a person learns in youth leaves a very lasting impression ; and such a person may still be weak-minded.^ In another case, a person is spoken of as being seventy-two years of age, and a weak man, easily im- posed upon.^ Again, a grantor is said to be eighty-four years of age, blind, or nearly so, and altogether dependent upon the kindness and assistance of others.'' From these examples, it is suggested that by weakness of mind is meant a sort of mental imbecility approaching to the condition of one who is actually non compos mentis, and analogous to childishness and dotage.^ ^ 1 Owing's Case, 1 Bland, 370, 391. ^ Harding u. Handy, 11 Wheat. 125 ; Chesterfield v. Janssen, 2 Ves. 156. « Twyne's Case, 3 Coke, 83. * White o. Small, 2 Ch. Cas. 103. 6 Bennet v. Vade, 2 Atk. 325. ^ Clarkson v. Hanway, 2 P. Wms. 204. ' Griffith B. Rohins, 3 Madd. 191. 8 Owing's Case, 1 Bland, 370, 392 ; Henderson v. McGregor, 30 Wis. 78 ; Johnson v. Chadwell, 8 Humph. 145. Where a person, though not positively non compos or insane, is yet of such great weakness of mind as to be unable to guard himself against imposition, or to resist importunity or undue influence, he -will be pro- tected in a court of equity when an unfair advantage has been taken of his weakness. And it is immaterial from what cause such weakness arose, § 21.] CONFIDENTIAL RELATIONS. 285 The circumstances which, taken in connection with this weakness of mind, constitute grounds of fraud whereby to annul pecuniary transactions are various. Among them the following may be mentioned : Where an ignorant old man was induced to execute a deed, surrendering to his children a large fund to which he was entitled, by being informed by them of the opinion of a lawyer whom they had employed, and in whom he had great confidence, that he had no right to the property, and also by the false representations of one of the children as to what they had agreed to give him, and as to the purpose for which the deed was to be used, it was held that equity would grant relief.^ So, too, an agreement with a weak old man, whereby he makes an assignment of his whole estate upon the consideration of the assignee's personal cove- nant to maintain him for life out of the profits of the estate, imports undue advantage ; and this without reference to any confidential relation between the parties, or to any state of anxiety or alarm on the part of the assignor .^ The fact that a deed has never been left for the grantor's perusal ; or that it has not been read by him ; or that it was prepared bj' the grantee and obtruded upon the grantor ; or that the gift was excessively large ; or that the other party had not the means to pay ; or that the grg,ntee had acquired a commanding in- fluence over the grantor, and had exercised it in the transac- tion ; or that the consideration was greatly inadequate ; ^ or that a relation of trust and confidence existed between the ■whether from illness, hereditary misfortune, the infirmity of old age, or from depressions resulting from sudden fear or overwhelming calamity. Tally V. Smith, 1 Cold. 290, 298 ; 1 Story, Equity, § 234. And a degree of weakness of intellect far below that which would justify a commission of lunacy, coupled with other circumstances showing that advantage had been taken of the weakness, will be sufficient to set aside the con- veyances of such a person. Walker v. McCoy, 3 Head, 103. 1 Powell V. Cobb, 3 Jones, Eq. 456. 2 Buffalow ». Buffalow, 2 Dev. & B. Eq. 241. » Cadwallader v. West, 48 Mo. 483; Freeland v. Eldridge, 19 Mo. 325. 286 PEESTJMPTIVE OR COISrSTETJCTIVE FRAUD. [CH. T. parties ; ^ or that the grantor had convej'ed all of his property, leaving himself to be fed and clothed at the pleasure of the grantee, — in all of these and similar cases, the weakness of mind of the party, though it does not render him non compos, will be sufficient, in connection with the other facts, to estab- lish a presumption of fraud, and entitle the party wronged to relief.^ Contracts made by persons under the influence of liquor, even when not completely intoxicated, are governed by the same principles which apply to other cases, where one party is in a position to expose him to the exercise of an im- proper influence by the other. If carried so far that the reasoning powers are destroyed, the contract is void; but, when it falls short of this, the contract will not be avoided, unless undue advantage (which, however, the law seems to presume) has been taken of the condition of the drunken party. Thus, if a party while excited by liquor has been led into a hard and disadvantagepus bargain, the contract will be set aside in equity. And the same is true of transac- tions with persons whose minds are enfeebled by habitual intoxication, though not intoxicated when the contract was made.^ Gifts also of property, made by a person in a state of mental imbecility owing to habitual intoxication, will often be treated as void upon the presumption of imposition. Thus, a person in such a condition made a voluntary and irrevocable deed of 1 Cadwallader v. West, 48 Mo. 483 ; Freeland v. Eldridge, 19 Mo. 325; Morisso V. Philliber, 30 Mo. 145. 2 See Hervey v. Hervey, 1 Atk. 584; Mountain v. Bennet, 1 Cox, 353; Nantes v. Corrock, 9 Ves. 183; White v. Small, 2 Ch. Cas. 103; Por- tengton v. Eglington, 2 Vern. 189 ; Donegal's Case, 2 Ves. 408; Bridg- man v. Green, lb. 627; Norton v. Billy, 2 Eden, 286; Wright v. Proud, 13 Ves. 136 ; Huguenin v. Basely, 14 Ves. 273 ; Harvey v. Pecks, 1 Munf. 518; Rutherford v. Ruff, 4 Dessaus. 350; Rowland v. Sullivan, lb., 518; Brogden v. Walker, 2 Har. & J. 285; Gibson v. Jeyes, 6 Ves. 275. ^ Birdsong v. Birdsong, 2 Head, 289. § 21.J CONFIDENTIAL RELATIONS. 287 gift of his whole estate to a cousin german, to the disherison of his half-sister, reserving however the use to the donor during his life. No reasonable motive was assigned for the act ; and it was held that fraud and imposition might be inferred from the vqry nature of the transaction.^ 1 Samuel v. Marshall, 3 Leigh, 567 ; Adams v. Ryerson, 2 Halst. Ch. 328 ; Hale v. Brown, 11 Ala. 87. As to actual fraud upon drunken per- sons, see ante, pp. 155, 156. 288 PRESUMPTIVE OE CONSTEXJCTIVB PKATJD. [CH. VI. CHAPTER VI. NOTICE. § 1. Of Putting One on Inqtjiby. A PTJRCHASBE of property with knowledge or notice that the title of the vendor is to be disputed for fraud is entitled to no consideration at law or in equity, if the fraud be established. He stands in the precise situation of his vendor.^ Of actual knowledge or notice we need not stop to speak ; it needs no explanation. But there is another kind of notice that deserves attention, to wit, constructive notice, or notice by construction of law, the consequences of which are equally fatal with those attending actual knowledge. The general proposition of law concerning constructive notice is, that, if facts are brought to the knowledge of a party which would put him, as a man of common sagacity, upon inquiry, he is bound to inquire ; and, if he neglect to do so, he will be chargeable with notice of what he might have learned upon examination.^ Where, for example, a party has had actual notice that property in dispute was in fact charged, incumbered, or in some way alfected with the claims 1 Peter v. Wright, 6 Ind. 183 ; Adams v. Stevens, 49 Maine, 362, and cases cited infra, passim. 2 Warren u. Swett, 31 N. H. 332 ; Cambridge Bank v. Delano, 48 N. Y. 326; Acer v. Wescott, 46 N. Y. 384; Willis v. Vallette, 4 Met. (Ky.) 186; Wood worth v. Paige, 5 Ohio St. 70; James v. Drake, 3 Sneed, 540; Colquitt V. Thomas, 8 Ga. 258; Martel v. Somers, 26 Tex. 551; Jones ti. Smith, 1 Hare, 43; Kennedy v. Green, 3 Mylne & K. 718. § 1.] NOTICE. 289 of others, he is considered as under constructive notice of all facts and instruments to a knowledge of which he would have been led by an inquiry after the charge, incumbrance, or other fact affecting the property.^ Hence, a person is chargeable with notice of an unrecorded lien, though he have no knowl- edge of its existence, if he have notice of the contents of the instrument giving the lien.^ The omission of indorsements of interest paid on a note or bill is not alone, however, sufficient to fix a purchaser with notice of equities existing between prior parties.^ In accordance with the above rule, that that which is sufficient to put a party upon inquiry is notice of what- ever the inquiry, reasonably prosecuted, V70uld disclose,* it has been held that if the purchaser of corn from a tenant know of the existence of the tenancy, and that his vendor, as tenant, has raised the corn on the demised premises, this will be notice to him df any statutory lien the landlord may have upon the prefbises for unpaid rent.^ If, however, there be no fraudulent turning away from knowledge of the facts which the res gestoe would suggest to a prudent mind ; if mere want of caution, as distinguished from fraudulent and wilful blindness, is all that can be im- puted to a purchaser of property, the doctrine of constructive ■notice will not apply to him.^ Hence, a party cannot be charged with notice of an advertisement in a newspaper, in the absence of statutory provision, merely because he is a subscriber to the paper.^ 1 WilUs ». Vallette, 4 Met. (Ky.) 186. 2 lb.; Tieman v. Thurman, 14 B. Mod. 279. ' National Bank v. Kirby, 108 Mass. 497. But see Hart v. Stickney, 41 Wis. 630 ; Newell v. Gregg, 51 Barb. 26-3. * Russell K. Kanson, 76 111. 167 ; Watt ». Scofield, lb. 261 ; Kennedy V. Green, 3 Mylne & K. 699; Dickey-v. Lyon, 19 Iowa, 544. ^ Watt V. Scofield, supra. 8 Jones V. Smith, 1 Hare, 43 ; Woodworth v. Paige, 5 Ohio St. 70. ' Watkins «. Peck, 13 N. H. 360; Clark v. Bicker, 14 N. H. 44; Lincoln V. Wright, 28 Penn. St. 76. But see King v. Paterson R. Co., 5 Dutch. 82. 19 290 PEESTJMPTIVB OE CONSTBUCTWE FKATJD. [CH. VI. Notice must be definite and certain. Mere rumor is not notice. To hear, for example, floating reports about an in- cumbrance upon land about to be bought does not affect the party with notice.^ But it is said to be otherwise of general reputation and belief.^ With regard to the question what constitutes notice of fraud in a conveyance, while it is settled that vague and general assertions, resting on mere hearsay and made by strangers, may be disregarded, still a direct statement to a purchaser of the existence and nature of an adverse claim or title will operate as notice, whether it was made by or on behalf of the holder of the adverse title, or by a mere stranger.^ The general doctrine is that notice cannot be binding, unless it proceed from a person interested in the property, and in the course of a treaty for its purchase ; but this rule applies only to notice in its limited sense, as distinguished from knowledge or such information as is substantially equivalent to knowl- edge. If it be shown that the purchaser knew or was informed of the existence of fraud, it is immaterial whether his knowledge was obtained from parties in interest or from third persons. From whatever quarter it may proceed, it will be sufficient if it be so definite as to enable the purchaser to ascertain whether it is authentic or not, and sufficiently clear and definite to put the purchaser on inquiry, and enable him to conduct that inquiry to an ascertainment of the fact.* The statements of third persons may be sufficient for this purpose ; and it has been suggested that the existence of a fact may acquire such a notoriety as to have the same effect.* But this is venturing upon doubtful ground. One who, prior to the issuing of a patent from the State to his grantor, knew that the State authorities claimed that the lands covered by it were reserved from sale, and knew of ineffectual attempts to purchase them from the State, has 1 Colquitt V. Thomas, 8 Ga. 258 ; James v. Drake, 3 Sneed, 540. 2 James v. Drake, supra. » Martel v. Somers, 26 Tex. 551. * Martel v. Somers, supra. ^ lb. § l.J NOTICE. 291 sufficient to put him upon inquiry, and to subject him to any equities growing out of any mistake or fraud under which the patent may have been issued. He is not a bona fide purchaser.^ So,, too, one who purchases land with notice that another has a contract for the purchase of the same prop- erty is bound to inquire into the nature of such contract, and takes subject to it, if valid, though he may not have notice that it is in writing.^ If a person purchase an instrument with constructive notice that it is void, he can neither recover thereon against the maker, nor (in the absence of fraud on the part of the vendor) can he recover from the latter the purchase price, paid.^ For example, a person is chargeable with notice of all the facts appearing upon the face of a county warrant pur- chase(f bj' him ; and, if they are invalid in law, he must suffer the loss of the purchase-money, unless the vendor was guilty of fraud or warranted the instrument good.* But while fraud does not render a contract void, so as ipso facto to cut off the claims of subsequent purchasers for value, it must be observed that little is sometimes required to impose upon such purchasers the duty of inquiry ; fail- ing in the performance of which, their claims must yield to those of the original party defrauded. Where a purchaser in such cases is fixed with notice of a fact which would have put him on an inquiry which he neglects to make, it is his own negligence in not pursuing the inquiry that oc- casions the loss. Thus, where the defendants, who claimed as subsequent purchasers of a mortgage interest, were aware at the time of their purchase that the plaintiff had been a mortgagee of the same property, they were considered as fixed with knowledge of the particulars of his security from 1 Attorney-Gen. v. Smith, 31 Mich. 359. 2 Connihan v. Thompson, 111 Mass. 270. » Christy v. Sullivan, 50 Cal. 337. See Lamert v. Heath, 15 Mees. & W. 487 ; Lawes u. Purser, 6 El & B. 930. * Christy v. Sullivan, supra. 292 PEESUMPTIVE OK CONSTEUCTIVE rRATJD. [CH. VI. ■which the title offered to them was derived, and with the evidences of fraud which there appeared.^ But though a party have notice of facts putting him upon inquiry, still, if with due diligence he make inquiry and become satisfied by evidence upon which a reasonable man may rely that a par- ticular fact does not exist, he is to be regarded as not affected with notice.^ This doctrine of constructive notice, by which a party is considered as so fixed with knowledge in law of an illegality as not to be able to complain of it, is applicable only between the party alleged to be affected with it and third persons, not parties to the illegality. If, indeed, a party have actual notice of a fraud, and allow the party committing it to go on, giving assent to his conduct, he cannot afterwards repudiate his acts, and claim to have the matter made good. Injuria non fit volenti. But constructive notice has no such effect. It would be very absurd to say that a client should not have a remedy against his attorney for the attorney's fraud, on the ground that the client knew what his attorney knew, and therefore had constructively assented to his fraud. And scarcely less absurd would it be to consider the client barred of relief, where others besides the attorney were involved in the misconduct complained of, on the ground that the client was affected with his attorney's knowledge of the faets.^ The doctrine of constructive notice rests upon the ground of protecting innocent persons, not of shielding wrongdoers. 1 Ogilvie V. JeafEreson, 2 Gifi. 353; Kennedy v. Green, 3 Mylne & K. 699, 718. 2 Hoyt V. Shelden, 3 Bosw. 267. ' See Sankey v. Alexander, Law R. 9 Irish Eq 259, 298. " There are some defences," said Lawson, C. S., "which a party is estopped from relying on by the rules of law and common sense ; and in this case, where all the defendants are charged with a common fraud, and where it was essential to the success of their design that facts should be suppressed, and where the facts were suppressed by the person who was their agent, it is impossible for them to call in aid the doctrine that, under another state of facts and between different parties, the agent would be deemed to have communicated them." Seeposf, p. 816. § 1.] NOTICE. 293 And this is none the less true where the client finds it necessary to his case to impute to himself part of the knowl- edge of the attorney, and repudiate the rest.^ Again, when, even in a case otherwise appropriate for the application of this doctrine, it appears that it was understood that the person through whose knowledge the constructive notice was alleged to arise was to suppress the facts from his principal or employer, the doctrine of constructive notice will not be applied. Thus, where it appeared that the defend- ants had communicated the existence of a settlement to the plaintiff's solicitor, and he told them that he should not inform his client lest it might make him feel nervous, it was considered that the client was not affected with constructive notice of the existence of the settlement.^ Such, too, is the rule where there is a moral certainty that there will be no disclosure to the principal.^ If a man take a conveyance of land from one, while another is in the open and visible possession of the estate, he will be affected with notice of every thing in relation to the title which could be known upon the most diligent inquiry. And, if in such case the person in possession have an equitable title to the land, the taking of the conveyance will be deemed a fraud ; and nothing will pass to the grantee which can avail him against such equitable title.* Hence, actual possession by a cestui que trust is constructive notice to a purchaser that there is some claim, title, or possession of the property, adverse to the vendor.^ 1 Sankey v. Alexander, Law R. 9 Irish Eq. 259, 318. ^ Sharpe v. Foy, Law R. 4 Ch. 35. » Kennedy v. Green, 3 Mylne & K. 699, 718 ; Atlantic Bank v. Hams, 118 Mass. 147 ; Thompson v. Cartwright, 83 Beav. 178. See also Atter- bury V. Wallis, Law R. 4 Ch. 35 ; Sankey v. Anderson, Law R. 9 Irish Eq. 298, 319 ; post, p. 316. * Hadduck v. Wilmarth, 5 N. H. 181 ; Hathaway v. Noble, 56 N. H. 508; Eli v. Gridley, 27 Iowa, 376 ; Van Orman v. Merrill, lb. 476, and cases cited in the following notes. * Johns V. Norris, 12 C. E. Green, 485 ; Daniels v. Davison, 16 Ves. 249 ; McDavit v. Pierrepont, 8 C. E. Green, 42. 294 PBESTJMPTIVB OR CONSTEUCTIVE FEAT7D. [CH. VI. It has been thought in England that notice of a tenancy is not notice of the title of the lessor.^ But, by the weight of authority, the rule of law in this country is different.^ The ground of the American rule is that a purchaser from the assumed owner is put upon notice that his grantor's owner- ship is not complete ; and, having notice of such fact, due diligence requires him to ascertain how far short of a perfect ownership the grantor comes. That is, he must ascertain all that can be ascertained by reasonable diligence from the existence of the tenancy and the record of the lease, if there be a written lease. The possession of land which will afford notice of the party's rights must be as open, notorious, and exclusive as is required to constitute adverse possession under the limitation laws.^ If land upon which there are no buildings be used for pasture by the grantee and others, this is not such visible, notorious, and exclusive possession by the grantee as amounts to constructive notice of ownership. The possession for such purpose must be actual and distinct, and be manifested by such acts of ownership as will naturally be observed and recognized by others.* So, where real estate is ostensibly as much in the possession of the husband as of the wife, there is no such actual possession by the wife as will import notice of an equitable interest possessed by her in the land to a 1 Barnhart v. Greenshields, 9 Moore, P. C. 18. But see Daniels v. Davidson, 16 Ves. 254 ; s. c. 17 Ves. 433. 2 Dickey v. Lyon, 19 Iowa, 544 ; Smith v. Jackson, 76 111. 254 ; Pitt- man V. Gaty, 5 Gilm. 186 ; Sailor v. Hertzog, 4 Whart. 259 ; Hood v. Fahnestock, 1 Penn. St. 470 ; Kerr v. Day, 14 Penn. St. 112 ; Wright v. Wood, 23 Penn. St. 120, 130; Morrison v. March, 4 Minn. 422; Bank of Orleans v. Flagg, 3 Barb. Ch. 317; Buck v. Holloway, 2 J. J. Marsh. 180. Contra, Flagg v. Mann, 2 Sum. 486 ; Seattle v. Butler, 21 Mo. 313. 8 Smith V. Jackson, 76 111. 254 ; Brown v. Volkening, 64 N. Y. 76. * Coleman v. Barklew, 3 Dutch. 357 ; Holmes v. Stout, 3 Green, Ch. 492 ; s. c. 2 Stockt. 419 ; McMechan v. Griffing, 3 Pick. 149 ; Butler v. Stevens, 26 Maine, 484; Powell v. Thompson, 9 Ala. 409. § 1.] NOTICE. 295 purchaser at execution sale, under a judgment against the husband, in whom the legal title apparently was at the time of the rendition of the judgment.^ In cases of fraudulent sales or mortgages, the rights of a subsequent purchaser are materially affected by the question of possession on the part of the intermediate vendor. Want of possession in him will generally operate as notice to his vendee. A learned English judge has quoted with approval the following proposition of law on this point: If B obtains a conveyance of land from A by fraud, and A quits the posses- sion to B, and B sells the land for a valuable consideration to C, bona fide and without notice, A can never obtain the land against C, because the fraudulent conveyance, with the quitting of possession, transfers an interest. And then, when C has obtained an interest at law for his money, bona fide, a court of equity ought not to take it from him.^ The rule of notice by possession does not apply in favor of a vendor remaining in possession, so as to require a purchaser from his grantee to inquire whether he has reserved any interest in the land conveyed. So far as the purchaser is concerned, the vendor's deed is conclusive. Having declared by his deed that he makes no reservation, he cannot after- wards set up any secret arrangement by which his grant is 1 Thomas v. Kennedy, 24 Iowa, 397-. 2 Sir John Stuart, V. C, in Ogilvie v. JeafEreson, 2 Giff. 353, 379, quoting Gilbert, Frauds, 287. "It is impossible, I apprehend," said Stuart, V. C, as cited, " to question the soundness of this statement of the principle, which sustains the defence of purchase for valuable consid- eration without notice. In the case of Jones v. Powles, 3 Mylne & K. 581, the mortagor, who obtained his title by fraud and forgery of a bill, was in actual possession of the estate ; and the mortgagor, who claimed by derivative title from him, was also in possession. Therefore, the de- fence of purchaser for valuable consideration by the mortgagee was sus- tained, not only on the ground that there was no reasonable cause to suspect that the bill was forged, but expressly because a long possession had followed the alleged devise ; and no reasonable diligence could have led to a discovery of the forgery." "296 PEESTTMPTIVE OE CONSTRUCTIVE EEAT7D. [CH. ATE. impai^red.^ Nor has the doctrine of constructive notice of defects in the title to land, arising out of the neglect of the purchaser to investigate, any application to cases of adverse possession and outstanding claim.^ Indeed, it is not fraudu- lent to purchase and take possession of land with actual notice of an outstanding claim.* The question in such a case is, simply, who has the better title ? The doctrine of fraud operates against the purchaser with notice, only when the opposing claimant had an equity in the land superior to the right of the purchaser's vendor. This doctrine as to possession does not always require the subsequent purchaser to have taken actual possession. It was indeed considered by Lord Rosslyn that the defence of a purchase for value without notice was a shield to protect the possession of propertj', and was not available in any case except to protect the actual possession.* But Lord Eldon overruled that doctrine, and decided that possession by the purchaser was not necessary, provided he purchased from an apparent owner, who was actually in possession.^ And this doctrine has recently been reaffirmed.^ A person who holds stock as trustee for another has no right, prima facie, to pledge it to secure a debt of his own growing out of a transaction independent of his trust.'' It is the duty of a trustee to use all reasonable diligence to pre- * Van Keuren v. Central R. Co., 9 Vroom, 165. ° Sands v. Hughes, 53 N. Y. 287 ; Clapp v. Brumagham, 9 Cowen, 558. ' Sands v. Hughes, supra. * Strode ». Blackbume, 3 Ves. 222. ' Wallwyn «. Lee, 9 Ves. 24. ' Ogilvie V. JeafEreson, 2 Giff. 353, 379. " According to the doctrine now fully established," said the court, "unless Catharine Jones had taken possession, and, being in possession as apparent owner, had sold and conveyed to the defendant for valuable consideration paid to her, they are not such purchasers as can defend themselves against the plain- tiff's right to relief against the fraudulent conveyance [from him] to Catharine Jones, and all those who claim by derivative title from her." ' Shaw V. Spencer, 100 Mass. 382. § l.J NOTICE. 297 serve the trust property ; and no one can acquire an interest therein as against the cestui que trust, who purchases the prop- erty with notice of the failure of the trustee to use proper diligence in preserving it to the beneficiary.^ To convict a purchaser of fraudulent participation in a breach of trust by an executor having authority to sell, the evidence of notice of the fraudulent intent on the part of the executor ought to be very strong. The purchaser has a right to presume, in the absence of direct and plain proof to the contrary, that the executor is exercising his power fairly and faithfully.^ One who purchases property from an executor below its value, under circumstances which, should put him upon in- quiry as to the right of the executor to make the sale, be- comes thereby, in case the sale is fraudulent, a party to the fraud. As to what should put a purchaser upon inquiry, it is held that the purchase from an executor of bonds payable to the testator is sufficient to indicate that prima facie they belong to the testator's estate ; and the purchaser, buying at an inadequate price, acts at his peril.^ Hence, if a certificate of stock expressed to be in the name of A, trustee, be by A pledged to secure his own debt, the pledgee is, by the language of the certificate, put on inquiry as to the character and limitations of the trust.* So, too, a note payable upon its face to a guardian or agent affords notice that the obliga- tion belongs to the ward or principal, and a holder can acquire no rights adverse to those of the parties in whose interest the restriction is made.^ 1 Joor V. Williams, 38 Miss. 546. ^ Davis v. Christian, 15 Gratt. 11. 8 Pinckard v. Woods, 8 Gratt. 140. * Shaw V. Spencer, 100 Mass. 382 ; Sturtevant v. Jaques, 14 Allen, 523; Duncan v. Judson, 15 Wall. 165. * McMasters v. Dunbar, 2 La. An. 577 ; Nicholson v. Jacobs, lb. 666 ; Louisiana Bank v. Orleans Nav. Co., 3 La. An. 294; Holmes v. Carman, 1 Freem. Ch. 408 ; Miller v. Helm, 2 Smedes & M. -687 ; Davis v. Hen- derson, 25 Miss. 549 ; Livermore v. Johnson, 27 Miss. 284. 298 PKESUMP'TIVE OR CONSTRTJCTIVB FRAUD. [CH. VI. Where the property or the paper of a firm is taken in pay- ment of the private debt of one of the partners, the law charges the creditor with notice of an abuse of trust, and imposes upon him the burden of repelling the presumption. The rule is founded upon the principle that the employment of the partnership funds by one of the partners for his private benefit is prima facie a fraud upon the partnership, and the creditor participating in the transaction is a party to the fraud.^ It will not take a case out of this principle that a negotiable note of the firm, made payable to a third person and by him indorsed, is found before maturity in the hands of one of the partners, and is by him indorsed to the plaintiff. The presumption in such case is that the note is accommoda- tion paper, the property of the firm, and not of the individual member ; and, if such note be transferred to a creditor for the private debt of the partner in whose possession it is, the cred- itor takes it charged with knowledge that it is firm property. The presumption, however, that the note belongs to the firm may be rebutted by the creditor, by showing that it has been regularly negotiated in due course, and has become the prop- erty of the individual partner.^ Purchasers of scrip dividends, though for value and with- out actual notice of fraud, may be affected with notice by the issuance of certificates of indebtedness in connection with the scrip. Thus, while negotiations between two gas companies for consolidation upon a certain basis of indebtedness were pending, one of the companies passed a resolution without the knowledge of the other, declaring a scrip dividend of ten per cent, upon the amount of their capital stock, thus in- creasing their indebtedness by so much. Certificates of in- debtedness were issued in accordance with the resolution. Consolidation was effected without knowledge on the part of the other company of this transaction. Upon a bill being 1 Mecutchen v. Kennady, 3 Dutch. 230 ; Halstead v. Shepard, 23 Ala. 538. See ante, pp. 148, 147. ^ Mecutchen c. Kennady, supra. § 1.] NOTICE. 299 filed for such purpose, the scrip was declared void, and the company issuing it were restrained from recognizing it as a valid obligation and from permitting its transfer. It was considered that the certificates of indebtedness should have put the purchasers of the scrip upon inquiry, though in fact purchased without notice and for value. The rule as to negotiable instruments is not applicable to such certificates.^ A purchaser of property for a valuable consideration is bound, when charged with notice of fraud, to answer all the allegations which tend to show that he had notice of the fraud.2 Thus, in the case cited, the plaintiff, seeking to impeach a deed as obtained by fraud on the part of the defendant vendors, alleged that certain suspicious circum- stances appeared on the back of the deed, which tended to show such fraud. The court accordingly required the deed to be produced for inspection, though the defendants had no actual notice of the fraud ; and, on further hearing, the de- fendant's purchase was set aside. In a proceeding charging a purchaser from a trustee with notice that the sale was in fraud of the rights of the benefici- ary, it is not enough for the purchaser to say in his answer (though the answer be not replied to) that the trustee in- formed him that he needed the money obtained to meet debts contracted for his cestui que trust, and that from aU the information he had he was led to believe that the trustee wanted the funds for proper purposes. Nor, in such a case, is it enough for the trustee himself to say that the necessities of the beneficiary required a sale of the trust fund, and that he had properly applied the proceeds to his use. He should state how they were applied.^ A person who purchases land from one who has only a bond for title is affected with constructive notice of any lien 1 Bailey v. Gaslight Co., 12 C. E. Green, 196. No account of interest was ordered. 2 Kennedy ». Green, 6 Sim. 6. » Cocke v. Minor, 25 Gratt. 246. 300 PRESUMPTIVB OR COKSTRXJCTIVE FRAUD. [CH. VI. upon the property for unpaid purchase-money due by the holder of the title bond to the obligor.^ § 2. Of Lis Pendens. There are other classes of cases of constructive notice to which the above principle of the duty of inquiry has no appli- cation ; as to which, indeed, no amount of inquiry, or no want of suggestions to inquiry, would afford any excuse.^ The first of these classes of cases to be considered is known as lis pendens, A person purchasing property pendente lite is treated as a purchaser with notice, and is subject to all the equities of the person under whom he claims, and is bound by the decree that may be made against the person from whom he derives title ; ^ and this, too, even though the vendor fraudulently conceal the pending trial.* But the rule applies only to cases in which the purchaser derives title from one of the litigating parties. If he claim adversely to both, by title paramount, the proceedings will not bind him. The judgment or decree settles the rights of the parties to the suit only, and those claiming under or deriving title from, them.^ Nor does the rule apply to purchasers at tax-sales. The authority of the State to make a tax-sale is paramount to the rights of 1 McLaurie v. Thomas, 39 111. 292. ■' It will indeed often happen that we shall meet with the case of facts suggesting inquiry in connection with the present subject ; but, upon examination, it will generally be found that such facts are merely inci- dental, and not necessary to establish the main feature of the notice. 8 Allen V. Morris, 5 Vroom, 159 ; Bishop of Winchester v. Paine, 11 Ves. 194; McPherson v. Housel, 2 Beasl. 301 ; Murray v. Ballou, 1 Johns. Ch. 574 ; Griswold v. Jackson, 2 Edw. Ch. 466 ; Metcalfe v. Pulvertoft, 2 Ves. & B. 205 ; Sorrell ». Carpenter, 2 P. Wms. 482 ;' Moore v. Mc- Namara, 2 Ball & B. 187. * Blanchard v. Ware, 43 Iowa, 530. * Allen v. Morris, supra. § 2.] NOTICE. 301 the owner and of all others ; and, when made in accordance with law, the sale is conclusive against all persons.^ The reason of the doctrine of lis pendens is that, if a transfer of interest pending a suit were to be allowed to affect the proceedings, there would be no end to litigation ; for, as soon as a new party was brought in, he might transfer to another, and render it necessary to bring that other into court ; and hence the suit might be interminable. This reason, however, has no application to a tlUrd person whose interest existed before the suit was commenced, and who might have been made an original party.^ A purchaser who has constructive or actual notice of a pending suit can only be held chargeable with knowledge of facts of which the record in the cause, as it existed at the time of the purchase, would have informed him. If these facts inform him that the vendor is committing a fraud in making the sale, he becomes, by purchasing, a party to the fraud. But he cannot be charged with a knowledge of facts afterwards brought into the case.* The burden of proving such a case as this, however, would doubtless rest upon the party claiming the property. It seems pretty clear at all events that, if a party's claim to property in litigation arose before the litigation began, he must show the fact.* Mere service of a subpoena is not a sufficient Us pendens, unless a bill or declaration be afterwards filed. But, when the bill or declaration is filed, the doctrine of lis pendens relates to the service of the subpoenal And the question must relate to the estate, and not merely to money securities upon it.^ So, if the suit ^ail for a defect of process, there is no lis pendens. Thus, where there is a defect in an attachment, the 1 Wright V. Walker, 30 Ark. 44. 2 Murray v. Lylbum, 2 Johns. Ch. 441. Dayis v. Christian, 15 Gratt. 11. < Hall v. Jack, 32 Md. 253. * Sugden, Vendors, 534, Perkins's ed. 8 lb. ;' Worsley v. Scarborough, 3 Atk. 392. 302 PKBSUMPTIVE OE CONSTBUCTIVE FRATTD. [CH. VI. debtor can conTey a good title to a purchaser for value without notice of the attachment proceedings.^ § 3. Of Registbation op Instruments. The second class of cases above referred to ^ is that of the registration of instruments under recording acts. The doctrine of constructive noMce in relation to registered deeds has in England been divided into two classes of cases : First, cases in which the party charged has had actual notice that the property in dispute was in fact charged, encumbered, or in some way affected ; and the courts have thereupon bound him with constructive notice of facts and instruments, to a knowledge of which he would have been led by an inquiry after the charge, encumbrance, or other circumstance affecting the property of which he had actual notice. Sec- ondly, cases in which the courts have been satisfied from the evidence before them that the party charged had designedly abstained from inquiry. The proposition of law upon which the former class of cases proceed's is, not that the party charged had notice of a fact or instrument which in truth related to the subject in dispute without his knowing that such was the case, but that he had actual notice that it did so relate. The proposition of law upon which the second class of cases proceeds is, not that the party charged had incautiously neglected to make inquiries, but that he had designedly abstained from such inquiries for the purpose of avoiding knowledge; apurpose which, if proved, would clearly show that he had a suspicion of the truth and a fraudulent determination not to learn it. In short, if there be not actual notice that the property is in some way affected, and no fraudulent turning away from a knowledge of facts 1 Burchard v. Fairhaven, 48 Vt. 327. " Ante, p. 300. § 3.] NOTICE. 303 which the res gestae would suggest to a prudent -mind, — if mere want of caution as distinguished from wilful blindness is all that can be imputed, — the doctrine of constructive notice will not apply .^ In accordance with these principles, it is held that, in order to affect the priority of a registered deed over an unregistered security by reason of fraud in the grantor, actual notice of the fraud must be fixed upon the grantee of such deed.^ A purchaser is constructively affected by the registration of a deed required to be put on record with such knowledge as the index entries afford ; and, if they are such as to necessarily put a cautious and prudent man upon inquiry, such inquiry will be considered to have been made, and notice given accordingly.^ The extent to which constructive notice is sometimes carried takes the subject entirely beyond the proper limits of con- structive fraud. It is quite proper to declare that a pur- chaser who will not examine the registry to ascertain the condition of the title of a party about to convey to him shall be held to be postponed to the rights of a prior encumbrancer, lessee, or grantee whose deed has been recorded ; and this on the ground of constructive fraud, even apart from the express language of the statute making the registration notice. Knowledge of the place of deposit of muniments of title-deeds would alone require a purchaser to examine the estate of his grantor's title. But this is not the extent of the rule concern- ing notice by registration, at least as held by some courts. The doctrine has been carried so far as to require a purchaser to take notice of that of which he can in fact have no knowl- edge from the books of registration, except by examining every ' Jones V. Smith, 1 Hare, 55; Ratcliffe v. Barnard, Law R. 6 Ch. 654; Chadwick v. Turner, Law R. 1 Ch. 319 ; Wliitbread v. Jordan, 1 Younge & C. 32; Agra Bank v. Barry, Law R, 6 Irish Eq. 128, 144. ' Agra Bank v. Barry, supra, criticising Wormald v. Maitland, 35 Law J. Ch. 69, and In re Allen, Law R. 1 Eq. 455. * Bostwick V. Powers, 12 Iowa, 456 ; Doyle v. Teas, 4 Scam. 202. 304 PRESUMPTIVE OR CONSTETJCTrVB FRAUD. [CH. VI. recorded instrument therein. Thus, it has been decided that the registration of a deed required to be recorded constitutes notice to subsequent purchasers, though the record of the instrument be not indexed.^ This, however, is upon the ground that under the statute as to registration the index is no part of the record : it could not well be sustained on the ground of constructive fraud. A man cannot be guilty of constructive fraud of this kind, except by shutting his eyes to facts to which he has a plain and adequate clew. The case simply turns upon a question of statutory interpretation ; and, as to this, it is proper to remark that there is strong author- ity to the contrary of the cases above referred to.^ By the law of California, a grantee of land must ascertain whether any of the preceding grantors of the property had made an earlier conveyance of the same, which, remaining unre- corded until after the registration of the second grant under which the present claimant holds, was then put upon record. If such were the facts, the present claimant, though a pur- chaser for value without actual notice, is considered to have constructive notice of such prior (and for a time) unrecorded grant.^ It may well be doubted, however, in the absence of a clear intent to this effect on the part of the Legislature, if this is not transcending the purpose of the registry acts.* But authorities in support of that rule are not wanting.^ 1 Mutual Life Ins. Co. v. Dake, 4 Cent. L. J. 340 ; Curtis v. Lyman, 24 Vt. 338 ; Bishop v. Schneider, 46 Mo. 472. See also Schell v. Stein, 76 Penn. St. 398 ; Chatham r. Bradford, 50 Ga. 327, and other cases cited in the Central Law Journal, ut supra. 2 Baruey v. McCarty, 15 Iowa, 510 ; Miller v. Bradford, 12 Iowa, 14; Whalley v. Small, 25 Iowa, 184 ; Noyes v. Horr, 13 Iowa, 570; Breed v. Conley, 14 Iowa, 269. See Barney v. Little, 15 Iowa, 527; 4 Cent. L. J. 387, and cases cited. 8 Clark V. Sawyer, 48 Cal. 133; Mahoney u. Middleton, 41 Cal. 41. * See Rawle, Covenants, 428 (4th ed.) ; Bates v. Norcross, 14 Pick. 224. ' Jarvis v. Aikens, 25 Vt. 685 ; Doe d. Potts v. Dowdall, 3 Houst. 369 ; Tiift o. Munson, 57 N. Y. 97 ; McCusker v. McEvey, 9 R. I. 525. See Bigelow, Estoppel, 326 (2d ed.). § 3.J NOTICE. ' 306 A mortgage duly recorded certainly operates as notice until discharged ; anH hence where a mortgagor has regained . possession by fraudulent practice, and has then conveyed to a purchaser for value, virho has no knowledge of the mortgage, the mortgagee may foreclose against him.^ But this is a very different case from the above. Though land be bid off at an administrator's sale for the administrator by a nominal purchaser, who after confirmation of the sale received a conveyance from the administrator, and subsequently conveyed to the latter, still subsequent pur- chasers for value are not, it is said, chargeable with notice of the fraud by the mere record of the conveyances between the administrator and nominal purchaser.^ But this proposition deserves further consideration. The registration of a deed defectively acknowledged is not constructive notice to a subsequent horm fide purchaser for value.^ And the registration of any deed is notice of only such fraud as appears on the face of the instrument : it is not notice of fraud perpetrated in its execution.* And, again, the registration of a deed is notice only to those who claim through or under the grantor.^ The purchaser of land is not bound to take notice of a registered lien or incumbrance upon the estate, created by any person other than those parties through whom he is compelled to make title.^ The doctrine of constructive notice to a purchaser by regis- tration does not apply where there is a false representation that the vendor has an unincumbered title. In such a case, the purchaser can, without an eviction,^ enjoin the collection 1 Grimes v. Kimball, 8 Allen, 153; 8. c. 3 Allen, 518. " Wells V. Polk, 36 Tex. 120. » Cockey v. Milne, 16 Md. 200. * Godbold V. Lambert, 8 Rich. Eq. 155; Hoffman v. Strohecker, 7 Watts, 86. 6 Corbin v. Sullivan, 47 Ind. 356; Ely v. Wilcox, 20 Wis. 523, 530; Maul V. Rider, 59 Penn. St. 167. 6 Harper v. Bibb, 34 Miss. 472. ' See ante, p. 68. 20 306 PEBSTJMPTIVE OK CONSTETJCTIVE FRAUD. [CH. VI. of the price agreed upon, though the conveyance contain cov- enants of warranty.^ The prior registration of a convej'ance obtained in fraud of a grantee registering later will be of no avail against the rights of the latter. Thus, if after knowledge of a sale to another, a person should procure another conveyance to himself from the vendor, and have the deed recorded before the registration of the deed to the first grantee, lie would be compellable in equity to surrender his fraudulent claim to the latter.^ But it is said to be necessary for a party relying upon an un- registered deed against a subsequent purchaser or attaching creditor to prove that the latter had actual notice of the deed.^ It is, however, clear that the kind and degree of notice suffi- cient to stand as a substitute for an actual record of a deed must be such as to charge a party with fraud in taking the second conveyance. He must know of the prior conveyance, and intend to defeat it. A floating rumor or a vague sus- picion is insufficient. Possession may or may not be notice of an unrecorded deed. Notice is not to be inferred from a possession which commenced before and has continued after a conveyance, without any change in the manner of the pos- session or use indicating an altered estate.* It has well been said that it would materially impair the security which men generally feel in a public registry, and greatly infringe upon the beneficent policy of the registry laws, to charge the public with notice of any estate that a party in possession might ac- quire. Possession has in fact no tendency in suo^h cases to put men upon inquiry.^ Thus, if a tenant in possession were to receive a conveyance of the reversion, and fail to record it before the registration of another conveyance of the lessor to a purchaser for value without notice, the latter would not be 1 Napier v. Elam, 6 Yerg. 108. See ante, p. 68. " Mercier v. Hemme, 50 Cal. 606. Spofford V. Weston, 29 Maine, 140. Sed quaere. * Emmons v. Murray, 16 N. H. 385. 6 Bell V. Twilight, 18 N. H. 159, 164. § 4.] NOTICE. 307 affected with notice of his grantor's fraud by the mere posses- sion of the tenant. So, too, if a grantor of land should take from the grantee a lease of the property and remain in pos- session, and the grantee, having recorded the conveyance to himself, should afterwards mortgage the premises for value to one having no notice of the lease, the mortgagee's rights would prevail over the lessee's, notwithstanding the posses- sion of the latter.^ A purchaser for value without notice of a prior unregis- tered conveyance may make a valid conveyance to one who has such notice.^ And the same is true of the case of a mis- take' in a conveyance.* And it would seem by analogy that the same rule would hold where the grantee had notice that the estate had been obtained from a remote grantor by fraud. If he derive title from a lona fide purchaser without notice, his claim to the estate should stand. The doctrine is explained on the ground that, but for the rule, the lona fide purchaser would not be able to enjoy the full benefit of his own unexceptionable title.* § 4. Op Pubchasees withottt Value. The third of the above-mentioned ^ classes of cases is that of purchasers without consideration. We have under this head to consider, then, who are, and who are not, purchasers for value. It will, however, be convenient and sufficient to point 1 BeU V. Twilight, 18 N. H. 159. 2 Bell V. Twilight, supra; Harrison v. Forth, Free, in Ch. 51 ; Low- ther V. Carlton, 2 Atk. 139; Sweet v. Southcote, 2 Brown, C. C. 66; Trull V. Bigelow, 16 Mass. 406; Boynton v. Reese, 8 Pick. 329; Fenno V. Sayre, 3 Ala. 458 ; Price v. Martin, 46 Miss. 489; Ledyard v. Butler, 9 Paige, 132. 8 Prescott V. Hawkins, 16 N. H. 122, 127; Bumpus v. Platner, 1 Johns. Ch. 213 ; Varick v. Briggs, 6 Paige, 823. * 1 Story, Equity, § 409. 6 Ante, p. 300. 308 PEESTJMPTIVE OE CONSTEtrCTIVE PKAXJD. [CH. VI. out the meaning of the term purchasers for value ; and it will be understood that all purchasers not coming under the defi- nitions are affected with notice. A bona fide purchaser for value obtains a good title, notwith- standing his vendor's title was obtained by fraud.^ Hence, where a man already married went through the ceremony of marriage again with another person, and then joined with her as his wife in assigning her property to a purchaser, the assignment was supported, though the woman had been deceived.^ So, if a trustee be in actual possession of the 1 Thompson v. Lee, 3 Watts & S. 479; Ball v. Shell, 21 Wend. 222; Moody V. Blake, 117 Mass. 23 ; Hoffman v. Noble, 6 Met. 68; Rowley v. Bigelow, 12 Pick. 307 ; Spindlerw. Atkinson, 3 Md. 409 ; Toole v. Dardeu, 6 Ired. Eq. 394; Thorpe v. Beavans, 73 N. Car. 241; Bradley v. Obear, 10 N. H. 477; Gage v. Gage, 29 N. H. 533; Shufelt v. Pease, 16 Wis. 659. But such vendor must have acquired a title in order to this result, unless the conduct of the real owner was fraudulent. A person buying goods without authority, for another, who refuses to receive them, can- not himself acquire title to them by taking possession upon such refusal ; nor is the case different when the party falsely represents himself to be a member of a firm for whom the goods are without authority purchased. He cannot take possession and convey a title even to a bona fide purchaser for value. Moody v. Blake, 117 Mass. 23. ' So, if a person sell goods to another, or has been led to' believe that he has sold them to such person, and deliver them, as he supposes, to such person, and the person who has led him into that belief receive and carry oif the goods and dispose of them to another, there has not been a sale to the person who has thus fraudulently represented himself to be a servant or agent of the supposed purchaser; and he cannot confer a good title on any one tlse, the property never having vested in him. Hardman v. Booth, 1 Hurl. & C. 803; Lindsay v. Cundy, Law R. 2 Q. B. Div. 96, Court of Appeal, reversing Law R. 1 Q. B. Div. 348. A purchaser at an execution sale cannot be held liable for any device of the defendant in the execution of which he was ignorant. Thorpe v. Beavans, 73 N. Car. 241. But the public policy in favor of sustaining judicial sales does not go so far as to protect a purchaser who has him- self been guilty of trick or artifice in obtaining the property at an under- value. Stewart v. Nelson, 25 Mo. 309; Schweitzer v. Tracy, 76 111. 345 ; Young V. Bradley, 68 111. 553 ; Michigan Cent. R. Co. v. Phillips, 60 111. 190; Jennings v. Gage, 13111. 610. " Sturge V. Starr, 2 Mylne & K. 195. § 4.] NOTICE. 309 trust estate, and convey it to an innocent purchaser for value, the remedy of the cestui que trust is against the trustee alone. The purchaser gets a good title.' A person, however, receiv- ing money raised on trust property in fraud of the cestui que trust, is said to be liable for the amount to the latter, though the money was obtained for value and without notice of the trust.2 Thus, in the case cited, the defendant had received money fraudulently raised on real property which had been settled on the plaintiff and her children ; and, though the defendant was trustee of this marriage settlement, he had no notice or knowledge that the money referred to had been raised on the trust property. But the plaintiff, her husband having deceased, was held entitled to follow the fund into the defendant's hands, and recover the same for herself and (as next friend) for her children. And it was thought imma- terial that the defendant had been discharged in insolvency since the money was put into his hands.^ Proof of fraud in a sale casts the burden upon a subsequent purchaser of showing that he bought for value and without notice.* But the purchaser of a fraudulent title must be able to show clearly that he is a bona fide purchaser without notice, and has paid the purchase-money, of which the receipt of the vendor will not be sufficient evidence.^ A purchaser for value is one who, at the time of his pur- chase, advances a new consideration, surrenders some security, or does some other act which, if his purchase were set aside, 1 Grove v. Robards, 36 Mo. 523. The ownership of a trust fund is unaffected by a change of the custo- dian, or where it is taken by a volunteer or one who has notice of the trust. Kepler v. Davis, 80 Penn. St. 153. '^ Buckeridge v. Glasse, Craig & P. 126. » The debt was not shown to have been in the defendant's schedule; but the court thought the result would have been the same, even if it had been proved to be there. * Easter v. Allen, 8 Allen, 7. « Hoffman v. Strohecker, 9 Watts, 183. See s. c. 7 Watts, 86. 310 PEBStrMPTIVE OE CONSTRUCTIVE FRAUD, [CH. VI. would leave him in a worse than his original situation,^ or (ac- cording to most of the authorities) which would leave him in a worse situation than he might have been but for the purchase.^ Thus, a person who takes a negotiable bill of exchange in payment, absolute or conditional, of a pre-existing debt ; or as security for a debt simultaneously created with the giving of the bill or note, where such instrument is part of the inducement to the credit ; or, according to the strong ten- dency and weight of authority, where the bill or note is taken as security for a pre-existing debt, whether there be an agree- ment to extend the time of the original credit or an.agreement not to extend the time, — in all of these cases, the holder of the paper is a holder for value ; and, if he have no notice of fraud or other defence available in an action between the original parties, his right to recover is perfect.^ In New York and in some other States, it is held that one to whom property, purchased through fraud, has been delivered by the defrauding buyer, in payment of a preceding debt, or in performance of an executory contract of sale made prior to acquiring possession of the property in question, though a consideration was paid at the time of the contract, is not a holder for value, and cannot hold the property as against the party who originally owned ^nd was defrauded of his posses- 1 Boon V. Barnes, 23 Miss. 136. Hence, a purchaser of property who has not paid any thing for it, though he may have agreed to pay full value, is not protected. Hicks v. Stone, 13 Minn. 434. But the case would be otherwise, where he had given security for payment. Starr v. Strong, 2 Sandf. Ch.,139. ' Blanchard v. Stevens, 3 Gush. 162 ; Bank of Republic v. Carrington, 5 R. I. 515 ; Redf . & B. Lead. Cas. 208, 209. ' The cases at variance with the last of these propositions, mainly in New York, are considered in the note to Swift v. Tyson, Redf. & B. Lead. Cas. 186, 195. The whole subject of holders for value under the circum- stances stated in the text is there presented, and the authorities, Ameri- can and English, examined. See, further, the late reaffirmance of the rule in New York (requiring the actual parting with some value, or otherwise positively changing the party's position), in Moore v. Ryder, 65 N. Y. 438. § 4.J NOTICE. 311 sion of the property.^ But payment, even in New York, is not necessary to make one a purchaser for value. The giving of securities is equally good.'^ In accordance with the above rule of law in New York, one who has innocently received from a husband, to secure the purchase price of goods then presently sold and delivered to him, and also to secure a prior indebtedness, a mortgage executed by the wife of the debtor upon her own property, which as to the prior indebtedness was a fraud upon the wife, cannot claim to have equities superior to hers, so long as the avoiding of the mortgage to the extent of such prior debt will not place him in any worse position than he originally occupied.^ To make the claim of the mortgage superior to that of the wife, it must appear that, in relation to the prior debt, he has done something, or parted with something, in reliance upon the mortgage, which will make the effect of defeating the mortgage as a security to that extent operate to his injury.* It is further held in New York that an execution creditor does not become a bona fide purchaser by buying goods at a sale thereof without making an advance upon them, when the goods were fraudulently purchased by the defendant in the execution. Such a proceediijg, it is said, gives the creditor no better title than a mere delivery would from the fraudulent defendant. The creditor advances nothing, and loses nothing by the proceeding. That is, the creditor had no right, under the circumstances, to levy on the goods in question ; and the mere sale had therefore conferred no title to him.^ A mere attaching creditor cannot be regarded as a bona fide 1 Barnard v. Campbell, 58 N. Y. 73. = Starr v. Strong, 2 Sandf. Ch. 139. 8 Smith V. Osbom, 33 Mich. 410. * lb. ; McWilliams v. Mason, 31 N. Y. 294. ^ Devoe v. Brandt, 53 N. Y. 462. This was quite clear for the further reason that there was evidence that the creditor had notice of his debtor's fraud. 312 PRESUMPTIVE OR CONSTRUCTIVE FRAUD. [CH. VI. purchaser for value. The claim of an attaching creditor is considered as not of equal strength with that of such a pur- chaser. He parts with nothing in exchange for the property, nor does he take it in satisfaction of any debt. The property is merely seized for the purpose of having it afterward so appropriated. The attaching creditor, by his attachment, ob- tains but a lien. It is a well-settled rule, at least in equity, that the general assignees of a bankrupt take his estate subject to every equitable claim existing against it in favor of third per- sons ; and so it is with judgment creditors in regard to the lien ,of their judgment.^ But if the property attached be afterwards sold under the levy, and the creditor become pur- chaser, paying cash or giving a valid security for payment, he will be a purchaser for value, even under the New York rule. One who claims against a prior donee or creditor as a pur- chaser for value must prove a fair consideration, not neces- sarily equal to the full value of the property, but a price paid which does not cause surprise or warrant a suspicion of fraud or contrivance on the part of the purchaser.^ Indeed, if the price paid be grossly below the value of the property, he will not be regarded as a purchaser for value as against a creditor, though in fact his purchase was made without knowledge of any fraudulent intent on the part of the vendor.* If any interest ad rem remain in the intermediate fraudulent vendor of property, it seems that the original vendor can fol- low the property into the hands of a bona fide purchaser for value to the extent of such interest. That is, he can sue upon the rights of the purchaser's vendor, and recover to the extent of such rights.* But, in the absence of trust or agency, this 1 Sch-weizer v. Tracy. 76 111. 345, 351; Ex parte Howe, 1 Paige, 125; Gibson «. Warden, 14 Wall. 249; Tousley v. Tousley, 5 Ohio St. 78; Nathan v. Giles, 5 Taunt. 558. See McLaughlin v. Shepherd, 32 Maine, 143. 2 Worthy v. Caddell, 76 N. Car. 82 ; Fullenwider v. Roberts, 4 Dev. & B. 278. « lb. * See Justh v. National Bank, 56 N. Y. 478. § 4.] NOTICE. 813 right of the intermediate vendor must, it should seem, be in the nature of a lien upon the property,^ and not a mere right of action for the breach of a contract; since the original, defrauded owner would not be a party to the contract. If the fraud practised on the owner of the property be of such a character as to prevent the passing of a title to the supposed vendee, the latter of course can convey no title to a subsequent purchaser, though the purchase be made with- out notice and for value. Thus, where under the pretence that an instrument was a deed of covenant to procure title- deeds, a solicitor obtained from his client a mortgage of prop- erty to secure the payment of an alleged debt not shown to exist, the deed thus procured was held to be void, not merely against the solicitor, but also against an assignee for value from him without notice of the fraud.^ No title passes to a hona fide purchaser for value of land, who claims under a deed which was surreptitiously and fraud- idently taken from the grantor's house, before signature and delivery .2 Arid it is held in Ohio that if the fraudulent pur- chaser of goods does not obtain a delivery of them under the contract, but subsequently acquires possession of them through fraud and misrepresentation, he cannot convey a good title to them as against the owner, even to a lona fide purchaser for value.* The distinction between the two classes of cases is found in the fact that in the latter there is no valid execution of the instrument. If the solemnities of signing, sealing, and delivering are tainted with imposture or deceit, these solemni- ties have no binding effect ; and the instrument to which they 1 Justh V. National Bank, 56 N. Y. 483, 484. See also Pennell v. Deffell, 4 DeG., M. & G. 372. 2 Vorley v. Cooke, 1 Giff. 230. See also ante, pp. 130, 157. ' Van Armringe v. Morton, 4 Whart. 382. * Dean v. Yates, 22 Ohio St. 388. 814 PEESUMPTIVB OE CONSTEUCTIVE FEAtTD. [CH. VI. have been fraudulently applied cannot be the act and deed of him who had no intention to execute such an instrument. By the common-law rules of pleading, evidence of imposture, falsehood, or fraud can be given in evidence under the plea of non est factum. The instrument is no more a genuine deed than it would be, had the signature been forged.^ But where the imposition consists merely in false representations of the condition or value of the property, or of the state of the title, or of claims upon it, or the like matters, the conveyance, though obtained bj^ fraud, is good until set aside, even as between , the parties, and is unimpeachable as to subsequent purchasers for value and without notice. In cases of this kind, there is an intention to convey the property, and that intention will be upheld, subject to the right of the injured party to relief from the consequences of the fraud of the other party, or of others who claim under him with notice or as volunteers. In the one case, the original party intends to alienate the particular property ; in the other, he does not. One who buys property from another who acquired the title by fraud must, in order to protect himself in his purchase, have been ignorant of any of the facts constituting the fraud, not onlj' at the time of his purchase, but also at the time of paying the, purchase price.^ To constitute one a purchaser without notice, he should have paid the purchase-money in whole or in part^ before notice.* Hence, a person re- ceiving notice after having contracted for the purchase of land, but before the delivery of the deed or adjustment of 1 Vorley v. Cooke, supra. " Scott V. Umbarger, 41 Cal. 410; Blanohard v. Ely, 12 Mich. 339; Warner v. Whittaker, 6 Mich. 138. " Hardin v. Harrington, 11 Bush, 367. See Pickett v. Baum, 29 Barb. 505; 2 Story, Equity, § 1502. * Paul V. Fulton, 25 Mo. 156; Vattier v. Hude, 7 Peters, 252; Dos- well V. Buchanan, 3 Leigh, 365; Dellard o. Crocker, 1 Speer, Eq. 20; Bash V. Bash, 3 Strobh. Eq. 131; Kyle v. Tait, 6 Gratt. 44; Cole v. Scott, 2 Wash. 141. § 5.] NOTICE. 315 the consideration, is not a purchaser without notice.^ But notice to a purchaser after his purchase does not affect him.^ To be a purchaser of land without notice, it is held that the party must have acquired the legal title : a purchaser of an equitable title is not within the protection. ^ Nor is one who holds title under a quit-claim deed regarded as a bona fide purchaser without notice.* § 5. Of Pelncipal and Agent, Client and Attorney, &o.^ The fourth and last of the classes of cases of notice above referred to ^ is that arising between principal and agent. The doctrine of constructive notice of fraud depends upon two considerations: first, that certain things existing in the relation or the conduct of parties, or in the case between them, beget a presumption of actual knowledge so strong that the law holds the knowledge to exist, because it is highly- improbable it should not ; and, next, that policy, and the safety of the public forbid a person to deny knowledge, while he is so dealing as to keep himself ignorant, or so as that he may keep himself ignorant, and yet all the while let his agent know, and himself perhaps profit by that knowledge. And under one or both of these heads comes the other principle, that whatever is notice enough to excite attention, and put the party on his guard and cause him to make inquiry, is also notice of every thing to which it is afterwards found that such 1 Prescott V. Hawkins, 16 N. H. 122; Blair v. Owles, 1 Munf. 38; Hoover v. Donally, 3 Hen. & M. 316 ; Jewett v. Palmer, 7 Johns. Ch. 65; Simms v. Richardson, 2 Litt. 274. 2 Low V. Blinco, 10 Bush, 331. « Wailes v. Cooper, 24 Miss. 208. ^ Watson V. Phelps, 40 Iowa, 482; May ». Le Clare, 11 Wall. 217; Oliver v. Pratt, 3 How. 333 ; Bragg v. Paulk, 42 Maine, 502 ; Smith v. Bank of Mobile, 21 Ala. 125 ; Boon v. Chiles, 10 Peters, 177; Vattier V. Hinde, 7 Peters, 252. 6 See also post, Chap. IX. § 4. " Ante, p. 300. 816 PRESUMPTIVE OE CONSTEtTCTIVE PEATJD. [CH. VI. inquiry might have led, though (for the want of the investiga- tion) all was unknown.^ Upon the first of these principles, while it is a general rule of law that a principal or client is affected with notice to his agent or attorney, received in the performance of the matter of the agency, the rule is to be limited to those cases in which the presumption of knowledge by the principal is a reasonable one. It does not apply to cases in which the contrary pre- sumption arises. Thus, where an agent or attorney himself commits the fraud upon his principal or client, he would of course conceal it. To fix the principal with constructive notice of the fraud in such case would be absurd and unjust. There must be something more than this to effect that result.^ The rule that a purchaser is in equity chargeable with con- structive notice of facts and circumstances which came to the knowledge of his attorney or agent for the purchase, and the rule that notice of a deed is constructive notice of its contents, do not apply to controversies between the vendor and pur- chaser in relation to their own rights. These rules as to con- structive notice are adopted only for the protection of the prior equitable rights of third persons against subsequent pur- chasers who claim in hostility to such rights.^ The notice to the counsel, attorney, or agent must be in the same transaction in which he is employed, according to the more general rule.* In Vermont, however, it is settled that it is not necessary that the notice should reach the attor- ney or agent in the same transaction. If the attorney or 1 Kennedy v. Green, 3 Mylne & K. 693, 719. See ante, pp. 288, 289. ° Kennedy v. Green, supra; Sharpe v. Foy, Law R. 4 Ch. 35; Atlantic Bank v. Harris, 118 Mass. 147 ; National Ins. Co. v. Minch, 53 N. Y. 144. » Champlin v. Laytin, 6 Paige, 189; s. c. 18 Wend. 407. * 2 Sugden, Vendors, 532, Perkins; Bracken v. Miller, 4 Watts & S. 102 ; Bank of United States v. Davis, 2 Hill, 451 ; Howard Ins. Co. v. Halsey, 4 Seld. 271; McCormick v. Wheeler, 36 111. 114; WilUs v. Val- lette, 4 Met. (Ky.) 186 ; Jones v. Bamford, 21 Iowa, 217 ; Wilde v. Gib- son, 1 H. L. Cas. 614, 624. § 5.J NOTICE. 317 agent has the notice, though acquired while acting in another and different transaction, the client or principal will be affected by it, the law presuming that the notice was communicated.^ And such seems to be now substantially the rule of law in Eng- land,^ and in the Supreme Court of the United States, except where the situation and fact are such that the notice would not be likely to be communicated.' And it would probably be conceded by all the courts that where one transaction is closely followed by and connected with another, or where it is clear that a previous transaction was present to the mind of the agent when engaged in another transaction, the notice to him will bind his principal.* If the agent of one principal, in the course of his employ- ment, collude with the agent of another to defraud either principal, and succeed, it is held that the defrauded principal cannot maintain an action therefor against the other princi- pal.^ The ground of this decision was said to be that, if the fraud were committed in the course of the principal's busi- ness, the principal would be affected by the agent's knowl- edge ; but knowledge of an agent's fraud upon his principal cannot be imputable to the principal. If it could be, the principal would be barred from proceeding ex delicto against his own or the colluding agent, and might even be liable criminally, where the act was a crime. The true ground for such a rule of law must lie in the fact that collusion against an agent's principal cannot be within the scope of any legiti- mate business, and can only render the opposite principal liable, when it was expressly authorized or ratified by him. If a party, with an understanding between himself and another that they shall be jointly interested, purchase prop- 1 Hart V. Farmers' & M. Bank, 33 Vt. 252; Abell v. Howe, 43 N. H. 403. 2 Dresser v. Norwood, 17 Com. B. n. 8. 466, Ex. Ch., reversing s. c. 14 Com. B. N. 8. 574. 8 Distilled Spirits, 11 Wall. 356, 366. * 2 Sugden, Vendors, 532, Perkins. ' Scofleld Go. V. State, 54 Ga. 635. 318 PRESUMPTIVE OE CONSTETJCTIVE FRAUD. [CH. VI. erty from a third person in his own name, committing a fraud upon the vendolr in the transaction, and then let into the purchase the party so to be jointly interested, the latter is bound by the fraud of the purchaser ; and this, too, though he had no actual notice of the fraud, and paid value for his interest in the property. Though in a sense such party may be a lona fide purchaser for value, still the first purchaser is in law his agent, and he is bound by his fraud. The sale may therefore be rescinded as against both parties.^ The directors of a corporation cannot be charged with notice of all of the acts of the managing officers, so as to be personally liable for their frauds.^ And, as to false repre- sentations made by the latter, the directors are not liable in the absence of proof that (knowing the representations to have been made) they (the directors) believed, or had reason to believe, at the time the managers made them, that the rep- resentations were false, and that they were for that reason fraudulently made ; or that the directors assumed, or intended to convey the impression, that they had actual knowledge of their truth, though conscious that they had no such knowledge.^ Notice to a husband is not notice to his wife, unless he is her agent, and, it is held, is engaged upon the business of the agency when he receives the notice.* And the same would doubtless be true of notice to the wife to affect the interests of the husband. The rule that'the presence of facts sufficient to put a man of fair intelligence upon inquiry is notice of such facts does not apply to the case of a party residing in a distant State, who has an agent at the place of the sale or other transaction, by whom the fraud is perpetrated.^ 1 McLean v. Clark, 47 Ga 24. 2 Wakeman o. Dalley, 51 N. Y. 27. " lb.; Meyer v. Amidon, 45 N. Y. 169; Oberlander v. Spiess, lb. 175, explaining Bennett v. Jordan, 21 N. Y.'238. < Snyder v. Sponable, 1 Hill, 567; s. c. 7 Hill, 427. * Livermore v. Johnson, 27 Miss. 284. PART 11. ADJECTIVE LAW OF FRAUD. PEOCEDURE AND INCIDENTS THEREOF, PAET IL ADJECTIVE LAW OF FRAUD. PROCEDUKE AND INCIDENTS THEREOF. CHAPTER VII. JURISDICTION. Subject to a few exceptions, courts of equity exercise a general jurisdiction in cases of fraud, sometimes concurrent with, and sometimes exclusive of, other courts.^ There are, however, many cases, such,_ for example, as those involving fraud in the sale of land, where the injured party may apply to either a court of law or a court of equity for redress. There are other cases, such, for example, as those involving fraud in trusts, where the injured party must apply to a court of equity in order to obtain an adequate remedy. There are other cases, such, for example, as those involving fraud in the probate of a will of real estate, where the injured parties must find their remedy in a court of common law.^ There are still other cases, such, for example, as those involving fraud in the probate of a will of personalty, where the parties injured must in most cases resort to another court altogether, — 1 1 Story, Equity, § 184. 2 lb. ; Webb v. Claverden, 2 Atk. 424 ; Kerrich v. Bransby, 7 Brown, Pari. Cas. 437 (TomliBs) ; Pemberton v. Pemberton, 13 Ves. 297. 21 322 PEOCEDTJEE AND INCIDENTS THEEEOP. [OH. Vn. the Court of Probate in this country, or the Ecclesiastical Court in England.^ A court of equity can grant relief from the consequences of fraud in a manner and upon terms which a court of law cannot do. There are cases, for example, where equity will give relief against the operation of instruments which are not void at law. A court of law will not pronounce a deed void on the ground of misrepresentation of matters dehors the instrument, where it appears that the exercise of ordinary capacity, with ordinary care, might have guarded against it.^ And yet equity will often refuse to order a specific perform- ance in such cases. In the case cited, it appeared that, upon the execution of a lease, the lessor misrepresented his title to demise the premises, by stating that he had the consent of parties interested therein, and that they would not interfere or disturb the possession of the lessee. In covenant by the lessor upon the lease, the lessee pleaded that the deed was obtained from the defendant by fraud and covin on the part of the plaintiff in making this false representation. But the court held that a court of law could not grant relief in such 1 Kerrich v. Bransby, supra; Allen v. McPherson, 1 Phill. 133; s. c. 1 H. L. Cas. 191; Broderick's Will, 21 Wall. 503. As to this point, see post, pp. 333, 334. 2 Hovenden «. Tilly, 5 Irish L. R. 462. ' " The defendant," said the court, " appears from the beginning to have been apprised of the existence and nature of the claims by which he has been since disturbed in his possession ; that he knew of these claims at the time he took the lease and executed the counterpart ; that he knew the terms, and understood the import of the terms of the lease ; and what he was told by the plaintiff himself was sufficient to make him aware that it was necessary, to his having a good title under the lease, that the persons having those claims should be consenting parties to it. This was surely of itself sufficient to lead his mind to the consideration of the manner in which he we«s to be protected from the consequences of those claims. . . . That in the exercise of his judgment he was or might be affected by the untrue representations made to him of their willingness to concur in or confirm the lease may be reasonably presumed ; but the ques- CH. Vn.] JURISDICTION. 323 It is an established doctrine that, when the legal estate in propertj^ has been acquired by fraud, the taker is regarded in equity as trustee of the party defrauded ; and such party may recover the estate or its avails, when distinctly identified, from the party or parties charged with the fraud. ^ And the injured party is entitled not only to enforce his equitable title to the property, but also to compel payment of all dam- ages he may have suffered. This whole purpose he could not accomplish at law, and hence he may resort to equity for the entire relief.^ In ejectment, the grantor of a deed, regularly executed and registered, cannot set up fraud in the procure- ment of the instrument. His remedy is to be found in a court of equity.* A deed of gift executed and acknowledged by one having legal capacity to convey cannot be avoided at law by proof that it was obtained by undue influence. The remedy is in equity.* So, too, a person who has executed a deed to a trustee cannot at law impeach for fraud in the purchaser a deed regularly executed by the trustee of the trust property. He should go into equity.^ So, also, conveyances in fraud of the marital rights of the husband are good at law. The remedy therefor is in equity.^ The remedy for fraud upon a partner tion is, whether such representations, made under such circumstances, can at law have the effect of avoiding the deed ab initio. I conceive that they cannot have that effect. . . . They would amount at most only to a promise that the claimants would join in the lease ; hut that would only be a promise by parol. And to hold that the legal existence of the deed as a deed should depend upon the truth of that representation, or the performance of that promise, would be to put such a representation or promise upon the same footing as an express covenant in the deed." 1 Cheney v. Gleason, 117 Mass. 657; Small v. Attwood, Younge, 507; Adams, Equity, 144. 2 Cheney v. Gleason, supra; Dodd v. Cook, 11 Gray, 495; Whitte- more v. Cowell, 7 Allen, 446. ' Ferguson v, Coleman, 5 Heisk. 378. * Truman v. Lore, 14 Ohio St. 144; Clary v. Clary, 2 Ired. 85. « Taylor v. King, 6 Munf. 358. ' Logan V. Simmons, 1 Dev. & B. 18. 324 PROCEDTJEE ANB INCIDBNTS THEEEOF. [CH. VH. in the settlement of partnership accounts is also by bill in equity. Assumpsit, for example, cannot be maintained.^ But this rule does not apply to the case of money obtained by such copartner from his fellow for the partnership, when the formation of the partnership and the obtaining the money were a fraud by the former upon the latter, practised for the sake of obtaining money for individual purposes. In such a case, the defrauded party may recover his money at law.^ Equity has jurisdiction of a bill alleging a conspiracy be- tween the defendants to defraud the plaintiff of his land, and setting forth the acts done in pursuance of the objects of the conspiracy.* A bill in equity is maintainable against a defendant who, claiming title under a deed alleged to be fraudulent, has taken possession of, and converted to his own use, sundry articles of personal property ; the plaintiff praying the court to set aside the fraudulent deed, and to compel the defendant to render a just account of the property so wrongfully taken, and pay the value thereof to the plaintiff. This is not a mere action of trover.* In a suit brought for partition by a purchaser of the interests of devisees, it is not regular to impeach for fraud or mistake the conveyance made to him. An application to a court of equity for partition does not seem to be an application to the sound discretion of the court, to be granted or refused accord- ing to the circumstances of the case, as in cases of specific performance and other cases. It is a remedy substituted for the difficult and perplexed remedy by writ of partition. The only indispensable requisite to entitle the plaintiff to relief is that he shall show a clear legal title. If his title be disputed or doubtful, the decree for partition will be suspended until 1 Holyoke v. Mayo, 50 Maine, 38.5; Chase v. Garvin, 19 Maine, 211. 2 Hale D. Wilson, 112 Mass. 444. 8 Dwinal v. Smith, 25 Maine, 379. » Cocke V. Bromley, 6 Munf. 184. CH. vn.] jTrRiSDicTiON. 325 he establishes his title at law by ejectment or other remedy.! Notwithstanding the fact that courts of equity generally have concurrent jurisdiction over fraud with courts of law, a determination at law of a question of fraud will conclude a re-examination of the same matter in equity, except perhaps where the complaining party was under some disability which prevented him from bringing his case fully and fairly before the court of law.^ Though courts of equity and courts of law have in most cases a concurrent jurisdiction in cases of fraud, still if a suit be first brought in a court of law, in which, upon the issues, the question of fraud should be tried and determined, the party injured by the fraud must make his defence there ; and, if he neglect to do so, equity has no jurisdiction to reUeve him.^ But this rule is probably to be understood of cases in which the defrauded party was bound to set up the fraud in the action at law. It can hardly be true of cases in which such party is entitled to bring a cross suit for the fraud.* Equity will entertain a bill to set aside an order of court obtained for a fraudulent purpose, and a sale made thereunder, notwithstanding the fact that the plaintiff might have accom- plished the same object by mere motion in the court which granted the order, if it be not clear that the rights of the parties could be so well protected and disposed under a motion. But where a full, adequate, and perfect remedy is attainable by motion, as in respect of orders fraudulently obtained for foreclosure sales, an independent proceeding is not allowed.^ 1 Wiseley v. Findlay, 3 Rand. 361 ; Wilkin v. Wilkin, 1 Johns. Ch. Ill ; Philips V. Green, 3 Johns. Ch. 302. 2 Smith V. Mclver, 9 Wheat. 532. * Haden v. Garden, 7 Leigh, 157. * See Bigelow, Estoppel, 107, 138 (2d ed.). 5 Hackley ». Draper, 60 N. Y. 88, overruling a dictum in Libby v. Kose- krans, 55 Barb. 202, 219; Brown v. Frost, 10 Paige, 243 ; American Ins. Co. V. Oakley, 9 Paige, 259 ; McCotter v. Jay, 30 N. Y. 80 ; Gould v. Mortimer, 26 How. Pr. 167. 326 PEO0BDT7EE AND INCIDBNTS THEEEOF. [CH, Vn. In any case of fraud, if the injured party is entitled to go into equity for relief as to any matter arising out of the con- tract or transaction in which he has been defrauded, he may there obtain full relief without resorting to a court of law. Equity having entertained jurisdiction as to part of the case will entertain jurisdiction as to the whole, and give final relief to the injured party.^ While a court of equity will not interfere in cases of fraud where a court of law has first taken jurisdiction and can furnish a full and adequate remedy, a court of equity will in a proper case intervene and order a fraudulent instrument, sought to be enforced in a law court, to be delivered up and cancelled. But the exercise of this power is to be regulated by sound discretion, as the circumstances of the particular case may require ; and, to be sustained, the resort to equity must be expedient, either because the instrument is liable to abuse, or because he defence not arising upon the face may be difficult or uncertain at law, or because of other special circumstances peculiar to the case which render a resort to chancery proper, and clear of all suspicion of design to promote expense and litigation.^ At common law, it has generally been held incompetent to a defendant sued at law on a specialty to plead that the instru- ment was obtained by false representations. Such defence must be made in equity. But it is otherwise of the execution of the in- strument, as where the bond is misread to the obligor, or where his signature is obtained to an instrument which he did not intend to sign. In such cases, fraud may be alleged at law.^ 1 Bradley v. Bosley, 1 Barb. Ch. 125. ' Glastenbury v. McDonald, 44 Vt. 450 ; Bank of Bellows Falls v. Rutland & B. R. Co., 28 Vt. 470 ; Hamilton v. Cumings, 1 Johns. Ch. 517. s Taylor v. King, 6 Munf. 358; Wyche v. Macklin, 2 Rand. 426; Dorr V. Munsel, 13 Johns. 430 ; Vrooman v. Phelps, 2 Johns. 177 ; Franchot V. Leach, 5 Cowan, 506 ; Champion v. White, lb. 509 ; Dale v. Roosevelt, 9 Cowen, 307; Belden v. Davies, 2 Hall, 433; Stryker v. Vanderbilt, 1 Dutch. 482 ; HoUey v. Younge, 27 Ala. 203 ; Wood v. Goodrich, 9 Yerg. 266. CH. Vn.J JURISDICTION. 327 The ground of this rule seems to be, that to admit evidence of fraud not relating to the execution of the deed would be to allow the obligor to disprove the presumption of considera- tion ; which presumption in the case of a specialty is an abso- lute one, not to be rebutted. Some courts, however, admit the plea of fraud as to the consideration, as well as to the execution of the instrument ; and in other courts it is allowed by statute.^ And in any case, if the plaintiff traverse the plea, he waives the estoppel, and the evidence of fraud becomes admissible.^ The doctrine that fraud not in the execution of a deed cannot be availed of at law applies not only to actions upon contracts under seal, but also to conveyances.^ Thus, in the case cited, a party proposed to convey a tract of land in trust, and his brother undertook to have the deed drawn, and thereupon, without the knowledge of the grantor, inserted a conveyance also of another tract of land in trust for him- self. Upon presenting the deed for execution, in reply to a question from the grantor, the brother said it was " all right," whereupon it was executed without reading. It was held, in an action of trespass quare clausum fregit, that the deed was binding. The remedy of the grantor was to be sought in equity. The fraud was deemed not to have been perpetrated in \h.Q factum of the grant. As to what is considered fraud in the factum or execution of a deed, as distinguished from fraud relating to the con- 1 Phillips V. Potter, 7 R. I. 289; Hoitt v. Holcomb, 23 N. H. 535, 552. See 3 Phillips, Evidence, 1448, note 969, Cowen's ed. In Hoitt v. Hol- comb, supra, the court hold that fraud not relating to the execution of a specialty is not necessarily fraud relating to the consideration ; and it was considered that the cases which refuse to admit evidence not relating to the execution have falleii into confusion in overlooking this distinction. It was conceded that no inquiry into the consideration of a deed could be made at law. 2 Wormley v. Moffet, 6 Munf . 120 ; Wyche v. Macklin, 2 Rand. 426. 8 McArthur v. Johnson, PhUl. (N. Car.) 317. 328 PEOCEDUEB AND rNCIDENTS THEEEOF. [CH. VII. sideration, the authorities afford various examples. One instance of fraud in the faetim is where the grantor of a conveyance intends to execute a certain deed, and another deed is surreptitiously substituted in its place.^ Another is afforded by the case of a deed executed by a blind or illiterate person, when, upon request to read the deed, it has been falsely read to him.^ The principle upon which such cases as the above pro- ceed is that the party was fraudulently caused to sign, seal, and deliver a different instrument from that intended. It could not therefore be properly called his deed. But, where the party knowingly executes the very instrument which he intended, but is induced to do so by some fraud in the treaty, the fraud relates to the consideration, and cannot be set up at law. Of this species of fraud is that practised upon a man who can read the instrument which he signs, seals, and delivers, but refuses to do so. " If the party," says the Touchstone, " that is to seal the deed can read himself, and doth not, or, being an illiterate or a blind man, doth not require to hear the deed read, or the contents thereof de- clared ; in these cases, albeit the deed be contrary to his mind, yet it is good and unavoidable at law ; but equity may correct mistakes, frauds, &c." ^ Nothing, therefore, which would be discoverable upon the reading of the instrument can make the deed invalid at law, unless the duty of reading de- volve upon the opposite party, and that duty is abused.* If in an action at law upon a sealed instrument there be fraud (not relating to the consideration) on the part of the 1 Canoy v. Troutman, 7 Ired. 155 ; Gant v. Hunsucker, 12 Ired. 254; Nichols V. Holmes, 1 Jones, 360; McArthur v. Jolinson, Phill. (N. Car.) 317. 2 2 Black. Com. 304 ; Manser's Case, 2 Coke, 3 ; McArthur v. John- son, supra. ° Shep. Touch. 561. ' McArthur v. Johnson, supra, overruling McKerall c. Cheek, 2 Hawkes, 343, which was said to be decided without argument or proper consideration. CH. Vn.] JUEISDICTION. 329 plaintiff, the court will hear evidence in resistance of the action. But a court of law will not allow evidence on the part of the plaintiff of fraud in the defendant ; as, for exam- ple, in the date of the deed. He should go into equity for relief.^ And, in a suit in equity for the correction of an alleged mistake in a bond, the defendant can allege that the bond was obtained by fraud, though no attempt is made to enforce it in such suit. It is not necessary for the defendant to wait until he is sued at law upon the bond, even in those States in which such fact would be available at law.^ Ther« is no equity to restrain the overseers of a railroad made over the plaintiff's land from using the road after its completion, or from interrupting the plaintiff's workmen in attempting to remove it and to restore the land to its original state, though the possession of the land for the purpose of constructing the railroad may have been obtained from a tenant of the plaintiff by means of circumvention and fraud.^ The question in such a case relates merely to the right of way; and, if the railroad company have not acquired the right, they are trespassers, and liable accordingly. The rem- edy is not by injunction.* An action cannot be maintained at law by stockholders of a corporation, in behalf of themselves and other stockholders, against the directors, for the benefit of the corporation, to recover profits supposed to have been gained, to its prejudice and damages, for losses suffered by it through the misconduct of the directors. And, ordinarily, the same rule will apply in equity. It is only from the necessity of the case, and to prevent a failure of justice, that suits in equity for such purpose are allowed. To justify a bUl in equity, it must be shown that suitable redress is not attainable through the action of the corporation. To this extent, all of the author- 1 Wood V. Goodrich, 9 Yerg. 266. 2 Hogencamp v. Ackerman, 2 Stockt. 267. » Deere v. Guest, 1 Mylne & C. 516. * lb. 330 PROCBDTTEB AND INCIDENTS THEEEOF. [CH. VII.* ities agree. There is some diversity, however, as to what will satisfy the requirement. Whether there must be aa effort to move the corporate body to the redress of its own injuries, and to that end an attempt to procure a meeting and vote of the stockholders, or whether an application to the present board of officers by whom the corporate affairs are managed, and a refusal by them to allow proceedings in its name and behalf, would be sufficient, does not seem to have been determined by any clear concurrence of decision. The question may depend somewhat upon the nature of the corporate organization, and the extent of powers confided to its officers for the time being. Where the stockholders retain no control of the corporate business except by means of an annual election of officers, those officers, during their term of service, represent the corporation for all purposes; and a refusal by them to take proper action for the protection of its interests, or to allow the use of the corporate name for that purpose, ought to be sufficient to justify a proceeding in behalf of the individual stockholders, making the corporation a party defendant. A formal application and refusal need not be alleged, if enough appear to show that such an appli- cation would be unavaOing. ^Where the directors themselves are the parties charged with the wrong, or by whose fraud or collusion the wrong has been accomplished, and the suit is to be brought against them, they are by the very nature of the case incapacitated for the service of representing the corpora- tion in anj"- action for the restoration of its rights, whether by suit or by proceedings in pais. If the corporate action is under the control of such parties, it is sufficient reason to warrant proceedings by suit in the name and behalf of the individual stockholders.^ In accordance with these principles, laid down by Mr. Jus- tice Wells in the case cited, it was there held that a bill for the 1 Mr. Justice Wells, in Brewer v. Boston Theatre, 104 Mass. 378. &6&post, pp. 351, 352. CH. Vn.] JTJEISDICTION. 331 purpose above indicated, which did not allege that any effort had been made to set the corporation in motion for the pur- pose of securing its own redress, or that any application had been made to the directors to take action in the matter, could not be maintained, if the bill did not clearly show that such effort or application would be unavailing. A creditor cannot maintain an action at common law against his debtor, or against persons conspiring with him, for fraud- ulently disposing of his property in order to avoid the pay- ment of his debts.^ The debtor in such a case has, indeed, committed a fraud upon others, to their damage ; but the law has provided a more suitable mode of procedure to meet such cases. If such an action were to be allowed, the result would generally be to prevent the possibility of a ratable division of the debtor's property among his creditors ; for it often happens that the estate of the debtor is insufficient to meet all the claims of the creditors, and, if an action for damages were to be allowed, the plaintiff would be entitled to recover the amount of his debt. This would be more than he would be entitled to under a distribution of the effects in bankruptcy. It is true a debtor may prefer one creditor over another in many cases, or one creditor may by diligence secure an advantage over other creditors ; but the proceedings in such cases must be according to established methods, of which an action for damages is not one. This principle will not be affected by the circumstance that the debtor has made false and fraudulent representations to his creditors as to his financial condition, by which they were deceived, and led to refrain from making attachments upon his property until it was too late.^ The same objection to 1 Austin V. Barrows, 41 Conn. 287 ; Cowles v. Day, 30 Conn. 410 ; Smith V. Blake, 1 Day, 258 ; Adler v. Fenton, 24 How. 407 ; Lamb v. Stone, 11 Pick. 527 ; Wellington v. Small, 3 Cush. 145 ; Moody v. Bur- ton, 27 Maine, 427. 2 Austin V. Barrows, 41 Conn. 287 ; Moody v. Burton, 27 Maine, 427. 332 PEOCBDUKB AND INCIDBNTS THBEEOP. [CH. Vn. the action will arise which exists in the case above stated. A further reason was also suggested in the case first cited, that the loss of an attachment which had not been under- taken in the least was not a reasonably certain effect of the fraud. But if it had appeared that the plaintiffs had actually- levied an attachment upon the defendant's property, and were prevented from retaining their lien by the defendant's fraudulent representations, we apprehend that the case would have been considered different, and the action held maintain- able.! Where an agreement against which a complainant in equity asks for relief is perpetual in its nature, and the keeping it on foot is a fraud on the party complaining, so that the only effectual relief against it is to have it annulled, the case is one for equity, not for law.^ There is some conflict of authority upon the question whether a party can resort to equity for redress by reason of fraud in cases in which an adequate redress is obtainable at law. Thus, in cases of breach of warranty, misrepresenta- tion, and the like, in respect of personal or real property, where the sole object of the party making complaint is to obtain damages for the wrong, and not rescission, injunction, or other peculiar remedy of equity, it is held by many of the authorities that resort must be had to the courts of common law.^ Upon this view, it has been held that a court of equity will not enjoin a proceeding at law on a policy of life insurance, on the ground that the same was obtained by fraud, where it 1 Bradley ». Fuller, 118 Mass. 239; ante, p. 86. 2 Jones V. Bolles, 9 Wall. 364. ' Life Assoc, of Scotland v. McBlain, Law R. 9 Irish Ch. 176; Hoars v. Bremridge, Law R. 14 Eq. 522 ; s. c. Law R. 8 Ch. 22 ; Teft o. Stewart, 31 Mich. 367 ; Russell v. Clark, 7 Cranch, 89 ; Hardwick ». Forbes, 1 Bibb, 212 ; Boardman v. Jackson, 119 Mass. 161 ; Suter v. Matthews, 115 Mass. 253 ; Williams v. Mitchell, 30 Ala. 299 ; Russell v. Little, 28 Ala. 160 ; Denny v. Gilman, 26 Maine, 149 ; Woodman v. Freeman, 25 Maine, 531-; Learned v. Holmes, 49 Miss. 290. CH. VII.] JUEISDICTIOK. 333 appears that the fraud consists merely in false representations of the habits of the assured. Such facts are properly cogniza- ble by a jury.^ But a contrary view has been expressed by Lord Eldon and by Chancellor Kent.^ And it is held in Indiana that where a vendor of real estate fraudulently rep- resents that he has a perfect title to the land sold, and the purchaser is thereby induced to purchase, he can enjoin the collection of the purchase-money until the title shall be made good.^ It seems clear, however, that if in such cases some furthsr relief than that of damages be sought, and that relief is of an equitable nature, the party must apply to equity for his redress.* It seems equally true that a court of equity may grant relief in certain cases relating to the probate of wills.^ Indeed, some of the early cases entertained a wide jurisdiction in this respect.^ But it has since been settled that equity will not set aside a will for fraud. However, though equity will not set aside a wiU? nor indeed restrain the probate of it in the proper court (for this is equally true), still, if the fraud be proved, it will not assist the party practising it, but will leave him to make such advantage of it otherwise as he can.'^ But, further, equity may, according to the real intention of the testator, declare a trust upon a will, though it be not con- tained in the will itself, in at least three cases : first, in the case of a notorious fraud upon a legatee, as if the draftsman of the will should insert his own name instead of that of the legatee ; secondly, where the words imply a trust for the re- 1 Life Assoc, of Scotland v. McBlain, supra ; Hoare v. Bremridge, supra. 2 Evans v. Bicknell, 6 Ves. 182 ; Bacon v. Bronson, 7 Johns. 201. 8 Hinkle v. Margerum, 50 Ind. 240 ; Warren v. Carey, 5 Ind. 319 ; Wiley V. Howard, 15 Ind. 169 ; Strong v. Downing, 34 Ind. 300. ■* Denny v. Gilman, 26 Maine, 149. * See Maundy ». Maundy, 1 Ch. Rep. 66; Well v. Thornagh, Free. Ch. 123; Goss v. Tracy, 1 P. Wms. 287. ' Fonblanque, Equity, Bk. 1, c. 2, § 3, note u. ' Fonblanque, ut supra. 334 PEOCEDTJHE AND INCIDENTS THEREOF. [CH. VH. lations, as in the case of a specific devise to the executors without a disposition of the residue ; thirdly, in the case of a legatee promising the testator to stand as a trustee for another.' So, too,- Lord Hardwicke has said that fraud in making or obtaining a will must be inquired into and determ- ined by the Ecclesiastical Court, but that fraud in procuring a will to be established in that court, fraud not upon the testator, but upon the person disinherited thereby, might be the subject of inquiry in equity.^ And the same distinction has, been recognized by other judges.^ So, where the fraud does not go to the validity of the whole will, but only to that of some particular clause, or where the fraud consists in un- duly obtaining the consent of the next of kin to the probate, courts of equity will interpose to declare the executor a trustee for the next of kin.* And it has been held that a will which has been fraudulently destroyed or suppressed may be set up in equity.^ But beyond cases of this kind, as to which the Court of Probate itself could afford no suitable relief, the jurisdiction of that court is as to proper cases exclusive, and its decision beyond review. The result of the authorities relating to jurisdiction in matters of fraud may be thus stated : The Ecclesiastical or Probate Court has exclusive jurisdiction, when the question pertains to a will of personal property, and the decision of such court as to the validity of the will is binding upon all other courts, except in respect of matters concerning which such courts cannot give an adequate relief. The courts of common law have jurisdiction of matters of fraud relating to 1 Marriot v. Marriot, Gilb. 203, 209 ; Allen v. McPherson, 5 Beav. 469 ; 8. c. 1 Phill. 133 ; 1 H. I,. Cas. 191. " Barnesley v. Powell, 1 Ves. Sr. 284. ' Meadows v. Duchess of Kingston, Amb. 762; Kennell v. Abbott, 4 Ves. 802. See Allen v. McPherson, ut supra. < 1 Story, Equity, § 440. ' Buchanan v. Matlock, 8 Humph. 390; ante, p. 128. CH. Vn.J JTJEISDICTION. 335 ■wills of real property, concurrent with that of the Court of Chancery ; they have also jurisdiction of matters of fraud for which damages alone are sought. The Court of Chancery has jurisdiction of matters of fraud in wills of personalty, in cases over which the Ecclesiastical or Probate Court can exercise no adequate authority ; it has jurisdiction concurrent with courts of law of matters of fraud arising in respect of wills " of real estate ; it has also concurrent jurisdiction with the same courts in actions for damages, where a further and equitable relief is sought ; and finally, subject to the excep- tion arising upon the first case above mentioned, it has juris- diction in all cases proper for relief of some kind, as to which no adequate relief can be elsewhere obtained.^ An action for deceit in the sale of a patent is maintainable in a State court, though the case involves collaterally the con- struction and validity of the letters-patent.^ 1 See also 1 Story, Equity, § 184. 2 David V. Park, 103 Mass. 501. 336 PKOCEDUEB AM) INCIDENTS THEEEOP. [CH. VHI. CHAPTER VIII. WHO MAT ALLEGE FRAUD.i § 1, Inteoductoet. One phase of this question has been fuUy presented in the chapter on Deceit. A party upon whom the law casts the duty of inquiring into, and therefore of knowing, the truth concerning facts fraudulently represented, cannot maintain an action for any damages he may have sustained, by reason of his having acted upon the false representations. He was not deceived, or at least he would not have been deceived, had he done that which the law required him to do ; that is, made due inquiry on the subject. As to the question when a party is so situated as to be bound to make inquiry, reference should be made to the chapter on Deceit. § 2. Op Damage to Person not Intended. Fraud is a personal defence, available (except when an in- strument is rendered absolutely void by it) only by the injured party ; ^ but, except in actions for false representations, it appears to be no defence that a fraud was not intended for the person upon whom it has taken effect. Generally speaking, if fraud has been practised, the wrongdoer must answer to any one directly injured thereby.^ This is clearly true where it appears from the wrong itself that it was intended to injure any one, indifferently, who might come into the proper situa- 1 As to the practice concerning parties, see Chap. XVI. § 1. 2 Crane v. Reeder, 25 Mich. 303 ; post, § i. " See Benzein v. Lenoir, 1 Dev. Eq. 225 ; Clifiord v. Brooke, 13 Ves. 131. § 3.] WHO MAY ALLEGE FRAUD. 337 tion. Thus, it has been held in New York that a corporation is liable for the fraudulent issue of stock, not only to the person to whom the over-issue is made, but also to any subse- quent bona fide purchaser thereof, on the ground that such acts are done with intent to defraud any and all purchasers who may be drawn into the fraudulent position.^ It is doubt- ful, however, if this is consistent with the English rule, though that rule relates to the effect of false representations.^ But if one supply another with the means of perpetrating a fraud in his name against a particular person, and the fraud is perpetrated by the same means against other parties, he is clearly liable.^ § 3. Of being Paeticeps Ceiminis. As a general rule, a party cannot set up his own sole fraud as a ground upon which to rest his action or defence.* Thus, a person cannot avail himself of a lien, the discharge of which has been fraudulently prevented by his own acts.^ A party to a fraud is not only barred by his misconduct from alleging that he has been injured thereby as to the person with whom he may have contracted, but also as to third persons upon whom the fraud was intended to operate. Thus, where a creditor entered into a secret arrangement with his debtor, in fraud of a general composition deed which he and the other creditors had executed, but was outwitted in the matter by the debtor, it was held that the creditor must abide by the consequences of his conduct. The other creditors could not 1 New York & N. H. R. Co. v. Schuyler, U N. Y. 30; Phelps v. Wait, 30 N. Y. 78 ; Suydam v. Moore, 8 Barb. 358; Bruff v. Mali, 36 N. Y. 200. 2 Swift V. Winterbotham, Law R. 8 Q. B. 244 ; ante, p. 90. 8 Wilson V. Green, 25 Vt. 450. * White V. Hunter, 23 N. H. 128 ; Woods v. Kirk, 28 N. H. 324 ; Carey v. Bown, 92 U. S. 171; Barnes v. Brown, 32 Mich. 148. ^ Carey v. Brown, supra. 22 338 PEOCBDTJEE AND INCIDENTS THEREOF. [CH. "VTn. be made to suffer, in order to enable him " to get even " with the debtor. It was no ground for disturbing a fraudulent agreement between A and B to injure C, that A had out- witted B.i The general rule of law that a person shall not take advan- tage of his own wrong is equally applicable whether such wrong be intentional or not. If intentional, it would be a gross fraud to allow him to profit by it ; and, if unintentional, when committed, he makes it in effect intentional by after- wards attempting to derive a benefit from it, since in so doing he adopts it. It has accordingly been held that if an officer, whose duty it is in cases of default in tax-suits to draft a de- cree enforcing the lien of the tax, should insert in the decree, whether intentionally or by negligence, a clause that summons has been served, contrary to the fact, he cannot afterwards become a purchaser of the property at the tax-sale.^ But it is not true that a party who sets up a title or defence which is honest and legal will he debarred from proving such defence by the circumstance that his evidence tends also to prove him guilty of a fraud in some other matter. Thus, in an action upon a contract, the defendant may show that the plaintiff has already taken advantage of a fraud committed by the defendant to annul the agreement.^ So, too, if an obligee has obtained a confession of judgment by fraud par- ticipated in by the obligor (as where the object is to defeat creditors), and the obligee is entitled, independently of such transaction, to an account, the court will decree an account, and allow him what may justly be due to the extent of the judgment, but no further.* So, too, where a conveyance is made for a small sum, much less than the value of the prop- erty, but fraudulently recited to be for the full consideration, 1 Ex parte Oliver, 4 DeG. & S. 359. " Martin v. Parsons, 50 Cal. 498 ; s. c. 49 Cal. 94. 8 Woods V. Kirk, 28 N. H. 324. * Clay V. Williams, 2 Munf . 105. § 3.] WHO MAY ALLEGE PEATJD. 339 equity will not set aside the conveyance absolutely, but will let it stand as security for the money actually advanced.^ There are other exceptions to the rule that courts of justice will not interpose for the relief of a party who has been particeps criminis in a fraudulent transaction. One of these exceptions is where the party suing, though particeps criminis, is not in pari delictu with the adverse party. There may be different degrees of guilt between the parties to the fraudulent transaction ; and if one party act under circum- stances of oppression, imposition, undue influence, or at great disadvantage with the other party concerned, so as to make it evident that his guilt was subordinate to that of the defend- ant, equity will grant relief.^ Where a transaction contravening public policy has taken place, relief may be given at the suit of one who is particeps criminis.^ Relief in such cases, it is somewhat obscurely said, is given to the public through the party.* Lord Hardwicke once observed : " It was urged for the defendant that this is a bill brought by one of the parties to this corrupt contract against a representative of the other, who is a stranger to it ; and that, although an executor might have claim to relief for the sake of providing assets, yet the court will show no favor to either of the parties themselves. But the truth is that, in these cases of violations of public policy, it is indifferent who stands before the court, if the intention of the contract be evident; because the court does not regard the state and condition of the parties so much as the nature of the contract and the public good." ^ Upon this principle, a bond to secure to one creditor the deficiency of a composition, without the knowledge of the other creditors, was in an English case I Lane v. Page, 1 Ambl. 233. " Soman v. Mali, 42 Md. 513, 532; Kitchen v. Greenabaum, 61 Mo. 110 ; 1 Story, Equity, § 800. s Hatch V. Hatch, 9 Ves. 292 ; St. John v. St. John, 11 Ves. 535 ; Jackson v. Mitchell, 13 Ves. 587 ; Whittingham v. Burgoyne, 3 Anstr. 914. * 1 Story, Equity, § 298. « Gilbert v. Chudleigh, 9 Ves. 299, note. 340 PEOCEDUEE AND INCIDENTS THEEEOP. [CH. Vin. ordered to be delivered up, though to one who was partioeps criminis.^ In another English case, a creditor, having sup- pressed the fact of his debt, was not permitted to set it up even against the person at whose instance and in whose favor he made the suppression.^ Among the exceptions to the rule that the courts will not interfere to protect either of the parties to an illegal contract is the case of a mere stakeholder, who, though having received money under an illegal contract, will not be allowed, by as- serting to such illegality, to retain the money .^ It is allowed a person sued upon a contract, whereby he agreed to procure an office in a corporation for the plaintiff, to show that he, the defendant, was at the time a shareholder in the corporation, with the attendant duties to other members thereof. The purpose of the contract being to influence the defendant in the decision of a question affecting the private rights of his associates, by considerations foreign to those rights, the contract is a fraud upon them, and is invalid.* In general, a contract, though for a valuable consideration, whereby an agent agrees to play false to his principal, is in- valid, and the object of the agreement may on principle be set up by either party in bar of an action by the other to en- force the contract ; at all events, if the agent sue, it has been decided that the other party can avoid liability b)'^ showing the nature of the contract.^ Where the plaintiff and defendant are parties to a combina- tion to defraud the government of the United States, and the defendant, in the execution of the fraudulent purpose, receives money from the United States in the name of the plaintiff, 1 Jackman v. Mitchell, 13 Ves. 581. ' Neville v. Wilkinson, 1 Brown, C. C. 543; Dalbiac v. Dalbiac, 16 Ves. 116, 125. ' Kitchen v. Greenabaum, 61 Mo. 110, 115 ; Wimer v. Pritchartt, 16 Mo. 252. « Guernsey ». Cook, 120 Mass. 501. See Fuller v. Dame, 18 Pick. 472. 6 Barnett v. Spencer, 4 Blackf . 206. § 3.J "WHO MAY ALLEGE PEAtTD. 841 and acting ostensibly as his agent, no action can be maintained by the plaintiff for the recovery of the money so received.^ Nor can a party urge that the fruits of an act done in viola- tion of explicit law have been obtained by another through fraud. The courts will not interfere in such a case in behalf of the interests of either party .^ It has been frequently held that the device of insuring property as that of a neutral, when in fact it is that of a bel- ligerent, is not contrary to law. Contracts made with under- writers in relation to property thus covered have always been enforced in the courts of neutral powers, in cases where the true character of the property, and the means taken to pro- tect it from capture have been fairly represented to the in- surers. The same doctrine has always been held where false papers have been used to cover the property, provided the underwriter knew, or was bound to know, that such strata- gems were always resorted to by the persons engaged in that trade. And it is considered that the same disguise may be continued after capture, in order to prevent the condemnation of the property, or to procure compensation for it when it has been lost by reason of the capture. Courts of the capturing nation would not enforce contracts of this description ; but the courts of a neutral country will respect them.^ It is generally laid down that a person can set up in defence to an action upon a contract that the contract was made in fraud of creditors or others.* Nor will the charact&r of such agreement be changed by showing that the claim of the third } Boyd V. Barclay, 1 Ala. 34. 2 Kitchen v. Greenabaum, 61 Mo. 110. 8 De Valengin v. Duffy, 14 Peters, 282. * Blacklock v. Dobie, Law R. 1 C. P. Div. 265; Begbie v. Phosphate Sewage Co., Law R. 10 Q. B. 491; s. c. Law R. 1 Q. B. Div. 679; Ager V. Duncan, 50 Cal. 325; Heineman v. Newman, 55 Ga. 262; Campbell v. Skinner, 30 Mich. 32; Church v. Muir, 4 Vroom, 318; Goudyu. Gebhart, 1 Ohio St. 262; Bigelow v. Comegys, 5 Ohio St. 256; Hamilton u. Scull, 25 Mo. 165; King v. Hutchins, 28 N. H. 561; Randall v. Howard, 2 Black, 585. 342 PEOCEDUEB AND INCIDENTS THEREOF. [CH. Vm. party whose rights were to be affected by it was also fraudu- lent.^ Hence, one may show that a note made by him was executed to the payee and plaintiff in fraud of creditors or others.^ In the case, therefore, of a composition, if one of the credi- tors, before executing the deed, obtain from the debtor security for the residue of his demand, that security is void at law, because it is a fraud on the rest of the creditors.^ This doc- trine was established in equity before it was recognized by courts of law, and continues in force there notwithstanding it has become a matter of legal cognizance.* The principle is that in such cases each creditor must act openly. As the other creditors may have been induced to come into terms upon a belief that all were to be on the same footing, any private agreement for greater benefit to one is a fraud upon the rest, and hence invalid.* But though a creditor may have obtained a preference in contemplation of an intended deed of composition, which preference would clearly be in- valid against other creditors under the composition, still it is held that, if the composition should go off, the securities given with such improper view may be retained against a commission of bankruptcy subsequently issued, and not con- templated at the time of the preference.^ It has been ob- served, however, that the case cited was not that of an action brought by the holder of the securities given with the purpose above stated, but an action of trover to recover possession of 1 Randall v. Howard, 2 Black, 585. 2 Ager u. Duncan, 50 Cal. 325; Hamilton v. Scull, 25 Mo. 165; Fay V. Fay, 121 Mass. 561. 8 Jackson v. Davison, 4 Barn. & Aid. 695; Wells v. Girling, 1 Brod. & B. 452; Fay v. Fay, 121 Mass. 561; Sternburgw. Bowman, 103 Mass. 325. * Jackman v. Mitchell, 13 Ves. 586 ; Constantein v. Blache, 1 Cox, 287; Fawcett v. Gee, 3 Anstr. 910; Middleton v. Onslow, 1 P. Wms. 768. ' Leicester u. Rose, 4 East, 380; Steinman v. Magnus, 11 East, 393; Mawson v. Stock, 6 Ves. 300; Ex parte Sadler, 15 Ves. 55; Lewis v. Jones, 4 Barn. & C. 511. « Wheelwright v. Jackson, 5 Taunt. 116. § 3.] WHO MAY ALLEGE FEATJD. 343 the instruments or their value ; to which instruments, being in possession, the defendant had the better right, upon the principle that, when the parties are in pari delicto, potior est conditio possidentis.^ An undertaking between a debtor and one of his creditors in effecting a composition of his debts, by which he agrees to a secret preference of such creditor, renders the whole com- position invalid ; and the debtor himself can plead such secret agreement in an action upon the contract of composition.^ The reason of this in part may be that the guilty creditor must be a party plaintiff to the suit, the contract being joint ; and, as one of the joint parties is barred from suing, the others (where the common-law rule has not been changed by statute) must also be barred. A receipt may also, in any action between the parties to it, be shown by the party giving it to be against the truth, and to have been given for a fraudulent purpose in which both parties participated.^ And, in general, either party to a fraudulent scheme can set up the common fraud in an action by the other.* A distinction is taken in some courts (in regard to such defences) between secret agreements of preference entered into between a debtor and one of several creditors who have 1 Note to Eastabrook v. Scott, 4 Ves. 461, Am. ed., distinguishing Wells V. Girling, 1 Brod. & B. 453, where it was decided that the holder of a note given to secure a preference in contemplation of a composition could not recover thereon, though the composition did not take effect ^ McFarland v. Garber, 10 Ind. 151; Case v. Gerrish, 15 Pick. 49; Stuart V. Blum, 4 Barr, 225; Cockshott v. Bennett, 2 T. R. 763; Lei- cester V. Rose, 4 East, 372 ; Knight v. Hunt, 5 Bing. 429. See Fay v. Fay, 121 Mass. 561; Ramsdell v. Edgarton, 8 Met. 227; Howe v. Litch- field, 3 Allen, 443 ; Sternburg v. Bowman, 103 Mass. 325. " King V. Hutchins, 28 N. H. 561. Where an agent pays an employ^ of his principal a part of the wages due him, and obtains from him by fraud a receipt in full for his services, the employ^ can recover from the prin- cipal the balance of the wages due, though the principal may have allowed the agent in settlement for the full amount of the employe's wages, as stated in the receipt. Noble v. The Northern Illinois, 23 Iowa, 109. * Campbell v. Skinner, 30 Mich. 32. 344 PEOCEDTJEE AND INCIDENTS THEEEOP. [CH. VTH. agreed, or are about to agree, to a composition with the debtor, and other agreements in fraud of creditors. The former are held void, and the debtor himself may set up the facts, on the ground, in part, that the facts indicate coercion. ^ The latter, at least without coercion, are binding as between the parties, even though executory ; and the debtor is not allowed to set up the fraud in defence.^ There is from one point of view a marked distinction between executed and executory contracts of a fraudulent character, where both parties are guilty. The former class are binding ; the latter may be avoided. From another point of view there is no distinction between them. The principle is the same in both cases ; to wit, that the courts will not lend their aid to the one party or to the other. The executed contract must therefore stand executed, because the courts will not interfere ; while the executory contract must fall for the same reason.^ Upon this principle, while the purchaser of property con- veyed to him for the purpose of defrauding creditors cannot impeach the conveyance, he can avoid a security given for the purchase price by showing the fraud intended by the parties.* But in Pennsylvania it has been held that a mort- 1 Case V. Gerrish, 15 Pick. 49 ; Ramsdell v. Edgarton, 8 Met. 227; Lothrop V. King, 8 Cush. 382 ; Partridge v. Messer, 14 Gray, 180 ; Stern- burg V. Bowman, 103 Mass. 325; Fay v. Fay, 121 Mass. 561; Atkins v. Knight, 46 Ala. 539. 2 Dyer v. Homer, 22 Pick. 253 ; Knapp v. Lee, 8 Pick. 452 ; Harvey V. Varney, 98 Mass. 118 ; Thompson v. Moore, 36 Maine, 47 ; Nichols v. Patten, 18 Maine, 229, overruling Smith v. Hobbs, 1 Faii-f. 71. See Brooks V. Martin, 2 Wall. 70. 8 Harvin v. Weeks, 11 Rich. 601; Smith v. Hubbs, 1 Fairf. 71 ; Jack- son u. Garnsey, 16 Johns. 189; Richart v. Castator, 5 Binn. 109 ; Glapp V. Tirrell, 20 Pick. 247; Osborn v. Moss, 7 Johns. 161; Worcester v. Eaton, 11 Mass. 375; Norris v. Norris, 9 Dana, 317; Nellis v. Clarke, 4 Hill, 424. * Harvin v. Weeks, 11 Rich. 601. But see Dyer v. Homer, 22 Pick. 253 ; Harvey v. Varney, 98 Mass. 118, 120. See the distinction stated supra, p. 343. § 3.] WHO MAY ALLEGE FRAUD. 345 gagor cannot resist a bill for foreclosure by evidence that the mortgage was executed to defraud creditors.^ The distinction above mentioned was not suggested. It is not clear that the law as laid down in other cases in this State does not fully accord with the doctrine above stated. It has been said,- indeed, by Mr. Justice Duncan, that the test whether a demand connected with an illegal transaction is capable of being enforced at law is whether the plaintiff requires the aid of the illegal transaction to establish his case. " If the plaintiff cannot open his case without showing that he has broken the law, the court will not assist him, whatever his claim in justice may be upon the defendant." ^ But, if the plaintiff can establish his (^prima facie) case without showing the illegality of the acts of the parties, he can recover.^ In an action upon a bond, for example, the plaintiff is not required to prove the consideration. He makes out his case by proving the execution of the instrument. The result therefore is that he can recover, though the bond was given to aid in perpe- trating a fraud upon a third person.* Cases of this class are in accord with the general law ; since that precludes the obligor at law from alleging fraud as a defence, whether the fraud be perpetrated on third persons or on the defendant merely, unless the fraud was practised in obtaining the execution of the instrument. But if the test of Mr. Justice Duncan is to be understood as a broad one, not limited to actions upon specialties, it is not consistent with the doctrine above stated. In a suit by the payee against the maker of a promissory note, for example, the law raises a prima fade presumption of con- sideration ; and the plaintiff therefore makes out a case for recovery by proving the execution of the note. The test above mentioned, as a general proposition, would therefore 1 Williams ». Williams, 34 Penn. St. 312. Sed qumre. See also Hendricbson v. Evans, 25 Penn. St. 441. '^ Swan u. Scott, 11 Serg. & R. 164, cited with approval in Evans v. Dravo, 24 Penn. St. 62. ^ Evans v. Dravo, supra. * lb. 346 PEOCEDUEE AND INCIDENTS THEEBOF. £CH. Vm. preclude the defendant (not of course from showing fraud on the part of the plaintiff alone, but) from showing that the note was executed by the parties in fraud of third persons. The test, however, is probably based upon the rule which precludes the obligor of a specialty from disputing the con- sideration of the instrument ; and, if that be the ground of it, it cannot be extended to cases of simple contracts. It is then consistent with the proposition that, if it appear upon the proper pleadings of the case, whether on the part of the plaintiff or on the part of the defendant, that the instrument was conceived in fraud, the courts will not aid in its en- forcement.^ § 4. Of the Peesonal Natueb of Feaitd.^ Only the party injured by the fraud, however, can claim active relief. Thus, if an attorney having a demand intrusted to him for collection fraudulently deceive his client in refer- ence to the responsibility of the debtor and the value of the demand, and thereby prevail upon the client to sell to him the demand for less than the amount due upon it, and the ' attorney subsequently collect the whole amount thereof, he will not be liable to refund to the debtor the amount received by him above the amount paid by him to the client. The fraud is upon the client ; and the attornej'^ is liable to him * This, we think, must be the meaning of the test ; for the same learned judge, in the same connection, says : " If the illegality be malum prohibitum only, the plaintiff may recover, unless it [the suit] be directly on the forbidden contract, a bond the consideration of which grows out of an Ulegal transaction. There the illegal consideration is the sole basis of the bond, and there can be no recovery." In the case before the court, the bond was given for the payment of a judgment upon a fraudu- lent claim. The consideration of the bond (which would be open to proof in Pennsylvania, there being no court of equity there) was there- fore considered as legal and binding; otherwise, evidence of fraud would have been received. 2 See also, ante, pp. 161-164. § 4.] WHO MAY ALLEGE FRAUD. 347 only.^ Nor can a purchaser of a ward's lands from the guar- dian allege that the sale was in fraud of the ward's rights.^ So, if a person make a conveyance to another which is after- wards rescinded, and a new conveyance of the same property be made to the plaintiff, the heirs of the first grantee cannpt allege that the plaintiff obtained the deed from the com- mon grantor by fraud.* Nor could the first grantee ; neither he nor his heirs having any interest in the property after the rescission. Upon the same principle, if a grant or patent for land, or a legislative confirmation of titles to land, has been made by the sovereign authorit)', which alone has the right to make it, without any provision in the patent, or by the law for inquiring into its fairness between the grantor and grantee, or between third parties and the. grantee, a third party cannot in eject- ment raise the question of fraud as between the grantor and grantee.* And a bill in equity to set aside letters-patent lies only between the sovereignty making the grant and the grantee.^ So an agent cannot sue for a false representation made to him in a transaction understood by the parties to be on behalf of the principal alone. So long as the representation was not made with intent to affect the interests of the agent, the principal alone can sue.® A principal, however, may main- tain an action upon a false representation made to hisi agent in the purchase of property.'' And, on the other hand, it is held that even where a party could not maintain an action against a principal for the fraudulent representations of his special agent, he may avail himself of such representations by way of defence to an action upon the contract by the principal.* 1 Marshall v. Joy, 17 Vt. 546. » Marvin v. Schilling, 12 Mich. 356. = Love V. Belk, 1 Ired. Eq. 163. * Field v. Seabury, 19 How. 323. 6 lb. 8 Wells V. Cook,"l6 Ohio St. 67. ' Tuckwell V. Lambert, 5 Cush. 23. 8 Concord Bank v. Gregg, 14 N. H. 331. 348 PROCEDURE AND INCIDENTS THEREOF. [CH. VIII. It is said that a person, though innocent, cannot avail him- self of an advantage obtained by the fraud of another, unless some consideration has been given by himself.^ Thus, in the case cited, a debtor and his surety persuaded the creditor to acjcept from the creditor the transfer of a mortgage, which the debtor knew to be imaginary, but which the surety,.relying on the debtor's statement, believed to be a good security. Afterwards, the creditor, at the request of the surety, who suggested to him that he was secured by the mortgage, released the surety. Friends of the latter now lent him money, on the faith of this lease, to enable him to com- pound with his creditors ; which the present creditor knew, at the time of giving the release, that they had refused to do, unless the release was obtained. The fraud of the principal debtor having afterwards been discovered, it was held that the creditor was entitled to be restored to his rights against the surety, since the latter had parted with no value by reason of the transaction.^ If an arrangement, however, between two parties, is, on general principles, fair as between them, it is not invalid merely because it may have been concocted and brought about by a third party, with a fraudulent intent to benefit himself. In such a case, so far as regards the third party, the whole may be looked upon as one transaction, in order to judge of his motives and to put a construction upon his acts. But as regards the other two, who, though affected by one part of the transaction, may be total strangers to the other part, it is not .only not necessary, but it would be unjust, to consider every part of the transaction affected by objections which in fact apply to particular portions of it only.^ The case cited affords 1 Soholefield v. Templer, 4 DeG. & J. 429, per Lord Ch. Chelmsford. 2 The creditor, it will be observed, had given the release at the instance and request of the debtor. Had he acted of his own motion, the case might have been different ; a distinction suggested by the Lord Chancellor, and founded upon Ex parte Wilson, 11 Ves. 410. 8 Ballamy v. Sabine, 2 Phill. Ch. (Eng.) 425. See Spencer v. Hand- ley, 4 Man. & G. 414. § 5.] ' "WHO MAY ALLEGE PEAITD. 349 a good illustration of this principle. An agreement between a father, tenant for life, and an eldest son, tenant in tail, for certain considerations to bar the entail and convey the estate to the son, was followed within a fortnight by a sale of the estate by the son to the solicitor who had acted for both parties in the agreement. In a suit after the death of the son without issue, by the next remainder-man in tail, who was also heir-at-law of the son, to set aside both transactions, and to have the estates resettled to the former uses, the Court of Chancery was of opinion upon the evidence that both trans- actions were but parts of one scheme, contrived by the solicitor for his own benefit. But being also of opinion that, on the principle of family arrangements, the agreement be- tween the father and the son was not necessarily an unfair one in itself, the court set aside the second only, and, dis- missing the bill as to the first, decreed the solicitor to convey the estate to the plaintifP. "Where property is sold, by auction in which creditors are interested as well as the owner, they have the same right that the owner has to object to fraudulent combinations among the bidders.^ But when the result of recovering property alleged to have been delivered to a creditor by way of fraudulent prefereiice would not be for the benefit of the creditors at large, but only of an individual creditor who claims a security on it, the trustee ought not to take proceedings for the re- covery of the property himself ; nor will the individual creditor be allowed to take them in his name.^ § 5. Of Suits by Personal RepkeseS^tatives. A deed fraudulently obtained may be impeached by the representatives of the grantor ; ^ but not so of a deed fraud- 1 Miltenberger v. Morrison, 39 Mo. 71. 2 Ex parte Cooper, Law R. 10 Ch. 510. » Stewart y. Iglehart, 7 Gill & J. 132. 350 PKOCEDUEB AND INCIDENTS THEREOF. [CH. YJII. ulently made by the decedent.^ But the representative of a fraudulent vendor who remained in possession until his death can, for the benefit of the creditors, it is held in New York, set up the fraud, and avoid the sale.^ So an administrator de bonis non may have a sale set aside which was made by his predecessor's fraud ; ^ though he could not do so if the fraud were that of the testator or intestate. The fraud of the latter cannot be made ground for rescission by his representa- tive.* That which binds a party binds his privies also. And, where assets of the estate have been fraudulently disposed of by the administrator-in-chief without consideration, an ad- ministrator de bonis non, if they can be identified, may recover them in an action at law.^ So, if the administrator-in-chief fraudulently, or without authority, make a sale of his intes- tate's personal property, the parties in interest may treat it as an administration ; and, if they so elect, the administrator de bonis non cannot recover the property.® It is said that even a judgment, if obtained by fraud, will not stand in the way.'' By the rules of the common law, actions for damages caused by fraud do not survive to the representative of the injured party.^ 1 Merry v. Fremon, 44 Mo. 518 ; McLaughlin v. McLaughlin, 16 Mo. 242 ; George v. Williamson, 26 Mo. 190 ; Sharp v. Caldwell, 7 Humph. 415 ; Moody v. Fry, 3 Humph. 567. 2 Babcook v. Booth, 2 Hill, 181. See McKnight v. Morgan, 2 Barb. 171. Under the Code of Georgia, the heir cannot maintain an action ' against a person as executor de son tort, who obtained a conveyance from the ancestor by fraud, unless he claim as creditor of the estate. Davis v. Davis, 56 Ga. 37. See Clayton v. Tucker, 20 Ga. 464. 8 Forniquet v. Forstall, 34 Miss. 87. < lb. ; Snodgrass v. Andrews, 30 Miss. 472 ; Winn v. Bamett, 31 Miss. 653 ; Moody v. Fry, 3 Humph. 567 ; Kipp ». Hanna, 2 Bland, 26 ; Eubanks v. Dobbs, 4 Pike, 173. 5 Swink u. Snodgrass, 17 Ala. 658. " Elliot «. Branch Bank, 20 Ala. 845. ' De Witt V. Miller, 9 Tex. 289. 8 8 Black, 802; 1 Chitty, Pleading, 68. §§ 6, 7, 8.] -WHO MAY ALLEGE FBAUD. 351 § 6. Of Suits by Distbibtjtees. The distributees of a deceased person may maintain a bill in equity to set aside as fraudulent a deed of gift of personal estate made by the decedent in his lifetime. And the court may at their suit declare the deed fraudulent, and annul it ; but the subject itself can only be decreed to the personal rep- resentative of the decedent, or to the distributees in a case in which the representative is a party .^ § 7. Op Sttits by Assignees. Thq assignee of a non-negotiable contract takes the same subject to any defence, including that of fraud, which could be raised against the assignor ; even though the assignment was made for value and without notice.^ Any other rule would make all contracts negotiable. § 8. Of Suits by Stockholders on Behalf of Cor- porations.^ A refusal by the directors of a corporation to prosecute a claim believed by them to be valid, and actually valid, in which no exercise of discretion is properly involved, will justify a court in allowing a stockholder to file a bill on the ground that their conduct in not suing is fraudulent as against his rights.* But there must be a clear default on the part of the directors, involving a breach of duty, in order to authorize 1 Samuel v. Marshall, 3 Leigh, 567. " Barrow v. Bispham, 6 Halst. 110. ' Ante, pp. 329-331. * Dodge 17. Woolsey, 18 How. 331 ; Le Grange v. State Treasurer, 24 Mich. 468, 472 ; Memphis v. Dean, 8 Wall. 64 ; Bronson v. La Crosse R. Co., 2 Wall. 283; Brewer v. Boston Theatre, 104 Mass. 378. 352 PEOCEDUEE AND INCIDENTS THEEEOP. [CH. VIII. a stockholder to institute the suit in his own behalf, or for himself and such others as may join with him.^ It is not, for example, such a violation of duty in the directors to refuse to sue a demand supposed to be valid by a stockholder, which it is clearly impossible for the former to enforce.^ § 9. Oe Suits by Paktnees and Joint Contractors. Such is the nature of the legal rights of partners that it is considered that they must not only join in actions at law, but a right of action must be established in both, or no recovery can be had. It is a general principle that all must be entitled to judgment or none ; and, in cases where either partner is precluded on the ground of fraud, the fraud operates not only against him, but also, by reason of th^ necessary joinder of par- ties, against the innocent partner. Were it otherwise, the judg- ment obtained would be the joint property of all the plaintiffs, and would go to the benefit of the guilty with the innocent ; and the law will not suffer a guilty party to come into court and reap the products of his own fraud by joining an innocent copartner with hiiu.^ If the innocent partner have any remedy, it is by suit in equity, where the objection of joining his guilty copartner can be obviated.* Thus, in the case just cited, it appeared that one of the plaintiffs in trover (one Estabrook) had entered into partnership with the other plain- tiff (one Bromley), purchasing a share of the goods held by the latter, and the goods were afterwards seized on attach- ment as the property of a third person. It further appeared 1 Memphis v. Dean, 8 Wall. 64. ^ Le Grange v. State Treasurer, 24 Mich. 468. 3 Estabrook v. Messersmith, 18 Wis. 545 ; Jones v. Yates, 9 Bam. & C. 532 ; Wallace v. Kelsall, 7 Mees. & W. 264, 273 ; Homer v. Wood, 11 Cush. 62 ; Fellows v. Wyman, 33 N. H. 358 ; Kilby v. Wilson, Kyan & M. 178 ; Richmond v. Heapy, 1 Stark. 202. * Estabrook v. Messersmith, supra. §§ 10, 11.] WHO MAT ALLEGE FEAXJD. 853 that the goods were sold to Bromley by the attachment debtor, and that such sale was fraudulent as to the attach- ment creditor. The court accordingly held that the partners could not recover, though Estabrook had purchased his interest without notice of the fraud. Nor can joint contractors sever the contract, so as to give one of them his share of the contract untainted by fraud on the part of the other, by which the whole contract was obtained.^ § 10. Of Conteibution. A bill to compel a division of profits cannot be maintained against an alleged copartner in a scheme tainted with fraud against the government or individuals. Public morals, pub- lic justice, and the well-established principles of all judicial tribunals, alike forbid the interference of the courts in aid of such enterprises. The law leaves the parties to the transac- tion where it found them. If either has sustained a loss by the bad faith of the other, the result is but just. A judicial tribunal will not shift the loss from one party to another, or equalize the benefits or burdens which may have resulted from the unlawful scheme.^ So, also, where a fraud is con- trived against several, and is successful against one only, that one cannot call upon the others upon whom the fraud was intended to contribute towards his loss.^ § 11. Of Infant's Suit by Next Feiend. If a bill have been filed on behalf of an infant under cir- cumstances of strong suspicion as to the motives of the next 1 Goode V. Hawkins, 2 Dev. Eq. 393. 2 Bartle v. Coleman, 4 Peters, 184. » Grubb V. CottreU, 62 Penn. St. 23. 354 PEOCEDTJKB ANI> INCIDENTS THEREOF. [CH. VUI. friend, the Court of Chancery will direct an inquiry whether the suit be for the benefit of the infant ; and, if it be, whether such next friend be a proper person to conduct it. The court has the power of removal, and of appointing a suitable person to act in this capacity for the infant.^ 1 Nolder v. Hawkins, 2 Mylne & K. 243. §§ 1, 2.] AGAINST "WHOM PBAUD MAY BE ALLEGED. 855 CHAPTER IX. AGAINST WHOM FRAUD MAY BE ALLEGED. § 1. Of the Wkongdoee. Redeess for fraud will always be granted against the wrongdoer himself, if satisfaction or a waiver of the wrong have not already been made, with perhaps the single excep- tion of fraud committed by the government oflScers of a State or Nation. And even in such a case, if the effect of the fraud be to draw an innocent party into an executory contract, the courts will allow him to give evidence of the fraud in bar of an action to enforce the contract. For such a purpose, the State stands in no better position than an individual.^ § 2. Op Infants. Infancy is no protection for the commission of a pure tort ; and fraud in such a form may be redressed, as well against an infant as against a party sui juris? But an infant is liable in an action ex delicto for fraud only in cases in which the form of action does not suppose that a contract has existed, the breach or failure of which is the real ground of action.* 1 Sooy V. State, 9 Vroom, 324. 2 Arnot 1?. Biscoe, 1 Ves. 95 ; Gilson v. Speer, 38 Vt. 311. * Gilson V. Spear, 38 Vt. 311 ; Liverpool Ad. ■Assoc, v. Fairhurst, 9 Ex. 422 ; Brown v. Dunham, 1 Root, 272 ; Geer v. Hovy, lb. 179 ; Wilt V. Welsh, 6 Watts, 9 ; Brown v. McCune, 5 Sandf. 228 ; Homer v. Thwing, 3 Pick. 492 ; Tucker v. Moreland, 10 Peters, 59 ; Ewell's L. C. Disabilities, 206. Contra, Wood «. Vance, 1 Nott & McC. 197 ; Peigne ». Sutcliffe, 4 McCord, 387 ; Kilgore v. Jordan, 17 Tex. 341. 356 PROCEDTJEE AND INCIDENTS THEREOF. [CH. IX. Hence, an action of deceit cannot be maintained against an infant for fraudulent representations made in the sale of a horse, not even though the plaintiff may have tendered back the horse, and demanded the purchase-money.^ The cases cited in the note as opposed to this proposition cannot easily be sustained. It is universally conceded that infancy is a good defence to an action ex contractu, though the contract vi^as procured by the infant's fraud ; but in the cases referred to it has been supposed that a different rule may prevail, if the infant be sued ex delicto for his fraud.^ The answer to this, however, is that, in cases in which the fraud is the foundation of a contract, there is no damage apart from the avoidance of the contract, and the infant has the legal right to avoid his promissory undertakings.^ It is a case of fraud without legal damage. Hence, in principle as well as by the weight of authority, it matters not that an infant has procured another to make a contract with him by false representations that he is of age or by any other fraudulent action : whether sued in contract or in tort, he can plead his infancy in bar of the proceeding.* And an infant can avoid 1 Gilson V. Spear, 38 Vt. 311 ; West b. Moore, 14 Vt. 447 ; Green v. Greenbank, 2 Marsh. 485. Contra, "Wood v. Vance, 1 Nott & McC. 197 ; Towne v. Wiley, 23 Vt. 361, dicla overruled in Gilson v. Spear, supra; Fitts V. Hall, 9 N. H. 441. See Burley v. Russell, 10 N. H. 184. ^ See Burley v. Russell, 10 N. H. 184, thus explaining Fitts v. Hall, 9 N. H. 441. 8 Ewell's L. C. Disabilities, 219, 220. * Johnson v. Pie, 1 Keb. 913 ; Grove v. Nevill, lb. 778 ; Cannam v. Farney, 3 Ex. 698 ; Price v. Hewett, 8 Ex. 146 ; Liverpool Ad. Assoc, v. Fairhurst, 9 Ex. 422 ; Wright v. Leonard, 11 Com. B. n. s. 258 ; De Roo V. Foster, 12 Com. B. n. s. 272; Bartlett v. Wells, 1 Best & S. 836; Burley v. Russell, 10 N. H. 184 ; Merriam v. Cunningham, 11 Cush. 40 ; Drary v. Drury, 2 Eden, 72 ; Beckett v. Cordley, 1 Brown, C. C. 353, 358 ; Nelson v. Stocke'r, 4 DeG. & J. 458 ; Cory ». Gertchen, 2 Madd. 40. See, further, Conroe ». Birdsall, 1 Johns. Cas. 127; Curtin v. Patton, 11 Serg. & R. 309 ; Stoolfoos v. Jenkins, 12 Serg. & R. 403 ; Keen v. Cole- man, 39 Penn. St. 299; Studwell v. Shatter, 54 N. Y. 249; Mathews v. Cowan, 59 111. 341 ; Densmore v. Cowan, lb. 347, note, and the valuable note by Mr. Ewell in his Leading Cases on Disabilities, pp. 206-220. § 2.] AGAINST WHOM PEAtJD MAY BE ALLEGED. 357 his executed contracts as well as his executory engagements, provided he can put the other party substantially in statu quo. But for pure torts an infant is liable'as well as an adult ; and hence, if his fraud be not the foundation of a contract between himself and the defrauded party, the courts will hold him answerable in some form- of liability for his conduct. In such a case, there is no contract, at least between the parties to the suit, for the infant to repudiate. He may therefore be proceeded against by an action ex delicto, or be barred by an estoppel if he attempt to repudiate his own conduct. There has, however, been some conflict as to the extent of this principle. It has indeed been maintained that the doctrine of estoppel in pais has no application to infants, even in cases of fraud. ^ This is no doubt true of all cases in which the fraud is the foundation of a contract between the litigating parties, as we have in substance said ; but it is contrary to many authorities, and, as we believe, to sound principle, when asserted of cases involving no contract between the parties. Thus, it is held by many courts that an infant may preclude himself from setting up title to property by disclaiming, actively or by silence, any right to the same, and thereby inducing another to purchase it as the property of the as- sumed owner ;^ though, in the case of real property, the es- toppel, according to the weight of authority, could be asserted only in equity.' To allow the estoppel in such cases is not 1 Lowell V. Daniels, 2 Gray, 161, 168; Brown v. MeCune, 5 Sandf. 224 ; Ackley v. Bygert, 33 Barb. 175, 198 ; Lackman v. Wood, 25 Cal. 147, 153; Norris v. Wait, 2 Kick. 148. See McCoon v. Smith, 3 Hill, 147. 2 Sugden, Vendors, 743 (14th Eng. ed.); Overton u. Bannister, 3 Hare, 503; Esron v. Nicholas, 1 DeG. & S. 118 ; Hall v. Timmons, 2 Rich. Eq. 120; Whittington v. Wright, 9 Ga. 23; Irwin v. Merrill, Dud. 72 ; Thompson v. Simpson, 2 Jones & L. 110 ; Story, Equity, § 380. See Stokeman v. Dawson, 1 DeG. & S. 90 ; Wright v. Snow, 2 DeG. & S. 321; Unity Joint Stock Assoc, li. King, 3 DeG. & J. 63; Bigelow, Estop- pel, 448 (2d ed.). » See Bigelow, Estoppel, 534-537 (2d ed.). 358 PKOCEDTJUE A2>rD INCIDENTS THEREOF. [CH. DC. to deprive the infant of the right to repudiate his contracts, since he has made no contract with the purchaser. The pur- chaser has bought from another person; and (unless such person were the infant's agent) the infant could maintain no action on the contract of sale, whether for breach of warranty or for failure to pay the purchase price. It is difficult, there- fore, to understand how he could repudiate the sale and recover the property.^ § 3. Of Maebied Womkn. What we have said above upon the question of the liability of infants upon contracts procured by their fraud, and of actions ex delicto and estoppels against infants in such cases and in cases of fraud unconnected with contract, is equally true of married women. Briefly, then, married women are not liable at common law on contracts which they have procured through fraudulent means, nor in actions ex delicto for false representations or other frauds by means of which they have procured such contracts. The same conflict of authority exists as to whether the doctrine of estoppel in pais by fraudu- lent conduct applies to married women. In Massachusetts, it has been declared that the doctjine does not apply to them.^ By other courts, the contrary has been laid down.^ And the 1 Of course, this difficulty would be removed if the vendor were to be treated in law as the infant's agent ; but it is apprehended that this would be a question of fact, dependent upon the actual relation of the vendor to the infant. See Pickard v. Sears, 6 Ad. & E. 469, where the nature of the facts in such a case (between adults) was left to the jury. a Lowell v. Daniels, 2 Gray, 161, 168 ; Bemis v. Call, 10 Allen, 512, 517; Merriam v. Boston &c. K. Co., 117 Mass. 241, 244. So in De- lancey v. McKeen, 1 Wash. C. C. 354. See Bigelow, Estoppel, 443 (2d ed.). ' Carpenter v. Carpenter, 10 C. E. Green, 194 ; Schwartz v. Saunders, 46 111. 18 ; Connolly v. Branstler, 3 Bush, 702 ; Wright v. Arnold, 14 B. Mon. 638 ; Jones v. Kearney, 1 Dru. & War. 134 ; Vaughan v. Vander- stegen, 2 Drew. 363 ; Wright v. Leonard, 11 Com. B. n. s. 258 ; 7>i re Lush, Law R. 4 Ch. 591 ; O'Brien v. Plilburn, 9 Tex. 297. § 3.] AGAINST "WHOM PEATTD MAY BE ALLEGED. 359 latter seems to us the more correct view, for reasons stated in the section relating to infants.^ Notwithstanding the common-law incapacity of a married woman to incur a debt by her contract merely, it is well established that a married woman is capable of committing a fraud, and that she is liable to be visited with the conse- quences of the commission of it.'^ In an English case, which has been cited as establishing this principle,^ it appeared that a married woman was entitled to an estate in fee-simple, expectant on the death of her mother. Her half-sister was about to be married. The married woman entitled to this remainder or reversion was anxious to promote that marriage ; and, in order to bring it about, induced her mother to repre- sent herself as owner in fee of the estate, though she was only tenant for life, the married woman entitled in remainder suppressing and concealing the fact of her own title. The marriage was accordingly effected by the mother conveying the estate, as if she were the owner in fee, to the intended husband. Afterwards, the married woman, who had thus induced her mother to execute this conveyance, became a widow ; and, on a bill filed by the husband of the sister, she was compelled by the court to convey the estate. A married woman's estate may become bound by her participation in fraud ; as where a mortgage is obtained upon property of the feme, upon the false ' representation made by her that she owned the absolute interest in the estate. Such a representation will give the mortgagee precedence over a prior marriage settlement of the same estate, of which the mortgagee had no notice at the time ; and this, too, though there was a defect in the feme's execution of the mortgage, which was not remedied until after the mortgagee had re- ceived notice of the settlement.* 1 Ante, p. 357. See also Bigelow, Estoppel, 443-447 (2d ed.). 2 Vaughan v. Vanderstegen, 2 Drew.'363, 879 ; Sharpe v. Foy, Law R. 4 Ch. 35. ' In Vaughan v. Vanderstegen, supra. * Sharpe v. Foy, Law R. 4 Ch. 35. 860 PEOCEDtTRE AND INCIDENTS THEREOF. [CH. IX. At common law, the participation of a married woman in the fraud of her husband will not impair her rights. Thus, where a married woman received a provision in lieu of dower under a transaction of the husband in fraud of his creditors, it was held that the provision would not be disturbed, the fact appearing that it was only equivalent to dower.^ And, a fortiori, where a husband in the transaction of his own business assumes to deal in his wife's name, and upon the credit of her estate, her knowledge of the fact will not operate to charge her with participation in fraud, nor her estate with liability for the indebtedness. So long as she abstains from active co-operation with him, there is no pre- sumption that he is acting as her agent or by her authority.^ A married woman may sometimes be bound by her fraud, where that was committed under the coercion of the husband. Thus, where a married woman wrote and signed a paper, dated before her marriage, purporting to give to her husband, in consideration of the intended marriage, her reversionary interest in a trust fund, it was held that a purchaser of the ■ same (to whom a similar acknowledgment was made by her) acquired a good title, notwithstanding the fact that the paper was executed under threats of the husband.^ And the same rule prevails in general in favor of an innocent purchaser for value, where the coercion does not go to the extent of de- priving the feme of her freedom of action.* There is no ground for equitable interference to apply the income of a married woman, which she is restrained from anticipating, to make good the consequences of her fraud, where the restraint on anticipation appears from the instru- ment in respect of which relief is sought.^ In the case cited, 1 Blanton v. Taylbr, 1 Gilmer, 209. See Quarles v. Lacy, 4 Munf. 251 ; Hudson v. Wheeler, 34 Tex. 356. 2 Lawrence v. Finch, 2 C. E. Green, 234. 8 In re Lush's Trusts, Law R. 4 Ch. 591. * Ante, p. 162. ' Arnold v. Woodhams, Law R. 16 Eq. 29. § 4.J AGAINST WHOM PKAT7D MAT BE ALLEGED. 361 a married woman had made an appointment to her husband of a reversionary interest, after having made a prior appoint- ment of such interest to her mother. By trusts executed before her marriage and before either of these appointments, she was under restraint of anticipation ; and these trusts were recited in the second appointment, but no mention was made of the appointment in favor of her mother. The second appointment was deposited by the husband with a creditor as security for debt ; and the creditor, on learning of the prior appointment, sought to hold the wife's separate estate for the fraud practised upon him ; but the court decided that he could not do so, on the ground that there had been no active misrepresentation on the part of the wife, and that the instrument disclosed the restraint on anticipation, and only attempted to deal with a reversionary interest, not being intended as a present security. ^ It was admitted that a mar- ried woman could not set up her equity to a settlement or the like against an active fraud committed by her.^ § 4. Of Agency. Employers are held liable for the fraudulent acts of their agents, when at the time of the commission of the fraud such 1 See Jackson ». Hobhouse, 2 Meriv. 483 ; Clive v. Carew, 1 John. & H. 199, 206. Referring to the decision of Wood, V. C, in the last- named case, Malins, V. C, in Arnold v. Woodhams, supra, said : " I thjnk his decision applies entirely to the pre.sent case ; and I agree with the view he expressed, that ' upon the whole it is the sounder course to adhere to the view taken by Lord Eldon in Jackson v. Hobhouse, namely, that, having once sanctioned this species of protection to a married woman by making it impossible for her in any way whatever to deal with the fund, the court . . . must go on to hold her interest in the fund protected even against her own fraudulent acts.' " See also Vaughan v. Vanderstegen, 2 Drew. 363 ; Sharpe v. Foy, Law R. 4 Ch. 35 ; In re Lush's Trusts, lb. 591; Robinson v. Wheelwright, 6 DeG., M. & G. 535. 2 In re Lush's Trusts, supra. 362 PEOCEDTJEB AND INCIDENTS THEREOF. [CH. IX. agent is acting within the scope of his employment, and the misconduct naturally connects itself with the service or duty being performed for the employer.^ A person may be author- ized to commit a fraud on behalf of another either by an express grant of authority, or by prior or contemporaneous acts clearly indicating the* existence of such a grant, or by a subsequent ratification. Irrespective of one of these facts, it is apprehended that, in the course of the transaction of a legitimate business, there can be no such thing as an implied authority to commit a fraud, even on the part of one who, in the management of such business, occupies the full position of an agent. The doctrine has, indeed, often been laid down that one who holds another out to the world as a competent and proper person to manage his business is responsible for the agent's conduct in the course of the business ; and this, properly understood, is doubtless true. If, for example, an agent is careless in the performance of a contract on behalf of his principal, the latter must abide the consequences. So, too, if an agent (not simply guilty of jiegligence) commit an actual fraud in the course of a negotiation for his principal, though without the latter^s knowledge, the principal will be bound, unless he repudiate the transaction before an injury has been done to the defrauded party .^ But we apprehend it would be too much to say that the principal could not repudiate the transaction before any damage had been done. And where the act of the agent is not done for the benefit or on behalf of his principal, to draw the principal into a con- tractual relation with the defrauded party, the act cannot be done in the course of the agency, since the very object of an agency is to enable the authorized party to transact business 1 Ray V. Bank of Kentucky, 10 Bush, 344 ; Sherley ». Billings, 8 Bush, 147; Burns v. Poulsom, Law R. 8 C. P. 563; Barwick v. English Joint Stock Bank, Law R. 2 Ex. 259. 2 On the ground of the subsequent acquiescence in or recognition of the contract. § 4.] AGAINST WHOM FEAUD MAY BE ALLEGED. 363 on behalf and in the stead and interest of the principal. Hence, in the absence of a subsequent ratification by the employer of such act, either expressly or by taking a benefit from the fraudulent act, the employer cannot, in princi- ple, be liable. The authorities, however, are not clear upon this point. Some, indeed, cannot be reconciled with the above doctrine ; but it is believed that an examination will show that the weight of authority, wherever the subject has been carefuUj- considered, supports the above view.^ A principal may indeed be liable for thefts or conversion committed by his agent ; but that is on the ground of his agreement to keep safely or with diligence and restore the property, and not on grounds of agency. And, even in such a case, the principal (if not a common carrier or innkeeper) is only bound to the exercise of diligence. It is expressly held that if the agent of a bailee, selected in good faith, turn aside from his passive duty of preserving the deposit, and appropiiate it to his own use, the bailee cannot be made to answer for his fraud or felony, unless prior to such action the bailee had reasonable ground to suspect his integrity.^ 1 Dodgson's Case, 3 DeG. & S. 85; Bernard's Case, 5 DeG. & S. 289; Mixer's Case, 4 DeG. & J. 575, overruling Brockwell's Case, 4 Drew. 205; Western Bank v. Addie, Law R. 1 H. L. Scotch, 145; Swift u. Jewsbury, Law R. 9 Q. B. 301 ; Mackey v. Commercial Bank, 30 Law T. N. s. 180 ; B. c. Law R. 5 P. C. 394. See Judson v. Bennett, 21 N. Y. 238; Barwick v. English Joint Stock Bank, Law R. 2 Ex. 259. See White V. Sawyer, 16 Gray, 586 ; Jeffrey v. Bigelow, 13 Wend. 518. We have discussed this subject more fully in Bigelow's L. C. Torts, pp. 23-35. 2 Ray ». Bank of Kentucky, 10 Bush, 344; United Soo. v. Underwood, 9 Bush, 609 ; Foster v. Essex Bank, 17 Mass. 479 ; Giblin v. McMuUen, Law R. 2 P. C. 317 ; Sutton v. Wilders, Law R. 12 Eq. 373. A trustee is liable, it seems, for the loss of trust funds caused by his solicitor having committed a fraud on the occasion of the investment of the same. It is otherwise if the fund be deposited with a bank in good repute, and is only allowed to remain there for a reasonable time. The money must be kept somewhere ; and there is no place so secure as a reputable bank. Sutton v. Wilders, Law R. 12 Eq. 373. 364 PEOCEDTJKE AND INCIDENTS THEREOF. [CH. IX. A principal is liable for the fraud of his agent only in so far as the latter is in fact his agent. If the agency be a limited or special grant of authority, the principal will not be liable for acts or concealments for which he might be liable if the agency were general. For example, in an action upon a policy of insurance, effected by the plaintiff on the life of his wife, the defendants averred that the plaintiff had con- cealed certain facts that were material to the risk, as to which the policy declared that, if any thing stated by the plaintiff should not be true, the agreement should not be binding. The evidence in support of the plea went to show that the wife had been examined by the defendants, and that she did not disclose the facts in question, concerning which, however, she was not asked any specific question. It was held that the evidence did not support the plea. It had merely shown that the wife was the special agent of the husband for a particular purpose, to wit, the answering such questions as the defendants should choose to ask her ; and these she had truly answered. But it was obsei'ved that, if the wife had been the plaintiff's general agent to effect the insurance for him, the case would be like that of any other agent going to effect a contract for his principal ; and her knowledge might then be considered the knowledge of the principal.^ An agent engaged with his principal in the commission of a fraud is equally liable with the principal.^ But an action for deceit in the nature of a conspiracy cannot be maintained 1 Huckman v. Femie, 3 Mees. & W. 505. 2 Carpenter v. Lee, 5 Yerg. 265. It is said, however, that if a party injured by the fraud of others release the principal in the wrong, he cannot proceed against those who are secondarily liable. Thompson V. Harrison, 2 Brown, C. C. 164. But this is probably on the ground that by the release he conveyed away his demand ; and, having nothing left to sue upon, he could maintain no action against the agent or ser- vant. This, however, is no necessary consequence of a mere discharge of one party. If the injured party reserve his right to sue the others, he certainly can maintain an action against them. § 4.] AGAINST WHOM FKATJD MAY BE ALLEGED. 365 "against a principal and his agent jointly for the unauthorized fraudulent acts and representations of the agent alone. Such action can be maintained only where some representation, wilfully false, or some designed and positively fraudulent artifice, is directly proved or necessarily to be presumed, from the circumstances attending the transaction itself, to have been made ar engaged in by the defendants jointly.^ If, however, a person procure another to make false representa- tions, the effect is the same as if the former had made them himself." The sheriff in an execution sale is not the agent of the defendant in the execution, and a purchaser cannot hold the defendant liable for the sheriff's misrepresentations at the sale either as ground for an action of deceit or for the purpose of a proceeding to rescind the contract of sale.^ Nor is a sheriff, in selling the property of the defendant in the ex- ecution, the agent of the plaintiff; and the plaintiff is not bound therefore by the false representations made by the sheriff.* Deception in sales will sometimes in equity convert a party into an agent, and render him liable to make redress, where perhaps an action at law (as for deceit) could not be maintained against him. Thus, in a recent case,* the defendant, being aware that the plaintiff wished to obtain shares in a certain company, represented to the plaintiff that he (the defendant) could obtain a certain number of the shares at £3 per share. The plaintiff agreed to purchase, and authorized the defendant to buy at that price ; and the shares were thereupon transferred, and the money paid. The plaintiff afterwards discovered that the defendant him- 1 Page V. Parker, 40 N. H. 47. See s. c. 43 N. H. 363. ^ Maggart v. Freeman, 27 Ind. 531. ' Vanscoyoo v. Kimler, 77 111. 151. * Weidler v. Farmers' Bank, 11 Serg. & R. 134. * Elimber v. Barber, Law R. 8 Ch. 56. 366 PEOCEDtJEB AND INCIDENTS THEREOF. [CH. IX. self owned the shares, and that he had just bought them for ' £2 per share with a view to the sale to the plaintiff. The plaintiff now filed a bill in equity, praying on these facts that the defendant might be decreed to pay the plaintiff the differ- ence between the two prices; and this relief was granted. It was held to be unnecessary for the plaintiff to rescind the contract and restore the shares ; or, rather, it was held no bar to relief that, by having disposed of a large number of the shares, he had precluded himself from I'escinding the contract and restoring the shares. This case is probably to be distinguished from cases in which the defendant owned the property before the negotia- tions with the plaintiff were undertaken or conceived. In such a case, a party may probably say that he knows where the property can be bought at such and such a price, though that be much above the price he paid for it ; provided, possi- bly, he do not misrepresent the present market value (if it have any) of the property. It would not help the plaintiff's case, it would seem, under such circumstances, to say that the defendant had constituted himself the plaintiff's agent : that wduld be simply meaningless. But where, the defendant, upon being authorized to purchase for the plaintiff, buys for himself with a view to selling to the plaintiff at a profit, the situation is different. The ease now is one of an agent mak- ing a profit out of a contract in reality between a third person and his principal. In such a case,, he can serve only the in- terests of his principal. The principal will be held implicated in the fraudulent con- duct of his agent, within the scope of what the principal ex- pected him to do, or for that which he knows the agent has done, if he insist upon taking the benefit of the act. Thus, a contract induced by substantial fraud, without which it would not have been made, cannot be enforced against the party misled, whether the fraud originated with the opposite party or with his agent ; that is, whether the fraud were con- § 4.] AGAINST WHOM PEAUD MAY BE ALLEGED. 867 certed by the principal or adopted by him.^ This has been a disputed question among the authorities, since the decision of the English Court of Exchequer in a case just cited. But the weight of authority and the dictates of sound reason are clearly in favor of the proposition stated. It cannot matter that the principal was innocent of fraud, when the contract obtained by his agent was effected. By accepting the contract, he took it subject to all the rights concerning it of the other party ; one of which certainly, as understood by such partj'', was to re- scind the agreement, if fraud was perpetrated upon him by the opposite side. And, by insisting upon enforcing it after knowledge of his agent's fraud, the plaintiff ratified the fraud; and a ratification is equivalent to. a grant of authority. The innocence therefore of a party who has profited by a fraud will not entitle him to retain the fruits of another man's mis- conduct, or exempt him from the duty of restitution.^ Nor can the bailee of one who has by purchase or otherwise ob- tained possession of goods by fraud resist the claim of property by the defrauded party any more than can his bailor.^ The false representations of a stranger to a transaction cannot of course affect a party not cognizant that such repre- sentations have been made. But it has been suggested that the fact that a third person had induced another to purchase property might justify the courts in presuming that he acted as agent of the vendor in the absence of any sufficient expla- nation of his conduct.* The mere relation of joint owner to property is not enough 1 Fitzsimmons v, Joslin, 21 Vt. 129, denying the well-known case of Comfoot V. Fowke, 8 Mees. & W. 358; Presby v. Parker, 56 N. H. 409 ; Lee V. Pearce, 68 N. Car. 76 ; Brown v. Bonner, 8 Leigh, 1 ; Durst v. Burton, 47 N. Y. 167. 2 Lee V. Pearce, 68 N. C. 76 ; Adams, Equity, 176 ; Brown v. Bonner, 8 Leigh, 1; Durst v. Burton, 47 N. Y. 167; Hopkins v. Snedaker, 71 lU. 449. s The Idaho, 93 U. S. 575. * Law V. Grant, 37 Wis. 548. See Pickard v. Sears, 6 Ad. & E. 469. 368 PROCEDURE AKD INCIDENTS THEREOF. [CH. IX. to constitute each of the owners the agent of the other, so as to bind him by false representations in an unauthorized sale of the whole property.^ But a part-owner of a horse, who stands by in silence and hears the other part-owner make false representations of the soundness of the animal to a person treating for the purchase of it, is bound by the repre- sentations equally with the one who made them.^ So, also, two owners of a vessel are jointly liable in an action of deceit for fraudulent representations made by one of them, acting for both, in a sale of the vessel.* It is a serious offence for an agent to act intentionally against the interests of his principal ; and such conduct not only renders him liable for the damage so caused, but, if the fact be known to the opposite party that the agent is violat- ing the confidence of his principal, such party by allowing the wrong to be consummated becomes himself a participant in the fraud, and relief will be granted against him. Thus, if a party be urged into the settlement of a claim by the action of one known by all concerned to be regarded as his counsel, when in fact he is acting in the interest of the opposite side, he will be entitled to relief from the injury thereby sustained, as well against the opposite party as against his supposed counsel.* The mere fact of being a director and stockholder is not in itself sufficient to make a party liable for the frauds and mis- representations of the managers of a corporation. Such persons are, prima fade, agents of the corporation, and not of the directors, and have no power, by mere virtue of the posi- tion, to bind the latter. Some knowledge and participation in the act claimed to be fraudulent must be proved upon the party sought to be charged. Hence, the mere fact that the 1 Holmes v. Wood, 32 Ind. 201. 2 Johnson v. Wallower, 15 Minn. 472. 8 White 0. Sawyer, 16 Gray, 586. * Briggs ». Withey, 24 Mich. 136. § 4.] AGAINST WHOM PEATJD MAT BE ALLEGED. 369 name of a person was published as a trustee of a corporation, and that a certificate of stock was issued to him, are not sufficient to authorize a verdict against him for a fraud perpe- trated by other trustees and agents of the corporation.^ Still, if the shareholders adopt and seek to enforce a contract entered into by him as their authorized agent, they cannot repudiate a fraud committed by him which led to the contract and was immediately connected with it.^ So, where an agent of a corporation issues spurious certificates, drawn up in the prescribed form, to an innocent purchaser for value, the cor- poration is liable for the fraud. ^ A bank is affected with knowledge possessed by one of its directors, who acts for the bank in discounting notes, that a particular note discounted at the bank was procured by fraud.* But the mere fact that one of the directors knew of the fraud will not prevent the bank from recovering on the note, if such director do not discount for the bank.^ A banking corporation is bound by a settlement made between its directors and its cashier, though the directors were guilty of fraud upon the corporation, unless the cashier participated therein.^ But of course the directors of a corporation are personally liable for their own fraudulent mismanagement.'^ There is much conflict of authority as to the position of the soliciting agent of an insurance company, when he assumes the duty of filling out the application for insurance. Is he now the agent of the applicant, or is he still performing the business of the underwriter ? If the former, the applicant is 1 Arthur v. Griswold, 55 N. Y. 400. " Ex parte Ginger, 5 Irish Ch. 174. » Titus V. Great Western Tump., 61 N. Y. 237. * National Security Bank v. Cushman, 121 Mass. 490. ^ lb. ; Washington Bank v. Lewis, 22 Pick. 24 ; Commercial Bank v. Cunningham, 24 Pick. 270; Housatonic Bank v. Martin, 1 Met. 294. " Frankfort Bank i'. Johnsou, 24 Maine, 490. ' Watts's' Appeal, 78 Penn. St. 370. 24 370 PROCEDURE AND INCIDEKTS THEREOF. [CH. IX. bound by his acts and statements, and the policy is void if untrue statements are made, though at his suggestion. This is the view taken by several of our courts.^ If, however, the party be considered as still acting for the underwriter, the latter will be bound by his acts and statements ; and hence, if the applicant be induced by him to make a particular state- ment, at variance with the truth, the case will be the same as if the insurer himself had induced the applicant to make it, and he will be estopped from asserting that the statement was false. Several of the courts hold to this view.^ In view of the fact that insurance companies send out men as solicitors for insurance, vested with powers the extent of which is seldom known to the persons solicited to assure ; and the fact that they generally assume the duty of assisting the applicant in making his proposal, and this too with the knowledge, if not upon express instructions, of the company, — in view of these facts, it seems but just to treat the solicitor (a name by which these persons often designate themselves) as acting for the underwriter. He does act for the underwriter clearly in assisting the applicant to some reasonable extent : this, it is well known, he has express instructions to do ; and how shall the applicant, often wholly unfamiliar with such matters, know the extent of his authority ? May he not fairly assume that he is acting for the company as well when he informs the applicant that a particular question may, under the circum- stances, be answered in a particular way, as when he is giv- ing his expressly authorized assistance ? A principal is bound 1 Smith V. Cash Ins. Co., 24 Penn. St. 320; Kichardson v. Maine Ins. Co., 46 Maine, 394; Wilson v. Conway Fire Ins. Co., 4 R. I. 141; Kihbe V. Hamilton Ins. Co., 11 Gray, 163; Lee v. Howard Ins. Co., 3 Gray, 583. 2 Beebe v. Hartford Ins. Co., 25 Conn. 51; Malleable Iron Works v. Phoenix Ins. Co., lb. 465; Campbell v. Merchants' Ins. Co., 37 N. H. 41; Rockford Ins. Co. v. Nelson, 75 111. 548; Mechler v. Phoenix Ins. Co., 38 Wis. 685; JEtna, Ins. Co. v. Olmstead, 21 Mich. 246 ; Masters 'v. Madison Ins. Co., 11 Barb. 624 ; Marshall v. Columbian Ins. Co., 27 N. H. 157; Cheever v. Union Life Ins. Co., 5 Big. 458. § 5.J AGAINST WHOM FRAUD MAY BE ALLEGED. 371 not merely by acts within the granted, but by acts within the apparent scope of his agent's powers. It is no answer to say that the applicant can recover the premiums paid (if his own conduct were free from fraud), upon a repudiation of the contract by the underwriter. The applicant may have been lulled into security and prevented from obtaining insurance elsewhere, or upon other terms, or from putting the risk into an insurable condition, by the action of the solicitor. Where the application, however, expressly denies the agent's authority to act for the company in answering the questions, the case would doubtless be different ; but if such denial be contained only in the policy, which (at least in cases of insur- ances at a distance) generally issues at a considerable interval after the making out of the application, it would seem to be too late to affect the case, though there is authority to the contrary.^ It seems clear at all events that where it appears that the in- surance companj"^ prepared the policy after a careful examina- tion of the insured premises by their own surveyor, with a full knowledge of the nature of the risk, any misdescription of the policy is attributable to the underwriter and not to the in- sured.'^ § 5. Of Paktnees.* Whenever credit is given to a firm in a transaction within the scope of the business of that firm, whether the partnership be of a general or a limited nature, it will bind all the part- ners, notwithstanding any secret reservations between them, unknown to those who give the credit. And no misapplica- tion of a fund by the party procuring it, to which the creditor 1 Kibbe v. Hamilton Ins. Co., H Gray, 163; Rohrback v. Germania Ins. Co., 62 N. Y. 47. i^ Benedict v. Ocean Ins. Co., 1 Daly, 8; Michael v. Mutual Ins. Co., 10 La. An. 737. See Sutterthwaite w. Mutual Ina. Assoc, 14 Penn. St. 393. _ 8 See ante, pp. 146-150, 232-236. 372 PEOCBDUEB AND INCIDENTS THEEEOr. [CH. IX. is not a party or privy, will exonerate the other partners from liability.^ This principle extends so far as to bind the firm for the frauds of one partner committed in the course of the firm business, though the other partners had no knowledge whatever of the fraud ; ^ for, by forming the connection of partnership, the partners declare to the world that they are satisfied with the good faith and integrity of each other, and impliedly undertake to be responsible for what they shall each do within the scope of the partnership concerns.^ Hence, if in the business of the partnership money be received, partly by one of the firm and partly by another, to be laid out on mortgage, and a mortgage is forged by one partner without the knowledge of the other, the innocent partner will be liable for the whole money.* So, if false representations of certain facts are fraudulently made in the partnership busi- ness by one partner, without the knowledge of the others, the firm will be bound, the innocent partners equally with the guilty.^ And this is, a fortiori, true where one of the firm has fraudulently obtained a security paj'able to the partnership ; for not only will the above rule apply, that the innocent part- ners are barred by the fraud of their fellow, but, the security being joint, all the partners, including the one guilty of fraud, must be plaintiffs in an action thereon. The plea of fraud would therefore be a double answer to the injured partj'.®^ In order to bind a partnership, every contract in the name of the firm must not only be within the scope of the partner- ' Story, Partnership, § 105. = lb. § 108; Pierce v. Wood, 23 N. H. 519; Locke-e. Steams, 1 Met. 560. ' Gow, Partnership, pp. 55, 146-148 (3d . ed.) ; Collyer, Partnership, 293-304 (2d ed.) ; Story, Partnership, § 108. * Story, ut supra. ' lb. ; Kapp v. Latham, 2 Barn. & Aid. 795 ; Griswold v. Haven, 25 N. Y. 595. * Richmond v. Heapy, 1 Stark. 202 ; Johnson v. Peck, 3 Stark. 66 ; Jones V. Yates, 9 Barn. & C. 532 ; Weaver v. Rogers, 44 N. H. 112 ; Johnson v. Byerly, 3 Head, 194 ; Homer v. Wood, 11 Cush. 62 ; Miller V. Price, 20 Wis. 117. § 5.J AGAINST WHOM FRAUD MAY BE ALLEGED. 373 ship business ; it must be made with a party who (in case of wrongdoing by one of the partners) has no knowledge or notice that the partner is acting in violation of his obligations and duties to the firm, or for purposes disapproved of by the firm, or otherwise in fraud of the firm.^ Every such contract, made with such knowledge or notice, will be void as to the firrti, though the individual partner may possibly be bound.^ Thus, if a person should trust a firm with full knowledge that one partner had withdrawn from it, or that the firm was dis- solved, or that the other members of the firm repudiated such transactions, he would have no remedy against any of the partners except the one with whom he had made the con- tract.^ So if the creditor have notice, actual or instructive, of any private arrangement between the partners by which the power of one partner is restricted, the creditor will be bound thereby.* Similar principles will apply, though not always to the same extent or with the same certainty, where one partner mis- applies the funds or securities or other effects of the firm in discharge or payment of his own private debts, claims, or contracts. In such cases, the creditor who deals with such partner, with knowledge, is deemed to act in fraud of the partnership ; and the transaction by Avhich such firm funds or effects are obtained will be held null.^ In a case of positive or constructive fraud, a retiring partner may, notwithstanding notice of his withdrawal, be liable for the new debts contracted by the new firm. This may take place when, upon the actual insolvency . of the firm, known 1 Lindley, Partnership, 260-269; Story, Partnership, § 128. * Story, rU supra; Hastings o. Hopkinson, 28 Vt. 108. » Story, § 130. • lb. ' lb.; Whitaker v. Brown, 11 Wend. 75; Gansevoort v. Williams, 14 Wend. 133; Wilson w. Williams, lb. 146; Dob v. Halsey, 16 Johns. 34; Lang v. Waring, 17 Ala. 145; Fall River Bank v. Sturtevant, 12 Cush. 372; Clay e. Cottrell, 18 Penn. St. 408; Venable v. Leviok, 2 Head, 351. 374 PEOCEDURE AND INCIDENTS THEEEOP. £CH. IX. to all the partners, they permit the retiring partner to-with- draw a portion of the partnership funds out of the reach of the joint creditors of the firm for the purpose of defrauding them. The retiring partner in such case will be liable to the full extent of the funds so fraudulently withdrawn.^ But the mere fact that a retiring partner knows at the time that the partnership is insolvent will not, of itself, involve him in any liabilities for the new firm, or vitiate the dissolution, if his action were without any intention of fraud, and entirely con- sistent in all respects with good faith ; ^ unless, indeed, it still come within the meaning of a statute concerning convey- ances to the detriment of creditors. The presfimption of fraud in such cases may, however, be ^rebutted by the circumstances of the particular case. Thus, it may be shown that the other partners have directly or by implication authorized or confirmed the application of the partnership funds, securities, or effects to the very purpose in question,^ or that the partner had acquired, with the con- sent of his copartners, an exclusive interest therein, or that from other circumstances the transaction was in fact bona fide and unexceptionable, though it went to the discharge of the private debt by one partner only.* But it may be taken as the general rule that where a note or security, or fund of the firm, has been received in discharge of a separate debt of one partner, the burden of proof is upon the creditor to show facts sufficient to repel every presumption of fraud or collu- sion or misconduct on his own part ; unless, indeed, the cir- cumstances already in proof on the other side repel such presumption.^ 1 Story, Partnership, § 163; Anderson v. Maltby, 2 Ves. Jr. 244; s. c. 4 Brown, C. C. 423. 2 Story, ut supra; Parker v. Ramsbottom, 3 Bam. & C. 257. 8 Wheeler v. Eice, 8 Cush. 205; Darling v. March, 22 Maine, 184. * Story, Partnership, § 133. 5 lb.; an(e, p. 146; Frankland ». McGusty, IKnapp, 274, 301; Foot w. Sabin, 19 Johns. 154, 157 ; Robinson v. Aldridge, 34 Miss. 352 ; King v. § 5.] AGAINST WHOM FBAXTD MAY BE ALLEGED. 375 The unexplained fact that a partnership security has been received from one of the partners in discharge of a separate claim against himself is a badge of fraud or of such palpable negligence as amounts to fraud, which it is incumbent on the party who so took the security to remove, by showing either that the partner from whom he received it acted under the authority of the rest, or at least that he himself had reason to believe so.^ Thus, in the case first cited, the bankers of an individual member of a firm, knowing that the firm transacted business at another banker's, received from and discounted for their customer bills of exchange purporting to be drawn and indorsed by the firm. The signatures of the firm as drawers and as indorsers, however, and of the customer as indorser, as well as the whole of the bills with the exception of the acceptances, were in the customer's handwriting. Upon the above principle, it was accordingly held that the transaction showed on its face a conversion of partnership property by the customer; that the bankers had been guilty of great negligence in abstaining from inquiry ; and that they could claim as against the other partners only so far as the customer himself might have claimed compensation from them in respect of money paid by him out of his private account for partner- ship purposes. If, however, one partner borrow money, representing that it is for the use of the firm, and give a note therefor in the firm name without the knowledge of his copartner, but ap- propriate the money to his own use, the firm will be liable ; unless the creditor knew or had reasonable ground to believe that the money was not borrowed for the use of the firm, or the circumstances were such as to put him upon inquiry, and Faber, 22 Penn. St. 21 ; Rogers v. Batchelor, 12 Peters, 229. Whether the same principles apply to joint stock companies, qumre. Mr. Justice Story inclines to the opinion that they do. Partnership, § 164. 1 Ex parte Darlington Banking Co., 4 DeG., J. & S. 681; Miller v. Richardson, 2 Ired. 250. 876 PROCEDURE AND INCIDENTS THEREOF. [CH. IX. he neglected to inquire.^ The presumption as to a note in the firm name is that it was given for partnership purposes ; and, if the other partner seek to avoid payment, the burden lies upon him to show that it was given in respect of a matter not relating to the partnership, and this with the knowledge of the payee. 2 In case of a debt fraudulently contracted for a firm by one member thereof alone, the others being ignorant of the fraud, while all the partners will be bound ih an action brought upon the contract or to recover the property so fraudulently ob- tained, still the liability to an action for the fraud is held to be limited to the partner who committed the same, unless the others assented to or ratified the wrongful act by adopting it, or by retaining its fruits with knowledge of the fraud.^ So, if a person take a note from one partner executed in the firm name for the private debt of the partner, his copartner being ignorant of the fact, the latter will not be bound ; nor will a person who became surety on the note be bound to the payee, if he signed his name supposing ' that the note was a valid firm note.* Partners are severally liable for funds which have come into the hands of one of them in the course of the firm busi- ness, and have been fraudulently appropriated by him.^ Thus, in the case cited, the plaintiff, being entitled to funds in court, gave a firm of solicitors a joint and several power of attorney to receive the money. This was sent to one of the partners, who obtained the money with it, deposited it in his 1 Wagner v. Freschl, 56 N. H. 495; Hayward v. French, 12 Gray, 457. 2 lb. " Stewart v. Levy, 36 Cal. 159, denying Townsend v. Bogart, 11 Abb. _Pr. 355. See White i>. Sawyer, 16 Gray, 586. * Hagar i>. Mounts, 3 Blackf. 57 ; s. c. lb. 261. Nor coald the partner attempting the fraud be held on the note, if it were a joint obligation. ' St. Aubyn v. Smart, Law R. 3 Ch. 646 ; Dundonald ». Masterman, Law R. 7 Eq. 504. § 5.] AGAINST WHOM FRATTD MAY BE ALLEGED. 877 own name in bank*, and afterwards absconded with it. A bill was now filed to subject the other partner to liability, and the court sustained the claim.^ If goods of the plaintiff be fraudulently sold by one of a firm, and the firm receive the profits, all the partners are liable for the wrongful sale.* But false statements and acts designed to give credit to another, whereby persons are in- duced to sell him goods on credit, do not render the author of such statements and acts liable jointly with the party who has gained credit by them in an action for goods sold, though the object of the fraud was to share in the goods purchased.^ A deceit practised by partners does not require a joint suit against them. The right of action for torts committed by the common action of several persons is several as well as joint, at least in America.* Partners cannot sue for the recovery of damages, or of funds justly belonging to the firm, where it is necessary for a recovery to show the fraud of one of their number.^ Nor is the case different where the defendant was cognizant of the fraud of the partner, and participated in it, in order to defraud the other partners. The remedy of the injured mem- bers of the firm is by bill in equity, where the guilty partner can be made a defendant.^ 1 The fact was also observed by the court that certain letters written by the firm in respect of the power of attorney, and the cost of stamping the power, were charged for in the bill of costs of the firm. , 2 Castle V. Bullard, 23 How. 172. 8 Farr v. Wheeler, 20 N. H. 569. * More V. Rand, 60 N. Y. 208; Lovejoy ». Murray, 3 Wall. 1 ; Stone p. Dickinson, 5 Allen, 29 ; Brown ». Cambridge, 3 Allen, 474. The rule seems to be otherwise in England. King v. Hoare, 13 Mees. & W. 494. 6 Farley v. Lovell, 103 Mass. 387; Homer v. Wood, 11 Gush. 62; Jones V. Yates, 9 Barn. & C. 532. * Farley ». Lovell, supra. 378 PKOCEDXJBE AND INCIDENTS THEREOF. [CH. IX. § 6. Of Conspirators and the Likb.^ Where two or more have entered into a conspiracy to de- fraud the plaintiff, any act done by either of the conspirators in furtherance of the common object, and in accordance with the general plan of the conspirators, becomes the act of all ; and each conspirator is responsible for such act.^ Hence, where a man has combined and conspired with others to cheat and defraud the plaintiff in the sale of certain property, by fraudulent concealments and misrepresentations, and the fraud has been perpetrated accordingly, though by some other mem- ber or members of the company, he will be liable, even where he has not himself made any of the misrepresentations com- plained of.^ And if an individual connect himself with others in a conspiracy to defraud, or for any other purpose, it is no answer to say that the whole plan was concocted before he became an associate. By connecting himself with them, and aiding in the execution of their plans, he adopts their prior' acts and declarations, so far as they constitute part of the r&s gestce.^ Where several agents conspire to injure the common prin- cipal and succeed in so doing, they are all liable for the dam- age, though some in fact obtained no benefit from the fraud.^ An action of deceit maybe maintained against two persons jointly, if both make false representations to the plaintiff to his damage, though they had not previously conspired or agreed to make such representations, and though but one of them was interested in the expected fruits of the fraud.® 1 See Chap. XVII. § 6, as to evidence. 2 Page V. Parker, 43 N. H. 363 ; Boaz v. Tate, 43 Ind. 60. 8 lb. * Den d. Stewart v. Johnson, 3 Harr. (N. J.) 87. 6 Walsham v. Stainton, 1 DeG., J. & S. 678. ' Stiles V. White, H Met. 356. On the other hand, two or more may join, who have been jointly injured, in an action against one. Medbury V. Watson, 6 Met; 246. §§7, 8.] AGAINST WHOM PBAUD MAY BE ALLEGED. 379 Hence, if a purchaser obtain property through fraud, and the same be delivered to another person who hands it over to his brother to be kept until further notice, and the brother conceal the property, all three are liable in trover for the same.^ § 7. Of Cotrustees. A trustee is answerable for the default of his cotrustee, if, with knowledge that his cotrustee is making an improper use of the trust property, he remain passive and decline to in- terfere. But, where the default is without the knowledge of the associate, he is not answerable.^ So, too, though a per- son named as one of several trustees in a deed unite in sales of the trust funds, such sales being necessary in the execution of the trust, he will not be liable for a fraudulent applica- tion of the proceeds by his cotrustees, if such proceeds do not come into his hands.^ There is no primary liability in respect of breaches of trust. All parties to a breach of trust are equally liable. And it is no objection to a suit for such a wrong that one of the de- fendants;^ against whom no relief is asked, may have been a party to the breach of trust.* § 8. Op Coexecutors or Administrators. It is a well-settled rule that an executor is not liable for the misconduct of his coexecutor any further than he is shown to have been knowing and assenting to it at the time. Merely permitting his coexecutor to possess the assets, without con- curring in a wrongful use of them, does not render him lia- > Allen V. Hartfleld, 76 111. 358. « Glenn v. McKim, 3 Gill, 366. 8 Griffin V. Macaulay, 7 Gratt. 476. See Boyd v. Boyd, 3 Gratt. 113. * Wilson V. Moore, 1 Mylne & K. 126. 380 PROCEDURE AND INCIDENTS THEREOF. [CH. IX. ble for the acts of his coexecntoi-. Each executor is liable simply for his own acts, and for what he receives and mis- applies, unless he join in the direction and misapplication of the assets.! One of several executors, indeed, is not liable for the fraudulent use of the testator's estate committed to his particular management, unless he is implicated in the fraudu- lent management. And it devolves upon the complaining party to prove participation in the fraud in such a case : it will not be presumed.^ Perhaps it would be otherwise if by the will both executors were given joint powers over the estate. An executor employed by his coexecutor as agent to sell an estate, which under the will the coexecutor alone had power to sell, and who hands over the price to the latter, is not accountable for a misapplication of the fund by the latter, since he had no legal right to retain it.* But it has been held that if the executor of a tenant in common, authorized to sell a fishery, take along with him the other tenant, and refer the purchaser to him as a person acquainted with the property, and such tenant commit a fraud upon the purchaser in his representations of the qualities and condition of the fishery, the executor is personally liable for the fraud.* Every person who acquires personal assets by a breach of trust or devastavit by an executor is responsible to those who are entitled under the will, if he be a party to the breach of trust. Generally speaking, he does not become a party to the breach of trust by buying or receiving as a pledge for money advanced to the executor at the time any part of the personal assets, whether specifically given by the will or otherwise. Such sale or pledge is considered prima facie consistent with the duty of an executor. Generally speaking, he does become 1 Peter e. Beverley, 10 Peters, 532. 2 Van Pell v. Veghte, 2 Green, 207. ' Davir v. Spurliug, 1 lluss. & M. 64. * Pettijohn v. AVilliams, 1 Jones, 145. § 8.] AGAINST WHOM FBATJD MAY BE ALLEGED. 381 a party to the breach of trust by buying or receiving in pledge any part of the personal assets, not for money advanced at the time, but in satisfaction of his private debt. Such a sale or pledge is considered inconsistent with the duty of an executor.^ We say " generally speaking " of these propositions, for there seem to be exceptions to both of them. Thus a sale or pledge for the private debt of the executor was supported under special circumstances in two cases before Lord Hard- wicke,^ though not entirely to the satisfaction of succeeding judges. Lord Eldon seemed to consider a case decided by Sir William Grant ^ as an exception to the first proposition. In the case referred to, advances made at the time of the transaction in question had been made to two executors who were partners as army agents, and were made to them in the course of their business as army agents, and therefore for their private purposes. By way of security, bonds of the testator were deposited with the lenders. Lord Eldon, on the appeal, was inclined to think that the lenders were to be treated as parties to the breach of trust as much as if the money had been applied to pay the private debt of the executors. And Sir John Leach was of the same opinion.* This eminent judge, from whom we have given the above propositions, thus stated the law relating to the last point : If a party deal- ing with an executor for the personal assets pays his money to the executor, so that it may be applied to the purposes of the will, he is not responsible for the executor's misapplication of it. But if, in dealing with the executor, he does in truth pay his money for the private purposes of the executor, he is equally a party to the breach of trust whether he applies his 1 Keane v. Robarts, 4 Madd. 332, 357. 2 Nugent V. GifEord, 1 Atk. 463 ; s. c. 2 Ves. 269 ; Mead v. Orrery, 3 Atk. 237. " McLeod V. Drummond, 14 Ves. 358 ; s. c. 17 Ves. 172. * Keane v. Roberts, 4 Madd. 332, 358. 382 PEOCEDUBB AND INCIDENTS THEREOF. [OH. IX. money to the private debt of the executor or to the private trade of the executor.^ The case before the court was not one of purchase or pledge from the executors, but of agents of the executors receiving moneys by the iiuthority of the executors, and remitting it to them in the course of their duty as agents, and in the proper forms of business, leaving the application of it to the purposes of the will wholly in the power of the executors. It was accordingly held that the agents were not liable as parties to the misconduct, of the executors. There is no implied warranty of title or soundness in sales by executors or administrators. To avoid a sale for defect in either of these particulars, it is necessary to prove actual fraud on the part of the vendor. And it is suggested that the proper remedy in such cases, except perhaps where the fraud relates to the title, is by an action against the repre- sentative in his individual capacity, and not by avoiding the sale.^ This proceeds upon the ground that the fraud, being that of the representative and not of the decedent, the former, and not the estate of the latter, is liable. Upon this point, it is laid down that an estate can neither be charged, nor charge others, by means of the fraudulent acts of the legal representative.^ But. property fraudulently obtained by an administrator from his intestate in the latter's lifetime is treated as assets in his hands for administration.* » Keane v. Robarts, 4 Madd. 332, 358. ' George v. Bean, 30 Miss. 147. It seems, however, that an estate of a decedent may be liable for a warranty made by an auctioneer even against the direction of the representative. Atwood v. Wright, 29 Ala. 346. » Crayton v. Hunger, 9 Tex. 285. * Emmerson v. Herriford, 8 Bush, 229. § 9.j AGAINST WHOM PBAUD MAY BE ALLEGED. 383 § 9. Op Oodistribxjtees. If one of several distributees, without the knowledge of the others, make a fraudulent representation in regard to property of the estate which is offered for sale, he alone will be liable : the rights of the innocent distributees cannot be affected thereby. The purchaser cannot, for example, enjoin the collection of the purchase-money.^ 1 Williams v. McCormack, 7 Humph. 308. 384 PEOCEDUBB AND INCIDENTS THEREOF. [CH. X. CHAPTER X. DEFENCES TO SPECIFIC PERFORMANCE. § 1. Intkoditctory. The modes of redress or relief on account of fraud vary according to the nature of the wrong committed, the circum- stances under which it was committed, and the situation of the parties at the time when the aid of the courts is sought. If the case be simply one of fraudulent representations, as in the course of a sale, an action of deceit may be brought at law ; if it be a case of fraud in the transaction of a commer- cial partnership, the injured party will resort to equity for redress ; and, if the wrongdoer should be attempting to en- force the terms of a contract obtained by him through fraud, he can plead the fraud in bar of the action. All of these modes of redress or relief, however, have already received suflScient attention, necessarily, in the chapter on Deceit, or in the chapter following that subject. But there are other modes of relief, of a special and peculiar nature, which must now receive attention. Of these there are four : the first to be presented arising by way of defence to a bill for specific performance ; the second, by bill for rescission ; the third, by motion for a new trial ; ' and the fourth, by estoppel in pais. First, then, of the defence of fraud to a bill praying the specific performance of a contract. 1 It was also deemed important, in connection with this remedy, to rehearse briefly the remedy by cross action, presented more at length in considering the subject of Judgments, ante, pp. 177-179. § 2.] DEFENCES TO SPECIFIC PERFORMANCE. 385 The jui'isdiction of courts of equity to compel performance of contracts was, in its origin, built upon the foundation of a legal right, the law giving the title,^ or rather a legal right to have the title completed ; ^ to which right, however, courts of law, which could only adjudge damages for non-perform- ance, had not the means of giving effect.^ Courts of equity, having once established their jurisdiction to this extent, did not stop here, and confine themselves to cases of strictly legal titles, but laid down another principle, now well settled, which operated to prevent the courts of law from being made the instruments of injustice. When, therefore, a party attempts to take an unjust advantage of any accident, mis- take, or fraud which renders a strict performance impossible, equity will interfere to restrain a harsh exaction, if the failure to conform to the requirements of the contract be not substantial.* § 2. Of the Statute of Fratjds. Parol Agreements. Part Performance. By the English Statute of Frauds, all parol agreements respecting any interest in, or to arise out of, real estate (ex- cept leases for terms not exceeding three years) are de- clared void. Courts of equity, however, have long been in the habit of deciding, upon equitable grounds, in contra- diction to the terms of this enactment. The earliest case upon this subject® was decided upon a principle recognized by 1 Halsey v. Grant, 13 Ves. 76. " Alley v. Deschamps, lb. 228. 3 Harnett ». Yielding, 2 Schoales & L. 553; 2 Hovenden, Fraud, 1, to which author we are indebted for much of this presentation of the older authorities. * Halsey ». Grant, 13 Ves. 77; Eaton v. Lyon, 3 Ves. 693; Seton v. Slade, 7 Ves. 274 ; Lennon v. Napper, 2 Schoales & L. 684 ; 2 Hovenden, Fraud, 1. 6 Foxcroft 0. Lyster, Colles P. C. 108. 25 386 PEOCBDTJEB AND INCIDENTS THEREOF. [CH. X. courts of law, but which, according to their modes of pro- cedure, was not capable of application to the particular case. By the highest tribunal of England, it was held to be against conscience to suffer a party, who had entered and expended his money on the faith of a parol agreement, to be treated as a trespasser, and for the other party, in fraud of his engage- ment, though that was verbal, to enjoy the advantage of the money laid out. This determination, though in the face of the statute, was founded on principles of natural justice, and has become established law.^ Nothing, however, is to be considered as part performance within the above rule and privilege which does not put the party seeking a specific execution into a situation that would bring a fraud upon him, if the agreement were not performed.^ When, for example, upon a parol agreement a man is admitted into possession of land, he would be liable to be treated as a trespasser, if his possession were not to be referred to the agreement. But to treat him as such would be a fraud ; and hence this is a ca,se of part performance.^ With regard to a tenant already in possession, the fact of his continuing in possession under a verbal contract of pur- chase is of no avail ; but where a person not previously in possession makes an agreement with the owner of an estate, and enters into possession, such possession is part perform- ance.* On the other hand, payment of money is not con- sidered as part performance so as to entitle the party to a specific performance ; for the money may be repaid with -inter- est, and the parties thus restored to their former situation,^ — 1 2 Hovenden, Fraud, 2. » Clinan v. Cooke, 1 Schoales & L. 41, Lord Kedesdale. » Gregory v. Mighell, 18 Ves. 333 ; Story, Equity, § 763. < Morphett v. Jones, 1 Swanst. 181; Buckmaster u. Harrop, 13 Ves. 474. ' Clinan v. Cooke, 1 Schoales & L. 41 ; Frame v. Dawson, 14 Ves. 388. Part payment of the purchase price is not part performance, so as to take a case out of the operation of the statute. lb. Secus, of payment and possession. Tibeau a. Tibeau, 19 Mo. 78. § 2.] DEFENCES TO SPECIFIC PEEFOEMANCE. 887 a result not easily effected and perhaps impossible in the other case. In order to take the case of a verbal agreement to convey land out of the Statute of Frauds, on the ground of part performance, two things are necessary. The terms of the contract must be established by clear, definite, and unequiv- ocal evidence ; and the acts relied upon must be exclusively referable to the contract. Where, therefore, a plaintiff, ask- ing for specific performance against an agent for alleged breach of trust, relied solely, to prove the agreement, upon the declaration of the defendant to a third person that he was pvirchasing for the plaintiff, and upon the immediate taking of possession by the defendant and part payment (by him) of the purchase-money, it was held that the plaintiff had not brought himself within the rule. No clear and definite contract was proved by the declaration of the defendant. The terms of the contract were left wholly uncertain. And, as to the possession, the court considered that, as there was no evidence of the terms under which the defendant took possession, they could not hold that such possession was referable to the contract.^ It was also doubted in the same case whether, even where the terms of the contract were clearly proved, and the pos- session shown to refer exclusively to the contract, the case would be taken out of the meaning of the statute. To determine any act to amount to a part performance, it was deemed essential that the act should be prejudicial to the party seeking the benefit of it ; for, it was well observed, the principle upon which courts execute the contract ' is to prevent the commission of fraud with impunity. If a plaintiff in an execution levied upon land make an agreement with the defendant that he will buy the property at sheriff's sale and hold it for the defendant's benefit, and then take advantage of such agreement to buy in the property 1 Wallace v. Brown, 2 Stookt. 308. 388 PEOCEDtTEB AND INCIDENTS THEEBOF. [CH. X. at a price lower than he otherwise could have done, he will be deemed to hold in trust for the defendant ; and the latter will be allowed to redeem.^ But it is held that equity will not enforce such an agreement, if in parol, except upon clear proof oi {rand OT mala fides; for the mere non-performance of a parol agreement is not of itself such a fraud as will call for the exer- cise of the powers of equity.^ Cases of this kind, by the weight of authority, do not fall within the doctrine which enables courts of equity, in derogation of the Statute of Frauds, to ef- fectuate parol contracts concerning lands on any notion of part performance. In such cases as the above mentioned, there is no part performance, in the proper sense of that term. The purchaser neither obtains nor holds possession of the premises by virtue of his agreement to take the property in trust. On the contrary, he enters upon the land by force of the title vested in him through the deed from the sheriff, by operation of law. With respect to his possession, the defendant's con- tract with him is entirely nugatory, and such possession therefore cannot be in execution of it.* And it has been well remarked, by the same learned court just cited, that to decree performance in such cases would be a disastrous practice ; for such practice must embrace in principle every case of an agreement to buy lands in behalf of a defendant in execution, however free from oppression or unfairness the transaction might be.* But whenever an agreement of this nature (so held the court) has been entered into, and the purchaser has made use of it or of any other contrivance, to obtain the ' Walker ». Hill, 6 C. E. Green, 191 ; Combs v. Little, 3 Green's Ch. 310; Marlatt v. Warwick, 8 C. E. Green, 108; s. c. 4 C. E. Green, 443 ; Merritt o. Brown, lb. 286 ; s. c. 6 C. E. Green, 401 ; Wallace «. Brown, 2 Stockt. 308 ; ante, pp. 107-120. 2 Walker v. Hill, supra; Merritt v. Brown, supra; Rogers v. Simmons, 55 111. 76 ; ante, pp. 117-119. 8 Merritt v. Brown, 6 C. E. Green, 401, 403. '' Explaining and limiting Combs v. Little and Marlatt v. Warwick, supra. § 2.] DEFENCES TO SPECIFIC PERFOBMANCB. 389 property for an inadequate price or to the oppression of the debtor, the right to equitable relief is clear. The jurisdiction of the court is founded upon the doctrine that it is the prov- ince of a court of conscience to prevent the Statute of Frauds from being made productive of the very evils it was designed to suppress. Still, so important is it deemed to maintain confidence in judicial sales, that the purchaser should be pro- tected against all pretences of a trust by parol, unless mala fides be proved by the clearest and most complete evidence.^ In order, then, that a delivery of possession to a purchaser of land should amount to such a part performance as to take the case out of the Statute of Frauds, the situation of the parties must be such that a refusal to carry out the parol contract of sale will work a fraud upon the purchaser.^ It is only with a view to protect an innocent party from a conse- quent fraud that equity will enforce a parol contract for the purchase of land upon part performance by him.* Hence, where the part performance consists in the making of valuable improvements upon the premises, the party will not be pro- tected, if it appear that when they were made it was known to him that the contract would not be fulfilled by the opposite party. The improvements must be made with the expectation that the contract will be performed.* The refusal to perform a contract can seldom of itself amount to a fraud ;^ but the consequences of such refusal may sometimes make the refusal fraudulent, and may therefore afford ground for the interference of equity. In an early case in Vir- ginia,^ it appeared that an heir had promised his mother to con- vey property to his brother on condition that she would give 1 Merritt v. Brown, supra. 2 White ». Watkins, 23 Mo. 423; Gilbert «. East Newark, 1 Beasl. 181. « Farrar v. Patton, 20 Mo. 81. * Parke v. Leewright, lb. 85. 5 Merritt v. Brown, supra; Rogers v. Simmons, supra. » Chapman v. Chapman, 4 Call, 430, argued by Randolph and Marshall, among other counsel. 390 PEOCEDUKB AND INCIDENTS THEKEOP. [CH. X. him (the heir) half of her estate. She agreed to do so ; and the heir accordingly executed several conveyances to his brother, one of which, however, was defective. He agreed to make this good ; but afterwards, discovering that his mother had conveyed part of her property to his brother, he refused to do so, and destroyed the defective deed. It was held that equity would not set up the deed against the heir, since the object of his refusal to convey was to prevent a fraud upon himself. Had he executed the gift, and the action of the mother had been considered fraudulent towards him, it would seem that he would have been entitled to relief, either against his mother or against his brother for rescission. So, refusal after marriage to perform an antenuptial agreement to execute a settlement is a fraud against which equity will grant relief.^ An executory contract for the sale of land will not be specifically enforced where the tract is described as contain- ing a certain number of acres, when in fact it contains much less, even though the vendor offer to make up the deficiency by the conveyance of adjoining lands. The law will not compel a man to pay for land he did not buy, or to accept less than he contracted for.^ And though a defendant resisting a claim for specific performance may introduce parol evidence that by fraud the written agreement does not express the real terms of the contract undertaken, a plaintiff, for the purpose of obtaining a specific performance with a variation, cannot do so.* § 3. Op Teems op Decree. Discretion op Court. Specific performance of an agreement is never compelled, unless the case is free from the imputation of all deception. 1 Dundas v. Dutens, 1 Ves. Jr. 196, 199. * Snedaker o. Moore, 2 Duval, 542. » WooUain ». Hearn, 7 Ves. 211. § 3.] DEFENCES TO SPECIFIC PERFORMANCE. 391 The remedy is one of sound discretion.^ The conduct of the person seeking it must be free from all blame ; misrepresen- tation, even as to a small part of the subject, will exclude him from relief in equity.^ Thus, for example, though a lease may have been executed with perfect good faith before any cir- cumstances are known to the lessee which would make the transaction fraudulent on his part ; still, if before delivery he discover any facts which give him an unfair advantage over the lessor, and are contradictory to the representations upon which the bargain was made, he cannot enforce delivery of the lease, or have a specific performance of the agreement.* So, where the contract sought to be enforced required the plaintiff to pay one-half of the expenditures upon a farm mort- gaged for the support of the plaintiff's father, who was also the defendant's father-in-law, and the parties disagreed as to whether the support of the father was part of the expenditure to be charged ; where also by the contract one party could be compelled to sell, but the other could not be compelled to buy ; where the plaintiff delayed fourteen years before asking a conveyance, holding meanwhile the defendant's notes to the value of the farm, given as a security for the promise to convey, which notes he had till then declined to surrender ; where, after the fourteen years, the defendant had sold the premises, supposing (as he claimed) that the contract was null by reason of non-performance by the plaintiff; where, further, aid was asked for relief from difficulties into which the plaintiff got himself in an attempt to defraud his creditors, — the court declined to interfere in favor of the plaintiff's claim for specific performance.* 1 Plummer v. Kappler, 11 C. E. Green, 481. * Cadman v. Horner, 18 Ves. 11. » Aliingdon v. Butler, 1 Ves. Jr. 208. * Snell V. Mitchell, 65 Maine, 48. 392 PROCEDUEB AND INCIDENTS THEEEOF. [CH. X. § 4. Of Wills. Pkomise to Testatoe as to Dis- position OF Peopeety. If a person acquire property under a will upon a parol promise to make a certain disposition concerning part of it, which promise is fraudulently made, equity will compel him to do what he agreed.^ Thus, in a recent case,^ it appeared that an aunt of the respondent, with whom she had lived and to whom by her will she had given all of her property, desired upon her death-bed to change her will and give a certain piece of real estate to a niece, and had a codicil prepared for that purpose. Before signing the same, she desired to sequre the consent of the respondent to the change, and had him called in for that purpose. After hearing her, he replied that she wss weak, and that she need not trouble herself to sign the codicil; he would convey the property to the niece, and carry out her wishes. Trusting his promise, the testatrix omitted to sign the codicil. The nephew having refused to carry out his promise after the death of the testatrix, it was held that he had taken the estate in trust, and that the refusal was fraudulent ; and he was compelled to execute a conveyance. § 5. Of Taking Advantage of Weak-minded or Illiteeate Persons.^ Where weak-minded or illiterate persons are induced by a party, in the absence of their professional adviser, to make an improvident bargain, no assistance towards compelling its execution will he afforded by equity,* though the case might 1 Ante, pp. 126, 127. = Dowd v. Tucker, 41 Conn. 197. » See ante, pp. 155, 156, 279-287. ■• Martin v. Mitchell, 2 Jao. & W. 423 ; Kerneys v. Hansard, Copp. 129. §6.] DEFENCES TO SPECIFIC PEEFOEMAKCB. 393 not be one for an action at law or for rescission in equity. In the case of an illiterate person, addicted to intoxication, whose course in life makes him very liable to imposition, such habits, though not carried to an excess constituting absolute incapacity, lay ground for strict examination whether an instrument executed by him does not show evidence, in itself, that advantage was taken of his habits.^ And where a man entitled to an estate under his father's will, subject to a pro- viso that, if he sold it within twenty-five years, half the pur- chase price should go to his brother, agreed to sell it, and afterwards pleaded intoxication as a ground for refusing to execute the agreement. Lord Hardwicke relieved him, be- cause the contract was palpably unreasonable. The vendor was in effect selling his patrimony for half its value, even supposing the purchaser had agreed to pay its full value.^ § 6. Of Inadequacy oe Ovee-valuation.^ Though mere inadequacy of consideration is not sufiBcient ground for setting aside a contract, it may induce the court to stay the exercise of its power to enforce the specific per- formance of a contract for the sale of land.* It is held in Massachusetts, however, that inadequacy of consideration or improvidence in the formation of a contract is not sufficient ground, in the absence of fraud, ambiguity, or mistake, for refusing a demand of specific performance.® So, too, it has 1 Say V. Barwiok, 1 Ves. & B. 199 ; Cook v. Clayworth, 18 Ves. 16 ; Dunnage v. White, 1 Swanst. 150 ; Mountain v. Bennet, 1 Cox, 353 ; ante, pp. 155, 156, 286, 287. 2 Fain 0. Brown, cited 2 Ves. 307; Revell ». Hassey, 2 Ball & B. 287. 8 See ante, pp. 136-140. ^ Powers V. Hale, 25 N. H. 145; Seymour v. Delaney, 6 Johns. Ch. 222; Proudfoot v. Wightman, 78 111. 553; Christian v. Ransome, 46 Ga. 138. ' Lee V. Kirby, 104 Mass. 420. See also Collier v. Brown, 1 Cox, 428 ; Day V. JJewman, 2 Cox, 77; Cathcart v. Robinson, 5 Peters, 264. 394 PROCEDUKE AND INCIDENTS THEREOF. [CH. X. been held that if a written agreement be entered into for the purchase of an estate at a price far beyond its value, but without any circumstances of fraud or surprise, the court will not decree a specific performance of the contract ; nor, on the other hand, will it rescind it.^ But the contrary will clearly be the case in transactions between parties in confidential relations, the agent, trustee, or like party seeking the perform- ance. Thus, if an agent authorized to sell land at a given price, should sell the same three years after, when the value has greatly advanced and is rapidly rising, at the price naiUed, without informing his principal of the rise in value, this would be such a wrong to the principal that equity would refuse on behalf of the purchaser to decree specific performance.^ There is therefore a distinction between the exercise of juris- diction for setting aside a contract and refusing execution.^ Equity will not carry hard or unreasonable agreements into execution.* If, for example, articles of agreement are un- fairly obtained, though the case be not such as to justify the court in setting them aside, still the court will not direct their performance.^ The power of awarding specific execution of contracts for the sale of lands rests in sound judicial discre- tion, and wiU not be applied to cases that are hard or unfair or unreasonable, or founded upon very inadequate considera- tions.^ The case may therefore often be such that equity will neither decree execution for the one party nor set aside the contract for the other. In such case, the contract stands ; and the parties must look to the courts of law for its enforcement or for defence. i Day ti. Newman, 2 Cox, 77. ' Proudf oot v. Wightman, 78 111. 553. 8 Powers V. Hale, 25 N. H. 145 ; Howell v. George, 6 Johns. Ch. 222. * lb. ; Fain v. Brown, 2 Ves. 307. s Howell ». George, 6 Johns. Ch. 226. ' lb. §§ 7, 8.] DEFENCES TO SPECIFIC PEEFOEMANCE. 395 § 7. Op Family Aeeangements. Family arrangements will not be severely scrutinized as to the pecuniary consideration, when they are not very unreason- able in themselves.^ But satisfactory evidence will be re- quired, in order to specific execution, to show that there has been no exercise of undue influence or fraud in the case.^ It would be thought a very suspicious and doubtful transaction, for example, if an uncle should obtain from his nephew a beneficial bargain of any kind, upon an inducement held out to the nephew that to consent to it would ultimately be to his advantage, but without any security for the performance of such engagement, or any provision against the caprice or . change of opinion of the uncle. Such a bargain, if unsup- ported by other circumstances, would not be upheld.* § 8. Of Innocent Lessees. An innocent lessee under a defective title is entitled to reasonable protection, which equity will administer according to circumstances. If the title of the lessor was derived through fraud, and the party defrauded come for relief with- out laches, it will be granted on condition that the innocent lessee shall be reimbursed for any permanent improvements on the estate made at his expense.* But if the party who has the real title, with full knowledge of his rights, sit still and permit the property to be treated as if no such right existed, a lessee under the party so allowed to exercise acts of owner- 1 Stapilton v. Stapilton, 1 Atk. 5; Froysel v. Llewellyn, 9 Price, 123; Myddleton v. Kenyon, 2 Ves. Jr. 410; Tweddell v. Tweddell; 1 Turn. & R. 13. 2 Hotchkiss V. Dickson, 2 Bligh, 348 ; Carpenter o. Herriot, 1 Eden, 340. » Dawson v. Massey, 1 Ball & B. 235. See, further, ante, pp. 261-266. ♦ Waring v. Mackreth, Forrest, 137. S96 PEOCEDTJKB AND INCIDENTS THEEEOF. [CH. X. ship will not merely be entitled to compensation for improve- ments upon, but will be protected in the possession of the estate during the term for which he has contracted.^ The case would, of course, be different with regard to a lessee who, knowing the nature of his title and the duration of his interest, imprudently engaged in expensive improvements.^ And, if a tenant for life have a leasing power, no fraud can be imputed to the remainder-man in looking on without interfering to prevent expenditure upon the property by one who has only a parol agreement from the tenant for life for a lease. The remainder-man has a right to presume that the party laying out his money has a valid lease, granted under the power, or at least a binding agreement for a lease. As against the remainder-man, who has entered into no agreement, written or parol, and has done no act on the faith of which the other party depended, fraud cannot be imputed if, when he suc- ceeds to the estate, he refuse to grant the expected lease. The only way in which he could be affected with fraud would be by showing that an expenditure had been designedly connived at by him, with knowledge that the party had only a parol agreement from the tenant for life.^ § 9. Of Mistake. The misrepresentation by a vendor of land of an occult quality of the property, though made in ignorance of the truth, and though the vendee agree to take the risk of this, is a decisive objection to a bill for specific performance by the vendor.* So, too, equity will refuse to make a decree of 1 Shine v. Gough, 1 Ball & B. 444; Medlicott v. O'Donnell, 1 BaU & B. 171. ^ Pilling «. Arraitage, 12 Ves. 85. « Blore V. Sutton, 3 Meriv. 237, 246; Stiles w. Cowper, 3 Atk.f693; Shannon ». Bradstreet, 1 Schoales & L. 73. * Fisher v. Worrall, 5 Watts & S. 478. §§ 10, 11.] DEFENCES TO SPECIFIC PBEFOEMANCE. 397 specific performance, if it appear that at an auction the agent of the purchaser was mistaken by those present at the auction for a puffer on the part of the seller who had been in the habit of employing him, and that the sale was thereby chilled, and the property in consequence knocked down at a very inadequate price, though nothing like fraud was imputed to the purchaser.! § 10. Of the IllegaXiItt of Contracts. A decree for the specific performjance of an agreement entered into in fraud of the laws and policy of the country can never be obtained. In such a case, it is not necessary that the objection should be made by the defendant ; the court will set it up.^ And, in general, equity will not specifi- cally enforce a contract growing directly out of another which is illegal or immoral.^ Equity will also refuse a specific per- formance, when the effect of enforcing the contract would be to endanger the interests of the public. Thus, though it has been decided at law that there is nothing illegal in a stipula- tion that the name of the vendor of the good-will of a busi- ness shall be continued in the firm after the party has entirely dissolved connection with the business,* still, as the effect of such an agreement will naturally be to allure and deceptively influence customers, it is not a contract which equity will enforce.^ § 11. Of Direct Fraud. A fortiori, specific performance will be refused in a case of plain fraud on the part of the plaintiff. Thus, where a party 1 Twining v. Morrice, 2 Brown, C. C. 330; Townsend v. Stangroom, 6 Ves. 338. 2 Evans v. Richardson, 3 Meriv. 470 ; Thomson v. Thomson, 7 Ves. 473. » Bowman v. Cunningham, 78 111. 48. * Bunn v. Guy, 4 East, 190. ' Bozou u. Farlow, 1 Meriy. 474. 898 PEOCEDUEE AND INCIDENTS THEEEOF. [CH. X. had bid off property at auction, and then purposely failed to comply with his bid, so as to bring about a resale, and thus secure the property, through the bid of a third person on his behalf, at a low sum, it was held that a specific performance would not be decreed in his favor under the second sale.^ So, too, equity will not only refuse a specific performance, if the plaintiff has been guilty of any fraud, but it will even rescind the contract on a bill of this kind, if such relief be demanded by the defendant.^ A party suing may in some cases be entitled to have money refunded, though paid by him on a contract obtained through his own fraud. Thus, a party obtained a contract by fraud for the purchase of land at an under-value ; and it was held that, though he had precluded himself from obtaining a decree for the specific performance of the contract, he was entitled to have the amount paid on the purchase price refunded.* On the other hand, it is familiar doctrine that an innocent party, suing for rescission on the ground of fraud, must restore all that he has received on the contract from the defendant.* § 12. Of Acts op Agents. Specific performance will be refused not only for unfairness on the part of him who seeks it, but also for unfair conduct on the part of the agent of him against . Stevenson, 10 Com. B. 713. In this case, it was said : " The commencement of an action in trover, which may be abandoned at any time, and which assumes that the goods came into the possession of the defendant lawfully, cannot without more be taken to be an election on the part of the assignees to avoid the transfer." It was said in Clough v. London Ry. Co. that this did not mean that no state- ment on the record, however explicit, could amount to an election. * Lord V. Brookfield, 8 Vroom, 552 ; Brewster v. Brewster, 9 Vroom, 119 ; KeUy w. Pember, 35 Vt. 183. § 6.] EESCISSION. 427 only when the object^ is to vacate the agreement in toto} Where, therefore, to an action upon a note the defendant pleaded an agreement by the plaintiff to pay the same, it was held a good reply that such agreement had been obtained by fraud ; and it was considered unnecessary for the plaintiff to show that he had rescinded the agreement pleaded.^ The rule that a contract tainted by fraud is binding until rescinded has no application to such a case. That rule has reference to the title to property. Hence, though a party to a contract obtained from him by fraud elect to proceed and take his rights under the contract, instead of rescinding, he may still maintain an action against the other party for the damages occasioned by his fraud.' 1 Brewster v. Brewster, supra. ^ Brewster v. Brewster, 9 Vroom, 119. « Mallory v. Leach, 35 Vt. 156; ante, p. 184. See also post, Chap. XVI. § 2. 428 PEOCBDUBB AND INCIDENTS THEREOF. [CH. XH. CHAPTER XII. CROSS-ACTIONS AND NEW TRIALS.i The law furnishes one of three remedies for fraud success- fully committed in the course of a trial ; to wit, a bill in equity to annul or enjoin the judgment, a cross-action, or a new trial. The first named (as well as the second) is given after the expi- ration of the term during which the fraudulent judgment was rendered. Generally speaking, it is given to supply the defect in legal procedure arising from the fact that, apart from stat- utory provision to the contrary, the power of a law court over its judgments ceases with the term in which they were rendered. It often happens to a party to discover, after the expiration of the term, that a judgment pronounced against him was obtained by the fraudulent conduct of the successful party ; and, to provide for such cases, the injured party has the right to file a bill in equity, praying for the proper relief.^ The remedy by bill in equity is also proper during the term in which the judgment of the law court was rendered, when the circumstances disclosed are such as to indicate that com- plete relief canaot be obtained by means of a new trial. But, inasmuch as this relief is supplementary, it is a general rule of law that it will be granted only when the complainant has been guilty of no negligence in respect of his rights at the trial in question.^ If the fraud were of such a nature as (in 1 We have had occasion to present the subject of cross-actions, ante, p. 177 ; but it could not be overlooked here. ^ See, for example, Edson v. Edson, 108 Mass. '590, 'where a decree of divorce of a previous term vyas set aside for fraud. * Equity ■will not grant an injunction or a new trial by way of relief CH.Xn.] CROSS-ACTIONS AND NEW TEIALS. 429 case of knowledge of it) to require presentation to the court, the party cannot safely forego the opportunity of pleading it, or of moving the court for a new trial by reason of it. For example, if the action were upon a promissory note, and the defendant should discover in the course of the trial that his signature thereto was foiged, it would be his duty to bring the fact at once to the notice of the court ; faUing of which, he would be bound, if judgment was rendered against him, to pay the sum decided to be due. He could not afterwards file a bill in equity for relief. And the same would be equally true in case, without actual knowledge of the fraud, he were put upon such notice thereof as, diligently prosecuted, would lead to a discovery of the wrong done him. If, however, the fraud were not discovered before the judgment was ren- dered, or afterwards within the time allowed by law for motions for a new trial, he could apply to equity for the re- dress desired. But the criterion of the right to call upon the Court of Equity for relief does not, it seems, depend in all cases upon the complaining party's knowledge or legal notice of the fraud before judgment. We have elsewhere seen that there may exist frauds in connection with claims prosecuted against a party which, not being necessarily connected with the validity of the claim, he may prefer to avail himself of in a proceeding instituted by himself instead of by his adversary ; and, in cases of this kind, we have seen that the law allows the party his own election in the matter, and does not impute to him laches for not doing that which may not have been for his interest to do. In such cases, the injured party has a right of cross- action against the wrongdoer, notwithstanc^ng the judgment which he has obtained ; and we apprehend that, if the facts were of such a nature as to require the aid of equity, the against a judgment at law obtained by fraud in a case where the party seeking relief has an adequate remedy by application to the court in which the fraud was perpetrated. Lyme v. Allen, 51 N. H. 243. 430 PEOCEDUEE AlJfD INCIDENTS THBEBOF, [CH. XH. cross-action could be brought in the Court of Chancery. Thus, if suit were brought upon a contract obtained by the defend- ant through fraud, he would be permitted to treat the con- tract as binding, allow it to pass into judgment accordingly, and then bring a cross-action for the fraud by which it was obtained.^ And if the facts making the fraud were compli- cated, so that relief could not be adequately obtained by an action in a court of common law, he could resort to equity. Indeed, according to the rule of law in several of the States, relief could be had in equity regardless of the question whether a court of common law could give adequate redress ; fraud being considered as giving universal jurisdiction in equity.^ Ha'Ving considered the subject of cross-action suf- ficiently elsewhere, we proceed now to the subject of new trials. It is a general rule of law that all unfair management, trick, fraud, or artifice in the course of a trial, and especially at- tempts to tamper with the jury, or to influence them, except in open proper argument before the court, will vitiate the verdict, if rendered in favor of the party guilty of such mis- conduct, and afford ground for a new trial.^ Under this head Mr. Graham has considered five classes of cases, to wit : 1. Where papers have been surreptitiously handed to the jury ; 2. Where a party has improperly approached a juror upon the subject of the trial; 3. Where there has been a neglect to correct improper attempts to influence the jury ; * 4. Where indirect measures are employed to influence or prejudice the jury ; 5. Where an attempt is made to mislead the court and the jury. Under the first head. Lord Coke has said that if, after the evidence has been given and the jury have departed from the 1 "JVanzer o. De Baun, 1 E. D. Smith, 261; ante, p. 177, where this subject is fully presented. ^ Ante, pp. 332, 333. » 1 Graham & W. New Trials, 45; 2 Archb. Pr. 225. * A ground, of course, for refusing a new trial. Post, p. 434. CH. XII.j CROSS-ACTIONS AND NEW TRIALS. 431 bar, the plaintiff or any one acting for him deliver any letter from the plaintiff to the jury concerning the matter in issue, or any evidence or any scroll touching the matter in issue which was not given in evidence, the verdict, unless found for the defendant, will be vitiated.^ So, too, if papers written upon and underscored so as to attract special attention be passed to the jury, without the knowledge of the other side, he will, if defeated, be entitled to another trial.^ But, though the paper surreptitiously handed to the jury contain nothing material to the issue, it may be questioned, notwithstanding the language of Lord Coke, whether a verdict for the party guilty of the intended fraud should not be set aside. It has been decided that if the jury carry out with them a deposition, part of which has been ruled out as inadmissible, the verdict will be permitted to stand, if the evidence be altogether irrelevant and immaterial, and the de- position were taken out by mistake.^ And the court say that, if the deposition had been delivered to the jury by the plaintiff's counsel without the consent of the other side, the verdict would be set aside, though it should fully appear that the rejected part had not been read to the jury. Such an act would be in contempt of the court, and, in effect, a tampering with the jury ; and such an act, it is apprehended, need not be successful to be rebuked. It is clear that, if the act amount to tampering with the jury, the verdict (if for the party committiug such act) will be set aside, though the juty were not influenced thereby.* 1 Coke, Litt. 227 ; Shande's Case, 1 Sid. 235 ; Alger v. Thompson, 1 Allen, 453 ; Killen v. Sistrunk, 7 Ga. 283; Flanders v. Davis, 19 N. H. 139; Lonsdale v. Brown, 4 Wash. C. C. 149; Durfee v. Eviland, 8 Barb. 46; Ball v. Carley, 3 Ind. 577. See Alexander v. Dunn, 5 Ind. 122; Bersch V. State, 13 Ind. 434 ; Newkirk v. State, 27 Ind. 1 ; Coffin v. Gephart, 18 Iowa, 256. But see Maynard v. Fellows, 43 N. H. 255. ' Watson V. Walker, 23 N. H. 471. » Lonsdale v. Brown, 4 Wash. C. C. 149. * Knight V. Freeport, 13 Mass. 218. 432 PEOCEDUBE ASD INCIDENTS THEREOF. [CH. XH. Under the second head, where a party or any one on his be- half directly approaches a juror upon the subject of the trial, there are numerous cases ; and the rule is well settled that for such misconduct a new trial will be granted, unless the verdict has been given for the opposite side.^ Thus, in the ease first cited, it appeared by an affidavit of one of the jurors that a difficulty in the plaintiff's account having been men- tioned after the jury had received the charge of the court and retired to consider of their verdict, the foreman of the jury declared that the plaintiff had satisfied him with regard to that difficulty in a conversation which he had had with him out of court, and after the jury had been sworn. A new trial was granted the defendant. And it is worthy of observation that while it is a disputed question whether affidavits of a juror should be received to prove the misconduct of the jury alone, as in deciding a case by the drawing of lots, affidavits have always been received to prove outside improper influences with the jury.^ It should be observed also that, though in fact such conduct is generally fraudulent, it is not necessary that it should be so. Even if a juror should make honest inquiry of one of the parties to the suit, after retiring, con- cerning the facts, the effect would be the same as if there had been a fraudulent tampering with him. If after the jury have retired, a witness at the trial be sent for by them, and admitted into their room without the knowl- edge of the court or parties, a new trial will be granted." And the same rule prevails where the jury, without the knowledge of the parties, take with them and use in the con- sulting room a material deposition which was not offered in 1 Ritchie v. Holbrooke, 7 Serg. & R. 458 ; Cottle v. Cottle, 6 Greenl. 140; Knight v. Freeport, 13 Mass. 218; PerMns v. Knight, 2 N. H. 74. 2 Ritchie v. Holbrooke, supra. 8 Luttrsll V. Maysville R. Co., 18 B. Mon. 291 ; Smith v. Graves, 1 Brev. 16. CH. XII.] CEOSS-AOTION AND NEW TRIALS. 433 evidence.^ And in general a new trial will be granted when the jury receive new evidence after leaving the bar.^ The acts of third persons may afford ground for a new trial. Such persons have no more right to interfere with the delibera- tions of the jury than have the parties themselves.^ Thus, where a friend of one of the parties induced several jurors to go with him upon the locus of the cause of action, without the knowledge of the party opposed to his friend, where he made certain explanations to them, the court granted a new trial to the opposite party.* So, where the plaintiff's son-in- law said to one of the jurors during the trial that the cause was of great importance to him, that he should have to pay the costs if the case should go against the plaintiff, and that the defence was a spiteful thing, a new trial was granted.* So, too, it is held that, upon a motion to set aside a verdict on account of remarks which were made to the jury by the officer in charge of them, it is sufficient to show that there is reason to suspect that the remarks were made, and, if made, that they were calculated to influence the verdict, without proving that such influence was in fact exerted.^ And in general, though a verdict wUl seldom be set aside merely because the jury have been approached, if it clearly appear that no injustice has been done, and the interference did not affect the result, still, if it ap- pear that they have been approached in such a manner as might have influenced their verdict, the verdict should be set aside ' Coffin V. Gephart, il8 Iowa, 256; Stewart i^. Burlington K. Co., 11 Iowa, 62. ^ Bronson v. Graham, 2 Yeates, 166; Thompson ». Mallet, 2 Bay, 94; Paine ». Van Note, 1 South. 146. ' Deacon v. Shreve, 2 Zab. 176 ; Knight v. Freeport, 13 Mass. 218. * Deacon v. Shreve, supra. 6 Knight V. Freeport, 13 Mass. 218. ° Thomas v. Chapman, 45 Barb. 98. But see Baker v. Simmons, 29 Barb. 198, where it was held that the fact that the officer in charge of the jury urged them to give a verdict for the plaintiff, which they did, was not of itself ground for a new trial. 28 434 PEOCEDUEE AND INCIDENTS THEEEOP. [CH. XH. without reference to the source or the motive of the inter- ference.^ The third head is simply the case of counter-misconduct. It is the duty of a party who knows of misconduct towards the jury on the opposite side to make the fact known to the court, if it be in his power to do so. The court is interested in such matters as well as the party against whom the fraud is practised ; and a new trial will not be granted upon the success of the fraud, not only because of the acquiescence of the complaining party,^ but (it would seem) because he has failed in the performance of a duty to the court. And, if the case be one of mutual attempts at fraud upon the administrar tion of justice, the proper course for the court would be to allow the verdict to stand, and to punish both of the parties. Under the fourth head are classed cases in which the jury are not directly approached, but either means are put in their way which, if observed by them, might prejudice them against the opposite party, or some artifice is employed to prevent the opposite party from producing all of his evidence. This latter case should more properly constitute a distinct head, since the success of such artifice does not operate to prejudice the jury, but solely to defeat the rights of the other party. As an illustration of the putting of improper means of decision in the way of the jury may be mentioned the case of a party distributing about the court and halls, at and before the trial, a statement of his case,^ or handbills reflecting upon the char- acter of the opposite party.* In these cases, it appears to be immaterial whether such means fell into the hands or came under the observation of the jury or not.^ As an illustration of the employment of artifice to prevent the other side intro- ducing evidence may be mentioned the case of an arrest and 1 Nesmith v. Cliuton Ins. Co., 8 Abb. Pr. 141. 2 Herbert v. Shaw, 11 Mod. 118. 8 Spenceley v. De Willott, 7 East, 108. * Coster V. Merest, 3 Brod. & B. 272; 8. c. 7 Moore, 87. 6 Coster V. Merest, supra. CH. XU.] CBOSS-ACIION AND NEW TRIALS. 435 imprisonment of a witness, and detention of him until after the trial, done for the purpose of preventing him from giving testimony.^ So, too, an interference by one party to defeat the service of a subpoena on behalf of the other, by inducing the witness to avoid testifying, and the giving to a witness a reward for testifying in a particular way, will ordinarily be ground for a new trial.^ A party may be guilty of misconduct by granting a favor to a juryman. Thus, if after the jury has been impanelled, one of them in the progress of the trial should be entertained by either of the parties, a verdict rendered in favor of such party will be set aside.^ But a mere indiscretion, not attended with a fraudulent design, and not resulting in injury to the opposite party, will not be ground for a new trial. In one case, the defendant, during a recess of the court, invited a juror to take a glass of soda with him, and also to dine with him, which the juror did, the defendant pajdng the charges.* Nothing was said to the juror about the suit. The two were neighbors, and in the habit of doing mutual favors, and, not- withstanding this, the juror was in favor of a verdict for the plaintiff; but, by consent of the parties, the agreement of a majority of the jurors was taken as the verdict of the jury, and thus a verdict was rendered for the defendant. It was held that there was no ground for a new trial.^ 1 Davis V. Daverill, 11 Mod. 141. As to acts of the kind by strangers, see Grovenor v. Fenwick, 7 Mod. 156 ; Rex v. Burdett, 2 Salk. 645 ; Bex V. Gray, 7 Burr. 510 ; Rex v. JolUile, 4 T. R. 285. ^ Barron v. Jackson, 40 N. H. 365. See Crafts v. Union Ins. Co., 36 N. H. 44. 8 "Walker v. Walker, 11 Ga. 203; Walker v. Hunter, 17 Ga. 364; Studley v. Hall, 22 Maine, 198 ; Phillipsburg Bank v. Fulmer, 31 N. J. 52. * The only effect of such evidence seems to be to indicate, in some degree, an intent to prevail upon the mind of the juror in respect of the verdict. * Vaughn v. Dotson, 2 Swan, 348. See also Hilton v. Southwick, 17 Maine, 303 ; Handley v. Call, 30 Maine, 9 ; Tripp v. County Com., 2 Allen, 556. 436 PEOCBDUEE AND INCIDBNTS THEREOF. [CH. XII. In regard to the next head, — attempts to mislead the court and jury, — an example is given of a plaintiff who had sold goods to the defendant on credit, taking as security the note of a third person which had been the property of the defend- ant. This security, by the negligence of the plaintiff, became worthless ; and the plaintiff having subsequently sued the defendant, declaring against him for goods sold and as in- dorser of the said security, the only question in the case had become, who should bear the loss of the note. The defend- ant, in this aspect of the case, relying upon production of the note by the plaintiff, had not given him' notice to produce it. The plaintiff now saw his advantage. To produce the note would be fatal, under the evidence already produced of his own negligence. If he did not produce it, the defendant could not give evidence of its contents, since he had not notified the plaintiff to exhibit it. The plaintiff, therefore, resorted to the sharp practice of taking a verdict upon the sale and delivery of the goods. But the court set aside the verdict, and granted a new trial, on the ground that the plaintiff had taken a verdict for the price of goods for which he had received satisfaction, the evidence of which was in his own possession, and had been purposely suppressed by him.^ Where it appears that, through the fraud and combination of the attorneys to a cause, a false and sham defence to the action has been interposed, and the court has been so deceived that no judgment has been obtained, and without any action of the court the case has been suffered to disappear from the docket, the injured party will be entitled to have the cause redocketed, and a trial instituted on the pleadings as they remain in the files of the court.^ So, if a party has been prevented from making a good defence at law by the promises or assurances of the party or attorney, on the other side, equity will relieve him.^ So, also, if the court be so imposed upon J Anderson ». George, 1 Burr. 352. ^ jjQgg „_ Davis, 60 Mo. 300. » Hollands. Trotter, 22 Gratt. 136; Poindexter «. Waddy, 6 Munf. 418. CH. Xn.] CROSS-ACTION AND NEW TRIALS. 437 as to suffer a false entry of appearance by a defendant to be made, the judge, upon a proper case, will, so far as possible, deprive the plaintiff of any advantage which he may have derived from his fraud.^ Nothing, indeed, is better settled than that, where -by mistake or fraud a party has gained an unfair advantage in proceedings in a court of justice which must operate to make the court an instrument of injustice, as where a default is taken after other arrangements have been made between counsel for the disposition of the cause, equity will interfere and restrain such party from reaping the fruits of the advan- tage gained.^ There may be such misconduct on the part of the judge as will wai-rant a new trial. Any proof of open corruption in favor of one of the parties will of course afford good ground to the opposite party, if defeated, for another trial. And the same wiH be true of far less serious offences. If, for example, the judge should write a letter to the jury, after the adjournment of the court, relating to the cause committed to them, a new trial would be granted.^ So, too, if, without the consent of the parties, the judge should visit the jury in their consulting room.* But, if such a visit should be made on request of the jury, with the knowledge of either party, his consent wiU be implied.^ So, too, if after retiring the jury are allowed by the judge, at their own request, but without the knowledge of the parties, to have a copy of the statutes for examination, the verdict cannot stand.® \} Bernecker v. Miller, 44 Mo. 102. ^ Bresnehan v. Price, 57 Mo. 422. 3 Sargent ». Roberts, 1 Pick. 337. ^ Hoberg v. State, 3 Minn. 262. ' Hancock v. Salmon, 8 Barb. 564. « Merrill v. Nary, 10 Allen, 416. See State v. Smith, 6 R. I. 33. 438 PEOCBDTJBE AND INCIDENTS THEREOF. [OH. Xm. CHAPTER XIII. ESTOPPEL IN PAIS. We have considered the subject of fraud in its relation to questions of estoppel in another work, and we shall here present nothing more than a summary of the same ; taking the same mainly from the Introduction to the work referred to.* Where a person by his words or conduct voluntarily causes another to believe in the existence of a certain state of things, and induces him to act upon that belief, so as to change his previous position, he will be estopped to aver against the latter a different state of things.^ This is called estoppel by conduct, or equitable estoppel.^ In order to this estoppel, all of the following elements must, generally speaking, have been present: 1. There must have been a representation concerning material facts ; 2. The representation must have been made with knowledge of the facts ; 3. The party to whom it was made must have been ignorant of the truth of the matter ; 4. It must have been made with the intention that it should be acted upon ; 6. It must have been acted upon.* The correspondence of these elements to those of an action for deceit will be observed. This equitable estoppel, indeed, stands upon the ground that the party against whom it is alleged has, by his words or conduct, deceived the party claim- ing the estoppel into the belief that a certain state of facts 1 Bigelow, Estoppel (2d ed.), Introd. pp. Ixiv-lxvii. a Piokard b. Sears, 6 Ad. & E. 469. ' It is of equitable origin, but has long been of legal cognizance also. * Bigelow, Estoppel, 437 (2d ed.). CH. xni.] ESTOPPEL IN PAIS. 439 is true ; and the former, having induced the latter to act upon such belief, is denied thereafter the right of disputing the truth of the representation made. The same qualifications to the rule requiring the party who claims the estoppel to show that the person who made the false representation knew that it was false, and the same presumptions of knowledge in certain cases that the party asserting the falsity of the representation was bound to know the truth of the matter, doubtless prevail in the law of estop- pel as in the law of actions for deceit. If the party asserting the falsehood were bound to know the truth of the matter, or if he made a positive assertion of fact, not knowing in fact whether it was true or not, he will not be permitted to say that he believed it to be true. So, on the other hand, if the party to whom the falsehood was made were bound to know the truth of the same, ^y reason of the nature of the statement or of the party's relation to the fact, his claim to the estoppel will be overturned. ^ In all ordinary cases, the representation must have reference to a present or past state of facts only, and not to future events, or to pure matters of law.^ It must also have been plain and certain, and such as would naturally lead to the action taken. ^ It has been, said that the doctrine of estoppel in pais (of which this particular estoppel is a branch) has no application to married women or to infants ; but the weight of authority- seems to favor the doctrine that both infants of years of discretion and married women may preclude themselves from denying the truth of their representations, in the case of pure torts. Where, however, the conduct or representation is so connected with matter of contract that the action must sound in contract, no estoppel arises.* This estoppel may arise from passive conduct or con- cealment, as well as from active conduct. A party, who 1 See Chapter I. §§ 3, 4. 2 Bigelow, Estoppel, 438-440 (2d ed.). « lb. 441. ■■ lb. 446-448. 440 PEOCEDTJEB AND INCIDENTS THBEEOF. [CH. XHI. stands by and allows another to contract upon the faith and understanding of a fact which he can contradict, may not afterwards dispute the fact in an action between himself and the person whom he has assisted in deceiving. Or, as the principle has 'been forcibly stated in the Court of Chancery, where a man has been silent when in conscience he ought to have spoken, he shall be debarred from speaking when conscience requires him to keep silent.^ If, however, the party's silence be not the result of fraud or of gross negligence, his conduct will not raise an estoppel against him.^ Forgetfulness of one's rights has sometimes been held excusable ; * but in such case it should not be the result of gross negligence.* The rule that the representation mu^ have been acted upon, in o^der to the estoppel, is inflexible. The estoppel, like the action for deceit, can never arise, in the absence of this element.^ Some latitude, however, has been given to the meaning of the rule. Thus, it has recently been held that proof of express damage is not always necessary, and that it will be sufficient, if it can fairly be presumed that damage would result to the innocent party by allowing the truth of the representation to be disproved.^ 1 Bigelow, Estoppel (2d ed.), 453, note; Niven v. Belknap, 2 Johns. 573. 2 lb. 467. « lb. 481, 482. * lb. 476. ' lb. 492, 493. • lb. 497-500 ; Knights v. WifEen, Law K. 5 Q. B. 660 ; Bassett v. Holbrook, 24 Conn. 453. CH. XIV.] LACHES AND STATUTES OF LIMITATION. 441 CHAPTER XIV. LACHES AND STATUTES OF LIMITATION. In cases of concurrent jurisdiction with courts of law, courts of equity consider themselves bound by the Statutes of Limi- tation which govern courts of law, and this in obedience to the statutes rather than by'analogy to them. In many other cases, they act upon the analogy of the like limitation at law. But there is a defence peculiar to courts of equity, founded on lapse of time and the staleness of the claim, where no acts of limitation apply. In such cases, equity, acting upon the principle of discouraging antiquated demands, refuses to interfere, where there have been great laches in prosecuting the claim, or long acquiescence in the assertion of adverse rights.^ The books afford many illustrations of this rule of law. The failure of a cestui que trust to take steps to set aside a conveyance made by him to the trustee of his trust estate for three years and eight months is prima facie unreasonable, where the trustee has' not been guilty of any positive act of fraud or concealment.^ So, too, a delay to sue for fraud for six years and a half after knowledge, the principal parties to the fraud having died in the mean time, is unreasonable.^ And, in an English case, a biU to set aside a purchase made by a trustee for himself and his children was dismissed after a lapse of eighteen years, upon the length of time only.* 1 Badger v. Badger, 2 Wall. 87, 94. " Jones V. Smith, 33 Miss. 215. ' Catnpau v. Van Dyke, 15 Mich. 871. * Gregory v. Gregory, Coop. Cas. in Ch. 201. 442 PEOCBDTJEB AND INCrDEKTS THBEEOF. [CH. XIV. Where an infant was fraudulently induced to execute a deed of land to another, believing that she was merely exe- cuting an instrument authorizing the person named therein to sell the land, and failed to make inquiry concerning the exercise of the power for thirteen years after attaining majority, when she was first informed of the fraud, she was held barred by her negligence from the privilege of asserting a claim to the premises.^ There was no evidence of a fraud- ulent concealment of her claim. A cestui que trust who is an infant, or otherwise not sui juris, cannot be prejudiced by any acquiescence in a purchase by the trustee, as against the trustee ;^ though it may be other- wise as against persons claiming under the trustee. Nor can it be held that, where the injured party has been non sui juris during part of the time, this period is to be reckoned a part of the period of acquiescence.^ A party defrauded in a contract will not be precluded from rescinding the agreement by delay, unless such delay amounts to a waiver, or unless he does some act which will prevent the other party from being put substantially in statu quo.^ Long acquiescence will raise a presumption of waiver ; ^ and this presumption will doubtless become conclusive, if in the mean tiiiie the situation of the property has been materially changed.^ The vendor must then be satisfied with an action for damages, even if he have not lost the right even to this. A purchaser who is entitled to rescind the contract of sale for fraud, but delays doing so for the purpose of affording the vendor, at his request, an opportunity of attempting to make ^ Weaver v. Carpenter, 42 Iowa, 343. The case involved the con- struction of a statute ; but the statute was simply a legislative statement of the common law. 2 March v. Russell, 3 Mylne & C. 31 ; Miles v. Wheeler, 43 111. 123. » Miles V. Wheeler, supra. * Martin v. Ash, 20 Mich. 166. 6 Sadler v. Robinson, 2 Stewt. 520. 8 See Clough v. London Ry. Co., Law R. 7 Ex. 26 ; Akerley v. Vilas, 21 Wis. 88. CH. XIV.J LACHES AND STATUTES OF LIMITATION. 443 the article sold satisfactory to the purchaser, is not precluded by such delay from rescinding the contract.^ This is not laches. So, if an article be sold warranted to answer two purposes, the purchaser is not bound to rescind the contract as soon as he finds that the article fails for one of the pur- poses. He may continue the trial of it until he finds that it fails in both, and may then rescind the contract on account of the failure of the article to meet the second test.^ An offer to rescind should be made as soon as practicable after discovery of the fraud, and before suit brought, in order to be of avail.^ It is not a question of the Statute of Limita- tions, but of diligence on the part of him who seeks to annul the contract.* The relief is granted to the vigilant, not to the negligent.^ If one who has a right to rescind a contract for the sale of land continue to claim the land under the contract, after knowledge of all the facts which give him the right of re- scission, and continue thereafter to exercise acts of ownership, he will be precluded from rescinding the contract.^ The party entitled to rescind cannot remain silent, and without pro- test permit, for example, the erection of buildings, and after- wards claim the right of rescission.^ Such conduct would amount to fraud in him ; and he would not be allowed to rescind, it should seem, even upon offering to restore the other party in statu quo. A party must come into equity with clean hands.* A party who has sdught to become a member of a corpo- ration is bound to use care and attention to ascertain his position, and to make his choice promptly of retaining or abandoning it. Hence, to subscribe for stock in a corporation 1 Powell V. Woodworth, 46 Vt. 378. = gtarr v. Torrey, 2 Zab. 190. ^ Bayard v. Holmes, 4 Vroom, 119; Upton v. Tribilcock, 91 U. S. 45; Thomas o. Barton, 48 N. Y. 193; Matlock v. Todd, 25 Ind. 128; DUl v. Camp, 22 Ala. 340; Hern v. Bumham, 28 Ala. 428. 4 Matlock V. Todd, 25 Ind. 128. ^ Patten v. Stewart, 24 Ind. 332. « Akerley v. Vilas, 21 Wis. 88. ' Memphis & C. R. Co. v. Neighbors, 51 Miss. 412. 8 See ante, pp. 184-189. 444 PROCEDURE AND INCIDENTS THEREOF. [CH. XIV. in August, 1870, to rest quietly until in the year 1873, never making any investigation as to the position in which he stood until that time, and until an assignee in bankruptcy of the corporation had made a demand upon him, is fatal to the right of repudiating the purchase.^ If a party be induced by the fraud or misconduct of another to delay proceedings until after the bar of the statute, he will still be entitled to relief.^ Thus, in a case in Michigan, the defendant having purchased the plaintiff's land at tax- sale, the latter, shortly before the time for redemption expired, offered to pay the defendant the amount of his bid, with twenty-five per cent, interest thereon, for an assignment of the certificate of the sale. The defendant accordingly prom- ised that he would send to the plaintiff an assignment of the certificate within two or three days. The plaintiff, relying upon this promise, permitted the time for redemption to expire, and then the defendant refused, upon tender of the proper amount, to accept the same. The court held that the refusal was fraudulent, and compelled the defendant (who had in the mean time obtained a deed) to execute a con- veyance to the plaintiff.^ In a recent case, it appeared that the illegitimacy of the plaintiff's elder brother (the first son) had been concealed 1 Upton V. Tribilcock, 91 U. S. 45. In this case Miller, J., dissenting, said : " I am of opinion that, where an agent of an existing corporation procures a subscription of additional stock in it by fraudulent representa- tions, the fraud can he relied on as a defence to a suit for the unpaid instalments, when suit is brought by the corporation ; and that, if the stockholder has in reasonable time repudiated the contract, and offered to rescind before the insolvency or bankruptcy of the corporation,' the defence is vaUd against the assignee of the corporation." Waite, C. J., and Bradley, J., concurred. 2 Laing v. McKee, 13 Mich. 124 ; Badger v. Badger, 2 Wall. 87, 94; Atlantic Bank v. Harris, 118 Mass. 147; Way «. Cutting, 20 N. H. 187; Williams v. Presbyterian Soc, 1 Ohio St. 478; Peck v. BuUard, 2 Humph. 41; Smallwood's Case, Law R. 3 Eq. 769; s. c. Law K. 3 H. L. 249; Vane v. Vane, Law R. 8 Ch. 383. ' Laing v. McKee, supra. CH. XIV.] LACHES AND STATtTTES OF LIMITATION. 445 from the plaintiff until after the lapse of the (ordinary) period of limitation as to actions concerning real estate. Upon the filing of a bill praying for a declaration that the plaintiff was entitled as heir to his father's estates, which had for many years been in the possession of his elder brother and the latter's heirs, it was held that the above-mentioned concealment had prevented the running of the Statute of Limitations.^ The mere non-discovery of a fraud, however, according to the more general rule, is not sufficient to take a case out of the Statute of Limitations. There must have been a conceal- ment of the fraud or of facts the knowledge of which would have led to a discovery .^ It is, however, doubtless unneces- sary that concealment of a fraud committed should appear, in order to prevent the statute from running until discovery of the fraud, if there be such a relation of trust and con- fidence between the parties as rendered it the duty of the party complained of to make disclosure.^ It is held in New Hampshire that the fraud by which the plaintiff's cause of action is concealed need not be other than that which constitutes the cause of action, if it actually have the effect of so concealing the cause of action from the plain- tiff.* And in Ohio it seems not to be necessary that the fraud should be concealed to make the lapse of time a bar to action.^ If a party, however, has been kept in ignorance of his rights 1 Vane v. Vane, Law R. 8 Ch. 383. 2 Peck V. Bullard, 2 Humph. 41 ; Boone v. French, 40 Iowa, 601 ; Humphrey v. Mattoon, 43 Iowa, 556; Hudson b. Wheeler, 34 Tex. 356; Munson v. Hallowell, 26 Tex. 477 ; Callis v. Waddy, 2 Munf. 511 ; Reed V. Minell, 30 Ala. 61. See Meader v. Norton, 11 Wall. 443. The fact that the debtor has made a fraudulent conveyance, and suc- cessfully concealed it, will not prevent his pleading the statute against the debt. Reed v. Minell, 30 Ala. 61. 8 Wilson V. Ivy, 32 Miss. 233 ; Buckner v. Calcote, 28 Miss. 432. 4 Way V. Cutting, 20 N. H. 187. » Longworth v. Hunt, 11 Ohio St. 194. 446 PEOCEDUEE AND INCIDENTS THEREOF. [CH. XTV. by the opposite party, lapse of time is certainly no bar in that State.i Fraudulent concealment of a cause of action for fraud will not arrest the operation of the Statute of Limitations, when the party had ample means of knowing the facts.^ Nor will the operation of the statute be arrested, where there is a mere omission to disclose a right of action by one not in a fiduciary relation to the injured party, and the latter has the means of discovering the facts.* However, where one party to a con- tract makes a positive representation, it is not laches in the other not to proceed immediately to verify that representa- tion. Until he has reason to doubt its accuracy, laches cannot commence.* The kind of fraud against which lapse of time affords no bar is said to be actual fraud ; that is, conduct involving grave moral guilt. Mere constructive fraud, involving no moral turpitude, is different, and may be barred by lapse of time.^ 1 Williams v. Presbyterian Soc, 1 Ohio St. 478. 2 McKown V. Whitmore, 31 Maine, 448; Farnam ». Brooks, 12 Allen, 333 ; Hudson v. Wheeler, 34 Tex. 356. 8 Nudd V. Harablin, 8 Allen, 130. * Partridge v. Usborne, 5 Russ. 232 ; Sankey o. Alexander, Law R. 9 Irish Eq. 259, 316; Reynell v. Sprye, 1 DeG., M. & G. 709. ' Farnam v. Brooks, 9 Pick. 212 ; Smallcombe's Case, Law R. 3 Eq. 769; 8. c. Law R. 3 H. L. 249. The latter case was a proceeding on the part of the official liquidator of an insurance company to place the execu- tors of one Smallcombe on the list of contributories. When the case was before the Master of the Rolls (Law R. 3 Eq. 769), Lord Romilly said . " The entry made by the directors in the book is treated as a false entry, and although it is one over which the seceding shareholders [including Smallcombe] could have no control, and although he was wholly ignorant of it, yet it is argued that this constitutes a suppression of truth, that the suppression of truth is a fraud, and that the shareholder must be made liable for the fraud committed by the directors, though it was done by the directors without any sinistef object or motive, although it was a matter by which they gained nothing, and although it is proved by the evidence that they bona fide believed they were acting in a manner most beneficial to all the other shareholders. I must say that to treat such a transaction as a fraud, and in consequence to say that no time can con- CH. XIV.] LACHES AND STATUTES OF LIMITATION. 447 Within what time a claim for relief against a constructive fraud will be barred depends upon the peculiar circumstances of the case. The claim for relief in equity may be and often is denied within the period fixed by the Statute of Limita- tions.^ But where the facts of the case are clearly established, and the controversy is not embarrassed by claims of third .persons or conflicting interests, mere delay to sue is not fatal.2 It is considered as incompatible with duties of a trustee of an express trust, such as is cognizable in equity only, to set up any claim to the trust property adverse to the rights of the cestui que trust. Acts in such cases which, if they had been done by a stranger, would be treated as adverse, are not so treated , in the case of an express trustee, since it is his duty to abstain from them. But it is at the election of the cestui que trust (not of the trustee) to treat such acts as adverse ; and the lapse of the period of the Statute of Limitations wiU not bar his remedy.^ done the irregularity of the transaction, is, in my opinion, to confound moral principles, and to introduce an element of great confusion into the doctrine of courts of equity, the fundamental principle of which as regards fraud is, as it appears to me, that nothing can be called fraud, and noth- ing can be treated as fraud, except an act which involves grave moral guilt. I feel strongly, and I have frequently endeavored to point out the injurious consequences of allowing such expressions to be used as ' equi- table fraud,' or ' that which courts of equity called fraud,' or ' construc- tive fraud,' when in fact no act has been done by any one which involves moral culpability. The only exception that I am aware of is that the phrase ' constructive fraud ' has been sometimes applied to cases where an innocent partner is made liable for the fraudulent acts of his co- partner. The expression is not a proper one even there, because the innocent partner has been guilty of no fraud; but he is in many cases properly made liable for, and compelled to redress, the wrong committed by his really fraudulent copartner." This language, however, must be understood of questions of lapse of time. It cannot be taken as broadly true. 1 Obert V. Obert, 1 Beasl. 423 ; Michared v. Girod, 4 How. 503 ; Doughty V. Doughty, 3 Halst. Ch. 649. 2 Obert V. Obert, supra. ' Kane v. Bloodgood, 7 Johns. Ch. 110. '448 PEOOEDTTRE AND INCIDENTS THEREOF. [CH. XIV. The existence of this rule of law has caused it to be some- times stated that the Statute of Limitations does not apply to cases of trust ; which is too broad a proposition. In respect of trusts which are strictly such, and recognized and enforced in courts of equity alone, such as the express trusts above re- ferred to, which are created by the parties for particular pur- poses, the above rule is in general true. It is perfectly clears . however, that in cases of trusts over which both courts of law and courts of equity have jurisdiction, and the bar of the statute would prevail at law, it will equally prevail in equity.^ And even in cases of express trusts, if an open, public, ad- verse claim is set up by the trustee against his cestui que trust, and the trust itself is denied longer to exist, the bar of the statute wiU apply .^ Hence, where an administrator or trustee becomes purchaser at a fraudulent sale by him of property belonging to the intestate or cestui que trust, and afterwards with the knowledge of the parties interested openly and notoriously asserts title in himself, a bill in equity for relief against him will not lie after the lapse of the period which is a bar by the Statute of Limitations.* And where fraud has been committed in the rendering of accounts, equity will open and examine the accounts after any length of time, even though the person who committed the fraud is dead.* If no facts are involved but the simple one of the length of time which has elapsed since the contract was made, the question of reasonable time is one of law. But where dis- i Keeton v. Keeton, 20 Mo. 530. ^ Robinson v. Hook, 4 Mason, 161 ; Kane v. Bloodgood, 7 Johns. Ch. 110. » Keeton v. Keeton, 20 Mo. 530j Kane v. Bloodgood, 7 Johns. Ch. 110. Boone v. Chiles, 10 Peters, 223 ; Robinson v. Hook, 4 Mason, 151 ; Baker V. Whiting, 3 Sum.. 486 ; Pipher v. Lodge, 4 Serg. & R. 815 ; Walker v. Walker, 16 Serg. & R. 384. * Pratt V. Weyman, 1 McCord's Ch. 156 ; Maddox, Ch. 102. CH. XIV.] LACHES AND STATUTES OP LIMITATION. 449 puted facts, involving questions of excuse, of the time of discovering the fraud, or the like, are to be passed upon, the question is one of mixed law and fact, and is for the jury under instructions.^ 1 Gatling V. Newell, 9 Ind. 572 ; Kelsey e. Ross, 6 Blackf. 536 ; Hol- brook V. Burt, 22 Pick. 546; Eingsley v. Wallis, 14 Maine, 57; Manahan V. Noyes, 52 N. H. 232. 29 450 PEOCBDTJEB AND INCIDENTS THEREOF. [CH. XV. CHAPTER XV. PLEADING. § 1. Of the Allegation of Fkatjd. Relief in equity or at law, on the ground of fraud, will not be granted, unless the fraud be made a distinct allegation in the bill or declaration, so that it may be put in issue in the pleadings.^ For example, a party seeking, on the ground of fraud, to open an account that has been allowed and settled in the Probate or Orphans' Court, must point out the par- ticulars in which the account is fraudulent, so as to apprise the opposite party what he intends to prove ; and he must lay such evidence before the court as will make out a clear prima fade case.^ In accordance with this rule, a party who seeks to charge another with the consequences of a breach of trust is bound so to state his case upon the bill that the circum- stances alleged must, if proved, necessarily, and at all events, constitute a breach of trust. His case must not be left to bare inference. Where, therefore, an informa- 1 Patton t). Taylor, 7 How. 132 ; Voorheea v. Bonesteel, 16 Wall. 16; Noonan v. Lee, 2 Black, 499 ; Chatauqua Bank v. White, 5 N. Y. 236; McCalmon v. Kankin, 8 Hare, 1, 15 ; Marshall v. Sladden, 7 Hare, 428, 444; Pickering v. Pickering, 4 Mylne & C. 289; Curry ». Keyser, 30 Ind. 214; Darnell v. Rowland, lb. 342; Steed v. Baker, 13 Gratt. 880; Knibb V. Dixon, 1 Rand. 249; Marr's Appeal, 78 Penn. St. 66; Small v. Boudi- not, 1 Stockt. 381. It is enough, however, to prove the substance of the fraud. Packard v. Pratt, 115 Mass. 405. But a breach of warranty can- not be proved under an allegation of false representations in deceit. Cooper V. Landon, 102 Mass. 58. See Chap. XVII. § 9. ^ Hyer v. Morehouse, Spencer, 125. See Atlantic Delaine Co. v. James, 94 U. S. 207. § 1.] PLEADING. 451 tion was filed, alleging that certain payments, charged to be illegal and improper, were about to be made by a municipal corporation out of corporate funds, and praying that the cor- poration might be restrained from making them, but the pay- ments were of such a kind that under certain circumstances (the existence of which was not negatived by the informa- tion) they might be justifiable, a demurrer was sustained.^ So, too, an offer to prove that a paper on which the right of one of the parties depends was procured by false and fraudu- lent representations, without stating what they were, should be rejected.^ A declaration in deceit must show not only what the fraud was, by which the plaintiff has been injured, but also its connection with the alleged damage, so that it may appear to the court whether the fraud and the damage sustain to each other the relation of cause and effect, or at least whether the one might have resulted directly from the other.^ A general charge that a party acted "fraudulently," or " made fraudulent representations," is not good, unless accom- panied with a statement of facts to sustain it.* Hence, a party seeking relief from the payment of purchase -money, on the ground of fraud, must allege it distinctly in his bill.^ And particular acts of fraud should be alleged.* Thus, that the plaintiff has understood that a sale was conducted fraudulently, that the defendants and others specified were the wrongdoers, and that they suppressed certain facts which ought to have been made known, is not a sufficient statement of the facts constituting the alleged fraud. It should appear in what respect the sale was fraudulently con- ducted, or what facts were suppressed to the detriment of the 1 Attorney-Gen. v. Norwich, 2 Mylne & K. 406. 2 Lewis V. Neugel, 38 Penn. St. 222. * Bayard v. Holipes, 5 Vroom, 296. * Riley v. Riley, 34 Wis. 372. ^ Noonan v. Lee, 2 Black, 499. « Marr's Appeal, 78 Penn. St. 66. 452 PEOCEDTJBB AND INCroENTS THEREOF. [CH. XV. plaintiff.^ But if the facts alleged clearly show fraud, actual or constructive, it will not be material that there is no direct averment of fraud.^ And, in an action for a false and fraud- ulent misrepresentation, it is sufficient to allege the substance of the representation. It is not necessary to set it out by a literal recital ; the amount of evidence required in a criminal case is not necessary .^ Nor can the objection that the facts constituting an alleged fraud are not stated in the declaration or bill be first raised in a court of error.* Though it is usual in actions for fraud to charge expressly a fraudulent intent, where the fraud is alleged to consist in intention, and the quo animo is the gist of the inquiry, still there is no rule requiring a fraudulent intent to be averred where the intent is a legal conclusion drawn from the facts alleged, and where the existence of those facts, and not the fraudulent intent, is the gist of the inquiry and the founda- tion of the rights asserted in the action.^ It has been said, however, that, in cases of actual fraud, the fraudulent intent should be charged in express terms, and not left to inference 1 Small u. Boudinot, 1 Stockt. 381. It is held in Missouri, under the new practice, to he unnecessary to set out the facts constituting fraud. A general plea of fraud is good. Edgell V. Sigerson, 20 Mo. 494. Indeed, that practice was considered proper in that State under the common-law system of pleading. Montgomery?;. Tipton, 1 Mo. 318 ; Pemberton v. Staples, 6 Mo. 59 ; Hill v. Montague, 2 Maule & S. 377. The effect of the decision in Edgell v. Sigerson, there- fore, is that the new practice does not require greater particularity than the old, not that it is satisfied with less. Under the Code of New York, it is held necessary to set out the facts. Faure v. Martin, 7 N. Y. 210. " Farnam v. Brooks, 9 Pick. 212 ; Mussina v. Goldthwaite, 34 Tex. 125 ; McCalmon v. Kankin, 8 Hare, 1, 15 ; Marshall v. Sladden, 7 Hare, 428, 444 ; Pickering v. Pickering, 4 Mylne & C. 289. If a declaration disclose a state of facts upon which an action may be maintained, independently of the existence of fraud, the plaintiff is not bound to prove fraud, though his declaration allege it; he may recover on the liability which the facts disclose, though the allegation of fraud be in, fact disproved. Swinfen v. Chelmsford, 5 Hurl. & N. 890. ' Montague v. Adams, 15 Vt. 237. * Mason v. Daly, 117 Mass. 403. ^ Carter v. Carter, 5 Tex. 93. § 1.] PLEADING. 453 from the facts stated.^ But, if the facts which constitute fraud are set forth with an averment of the injurious result, the case is certainly sufficient on the pleadings ; and a detail of the circumstances which tend to establish a dishonest intent in the conduct of the other party may be properly left for production in taking the evidence.^ In an action for a false warranty, whether the action be in assumpsit or in tort, a scienter need not be averred, and, if averred, need not be proved.^ But if, in a suit to recover damages for a fraudulent representation of soundness of a horse, the plaintiff allege that the disease constituting the unsoundness is the glanders, he must, it is said, prove the allegation ; for, though it was unnecessary to make it, it is not immaterial when made.* Courts of equity, acting on the principle of discouraging antiquated demands, refuse to interfere to establish a stale trust, except, first, where the trust is clearly proved ; and, secondly, where the facts have been fraudulently and suc- cessfully concealed by the trustee from the knowledge of the cestui que trust. And, in such cases for relief, the cestui que trust should set forth in his bill specifically what were the impediments to an earlier prosecution of his claim, how he came to be so long ignorant of his rights, and the means used by the respondent, to fraudulently keep him in ignorance, and how and when he first came to a knowl- edge of his rights.^ Otherwise, the court may justly refuse to consider his case, without inquiring whether there is a 1 Bartholomew v. Bentley, 15 Ohio, 659. 2 Tong V. Marvin, 15 Mich. 60; McMahan v. Rice, 16 Tex. 335. ' Schuchardt v. Allen, 1 Wall. 359 ; Williamson v. Allison, 2 East, 446 ; Gresham v. Postau, 2 Car. & P. 540 ; Brown v. Edgington, 2 Man. & G. 279; Holman v. DoiA, 12 Barb. 336 ; House v. Fort, 4 Blackf. 293 ; Trice v. Cockran, 8 Gratt. 449; Laseter v. Ward, 11 Ired. 443. * Lindsay v. Davis, 30 Mo. 406. But compare Swinfen v. Chelmsford, 5 Hurl. & N. 890, ante, p. 452. » Badger v. Badger, 2 Wall. 87. 454 PEOCEDUEE AND INCIDBNTS THEEEOF. [CH. XV. demurrer or formal plea of the Statute of Limitations con- tained in the answer.^ If charges of fraud in a bill in equity be made upon infor- mation and belief, they should be charged as true, so that, if taken as confessed, a decree may be rendered, granting relief.^ In suing in respect of a fraudulent sale, a count for dam- ages for the fraud and a count for rescission of the contract, or, what is the same thing, for recovery of the consideration given, are repugnant. The former affirms, as the latter dis- affirms, the contract.^ In the former case, the complaining party is not bound to tender back the money or property received ; in the latter, he is bound to make the tender,* unless it be of no value.^ In an action to enjoin the collection of the purchase price of land sold through the false representations of the vendor, the proceeding is based upon the vendor's fraud, and not upon the covenants of his deed ; and hence it is not necessary to make the deed part of the pleading.® § 2. Op the Denial op Feaud. Just as a general allegation of fraud in a bill or declaration is insufficient to justify relief, so a general denial of proper allegations of fraud in a bill is not sufficient. Every allega- tion importing fraud should be answered.' And, where an act charged upon a defendant is peculiarly within his own knowledge, as where it relates to the manner in which he had bid off property at auction, the general rule of equity plead- 1 Badger v. Badger, 2 Wall. 87. ^ Memphis, &c., R. Co. v. Neighbors, 51 Miss. 412. 8 Heastings v. MoGee, 66 Penn. St. 384, 387. * lb. 6 Babcock v. Case, 61 Penn. St. 427. ° Hinkle v. Margerum, 50 Ind. 240. See Jagers v. Jagers, 49 Ind. 428. ' Gray v. Regan, 23 Miss. 304. §,2.] PLEADrCTG. 455 ing is that lie must answer the charge positively, and not merely according to his remembrance or belief.^ But, if such an improper answer be not excepted to, and a replication be made, the objection to its sufficiency is waived.^ A plea in bar to a suit upon a note that it was given for land sold by the plaintiff under false representations is bad, unless it aver a reconveyance of the property or tender thereof, or something equivalent.^ And, in general, a plea that a con- tract sought to be enforced against the defendant was ob- tained by the plaintiff's fraud should aver that the defendant has repudiated the contract by tendering to the plaintiff the benefit received under it.* The old maxim, ex dolo malo non oritur actio, laid down the general rule that a contract could not be the subject of an action, if it could be impeached for fraud or illegality. But the later cases have qualified the rule to the extent of holding that fraud merely gives a right to rescind the contract.^ In an action against a shareholder for calls, the plea, after stating that the defendant had been in- duced by fraud to become a shareholder, went on to aver that he had repudiated the shares, and that he had received no benefit from them. This was considered as sufficient within the above rule.^ Of course, if a party can have derived no benefit from the contract, it is not necessary for him, when sued on the engagement, to aver a previous repudiation.^ Whether a plea of fraud to an action upon a sealed contract should set out the facts constituting the supposed fraud, as is necessary in the case of a declaration or a bill in equity, is a 1 Slater «. Maxwell, 6 Wall. 268, 274. 2 lb. ; Story, Equity PI., § 877. « Post v. Shirley, 5 Blackf. 430. * Deposit Life Assur. Co. v. Ayscough, 6 El. & B. 761 ; Clarke v. Dixon, EL, B. & E. 148; Bwlch-y-Plwm Mining Co. v. Baynes, Law R. 2 Ex. 324 ; Anderson v. Costello, 5 Inah. Rep. C. L. 544. 6 Anderson v. Costello, supra. ' Bwleh-y-Plwm Mining Co. v. Baynes, supra. " The plea," said Bramwell, B., "alleges all these facts, fraud, prompt repudiation, and restitution as far as possible." ' Anderson v. Costello, supra. 456 PEOCEDtTEE AND INCIDENTS THEEEOF. [CH. XV. point of interest. In those States in which it is held that fraud not relating to the execution of a deed cannot be made a defence at law, it would seem that a special plea would be incomplete without setting out sufficient facts to show whether the fraud relates to the consideration or to the execution. But probably the general issue would admit evidence of fraud in the execution. In those States in which fraud is held a good defence without reference to this distinction between consideration and execution, it has been decided to be unne- cessary to set out the facts of the fraud.^ § 3. Op Demureer. If a bill contain an allegation of fraud, it is a general rule, as we have seen, that such allegation must be answered, and a general demurrer will not be allowed.^ Wlfen, however, fraud is charged in a bill, it need not be answered, if the bill admitting the fraud presents no ground for relief.^ Thus, a bill to enforce a parol sale of land, charging the defendant with fraudulently refusing to reduce the agreement to writing, though it was part of the contract that it should be reduced to writing, is demurrable without an answer to the charge of fraud.* A demurrer cannot be good as to a part which it covers, and bad as to the rest. It must stand or fall as a whole.^ Hence, where the plaintiff's bill charged a combination to cheat and defraud the plaintiff, and the defendant filed a general demurrer to the whole bill, it was held that the de- 1 Hoitt ». Holcomb, 23 N. H. 535, containing an elaborate review of this subject. 2 Stovall V. Northern Bank, 5 Smedes & M. 17; ante, p. 454. 8 Box u. Stanford, 13 Smedes & M. 93 ; Walker v. Gilbert, 7 Smedes & M. 456 ; Morton v. Grenada Academy, 8 Smedes & M. 773. * Box V. Stanford, supra. 6 Shearer v. Shearer, 50 Miss. 113 ; Story, Equity PL, § 443. § 3.] PLEADING, 457 murrer should be overruled, since that part of the bill charg- ing a combination to cheat and defraud the plaintiff required an answer.^ So, too, a demurrer to a plea of fraud in obtain- ing a judgment sued upon should be special, not general.^ 1 Shearer v. Shearer, supra. " Christmas v. Russell, 5 Wall. 290. 458 PBOOBDUEE AND INCIDENTS THEBBOF. [CH. XVI. CHAPTER XVI. PRACTICE. § 1. Op Parties. The rule in equity as to parties defendants is that all whose interests would be materially affected by the decree sought to be obtained must be before the court. Hence, where a minority of stockholders and bondholders of a railroad com- pany seek to set aside as fraudulent a sale and foreclosure of mortgage made through the co-operation of the other stock- holders and bondholders, the bill must make not only the purchaser a party, but also the consenting stockholders and bondholders.^ But stockholders of a corporation, who have been allowed to put in answers in the name of a corporation, cannot be regarded as answering for the corporation itself. In a special case, however, where there is an allegation that the directors fraudulently refused to attend to the interests of the corporation, a court of equity will in its discretion allow a stockholder to become a party defendant for the purpose of protecting from unfounded claims against the company his own interests and the interests of such other stockholders as choose to join him in the defence.^ In an action against directors of a mutual insurance company for refusing to pay a loss, when they had funds wherewith to do so, but which they have fraudulently applied to other purposes, the insur- ance company should be made a party .^ 1 Eibon V. Railroad Co., 16 Wall. 446. 2 Bronson v. La Crosse R. Co., 2 Wall. 283. See ante, pp. 329, 330, 351, 352. * Lyman v. Bonney, 101 Mass. 562. That relief in equity will be § 1.] PRACTICE. 459 A note and mortgage executed to a railroad company, which were procured by fraudulent representations, having been trans- ferred to a city to secure it against liability on its bonds issued in aid of the road, the claim that the bonds are invalid for want of authority in the city to issue them will not be deter- mined, and the city required to deliver up the note and mort- gage to the maker, unless the holders of the bonds are not only made parties to the suit for such purpose, but so sub- jected to the jurisdiction of the court that it may compel a surrender of the bonds.^ Where judgments are impeached and sought to be set aside in equity for fraud, the plaintiffs in such judgments are indis- pensable parties to the bill, and no decree can be rendered in favor of the complainant without making them parties.* It is not enough that the defendant admits himself to be the owner of the judgment, since such an admission may be collusive.^ On a bill in equity by heirs to set aside a deed procured from the ancestor by fraud, a sale of the estate being desired to pay the charges equitably due the grantee for advances, it is necessary that all of the heirs, should be made parties, before such a sale can be ordered.* A bill which seeks to set aside a fraudulent receipt obtained by an administrator from a distributee of a decedent's estate, and to recover the amount coming to that distributee, is not a suit in which all other persons interested in the estate can be heard, unless they are made parties, or make themselves parties to the suit in some appropriate way.^ The sureties of an administrator on his official bond may be joined with him in an equity proceeding for an erroneous and fraudulent administration of the estate granted in such cases, see Peabody v. Flint, 6 Allen, 62 ; Robinson v. Smith, 3 Paige, 222; Cunningham v. Pell, 5 Paige, 607; Hodges v. New England Screw Co., 1 R. I. 340; Curran v. Arkansas, 15 How. 304; Scott V. Eagle Fire Ins. Co., 7 Paige, 198. 1 Burhop V. Roosevelt, 20 Wis. 338. ^ May v. Barnard, 20 Ala. 201. 8 Marshall v. Beverley, 5 Wheat. 313. * Harding v. Handy, 11 Wheat. 103. » Hook v. Payne, 14 Wall. 252. 460 PKOCEDUKB AND INCIDENTS THEEBOF. [CH. XVI. by him, if on finding a balance against the administrator those sureties would be liable.^ Where a bill to set aside a conveyance as fraudulent is re- manded or dismissed, because the complainant has not added necessary parties, costs are allowed a co-defendant, the per- son charged with having received the fraudulent conveyance.^ The rule of equity that all persons materially interested in the subject-matter of a suit should be made parties to it, like all general rules, will yield whenever it is necessary that it should 3deld, in order to accomplish the ends of justice. It will yield, if the court is able to proceed to a decree and do justice to the parties before it without injury to absent per- sons, equally interested in the litigation, who cannot con- veniently be made parties to the suit. And this exception prevails as well in the case of a bill founded on fraud as in other cases.^ Where a release is fraudulently obtained from one of two joint contractors, the releasing contractor is not a necessary party to a bill filed by his co-contractor against the opposite party to the contract.* It is doubtful, however, if this would be true where the co-contractor, and not the opposite party, had fraudulently obtained the release. In such a case, there would be no reason why the defendant should not plead the non-joinder. § 2. Of the Form op Remedy. A sale, whether of real or of personal property, procured by fraud, is not absolutely void : it is only voidable, at the election of the vendor.^ The vendor in such case may either avoid the sale on the discovery of the fraud, and reclaim the 1 Payne v. Hook, 7 Wall, 425. " Gaylords v. Kelshaw, 1 Wall. 81. » Payne v. Hook, 7 Wall. 425, 431. * Canal Co. v. Gordon, 6 Wall. 561. " Weed v. Page, 7 Wis. 503. § 2.] PEACTICE. 461 property (in trover, without a previous demand, if it be per- sonal 1) where the rights of third persons have not intervened, or he may affirm the contract, and sue for damages.^ But, if he elect to cancel the contract, he must return or offer to return the money received from the other party .^ General assumpsit lies to recover the consideration paid for the purchase of property, when the sale is avoided for fraud.* If a mort- gage be fraudulently executed, the remedy of a party seeking to contest it is by bill in equity, alleging the fraud, or by an action at common law, not by a petition to redeem.® Election made by defrauded vendor of goods to sue for damages for the fraud is a binding affirmation of the sale ; and he cannot afterwards set up fraud in the sale for the purpose of defeating an assignment of the property made by the fraud- tilent purchaser for the benefit of creditors, though the assign- ment be made in furtherance of the fraud, with full notice to the assignee.^ On the other hand, an election by the de- frauded party to rescind the contract is conclusive ; and he cannot afterwards, by any act of his own merely, revive the same.'^ As fraud in the sale of property does not render the trans- action void, it follows that a vendor of land, defrauded in the sale thereof by the purchaser, cannot maintain ejectment for 1 Thurston v. Blanchard, 22 Pick. 18. 2 lb. ; Heastings v. McGee, 66 Penn. St. 384; PearsoU v. Chapin, 44 Penn. St. 9; Garland v. Spencer, 46 Maine, 528; Percival v. Hichbom, 56 Maine, 575; Cook v. Gilman, 34 N. H. 556; Clarke v. Dixon, EL, B. & E. 148. ' Weed V. Page, supra. There is no rule that a debt due to joint creditors, which has been contracted by fraud, can be set ofE against a separate debt due from, one of the joint creditors. Middleton v. Pollock, Law R. 20 Eq. 515, ex- plaining Ex parte Stephens, 11 Ves. 24; VuUiamy v. Noble, 3 Meriv. 593. * James v. Hodsden, 47 Vt. 127 ; Loomis v. Wainwright, 21 Vt. 520; Connecticut & P. R. Co. v. Newell, 31 Vt. 364. ^ Brewer v. Hyndman, 18 N. H. 9. 6 Kennedy v. Thorp, 51 N. Y. 174. ' Kinney v. Kieman, 49 N. Y. 164. 462 PEOCEDUEB AND INCIDENTS THEEBOF. [CH. XVI. the recovery of the property ; since ejectment requires a legal title in the plaintiff. Nor, on the other hand, can ejectment by the grantee be resisted, since he has the legal title, not- withstanding the fraud.^ In the case cited, land of an intestate had been sold and conveyed by an administrator without authority of law to one Ackerson, under whom the defendant claimed. The title still remaining in the heir, the plaintiff obtained a conveyance from him for a nominal consideration, by fraudulently representing that he was pro- curing it for the benefit of Ackerson. In ejectment against the grantee of Ackerson, it was held that the legal title had passed to the plaintiff, and that the defendant had only an equitable interest in the land ; and this fraud could not be set up in bar of the action under a mere general denial. It was decided, however, that under the practice in Wisconsin it could be set up by way of counterclaim as a ground of equitable relief, the issue thus made up to be determined by the court.^ An action for damages for the fraud of the defendant in purchasing personal property of the plaintiff's debtor, and aiding the debtor to abscond, in order to prevent the plaintiff from enforcing payment of his claim by attaching the property or arresting the body of the debtor, cannot be sustained. The proper remedy is either to attach specifically the prop- erty transferred, or to attach it in the defendant's hands by garnishment.^ But the fact that a party has bought goods through fraudulent representations, and has given his note for payment, will not enable the vendor to treat the note as an equitable demand, and thus go into equity to enforce payment of it by a seizure of the goods, even where the goods can still be identified.* According to technical rules of practice, one who has taken in settlement of a claim a third person's promissory note, 1 See Lombard «. Cowham, 34 Wis. 486. 2 n,, " Lamb v. Stone, 11 Pick. 527. * Monroe v. Cutter, 9 Dana, 95. § 2.] PEACTICE. 463 under false representations as to the amount due thereon, should not sue upon the original consideration for the balance due, but should either repudiate the settlement and tender back the note or its proceeds, and then sue upon the original claim ; or, retaining the proceeds of the note, he should sue in deceit for the false representation, and seek damages for the loss sustained by the defendant's fraud.^ A cross-action will, it seems, lie for the cancellation of a contract or security obtained by fraud, pending an action thereon to enforce the same.^ And we have elsewhere seen that a cross-action for fraud in procuring a contract may be maintained even after a judgment on the contract in favor of the wrongdoer, if no plea or evidence of the fraud were pleaded or offered at the former trial.^ A fortiori, one not a party to a former cause may maintain an action against persons for suborning witnesses to give false testimony therein to the damage of the present plaintiff's character ; * though the action might not be maintainable against a witness in the former trial.® So, if a purchaser sued for property sold him through fraud neglect to recoup his damages thereby in an action for the price, he may sue for such damages ; but he cannot, it is said, pending the latter action, enjoin the judgment for the price on the ground that the vendor is insolvent. He should have recouped.® A defendant, ignorant of facts which entitle him to file a cross-bill until the depositions of the plaintiff's witnesses reveal such facts, cannot, if he now file his cross-bill without unnecessary delay, be deprived of the benefit of such facts at the plaintiff's instance, when he was wilfully kept in ignorance 1 Jarrett v. Morton, 44 Mo. 275. 2 McHenry v. Hazard, 45 N, Y. 580. » Ante, p. 171; Wanzer v. De Baun, 1 E. D. Smith, 261; Michigan V. PhcEnix Bank, 33 N. Y. 9. * Rice V. Coolidge, 121 Mass. 393. 6 lb. See Smith v. Lewis, 3 Johns. 157 ; ante, p. 171. « Hall V. Clark, 21 Mo. 415. 464 PEOCEDTJEE AND rNCIDENTS THEREOF. [CH. XVI. of them by a person acting in concert with the plaintiff, who had been recommended by the plaintiff to the defendant as a trustworthy person in! the transaction, but whose fraudulent conduct is the ground of the cross-bill.^ There is a clear distinction in law between the case of an attempt to enforce an agreement (as by an action upon it) tainted with fraud, and that of a proceeding growing out of the agreement, as to which the fraud is but a collateral inci- dent. Thus, the terms of a lease obtained by a fraud upon the lessor as to the intended use of the premises cannot be enforced against him in an action upon any of the coYcnants. But if, after putting the lessee into possession under the lease, the lessor forcibly eject the lessee, the latter can maintain eject- ment against the former for a restoration of the premises ; and the fraud by which the lease was obtained wiU be no defence. By the execution of the lease and the giving of possession, an estate passes to the lessee, of which he cannot be divested by a collateral fraud. The lessor's remedy is in a court of equity, or perhaps by an action at law for false representations.^ A person not competent to contract cannot be made liable in an action ex contractu, even if he might be liable ex delicto upon substantially the same facts.^ § 3. Op Discoveey. When a defendant in equity is charged with having pro- cured a title to property by fraud, and is fraudulently setting up such title to defeat the plaintiff, equity will compel him to disclose the fact alleged as a fraud, and all the circumstances attending it, in order that the court may determine whether those circumstances establish the charge.* For example, the 1 Berryman v. Graham, 6 C. E. Green, 370. 2 Feret v. Hill, 15 Com. B. 207. 8 Studwell V. Shatter, 54 N. Y. 249. See ante, p. 356. * Howell V. Ashmore, 1 Stockt. 82. § 4. J PRACTICE. 465 defendant can be compelled to disclose whether he purchased with notice of the plaintiff's right, or whether he has paid the purchase-money. In order to obtain protection, he must have purchased without notice, and for value, and have paid the purchase price.^ § 4. Of Chakges of Actual Fkattd. It is an established doctrine of courts of equity that where a bill sets up a case of actual fraud, and makes that the ground of the prayer for relief, the plaintiff is not in general entitled to a decree by establishing some one or more of the facts quite independent of fraud, though such facts might of themselves create a case under a distinct head of equity from that which would be applicable to^he case of fraud originally stated.^ Hence, where a bill makes a charge of actual fraud which is not established, the bill will be dismissed, though it state other grounds upon which relief might have been granted, were they not blended with the allegation of fraud.^ But this rule applies only when actual or moral, as distinguished from con- structive, fraud is charged.* If a case of fraud is made .by a bill, and is not established by the evidence, and another case for relief is alleged in the same bill and proved, so much only of the bill as relates to the case of fraud will be dismissed. Relief may be given on the other part. But, if a case of actual fraud is alleged by the bill, the plaintiff, according to the established practice, cannot 1 Howell V. Ashmore, 1 Stockt. 82; 2 Story, Equity, § 1502. 2 Leighton v. Grant, 20 Minn. 345; Wilde v. Gibson, 1 H. L. Cas. 605; Eyre v. Potter, 15 How. 42, 56; Fisher v. Boody, 1 Curt. C. C. 211; Tillinghast v. Champlin, 4 R. I. 173; Williams v. Sturdevant, 27 Ala. 699 ; 1 Dan. Ch. Pr. 335, Perkins's ed. 8 Mount Vernon Bank v. Stone, 2 R I. 129. See Masterson v. Finnegan, lb. 316. * Aldrich v. WUoox, 10 R. I. 405; Tillinghast v. Champlin, 4 R. I. 173. PEOCEDTTEE AND INCIDBNTS THEREOF. [CH. XTI. obtain relief by proving a case of constructive fraud merely.^ Nor is an allegation of actual fraud sustained by proof of a mistake.^ It is held, however, in Iowa that relief will be granted in equity under a bill seeking rescission upon a charge of fraud on proof of mistake, the evidence failing to substantiate the charge of fraud.^ That the consequences of fraud will not always be inflicted where the evidence discloses nothing but mistake is clear. Thus, where a family arrangement was effected, whereby a son, in consideration of the conveyance of certain property from his parents, agreed, among other things, to support them through life, but the conveyancer, through ignorance, did not provide any proper security for the parents, and the latter sought to have the arrangement annulled for fraud and undue influence, the court declined to grant such relief, but decreed the execution of such securities as would insure the perform- ance of the son's engagements.* The application of the rule of courts of equity to dismiss a biU in which the title to relief is founded upon allegations of actual fraud, if fraud be not proved, depends not upon the use or omission of the word " fraud " in the bill, but upon the fact whether the charges upon which the relief is sought are in their nature such as the .court regards as constituting fraud.* A bill founded on an imputation of fraud and personal cor- ruption will not in general warrant an inquiry, on disproof of such imputation, whether there has not been neglect of duty.' 1 Parr v. Jewell, 1 Kay & J. 671 ; Wilde v. Gibson, 1 H. L. Cas. 605. 2 Mercier c. Lewis, 39 Cal. 532; Dudley v. Soranton, 57 N. Y. 424. See Pierce v. Brassfield, 9 Ala. 573 ; ante, pp. 61-64. * Montgomery v. Shockey, 37 Iowa, 107 ; Sweezey v. Collins, 36 Iowa, 589. * Van Donge v. Van Donge, 23 Mich. 321. 6 McCalmon v. Rankin, 8 Hare, 1, 15 ; Marshall v. Sladden, 7 Hare, 428, 444; Pickering v. Pickering, 4 Mylne & C. 289. 8 Ferraby v. Hobson, 2 Phill. Ch. (Eng.) 255; Glasoott v. Lang, lb. 310. §§ 6, 6.] PEACTICB. 467 The circumstances, however, may sometimes justify the court in allowing the bill to be used for a secondary or inferior kind of relief to which the plaintiff might otherwise have been entitled. Thus, where a bill sought to set aside a bottomry bond, as having been concocted in a fraudulent conspiracy between the captain of the ship and the obligee, the court, at the request of the defendant, after disproof of the fraud, directed the usual inquiries for the purpose of ascertaining how much of the sum secured by the bond was a proper subject of bottomry.^ § 5. Of the Denial of Featjd. An answer responsive to the bill, denying its allegations of fraudulent conduct, is conclusive upon that question, unless overcome by the testimony of two witnesses, or of one with corroborating circumstances.^ But when a bill in equity makes specific charges of fraud, aiid the answer contains only a general denial of all fraud, the charges are not to be taken to be true, and the defendant precluded from disputing them, but the plaintiff should except to the answer for want of particularity.^ Where there are several plaintiffs, and one of them fraudu- lently gives a release to prejudice the real plaintiff, and that release is pleaded, the court will set aside the plea, and order the release to be given up for cancellation. But the fraud must be clearly made out by the affidavits of the party seek- ing to set aside the plea.* § 6. Of Amendment. The general rule, which requires some matter of record, entry, or memorandum in the handwriting of the judge, to 1 Glasfiott V. Lang, supra. 2 Feigley v. Feigley, 7 Md. 537. ' Parkman v. Welch, 19 Pick. 231. * Barker v. Bichardson, 1 Younge & J. 362. 468 PROCEDURE AND INCIDBKTS THEREOF. [CH. XVI. authorize an amendment of the record nunc pro tunc does not apply to cases in which the entry is impeached for fraud ; and though these cases generally arise collaterally, yet an entry relating to a grant of letters of administration may be amended on a direct application, of which the opposite party must have notice, setting forth the fraud specifically, and making the necessary proof.^ So, too, fraud discovered after suit brought will entitle the party to amend his action so as to include it.* When an account is opened on the ground of fraud, the whole of it may be unravelled ; but, where permission is merely given to surcharge and falsify, the account stands as prima facie correct, and the onus of proving mistake is on the party alleging them ; and therefore when a bill is filed to impeach a decree on the ground of fraud, if the answer denies all fraud, but admits an error or mistake, the complainant cannot have a decree unless he amends his bill.^ § 7. Of Law and Fact. In some cases, fraud is self-evident ; and, when so, it is the proper province of the court to adjudge upon it, without submitting its existence to the decision of the jury. Cases of dishonest misrepresentations, and deceitful attempts to mis- lead, are examples. Indeed, the whole law of deceit is an illustration of this proposition. Certain elements of deceit being found or admitted, the court rules that they constitute 1 Dunham v. Kobert, 28 Ala. 286. If the motion simply allege, as the ground for the amendment asked, that the record states a fact which was not proved, that as it stands it operates a fraud on the rights of the plaintiff in the motion, and that it is void in law, on account of fraud in a legal sense, the allegation is not sufficiently specific to authorize the introduction of parol evidence to prove that the fact recited was not true. 2 Truebody v. Jacobson, 2 Cal. 269. « Cowan V. Jones, 27 Ala. 317. § 7.] PRACTICE. 469 fraud. In other cases, the existence of fraud depends upon a variety of circumstances, arising from motive and intent, and inferences from circumstantial evidence ; and, in such cases, the court should submit to the jury the question of fraud, upon proper instructions concerning the tests of fraud. ^ In still other cases, there arises from the situation of the parties a presumption of fraud, — a presumption which may generally be rebutted. These are cases of constructive fraud ; examples of which are found in transactions between attorney and client, guardian and ward, and trustee and cestui que trust. For the sake of protecting parties in such dependent situa- tions, the law wisely requires the party in the superior posi- tion to overcome a positive presumption against the fairness of the particular transaction. But, if there be evidence tending to overture the presumption, it must, in most cases at least, be submitted to the jury, and their decision of the existence of fraud invoked ; or rather their decision must be invoked to determine whether the presumption is rebutted. If no rebut- ting evidence be offered, it is the duty of the court to adjudge the existence of fraud as matter of law.^ When, therefore, it is sometimes said, the facts are clear and undisputed, the question whether there is fraud or not is for the court ; but when the evidence is conflicting, or the facts are not clear and undisputable, the question is for the jury.^ Hence, when the question whether certain instruments are fraudulent or not is put in issue, and the .evidence on that point is conflicting, it is error for the court to charge that, if the jury believe the evidence, they must find for the plaintiff.* The interpretation of written statements of fact, as to 1 In an issue on a question of fraud, the court should instruct the jury ■what circumstances would constitute such a fraud as would entitle the complaining party to relief ; for it is not every fraud for which the law affords reUef . Flack v. Neill, 22 Tex. 253. 2 See Hardy v. Simpson, 13 Ired. 132. 8 Upton V. Raiford, 29 Ala. 188. * Williams v. Hartshorn, 80 Ala. 211. 470 PEOCEDtTEE AND INCIDENTS THEEEOP. [CH. XVI. whether they are false or not, seems to belong to the court.^ The question whether facts not disclosed or falsely stated is material, is for the jury to determine ; ^ unless it appear either directly or by plain inference from the contract that they are deemed material,^ or unless they are of an evident and glaring character.* § 8. Op Veedicts Conteaey to Evidence. Where the question is fraud, depending on the oral testi- mony of witnesses, the jury and the judge at nisi prius are so much better enabled to decide than an appellate court can be, from mere inspection of a written statement of the evi- dence, that the judgment will not be reversed, unless the ver- dict is clearly void of evidence to support it, or is clearly against the evidence adduced.^ § 9. Op Featjd on Dowbe Rights. Where a bill by a widow is sustained, charging her late husband with making a conveyance in fraud of her right of dower, the proper practice by way of relief is for the court to » Swift V. Mass. Life Ins. Co., 63 N. Y. 186; s. c. 5 Big. 392; Smith V. .aitna Life Ins. Co., 49 N. Y. 211; s. c. 3 Big. 708; Horn v. Amicable " Life Ins. Co., 64 Barb. 81; 8. c. 3 Big. 712; Hutchinson v. National Life Assur. Soc, 3 Big. 444; Cazenove ». British Ins. Co., lb. 202; Huck- man v. Fernie, 3 Mees. & W. 505; s. c. 2 Big. 253; Fowkes v. Man- chester Life Assoc, 3 Best & S. 917; s. c. 2 Big. 631. 2 Rawlins v. Desborough, 2 Moody & R. 328 ; s. c. 2 Big. 271 ; Huguenin v. Rayley, 6 Taunt. 186; 8. c. 2 Big. 208; Perrins v. Marine Ins. Soc, 2 El. & E. 317; s. c. 2 Big. 561. " Campbell v. New England Life Ins. Co., 98 Mass. 381 ; s. c. 1 Big. 229. < Bufe V. Turner, 6 Taunt. 338. « Oliver v. Chapman, 15 Tex. 400. §§ 10, 11.] PBACTICE. 471 assign her dower, and order an account between the parties concerned. It is not proper for the chancellor to submit to a jury the matter of damages. And the finding of a jury will not bind the chancellor.^ § 10. Of Sitevitoeship of Actions. It is held that an action for fraudulently recommending a party as worthy of credit does not survive against the repre- sentative of the wrongdoer, either at common law or under the statutes of Massachusetts or Virginia.^ On the other hand, it has been decided in equity that, in cases of fraud, the remedy never dies with the person who practised it, but will follow his estate.^ Damages at law cannot be recovered (except by statute) by the representative of the injured party. § 11. Of Submission to Judgment. In order to save unnecessary expense, equity will at any time stop a suit, when the defendant submits to satisfy the plaintiffs just demands.^ But if the defendant, in fraud of his tendered submission, omit to discharge the plaintiff's de- mand, with costs, at the time appointed by the court, he will render himself liable for the costs of all proceedings conse- quent on the order made upon his application ; and the plain- tiff will be at liberty to renew proceedings in the cause.® 1 London v. London, 1 Humph. 1; Curtis v. Curtis, 2 Brown, C. C. 620. See Mundy v. Mundy, 2 Ves. Jr. 122 ; s. c. 4 Brown, C. C. 295. 2 Read v. Hatch, 19 Pick. 47 ; Henshaw v. Miller, 17 How. 212. 8 Garth ». Cotton, 1 Ves. 546, 577. * 1 Chitty, Pleading, 68; 3 Black. Com. 302. 6 Praed v. Hull, 1 Sim. & S. 332. « Boys v. Ford, 4 Madd. 48. 472 PEOCEDUEE AND INCIDENTS THBEBOF. [CH. XVII. CHAPTER XVII. EVIDENCE. § 1. Of Couets of Law and Couets op Equity. It is often said that fraud may be presumed in equity, but must be proved at law; or, as it is sometimes stated, that equity will grant relief upon the ground of fraud as estab- lished by presumptive evidence, which evidence courts of law would not always deem sufficient to justify a verdict.^ The proposition would be more clear and perhaps strictly accurate if, instead of the latter clause, it should be stated, " which («. e., the presumptive evidence of equity) could not gen- erally be received at law." The meaning of the above proposition, it is apprehended, is not that a different value can be attached to the same admitted evidence at law from that given to it in equity, but that certain kinds of evidence are inadmissible at law, owing to the nature of the procedure of law courts, which would be admissible in equity ; and cer- tain cases of presumptive evidence furnish an example of the rule. The reason of the apparent diversity lies simply in the fact that courts of equity have jurisdiction of a large class of cases, in which a decree for fraud may be rendered upon presumption, of which the law courts have no or but a lame jurisdiction. Thus, if a client has been wrongfully induced 1 King V. Moon, 42 Mo. 551; Jackson v. King, 4 Cowen, 207; 1 Story, E quity, § 190 ; Chesterfield v. Janssen, 2 Ves. 155. See also Wilcox u. Iowa Wesleyan Univ., 32 Iowa, 367, dictum: Smith v. Harrison, 2 Heisk. 230 , 240; FuUagar v. Clark, 18 Ves. 481, 483. § l.J EVIDENCE. 473 to make a gift to his attorney, or if a trustee has made a wrongful purchase of the trust property, the client or the cestui que trust must go into equity in order to obtain adequate relief; and upon the filing of the bill, showing the relation of the parties and the gift or purchase, the court at once raises a presumption of fraud against the attorney or trustee, suffi- cient, unless overcome, to justify a decree sustaining the bill. Now the injured party could not accomplish this at law, not because of a different rule there as to the matter of evidence, but because the law court could not undertake to grant the relief. Its course of procedure would not permit it to enter- tain jurisdiction of the cause. And this is true of the whole class of cases arising between persons standing in confidential relations to each other. But, if a law court have obtained jurisdiction of such a cause in any way, as where a trustee sues his cestui que trust upon a promissory note, there is no doubt that, upon the defendant's bringing to the attention of the court the situation of the parties, he will thereby make out s, prima fade case of fraud. And in general, where these courts have concurrent jurisdiction, the rules of evidence in them are the same, whether in cases of actual or of constructive fraud.' ^ A chancellor cannot find fraud as a fact on less evidence, or evidence different from that which would he required to authorize a jury to find the same fact. The true rule in all courts is to require such legal evi- dence as will overcome in the mind of the tribunal the legal presumption of innocence, and beget a belief of the truth of the allegation of fraud. Marksbury v. Taylor, 10 Bush, 519. " Any other rule," said the court, in this case, " would be calculated to create invidious distinctions between the different courts of the country, and would make the rights of parties depending upon questions of fraud or no fraud to turn upon the accident which brought them into the particular forum, and not upon uniform and known rules of law. Almost every alleged fraud in the innumerable transactions of men may in some way be made cognizable in a court of equity ; and, as the party alleging the fraud selects his own forum in all cases of concurrent jurisdiction, nearly all questions of fraud would soon come into courts of equity for decision. ' Under such a rule, it would become the interest of the party charging it to avoid issues out of chan- cery to be tried by juries, to the embarrassment of the courts and the prejudice of the due administration of justice." 474 PBOCEDUEE AND INCIDENTS THEEEOF. [CH. XVH § 2. Op Feaud in Law and Featjd in Fact. Fraud in law differs from fraud in fact in that, when certain indicia are established, its presence is determined by the court as matter of law, regardless of the existence of any evil in- tent on the part of the person engaged in it ; whereas fraud in fact depends upon the fraudulent intent of the party, and the facts establishing such intent are for the jury.^ § 3. Of Prepondeeating Evidence. Parties engaged in fraudulent schemes always resort to the use of legal forms, as far as possible, to cover their purposes ; and hence it would often be expecting too much to look for clear and undisputed evidence of fraud. The law therefore does not require it ; and this is especially true upon motions for new trials, on the ground that the evidence does not support the verdict of fraud.^ But it is equally true upon exceptions to instructions to the jury. The jury may be instructed that they can find fraud upon a mere prepon- derance of evidence. It is not necessary for the evidence to show beyond a reasonable doubt that a party is guilty of fraud.^ It is settled law that, upon the trial of a civil action in which the claim or defence is based on alleged fraud, the issue may be determined in accordance with the preponderance or weight of evidence, except in cases of resulting trusts aris- ing on verbal agreements to buy for another.* In other cases of fraud, nothing more is required than that the evidence 1 Milne v. Henry, 40 Penn. St. 352. 2 Gill e. Crosby, 63 111. 190. 8 Ford V. Chambers, 19 Cal. 143 ; Young v. Edwards, 72 Penn. St. 257 ; Abbey v. Dewey, 25 Penn. St. 413 ; Lee v. Pearce, 68 N. Car. 76 ; Gordon v. Parmelee, 15 Gray, 413; Rea v. Missouri, 17 Wall. 532. * See post, p. 489. § 3.^ EVIDENCE. 475 should be sufficient to satisfy the conscience of a common man, although the evidence does not amount to absolute certainty.! Evidence of fraud is not required to be more direct and positive than that of facts and' circumstances tend- ing to the conclusion that it has been committed.^ Hence, an instruction to the jury that the fraud in question could not be found by them, except upon clear and undoubted proof of it, is erroneous. If the party alleging the fraud produce such evidence as the jury could reasonably and safely rest their consciences upon, it is sufficient.^ Where, however, the parties stand upon an equal footing, — that is, where no relation of confidence or the like exists, — circumstances attending a transaction which are consistent equally with a fraudulent intent or with an honest purpose will not be treated as fraudulent.* There is some conflict of authority upon the degree of evidence required to prove the commission of a fraud which is indictable. Under an indictment, the evidence must be more than simply preponderating : there must be such evi- dence as shall leave no reasonable doubt of the commission of the act in order to justify a conviction. In some cases, it has been held that the same degree of proof is required in a civil action upon the issue of the commission of the act.^ In other cases, it is held to be sufficient if the evidence, as in other cases, be preponderating.* And this seems to be the better 1 Young V. Edwards, 72 Penn. St. 257. 2 Rea V. Missouri, 17 Wall. 532. 8 Abbey v. Dewey, 25 Penn. St. 413. * Drummond v. Couse, 39 Iowa, 442 ; Lyman v. Cessford, 15 Iowa, 229; Schofield v. Blind, 33 Iowa, 175; Hamilton v. Bishop, 22 Iowa, 306. 6 McConnel v. Delaware" Ins. Co., 18 111. 228 ; Thurtell v. Beaumont, 8 Moore, 612 ; s. c. 1 Bing. 339. 8 Jones V. Greaves, 26 Ohio St. 2 ; Munson v. Atwood, 30 Conn. 102 ; Schmidt v. New York Ins. Co., 1 Gray, 529 ; Blaeser v. Milwaukee Ins. Co., 37 Wis. 31, explaining and modifying Pryce v. Security Ins. Co., 29 Wis. 270; Washington Ins. Co. v. Wilson, 7 Wis. 169; Wright v. Hardy, 22 Wis. 348; Ellis v. Buzzell, 60 Maine, 209; .ffitna Ins. Co. v. 476 PEOCEDTJEB AND INCIDENTS THEEBOF. [CH. XVII. opinion, as well as supported by the weight of authority. It has well been said that, where civil rights are to be ascertained, a less degree of probability may be safely adopted as a ground of judgment than in criminal cases which affect life and liberty.^ § 4. Op Circumstantial Evidence. The specific fraud stated in the pleadings, or the substance of it, must be proved. The fact that other like frauds have been committed merely renders the commission of the one alleged more or less probable : it does not conclusively estab- lish the commission of it. It has well been said that the fact that a man commits a crime or a fraud, the exposure of which will destroy his credit and render him insolvent, and conceals it, cannot be held to make voidable every purchase which he may make upon credit, without fraud and in good faith.^ In the investigation of a question of fraud, however, courts should be liberal in the receipt of evidence tending to disclose the true nature of the transaction.^ Very slight circum- stances, apparently trivial in themselves, when joined with other facts, may afford irrefragable proof of fraud.* It is not necessary that a party, seeking to impugn a contract for fraud or undue influence, should sustain his case by direct and posi- tive testimony.^ Fraud may be proved by or inferred from circumstantial evidence.® Upon a question of fraud, indeed, Johnson, 11 Bush, 587; Wightman v. Western Ins. Co., 8 Rob. (La.) 442 ; Hoffman v. Western Ins. Co., 1 La. An. 216. See also Bradish v. Bliss, 35 Vt. 326 ; Gordon v. Parmelee, 15 Gray, 416 ; Freeman v. Free- man, 31 Wis. 235, explained in Blaeser v. Milwaukee Ins. Co., supra. 1 2 Russell, Crimes, 727 (7th Am. ed.). 2 Comins v. Coe, 117 Mass. 45. ' Garrigues v. Harris, 17 Penn. St. 344 ; Zerbe v. Miller, 16 Penn. St. 488. * Hopkins v. Sievert, 58 Mo. 201. 6 Conant v. Jackson, 16 Vt. 335. * Thompson v. Shannon, 9 Tex. 536; Graham v. Roder, 5 Tex. 141; § 4.] EVIDENCE. 477 the evidence may embrace all the facts and circumstances which go to make up the transaction, disclose its true charac- ter, and explain the acts and intentions of the parties.^ Thus, where there is proof that a bond has been altered, facts tend- ing to show fraud on the part of the obligee, by showing his relations and dealings with the obligor, are admissible under the plea of non est factum. Such evidence is not designed to impeach the consideration of the bond.^ So, in support of the allegation that a trader bought goods, with intent not to pay for them, it is proper to show that his shop was found closed and empty soon after the sale.^ In one case, a jury were authorized to consider by whom an insurance was ob- tained, whether at the instance of the insured or of the under- writer's agent, as possibly throwing light upon a question of fraud in effecting the contract.* Where fraud is charged on an agent and made to depend on his management of a sale of lands, the question of its ex- istence must be determined more or less by the fact whether the agent knew the condition of the title, and what that condition was. Hence, in such case, the agent is entitled to introduce evidence of the- condition of the title and its mar- ketable value, in an action for a fraudulent sale of land at a price lower than the land was worth." So, also, as tending to disprove allegations of fraud in the execution of a mortgage on the part of the mortgagee, he may show that the mortgagor executed the instrument of his own accord and without solici- tation from the mortgagee.® So, also, in questions of fraud, evidence of acts done before any rights of the parties charging Parrott v. Parrott, 1 Heisk. 681; Strong v. Hines, 35 Miss. 201; Smalley V. Hale, 37 Mo. 102 ; O'Donnell v. Segar, 25 Mich. 367 ; Southern Life Ins. Co. V. Wilkinson, 53 Ga. 535. ' Smalley v. Hale, 37 Mo. 102. « Edelin b. Sanders, 8 Md. 118. 8 Skinner v. Flint, 105 Mass. 528. * Southern Life Ins. Co. v. Wilkinson, 53 Ga. 535 ; s. c. 5 Big. 85. Weeks ». Downing, 30 Mich. 4. « Blaokwell v. Cummings, 68 N. Car. 121. 4X8 PEOCEDUEE AKD INCIDBNTS THEEEOF. [CH. XVH. fraud had supervened, and tending to illustrate the conduct of the parties and to show their relations, is admissible.^ Where an actual fraud is charged, perpetrated with a fraud- ulent intent, and the evidence to sustain the charge consists of circumstances, evidence of good character in rebuttal is said to be admissible.^ § 5. Op Evidence op Othee Featjds. Where unlawful acts of the same general character are continuous in their operation, and appear to be parts of a general scheme or plan, participation in them at an earlier stage is the usual evidence that one who was afterwards present was a participator then.^ Hence, evidence of other similar transactions about the same time with other persons, if so connected as to show a general purpose of fraud, or that the party was conducting his business in an unusual manner, indicating an expectation of failure, is admissible to sustain a charge of fraud.* And such fraud may be proved by third persons or by the cross-examination of the party himself.^ The admissibility of such evidence is placed on the ground that where transactions of a similar character, participated in by the same parties, are closely connected in time, the infer- ence is reasonable that they proceed from the same motive.® 1 Craig's Appeal, 77 Penn. St. 448. 2 Dawkins v. Gault, 5 Rich. 151 ; Sweets v. Plunket, 1 Strob. 372 ; 1 Greenl. Evidence, §§ 54, 55. » Tyson v. Booth, 100 Mass. 258. * Haskins v. Warren, 115 Mass. 514; McAleer v. Horsey, 35 Md. 439 ; Crogin v. Tarr, 32 Maine, 55; Hawes v. Dingley, 17 Maine, 341; Knight V. Heath, 23 N. H. 410 ; Hovey v. Grant, 52 N. H. 569 ; Pierce v. Hoff- man, 24 Vt. 525. 6 McAleer v. Horsey, 35 Md. 439. 6 Lincoln v. Claflin, 7 Wall. 132, 138, Field, J. ; Castle v. BuUard, 23 How. 172 ; Gary v. Retailing, 1 Hill, 317. See Hall v. Naylor, 18 N. Y. 588 ; Castle v. BuUard, 23 How. 172 ; Kea v. Missouri, 17 Wall. 532. § 5.] EVIDENCE. 4.79 Where a writing is impeached as forged or fraudulent, evidence tending to prove another writing upon the same subject-matter, and upon the same paper, to be forged or fraud- ulent, is admissible, though the last writing be not offered in evidence.^ So, too, upon a question respecting the fraud- ulent character of a deed obtained by an administrator from one of the heirs, evidence of fraud in relation to the property of another heir of the same estate is admissible.^ In order to prove fraud in a conveyance, evidence that the debtor, about the same time, made other conveyances indicating collusion, is proper.^ Where there were circumstances creating suspicion that a note had been fraudulently altered, the alteration of other notes made and indorsed by the same parties, to take up one for which the note in question has been given, is admissible as tending to strengthen the suspicion.* So, also, testimony to prove that false certificates of the value of an article sold were exhibited by the seller to others than the purchaser for the purpose of effecting a sale, being evidence of a general design to deceive any one who could thus be drawn in to make the purchase, is admissible to prove fraud in the sale.^ To prove that representations of the vendor of a machine as to its efficiency in certain particulars were false, the pur- chaser may show that other similar machines, made and sold by the same vendor, had upon trial been found defective in those particulars.® But the rule is held to be otherwise in an action for the price of an article warranted suitable for a 1' Knight V. Heath, 23 N. H. 410. » Lovell V. Briggs, 2 N,. H. 218. » Whittier v. Varney, 10 N. H. 291 ; Burnham v. Carr, 11 Wend. 83 ; Blake ». White, 13 N. H. 267 ; Howe ». Reed, 3 Fairf. 515 ; Aldrich v. Warren, 4 Shep. 565; Hawes v. Dingley, 5 Shep. 341; Foster v. Hall, 12 Pick. 89. * Rankin v. Clarkebill, 2 Johns. Cas. 198; Snell v. Moses, 1 Johns. 99. ' Aldrich v. Warren, 16 Maine, 465. ' Waters Heater Co. v. Smith, 120 Mass. 444. See Pike v. Fay, 101 Mass. 134. 480 PEOCEDUEE AND INCIDENTS THEEEOP. [CH. XYU. certain purpose, where the defence is based upon the breach of such warranty, and not upon deceit. In such a case, the plaintiff must show that the particular article corresponds to the warranty, and cannot prove that others of the same pattern and style do.^ On the question of a person's pretended and fraudulent purchase of property, evidence of his obtaining or attempting to obtain other property under color of a purchase, without paying for it, so connected in time and circumstances as to afford evidence of a general scheme of fraud, is admissible.^ On the issue whether a sale of goods was induced by fraud of the buyer, evidence is admissible of a previous purchase by him of like goods from the same party, the terms of which were referred to and adopted in the sale in question.^ So, too, in trespass for property which the defendant claimed was fraudulently purchased by the plaintiff, testimony* of other fraudulent dealings between the parties about the same time of the- one in question is admissible.* Representations made by a vendor of land upon a former sale of an adjoining parcel of land to the same person, which representations extended to the lands now in question and were repeated at the second sale, are competent evidence in a suit for fraud in the second sale. And the fact that the second sale was not in contem- plation when the first was made, and that the vendor was not then in a position to make it, is immaterial.^ Evidence of other frauds committed by the defendant about the same time is not admissible, unless it appear that such frauds and the one in suit were parts of one fraudulent scheme, committed in pursuance of a common purpose.® Hence, to 1 WatersHeaterCo.il. Smith,120Mass.444; Vale «. Butler, 111 Mass. 55. 2 Hovey v. Grant, 52 N. H. 569 ; Jacobs v. Shorey, 48 N. H. 100 ; Lee V. Lamprey, 43 N. H. 15. ' Skinner ». Flint, 105 Mass. 528. * Pierce v. Hoffman, 24 Vt. 525. ^ Kost v. Bender, 25 Mich. 515. « Jordan v. Osgood, 109 Mass. 457. See Lynde v. McGregor, 13 Allen, 172 ; Taylor v. Robinson, 2 Allen, 562 ; Williams v. Bobbins, 15 Gray, 590 ; Wiggin v. Day, 9 Gray, 97 ; Rowley v. Bigelow, 12 Pick. 307. § 5.J EVIDENCE. 481 prove an alleged sale of a chattel to be fraudulent evidence cannot be received of a fraudulent sale of another chattel at another time, in another jurisdiction, and to another party.^ It is laid down in New York that if it be sought, in an action for fraud, to corroborate the evidence of the fraud complained of by proof of a contemporaneous fraud, the evi- dence of the latter wrong must be such as to warrant the submission of the case to the jury, were the action founded thereon. 2 And it has recently been held in New York, in an action on a note alleged to have been fraudulently altered, that evidence that another note, made at the same time, by the same person, of the same tenor and date of the one in question, for the same consideration, but payable at a differ- ent time, was owned by .the plaintiff, and was by him altered in the same particular, after it came into his hands, without the consent or ratification of the maker, is inadmissible.^ It was conceded in the case referred to that, on an issue of the forgery of a note, it is proper, for the purpose of sho^^fing a fraudulent intent, to give evidence of the possession and uttering of other like forged notes ; * but a majority thought the rule inapplicable to the above case, — a position not easily understood. It is held in Connecticut that the cases in which evidence of other similar fraudulent transactions is admissible to prove a particular fraud are only those of a conspiracy to commit fraud. The object of such evidence is considered to be to show, first, the fact of a conspiracy of the defendant with others to commit frauds similar to the particular fraud in question ; and, secondly, as an inference, that the fraud in question was part of the same conspu'acy. Hence, evidence of other distinct and independent acts of fraud cannot be 1 Staples V. Smith, 48 Maine, 470. 2 Meyer v. Cullen, 54 N. Y. 392. » Booth V. Powers, 56 N. Y. 22. * Kex V. Wylie, 4 Bos. «& P. 92 ; Kankin v. Blackwell, 2 Johns. Cas. 198. 31 482 PEocEDrruB and incidents thereof, [ch. xvn. received to prove a disposition to commit fraud, and thus to render the commission of the particular fraud in suit probable.^ Fraud may be proved either by intrinsic evidence of unfair- ness in the transaction itself, or by evidence of facts and circumstances attending it, which by the ordinary tests by which we judge of the motives to action appear inconsistent with an honest purpose.^ When therefore it is said that in ordinary cases fraud cannot be presumed, it is not meant that the presumption of fraud may not arise and be legitimately deduced from such evidence, but only that it is not to be as- sumed of a transaction that it is fraudulent in the absence of proof afforded by intrinsic unfairness in the transaction itself, or by extrinsic facts and circumstances leading to that con- clusion.^ It has well been said that there is reason to appre- hend that jurors are not infrequently misled in cases of this character by being told that fraud cannot be presumed, but must be proved ; thereby inducing the belief that fraud is a thing which has material existence, and is tangible, and can- not be proved otherwise than by evidence direct and positive. Such, it need hardly be said, is not its nature : it is not a thing susceptible of ocular observation or physical demonstra- tion. Yet its existence in a given case maybe sufficiently demonstrated for judicial purposes, and to warrant judicial action, by evidence of facts either intrinsic or extrinsic to the transaction impeached. Thus, inadequacy of consideration, though in general not ajBfording ground for annulling a trans- action, may be so very great as to shock the conscience ; and, when this is the case, fraud may well be inferred.* So, too, where a party is prevented from performing a condition prece- dent by the promises and assurances of another who is to 1 Edwards v. Warner, 35 Conn. 517; Gardner v. Preston, 2 Day, 205. a Burch v. Smith, 15 Tex. 219. 8 ij,. * lb., per Wheeler, J., in an opinion replete with good sense and sound law. See 1 Story, Equity, § 246. § 6.J EVIDENCE. 483 derive a benefit from the non-performance of such condition, such conduct may well be treated as intentional deception.^ § 6. Of Evidence of Conspirators and Joint Tres- PASSERS. In cases of conspiracy to defraud, embracing a number of similar cases in which there is one common design and one object to be accomplished, the proceedings of the conspirators may be regarded as one continuous act. In such cases, each part has an important relation to the whole, and may throw light upon the entire transaction.^ Thus, where sundry notes of like character were obtained from different persons by a series of fraudulent acts, the whole being done under a con- spiracy to defraud all who could be imposed upon, it was held that, for the purpose of proving the fraud as to one of the notes, evidence was admissible of the fraudulent practices in procuring the others.^ In the case of .the charge of a combination to defraud, the declarations of each of the parties to such combination, relat- ing thereto, are evidence against the others, though made in the absence of the latter ; provided the parties were at the time of the declarations engaged in the furtherance of the common design. If made after the consummation of the enter- prise, the declarations would be admissible only against those who made them or authorized them to be made.* But the 1 1 Story, Equity, § 246. " Knotwell v. Blanchard, 41 Conn. 614 ; Hozie v. Hofne Ins. Co., 32 Conn. 21 ; Edwards v. Warner, 35 Conn. 517. * Knotwell v. Blanchard, supra. * Lincoln ». Claflin, 7 Wall. 132; Jenne v. Joslyn, 41 Vt. 478; Har- rison o. Wisdom, 7 Heisk. 99; Sweat v. Rogers, 6 Heisk. 117; Strady ». State, 5 Cold. 300; Burns v. McCabe, 72 Penn. St. 309; McCabe v. Bums, 66 Penn. St. 356. Perhaps, if the declarations of one are made soon after the trans- actions, they are admissible against his fellows. See McCaskey v. Graff, 23 Penn. St. 321 ; Helser v. McGrath, 58 Penn. St. 458. 484 PEOCEDTJEB AKD INCIDENTS THEEEOP. [CH. XVIl. party must first prove a fraudulent combination to deceive and defraud him. In the absence of conspiracy or combina- tion, the acts or declarations of any of the alleged joint tort- feasors are inadmissible against the others.-' Slight evidence of collusion or concert is suiBcient to let in the declarations of one of the parties as evidence against all, though not made in the presence of each other ; ''■ but there must be some evidence of the combination. Such may be inferred, for example, from the relation and conduct of the parties, and the circumstances surrounding them.^ Thus, where a coal merchant replenished his yard with coal pur- chased on credit, and immediately transferred the property to his broker at a greatly inadequate price and absconded, this was considered sufficient evidence of collusion between the parties to make the acts and declarations of one evidence against the other.* Evidence that parties holding under a deed sought to be cancelled for fraud knew that the agent who made the deed intended to defraud his principal, is ad- missible to prove connivance and confederation on their part.^ The essence of a conspiracy, so far as it justifies a civil action for damages, is a concert or combination to defraud or to cause other injury to person or property, which actually re- sults in damages to the person or property of the party injured or defrauded.^ In a suit by a creditor of a firm in which the partnership relation of one of the defendants is denied, it is not compe- tent for him to prove a combination of two of the admitted partners to suborn witnesses against himself, unless there be 1 Brinkley v. Piatt, 40 Md. 529; Kimball w. Harman, 34 Md. 407; Helser v. McGrath, 58 Penn. St. 458. " Rogers ». Hall, 4 Watts, 359 ; Price v. Junkin, lb. 85. » McDowel V. Rissell, 37 Penn. St. 164. Evidence of the declarations of one of several conspirators may be given before proof of the con- spiracy, if conditional upon proving the conspiracy afterwards. Place J). Minster, 65 N. Y. 89. < Kelsey ». Murphy, 26 Penn. St. 78. 6 Gibson v. Fifer, 21 Tex. 783. « Place v. Mmster, 65 N. Y. 89. § 7.] EVIDENCE. 485 evidence that the plaintiff was engaged in the combination.^ But evidence that two or more persons conspired to commit a fraud upon another, and did commit it, is sufficient to author- ize a verdict against them all for the damages sustained though there be no proof that they all participated in the profits of the fraud.^ The declarations of one of two partners, joint defendants,, made after a dissolution of the firm, are evidence against both as to any contract made before dissolution, whether the other partner be present or not.^ The principle, indeed, seems to extend so far as to embrace evidence of the declarations of one partner to bind the firm for frauds committed by him in the course of the partnership business, even when the other part- ner had not the slightest connection with or knowledge of the fraud.* It has been expressly adjudged that where A and B, partners in trade, made a compromise of their debts, and trans- ferred their property to pay a certain per cent, thereon upon being discharged from paying the balance, and at the same time agreed that any fraudulent representation or concealment of property should revive the claim for the balance, and dur- ing the negotiation one of the partners, without the knowledge of the other, made statements relative to some of the property conveyed, tending to show fraud, evidence of such statements were admissible in an action against both partners for the balance.^ § 7. Of Declarations of Defendant oe his Pre- decessor.^ when in the course of an action it is necessary to inquire into the nature of a particular act, and the intention of the person 1 BatdorfE v. Bank of Reading, 61 Penn. St. 179. 2 Jemegan v. Wainer, 12 Tex. 189. « Kerce v. Wood, 23 N. H. 519 ; Mann v. Locke, 11 N. H. 246. * Pierce b. Wood, supra; Story, Part. § 108. ' Pierce v. Wood. ' As to declarations of testators, see post, pp. 501-503. 486 PEOCEDUKE AND INCIDENTS THBEEOP. [CH, XVH. who did it, proof of what was said by such person at the time of doing the act is admissible for the purpose of showing its true character.^ The declarations of the vendor of property made before the sale, and tending to prove fraud on his part, are admissible in evidence in favor of the purchaser.^ Con- versations and negotiations, prior and leading to a contract, are evidence to prove fraud ; but there should be clear evi- dence that the transaction continued to the time of entering into the contract.^ It is, however, held that in an action to recover the amount of money received by the defendant upon a contract obtained through his misrepresentations, the repe- tition of the false statements made after the date of the con- tract is competent evidence of the defendant's bad faith from the beginning.* And, as to the extent of damages sustained by a fraudulent sale of land to the plaintiff, facts which oc- curred subsequently to the contract, which are calculated to show satisfactorily what was the real value of the estate, may be given in evidence.^ The declarations of a grantor of a deed, alleged to have been procured by fraud and never delivered, may be received to rebut evidence tending to sustain those allegations.® The declarations of a grantor as to fraud on his part are never evi- dence, however, against an honest purchaser for an adequate consideration, though they were made before the execution of his conveyance, he having no knowledge of any fraudulent design in the grantor.' So, too, the declarations of a party charged with fraud, when they are not part of the res gesta, but explanatorj' of a concomitant act, are inadmissible.^ 1 Curtis V. Moore, 20 Md. 93 ; Kalb ». Whitely, a GiU & J. 188; McDowell V. Goldsmith, 6 Md. 329. 2 Fisher v. True, 38 Maine, 534; Howe v. Eeed, 3 Fairf. 515. ' » McGinty v. McGinty, 63 Penn. St. 88. * Cummings v. Cummings, 5 Watts & S. 553. 6 Campbell ». Hillman, 15 B. Mon. 516. « Little V. Gibson, 39 N. H. 505. ' MoElfatrick v. Hicks, 21 Penn. St. 402. 8 United States v. Mertz, 2 Watts, 406. § 8.] EVIDENCE. 487 Evidence that a vencjor of property made statements to a third person, subsequently to the sale, at variance with his representations to the purchaser made at the time of the sale, is admissible, as, tending to show that he knew such represen- tations to be false when he made them.^ So, proof of subse- quent declarations and acts of the donor in a deed of gift, though inadmissible taken singly, may be received under total absence of testimony applying to the time of the contract, in connection with corroborating circumstances, to show that the nature of the writing was misunderstood or misrepre- sented at the time of the signature.^ § 8. Op Parol Evidence. Parol evidence is admissible to contradict the terms of a written contract, in cases where the contract was obtained by fraud.^ Thus, if the vendor of property should verbally agree with the purchaser to remit in the purchase price a sum due by the purchaser to a relative of the vendor, and thereby induce a purchase, the vendor could not afterwards insist upon payment for the full price of the property as stated in the written contract of sale, on the ground that parol evi- dence could not be received to vary the terms of the writing.* So, where an agreement is to the effect that " for no consid- eration " the obligor undertakes certain things, the obligee may prove a consideration by parol, where the terms of the obligation, in connection with the evidence, show a deliberate design on the part of the obligor to defraud and overreach the obligee ; and this, too, though the obligee observed the 1 Jones V. Hopkins, 32 Iowa, 503. 2 Clay V. Williams, 2 Munf. 108. ' Hare v. Shearwood, 1 Ves. Jr. 241 ; Cozzins v. Whittaker, 3 Stewt. & P. 322 ; Meiley v. Butler, 26 Ohio St. 535. * MeUey v. Butler, 26 Ohio St. 535. 488 PROCEDUEB AND iNCrDENTS THEEEOP. [CH. XVII. words in question at the time the agreement was drawn, and signed the contract after objection.^ Though there be a written contract between the parties, this does not preclude parol proof of fraudulent representa- tions made at the same time as an inducement to the contract.^ And where there is nothing in a written contract of a peculiar character, requiring its production as the best evidence of the matter in issue, parol evidence of fraud in the transaction may be given, without producing the writing upon notice to do so.* So, too, notice to the opposite party to produce an original paper which he has obtained by fraud is unnecessary for the sake of laying ground for introducing secondary evi- dence of its contents.* In an action for deceit, in giving a false credit in the sale of goods, the plaintiff may prove the sale and delivery of the goods, and the indebtedness of the purchaser, without producing the notes given by him for the payment of the goods. If the defendant would show that the credit given upon the notes had not expired, he should give notice to produce them.^ Nor does the rule which excludes parol evidence to vary or add to the terms of a written contract apply to the ease of a promise by the vendor of land to do some further act for the improvement of the premises after the sale. If the act agreed to be done be a material part of the inducement to purchase, the failure to perform it will afford the purchaser ground for rescission of the contract.^ A deed absolute may be shown in equity to have been 1 Young V. Young, 19 Tex. 504. " Prentiss v. Russ, 16 Maine, 30; Kimball v. Mtna, Ins. Co., 9 Allen, 540. « Condict V. Brown, 21 Tex. 421. * Neally v. Greenough, 25 N. H. 325 ; Davis v. Spooner, 3 Pick. 284 ; Doe d. Pearson o. Ries, 7 Bing. 724; Edington v. Nixon, 2 Bing. N. C. 324; People v. Holbrook, 13 Johns. 90. 6 Wyman v. Rae, 11 Gill & J. 416. ' Donelson v. Weakley, 3 Yerg. 178. § 8.] EVIDENCE. 489 intended as a mortgage.^ Still, to set aside a solemn instru- ment between parties, and convert it into an obligation of different import on the" ground of fraud, the evidence must relate to what occurred at the execution of the instrument, and should be clear and precise.^ But, where a deed is attacked as fraudulent, there should be other evidence of consideration than the recitals in it.^ A resulting trust in lands may be proved by parol, as by the admissions or dec- larations of the purchaser.* But the evidence should be clear and unequivocal, and not merely preponderating. There should be no room for reasonable doubt as to the facts.^ Where there has been a long lapse of time, and the parties have died since the transaction in question, the case should be looked upon with suspicion, and the trust allowed only upon the most satisfactory evidence.^ If a corporation file a bill, alleging that certain acts were done by committees thereof, whereby a resulting trust in certain land, conveyed to a third party, arose in favor of the corpdration, it cannot prove the authority of the committees to act therefor, by parol evidence. Their power to act can be shown only by the corporation records.'' Where a bill seeks to convert a purchaser of property at auction into a trustee for the plaintiff, upon the ground that the purchase was made with the money of the plaintiff, and as his agent, the legal title having been made to the purchaser, 1 McDonough ». McNiel, 113 Mass. 92 ; Campbell v. Dearborn, 109 Mass. 130 ; anle, p. 116. 2 Stine V. Sherk, 1 Watts & S. 195. 8 Whitaker v. Garnett, 3 Bu.sh, 402. * Lloyd V. Carter, 17 Penn. St. 216 ; Byers o. Wackman, 16 Ohio St. 440 ; Nelson v. Worrall, 20 Iowa, 470 ; ante, p'. 108. * Johnson v. Quarles, 46 Mo. 423; Baker ». Vining, 30 Maine, 120; Malin v. Malin, 1 Wend. 625; SewaU v. Baxter, 2 Md. Ch. 447; HoUida I!. Shoop, 4 Md. 465 ; Boyd v. McLane, 1 Johns. Ch. 582 ; Enos v. Hunter, 9 lU. 211. « Nelson v. Worrall, 20 lo-wa, 470. ' Meth. Chapel Corp. v. Herrick, 25 Maine, 354. 490 PEOCEDURE AND INdDBNTS THEREOF. [CH. XVH. mere parol proof that the purchaser admitted the trust will not, it is held in North Carolina, be sufficient to entitle the plaintiff to relief. There must be corroborating evidence of facts and circumstances dehors the deed inconsistent with an absolute purchase for the defendant.^ And where the facts and circumstances relied upon as corroborating the CYidence of the purchaser's declarations are unsatisfactory, and sus- ceptible of various and contradictory conclusions, some of which are consistent with the defendant's claim, they will be deemed insufficient to establish the trust.^ The Statute of Frauds cannot be set up as a defence to an action for fraud, whereby a vendor deceived an ignorant pur- chaser into the belief that he was buying Blackaere, when in fact Whiteacre was conveyed. In all such cases, the buyer may disregard the written instrument of conveyance, and sue directly for the fraud.^ § 9. Of Variance. Allegata et Probata. Where a case is based on fraud, the fraud must be proved, and no relief can be given on any different ground. But the obtaining property, for example, or of any benefit, through the undue and unconscientious abuse of influence by a person in whom trust and confidence are placed, is treated as fraud of the gravest character ; and, if such frauds are alleged and proved, the allegation that they were parts of a scheme early conceived and deliberately carried out, whether it be made out or not, is of no consequence in such a suit. " If a man robs his fellow-traveller, and is indicted for so doing, the allegation that he became the companion of his victim with a preconcei,ved design to rob him is wholly immaterial." * 1 Clement «. Clement, 1 Jones, Eq. 184 ; Briggs v. Morris, lb. 193. 2 Clement v. Clement, supra. 8 Ochsenkehl v. Jeffers, 32 Mich. 482. ♦ Moxon V. Payne, Law K. 8 Ch. 881, James, L. J. § 9.] EVIDENCE. 491 In accordance with the above-stated rule of law, it is gen- erally held that an allegation of actual fraud is not sustained by proof of mistake.^ So, where the gist of an action is a false and fraudulent representation made by the defendant in the course of negotiations, as an inducement to a contract, the plaintifp must aver and prove that the defendant knew the representation to be false when he made it. And this is not established by showing that, though the defendant believed it to be true when he made it, yet after the negotiations were concluded, and had been merged in a written contract with- out warranty, he ascertained it to be false, and neglected to communicate his knowledge to the plaintiff.^ Nor is a dec- laration, which alleges that the representations made were well known by the defendant to be untrue, supported by proof that the defendant had reasonable cause to believe that they were untrue.^ In an action by a seller to recover damages sustained by means of a sale induced by the fraud of the purchaser's agent, evidence that the purchaser afterwards sold the prop- erty for less than the price at which the seller sold it, and less than the market value, is admissible as tending to show knowledge on the purchaser's part of the fraud, and partici- pation in it.* And evidence of designed partial statements which deceive, and concealment of facts, such as to make those declared partial and misleading, is admissible under a charge of fraudulent misrepresentations.^ An allegation of fraudulent representations in an action of deceit is not supported by evidence of a breach of warranty, 1 Mercier ». Lewis, 39 Cal. 532; Dudley ». Soranton, 57 N. T. 424. See Kerce v. Brassfield, 9 Ala. 573; ante, pp. 61-64. But see Montgomery V. Shookey, 87 Iowa, 107. ' Pettigrew v. CheUis, 41 N. H. 95 ; Page ». Parker, 40 N. H. 47 ; 8. 0. 43 N. H. 363. ' Pearson v. Howe, 1 Allen, 207. * Packer v. Lockman, 115 Mass. 72. « Kenyon v. Woodruff, 33 Mich. 310. 492 PEOCEDUEB AST) INCIDENTS THEREOF. [CH. XVn. though the plaintiff might have maintained an action in the latter form.^ This is true under the Code of New York, at least so far as the damages claimed are distinct from the damages arising by reason of the breach ; ^ and at common law it is apprehended that it is true in all cases. U converso, if the form of action be ex delicto, evidence of a right of action in contract cannot be received.^ Nor is it enough in support of a plea of fraud to show that the transaction was in contra- vention to some statute, such as the statute against usury. It must be shown that some concealment or other deception was practised with respect to the particular transaction.* It is, however, sufficient to prove the substance of the charge of fraud. ^ An allegation, for example, that a horse had the glanders at the time of sale, is sustained by evidence that at such time he had the seeds of that disease, which afterwards developed into the perfect disease.^ Gross mis- take, however, is not conclusive evidence of fraud.^ The charge of fraud, as we have said, is not to be proved by evidence of mistake.* Though evidence of mere inadequacy of consideration in a contract will not, of itself, substantiate a charge of fraud, yet 1 Cooper V. Landon, 102 Mass. 58. 2 Graves ». Waite, 59 N. Y. 156. ' Barnes v. Quigley, lb. 265. * Green v. Gosden, 3 Man. & G. 446. ' Packard v. Pratt, 115 Mass. 405. Unnecessary allegations need not, as a rule, be proved. Thus, the common averment of conspiracy in an action of deceit need not be proved. Haywood v. Draper, 3 Allen, 551. So, of an allegation of a scienter in an action for breach of warranty in the sale of property, though proof of it would not defeat the action. Hughes V. Funston, 23 Iowa, 257. Nor is it necessary to prove a scienter, •when the facts are peculiarly within the knowledge of the party sought to be charged, or (in general terms) when such party is bound to know the true state of facts. Morse ». Dearborn, 109 Mass. 593 ; ante, pp. 57-60. 8 Woodbury v. Robbins, 10 Cush. 520. ' Leighton ». Grant, 20 Minn. 345. 8 Ante, p. 491; Dudley v. Scranton, 57 N. Y. 424. § 10.] EVIDENCE. 493 ■when that inadequacy is gross and connected with other circumstances of a suspicious character, it may furnish suffi- cient ground to induce a court of chancery to rescind the contract.^ In an action for fraud, it is not necessary for the plaintiff to prove all of the allegations of his declaration as to the means used by the defendant in doing the act complained of, or the manner of carrying it out, provided less than all are sufficient to constitute a cause of action, and what are suffi- cient are proved.^ Thus, if it be found that a beneficiary under a will intended to defraud the testator for his own per- sonal gain under the testament, that he had an opportunity to practise deception at the time, and actually employed some of the means usually resorted to for that purpose, that a result was produced in his favor contrary to the known wishes and fixed purpose of the testator, and no satisfac- tory explanation of the change is furjiished, the benefit is vitiated.^ § 10. Of the Bdeden of Pkoop. In general, it devolves upon the party who complains of actual fraud to prove the truth of his allegations by express evidence of deceptive misconduct in the alleged wrongdoer. If the fraud complained of belong to the division termed Constructive Fraud, the burden of proof devolves, as we have seen, upon the party complained of: he must establish the perfect fairness and honesty of the transaction, and the fact that he made a full and adequate disclosure to such party be- fore the transaction. This subject has, however, been fully considered, necessarily, in treating of Confidential Relations 1 Howard v. Edgell, 17 Vt. 9. 2 Somers v. Richards, 46 Vt. 170 ; Packard v. Pratt, 115 Mass. 405. » McLaughlin v. McDevitt, 63 N. Y. 213. 494 PEOCBDTJEB AND INCIDENTS THEEEOP. [CH. XVH. and the like.^ We have here to consider mainly the que^ion of the burden of proof under allegations of actual fraud. If a defendant allege that a contract sued on was obtained from him by fraud, the burden of proving the fraud lies on him j^ and this, too, though the fraud alleged consist in the false read- ing of an instrument to one who could not read.^ Where the plaintiff and defendant both claim under purchases from the same person, by conveyances valid on their face, the party al- leging fraud in the purchase of the other is bound to prove it; but, when one of the conveyances is by evidence impeached for fraud, the burden of proof is changed, and the evidence of fraud must be overcome by counter-evidence of hona fides* And it is said that when a bill alleges that a party falsely and fraudulently represented himself and others as invested with title by means of a conveyance from another, and the answer asserts that such title exists, the defendant must show it, otherwise the allegation will be taken as admitted.^ So, if a garnishee set up a claim to the funds garnisheed in his hands, he must prove the bona fides of his claim, when it is derived from the judgment debtor after the origin of the* creditor's demand.^ Hence, where a garnishee produced notes signed by the judgment debtor, bearing date prior to the judgment^ but did not prove their existence before the judg- ment in consideration, it was held proper for the jury to say whether there was fraud or collusion between the garnishee and the judgment debtor.^ An allegation that property has been obtained from the complaining party by fraud is sufficient to cast the burden of proof upon a subsequent purchaser, to show that he purchased 1 Chap. V. 2 Beatty v. Fishel, 100 Mass. 448; Stewart v. Thomas, 15 Gray, 171 ; Baldwin v. Parker, 99 Mass. 79 ; Howe v. Howe, lb. 88. ^ Beatty v. Fishel, supra. * Hair v. Little, 28 Ala. 236. « Wellborn v. Tiller, 10 Ala. 305. » Williams v. Hill, 19 How. 243. ' lb. § 10.] EVIDENCE. 495 witKout notice of such fraud and for value,^ or that between him and the claimant there is a party who purchased under such circumstances. It devolves upon a purchaser, under a conveyance obtained by his vendor through fraud, to show by evidence aliunde that he purchased in good faith for a val- uable consideration. The recitals of the deed are not suffi- cient evidence in his favor.^ As between parties claiming title to land, it seems clear that proof of fraud on the part of the defendant's vendor will not cast the onus upon the defendant of proving that he is a purchaser for value (where the burden was not already upon him of showing such fact) ; and that, without some evidence that the defendant is -not a bona fide purchaser for value, the evidence of the vendor's fraud should be rejected.' It is a general rule in matters of account that where there has been a settlement, and the account has either been signed or a security executed on the foot of it, equity will not open it, unless the evidence produced (and that evidence founded upon charges in the plaintiff's bill) show the transaction to be so iniquitous that it ought not to be brought forward at all to affect the party sought to be bound. If the account impeached be a settled account, the court requires the errors to be speci- fied in the bill, and to be proved as specified ; otherwise, it would be easy to overturn the fairest accounts, if of a compli- cated nature.* Settled accounts may be opened also when fraud is reasonably to be inferred from the mode of taking the 1 Miller v. Fraley, 21 Ark. 22 ; Haskins v. Warren, 115 Mass. 514. 2 Throckmorton v. Rider, 42 Iowa, 84 ; SUlyman v. King, 36 Iowa, 207 ; Kittridge v. Chapman, Ih. 348 ; Falconhury v. Mcllravy, lb. 488. * Barnes v. Hardeman, 15 Tex. 366 ; Sydnor v. Roberts, 13 Tex. 598 ; Fetterman v. Murphy, 4 Watts, 424 ; Price v. Junkin, lb. 85 ; Jackson V. Henry, 10 Johns. 185 ; Anderson v. Roberts, 18 Johns. 515. * Drew V. Power, 1 Schoales & L. 192 ; Chambers v. Goldwin, 9 Ves. 266. But see Clyce v. Anderson, 49 Mo. 37, holding that the final settle- ments of executors or administrators may be opened for any improper act or concealment which operates to the prejudice of the parties directly interested in the estate. 496 PEOCEDTTEE AND INCIDENTS THEEEOP. [CH. XVII. accounts, though no facts of positive fraud be distinctly proved. Thus, it would be dangerous if accounts settled between two stewards, without vouchers produced, should be deemed con- clusive against their principals.^ And the absence of the vouchers would be sufficiently suggestive of fraud to require the parties seeking to sustain the accounts to prove their accuracy. If a deed be destroyed by the fraudulent act of the party claiming under it, its contents, generally speaking, cannot be proved or supplied by prescriptive presumption on his behalf, or by an innocent purchaser from him for value. Thus, where a landlord, after a sale of lots, reserving ground rent, and de- livery of the deeds, obtained possession of them, and having fraudulently altered the clauses reserving the rents, sold them, it was held that a purchaser from him, though for value and without notice, could not recover against the lessees either by suit at law or by distress.^ Where a document has been altered or destroyed by the party moving to prove its contents, the burden is upon him to show affirmatively facts which negative the presumptively fraudulent design.^ In order to show that the destruction of letters was not fraudulent, a witness who was present and advised the act may be allowed to state his declarations made to the party at the time. Such declarations are admissible as part of the res gestce, and as explanatory of the motive which influenced the party to destroy them.* The destruction of letters of an indecent character, as soon as received, is not, it seems, to be regarded as fraudulent, so as to prevent the party thus acting from proving their con- tents.^ So, too, the destruction of a paper which has become of no importance to the parties, and has been given up to the 1 Beaumont v. Boultbee, 7 Ves. 017. 2 Wallace v. Harrastad, 44 Penn. St. 492. 8 Blade v. Nolaiid, 12 Wend. 173; Tobin t>. Shaw, 45 Maine, 331 j ante, pp. 98-107. * Tobin V. Shaw, 45 Maine, 331. ^ Bowen v. Reed, 103 Mass. 48. § 11.] EVIDENCE. 497 party bound by it is uo evidence of a fraudulent design, so as to prevent the introduction of parol evidence of its contents.^ If a person be deprived by the fraud of the opposite party of the possession of a v/ritten instrument belonging to him, secondary evidence of its contents may be given by him.^ § 11. Of Evidence in Rebuttal. As to evidence in rebuttal of the charge of fraud, it is held that, in an action for a deceit in a false warranty upon an ex- change of property, it is not competent for the defendant to give in evidence the defects of the property which he received from the plaintiff ; at least, in the absence of fraud or warranty on the part of the plaintiff.^ But, in a suit for fraud in mis- representing the character and value of a note and mortgage received in exchange for personal property, it is admissible to prove the value of the chattels, both to show the extent of the fraud, and as part of the res gestoe, to throw light on the proba- bilities of the whole transaction.* In an action for falsely and fraudulentlj' representing a tradesman to be trustworthy, evidence of his fellow-tradesmen concerning his reputation for trustworthiness is admissible, as tending to show that the statements were made in good faith.^ If it be sought to cha,rge a person with fraud and deceit in representing another as worthy of credit, he may, for the purpose of repelling the imputation of fraud, prove 'what he » Oriental Bank v. Haskins, 3 Met. (Ky.) 332. 2 Grimes v. Kimball, 3 Allen, 518 ; Almy v. Reed, 10 Cush. 421. * Odom V. Harrison, 1 Jones, 402. * Stone V. Coyell, 29 Mich. 359. To sustain a defence to a note given for the purchase of property, on the gi'ound that the property was not what it was represented to be, the same class of facts must be proved as would be necessary to maintain an action for deceit in the sale. Wilder v. De Cou, 18 Minn. 470 j King V. Eagle Mills, 10 Allen, 548. 6 Sheen v. Bumpstead, 2 Hurl. & C. 193. 32 498 PROCBDUKE AND INCIDENTS THEEEOP. [CH. XVH. had said he thought such person worth prior to the time of making the statement complained of.^ And similar evidence may be given against him to establish his fraud.^ In a contest for fraudulent misrepresentations, in that the defendant had represented that the maker of certain notes, taken by the plaintiff from the defendant in payment of goods, was solvent, when in fact he was at that time insolvent, evi- dence is admissible on the part of the defendant that the maker was solvent at the maturity of the notes, for the purpose of showing that the plaintiff, by the exercise of proper diligence, would not have suffered loss, and also as tending to show that the representations were true at the time when they were made.^ Fraud being established against a party, it is for him, if he allege laches in the other party in repudiating the transaction, to show when the latter- acquired a knowledge of the truth, and to prove that he knowingly forbore to assert his right.* § 12. Of Criminating One's Self. Though a defendant is not bound to criminate himself, — that is, to furnish evidence by which a criminal prosecution can be sustained, — he may still be compelled to make discovery of a non-criminal fraud, however great the moral turpitude of the facts.^ 1 McCracken v. West, 17 Ohio, 16. 2 Edwards v. Owen, 15 Ohio, 500. ' Stanley v. Irwin, 34 Iowa, 418. * Lindsay Petroleum Co. v. Hurd, Law R. 5 P. C. 221. ^ Foss V. Haynes, 31 Maine, 81; Neally b. Ambrose, 21 Pick. 185; DevoU V. Brownell, 5 Pick. 448 ; ante, pp. 464, 465. § 13.] EvroENCB. 499 § 13. Op Privileged Commitnications. In the absence of collusion between an attorney and his client in respect of matters of evidence affecting the interests of third persons, documents put into the hands of the attorney by his client, and oral communications made by the client in respect of his legal interests, are privileged ; and the attorney cannot be compelled to divulge them. But if the attorney conspire with his client in concocting a fraud, in respect of which relief is sought by the injured party, there is no such privilege. The courts, it has been aptly observed, will not permit it to be said that the contriving of a fraud forms part of the professional business of an attorney.^ In the case first cited, a bill in equity sought relief in respect of alleged fraud ; and it was charged that the defendant Taylor, an annuitant, and his wife, and the defendant Jefferyes, a residuary legatee, with a view to his own interest, and also with a view to the interests of the other residuary legatees, took counsel together, and with their respective solicitors, in order to devise some means of defeating the title of the plaintiffs to the annuity. There was a strong charge introduced for the purpose of rais- ing the question of conspiracy and of obtaining discovery. But, looking at the whole transaction as stated in the bill and answer, the court held that it was not a fraud, and therefore that the solicitor was not bound to set forth the contents of the documents desired. Nor is it enough to break down the privilege, that fraud is made out against the client. There must be a specific charge connecting the attorney with the ffaud.^ 1 By Lord Cranworth in FoUett ». Jefferyes, 1 Sim. n. s. 1. See Charlton v. Coombes, 4 Giff. 372. 2 Charlton v. Coombes, supra. 500 PKOCEDTJRB AND INCIDENTS THEREOF. [CH. XVn. § 14. Of Failtjeb op Peoop of Feaud. If the relief sought by a bill in equity be based on fraud, the failure to prove the fraud is fatal. But if, by striking out of the bill the allegation of fraud, there be sufficient equity stated and proved, and the allegation of fraud be only subsidiary, it is a fact merely affecting the costs.^ § 15. Of Feaxjd on Testatoes. When a will is contested on the ground of fraud or undue influence, a very broad range of inquiry is permitted, extend- ing into the whole chain of circumstances attending the preparation of the will ; and the transaction must be deemed to embrace all of the immediate preliminaries.^ Thus, where a will disinheriting the testator's relatives in favor of his wife and her relatives was impeached for undue influence and want of capacity, it was considered competent to prove the wife's abuse of the husband's relatives, and a quarrel with him about a former will by which he had made provision for them.3 Evidence that parties had lived together in adulter- ous intercourse is pertinent as one of several facts to prove the prevalence of undue influence ; but it is doubtful whether by itself it ought to be regarded as conclusive of such in- fluence, in relation to property transactions between them.* Influence properly gained, however, though used for a selfish purpose and to obtain an unjust advantage, is not fatal to a party receiving a bounty, provided the gift is of the free act and will of the donor.^ 1 London Chartered Bank v. Lempriere, 9 Moore, P. C. n. s. 426. See Parker v. McKenna, Law E. 10 Ch. 96. 2 Beaubien v. Cicotte, 12 Mich. 459. » lb. * Wallace v. Harris, 32 Mich. 380. ' Howe v. Howe, 99 Mass. 88. § 15.J EVIDENCE. 501 On the trial of issues whether the execution of a will was procured by fraud or undue influence, and whether the will was executed by the testatrix in ignorance of its contents, after the introduction of evidence of a previous condition of her mind, having relation to the disposal of her property, evidence of her subsequent acts or declarations is admissible to prove the subsequent existence of that condition, if such acts or declarations are significant of a condition sufficiently permanent in its nature, and they occurred so soon after the execution of the will as to afford a reasonable inference that such was then also the condition of her mind.^ But such evidence is inadmissible to prove the actual fact of fraud or undue influence in another.^ So, too, upon similar issues, in order to rebut any presumption that the will was freelj' executed which might arise from the fact that the will remained unre- voked for a considerable time, evidence of the testator's sub- sequent acts or declarations indicating dissatisfaction with or ignorance of the contents of the instrument may be produced.' The declarations of a testator before and at the time of making his will and afterwards, if so near as to be part of the res gestae, are admissible to show fraud or the absence of it* in obtaining a will. But it is generally otherwise of declara- tions at anj'^ distance of time after the will has been executed, especially if the will has been in the testator's possession.* This is held true of declarations made by the testator only six or eight days after executing the will, where there is no 1 Shailer v. Bumstead, 99 Mass. 112. See Jackson v. KnifEen, 2 Johns. 31 ; Waterman v. Whitney, 1 Kern. 157 ; Cotnstock v. Hadlyme Society, 8 Conn. 254 ; Robinson v. Hutchinson, 26 Vt. 47 ; Moritz v. Brough, 16 Serg. & R. 402 ; McTaggart v. Thompson, 14 Penn. St. 149, 154; Boylan u. Meeker, 4 Dutch. 274. But see Reel v. Reel, 1 Hawks, 248 ; Howell v. Barden, 3 Dev. 442. 2 lb. ; Provis v. Reed, 5 Bing. 435 ; Marston ». Roe, 8 Ad. & E. 14. s Shailer v. Bumstead, supra. * Patton V. Allison, 7 Humph. 320 ; Adair v. Adair, 30 Ga. 102. See Thompson v. UpdegrafE, 3 W. Va. 629. 6 Smith V. Fenner, 1 Gall. 170 ; Richardson o. Richardson, 35 Vt. 238. 502 PEOCBDTJEE AND INCIDENTS THEREOF. [CH. XVH evidence that the will was not in his possession at the time.' On the other hand, declarations of the testator made even at the distance of ten years prior 'to the execution of the will, and repeated five years after, have been held admissible to show a fixed purpose to make a will similar to the one in controversy, and to rebut any impression that it was procured fraudulently or by the undue influence of others.^ The rule, therefore, is not so strict as to require that proof of undue influence should be confined to the time of the execution of the will. Still, the party offering the evidence of declarations made at another time must show that they are so connected with the act done as to furnish some reasonable ground of inference that the act was influenced in whole or in part by them.^ Thus, it was held in the case last cited that no reasonable inference adverse to the will in question could be drawn from the mere fact that six years or more before it was executed the testator said' he would not make a will, although the executor and his wife were harrying him to do so. Dis- connected from proof of intervening persuasion, the declaration of the testator was too remote from the act alleged to have been influenced. Mere parol declarations by a testator as to his wishes concerning the disposition of his property, whether made ^ Runkle v. Gates, 11 Ind. 95. It seems to be otherwise of subsequent declarations showing that the will was obtained by coercion. Beaubien V. Cicotte, 12 Mich. 459. And in North Carolina it has been decided that subsequent declarations of the testator are admissible to prove that the will was obtained by fraud, without evidence of the connection of the declarations with the execution of the instrument or that the same was not in the possession of the decedent. At least, the reports are silent upon these two points. Howell v. Barden, 3 Dev. 442 ; Hester o. Hester, 4 Dev. 228. Subsequent declarations of the testator tending to show a deficiency of mental capacity and imposition are admissible. ' Waterman v. Whitney, 11 N. Y. 157. 2 Roberts b. Trawick, 17 Ala. 55. See O'Neil v. Murray, 4 Bradf. 311 ; Neel v. Potter, 40 Penn. St. 483. 8 Bunyard v. McElroy, 21 Ala. 314. § 15.] EVIDENCE. 603 contemporaneously with the execution of the will, or at another time, cannot, in the absence of fraud, be admitted in evidence under the Pennsylvania Statulfe of Wills, so as to affect the written will. The testator himself cannot create a valid parol trust in opposition to the terms of his written will ; but when- ever the testator is induced by the devisee, either by promises or otherwise, to omit from his will a devise which he would have made, had such inducement not been held out to him, there equity (not the testator) raises a trust, and converts the devisee into a trustee for the purpose of compelling him to carry out the intention of the testator, and thus preventing him from perpetrating a fraud by appropriating the property to his own use. But equity never raises such a trust except in cases where the devisee in some way, by words or silence, encour- ages or induces the testator to devise the property to him.^ To avoid a deed for undue influence, it must be shown that the influence existed, and that it was exercised for an undue purpose. The former may be inferred from the relation of the parties to each other ; the latter must be determined from the nature and results of the transaction called in question. Both these points must concur to produce the effect of avoid- ance.^ When the question is of fraud and undue influence in procuring the making of a will, evidence is admissible of facts and declarations which tend to show a motive for the use of fraud and undue influence.^ So, too, the declarations of one who is at the same time executrix and legatee, made before and at the time of the execution of the will, are admissible to show that she exerted an undue influence over the mind of the testator.* Where a will is contested upon the ground of undue influ- 1 Schultz's Appeal, 80 Penn. St. 396, 402. Opinion of auditor, adopted by the court. 2 Millican v. Millican, 24 Tex. 426 ; 2 Lead. Cas. in Equity, 1156 (4th Am; ed.), note to Huguenin v. Baseley. * Lucas V. Parsons, 27 Ga. 593. * Jackson v. Jackson, 82 Ga. 325. 504 PROCBDUEE AND INCIDENTS THEREOF. [CH. XVn. ence or incapacity, it is permissible to inquire whether the provisions of the will are just and reasonable and consonant with the state of the testator's'^amily relations ; and, if they are, that is a circumstance conducing in some degree to es- tablish the capacity of the testator, and the absence of fraud or undue influence in the execution of the will. On the other hand, the fact that the will makes an unnatural and in- equitable distribution of the property is a circumstance tending in the opposite direction, and is proper to be weighed by the jury in pronouncing upon the issue devisavit vel non?- Gross and un- accountable inequalities in the dispositions of a will require, it is said, satisfactory evidence that it was the free and delib- erate choice of a rational, self-poised, and clearly disposing mind. If such evidence be wanting, the will may be set aside.^ Evidence showing from what source a testator derived his estate is admissible upon an issue as to the validity of a will impeached for undue influence on the part of certain of the testator's family, for the purpose of showing that they have a stronger moral claim to his bounty by reason of such evidence than others.^ As relevant to the question of imposition by a beneficiary of the testator to whom he was not related, evidence may be given that the decedent possessed a large fortune, that he had neither wife nor child, and that his relations with such beneficiary were of an intimate business and social character.* As in other cases, fraud in regard to obtaining a will need not be proved, by direct and positive testimony. Any fact, however slight, bearing at all upon the point, and not wholly irrelevant, may be admitted, provided it be strong enough to satisfy the jury of the existence of the fraud.^ Old age 1 Fountain ». Brown, 38 Ala. 72. ^ Harrel v. Harrel, 1 Duv. 203. ' Patterson ». Patterson, 6 Serg. & R. 55. « Frew V. Clarke, 80 Penn. St. 170. ' Davis V. Calvert, 5 Gill & J. 269. Evidence of dispositions of property by a testator in fraud of a valid § 15.] EVIDENCE. 505 alone, however, is not sufficient ground to support a charge of imposition. 1 If a person be charged with procuring the destruction of a will, the party attempting to set it up may prove the declara- tions of such person as part of the res gestae, if they are con- temporaneous with and illustrate the act.^ agreement made upon consideration must be clear and decisive. Mundy V. Foster, 31 Mch. 313. 1 Lewis t). Pead, 1 Ves. Jr. 19. > Batton ». Watson, 13 Ga. 63. 506 PEOCEDUEB AND INCIDENTS THEKEOF. [CH. XVIH. CHAPTER XVIII. DAMAGES. In cases of fraud, the rule of damages is that the wrong- doer must answer for those results, injurious to the other party, which must be presumed to have been within his con- templation at the time of the commission of the fraud.^ As to the meaning of this rule, the opinion of the court, in the case first cited, contains an illustration to this effect : If one should sell timber, which should be used to prop up a building, and, by reason of the imperfection of the timber, the build- ing should fall and be destroyed, the seller, though he had ■ acted Traudulently in the sale, would not be liable beyond the difference in value between good timber and that sold. The consequence of the falling of the building could not have been within the contemplation of the seller. But, if the tim- ber were sold by a carpenter for the very purpose of propping up the building, he would be answerable for all the damage done to the building as the effect of his deceitful representa- tion. In the former case, the result would not be the natural and usual effect of the fraud, as effect follows cause. Rotten timber will break more easily than sound, and such a result 1 Crater ». Binninger, 4 Vroom, 513 ; Marsh v. Webber, 16 Minn. 418 ; s. c. 13 Minn. 109. But, in case of a fraudulent sale and warranty of property, the purchaser may rescind the contract, return the property, and recover back the price paid for it, or he may affirm the contract and recover damages for the fraud. Marsh v. Webber, supra. In the latter case, the plaintifi is entitled to recover all the damages of which the act complained was the efficient cause. Marsh v. Webber, supra; Sherrod V. Langdon, 21 Iowa, 518. It is said to be proper to include attorneys' fees in the suit as part of the damages. Bracken v. Neill, 15 Tex. 109. CH. XVm.j DAMAGES. 607 is the proper effect of the fraud ; but non constat that, when sold for no particular, specified use, the timber will be used to prop up a building, liut, if the timber be sold for the very purpose of propping up a building, it is then the natural and inevitable result of the action of the wrongdoer that the building should fall.^ In the case above referred to,^ the plaintiff had been enticed, by the fraud of the defendant, into an oil speculation ; and it was held that the defendant was liable for the moneys put by the plaintiff into the concern in the ordinary course of business. It is not inconsistent, perhaps, with the principle above laid down, that in an action for damages from the communication of disease by sheep of a vendor who had falsely represented them to be sound, the purchaser ma)' recover for other sheep lost thereby, which he owned at the time of the purchase, though the vendor did not know that he owned other sheep.' .It was certainly presumable that the party had other sheep, at least if he were a dealer in such stock. Contingent damages, however, cannot be recovered in an action for deceit. The plaintiff can recover for actual damages only.* If the vendor of a horse fraudulently conceal the fact that the animal has a contagious or infectious disease, and the purchaser, not knowing or having ground to know the fact, put the horse with other horses, to which such disease is communicated, the purchaser can recover as damages the value of all the horses lost thereby ; ^ or, in case none of the horses are lost or rendered worthless by taking the disease, ' See upon this subject generally Hadley v. Baxendale, 9 Ex. 341 ; Woodyer v. Great Western Ry. Co., Law R. 2 C. B. 318; Mullett o. Mason, Law R. 1 C. B. 557 ; Gary v. Thames Iron ^Vorks, Law R. 3 Q. B. 181 ; Portman v. Middleton, 4 C. B. n. s. 322 ; Bramley v. Chesterton, 2 C. B. N. s. 592 ; Hamilton w. MePherson, 28 N. Y. 76 ; Taffin v. Colver, 16 N. Y. 494; Abbott v. Gatch, 13 Md. 314. 2 Crater v. Binninger, 4 Vroom, 513. * Sherrod v. Langdon, 21 Iowa, 518. ■* Kimmans v. Chandler, 13 Iowa, 327. 6 Johnson u. Wallower, 18 Minn. 288 ; s. c. 15 Minn. 474. 508 PROCEDURE AND INCIDENTS THEREOF. [CH. XVni. he can recover the difference between their value after sick- ness and their value before, with doubtless the cost of attempt- ing to cure them. And the same is true of a warranty of sheep, sold as sound, which in fact have an infectious disease. The purchaser is entitled to recover for the whole loss caused by the presence of the diseased sheep among those which caught the disease after the sale, without the purchaser's fault, as well as for the loss of the very sheep infected at the time of the jjale.^ And this, too, whether the spread of the infection was confined to the flock purchased, or, as we have seen, extended to other flocks of the purchaser with which the diseased sheep were (without fault) placed.^ It is now well settled that, in actions for deceit or breach of warranty in sales, the measure of damages is the difference between the actual value of the property at the time of the purchase, and its value if the property had been what it was represented or warranted to be.^ The price paid for the property is strong but not conclusive evidence of its value, as it was represented to be.* And, where the price paid for one animal is another animal, the age, appearance, and qualities 1 Marsh v. Webber, 16 "Minn. 418; Bradley b. Rea, 14 Allen, 20; Wentz V. Morrison, 17 Tex. 372. ^ Marsh v. Webber, supra; Sherrod v. Langdon, 21 Iowa, 518; ante, p. 507. " Gray, J., in Morse v. Hutchins, 102 Mass. 439 ; Stiles v. White, 11 Met. 356 ; Tuttle v. Brown, 4 Gray, 457 ; WMtmore v. South Boston Iron Co., 2 Allen, 52 ; Fisk v. Hicks, 31 N. H. 535 ; Woodward v. Thacher, 21 Vt. 580 ; Muller v. Eno, 4 Kern. 597 ; Sherwood v. Sutton, 5 Mason, 1 ; Loader v. Kekul6, 3 Com. B. n. s. 128; Dingle v. Hare, 7 Com. B. n. s. 145 ; Jones v. Just, Law R. 3 Q. B. 197 ; Drew v. Beall, 72 111. 164 ; Wallace v. Wren, 32 111. 146. In the absence of fraud, the measure of damages for the breach of an executory contract of sale is the sum paid and expenses incurred. If, therefore, no money has been paid, the recovery is nominal. But, if there be fraud in the defendant, the plaintifE may recover the value of his bargain. Thompson v. Sheplar, 72 Penn. 160. * Carr'u. Moore, 41 N'. H. 131 ; Fisk v. Hicks, 31 N. H. 535; Gary V. Gruman, 4 Hill, 625; Page v. Parker, 40 N. H. 47; s. c. 43 N. H. 363 ; Stiles v. White, 11 Met. 356. CH. XVin.J DAMAGES. 609 of the latter animal, and the price for which it sold, are com- petent to be considered by the jury as determining the value of the formed. So, too, the price at which other property, of like character, was actually sold in the vicinity, at or about the same time, may be shown in evidence ; ^ and, in the case of horses, evidence of such sales a year after the date of the transaction in controversy is competent.^ Where an action is brought upon a promissory note or bill of exchange, by the payee, the defendant may go back of the contract sued upon, and prove a warranty or a fraud in the sale of property, for the price of which the note or bill was given, and recoup the damages occasioned to him by the fraud or the breach of that warranty.* So, in an action for deceit in the exchange of property, the defendant may recoup the plaintiff's deceit, practised upon the defendant in respect of the property transferred to the latter in the ex- change.* But, in determining the measure of damages to be awarded to a purchaser, who has been deceived as to the value of his purchase, the jury are not authorized to consider the value of any property which the plaintiff may have given in exchange for that in suit,^ unless the plaintiff was guilty of fraud in relation to it. In an action for false representations in the sale of an interest in a partnership, the measure of damages is the dif- ference between the actual value of the defendant's interest and its value as it would have been, had the representations been true.* In an action for false representations in the sale of corpo- 1 Carr v. Moore, 41 N. H. 131 ; White v. Concord R. Co., 30 N. H. 188 ; Beard o. Kirk, 11 N. H. 397. " Carr v. Moore. 8 Carey v. Gwillow, 105 Mass. 18 ; Perley v. Balch, 23 Pick. 283 ; Burnett v. Smith, 4 Gray, 50; Dorr u. Fisher, 1 Cush. 271, 275. * Carey v. Gwillow, 105 Mass. 18. Contra, Odom v. Harrison, 1 Jones (N. Car.), 402. 6 Drew V. Beall, 62 111. 164. » Morse v. Hutchins, 102 Mass. 439. 510 PROCEDUEB AND INCrDENTS THEREOF. [CH. XVIH. ration stock, the general rule as to the measure of damages is the difference between the value of the stock, as it really was at the time of the plaintiff's purchase, and what its value would have been, had the representations of the vendor been true. The sum paid by the purchaser for the stock, and afterwards as assessments therefor, with interest, does not constitute the measure, except in so far as such assessments were rendered necessary by the false representations.^ Nor is the market value of the stock at the time of purchase conclusive of its actual value, since the real condition of the company may not be known at the time. The purchaser is not bound to sell it then, but may keep it until its true value at that time can be ascertained, as the basis of his right to damages.^ The measure of damages in an action for falsely represent- ing a note to be due and unpaid, thereby inducing the plain- tiff to purchase it, is the full amount of the note. The jury will not be allowed to make an estimate of the market value of the note.^ So, in an action for damages sustained by false representations as to the quantity of land conveyed by the defendant, the measure of damages is the contract price per acre, with interest, for the amount of the deficit.* But, in cases of rescission, the courts will adopt a valuation set upon the property or parcels of it by the parties, only when such valuation appears to be not unconscionable, and fiee from fraud, and both parties had an equal opportunity to judge of such value.^ If an owner of land make a contract to convey the same, upon which the consideration is paid, and then purposely put it out of his power to convey, by granting the premises to 1 Bowman v. Parker, 40 Vt. 410. 2 Hubbell V. Meigs, 50 N. Y. 480. » Sibley v. Hulbert, 15 Gray, 509. * Hallam v. Todliunter, 24 Iowa, 166. ' Franklin v. Greene, 2 Allen, 519. CH. XVITI.] DAMAGES. 511 another, the measure of damages in favor of the party thus defrauded is not merely the price paid, and interest, but com- pensation for the actual loss sustained, including any enhanced value of the property at the time the contract should have been performed .^ Where parties have by fraud induced another innocently to convert the property of a third person for their benefit, and have undertaken his defence in trover brought by the latter, and have failed, and execution has been levied upon sufficient of his property to satisfy ^ihe judgment, the measure of his damages, in an action against such parties for the fraud, is the amount of the judgment against him, with interest, though he has not in fact paid such judgment.^ If it appear, in an action for money had and received, that the defendant has fraudulently obtained the plaintiff's money, he is chargeable with interest from the time he so obtained it, and not merely from the time of demand of restitution.^ A distinction is to be observed between a promise obtained by fraud and a promise fairly obtained, but some part of the consideration of which is fraudulent. In the one case, the promise itself is not binding ; in the otlier. it is valid. For example, if a note be given for goods sold, the quality of which was fraudulently concealed or misrepresented, or if the knowl- edge of an overcharge for the same was fraudulently concealed by the seller, the note could be avoided in toto; but, if the note was obtained fairly, the buyer could not avoid it by showing that the seller had made fraudulent charges in respect of some of the items in the bill of goods. The sale would be valid in such case ; and the courts would only grant a reduc- tion of damages to the purchaser.^ ^ Burdiok r. Seymour, 39 Iowa, 452, making the distinction between such an action and an action upon a warranty. Foley v. McKeegan, 4 Iowa, 1. 2 Kenyon r. Woodruff, 33 Mich. 310. 8 Atlantic Bank v. Harris, 118 Mass. 147; Wood v. Robbins, 11 . Mass. 504. * Haycock v. Rand, 5 Cush. 26. 612 PEOCEDTJEE AND INCIDENTS THEEEOP. [CH. XVIH. The fraudulent conduct of a trustee towards his cestui que trust is not to be palliated by evidence of subsequent events of a mere accidental nature, which, had it not been for the trustee's misconduct, would have injuriously affected the in- terest of the cestui que trust. The trustee must account for his misconduct, without regard to such events. Thus, where a trustee colluded with a remainder-man and with tenants of the cestui que trust, tenant for life, and caused her to be ejected and to lose her rents, it was determined that the subsequent insolvency of some of these tenants could not be taken into consideration in measuring the damages due the beneficiary from her trustee by reason of his misconduct.-* In a leading case in England, the Lord Chancellor, having a similar matter in view, put this question : Suppo^ an estate to be of the value of £50,000, and a trustee buys it for him- self for .£40,000, committing a great fraud upon his cestui que trust. By reason of the calamities of war or other general distress, landed property sinks in value more than one-fifth, and the trustee then sells the estate for £35,000. Would it not be true that he would be bound to pay the £10,000 as a satisfaction for the fraud committed by him, though he had actually received less for the estate than he had paid for it ? The money would be due, not in consequence of what the trustee sold the land for, but of what the cestui que trust lost by the first act of the trustee at the time. The only conse- quence in a court of equity, it was observed, is that what one party lost by the undue advantage taken by the other must be made good.^ Damages upon allegations of fraud, even under the New York Code, cannot be recovered in an action ex contractu, so far as they are distinct from the damages arising by reason of the breach of contract.^ And, on the other hand, where the ' Kaye v. Powel, 1 Ves. Jr. 408. 2 Fox V. Mackreth, 2 Cox, 320, 322. » Graves v. Waite, 59 N. Y. 156. CH. XVin.] DAMAGES. 513 form of action is ex delicto damages, as in an action of con- tract, cannot be awarded.^ In cross-actions for damages, whereby a party has been drawn by fraud into a contract which has passed into judg- ment (without issue as to the matter of fraud), it would seem that the measure of damages would be the extent of the injury suffered by reason of the fraud, less any benefit derived under the contract, regardless of the existence of the judgment for the opposite party. If the contract had been accepted without suit, it is clear that the measure of damages in an action for the fraud would not be affected by the fact that the injured party had elected to treat the contract as binding, except in so far as he had received a benefit from it ; and the fact that the contract has passed into the higher form of a judgment could not make the case different. Exemplary damages are allowable, it is held, in an action for deceit, when the evidence tends to show that the defend- ant wUfuUy purposed to deceive and defraud the plaintiff.^ 1 Barnes v. Quigley, 59 N. Y. 265. 2 Nye V. Merriam, 35 Vt. 438; Byram v. McGuire, 8 Head, 530 ; Oliver v. Chapman, 15 Tex. 400. STATUTES. FRAUD ON CREDITORS AND PURCHASERS. STATUTES. FRAUD ON CREDITORS AND PURCHASERS. [purely criminal statutes are omitted.] ENGLAND. XIII. Elizabeth, Chapter V. § 1. Fraudulent deeds made to avoid the debts of others shall be void ; and the penalties of the parties to such fraudulent assurances. _ § 2. All fraudulent conveyances made to avoid the debt or duty of others shall be void. § 3. The forfeiture of the parties to fraudulent deeds. § 4. Common recoveries against the tenants of .freehold. § 5. Making an estate whereby a voucher may be used in a formedon. § 6. Estates upon good consideration and bona fide. § 1. Foe the avoiding and abolishing of feigned, covinous, and fraudulent feoffments, gifts, grants, alienations, convey- ances, bonds, suits, judgments, and executions, as vrell of lands and tenements as of goods and chattels, more commonly used and practised in these days than hath been seen or heard of heretofore : vrhich feoffments, gifts, grants, alienations, convey- ances, bonds, suits, judgments, and executions have been and are devised and contrived of malice, fraud, covin, collusion, or guile, to the end, purpose, and intent to delay, hinder, or de- fraud creditors and others of their just and lawful actions, suits, debts, accounts, damages, penalties, forfeitures, heriots, mortuaries, and reliefs, not only to the let or hinderance of the 518 PEATJD ON CREDITORS AND PURCHASERS. due course and execution of law and justice, but also to the overthrow of all true and plain dealing, bargaining, and che- visance between man and man, without the which no Common- wealth or civil society can be maintained or continued : § 2. Be it therefore declared, ordained, and enacted by the authority of this present Parliament, that all and every feoff- ment, gift, grant, alienation, bargain, and conveyance of lands, tenements, hereditaments, goods, and chattels, or any of them, or of any lease, rent, common, or other profit or charge out of the same lands, tenements, hereditaments, goods, and chattels, or any of them, by writing or otherwise, and all and every bond, suit, judgment, and execution, at any time had or made sithence the beginning of the. Queen's Majesty's reign that now is, or at any time hereafter to be had or made, to or for any intent or purpose before declared or expressed, shall be from henceforth deemed and taken (only as against that person or persons, his or their heirs, successors, executors, administrators and assigns, and every of them, whose actions, suits, debts, accounts, damages, penalties, forfeitures, heriots, mortuaries, and reliefs, by such guileful, convinous, or fraudu- lent devices and practices as is aforesaid, are, shall, or might be in any ways disturbed, hindered, delayed, or defrauded), to be clearly and utterly void, frustrate, and of none effect ; any pretence, color, feigned consideration, expressing of use, or any other matter or thing to the contrary, notwithstanding. § 3. And be it further enacted by the authority aforesaid, that all and every the parties to such feigned, covinous, or fraudulent feoffment, gift, grant, alienation, bargain, convey- ance, bonds, suits, judgments, executions, and other things before expressed, and being privy and knowing of the same, or any of them, which after the tenth day of June next coming shall wittingly put in use, avow, maintain, justify, or defend the same, or any of them, as true, simple, and done, had, or made, bona fide and upon good consideration ; or shall alien or assign any the lands, tenements, goods, leases, or ENGLAND. 519 other things before mentioned, to him or them conveyed as is aforesaid, or any part thereof, shall incur the penalty and forfeiture of one year's value of the said lands, tenements, and hereditaments, leases, rents, commons, or other profits of or out of the same ; and the whole value of the said goods and chattels ; and also so much money as are or shall be con- tained in any such covinous and feigned bond, the one moiety whereof to be to the Queen's Majesty, her heirs and successors, and the other moiety to the party or parties grieved by such feigned and fraudulent feoffment, gift, grant, alienation, bargain, conveyance, bonds, suits, judgments, executions, leases, rents, commons, profits, charges, and other things afore- said, to bje recovered in any of the Queen's courts of record, by action of debt, bill, plaint, or information, wherein no essoin, protection, or wager of law shall be admitted to the defendant or defendants ; and also, being thereof lawfully convicted, shall suffer imprisonment for one half year without bail ox mainprise. § 4. Provided always, and be it further enacted by the authority aforesaid, that whereas sundry common recoveries of lands, tenements, and hereditaments have heretofore been had and hereafter may be had against tenant in tail, or other tenant of the freehold, the reversion or remainder, or the right of reversion or remainder, then being in any other jjerson or persons, that every such common recovery heretofore had, or hereafter to be had, of any lands, tenements, or heredita- ments, shall as touching such person or persons which then had any remainder or reversion, or right of remainder or reversion, and against the heirs of every of them, stand, remain, and be of such like force and effect, and of none otTier, as the same should have been, if this act had never been had ne made. § 5. Provided always, and be it further enacted by the authority aforesaid, that this act, or any thing therein con- tained, shall not extend to make void any estate or convey- ance, by reason whereof any person or persons shall use any 520 FKAUD ON CEEDITOES AST} PUECHASERS. voucher in any writ of formedon now depending or hereafter to be depending, but that all and every such vouchers in any writ of formedon shall stand and be in like force and efFect, as if this act had never been had ne made ; any thing before in this act contained to the contrary, notwithstanding. § 6. Provided also, and be it enacted by the authority aforesaid, that this act, or any thing therein contained, shall not extend to any estate or interest in lands, tenements, here- ditaments, leases, rents, commons, profits, goods, or chattels, had, made, conveyed, or assured, or hereafter to be made, conveyed, or assured, which estate or interest is or shall be upon good consideration and bona fide lawfully conveyed or assured to any person or persons, or bodies politic or corpo- rate, not having at the time of such conveyance or assurance to them made any manner of notice or knowledge of such covin, fraud, or collusion as is aforesaid ; any thing before mentioned to the contrary hereof, notwithstanding. XXVII. Elizabeth, Chapter IV. § 1. Preamble. § 2. Fraudulent conveyances made to deceive purchasers shall be void. § 3. The penalty of the parties to fraudulent conveyances, who do avow the same. § 4. Conveyances made upon good considerations and honajide. § 5. Lands first conveyed with condition of revocation or alteration, and after sold for money or other good consideration. § 8. Mortgages lawfully made. § 7. Statutes merchant, &c., shall be entered in the office of the Clerk of Recognizances. § 8. The statute not entered void against the purchaser. § 9. The forfeiture of the clerk not entering or not indorsing a statute. § 10. Clerk of Recognizances' fees to search. § 11. Assurance of lands defeated, and the party in possession at the time of the statute. § 12. The authority of the Court of Star Chamber. § 1. Forasmuch as not only the Queen's most excellent Majesty, but also divers of her Highness's good and loving sub- ENGLAND. 621 jects, and bodies politic and corporate, after conveyances ob- tained or to be obtained, and purchases made or to be made, of lands, tenements, leases, estates, and hereditaments, for money or other good considerations, may have, incur, and receive great loss and prejudice by reason of fraudulent and covinous con- veyances, estates, gifts, grants, charges, and limitations of uses heretofore made or hereafter to be made of, in, or out of lands, tenements, or hereditaments so purchased or to be pur- chased ; which said gifts, grants, charges, estates, uses, and conveyances were, or hereafter shall be, meant or intended by the parties that so make the same to be fraudulent and covinous, of purpose and intent to deceive such as have purchased or shall purchase the same ; or else by the secret intent of the parties the same be to their own proper use, and at tbeir free disposition, colored nevertheless by a feigned countenance and show of words and sentences, as though the same were made bona fide, for good causes, and upon just and lawful considerations : § 2. For remedy of which inconveniences, and for the avoid- ing of such fraudulent, feigned, and covinous conveyances, gifts, grants, charges, uses, and estates, and for the mainten- ance of upright and just dealing in the purchasing of lands, tenements, and hereditaments : Be it ordained and enacted, by the authority of this present Parliament, that all and every conveyance, grant, charge, lease, estate, encumbrance, and limitation of use or uses, of, in, or out of any lands, tenements, or other hereditaments whatsoever, had or made any time heretofore sithence the beginning of the Queen's Majesty's reign that now is, or at any time hereafter to be had or made, for the intent and of purpose to defraud and deceive such person or persons, bodies politic or corporate, as have purchased or shall afterward purchase in fee-simple, fee-tail, for life, lives, or years, the same lands, tenements, and hereditaments, or any part or parcel thereof, so formerly conveyed, granted, leased, charged, encumbered, or limited in use, or to defraud 522 FEATJD ON CEEDITOKS AND PTJECHASEKS. and deceive such as have or shall purchase any rent, profit, or commodity in or out of the same, or any part thereof, shall be deemed and taken only as against that person or persons, bodies politic and corporate, his and their heirs, successors, executors, administrators, and assigns, and against all and every other person or persons, lawfully having or claiming by, from, or under them, or any of them, ■which have purchased or shall hereafter so purchase for money or other good consid- eration, the same lands, tenements, or hereditaments, or any part or parcel thereof, or any rent, profit, or commodity, in or out of the same, to be utterly void, frustrate, and of none effect; any pretence, color, feigned consideration, or expressing of any use or uses to the contrary, notwith- standing. § 3. And be it further enacted by the authority aforesaid, that all and every the parties to such feigned, covinous, and fraudulent gifts, grants, leases, charges, or conveyances before expressed, or being privy and knowing of the same or any of them, which after the twentieth day of April next coming shall wittingly and willingly put in use, avow, maintain, jus- tify, or defend the same or any of them, as true, simple, and done, had, or made, bona fide, or upon good consideration, to the disturbance or hinderance of the said purchaser or pur- chasers, lessees or grantees, or of or to the disturbance or hinderance of their heirs, successors, executors, administrators, or assigns, or such as have or shall lawfully claim any thing by, from, or under them or any of them, shall incur the penalty and forfeiture of one year's value of the said lands, tenements, and hereditaments so purchased or charged; the one moiety whereof to be to the Queen's Majesty, her heirs and successors, and the other moiety to the party or parties grieved by such feigned and fraudulent gift, grant, lease, conveyance, encum- brance, or limitation of use, to be recovered in any of the Queen's courts of record, by an action of debt, bill, plaint, or information, wherein no essoin, protection, or wager of law ENGLAND. 523 shall be admitted for the defendant or defendants ; and also, being thereof lawfully convicted, shall suffer imprisonment for one-half year without bail or mainprise. § 4. Provided also, and be it enacted by the authority afore- said, that this act, or any thing therein contained, shall not extend or be construed to impeach, defeat, make void, or frus- trate any conveyance, assignment of lease, assurance, grant, charge, lease, estate, interest, or limitation of use or uses, of, in, to, or out of lands, tenements, or hereditaments heretofore at any time had or made, or hereafter to be had or made, upon or for good consideration and hona fide to any person or per- sons, bodies politic or corporate ; any thing before mentioned to the contrary hereof, notwithstanding. § 5. And be it further enacted by the authority aforesaid, that if any person or persons have heretofore, sithence the beginning of the Queen's Majesty's reign that now is, made or hereafter shall make any conveyance, gift, grant, demise, charge, limitation of use or uses, or assurance of, in, or out of any lands, tenements, or hereditaments, with any clause, pro- vision, article, or condition of revocation, determination, or alteration, at his or their will or pleasure, of such conveyance, assurance, grants, limitations of uses or estates of, in, or out of the said lands, tenements, or hereditaments, or of, in, or out of any part or parcel of them, contained or mentioned in any writing, deed, or indenture of such assurance, conveyance, grant, or gift ; and after such conveyance, grant, gift, demise, charge, limitation to uses, or assurance so made or had, shall or do bargain, sell, demise, grant, convey, or charge the same lands, tenements, or hereditaments, or any part or parcel thereof, to any person or persons, bodies politic and corporate, for money or other good consideration paid or given (the said first conveyance, assurance, gift, grant, demise, charge, or limitation, not by him or them revoked, made void, or altered, according to the power and authority, of expressed unto him or them in and by the said secret conveyance, assurance, gift 524 FBAtTD ON CEEDITOES AND PURCHASERS. or grant), that then the said former conveyance, assurance, gift, demise, and grant, as touching the said lands, tenements, and hereditaments, so after bargained, sold, conveyed, demised, or charged against the said bargainees, Vendees, lessees, grantees, and every of them, their heirs, successors, executors, administrators, and assigns, and against all and every person and persons which have, shall, or may lawfully claim any thing by, from, or under them or any of them, shall be deemed, taken, and adjudged to be void, frustrate, and of none effect, by virtue and force of this present act. § 6. Provided, nevertheless, that no lawful mortgage made or to be made hona fide, and without fraud or covin, upon good consideration, shall be impeached or impaired by force of this act, but shall stand in the like force and effect as the same should have done, if this act had never been had nor made ; any thing in this act to the contrary in any wise, n ot with stan din g. § 7. And be it further enacted by the authority aforesaid, that all the whole tenor and contents of all statutes-merchant and statutes of the staple, hereafter to be knowledged, shall, within six months next after such knowledging, be entered in the office of the Clerk of Recognizances, taken according to the statute made in the three-and-twentieth year of the reign of the late King Henry the Eighth, by the showing forth of the said statute-merchant or statute-staple so knowledged unto the said clerk ; which said Clerk of the Recognizances shall enter, or cause to be entered, tlie same statutes into a book for that purpose to be provided and safely kept by him, taking eightpence and no more for every such entry. § 8. And be it further enacted, that if the party to whom such statute-merchant or of the staple shall be knowledged, his executors, or administrators, do or shall not, within four months next after the knowledging of any such statute, bring and deliver, or cause to be brought and delivered, unto the ENGLAND. 625 said clerk, or his deputy or deputies for the time being, all and every such statute and statutes as shall be so knowledged to him or to his use, whereby and to the intent that the said clerk, his deputy, or deputies, may take and enter a true copy thereof, that then every such statute-merchant and of the staple not so entered shall be void, frustrate, and of none effect, against all and every such person and persons, and bodies politic and corporate, their heirs, successors, executors, administrators, and assigns only, as shall after the knowledging of the said statutes, or any of them, purchase for money or other good consideration the lands, tenements, or heredita- ments which were liable to the same statute-merchant or of the staple, or any part or parcel thereof, or any rent, lease, or profit of or out of the same. § 9. And if the said clerk, or his deputy or deputies for the time being, shall not upon such showing and delivery unto him or them of any statute-merchant or of the staple enter or cause to be entered the same in his said book within the said time of six months, and also indorse upon every such statute so by him entered the day and year of his said entry, with his or their own name, then every such clerk failing or de- fective in that behalf shall forfeit and lose for every statute- merchant and of the staple so brought unto him or them, and not entered and indorsed, or caused to be entered and indorsed as aforesaid, the sum of twenty pounds ; the one moiety whereof to be to the Queen's Majesty, her heirs and suc- cessors, and the other moiety to him or them that will sue for the same in any of the Queen's courts of record, by action of debt, bill, plaint, or information, wherein no essoin, protec- tion, or wager of law shall be allowed. § 10. And be it further enacted by the authority aforesaid, that no Clerk of the said Recognizances shall or may take, for or in respect of any search to be made for or concerning any statute-merchant or of the staple so to be entered as afore- said, above twopence for one year's search, and so after the 626 PKATJD ON CEEDITOES AND PUECHASEES. rate of twopence for every year and not above, upon pain to for- feit and lose to the party or parties grieved thereby twenty times as much as he shall take contrary to the true meaning of this act, to be recovered in any of the Queen's Majesty's courts of record, by action of debt, bill, plaint, or information, wherein no protection or wager of law shall be allowed. This act to continue for the space of ten years, and from thenceforth unto the end of the Parliament then next following. § 11. Provided always, that this act, nor any thing therein contained, shall extend or be construed to make good any purchase, grant, lease, charge, or profit of, in, or out of any lands, tenements, or hereditaments heretofore made void, defeated, or undone by reason of any former conveyance, grant, or assurance, so as the party or parties, or their heirs or assigns, which have so defeated or made void the same, were in actual possession the first day of the present Parlia- ment, of or in the said lands, tenements, or hereditaments whereof or out of which any such purchase, grant, lease, charge, or profit was made. § 12. Provided that this act, nor any thing therein con- tained, shall extend in any sort to restrain or impair the jurisdiction, power, or authority of the Court of Star Cham- ber. [Made perpetual by Stat. 39 Eliz. c. 18, § 32.] III. WiLiaAM AND Maey, Chaptbb XIV. • § 1. Preamble. § 2. Wills fraudulent against creditors. § 1. Whereas, it is not reasonable or just that by the prac- tice or contrivance of any debtors their creditors should be defrauded of their just debts ; and nevertheless it hath often so happened that where several persons having by bonds or other specialties bound themselves and their heirs, and have ENGLAND. 627 afterwards died seized in fee-simple of and in manors, mes- suages, lands, tenements, and hereditaments, Or had power or authority to dispose of or charge the same by their last wills or testaments, have to the defrauding of such their creditors, by their last wills or testaments, devised the same, or disposed thereof in such manner as such creditors have lost their said debts ; for the remedying of which, and for the maintenance of just and upright dealing, — § 2. Be it enacted and declared by the King's and Queen's most excellent Majesties, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, that all wills and testaments, limitations, dispositions, or appointments of or concerning any manors, messuages, lands, tenements, or hereditaments, or of any rent, profit, term, or charge out of the same, whereof any person or per- sons, at the time of his or their decease, shall be seized in fee-simple, in possession, reversion, or remainder, or have power to dispose of the same b}' his, her, or their last wills or testaments, to be made after the five-and- twentieth day of March in the year of our Lord God one thousand six hundred ninety-and-two, shall be deemed and taken (only as against such creditor or creditors as aforesaid, his, her, or their heirs, successors, executors, administrators, and assigns, and every of them) to be fraudulent, and clearly, absolutely, and utterly void, frustrate, and of none effect ; any pretence, color, feigned or presumed consideration, or any other matter or thing to the contrary, notwithstanding. § 3. And for the means that such creditors may be enabled to recover their said debts, be it further enacted by the authority aforesaid, that in the cases before mentioned every such creditor shall and may have and maintain his, her, and their action and actions of debt upon his, her, and their said bonds and specialties, against the heir and heirs-at-law of such obligor or obligors, and such devisee and devisees. 528 FRAUD ON CKBDIT0B8 AND PUECHASEES. jointly by virtue of this act ; and such devisee or devisees shall be liable and chargeable for a false plea by him or them pleaded, in the same manner as any heir should have been for any false plea by him pleaded, or for not confessing the lands or tenements to him descended. UNITED STATES. 529 UNITED STATES. Kevised Statutes, 1875, Title 61, Chapter III. § 5021. Acts of bankruptcy, § 5021. Any person residing within the jurisdiction of the United States and owing debts provable in bankruptcy exceeding the amount of three hundred dollars, ^ — First. Who departs from the State, district, or territory of which he is an inhabitant with intent to defraud his creditors ; or, being absent, remains absent with such intent ; or. Second. Who conceals himself to avoid the service of legal process in any action for the recovery of a debt or demand provable in bankruptcy; or, Third. Who conceals or removes any of his property to avoid its being attached, taken, or sequestered on legal process ; or, Fourth. Who makes any assignment, gift, sale, conveyance, or transfer of his estate, property, rights, or credits, either within the United States or elsewhere, with intent to delay, defraud, or hinder his creditors ; or. Seventh. Who, being bankrupt or insolvent, or in contem- plation of bankruptcy or insolvency, makes any payment, gift, grant, sale, conveyance, or transfer of money or other property, estate, rights, or credits, or gives any warrant to confess judgment ; or procures or suffers his property to be taken on legal process, with intent to give a preference to one 1 In re Marvin, I Dill. 178. 84 530 FEATJD ON CEEDITOKS AND PUECHASBKS. or more of his creditors, or to any person or persons who are or may be liable for him as indorsers, bail, sureties, or other- wise, or with the intent, by such disposition of his property, to defeat or delay the operation of this act ; ^ or. Eighth. Who, being a banker, broker, merchant, trader, manufacturer, or miner, has fraudulently stopped payment, or who has stopped or suspended and not resumed payment of his commercial paper, within a period of fourteen days, shall be deemed to have committed an act of bankruptcy, and to have become liable to be adjudged a bankrupt. And, if such person shall be adjudged a bankrupt, the assignee may recover back the money or other property so paid, conveyed, sold, assigned, or transferred contrary to this title, provided the person receiving such payment or conveyance had reason- able cause to believe that a fraud on this title was intended, and that the debtor was insolvent, and such creditor shall not be allowed to prove his debt in bankruptcy .^ Chapter V. § 5110. Grounds of opposing discharge. § 5110. No discharge shall be granted, or, if granted, shall be valid, in any of the following cases : — First. If the bankrupt has wilfully sworn falsely in his affidavit annexed to his petition, schedule, or inventory, or upon any examination in the course of the proceedings in bankruptcy, in relation to any material fact.^ Second. If the bankrupt has concealed any part of his es- 1 Wright V. Filley, 1 Dill. 171 ; In re Wynne, 4 Bank. Reg. h ; Inre Merchant Insurance Co., 6 Bank. Reg. 43 ; In re Bibblee, 3 Ben. 288. * In re Massachusetts Brick Co., 5 Bank. Reg. 408 ; In re Patent Bolt Co., 3 Ben. 369. ' In re Beardsley, 1 Bank. Reg. 52 ; In re Solomon, 2 Bank. Reg. 94; In re Needham, 2 Bank. Reg. 124 ; In re Keefer, 4 Bank. Reg. 126 ; In re Snuth, 5 Bank. Reg. 20 ; In re Rainsford, 5 Bank. Reg. 381. UNITED STATES. 531 tate or effects, or any books or writings relating thereto, or has been guilty of any fraud or negligence in the care, custody, or delivery to the assignee of the property belonging to him at the time of the presentation of his petition and inventory, excepting such property as he is permitted to retain under the provisions of this title, or if he has caused, permitted, or suffered any loss, waste, or destruction thereof.^ Third. If, within four months before the commencement of such proceedings, the bankrupt has procured his lands, goods, money, or chattels to be attached, sequestered, or seized on execution.^ Fourth. If at any time after the second day of March, eigh- teen hundred and sixty-seven, the bankrupt has destroyed, mutilated, altered, or falsified any of his books, documents, papers, writings, or securities, or has made or been privy to the making of any false or fraudulent entry in any book of account or other document, with intent to defraud his cred- itors, or has removed or caused to be removed any part of his property from the district with intent to defraud his creditors. Fifth. If the bankrupt has given any fraudulent preference contrary to the provisions of the act of March two, eighteen hundred and sixty-seven, to establish a uniform system of bankruptcy, or to the provisions of this title, or has made any fraudulent payment, gift, transfer, conveyance, or assign- ment of any part of his property, or has lost any part thereof in gaming, or has admitted a false or fictitious debt against his estate.^ 1 In re Hill, 1 Bank. Keg. 114 ; In re Rathbone, 1 Bank. Reg. 145 ; In re O'Bannon, 2 Bank. Reg. 6 ; In re Solomon, 2 Bank. Reg. 94 ; In re Goodridge, 2 Bank. Reg. 105 ; In re Hussman, 2 Bank. Reg. 140 ; In re White, 2 Bank. Reg. 179 ; In re Beal, 2 Bank. Reg. 178 ; In re Rainsford, 5 Bank. Reg. 381. ^ In re Belden, 2 Bank. Reg. 14. « In re Rosenfeld, 1 Bank. Reg. 161 ; 8. c. 2 Bank. Reg. 49 ; In re Metzger, 2 Bank. Reg. 114 ; In re Locke, 2 Bank. Reg. 128 ; In re Free- man, 4 Bank. Reg. 17 ; In re Warner, 5 Bank. Reg. 414. 532 PEAITD ON CEEDITOKS AND PXJECHASEES. Sixth. If the bankrupt, having knowledge that any person has proved such false or fictitious debt, has not disclosed the same to his assignee within one month after such knowledge. Seventh. If the bankrupt, being a merchant or tradesman, has not, at all times after the second day of March, eighteen hundred and sixty-seven, kept proper books of account.' Eighth. If the bankrupt, or any person in his behalf, has procured the consent of any creditor to the discharge, or influenced the action of any creditor at any stage of the pro- ceedings, by any pecuniary consideration or obligation.^ Ninth. If the bankrupt has, in contemplation of becoming bankrupt, made any pledge, payment, transfer, assignment, or conveyance of any part of his property directly or indi- rectly, absolutely or conditionally, for the purpose of pre- ferring any creditor or person having a claim against him, or who is or may be under liability for him, or for the purpose of preventing the property from coming into the hands of the assignee, or of being distributed in satisfaction of his debts.* Tenth. If the bankrupt has been convicted of any mis- demeanor under this title. Chapter VIII. § 5128. Preferences by insolvent. § 5129. Fraudulent transfers of property. § 5130. Presumptive evidence of fraud. § 5128. If any person, being insolvent, or in contem- plation of insolvency, within four months before the filing of the petition by or against him, with a view to give a prefer- 1 In re Cocks, 3 Ben. 260 ; In re Solomon, 2 Bank. Heg. 94 ; In re Newman, 2 Bank. Reg. 99 ; In re Gay, 2 Bank. Reg. 114 ; In re Mur- dock, 4 Bank. Reg. 17 ; In re Tyler, 4 Bank. Reg. 27 ; In re Bound, 4 Bank. Reg. 164. 2 In re Mawson, 2 Ben. 332 ; In re Mawson, 2 Ben. 412. ' In re Brodhead, 3 Ben. 106 ; In re Freeman, 4 Bank. Reg. 17 ; In re Critew, 5 Bank. Reg. 423. UNITED STATES. 633 ence to any creditor or person having a claim against him, or who is under any liability for him, procures or suffers any part of his property to be attached, sequestered, or seized on execution, or makes any payment, pledge, assignment, trans- fer or conveyance of any part of his property, either directly or indirectly, absolutely or conditionally, the person receiv- ing such payment, pledge, assignment, transfer, or convey- ance, or to be benefited thereby, or by such attachment, having reasonable cause to believe such person is insolvent, anci that such attachment, payment, pledge, assignment, or conveyance is made in fraud of the provisions of this title, the same shall be void, and the assignee may recover the property, or the value of it, from the person so receiving it, or so to be benefited.^ § 5129. If any person, being insolvent, or in contem- plation of insolvency or bankruptcy, within six months before the filing of the petition by or against him, makes any pay- ment, sale, assignment, transfer, conveyance, or other dispo- sition of any part of his property to any person who then has reasonable cause to believe him to be insolvent, or to be act- ing in contemplation of insolvency, and that such payment, sale, assignment, transfer, or other conveyance is made with a view to prevent his property from coming to his assignee in bankruptcy, or to prevent the same from being distributed under this act, or to defeat the object of, or in any way im- 1 Toof V. Martin, 13 Wall. 40 ; Traders' Bank v. Campbell, 14 Wall. 87 ; Gibson v. Warden, 14 Wall. 244 ; Buchanan v. Smith, 16 Wall. 277 ; Walburn u. Babbitt, 16 Wall. 577 ; Wager v. Hall, 16 Wall. 584 ; Wil- son V. City Bank, 17 Wall. 473 ; Tn re Binninger, 7 Blatch. 262 ; Cook- ingham v. Morgan, 7 Blatch. 480 ; Collins v. Gray, 8 Blatch. 483 ; Bean V. Brookmeyer, 1 Dill. 151 ; Wright v. Filley, 1 Dill. 171 ; Rison v. Knapp, 1 Dill. 186 ; Vanderhoof v. City Bank, 1 Dill. 476 ; In re Dibblee, 3 Ben. 283 ; Graham o. Stark, 3 Ben. 520 ; In re Davidson, 4 Ben. 10 ; In re Terry, 4 Bank. Reg. 33 ; In re Butler, 4 Bank. Reg. 91 ; Vogle v. Lathrop, 4 Bank. Reg. 146 ; Golson o. NeihofE, 5 Bank. Reg. 56; Kohlsaat v. Hoguet, 5 Bank. Reg. 159 ; Haskell v. Ingalls, 5 Bank. Reg. 205 ; Hood v. Kar- per, 5 Bank. Reg. 358 ; Scammon v. Cole, 5 Bank. Reg. 257. 534 FEATJD ON CEEDITOES AND PTJKCHASEBS. pair, hinder, impede, or delay the operation and effect of, or to evade any of the provisions of this title, the sale, assign- ment, transfer, or conveyance shall be void, and the assignee may recover the property, or the value thereof, as assets of the bankrupt.^ § 5130. The fact that such a payment, pledge, sale, assign- ment, transfer, conveyance, or other disposition of a debtor's property, as is described in the two preceding sections, is not made in the usual and ordinary course of business of the debtor, shall be prima facie evidence of fraud.^ § 5131. Any contract, covenant, or security made or given by a bankrupt or other person with, or in trust for, any creditor, for securing the payment of any money as a consideratioit for or with intent to induce the creditor to forbear opposing the application for discharge of the bankrupt, shall be void ; and any creditor who obtains any sum of money or other goods, chattels, or security from any person as an inducement for forbearing to oppose, or consenting to such application for discharge, shall forfeit all right to any share or dividend in the estate of the bankrupt, and shall also forfeit double the value or amount of such money, goods, chattels, or security so obtained, to be recovered by the assigned for the benefit of the estate. 1 Toof V. Martin, 13 Wall. 40 ; Gibson v. Warden, 14 Wall. 244 ; Tiffany v. Lucas, 15 Wall. 410 ; Cook v. Tullis, 18 Wall. 332 ; Tiffany v. Boatman's Institution, 18 Wall. 375 ; Bartholemew ». Bean, 18 Wall. 635 ; Hubbard v. Allaire Works, 7 Blatch 284 ; Andrews v. Graves, 1 Dill. 108 ; Bean v. Brookmeyer, 4 Bank. Reg. 57; In re Butler, 4 Bank. Reg. 91 ; Burkholder v. Stump, 4 Bank. Reg. 191 ; In re Hunt, 2 Bank. Reg. 166 ; Judson v. Kelty, 6 Bank. Reg. 165. 2 Walbun v. Babbitt, 16 Wall. 577 ; In re Hunt, 2 Bank. Reg. 166 ; Bison V. Heddens, 4 Bank. Reg. 114. ALABAMA. 635 ALABAMA. Revised Code, Part 2, Title 3, Chapter IV., Aeticlb 1. § 1861. Conveyances, &c., of personal property, in trust for the grantor, are void as to his creditors. § 1865. All instruments made to hinder, delay, or defraud creditors, &o., void as to creditors. § 1866. Mortgages, &c., void as to creditors, if the grantor reserve a benefit. § 1867. General assignments enure equally to all creditors. § 1861. All deeds of gift, all conveyances, transfers, and assignments, verbal or written, of goods, chattels, or things in action, made in trust for the use of the person making the same, are void against creditors, existing or subsequent, of such person.^ § 1865. All conveyances, or assignments in- writing, or otherwise, of any estate or interest, in real or personal prop- erty ; and every charge upon the same, made with intent to hinder, delay, or defraud creditors, purchasers, or other persons of their lawful suits, damages, forfeitures, debts, or demands ; and every bond, or other evidence of debt, given, suit commenced, decree or judgment suffered, with the like intent, against the persons who are or may be so hindered, delayed, or defrauded, their heirs, personal representatives, and assigns, are void.^ 1 Reynolds v. Crook, 31 Ala. 634 ; Miller v. Stetson, 32 Ala. 161; King V. Kenau, 38 Ala. 63 ; Montgomery v. Kirksey, 26 Ala. 172 ; Wiley V. Knight, 27 Ala. 336. ^ Spencer v. Goodwin, 30 Ala. 355 ; Higgins v. Perrine, lb. 396 ; Kavanaugh v. Thompson, 16 Ala. 817 ; Wilhams v. Maull, 20 Ala. 730; Cole V. Varner, 31 Ala. 244 ; Williams v. Avery, 38 Ala. 115. 636 PEATTD ON CEBDITOES AND PUKCHASBRS. § 1866. Every deed of trust, mortgage, or other security, hereafter made to secure any pre-existing debt, vhether such debt is due or not, or absolute or conditional, is fraudulent and void, as to the creditors of the grantor, when any creditor provided for thereby is required to make any release, or to do any other act impairing his existing rights, before participat- ing in or receiving the securities therein provided for him. § 1867. Every general assignment made by a debtor, by which a preference or priority of payment is given to one or more creditors, over the remaining creditors of the' grantor, shall be and enure to the benefit of all the creditors of the grantor equally.^ 1 Price V. Mazange, 31 Ala. 701 ; Holt v. Bancroft, 30 Ala. 193 ; "Warren v. Lee, 32 Ala. 440 ; Stetson v. Miller, 36 Ala. 642 ; Longmire V. Goode, 38 Ala. 577. ARKANSAS. 537 ARKANSAS. Digest of Statutes, 1858, Chap. LXXIV., p. 547. § 3. Deeds of gift, conveyances of goods and chattels, in trust to the use of the person giving or conveying, void against creditors existing, and subsequent purchasers. § 4. Made with intent to hinder and defraud creditors, &c., void as against creditors and purchasers, prior and -subsequent. § 5. Not void in favor of subsequent purchaser, if by deed or conve3Rance acknowledged or proved and recorded, or with actual notice ; un- less the grantee or person to be benefited were party or privy to the fraud. § 6. Gifts of goods, &c., and conveyances upon consideration not good in law, void as against creditors, and even against the grantor, unless possession bona fide accompany the gift or conveyance. § 9. Not to extend to estates, &c., upon valuable consideration, and liona fide conveyed ; nor against purchaser without notice of fraud, from fraudulent grantee. § 3. Every deed of gift and conveyance of goods and chat- tels in trust to the use of the person so making such deed of gift or conveyance is declared to be void as against the credi- tors existing, and subsequent purchasers. § 4. Every conveyance or assignment, in writing or other- wise, of any interest or estate in lands, or in goods and chattels, or things in action, or of any rents issuing therefrom, and every charge upon lands, goods, or things in action, or upon the rents and profits thereof, and every bond, suit, judgment, decree, or execution, made or contrived with the intent to hinder, delay, or defraud creditors or other persons of their lawful actions, damages, forfeitures, debts, or demands, as against creditors and purchasers prior and subsequent, shall be void.i 1 Payne v. Burton, 5 Eng. 53 ; Kingold v. Waggoner, 14 Ark. 69. 538 FEAtJD ON CEEDIT0E8 AND PTJECHASEES. § 5. No such conveyance or charge shall be deemed void in favor of an innocent subsequent purchaser, if the deed or conveyance shall have been duly acknowledged or proven and recorded, or the purchaser have actual notice thereof at the time of his purchase, unless it shall appear that the grantee in such conveyance, or person to be benefited by such charge, was party or privy to the fraud intended. § 6. Every gift of goods, chattels, and slaves, and all other conveyances of the same, not on consideration deemed good in law, shall be void as against all creditors and purchasers, and all such gifts, grants, and conveyances shall be void even against the grantor, unless possession really and bona fide accompany such gift or conveyance. § 9. This act shall not extend to any estate or interest in any lands or tenements, goods or chattels, or any rents or profits out of the same, which shall be upon a valuable con- sideration and bona fide and lawfully conveyed ; nor shall this act be construed to avoid any deed or sale to a subsequent bona fide purchaser from the grantee for valuable consideration, and without notice of fraud. CALIPOBNIA. 539 CALIFORNIA. Civil Code, Title III. § 1227. Certain instruments void against purchasers, &c. § 1228. Not void against purchaser having notice, unless fraud is mutual. § 1229. Power to revoke when deemed executed. §1230. Same. § 1227. Every instrument other than a will, affecting an estate in real property, including every charge upon real property or upon its rents or profits, made with intent to defraud prior or subsequent purchasers thereof or incum- brancers thereon, is void as against every purchaser or in- cumbrancer for value of the same property, or the rents or profits thereof.^ § 1228. No instrument is to be avoided under the last section, in favor of a subsequent purchaser or incumbrancer having notice thereof at the time his purchase was made or his lien acquired, unless the person in whose favor the instru- ment was made was privy to the fraud intended. § 12^9. Where a power to revoke or modify an instrument affecting the title to, or the enjoyment of, an estate in real property, is reserved to the grantor or given to any other person, a subsequent grant of or charge upon the estate, by the person having the power of revocation, in favor of a pur- chaser or incumbrancer for value, operates as a revocation of the original instrument, to the extent of the power, in favor of such purchaser or incumbrancer. § 1230. Where a person having the power of revocation, within the provisions of the last section, is not entitled to 1 Smith 0. Morse, 2 Cal. 524 ; Hedden v. Jordan, 21 Cal. 92. 540 FRAUD ON CEEDITOES AND PDECHASEES. execute it until after the time at which he makes such grant or charge as is desciibed in that section, the power is deemed to be executed as soon as he is entitled to execute it. Part II. Title II. § 3439. Transfer, &c., with intent to defraud creditors. § 3440. Certain transfers presumed fraudulent. § 3441. Creditor's right must be judicially ascertained. § 3442. Questions of fraud, how determined. § 3439. Every transfer of property or charge thereon made, every obligation incurred, and every judicial proceeding taken, with intent to delay or defraud any creditor or other person of his demands, is void against all creditors of the debtor, and their successors in interest, and against any person upon whom the estate of the debtor devolyes in trust for the benefit of others than the debtor.^ § 3440. Every transfer of personal property, other than a thing in action, or a ship or cargo at sea, or in a foreign port, and every lien thereon, other than a mortgage, when allowed by law, and a contract of bottomry or respondentia, is conclu- sively presumed, if made by a person having at the time the pos- session or control of the property and not accompanied by an immediate delivery, and followed by an actual and continued change of possession of the things transferred, to be fraud- ulent, and therefore void, against those who are his creditors while he remains in possession, and the successors in interest of such creditors, or against any persons on whom his estate devolves in trust for the benefit of others than himself, and against purchasers or incumbrancers in good faith subsequent to the transfer.2 » Montgomery v. Hunt, 5 Cal. 366 ; Riddell v. Shirley, lb. 488 ; Ryan V. Daly, 6 Cal. 238 ; Thornburgh v. Hand, 7 Cal. 554 ; McKenty v. Glad- win, 10 Cal. 227. 2 Burpee u. Bunn, 22 Cal. 194; Regli v. McClure, 47 Cal. 612; O'Brien v. Chamberlin, 50 Cal. 285. CALEFOKNIA. 541 § 3441. A creditor can avoid the act or obligation of his debtor for fraud only where the fraud obstructs the enforce- ment, by legal process, of his right to take the property affected by the transfer or obligation. § 3442. In all cases arising under section 1227, or under the provisions of this title, except as otherwise provided in section 8440, the question of fraudulent intent is one of fact, and not of law ; nor can any transfer or charge be ad- judged fraudulent solely on the ground that it was not made for a valuable consideration.^ Statutes of 1875-1876, Chapter CCCCXIX. § 8. Preferences by insolvent persons. § 8. If any person, being insolvent, or in contemplation of insolvency within two months before the filing of a petition by or against him, with a view to give a preference to any creditor or person having a claim against him, or who is under any liability for him, procures any part of his property to be attached, sequestered, or seized on execution, or makes any payment, pledge, assignment, transfer, or conveyance of any part of his property, either directly or indirectly, absolutely or conditionally, the person receiving such payment, pledge, ass^nment, transfer, or conveyance, or to be benefited thereby, or by such attachment, having reasonable cause to believe that such person is insolvent, and that such attachment, seizure, payment, pledge, conveyance, transfer, or assignment is made with a view to prevent his property from coming to his assignee in insolvency, or to prevent the same from being distributed ratably among his creditors, or to defeat the object ot, or in any way hinder, impede, or delay the operation of, 1 Billings r. BiUings, 2 Cal. 107; Gillan u. Metcalf, 7 CaL 137; Tnlly V. Harloe, 35 Cal. 302 ; Jamison v. King, 50 Cal. 132. 642 PKAXTD OK CBEDITOES AND PTJECHASERS. or to evade any of the provisions of this act, or of the act or acts to which this act is supplemental, or of which tliis act is amendatory, such transfer, payment, conveyance, pledge, or assignment is void, and the assignee may recover the property, or the value thereof, as assets of such insolvent debtor ; and if such sale, assignment, transfer, or conveyance is. not made in the usual and ordinary course of the business of the debtor, the fact shall be prima facie evidence of fraud. COLORADO. 543 COLORADO. Revised Statutes, Chapter XXXVII. § 1. Conveyances to defraud purchasers void. § 2. Conveyance not void if purchaser have notice, unless the grantee is privy to fraud. § 3. Conveyance with power of revocation void as against subsequent purchasers. § 11. Conveyance of chaittels in trust for grantor void as against cred- itors. § 14. Sale of chattels, possession remaining with vendor, conclusively presumed fraudulent as against vendor's creditors. § 15. The term " creditors " construed. § 17. Conveyances intended to delay, hinder, or defraud creditors void. § 19. Conveyances void as to creditors, also void as against heirs, as- signees, and personal representatives. § 20. Fraudulent intent, question of fact ; conveyance not fraudulent solely for want of consideration. § 21. Not to affect title of purchaser for valuable consideration without notice of fraud. § 22. The term " lands " construed. § 23. The term " conveyance " construed. § 1. Every conveyance of any estate or interest in lands, or the rents and profits of lands, and every charge upon lands, or upon the rents and profits thereof, made or created with the intent to defraud prior or subsequent purchasers for a valuable consideration of the same lands, rents, or profits, as against such purchasers shall be void. § 2. No such conveyance or charge shall be deemed fraud- ulent, in favor of a subsequent purchaser, who shall have actual or legal notice thereof at the time of his purchase, 644 FEAUD ON CEEDITOES AND PUKCHASBES. unless it shall appear that the grantee in such conyeyance, or person to be benefited by such charge, was privy to the fraud intended. § 3. Every conveyance or charge of or upon any estate or interest in lands, containing any provision for the revocation, determination, or alteration of sucli estate or interest, or any part thereof, at the will of the grantor, shall be void as against subsequent purchasers from such grantor, for a valuable con- sideration, of any estate or interest so liable to be revoked, determined, or altered by such grantor, by virtue of the power reserved or expressed in such prior conveyance or charge. § 11. All deeds of gift, all conveyances, and all transfers or assignments, verbal or written, of goods, chattels, or things in action, made in trust for the use of the person making the same, shall be void, as against the creditors existing of such person. § 14. Every sale made by a vendor of goods and chattels in his possession or under his control, and every assignment of goods and chattels, unless the same be accompanied by an immediate delivery, and be followed by an actual and con- tinued change of possession of the things sold or assigned, shall be presumed to be fraudulent and void, as against the creditors of the vendor, or the creditors of the person making such assignment, or subsequent purchasers in good faith, and this presumption shall be conclusive. § 15. The term " creditors," as used in the last section, shall be construed to include all persons who shall be cred- itors of the vendor or assignor, at any time whilst such goods and chattels shall remain in his possession or control. § 17. Every conveyance or assignment in writing or other- wise of any estate or interest in lands, or in goods or things in action, or of any rents and profits issuing thereupon, and every charge upon lands, goods, or things in action, or upon the rents and profits thereof, made with the intent to hinder, COLORADO. 545 delay or defraud creditors, or other persons, of their lawful suits, damages, forfeitures, debts, or demands, arid every bond or other evidence of debt given, suits commenced, decree or judgment suffered with the like intent, as against the person so hindered, delayed, or defrauded, shall be void.i § 18. Every conveyance, charge, instrument, or proceeding, declared to be void by the provisions of this chapter, as against creditors or purchasers, shall be equally void against the heirs, successors, personal representatives, or assignees of such creditors or purchasers. § 19. The question of fraudulent intent, in all cases arising under the provisions of this title, shall be deemed a question of fact, and not of law ; nor shall any conveyance or charge be adjudged fraudulent against creditors or purchasers, solely on the ground that it was not founded on a valuable con- sideration. § 20. The provisions of this chapter shall not be construed in any manner to affect or impair the title of a purchaser for a valuable consideration, unless it shall appear that such pur- chaser had previous notice of the fraudulent intent of his immediate grantor, or of the fraud rendering void the title of such grantor. § 21. The term " lands," as used in this chapter, shall be construed as co-extensive with " lands, tenements, and heredit- aments ; " and the term " estate, and interest in lands," shall be construed to embrace every estate and interest, freehold and chattel, legal and equitable, present and future, vested and contingent, in lands as above defined. § 22. The term " conveyance," as used in this chapter, shall be construed to embrace every instrument in writing, except a last will and testament, whatever may be its form and by whatever name it may be known in law, by which any estate or interest in lands is created, aliened, assigned, or surrendered. 1 Wilcoxen v. Morgan, 2 Colorado, 473. 35 546 TKAUD ON CEEDITOES AND PUBOHASBES. CONNECTICUT. Geneeal Statutes, Revision of 1875, Title 18, Chaptee III. § 1. Fraudulent conveyances, when void. § 2. Forfeiture by any party to such conveyance. § 1. All fraudulent conveyances, suits, judgments, execu- tions, or contracts, made or contrived with intent to avoid any debt or duty belonging to others, shall, notwithstanding any pretended consideration therefor, be void as against those persons only, their heirs, executors, administrators, or assigns, to whom such duty belongs.^ § 2. Any party to any such fraudulent proceeding, who shall wittingly justify the same as being made in good faith and on good consideration, shall forfeit one year's value of any real estate and the whole value of any personal estate conveyed, changed, or contracted for thereby; half to the party aggrieved who shall sue for the same, and half to the State.2 1 Benton v. Jones, 8 Conn. 189 ; Burrows v. Stoddard, 3 Conn. 160 ; Gaylor v. Harding, 37 Conn. 508 ; Bishop v. Warner, 19 Conn. 460; Beers v. Lyon, 21 Conn. 604 ; Toby v. Reed, 9 Conn. 216 ; Beers v. Botsford, 13 Conn. 146 ; Parker v. Crittenden, 37 Conn. 148 ; Lynch v. Beecher, 88 Conn. 490 ; Hawes v. Mooney, 39 Conn. 37. 2 Fowler v. Frisbie, 3 Conn. 320. CONNECTICUT. 547 DELAWARE. Laws op 1874, Chapter LXIII. § 4. Sale of goods void as to third parties, unless on a consideration and delivery of possession. § 4. No sale, whether with or without bill of sale, of any goods or chattels, within this State, shall be good in law (except as against the vendor), or shall change or alter the property in such goods or chattels, unless a valuable consid- eration for the same shall be paid, and unless the goods and chattels sold shall be actually delivered into the possession of the vendee, as soon as conveniently may be after the making of such sale. And if such goods and chattels, so sold, shall afterwards come into and continue in the possession of the vendor, the same shall be liable to the demands of all his creditors. Chapter CXXXII. § 4. Preferring creditors in assignment void. § 4. If any person in contemplation of insolvency, or in contemplation of taking the benefit of any of the insolvent laws of this State, shall make an assignment of his estate or effects for the benefit of creditors, and by such assignment, either under its provisions or otherwise, shall prefer any creditors to others, or shall, in or by such assignment, secure or pay to any creditor a greater proportion of his debt or demand than shall be secured or paid to all his creditors ; 548 I"BATTB ON CEEDITOKS AND PUECHASEES. every such assignment so giving a preference shall be deemed fraudulent and absolutely void, and the estate or effects con- tained therein shall be liable to be taken in execution or attached for the payment of such assignor's debts, as fully as if no such assignment had been made ; and the person making such fraudulent assignment shall for ever be deprived of the benefit of any insolvent law of this State. FLORIDA. 649 FLORIDA. Laws of 1872, Chapter XXVII. § 1. Conveyances to defraud creditors made void. § 2. Conveyances to defraud purchasers declared void. § 3. Conveyances of uses, &c., Vfith clause of revocation, declared void as against subsequent sales. § 1. Every feoffment, gift, grant, alienation, bargain, sale, conveyance, transfer, and assignment of lands, tenements, hereditaments, and other goods and chattels, or any of them, or any lease, rent, use, common, or other profit, benefit, or charge whatever, out of lands, tenements, hereditaments, or other goods and chattels, or any of them, by writing or other- wise, and every bond, note, contract, suit, judgment, and execution which shall at any time hereafter be had, made, or executed, contrived, or devised of fraud, covin, collusion, or guile, to the end, purpose, or intent to delay, hinder, or de- fraud creditors or others of their just and lawful actions, suits, debts, accounts, damages, demands, penalties, or forfeitures, shall be from henceforth, as against the person or persons, or body politic or corporate, his, her, or their heirs, successors, executors, administrators, and assigns, and every of them, so intended to be delayed, hindered, or defrauded, deemed, held, adjudged, and taken to be utterly void, frustrate, and of none effect ; any pretence, color, feigned consideration, expressing of use, or any other matter or thing to the contrary, notwith- standing : provided, that the aforegoing section of this act, or 550 FRAUD ON CKBDITOES AND PURCHASERS. any thing therein contained, shall not extend to any estate or interest in lands, tenements, hereditaments, leases, rents, uses, commons, profits, goods, or chattels which shall be had, made, conveyed, or assured, if such estate or interest shall be upon good consideration, and bona fide lawfully conveyed or assured to any person or persons, or body politic or corporate, not having, at the time of such conveyance or assurance to them made, any manner of notice or knowledge of such covin, fraud, or collusion as aforesaid, any thing in the said section to the contrary, notwithstanding.^ § 2. Every feoffment, deed, conveyance, mortgage, grant, charge, lease, transfer, assignment, estate, encumbrance, in- terest, and limitation of use or uses of, in, or out of any lands, tenements, or other hereditaments whatsoever, which shall at any time hereafter be had, made, executed, or contrived for the intent and purpose of defrauding and deceiving such person or persons, bodies politic or corporate, as shall after- wards purchase the same lands, tenements, and hereditaments, or any part thereof, or any estate, interest, rent, property, right, or commodity in, to, or out of the same, or any part thereof, so formerly conVeyed, granted, leased, charged, transferred, assigned, encumbered, or limited in use, shall be deemed, adjudged, taken, and held, as against the person or persons, bodies politic and corporate, their heirs, successors, executors, administrators, and assigns, and against all and every person and persons lawfully having or claiming by, from, through, or under them, or any of them, who shall have so purchased for money or other good consideration the same lands, tenements, hereditaments, or any part thereof, or any .estate, right, inter- est, profit, benefit, or commodity in, to, or out of the same, to be utterly void, frustrate, and of none effect; any pretence, 1 Ferrall v. Bradford, 2 Fla. 508 ; Gassett v. Wilson, 3 Fla. 235 ; Gibson u. Love, 4 Fla. 217 ; Kent v. Lyon, lb. 475; Barrow «.' Bailey, 5 Fla. 9 ; Wilson v. Lott, lb. 805 ; White v. Walker, lb. 478 ; Bellamy i>. Bellamy, 6 Fla. 62 ; Smith r. Hines, 10 Fla. 268. FLORIDA. 651 feigned consideration, or expressing of use or uses to the contrary, notwithstanding : provided, that nothing in this section of this act contained shall extend or be construed to impeach, make void, or frustrate any conveyance, assignment of lease, assurance, grant, charge, lease, estate, interest, or limitation of use or uses of, in, to, or out of any lands, tene- ments, or hereditaments which shall be made upon and for good consideration, and bona fide, to any person or persons, bodies politic or corporate ; any thing in this section of this act to the contrary, notwithstanding.^ § 3. If any person or persons shall make any conveyance, gift, grant, demise, charge, limitation of use or uses, or assurance of, in, or out of any lands, tenements, or heredit- aments, with any clause, provision, article, or condition of revocation, determination, or alteration, at his, her, or their will or pleasure, of such conveyance, gift, assurance, grant, demise, charge, limitation of use or uses, contained in the same, or in any_ other writing whatever, of, in, or out of the said lands, tenements, or hereditaments, or any part or parcel of them, and after such conveyance, grant, gift, demise, charge, limitation of uses or assurance so made or had, shall, or do bargain, sell, demise, grant, convey, transfer, or charge the same lands, tenements, or hereditaments, or any part or parcel thereof, or any estate, right, or interest in the same, to any other person or persons, bodies politic or corporate, for money or other good consideration (the said first conveyance, assurance, gift, grant, demise, charge, or limitation not being revoked, made void, or altered according to the power and authority reserved or expressed in and by the said first con- veyance or other writing), that there the said former convey- ance, assurance, gift, grant, demise, charge, or limitation, as touching the said lands, tenements, and hereditaments, and estate, right, or interest in the same, so afterwards bargained, 1 Southern Ins. Co. v. Lanier, 5 Fla. 110 ; McKay v. Bellows, 8 Fla. 31 ; Hancock v. Tucker, lb. 435. 552 FEATTD ON CEEDITORS AND PTJECHASBRS. sold, granted, conveyed, demised, transferred, or charged, as against the said bargainees, vendees, grantees, lessees, and every of them, their heirs, successors, executors, administra- tors, and assigns, and as against all and every person and persons who shall or may lawfully lay claim by, through, from, or under them, or any of them, shall be deemed, taken, and adjudged to be void and of none effect. Chapter XXVIII. § 1. Loan of chattels for two years void as against creditors and pur- chasers. § 1. Where any loan of goods and chattels shall be pre- tended to have been made to any person, with whom, or those claiming under him, possession shall have remained for the space of two years, without demand made and pursued by due process of law on the part of the pretended lender, or where any reservation or limitation shall be pretended to have been made, of a use or property by way of condition, reversion, remainder, or otherwise, in goods and chattels, the possession whereof shall have remained in another, as afore- said, the same shall be taken as to the creditor and purchasers of the persons aforesaid, so remaining in possession, to be fraudulent within this act, and that the absolute property is with the possessor, unless such loan, reservation, or limitation of use or propertj^ were declared by will or deed in writing, proved and recorded as aforesaid.^ 1 Crowell V. Skipper, 6 Fla. 580. GEORGIA. 553 GEORGIA. Code of 1873. § 1952. Void acta. § 2631. Sales to defraud creditors, &c. § 2632. Protection of bonajide purchaser. § 2634. What is fraud. § 2635. Concealment, when fraud. § 2662. Gifts void against creditors, &c. § 2751. Fraud, what may constitute. § 1952. The following acts by debtors shall be fraudulent in law against creditoi-s, and as to them null and void ; viz. : — 1. Every assignment or transfer by a debtor, insolvent at the time, of real or personal property, or choses in action of any description to any person, either in trust or for the benefit of or on behalf of creditors, where any trust or benefit is reserved to the assignor or any person for him. 2. Every conveyance of real or personal estate, by writing or otherwise, and every bond, suit", judgment, and execution, or contract of ainy description, had or made with intention to delay or defraud creditors, and such intention known to the party taking ; a bona fide transaction on a valuable considera- tion, and without notice or grounds for reasonable suspicion, shall be valid. 3. Every voluntary deed or conveyance, not for a valuable consideration, made by a debtor insolvent at the time of such conveyance.-' 1 The cases construing this section are very numerous. The following are the most recent: Cubbage v. Hazlehurst, 42 Ga. 124; Allen v. Brown, 43 Ga. 305; Rowland o. Coleman, 45 Ga. 204. 654 FRAUD ON CEBDITOKS AND PtTBCHASEES. § 2631. Every sale made with intent to defraud either creditors of the vendor, or prior or subsequent purchasers, if such intention be known to the vendee, shall be absolutely void as against such creditors or purchasers. § 2632. Every voluntary deed or conveyance, made by any person, shall be void as against subsequent bona fide purchaser for value, without notice of such voluntary conveyance.^ § 2634. Fraud may exist from misrepresentation by either party, made with design to deceive, or which does actually deceive the other party ; and in the latter case such misrep- resentation voids the sale, though the party making it was not aware that his statement was false. Such misrepresenta- tion may be perpetrated by acts as well as by words, and by any artifices designed to mislead. A misrepresentation, not acted on, is not ground for annulling a contract.^ § 2635. Concealment of material facts may in itself amount to a fraud, — 1. When direct inquiry is made, and the truth evaded. 2. When, from any reason, one party has a right to expect full communication of the facts from the other. 3. Where one party knows that the other is laboring under a delusion with respect to the property sold or the condition of the other party, and keeps silence. 4. Where the concealment is of intrinsic qualities of the article which the other party, by the exercise of ordinary prudence and caution, could not discover.^ 1 Cumming v. Gumming, 3 Kelly, 460; Woodward v. Solomaii, 7 Ga. 246; Withington ». Doe, 9 lb. 23; Fowler v. Waldrip, 10 lb. 350; Harper V. Scott, 12 lb. 127 ; Clayton v. Brown, 17 lb. 217 ; Brown c. Burke, 22 lb. 574; Weed v. Davis, 25 lb. 684 ; Russell v. Kearney, 27 lb. 96 ; Black V. Thornton, 81 lb. 641. 2 James v. Mercer University, 17 Ga. 515 ; Smith v. Mitchell, 6 lb. 458; Boyoe v. Watson, 20 lb. 517; Hopkins o. Cooper, 28 lb. 392; Powell ». Boring, 35 lb. 31; Chisolm v. Chittenden, 45 lb. 214; Straus c. Herman, 45 lb. 222; Sims «. Ferrill, 45 lb. 585. 8 Sibley v. Beard, 5 Ga. 550 ; Crutohfield ». Danilly, 16 Ga. 432 ; Winter v. Bullock, 6 Ga. 230. GEOEGIA. 555 § 2662. An insolvent person cannot make a valid gift to the injury of his existing creditors ; and where possession, partially or entirely, remains with the donor, ever}' parol gift is void against bona fide creditors and purchasers without notice.^ § 2751. Fraud voids all contracts. Fraud may not be pre- sumed, but in itself subtle, slight circumstances may be sufficient to carry conviction of its existence.^ 1 Turner v. Thurmond, 28 Ga. 174 ; Black v. Thornton, 31 Ga. 641. 2 Anstell V. Rice, 5 Ga. 472 ; Brady v. McKee, 30 Ga. 748 ; Green v. Lowry, 88 Ga. 548. 556 FRAUD ON CRBDITOES AND PURCHASERS. ILLINOIS. Revised Statutes, 1874, Chapter LIX. § 4. Fraudulent conveyances, &c. § 5. Innocent purchaser. § 6. Conveyances of personalty, vphen fraudulent. § 7. Loan, reservation, &c., of personalty, when fraudulent. § 10. Wills, &c., against whom fraudulent. § 11. Liabilities of representatives and heirs. § 4. Every gift, grant, conveyance, assignment, or transfer of, or any charge upon any estate, real or personal, or right or thing in action, or any rent or profit thereof, made with the intent to disturb, delay, hinder, or defraud creditors or other persons, and every bond or other evidence of debt given, suit commenced, decree or judgment suffered, with like intent, shall be void as against such creditors, purchasers, and other persons. - § 5. The foregoing section shall not affect the title of a purchaser for a valuable consideration, unless it appear that he had notice of the fraudulent intent of his immediate grantor, or of the fraud rendering void the title of such grantor. § 6. Every conveyance of goods and chattels on considera- tion not deemed valuable in law shall be taken to be fraudu- lent, unless the same be by will duly proved and recorded, or by deed in writing duly acknowledged or proved, and recorded as in the case of deeds of real estate, or unless possession shall really and bona fide remain with the donee. § 7. Where any loan of goods and chattels shall be pre- tended to have been made to any person with whom, or those ILLINOIS. 557 claiming under him, possession shall have remained for the space of five years, without demand made and pursued by due process of law on the part of the pretended lender, or where any reservation or limitation ^hall be pretended to have been made, of a use or property by way of condition, reservation, remainder, or otherwise, in goods or chattels, the possession whereof shall have remained in another as afore- said, the same shall be taken, as to creditors and purchasers of the person aforesaid so remaining in possession, to be fraud- ulent, and that the absolute property is with the possession, unless such loan, reservation, or limitation of use or property, were declared by will or deed in writing, proved and recorded as aforesaid. § 10. All wills and testaments, limitations, dispositions, or appointments of or concerning any lands and tenements, or of any rent, profit, term, or charge out of the same, whereof any person, at the time of his decease, shall be seized in fee-simple, in possession, in reversion, or remainder, or have power to dispose of the same by his last will and testament, shall be deemed and taken (only as against the person, his heirs, successors, executors, administratoi's, or assigns, and every of them whose debts, suits, demands, estates, and interests by such will, testament, limitation, disposition, or appointment as aforesaid, shall or might be in any wise dis- turbed, hindered, delayed, or defrauded) to be fraudulent, void, and of no effect, any pretence, color, feigned or pre- sumed consideration, or any other matter or thing to the contrary, notwithstanding. § 11. Any person, his heirs, devisees, executors, adminis- trators, successors, or assigns, and every of tliem who shall or may have any debts, suits, or demands against any person who shall make any fraudulent devise as aforesaid, or who have any debts, suits, or demands against any person who shall die intestate, and have real estate to his heirs to de- scend according to the laws of this State, may have and 558 , FEATTD ON CREDITORS AND PURCHASERS. maintaiu the same actions which lie against executors and ad- ministrators upon his bonds, specialties, contracts, and agree- ments against the executors or administrators and the heirs, or against the executors or administrators and the devisees, or may join the executors or administrators, the heir or heirs, and the devisees of such obligor, and shall not be delayed for the non-age of any of the parties. INDIANA. 659 INDIANA. Revision of 1876, Chapter CXXII. § 8. Fraudulent sale. § 9. " Creditors," definition of. § 10. Assignments, &c. , of goods to be acknowledged and recorded. § 11. When deemed recorded. § 12. Conveyances to defraud purchasers, void. § 13. Exception. § 14. Conveyance with power to revoke, void. § 15. When valid. § 16. Valid from time right to revoke vests. § 17. Conveyances to defraud creditors, void as to them. § 18. Deeds of gift, &o., void as to creditors. § 19. Such conveyances, &c., void as to heirs, &o. § 21. Fraudulent intent to be question of fact. § 8. Every sale made by a vendor of goods in his possession or under his control, unless the same be accompanied by im- mediate delivery, and followed by an actual change of the possession of the things sold, shall be presumed to be fraudu- lent and void, as against the creditors of the vendor or sub- sequent purchasers in good faith, unless it shall be made to appear that the same was made in good faith and without any intont to defraud such creditors or purchasers.^ § 9. The term "creditors," as used in the last section, shall 1 Jones ti. Gott, 10 Ind. 240 ; Kane v. Drake, 27 Ind. 29; Wilcoxen ». Annesly, 23 Ind. 285 ; Nutter v. Harris, 9 Ind. 88 ; Williams v. Smith, 7 Ind. 559 ; Bricker v. Hughes, 4 Ind. 146 ; Pierce r. Gibson, 2 Ind. 408 ; Lathrop v. Rogers, 1 Ind. 554 ; Carlisle v. Wallace, 12 Ind. 253 ; Wright V. Maxwell, 9 Ind. 192; Newly ii. Rogers, 40 Ind. 9; Barkalow v. Pfeiffer, 38 Ind. 214. 660 FRAUD ON CREDITORS AND PURCHASERS. be construed to include all persons who shall be creditors of the vendor or assignor, at any time whilst such goods were in his possession or under his control. § 10. No assignment of goods by way of mortgage shall be valid against any other person than the parties thereto, where such goods are not delivered to the mortgagee or assignee, and retained by him, unless such assignment or mortgage shall be acknowledged, as provided in case of deeds of con- veyance, and recorded in the recorder's office of the county where the mortgagor resides, within ten days after the execu- tion thereof.! § 11. Every such mortgage shall be considered as recorded from the time it shall be left at the proper recorder's office for that purpose. § 12. Every conveyance of any estate in lands, and charge, trust, limitation of use or uses upon or in any lands, made, or created with the intent to defraud prior or subsequent purchasers for a valuable consideration, of the same lands, as against such purchasers for a valuable consideration shall be void. § 13. No such conveyance, charge, estate, interest, use, or trust, otherwise valid, shall be deemed fraudulent in favor of a subsequent purchaser, who shall have actual or legal notice thereof at the time of his purchase, unless it shall appear that the grantee in such conveyance, or person to be benefited by such charge, estate, interest, use, or trust, was privy to the fraud intended.^ § 14. Every conveyance or charge of or upon any estate, containing any provision for revocation at the will of the grantor, shall be void, as against subsequent purchasers from 1 Lockwood V. Slevin, 26 Ind. 124; Kennedy v. Shaw, 38 Ind. 474 ; Duke V. Strickland, 43 Ind. 494 ; Davidson v. King, 47 Ind. 372 ; Stone- breaker V. Kerr, 40 Ind. 186; Philbrooks v. McEwen, 29 Ind. 347; Woodward v. Wilcox, 27 Ind. 207. 2 Lockwood V. Slevin, 26 Ind. 124. INDIANA. 561 such grantor, for a valuable consideration, of any estate, or interest so liable to be revoked, although the same may not be expressly revoked. § 15. Where a power to revoke a conveyance of any interest in lands, and to reconvey the same, shall be given to any person other than the grantor in such conveyance, and such person shall thereafter convey such interest to a purchaser for a valuable consideration, such subsequent conveyance shall be valid. § 16. If a conveyance to a purchaser under either of the two last preceding sections shall be made, before the person making the same shall be entitled to execute his power of re- vocation, it shall be valid from the time the power of revo- cation shall vest in such person. § 17. All conveyances or assignments in writing or other- wise, of any estate in lands, goods, or things in action, and all bonds, contracts, evidences of debt, judgments, decrees, made or suffered with the intent to hinder, delay, or defraud creditors or other persons of their lawful damages, forfeitures, debts, or demands, shall be void as to the person sought to be defrauded. § 18. All deeds of gift, conveyances, transfers, or assign- ments, verbal or written, of goods or things in action, made in trust for the use of the person making the same, shall be void as against creditors, existing or subsequent, of such person. § 19. Every conveyance, charge, instrument, act, or pro- ceeding, declared by the provisions of this act to be void, as against creditors or purchasers, shall be void against the heirs, personal representatives, or assignees of such creditors or purchasers. § 20. The provisions of this act shall not be construed to affect the title of a purchaser for a valuable consideration, un- less it shall appear that such purchaser had previous notice of the fraudulent intent of his immediate grantor or assignor, 662 FRAUD ON CEEDITOES AND PUECHASEES. or of the fraud rendering void the title of such grantor, or assignor. 1 § 21. The question of fraudulent intent, in all cases aris- ing under the provisions of this act, shall be deemed a ques- tion of fact, nor shall any conveyance or charge be adjudged fraudulent, as against creditors or purchasers, solely on the ground that it was not founded on a valuable consideration.^ 1 Bunnel v. Witherow, 29 Ind. 123. 2 Maple V. Burnside, 22 Ind. 139; Kane v. Drake, 27 Ind. 29 ; Eicks V. Doe, 2 Blackf . 347 ; Sparks v. The State Bank, 7 Blackf. 469; Tenant V. Rumfield, 11 Ind. 130. KENTUCKY. 563 KENTUCKY. General Statutes, Chapter XLIV., Article I. § 1. When conveyances, &e., void. Purchaser without notice not affected. § 2. Voluntary conveyance. § 3. Possession must accompany sale of personal property. § i. Loans and reservations in transfers of personal property. § 1. Every gift, conveyance, assignment, or transfer of, or charge upon any estate, real or personal, or right, or thing in action, or any rent or profit thereof, made with the intent to delay, hinder, or defraud creditors, purchasers, or other per- sons, and every bond or other evidence of debt given, action commenced, or judgment suffered, with like intent, shall be void, as against such creditors, purchasers, or other persons. This section shall not affect the title of a purchaser for valuable consideration, unless it appear that he had notice of the fraudulent intent of his immediate grantor, or of the fraud rendering void the title of such grantor. § 2. Every gift, conveyance, assignment, transfer, or charge made by a debtor, of or upon any of his estate; without valuable consideration therefor, shall be void as to all his then existing liabilities, but shall not, on that account alone, be void as to creditors whose debts or demands are thereafter contracted, nor as to purchasers with notice of the voluntary alienation or charge ; and, though it be adjudged to be void as to a prior creditor, it shall not therefor be deemed to be void as to such subsequent creditors or purchasers.-* § 3. Every voluntary alienation of, or charge upon personal 1 Crosby v. Boss, 3 J. J. Marsh. 290 ; Hanson v. Buckner, 4 Dana, 253. 664 FEATTD ON CEEDITOES AND PTJBCHASEES. property, unless the actual possession in good faith accompa- nies the same, shall be void as to a purchaser without notice, or any creditor, prior to the lodging for record of such transfer or charge in the office of the county court for the county where the alienor or person creating the charge Hves.^ § 4. Where any loan of personal property is pretended to have been made to any person with whom, or those claiming under him, possession shall have remained for five years, with- out demand made and pursued by due process of law on the part of the pretended lender, or where any reservation or limi- tation, by way of condition, reversion, remainder, or other- wise, is pretended to have been made in the alienation of such property so possessed, the absolute right shall be deemed to be with the possession in favor of a purchaser without notice, or any creditor of the ^person so remaining in possession, unless the written evidence of the loan, reservation, or limita- tion be duly recorded in the county where the person resides before the possession is taken, or is contained in a properly recorded will. Article II. § 1. Preference of creditors. § 1. Every sale, mortgage, 6r assignment made by debtors, and every judgment suffered by any defendant, or any act or device done or resorted to by a debtor, in contemplation of insolvency, and with the design to prefer one or more credi- tors to the exclusion in whole or in part of others, shall operate as an assignment and transfer of all the property and effects of such debtor, and shall enure to the benefit of all his creditors (except as hereinafter provided) in proportion to the amount of their respective demands, including those which are future and contingent ; but nothing in this article shall vitiate or affect any mortgage made in good faith to secure any debt or liability created simultaneously with such mort- gage, if the same be lodged for record within thirty days after its execution. MAINE. 665 MAINE. Revised Statutes, 1871, Chapter LXXIX. § 8. Transfer of property to prefer or defraud creditors void. § 8. All property conveyed or transferred by the assignor, previous to and in contemplation of the assignment, with the design to defeat, delay, or defraud creditors, or to give a pref- erence to one creditor over another, shall pass to the assignee by the assignment, notwithstanding such transfer ; and the assignee may recover, collect, and apply it for the benefit of the creditors. Chaptee LXXXVI. § 63. Goods fraudulently conveyed may be held by trustee process. § 63. If any alleged trustee has in his possession any goods, effects, or credits of principal defendant, which he holds under a conveyance fraudulent and void as to the defendant's creditors, he may be adjudged a trustee on account thereof, although the principal defendant could not have maintained an action therefor against him.^ Chaptee CVI. § 44. Cases in which defendant may impeach the plaintiff's title-deeds. § 44. In all actions respecting lands or any interest therein, a title-deed offered in evidence may be impeached by the 1 Bannister v. Higginson, 15 Me. 73; Page v. Smith, 25 Me. 256; Fletcher v. Clarke, 29 Me. 485; Glass v. Nicholls, 35 We. 328; Skowhe- gan Bank v. Farrar, 46 Me. 293 ; Blodgett ii. Chaplin, 48 Me. 322. 566 FEAUD ON CREDITOBS AND PUECHASEES. defendant as obtained by fraud, where the grantor, if a party, eould impeach it, if the defendant has been in the open, peace- able, and adverse possession of the premises for twenty years. MARYLAND. 567 MARYLAND. Public General Laws; Article XLVIII. Insolvency. § 6. Person guilty of fraud not to be discharged. § 7. Confession of judgment or assignment to favor creditors void. § 8. Preference of creditors. § 13. Wliat deeds ior benefit of creditors valid. § 6. No person shall be released or discharged under this article who has conveyed, concealed, or disposed of his prop- erty to defraud or delay his creditors, or prevent the same from being applied to the payment of his debts, or who has within one year of the time of filing his petition, by the con- veyance or assignment of his property, or debts, or claims, or payment of money, given an undue and improper preference to any of his creditors. § 7. An)- confession of judgment, and any conveyance or assignment, made by any insolvent unSer this article for the purpose of defrauding his creditors or giving an undue pref- erence, shall be void, and the property or thing conveyed or assigned shall vest in the trustee ; and all acts done by a petitioner before his application, when he shall have no reason- able expectation of being exempted from liability to execution, on account of his debts or responsibilities, without petitioning for the benefit of the insolvent laws, shall be deemed to be within the meaning and purview of this section. § 8. Any judgment or decree confessed to give an undue preference to any creditor, or for the purpose of defrauding any creditor, shall be void, and excluded in the distribution under this article. 668 FRAUD ON CREDITORS AND PURCHASERS. § 13. No deed or conveyance to a trustee for the benefit of creditors generally shall be deemed fraudulent, or a fraud- ulent or undue preference, because of a condition requiring the creditors to release the debtor, and depriving any creditor who refuses to release of all benefits from property so con- veyed in trust ; but all such deeds of trust are hereby declared to be valid, and shall not be set aside either at the suit of a trustee under this article, or at the suit of any creditor. MASSACHUSETTS. 569 MASSACHUSETTS. General Statutes, Chapter CII. § 12. Lands fraudulently conveyed may be first recovered by executor, &c. § 12. An executor or administrator, licensed to sell land fraudulently conveyed by the deceased, or fraudulently held by another person for him, or to which he had a right of entry or of action, or a right to a conveyance, may first obtain possession thereof by entry or by action, and may sell the same at any time vrithin one year after so obtaining pos- session.^ CHAPTER cm. § 1. Lands and rigbts thereto may be taken on execution. § 1. AH lands of the debtor in possession, remainder, or reversion, all his rights of entry into lands, and of redeeming mortgaged lands, and all lands and rights above described fraudulently conveyed by him with intent to defeat, delay, or defraud his creditors or purchasers, or directly or in- directly paid for by him, the record title to which is retained in the vendor, or is conveyed to a third person with intent to defeat, delay, or defraud the creditors of the debtor, or on a trust for him, express or implied, whereby he is entitled to present conveyance, may, except as provided in chapter one 1 Yeomans v. Brown, 8 Met. 51; Tenney v. Poor, 14 Gray, 500; Han- num V. Day, 105 Mass. 33. 570 FKATJD ON CEEDITOES AND PtJECHASBES. hundred and four, be taken on execution for his debts in the manner hereinafter provided.^ CHAPTER CXVIII. Insolvency. § 87. Discharge forfeited by proceedings in fraud of creditors. § 88. Fraudulent preferences avoid a discharge. § 89. Fraudulent payments void. § 90. Proceedings not to apply to necessaries. § 91. Sales, &c. to prevent property from coming to assignee, &c. § 103. Applications by creditors. § 87. A discharge shall not be granted or valid, if the debtor has wilfully sworn falsely as to any material fact in the course of the proceedings, or if he has fraudulently con- cealed any part of his estate or effects, or any books or writ- ings relating thereto ; or if, being insolvent and having reasonable a,nd sufficient cause to believe himself so, he has, within one year next before the filing of a petition by or against him, paid or secured, either directly or indirectly, in whole or in part, any borrowed money or pre-existing debt, or any liability of his or against him ; or, if within six months before the filing the petition by or against him, he has pro- cured his land, goods, money, or chattel to be attached, se- questered, or seized on execution ; or if, subsequently to the sixth day of July, eighteen hundjred and fifty-six, he has destroyed, altered, mutilated, or falsified any of his books, documents, papers, writings, or securities, or has made or been privy to the making of any false or fraudulent entry in any book of account or other document with intent to de- fraud his creditors, or has made any fraudulent payment, gift, transfer, conveyance, or assignment of any part, of his 1 There are many cases involving the construction of this section, the latest being Cheneery v. Stevens, 97 Mass. 77 ; Hamilton b. Cone, 99 Mass. 479 ; Freeland v. Freeland, 102 Mass. 477. MASSACHUSETTS. 671 property, or spent any part thereof in gaming ; or if, having knowledge that any person has proved a false debt against his estate, he has not disclosed the same to his assignee within one month after such knowledge ; or if, being a merchant or tradesman, he has not, subsequently to said date, kept proper books of account. And the discharge shall be null and void, if the debtor, or any person in his behalf, shall have procured the assent of any creditor thereto by any pecuniary con- sideration. ^ § 88. If any person, in contemplation of becoming insolvent and of obtaining a discharge in insolvency, makes any pay- ment, pledge, assignment, transfer, or conveyance of any part of his property, directly or indirectly, absolutely or conditionally, for the purpose of preferring any creditor or person having a claim against him, or who is or may be under any liability for him, or for the purpose of preventing the property from coming to the hands of his assignee in insol- vency, or of being distributed under the laws relating to insolvency in satisfaction of his debts, except as provided in section ninety, he shall not be entitled to a discharge, and any discharge received by him shall be void and of no effect.2 § 89. If any person, being insolvent or in contemplation of insolvency, within six months before the filing of the petition by or against him, with a view to give a preference to any creditor or person having a claim against him, or who is under any liability for him, procures any part of his prop- erty to be attached, sequestered, or seized on execution, or makes any payment, pledge, assignment, transfer, or convey- 1 See, among the later cases, Thompsoa v. Stone, 8 Cush. 103 ; Wil- liams V. Coggeshall, 8 lb. 377 ; Boardman v. Kebber, 10 lb. 545 ; Lee v. Kilbum, 3 Gray, 594. Who may contest, see Sullivan v. Hunt, 5 Allen, 124 ; Barnard v. Crosby, 6 Allen, 327 ; Bartholomew v. McKinstry, 6 lb. 567 ; Vennard v. McConnell, 11 lb. 555; Kelman v. Sheer, 11 lb. 566. 2 Jones V. Rowland, 8 Met. 377; Holbrook v. Jacks, 7 Cush. 136; Hobbs V. Stone, 5 Allen, 109. 572 FRAUD ON CREDITOES AND PtTRCHASEKS. ance of any part of his property, either directly or indirectly, absolutely or conditionally, the person receiving such pay- ment, pledge, assignment, transfer, or conveyance, or to be benefited thereby, having reasonable -cause to believe such person is insolvent or in contemplation of insolvency, and that such payment, pledge, assignment, or conveyance is made in fraud of the laws relating to insolvency, the same shall be void; and the assignees may recover the property, or the value of it, from the person so receiving it or so to be benefited.^ § 90. The provisions of the three preceding sections shall not apply to any payment of money or transfer of property in payment, not exceeding twenty-five dollars in amount, upon a debt contracted for necessaries furnished to the debtor or his family. § 91. If any person being insolvent or in contemplation of insolvency, within six months before the filing of the petition by or against him, makes any sale, assignment, transfer, or other conveyance of any description, of any part of his prop- erty, to any person who then has reasonable cause to believe such person insolvent or in contemplation of insolvency, and that such sale, assignment, transfer, or other convej'ance is made with a view to prevent the property from coming to his assignee in insolvency, or to prevent the same from being distributed under the laws relating to insolvency, or to defeat the object of, or in any way impair, hinder, impede, or delay the operation and effect of, or to evade, any of such provi- sions, the sale, assignment, transfer, or conveyance shall be void, and the assignee may recover the property, or the value thereof as assets of the insolvency. And if such sale, assign- ment, transfer, or conveyance, is not made in the usual and 1 Very many cases have been decided under this section, the latest of which are Kingman v. Tirrell, 11 Allen, 97 ; Vennard v. McConnell, 11 Allen, 555 ; Lynde v. McGregor, 13 Allen, 182 ; Burpee v. Sparhawk, 97 Mass. 342. MASSACHUSETTS. 573 ordinary course of business of the debtor, that fact shall be prima facie evidence of such cause of belief.^ § 103. If any person arrested on mesne process in a civil action for the sura of one hundred dollars or upwards, founded upon a demand in its nature provable against the estate of an insolvent debtor, has not given bail therein on or before the return day of such process ; or has been actually imprisoned for more than thirty days, in any civil action founded upon such contract, for the sum of one hundred dollars or upwards ; or if any person whose goods or estate are attached on mesne process in any civil action founded on such contract, for the sum of one hundred dollars or upwards, has not within seven days from the return day of such process dissolved the attachment in the manner provided in chapter one hundred and twenty-three ; or if any person has removed himself or any part of his property from the State, with intent to defraud his creditors ; or has concealed himself to avoid arrest, or any part of his property to prevent its being attached, or taken on legal process ; or procured himself or his property to be arrested, attached, or taken on any legal process ; or has made any fraudulent payment, conveyance, or transfer of any part of his property, any of his creditors whose claims prova- ble against his estate amount to the sum of one hundred dollars may, within ninety days thereafter, apply by petition to the judge for the county in which the debtor resides, or, in case the debtor has ceased to reside in this State, within one year next before the commencement of proceedings against him, in the county in which he last had his residence, setting forth the facts and the nature of such claims, verified by oath, and praying that his estate may be seized and distributed according to the provisions of this chapter.^ 1 The later cases only are cited: Metcalf v. Munson, 10 Allen, 491; Kingman ». Tirrell, 11 lb. 97 ; Lynde v. McGregor, 13 lb. 172, 182 ; Copeland v. Tayler, 99 Mass. 613. 574 fkatjd on ceeditoes and pttechasbes. Chapter CXXIII. § 55. Attachment of real estate fraudulently conveyed, &c. § 56. When an attachment on mesne process is made of real estate, or any right or interest therein which has been fraudulently conveyed by the debtor to a third person, or which has been purchased, or the purchase-money of which has been directly or indirectly paid by the debtor and the title thereto retained in the vendor or conveyed to another person, with the design and for the purpose of fraudulently securing the same from attachment by a creditor of such debtor, or with the intent and for the purpose of delaying, defeating, or defrauding creditors, it shall not be valid against a subsequent attaching creditor, or against a person who afterwards pur- chases the estate for a valuable consideration and in good faith, unless the officer, in addition to the return required by the preceding section, also returns a brief description of the estate attached, by its locality, situation, boundaries, or other- wise, as known to him, and the name or names of the person or persons in whom the record or legal title stands.^ 1 The later cases only are cited: Ensign v. Briggs, 6 Gray, 329 ; Mer- riam V. Sewal, 8 lb. 316; Foster v. Goulding, 9 lb. 50 ; Vennard v. Mc- Connell, 11 Allen, 555. 2 Livermore ». Boutelle, 11 Gray, 217 ; Aldrich v. Earle, 13 lb. 578; Hunkley v. Phelps, 2 Allen, 77; Mill River Loan F. Ass'n. v. Claflin, 9 lb. 101 ; Wadsworth v. Williams, 97 Mass. 839 ; Hamilton v. Cone, 99 lb. 478. massachttsetts. 575 Chapter CXLII. § 25. Fraudulent conveyance to trustee. § 25. If a person summoned as trustee has in his possession goods, effects, or credits of the defendant, which he holds by a conveyance or title that is void as to the creditors of the defendant, he may be adjudged a trustee, although the de- fendant could not have maintained an action therefor against him.^ 1 Dix V. Cobb, 4 Maas. 508 ; Howe v. Field, 5 lb. 390; Thomas v. Goodwin, 12 lb. 140. 676 FRAUD ON CEBDITOBS AND PT7ECHASBES. MICHIGAN. Compiled Laws, Title XXVII., Chapter CLXVI. § 1. Conveyances with intent to defraud. § 2. Qualification of last section. § 3. Conveyance with power of revocation at will of grantor void. § 5. Ibid. § 1. Every conveyance of any estate or interest in lands, or the rents and profits of lands, and every charge upon lands or upon the rents and profits thereof, made or created with in- tent to defraud prior or subsequent purchasers for a valuable consideration, of the same lands, rents, or profits, as against such purchasers shall be void.^ § 2. No such conveyance or charge shall be deemed fraudu- lent, in favor of a subsequent purchaser, who shall have actual or legal notice of the prior conveyance or charge, at the time of his purchase, unless it shall appear that the grantee in such prior conveyance, or person to be benefited by such charge, was privy to the fraud intended. § 3. Every conveyance or charge of or upon any estate or interest in lands, containing any provision for revocation, determination, or alteration of such estate or interest, or any part thereof, at the will of the grantor, shall be void as against subsequent purchasers from such grantor for a valua- ble consideration of any estate or interest so liable to be revoked or determined, although the same be not expressly revoked, determined, or altered by such grantor, by virtue of * Fox V. Willis, 1 Mich. 321 ; Peirson v. Manning, 2 Mich. 445 ; Cleland v. Taylor, 3 Mich. 201; Herschfeldt v. George, 6 Mich. 456. MICHIGAN. 577 the power reserved or expressed in such prior conveyance or charge. § 4. When a power to revoke a conveyance of any lands, or the rents and profits thereof, and to reconvey the same, shall be given to any person other than the grantor in such conveyance, and such person shall thereafter convey the same lands, rents, or profits to a purchaser for a valuable consider- ation, such subsequent conveyance shall be valid, in the same manner and to the same extent as if the power of revocation were recited therein, and the intent to revoke the former conveyance expressly declared. § 5. If a conveyance to a purchaser, under either of the two last preceding sections, shall be made before the person mak- ing the same shall be entitled to execute his power of revoca- tion, it shall nevertheless be valid, from the time the power of revocation shall actually vest in such person, in the same manner and to the same extent as if then made. Chaptek CLXVII. § 1. Certain transfers of personal property void. § 7. When sale, &o., to be presumed fraudulent, unless followed by change of possession. § 8. Who deemed creditors. § 9. Two last sections qualified. § 10. Mortgage of goods and chattels void in certain cases. § 13. When mortgage shall cease to be valid unless renewed. § 1. All deeds of gift, all conveyances, and all transfers or assignments, verbal or written, of goods, chattels, or things, in action, .made in trust for the use of the person making the same, shall be void, as against the creditors, existing or sub- sequent, of such person. § 7. Every sale made by a vendor of goods and chattels in his possession or under his control, and every assignment of 37 678 FRAUD ON CEBDITOES AND PUECHASBES. goods and chattels by way of mortgage or security, or upon any condition whatever, unless the same be accompanied by an immediate delivery, and be followed by an actual and con- tinued change of possession of the things sold, mortgaged, or assigned, shall be presumed to be fraudulent and void, as against the creditors of the vendor or the creditors of the person making such assignment, or subsequent purchasers in good faith, and shall be conclusive evidence of fraud, unless it shall be made to appear, on the part of the persons claim- ing under such sale or assignment, that the sale was made in good faith, and without any intent to defraud such creditors or purchasers.^ § 8. The term " creditors," as used in the preceding section, shall be construed to include all persons who shall be creditors of the vendor or assignor, at any time whilst such goods and chattels shall remain in his possession or under his control. § 9. Nothing contained in the two last sections shall avoid or defeat any contract of bottomry or respondentia, nor any transfer, assignment, or hypothecation of any vessels or goods at sea or abroad, if the assignee or mortgagee shall take pos- session of such vessels or goods, as soon as may be after the arrival thereof. § 10. Every mortgage, or conveyance intended to operate as a mortgage, of goods and chattels, which shall hereafter be made, which shall not be accompanied by an immediate delivery, and followed by an actual and continued change of possession of the things mortgaged, shall be absolutely void as against the creditors of the mortgagor and as against sub- sequent purchasers or mortgagees in good faith, unless the mortgage or a true copy thereof shall be filed in the ofl&ce of the township clerk of the township, or the city clerk of the 1 Jackson v. Dean, 1 Doug. Mich. -519 ; Comstock v. HoUon, 2 Mich. 3.55 ; Doyle v. Stevens, 4 Mich. 87 ; Oliver v. Eaton, 7 Mich. 108 ; Gay V. Bidwell, 7 Mich. 519. MICHIGAN. 579 city, or city recorder of cities having no officer known as city clerk, where the mortgagor resides, except where the mort- gagor is a non-resident of the State, when the mortgage or a true copy thereof shall be filed in the office of the township clerk of the township, or city clerk of the city, or city re- corder of cities having no officer known as city clerk, where the property is.' § 13. Every such mortgage shall cease to be valid, as against the creditors of the person making the same, or subse-' quent purchasers and mortgagees in good faith, after the ex- piration of one year from the filing of the same or a copy thereof, unless, within thirty days next preceding the expira- tion of the year, the mortgagee, his agent or attorney, shall make and annex to the instrument or copy on file as afore- said an affidavit, setting forth the interest which the mortga- gee has, by virtue of said mortgage, in the property therein mentioned, upon which affidavit the township or city clerk shall indorse the time when the same was filed : provided, that such affidavit being made and filed before any pui-chase of such mortgaged property shall be made, or other mortgage received or lien obtained thereon in good faith, shall be as valid to continue in effect such mortgage as if the same were made and filed within the period as above provided.^ 1 Tannahill v. Tuttle, 3 Mich. 105; Eggleston v. Mundy, 4 Mich. 295; Woodruff V. Phillips, 10 Mich. 500. » Wetherell v. Spencer, 3 Mich. 123. 580 PKAT7D ON CREDITORS AND PURCHASERS. Chapter CLXVIII. § 1. Conveyances to hinder or defraud creditors void. § 3. Certain conveyances, &c., void, as to heirs, &c. § i. Intent a question of fact. § 5. Purchaser without notice protected. § 6. Term " conveyance," how construed. § 1. Every conveyance or assignment, in writing or other- wise, of any estate or interest in lands, or iii goods, or things in action, or of any rents or profits issuing therefrom, and any charge. upon lands, goods, or things in action, or upon the rents or profits thereof, made with the intent to hinder, delay, or defraud creditors or other persons of their lawful suits, damages, forfeitures, debts, or demands, and every bond or other evidence of debt given, suit commenced, decree or judgment suffered, with the like intent, as against the persons so hindered, delayed, or defrauded, shall be void.^ § 3. Every conveyance, charge, instrument, or proceeding, declared by law to be void as against creditors or purchasers, shall be equally void as against the heirs, successors, personal representatives, or assigns of such creditors or purchasers. § 4. The question of fraudulent intent, in all cases arising under this or either of the last two preceding chapters, shall be deemed a question of fact and not of law.^ § 5. None of the provisions of this or the last two preced- ing chapters shall be construed in any manner to affect or impair the title of a purchaser for a valuable consideration, unless it shall appear that he had previous notice of the fraudulent intent of his immediate grantor, or of the fraud rendering void the title of such grantor. § 6. The term " conveyance," as used in this and the pre- 1 Buck V. Sherman, 2 Doug. Mich. 176. " Pierson v. Manning, 2 Mich. 445 ; Jackson v. Dean, 1 Doug. Mich. 519 ; Oliver v. Eaton, 7 Mich. 108 ; Bagg v. Jerome, lb. 145. MICHIGAN. 681 ceding eightieth chapter, shall be construed to embrace every instrument in writing, except a last will and testament, what- ever may be the form of such instrument, and by whatever name it may be known in law, by which any estate or interest in lands is created, aliened, assigned, or surrendered. CHAPTER CCXXXI. § 18. Insolvent having preferred creditors, not entitled to discharge. § 18. If it shall appear on such hearing, on the examina- tion of the insolvent or otherwise, that, in contemplation of his becoming insolvent, or of his petitioning for a discharge under the provisions of this chapter, or, knowing of his insolvency, such insolvent has made any assignment, sale, or transfer, either absolute or conditional, of any of his estate, or of any interest therein, or has confessed any judgment or given any security, with a view to give a preference for an antecedent debt to any creditor, he shall not be entitled to a discharge under this chapter. 582 FRAUD ON CEEDITOES AND PTXRCHASEES. MINNESOTA. Revision op 1866, Chaptbk XXX. § 17. Effect of sale or assignment when firm is insolvent. § 18. Effect of sale, &o., of property of either partner when firm is insol- vent. § 17. Every sale, assignment, or transfer of any of the property or effects of such partnership, made by such partner- ship when insolvent or in contemplation of insolvency, or after, or in consequence of the insolvency of any partner, with the intent of giving a preference to any creditor of such partnership or insolvent partner, over other creditors of such partnership ; and every judgment confessed, lien created, or security given by such partnership, under the like circum- stances and with the like intent, is void as against the cred- itors of such partnership. § 18. Every such sale, assignment, or transfer of any of the property or effects of a general or special partner, made by such special or general partner when insolvent or in contem- plation of insolvency, or after, or in contemplation of the in- solvency of the partnership, with the inte'nt of giving to any creditor of his own or of the partnership a preference over creditors of the partnership ; and every judgment confessed, lien created, or security given by such partner under the like circumstances and with the like intent, is void as against the creditors of the partnership. MINNESOTA. 583 Chapter XLI., Title I. § 1. Conveyance when void. § 2. Not fraudulent unless grantee ■was privy to the fraud. § 3. Conveyance void as against subsequent purchasers, when. § 4. Conveyance by person to whom revocation has been given, valid. § 5. Conveyances under either of preceding sections, valid. § 1. Every conveyance of any estate or interest in lands, or the rents and profits of lands, and every charge upon lands, or upon the rents and profits thereof, made or created with the intent to defraud prior or subsequent purchasers for a valuable consideration of the same lands, rents, or profits, as against any such purchasers, shall be deemed void.^ § 2. No such conveyance or charge shall be deemed fraudu- lent, in favor of a subsequent purchaser who had actual or legal notice thereof at the time of his purchase, unless it appears that the grantee in such conveyance, or person to be benefited by such change, was privy to the fraud intended. § 3. Every conveyance or charge of or upon any estate or interest in lands, containing any provision for the revocation, determination, or alteration of such estate or interest, or any part thereof, at the will of the grantor, shall be void, as against subsequent purchasers from such grantor, for a valuable con- sideration, of any estate or interest, so liable to be revoked or determined, although the same is not expressly revoked, determined, or altered by such grantor, by virtue of the power reserved or expressed in such prior convej'ance or charge. § 4.. When a power to revoke a conveyance of any lands or the rents and profits thereof, and to reconvey the same, is given to any person other than the grantor in such convey- ance, and such person thereafter conveys the same land, rents, or profits to a purchaser for a valuable consideration, such 1 Greenleaf v. Edes, 2 Minn. 264 ; Lemay v. Bibeau, lb. 291 ; Banning V. Sibley, 3 Minn. 389. 684 PRAITD ON CEEDITOBS AND PURCHASEES. subsequent convej'ance shall be valid in the same manner and to the same extent as if the power of revocation was recited therein, and the intent to revoke the former convey- ance expressly declared. § 5. If a conveyance to a purchaser under either of the two preceding sections is made before the person making the same is entitled to execute his power of revocation, it shall nevertheless be valid from the time the power of revocation actually vests in such person, in the same manner and to the same extent as if then made. Title III. § 14. Conveyances of personal property void, when. § 15. Sale of chattels presumed void, when. § 16. Term " creditors " defined. § 17. Limitation of two preceding sections. § 18. Conveyances made with intent to hinder, delay, or defraud creditors, void. § 19. Conveyances void as to creditors, void as to heirs. § 20. Fraudulent intent a question of fact. § 21. Purchaser without notice, protected. § 22. Term " conveyances " defined. § 14. All deeds of gift, all conveyances, and all transfers or assignments, verbal or written, of goods, chattels, or things in action, made in trust for the use of the person making the same, shall be void, as against the creditors existing or subse- quent of such person.! § 15. Every sale made by a vendor of goods and chattels in his possession or under his control, and every assignment of goods and chattels, unless the same is accompanied by an im- mediate delivery, and followed by an actual and contiuued change of possession of the things sold or assigned, shall be presumed to be fraudulent and void, as against the creditors 1 Truitt V. Caldwell, 3 Minn. 364 ; Chaphard v. Bayard, 4 lb. 533. MINNESOTA. 585 of the vendor or assignor, or subsequent purchasers in good faith, unless those claiming under such sale or assignment make it appear that the same was made in good faith, and without any intent to hinder, delay, or defraud such creditors or purchasers. § 16. The term " creditors," as used in the preceding sec- tion, includes all persons who are creditors of the vendor or assignor, at any time while such goods and chattels remain in his possession or under his control. § 17. Nothing contained in the two preceding sections shall apply to contracts of bottomry or respondentia, nor as- signments or hypothecations of vessels or goods at sea, or in foreign ports, or without this State ; provided the assignee or mortgagee takes possession of such vessel or goods as soon as possible after the arrival thereof within this State. § 18. Every conveyance or assignment in writing or other- wise, of any estate or interest in lands, or of any rents or pro- fits issuing therefrom, and every charge upon lands or upon the rents or profits thereof, niiide with the intent to hinder, delay, or defraud creditors or other persons of their lawful actions, damages, forfeitures, debts, or demands, and every bond or other evidence of debt given, actions commenced, order, or judgment suffered, with the like intent as against the persons so. hindered, delayed, or defrauded, shall be void.^ § 19. Every conveyance, charge, instrument, or proceeding, declared to be void by the provisions of this and the two pre- ceding titles, as against creditors or purchasers, shall be equally void against the heirs, successors, personal represen- tatives, or assignees of such creditors or purchasers. § 20. The question of fraudulent intent in all cases arising under the provisions of this title shall be deemed a question of fact, and not of law, and no conveyance or charge shall be 1 Scott V. Edes, 3 Minn. 377 ; Banning v. Sibley, lb. 389. 586 FEATJD ON CEBDITORS AND PUECHASBES. adjudged fraudulent as against creditors, solely on the ground that it was not founded on a valuable consideration.^ § 21. The provisions of this title shall not be construed in any manner to affect or impair the title of a purchaser for a valuable consideration, unless it appears that such purchaser had previous notice of the fraudulent intent of his immediate grantor, or of the fraud rendering void the title of such grantor.^ § 22. The term " conveyance," as used in this chapter, shall be construed to embrace every instrument in Writing, except a last will and testament, whatever may be its form, and by whatever name it may be known in law, by which any estate or interest in lands is created, alienated, assigned, or surrendered. 1 Gere v. Murray, 6 Minn. 305. ^ lb. MISSISSIPPI. 587 MISSISSIPPI. Revised Code op 1871. § 2893. Conveyances, &c., when void. § 2894. Bona fide conveyances for value. § 2893. Every gift, grant, or conveyance of land, goods, or chattels, or of any rent, common, or other profit or charge out of the same, by writing or otherwise, and every bond, suit, judgment, or execution had or made, and contrived of malice, fraud, covin, collusion, or guile, to the intent or pur- pose to delay, hinder, or defraud creditors of their just and lawful actions, suits, debts, accounts, damages, penalties, or forfeitures, or to defraud or deceive those who shall purchase the same land, or any rent, profit, or commodity out of it, shall be from henceforth deemed and taken only as against the person or persons, his, her, or their heirs, successors, executors, administrators, or assigns, and every one of them whose debts, suits, demands, estates, or interests, by such guileful and covinous devices and practices as aforesaid, shall or might be in any wise disturbed, hindered, delayed, or defrauded, to be clearly and utterly void, any pretence, color, feigned consideration, expressing of use, or any other matter or thing to the contrary, notwithstanding ; and, moreover, if any conveyance be of goods or chattels, and be not on consid- eration deemed valuable in law, it shall be taken to be fraud- ulent within this act, unless the same be by will, duly proved and recorded, or by writing acknowledged or proved ; and such writing, if the same be for real estate, shall be acknowl- edged or proved, and recorded in the county where the land 588 PKAUD ON CREDITORS AJSD PURCHASERS. conveyed is situated ; and, if for personal property, then in the county where the donee shall reside or the property shall be, and the proof or acknowledgment, in either case, shall be taken or made, and certified in the same manner as convey- ances of land are by law directed to be acknowledged or proved and recorded, unless, in the case of personal property, possession shall really and bona fide remain with the donee ; and in like manner where any loan of goods and chattels shall be pretended to have been made to any person with whom, or those claiming under him, possession shall have remained for the space of three 3'ears, without demand made and pursued by due course of law on the part of the pretended lender, or where any reservation or limitation shall be pretended to havfe been made, of a use or property by way of condition, reversion, remainder, or otherwise, in goods or chattels, the possession whereof shall have remained in another as aforesaid, the same shall be taken, as to the creditors and purchasers of the per- sons aforesaid so remaining in possession, to be fraudulent within this article, and that the absolute property is with the possession, unless such loan, reservation, or limitation of use or property were declared by will or by writing, proved or acknowledged and recorded, as aforesaid. § 2894. This act shall not extend to any estate or interest. in any lands, goods, or chattels, or any rents, common, or profit out of the same, which shall be upon good consideration and hona fide, lawfully conveyed or assured to any person or persons, or bodies politic or corporate ; nor shall it, in any case, extend to creditors whose debts were contracted after such fraudulent act, unless made with intent to defraud them ; and, though a conveyance or contract be decreed void as to prior creditors, it shall not, on that account, be void as to subsequent creditors or purchasers. MISSOURI. 589 MISSOURI. General Statutes, Chapter CVII. § 1. Deed of gift, &c., void as to creditors and purchasers, ^hen. § 2. Conveyances of land, &c., -with intent to delay, hinder, or defraud creditors, utterly void. § 3. Qualification of preceding section as to suhsequent purchasers. §4. Gift of goods, chattels, &c., void as to creditors and purchasers, ■when. § 5. Loans after five years' possession, &c., declared void, unless loan, &c., was declared by will or deed in ■writing proved and acknowl- edged, t&c. § 6. Conveyances not valid until delivered for record, and not then if made with intent to defraud, &c. § 7. Not to extend to bona Jide conveyances or subsequent hona fide purchasers. § 8. Mortgage or deed of trust to personal property, not vaUd unless delivered, &c. § 9. Preceding section not to defeat contracts of bottomry, respon- dentia, &c. § 10. Every sale of goods, &c., declared to be void, without a change of possession, &c. § 11. Conveyances of land by citizen of this State to citizen of other States, declared inoperative, when. § 1. Every deed of gift and conveyance of goods and chat- tels, in trust, to the use of the person so making such deed of gift or conveyance, is declared void as against creditors, existing and subsequent, and purchasers.^ § 2. Every conveyance or assignment, in writing or other- ■wise, of any estate or interest in lands, or in goods or chattels, or in things in action, or of any rents or profits issuing there- » Kobinson v. Bobards, 15 Mo. 459; State v. D'Oench, 31 lb. 453; State V. Tasker, lb. 457; King ». Moon, 42 lb. 351; Morrison v. Philli- ber, 30 lb. 145. 690 PEATJD ON CREDITORS AND PURCHASERS. from, and every charge upon lands, goods, or things in action, or upon the rents and profits thereof, and every bond, suit, judgment, decree, or execution made or contrived with the intent to hinder, delay, or defraud creditors of their lawful actions, damages, forfeitures, debts, or demands, or to defraud or deceive those who shall purchase the same lands, tenements, or hereditaments, or any rents, profit, or commodity issuing out of them, shall be from henceforth deemed and taken as against said creditors and purchasers, prior and subsequent, to be clearly arid utterly void.^ § 3. No such conveyance or charge shall be deemed void, in favor of subsequent purchaser, if the deed or conveyance shall have been duly acknowledged or proved and recorded, or the purchaser have actual notice thereof at the time of the payment of the purchase-money, unless it shall appear that the grantee in such conveyance, or person to be benefited by such charge, was party or privy to the fraud intended. § 4. Every gift of goods and chattels, and all other convey- ances of the same, not for a consideration deemed valuable in law, shall be void as against all creditors and purchasers, unless possession shall really and bona fide accompany such gift or conveyance, or unless the same be by will, duly proved and recorded, or by deed in writing acknowledged or proved, and then recorded (in the county in which the donor or grantor resides ; if he does not reside in this State, then in the county in which the property is), in such manner as conveyances of lands are, by law, directed to be acknowledged or proved and recorded.^ § 5. When any goods or chattels shall be pretended to have been loaned to any person with whom, or those claiming under 1 Chouteau B. Sherman, 11 Mo. 385; Little v. Eddy, 14 Mo. 160; Cason II. Murray, 15 Mo. 378; Woodson v. Pool, 19 Mo. 340; Rankin v. Harper, 23 Mo. 579; Zeiglerf. Maddox, 26 Mo. 575; Howe v. Waysman, 12 Mo. 169. " Gamble v. Johnson, 9 Mo. 598; Law v. Kingsbury, 11 lb. 402; Pepper V. Carter, lb. 540 ; Murray v. Fox, lb. 535 ; Pemberton v. Pemberton, 22 lb. 338 & 163; Salmon ». Rogers, 24 lb. 192. MISSOURI. 591 him, possession shall have remained for the space of five years, without demand made and pursued by due process of law on the part of the pretended lender, or when any reservation or limitation shall be pretended to have been made of any use of property by way of condition, reservation, or remainder, or otherwise, in goods or chattels, the possession whereof shall have remained in another, the same shall be taken, as to all creditors and purchasers of the person so remaining in pos- session, to be void, and that the absolute property is with the possession, unless such loan, reservation, or limitation of use or property was declared by will or deed in writing, proved or acknowledged and recorded, as required in the preceding section.! § 6. No conveyance required by either of the two preceding sections to be recorded shall be valid or binding, except be- tween the parties and their legal representatives, until the same shall have been deposited in the recorder's office for record ; and, even then, if made with intent to defraud prior creditors or purchasers, shall be void against such creditors and purchasers. § 7. This act shall not extend to any estate or interest in any lands, tenements, hereditaments, goods, or chattels, or any rents, profits, or commons out of the same, which shall be upon valuable consideration and bona fide and lawfully conveyed; nor shall it be construed to avoid any deed as against any subsequent bona fide purchaser from the grantee for valuable consideration, and without notice of fraud.^ § 8. No mortgage or deed of trust of personal property hereafter made shall be valid against any other person than the parties thereto, unless possession of the mortgaged or trust property be delivered to and retained by the mortgagee or trustee or cestui que trust, or unless the mortgage or deed of 1 Smart v. Wather, 8 Mo. 522; McDermott v. Barnum, 16 lb. 114; Criddle ». Criddle, 21 lb. 522 ; Jones v. Briscoe, 24 lb. 498. 2 See Wineland v. Coonce, 5 Mo. 296. 592 PEACTD ON CREDITOKS.AND PUECHASEBS. trust be acknowledged or proved, and recorded in the county in which the mortgagor or grantor resides, in such manner as conveyances of lands are, by law, directed to be acknowledged or proved and recorded.^ § 9. Nothing contained in the preceding section shall avoid or defeat a contract of bottomry, respondentia, nor any trans- fer or assignment or hypothecation of any boat, vessel, ship, or goods, at sea or abroad, if the mortgagee, trustee, or cestui que trust shall take possession of such boat, vessel, ship, or goods as soon as may be after the arrival thereof within this State. § 10. Every sale made by a vendor of goods and chattels in his possession or under his control, unless the same be accompanied by delivery in a reasonable time (regard being had to the situation of the property), and be followed by an actual and continued change of the possession of the things sold, shall be held to be fraudulent and void as against the creditors of the vendor or subsequent purchasers in good faith.2 § 11. Any conveyance of land made by a citizen or citizens of this State to a citizen or citizens of any of the States or territories of the United States, without a valuable or bona fide consideration, and for the purpose of or with the view of giving jurisdiction to any of the courts of the United States, and thereby to harass the occupants thereof, shall be and the same conveyance is hereby declared inoperative, except as to the transferee and his heirs, in whom the said conveyance shall vest in him an irreclaimable fee-simple title to the said land, which, notwithstanding any release or reconveyance by the transferee, during his life, may be asserted by the heir or heirs of such transferee after his death, in any of the courts of this State, and shall be good and valid against the person I 1 Bryson v. Penix, 18 Mo. 13; Bennett v. Robinson, 19 lb. 604; Johnson v. JeSriesj 30 lb. 423 ; Bevans v. Ballou, 31 lb. 437. 2 Claflin V. Rosenberg, 42 Mo. 489. MissouBi. 593 so conveying, and his heir or heirs, and all claiming from, through, or under them, in any way whatever, any law to the contrary, notwithstanding; but the claim of the transferee, or his heirs, shall not thereby be strengthened against the occupants. 38 594 PEATJD ON CEEDITOES AKD PUECHASEES. NEBRASKA. GENEEAii Statutes, 1873, Chaptee XXV. § 1. Conveyance, ■when void. § 2. Not void as to subsequent purchaser, when. § 7. Conveyances, when void as to creditors. § 11. Sale or assignment void vinless accompanied by an immediate delivery. § 12. Term " creditors " defined. § 13. Reservation as to certain contracts. § 14. Mortgage, when void. § 15. Mortgage shall cease to be valid, when. § 17. Assignment made with intent to defraud creditors, void. § 20. Fraudulent intent, how decided. § 21. Title of purchaser not afEected, except when. § 22. Term " lands " defined. § 23. Term " conveyance" defined. § 1. Every conveyance of or charge upon any estate or interest in lands, or the rents and profits thereof, made or created with intent to defraud prior or subsequent pur- chasers for a valuable consideration, shall, as against such purchasers, be void. § 2. No such conveyance or charge shall be deemed fraud- ulent, in favor of a subsequent purchaser, who shall have actual or legal notice thereof at the time of his purchase, unless it shall appear that the grantor in such conveyance, or the person to be benefited by such charge, was privy to the fraud intended. § 7. All deeds of gift, all conveyances, and all transfers or assignments, verbal or written, of goods, chattels, or things in action, made in trust for the use of the person NEBRASKA. 595 making the same, shall be void as against the creditors, existing or subsequent, of such person. § 11. Every sale made by a vendor of goods and chattels in his possession or under his control, and every assignment of goods and chattels, by way of mortgage or security, or upon any condition whatever, unless the same be accom- panied by an immediate delivery, and be followed by an actual and continued change of possession, of the things sold, mortgaged, or assigned, shall be presumed to be fraud- ulent and void, as against the creditors of the vendor, or the creditors of the person making such assignment, or subse- quent purchasers in good faith, and shall be conclusive evidence of fraud, unless it shall be made to appear on the part of the persons claiming under such sale or assignment that the same was made in good faith, and without any intent to defraud such creditors or purchasers. § 12. The term " creditors," as used in the last section, shall be construed to include all persons who shall be cred- itors of the vendor or assignor at any time whilst such goods and chattels shall remain in his possession or under his control. § 13. Nothing contained in sections ten and eleven shall be construed to apply to contracts of bottomry or respon- dentia, nor to assignments or hypothecations of vessels or goods at sea, or in foreign ports, or upon the waters of a navigable stream, if the assignee or mortgagee shall take possession of such vessels or goods as soon as may be after the arrival thereof. § 14. Every mortgage, or conveyance intended to operate as a mortgage, of goods and chattels hereafter made, which shall not be accompanied by an immediate delivery, and be followed by an actual and continued change of possession of the things mortgaged, shall be absolutely void as against the creditors of the mortgagor, and as against subsequent pur- chasers and mortgagees in good faith, unless the mortgage, 596 FRAUD ON CEBDITOKS AND PTJECHASEES. or a true copy thereof, shall be filed and recorded as directed by law. § 15. Every mortgage filed and recorded in pursuance of this subdivision shall cease to be valid as against t^he cred- itors of the person making the same, or against subsequent purchasers or mortgagees in good faith, after the expiration of one year from the filing thereof, unless, within thirty days next preceding the expiration of the year, a true copy of such mortgage, together with a statement exhibiting the interest of the mortgagee in the property mortgaged, shall be again filed and recorded in the office of the county clerk. § 17. Every conveyance or assignment, in writing or oth- erwise, of any estate or interest in lands, or in goods or things in action, or of any rents or profits issuing therefrom, and every charge upon lands, goods, or things in action, or upon the rents or profits thereof, made with the intent to hinder, delay, or defraud creditors or persons of their lawful rights, damages, forfeitures, debts, or demands, and every bond or other evidence of debt given, suit commenced, or decree or judgment suffered, with the like intent, as against the persons so hindered, delayed, or defrauded, shall be void. § 20. The question of fraudulent intent in all cases aris- ing under the provisions of this chapter shall be deemed a question of fact, and not of law ; and no conveyance or charge shall be adjudged fraudulent, as against creditors or purchasers, solely on the ground that it was not founded on a valuable consideration. § 21. The provisions of this chapter shall not be con- strued in any manner to affect or impair the title of a pur- chaser for a valuable consideration, unless it shall appear that such purchaser had previous notice of the fraudulent intent of his immediate grantor, or of the fraud rendering void the title of such grantor. § 22. The term " lands," as used in this chapter, shall be KEBKASKA. 597 construed as coextensive in meaning with " lands, tenements, and hereditaments," and the terms " estate and interest in lands " shall be construed to embrace every estate and in- terest, freehold and chattel, legal and equitable, present and future, vested and contingent, in lands, as above described. § 23. The term " conveyance," as used in this chapter, shall be construed to embrace every instrument in writing (except a last will and testament), whatever may be its form, and by whatever name it may be known in law, by which any estate or interest in lands is created, aliened, assigned, or surrendered. 598 FRAUD ON CREDITORS AND PURCHASERS. NEW JERSEY. Revised Statutes op 1874-75. § 11. Conveyances in trust for the grantor, void as to creditors. § 12. Conveyances to hinder, delay, or defraud creditors. § 13. Conveyances in fraud of purchasers. § 14. Conveyances with clause of revocation. § 15. Proviso. § 11. Every deed of gift and every conveyance, transfer, and assignment of goods, chattels, or things in action, made in trust for the use of the person making the same, shall be void as against creditors. § 12. Every conveyance, grant, or alienation of lands, tenements, hereditaments, or goods and chattels, or of any estate or interest therein, whether made by writing or other- wise, and every judgment and execution which have been or shall be contrived in fraud, covin, or collusion, with intent to hinder, delay, or defraud creditors and others of their lawful actions, debts, damages, or demands, shall be deemed and taken (only as against those persons, their executors, admin- istrators, or assigns, whose actions, debts, damages, or demands are or may be hindered or defeated by such covinous or fraud- ulent devices and practices) to be utterly void and of no effect, any feigned consideration, color, or other pretence to the contrary, notwithstanding. § 13. Every conveyance, grant, or alienation of lands, ten- ements, or hereditaments, or of any estate or interest therein which has been or hereafter shall be made with intent to defraud and deceive such person or persons as have purchased or shall purchase any such lands, tenements, or hereditaments, NEW JERSEY. 599 » or any estate, right, or interest therein, shall be deemed and taken (only as against such persons, their heirs, executors, administrators, or assigns as have purchased, or shall hereafter purchase such lands, tenements, or hereditaments, or any part thereof, or any estate, right, or interest therein for money or other good consideration) to be utterly void and of no effect ; any feigned consideration, color, or other pretence to the contrary, notwithstanding. § 14. If any person has made, or hereafter shall make, any conveyance, gift, grant, demise, charge, or ^surance of any lands, tenements, or hereditaments, with any clause, provision, or condition of revocation or alteration, at his or her will or pleasure, contained or mentioned in any writing, deed, or indenture ; and after such conveyance, gift, grant, demise, charge, or assurance so made, shall bargain, sell, demise, grant, convey, or charge the same lands, tenements, or hereditaments, or any part or parcel thereof, to any person or persons for money or other good consideration paid or given (the said first conveyance, gift, grant, demise, charge, or assurance not having been revoked or altered according to the power and authority reserved or expressed in the said secret conveyance, assurance, gift, or grant), then the said former conveyance, gift, grant, demise, charge, or assurance of the said lands, tenements, or hereditaments, shall be void and of no efiPect, as against such subsequent bargainees, vendees, lessees, grantees, and every of thtm, their heirs, successors, executors, admin- istrators, and assigns, and every person or persons who may lawfully have or claim any thing by, from, or under them or any of them. § 15. Provided always, that nothing in this act contained shall be construed to impeach, defeat, or make void any con- veyance, assignment, grant, or sale of any lands, tenements, or hereditaments, goods or chattels, made for a good consid- eration, and hona fide, to any person not having at the time of such conveyance, assurance, or sale any notice or knowledge 600 PEAtrD ON CEEDITOES AND PTTRCHASEKS. « of such covin, fraud, or collusion as aforesaid ; and, also, that no mortgage, made bona fide and without fraud or covin, and upon good consideration, shall be impeached or impaired by this act ; but every such mortgage shall have like force and . effect, as if this act had not been made. NEW YORK. 601 NEW YORK. Revised Statutes, Part II., Chapter VII., Title I. § 1. Conveyances of lands, &c., with intent to defraud purchasers, void as to them. § 2. Qualiflcation of preceding section, as to subsequent purchasers. § 3. Conveyances containing power of revocation, &c., void as to subse- quent purchasers. § 1. Every conveyance of any estate or interest in lands, or the rents and profits of lands, and every charge upon lands, or upon the rents and profits thereof made or created, with the intent to defraud prior or subsequent purchasers, for a valuable consideration, of the same lands, rents, or profits, as against such purchasers, shall be void.^ § 2. No such conveyance or charge shall be deemed fraudu- lent in favor of a subsequent purchaser who shall have actual or legal notice thereof at the time of his purchase, unless it shall appear that the grantee in such conveyance, or person to be benefited by such charge, was privy to the fraud intended. § 3. Every conveyance or charge of or upon any estate or interest in lands containing any provision for the revocation, determination, or alteration of such estate or interest, or any part thereof, at the will of the grantor, shall be void as against subsequent purchasers from such grantor for a valuable con- sideration, of any estate or interest so liable to be revoked or determined, although the same be not expressly revoked, determined, or altered by such grantor by virtue of the power reserved or expressed in such prior conveyance or charge. 1 Leitch V. HoUister, 4 Comst. 211. 602 FRAUD ON CREDITORS AND PURCHASERS. Chapter VII., Title II. § 1. Transfers of personal property for use of grantor void as to creditors. § 5. Certain transfers of goods, &c., fraudulent as to creditors. § 6. Who to be deemed creditors within last section. § 7. QuaM'cations of two last sections. § 1. All deeds of gift, all conveyances, and all transfers or assignments, verbal or written, of goods, chattels, or things in action, made in trust for the use of the person making the same, shall be void as against the creditors, existing or subse- quent, of such person.^ § 5. Every sale made by a vendor of goods and chattels in his possession or under his control, and every assignment of goods and chattels by way of mortgage or security, or upon any condition whatever, unless the same be accompanied by an immediate delivery, and be followed by an actual and continued change of possession of the things sold, mortgaged, or assigned, shall be presumed to be fraudulent and void as against the creditors of the vendor, or the creditors of the person making such assignment, or subsequent purchasers in good faith ; and shall be conclusive evidence of fraud, unless it shall be made to appear on the part of the persons claiming under such sale or assignment that the same was made in good faith, and without any intent to defraud such creditors or purchasers.^ 1 Dunham v. Whitehead, 21 N. Y. 133 ; Wilson v. Robertson, 21 N. Y. 594; Bayard v. Hoffman, 4 Johns. Ch. 452; DePeyster v. Snyder, 6 N. Y. 510 ; Leitch v. Hollister, 4 N. Y. 211 ; McLean v. Button, 19 Barb. 450 ; Curtis v. Leavitt, 17 Barb. 316 ; Burdick v. Post, 12 Barb. 168 ; James v. Patten, 8 Barb. 344 ; Wilson v. Robertson, 19 How. Pr. 357 ; Spies v. Boyd, 1 E. D. Smith, 448. 2 Griffin v. Marquardt, 17 N. Y. 28 ; Adams v. Davidson, 10 N. Y. 310; Butler v. Miller, 1 N. Y. 497 ; Clute v. Fitch, 25 Barb. 428; Groat V. Rees, 20 Barb. 26 ; McLean v. Button, 19 Barb. 450 ; Curtis v. Leavitt, 17 Barb. 316 ; Hall v. Arnold, 15 Barb. 599 ; Bishop v. Cook, 13 Barb. NEW YOKK. 603 § 6. The term " creditors," as used in the last section, shall be construed to include all persons who shall be creditors of the vendor or assignor at any time whilst such goods and chattels shall remain in his possession or under his control. § 7. Nothing contained in the two last sections shall be construed to apply to contracts of bottomry or respondentia, nor to assignments or hypothecations of vessels or goods at sea or in foreign ports. Chapter VII., Title III. § 1. Instruments relating to real or personal property, made to defraud, void. § 3. Instruments void as to creditors, to be void as to representa- tives, &c. § i. Fraudulent intent, a question of fact. § 5. Certain purchasers not to be affected by fraud, -without notice. § 6. Meaning of terms " lands," and " estate and interest in lands." § 7. Meaning of term " conveyance." § 1. Every conveyance or assignment, in writing or other- wise, of any estate or interest in lands, or in goods or things in action, or of any rents or profits issuing therefrom, and every charge upon lands, goods, or things in action, or upon the rents or profits thereof, made with the intent to hinder, 326 ; Swift v. Hart, 12 Barb. 530 ; Frost v. Willard, 9 Barb. 440 ; Otis ». Sill, 8 Barb. 123 ; Browning v. Hart, 6 Barb. 94 ; Birdseye v. Kay, 4 Hill, 162 ; Hanford v. Artcher, 4 Hill, 271 ; Butler v. Van Wyck, 1 Hill, 449; Cole v. White, 26 Wend. 511; White v. Cole, 24 Wend. 116; Friesby V. Thayer, 25 Wend. 398 ; Smith v. Acker, 23 Wend. 653 ; Bennett V. Earll, 21 Wend. 117 ; Gregory v. Thomas, 20 Wend. 19 ; Stevens v. Fisher, 19 Wend. 183 ; Randall o. Cook, 17 Wend. 55; Wood v. Lowry, 17 Wend. 495 ; Murray v. Burtis, 15 Wend. 212 ; 8. c. 6 Wend. 402 ; Gardner u. Adams, 12 Wend. 298; Jennings v. Carter, 2 Wend. 446; Out- water V. Dodge, 7 Cow. 85 ; Bissell v. Hopkins, 3 Cowen, 166 ; Brown v. Wilmerding, 5 Duer, 220; Fairbanks v. Bloomfield, 5 Duer, 441; Hull o. Carnley, 2 Duer, 99; Van Buskirk v. Warren, 13 Abb. Pr. 145; Churchill V. Bennett, 8 Abb. Pr. 309. 604 FEATTD ON CRBDITOES AND PTJBCHASEKS. delay, or defraud creditors or other persons of their lawful suits, damages, forfeitures, debts, or demands, and every bond or other evidence of debt given, suit commenced, decree or judgment suffe^'ed, with the like intent, as against the persons so hindered, delayed, or defrauded, shall be void.^ § 3. Every conveyance, charge, instrument, or proceeding declared to be void, by the provisions of this chapter, as against creditors or purchasers, shall be equally void against the heirs, successors, personal representatives, or assignees of such cred- itors or purchasers.^ § 4. The question of fraudulent intent in all cases arising under the provisions of this chapter shall be deemed a question of fact and not of law ; nor shall any conveyance or charge be adjudged fraudulent as against creditors or purchasers solely on the ground that it was not founded on a valuable consideration.^ § 5. The provisions of this chapter shall not be construed in any manner to affect or impair the title of a purchaser for a valuable consideration, unless it shall appear that such pur- 1 Dunham v. Waterman, 17 N. T. 9 ; Nichols ». McEven, 17 N. Y. 22; Leavitt v. Curtis, 15 N. Y. 9 ; Seymour v. Wilson, 15 N. Y. 569; Nichol- son V. Leavitt, 6 N. Y. 515 ; Spaulding v. Strang, 32 Barb. 240 ; Wilson V. Forsyth, 24 Barb. 120 ; Tallmadge v. Sill, 21 Barb. 55 ; Clark v. Fuller, 21 Barb. 128 ; Pine v. Rickert, lb. 469 ; Bellows t>. Partridge, 19 Barb. 176 ; Rathbun v. Platner, 18 Barb. 274 ; Curtis v. Leavitt, 17 Barb. 316 ; Loomis V. Tift, 16 Barb. 544; Kellogg v. Slawson, 15 Barb. 56; Moir V. Brown, 14 Barb. 39 ; Burdick v. Post, 12 Barb. 168 ; Browning v. Hart, 6 Barb. 91 ; Russell v. Lasher, 4 Barb. 232 ; Plank k. Schermerhorn, 3 Barb. Ch. 645 ; Wilder v. Fondey, 4 Wend. 100 ; Wadsworth v. Haven, 3 Wend. 411 ; Markie v. Cairns, 5 Cow. 554 ; Jackson v. Myers, 18 John. 427 ; Smith v. Howard, 20 How. Pr. 123 ; Bilsborow v. Titus, 15 How. Pr. 95 ; Moore v. Livingston, 14 How. Pr. 11 ; Paton v. Westervelt, 2 Duer, 362. 2 Hanford v. Artcher, 4 Hill, 271. « Seymour v. Wilson, 14 N. Y. 567 ; Edgell v. Hart, 9 N. Y. 213 ; Kellogg V. Slawson, 15 Barb. 56 ; Bishop v. Cook, 13 Barb. 326 ; Tift V. Barton, 4 Den. 174 ; Smith e. Asher, 23 Wend. 654 ; Cunningham v. ■Freeborn, 11 Wend. 250 ; Ryckman v. Wilmerding, 5 Duer, 220 ; Hull v. Camley, 2 Duer, 99. NEW YOEK. 605 chaser had previous notice of the fraudulent intent of his immediate grantor, or of the fraud rendering void the title of each grantor.^ § 6. The term " lands," as used in this chapter, shall be construed as coextensive in meaning with " lands, tenements, and hereditaments ; " and the terms " estate and interest in lands " shall be construed to embrace every estate and inter- est, freehold and chattel, legal and equitable, present and future, vested and contingent, in lands, as above defined.* § 7. The term " conveyance," as used in this chapter, shall be construed to embrace every instrument in writing (except a last will and testament), whatever maybe its form and by what- ever name it may be known in law, by which any estate or interest in lands is created, aliened, assigned, or surrendered. Laws of 1833, Chapter CCLXXIX. § 1. Chattel mortgages void unless filed. § 1. Every mortgage, or conveyance intended to operate as a mortgage, of goods and chattels hereafter made, which shall not be accompanied by an immediate delivery, and be followed by an actual and continued change of possession of the things mortgaged, shall be absolutely void as against the creditors of the mortgagor, and as against subsequent purchasers and mortgagees in good faith, unless the mortgage, or a true copy thereof, shall be filed as directed in the succeeding section of this act.' 1 Jessup V. Hulse, 21 N. T. 168 ; Griffin v. Marquardt, 17 N. Y. 28 ; Clute V. Fitch, 28 Barb. 431 ; Dunham v. Waterman, 3 Duer, 166. '^ Farmers' Fire Ins. Co. v. Edwards, 26 Wend. 559. » Van Heuseu v. RadclifE, 17 N. Y. 582 ; Griswold v. Sheldon, 4 Comst. 598 ; Baskins v. Shannon, 3 N. Y. 311 ; Stevens v. Buffalo R. Co., 31 Barb. 596; Wood ». Lowry, 17 Wend. 495. 606 FEAUD ON CEBDITOES AND PUECHASEES. Laws of 1858, Chaptbe CCCXIV. § 1. Trustees, &c., may impeach assignments. § 2. And have actions against offenders. § 1. That any executor, administrator, receiver, assignee, or other trustee of an estate, or the property and effects of an insolvent estate, corporation, association, partnership, or indi- vidual, may, for the benefit of creditors or others interested in the estate or property so held in trust, disaffirm, treat as void, and resist all acts done, transfers and agreements made in fraud of the rights of any creditor, including themselves and others interested in any estate or property held by or of right belonging to any such trustee or estate. § 2. That every person who shall, in fraud of the rights of creditors and others, have received, taken, or in any manner interfered with, the estate, property, or effects of any deceased person or insolvent corporation, association, partnership, or individual, shall be liable in the proper action to the executors, administrators, receivers, or other trustees of such estate or property for the same, or the value of any property or effects so received or taken, and for all damages caused by such acts to any such trust estate. NORTH CAROLINA. 607 NORTH CAROLINA. Battle's Revisal, Chapter L. § 1. Conveyances of lands or goods made to defraud creditors void. § 2. Conveyances of lands, &c., to defraud purchasers, void. § 3. Voluntary conveyances not deemed fraudulent as to creditors, merely because of indebtedness of donors. Indebtedness evidence only of fraud, to be left to the jury. § 4. Conveyances bona fide, upon good consideration, valid. § 5. Bona fide purchasers without notice, under deeds made on a legal consideration, valid. § 6. Purchasers of estates fraudulently conveyed to have relief. § 7. Persons removing debtors to hinder, delay, or defraud creditors, liable for their debts. § 1. For avoiding and abolishing feigned, covinous, and fraudulent gifts, grants, alienations, conveyances, bonds, suits, judgments, and executions, as well of lands and tenements as of goods and chattels, which may be contrived and devised of fi-aud, to the purpose and intent to delay, hinder, and defraud creditors and others of their just and lawful actions and debts, — The General Assembly of North Carolina do enact. That every gift, grant, alienation, bargain, and conveyance of lands, tenements, and hereditaments, goods and chattels, by writing or otherwise, and every bond, suit, judgment, and execution, at any time had or made, to or for any intent or purpose last before declared and expressed, shall be deemed and taken (only as against that person, his heirs, executors, administrators, and assigns, whose actions, debts, accounts, damages, penalties, and forfeitures, by such covinous or fraudulent devices and practices aforesaid, are, shall, or 608 FRAUD ON CREDITOES AND PTJBCHASEES. might be in any wise disturbed, hindered, delayed, or de- frauded) to be utterly void and of no effect ; any pretence, color, feigned consideration, expressing of use, or any other matter or thing to the contrary, notwithstanding. § 2. Every conveyance, charge, lease, or incumbrance of any lands or hereditaments, if the same be made with the actual intent in fact to defraud such person, as hath pur- chased or shall purchase in fee-simple, or for lives or years, the same lands or hereditaments, or to defraud such as shall purchase any rent or profit out of the same, shall be deemed utterly void against such person, and others claiming under him, who shall purchase for the full value thereof the same lands or hereditaments, or rents or profits out of the same, without notice before and at the time of his purchase, of the conveyance, charge, lease, or incumbrance, by him alleged to have been made, with intent to defraud ; and possession taken or held by or for the person claiming under such alleged fraudulent conveyance, charge, lease, or incumbrance, shall be always deemed and taken as notice in law of the same. § 3. No voluntary gift or settlement of property by one in debt shall be deemed or taken to be void in law, as to cred- itors of the donor or settler prior to such gift or settlement, by reason merely of such indebtedness, if property, at the time of making such gift or settlement, fully sufficient and available for the satisfaction of his- then creditors, be retained by such donor or settler ; but the indebtedness of the donor or settler at such time shall be held and taken, as well with respect to creditors prior as creditors subsequent to such gift or settlement, to be evidence only from which an intent to delay, hinder, or defraud creditors may be inferred ; and, in any trial at law, shall, as such, be submitted by the court to the jury, with such observations as may be right and proper. § 4. Nothing contained in the foregoing sections shall be NORTH CAEOLINA. 609 construed to impeach or make void any conveyance, interest, limitation of use or uses, of or in any lands or tenements, goods or chattels, bona fide made, upon and for good con- sideration, to any person not having notice of such fraud. § 5. No conveyance or mortgage made to secure the pay- ment of any debt or the performance of any contract or agreement shall be deemed void, as against any purchaser for valuable or other good consideration of the estate or property conveyed, sold, mortgaged,, or assigned, by reason that the consideration of such debt, contract, or agreement, shall be forbidden by law, if such purchaser, at the time of his purchase, shall not have had notice of the unlawful con- sideration of such debt, contract, or agreement. § 6. Purchasers of estates previously conveyed in fraud of creditors or purchasers shall have like remedy and relief as creditors might have had before the sale and purchase. § 7. If any person shall remove, or shall aid and assist in removing, any debtor out of any county in which he shall have resided for the space of six months or more, with the intent, by such removing, aiding, or assisting, to delay, hin- der, or defraud the creditors, or any of them, of such debtor, the person so removing, aiding, or assisting therein, and his executors or administrators, shall be liable to pay all debts which the debtor removed may justly owe in the county from which he was so removed ; and the same may be recovered by the creditors, their executors or administrators, by a civil action. 39 610 FKAT7D ON CBBDITOES AND PTJECHASBES. OHIO. Revised Statutes, Chapter XL VII. § 1. Deeds, &c., made in trust for grantor, void. § 2. Gifts, grants, &c., made to defraud creditors, void. § 3. Possession for five years, of goods, &c., gives right, unless, &c. § 1. Be it enacted by the General Assembly of the State of Ohio, that all deeds of gifts and conveyances of goods and chattels, made in trust to the use of the person or per- sons making the same, shall be, and hereby are declared to be void and of no effect. ^ § 2. That every gift, grant, or conveyance of lands, tene- ments, hereditaments, rents, goods, or chattels, and every bond, judgment, or execution, made or obtained with intent to defraud creditors of their just and lawful debts or damages, or to defraud or to deceive the person or persons who shall purchase such lands, tenements, hereditaments, rents, goods, or chattels, shall be deemed utterly void and of no effect.^ § 3. That where any loan of goods and chattels shall be pretended to have been made to any person with whom (or 1 Steele v. Lowry, 4 Ohio, 72. " Burgett V. Burgett, 1 Ohio, 469 ; Barr o. Hatch, 3 Ih. 527 ; Douglass V. Dunlap, 10 lb. 163; Tremper v. Barton, 18 lb. 418 ; Brown v. Webb, 20 lb. 389 ; Barton v. Morris, 15 lb. 408 ; Lockman v. Lockman, 18 lb. 362 ; Irwin v. Longworth, 20 lb. 581 ; Swift v. Holdbridge, 10 lb. 230 ; Bond V. Swearingen, 1 Ohio, 395 ; Renick v. Bank of Chillioothe, 8 lb. 629; Hood v. Brown, 2 lb. 271 ; Gwin o. Selby, 5 Ohio St. 97; Sigder V. Knox Co. Bank, 8 lb. 511 ; Starr v. Stan-, 1 Ohio, 321 ; Bryce v. Myers, 5 lb. 121 ; Meller v. Wilson, 15 lb. 108 ; Christmas v. Spink, 15 lb. 600 ; Hoffman v. Mackall, 5 Ohio St. 124. OHIO. 611 those claiming under him) possession ^ shall have remained, for the space of five years, such goods and chattels shall be deemed the property of the person having such possession, unless a reservation of the right of such goods and chattels shall have been made to the lender in writing, and such writing shall have been recorded within six months from the time of making such loan, in the recorder's office for the county where one or both of the parties shall then have resided. Chapter LVII. § 84. Assignments in contemplation of insolvency to enure to benefit of all creditors. § 84. All assignments in trust to a trustee or trustees, made in contemplation of insolvency, with the intent to prefer one or more creditors, shall enure to the equal benefit of all creditora in proportion to the amount of their respective claims, and the trusts arising under the same shall be ad- ministered in conformity to the provisions of this act.^ Chapteb CCCXXXVII., Laws op 1863. § 85. Transfers, &c., to defraud void ; remedy; proviso; rights of credi-. tors. § 85. Be it enacted, that section seventeen of said act be so amended as to read as follows : All transfers, convey- ances, or assignments made with intent to hinder, delay, or defraud creditors, shall be declared void at the suit of any creditor ; and the probate judge of the proper county, after 1 Collins V. Myers, 16 Ohio, 547 ; Brown v. Webb, 20 lb. 389 ; Free- man V. Kawson, 5 Ohio St. 1 ; Harman v. Abbey, 7 lb. 218. 2 Hoffman v. Mackall, 5 Ohio St. 151 ; Miller v. Estill, lb. 508; Conklin :;. Coonrod, 6 lb. 611 ; Sigler v. Knox Co. Bank, 8 lb. 511. 612 FRAUD ON CEBDITORS AND PUEOHASEES. such transfer, conveyance, or assignment shall have been de- clared by a court of competent jurisdiction to have been made, with the intent aforesaid, shall, on the application of any creditor, appoint an assignee, according to the provisions of this act, who, upon being duly qualified, shall proceed by due course of law to recover possession of all property so transferred, conveyed, or assigned, and to administer the same as in other cases of assignments to trustee for the benefit of creditors-; provided, however, that any creditor instituting a suit for the purpose aforesaid shall cause notice of the pendency and object thereof to be published for at least four consecutive weeks in some newspaper printed, or of general circulation in the county in which said suit shall be pending; and all creditors who shall, within fifteen days next after the expiration of said notice, file an answer in said action in the nature of a cross petition, praying to be made parties thereto, and setting forth the nature and amount of their respective claims, and shall secure the payment of their pro rata share of the costs and expenses of such action, in- cluding reasonable counsel fees, in proportion to the amount of their said claims, either by a deposit of money or by an undertaking given to the plaintiff in such sum, and with such security as the court or clerk thereof shall require and approve, shall be first entitled, with the plaintiff, to the .benefit of such transfer, conveyance, or assignment, in pro- portion to the amount of their respective claims ; and after the costs and expenses aforesaid, and the claims of the afore- said creditors shall have been paid by such assignee, the residue in his hands, if any, shall enure to the equal benefit of the remaining creditors, in proportion to their claims.^ 1 Jamison v. MoNally, 21 Ohio St. 295 ; Oliver v. Moore, 23 lb. 474; Swihart ». Shaum, 24 lb. 432; Beaumont v. Herrick, 24 lb. 445; Dye B. Dye, 21 lb. 85 ; Buckingham v. Com. Bank, lb. 131 ; Fowler v. Trebein, 16 lb. 493. ORBQON. 613 OREGON. General Laws op 1872 : Miscellaneous Laws, Chapter VL, Title II. § 40. Fraudulent conveyance, as to -whom void. § 41. Qualification of last section. § 42. Conveyance with power of revocation at the will of the grantor, when and as to whom void. § 40. That every conveyance or interest in lands, or the rents or profits of lands, and every charge upon lands, or upon the rents and profits thereof, made or created with the intent to defraud prior or subsequent purchasers, for a val- uable consideration of the same lands, rents, or profits, as against such purchasers, shall be void. § 41. No such conveyance or charge shall be deemed fraudulent in favor of a subsequent purchaser, who shall have actual or legal notice thereof at the time of his pur- chase, unless it shall appear that the grantee in such convey- ance, or person to be benefited by such charge, was privy to the fraud intended. § 42. Every conveyance or charge of or upon any estate or interest in lands, containing any provision for the revo- cation, determination, or alteration of such estate or interest, or any part thereof, at the wiU of the grantor, shall be void aa against subsequent purchasers from such grantor for a valu- able consideration, of any estate or interest, so liable to be revoked or determined, although the same be not expressly revoked, determined, or altered by such grantor, by virtue of the power reserved or expressed in such prior conveyance or charge. 614 FRAUD ON CREDITORS AND PURCHASERS. Title III. § 45. Gifts or transfers of personal property, when void. § 45. All deeds of gift, all conveyances, and all transfers or assignments, verbal or written, of goods and chattels or things in action made in trust for the person making the same, shall be void as against the creditors, existing or sub- sequent, of such person. Title IV. § 51. Conveyance or assignment of real or personal property, made with intent to hinder or defraud, void. § 53. Conveyance, &c., if void against creditor, &c., void against his representative. § 54. Fraudulent intent, a question of fact. § 55. Purchaser, when not affected by fraud of his grantor. § 56. Term " lands " and " estate and interest in lands," definition of. § 57. Term "conveyance," definition of. § 51. Every conveyance or assignment in writing or other- wise, of any estate or interest in lands or in goods, or things in action, or of any rents or profits issuing therefrom, and every charge upon lands, goods, or things in action, or upon the rents or profits thereof, made with the intent to hinder, delay, or defraud creditors or other persons of their lawful suits, damages, forfeitures, debts, or demands, and every bond or other evidence of debt given, suit commenced, decree or judgment suffered with the like intent, as against the persons 80 hindered, delayed, or defrauded, shall be void. § 53. Every conveyance, charge, instrument, or proceed- ing, declared by law to be void, as against creditors, pur- chasers, or mortgagors, shall be equally void as against the heirs, successors, personal representatives, or assigns of such creditors, purchasers, or mortgagees. OREGON. 615 § 54. The question of fraudulent intent in all cases arising under the provisions of Titles II., III., or IV. of this chapter, shall be deemed a question of fact, and not of law. § 55. The provisions of Titles II., III., and IV. of this chap- ter shall not be construed in any manner to affect or impair the title of a purchaser, for a valuable consideration, unless it shall appear that such purchaser had previous notice of the fraudulent intent of his immediate grantor, or of the fraud rendering void the title of such grantor. § 56. The term " lands," as used in Titles II., III., and IV. of this chapter, shall be construed as coextensive in meaning with "lands, tenements, and hereditaments," and the term " estate and interest in lands " shall be construed to embrace every interest, freehold, and chattel, legal and equitable, present and future, vested and contingent, in lands as above defined. § 57. The term " conveyance," as used in Titles II., III., and IV. of this chapter, shall be construed to embrace every instrument in writing, except a last will and testament, what- ever may be its form, and by whatever name it may be known in law, by which any estate or interest in lands is created, aliened, assigned, or surrendered. 616 FBAtrD OS CEBDITOBS AND PtTRCHASEES. PENNSYLVANIA. 2 Beightlt's Ptjedon's Digest, Appendix, p. 1486. § 1. Purpose of the act. § 2. Deeds made with intent to delay, hinder, or defrand creditors, to be void. But only as against those intended to be defrauded. § 3. Bona fide conveyances excepted. § 1. For the avoiding and abolishing of feigned, covinous, and fraudulent feoffments, gifts, grants, alienations, convey- ances,^ bonds, suits, judgments, and executions, as well of lands and tenements, as of goods and chattels,^ more com- monly practised in these days than hath been seen or heard of heretofore; which feoffments, gifts, grants, alienations, conveyances, bonds, suits, judgments and executions, have been, and are, devised and contrived of malice, fraud, covin, collusion, or guile, to the end, purpose, and intent to delay, hinder, or defraud creditors^ and others of their just and lawful actions, suits, debts, accounts, damages, penalties, forfeitures, heriots, mortuaries, and reliefs, not only to the let or hindrance of the due course and execution of law and justice, but also to the overthrow of all true and plain dealing, bargaining, and chevisance between man and man, without the which no commonwealth or civil society can be maintained or continued: 1 Adlum V. Yard, 1 Rawle, 171 ; Kepner v. Burkhart, 5 Penn. St. 480. See Hays v. Heidelberg, 9 Penn. St. 207. 2 Whiting I). Johnson, 11 S. & R. 328 ; Gates v. Johnston, 3 Penn. St. 52 ; McNeal v. Smith, 1 Yeates, 552. See Bredin «. Bredin, 3 Penn. St. 81. 8 Lantz V. Worthington, 4 Penn. St. 153 ; Reamer's Appeal, 18 lb. 510; Lyon ». Hampton, 20 lb. 46 ; Truitt v. Ludwig, 25 lb. 145 ; Leech V. Shantz, 2 Phila. 310. PENNSYLVANIA. 617 § 2. Be it, therefore, declared, ordained, and enacted by the authority of this present parliament, that all and every feoffment, gift, grant, alienation, bargain, and conveyance of lands, tenements, hereditaments, goods, and chattels, or of any of them, or of any lease, rent, common, or other profit or charge out of the same lands, tenements, hereditaments, goods, and chattels, or any of them, by writing or otherwise ; and all and every bond, suit, judgment and execution, at any time had or made sithence the beginning of the queen's majesty's reign, that now is, or at any time hereafter to be had or made, to or for any intent or purpose before declared and expressed ^ shall be from henceforth deemed and taken (only as against that person or persons, his or their heirs, successors, executors, administrators, and assigns, and every of them, whose actions, suits, debts, accounts, damages, penalties, forfeitures, heriots, mortuaries, and reliefs by such guileful, covinous, or fraudulent devices and practices, as is aforesaid, are, shall or might be, in any ways, disturbed, hindered, delayed, or defrauded,^ ) to be clearly and utterly void, frustrate, and of none effect,* any pretence, color, feigned consideration, expressing of use, or any other matter or thing to the contrary, notwithstanding.* § 3. This act, or any thing therein contained, shall not extend to any estate or interest in lands, tenements, heredit- aments, leases, rents, commons, goods, or chattels, had, made, conveyed, or assured, or hereafter to be had, made, conveyed or assured, which estate or interest is, or shall be, upon good 1 Snyder v. Christ, 39 Penn. .St. 499 ; Mullen v. Wilson, 44 lb. 413 ; Preston v. Jones, 50 lb. 54. See Hamet v. Dundass, 4 Penn. St. 178 ; Greenfield's Estate, 14 lb. 489. * Murphy v. Hubert, 16 Penn. St. 50 ; Buepler v. Gloninger, 2 Whart. 226; Stewart v. Kearney, 6 Whart. 453; Jack ». Dougherty, 3 Whart. 151. 8 Byrod's Appeal, 31 Penn. St. 241 ; Fisher's Appeal, 33 lb. 294 ; Hoffman's Appeal, 44 lb. 95 ; Jacoby's Appeal, 67 lb. 434. * Passmore v. Eldridge, 12 S. & R. 198 ; Mitchell v. Stiles, 13 Penn. St. 306. 618 FEATJD ON CEBDITOES AND PUECHASBES. consideration,! and bona fide ^ lawfully conveyed or assured to any person or persons, or bodies politic or corporate, not having, at the time of such conveyance or assurance to them made, any manner of notice or knowledge of such covin, fraud or collusion, as is aforesaid, any thing before mentioned to the contrary hereof, notwithstanding. 1. Beightly's Pttedon's Digest, p. 782. § 44. Of the property of an insolvent at the time of his discharge. § 44. If any insolvent as aforesaid shall, prior to such assignment, have conveyed or transferred any part of his real or personal estate to his wife and children, or either of them, or to any person in trust for them, or either of them, or shall have conveyed or transferred the same to any other person, with intent to defraud his creditors, the trustees aforesaid shall have power to recover and dispose of the same, as fully and effectually, as if the said insolvent had been actually seised or possessed thereof at the time of such assignment.^ » Stafford v. Stafford, 27 Penn. St. 144; Comity Bank e. Carter, 38 lb. 446 ; Helfrich v. Stem, 17 lb. 144 ; Shontz v. Brown, 27 lb. 122. ^ Gaus V. Kenshaw, 2 Penn. &i. 34 ; Clemens v. Davis, 7 lb. 264 ; Ashmead v. Hean, 13 lb. 584 ; Lerbe ». Miller, 16 lb. 488. 8 Tanes ». BulUtt, 35 Penn. St. 308. RHODE ISLAND. 619 RHODE ISLAND. General Statutes of 1872, Chapter CLXII. § 1. Conveyances, &c., made in fraud of creditors, declared void. § 1. Every gift, grant, or conveyance of land, tenements, hereditaments, goods, or chattels, or of any rent, interest, or profit out of the same by writing or otherwise, and every note, bill, bond, contract, suit, judgment, or execution, had or made and contrived of fraud, covin, collusion, or guile, to the intent or purpose to delay, hinder, or defraud creditors of their just and lawful actions, debts, suits, accounts, damages, or just demands of what nature soever, or to deceive or de- fraud those who shall purchase bona fide the same lands, tene- ments, hereditaments, goods, or chattels or any rent, interest, or profit out of them, shall be henceforth deemed and taken as against such person or persons, his, her, or their heirs, successors, executors, administrators, or assigns, and every of them, whose debts, suits, demands, estates, rights, or interests by such guileful and covinous devices and practices as afore- said shall or may be in any wise injured, disturbed, hindered, delayed, or defrauded, to be clearly and utterly void, any pretence, color, feigned consideration, expressing of use, or any other matter or thing to the contrary, notwithstanding. 620 FBATJD ON CKEDITORS AND PUECHASEES. SOUTH CAROLINA. Revised Statutes of 1873, Chapter LXXXII. § 15. Conveyances made to defraud creditors void. § 16. Conveyances made to deceive purchasers void. § 18. Conveyances upon good consideration to be valid. § 19. Lands conveyed with condition of revocation, &c., and afterwards sold for good consideration, the first conveyances to be void. Not to afEect mortgages hona fide made. § 15. Every feoffment, gift, grant, alienation, bargain, and conveyance of lands, tenements, or hereditaments, or of any of them, or of any lease, rent, commons, or other profit or charge out of the same, by writing or otherwise ; and every bond, suit, judgment, and execution, which may be had or made, to or for any intent or purpose to delay, hinder, or de- fraud creditors and others of their just and lawful action' suits, debts, accounts, damages, penalties, and forfeitures, shall be deemed and taken (only as against that person or persons, his or their heirs, successors, executors, administra- tors, and assigns, and every of them, whose actions, suits, debts, accounts, damages, penalties, and forfeitures, by such guileful, covinous, or fraudulent devices and practices, as is aforesaid, are, shall or might be, in any ways disturbed, hin- dered, delayed, or defrauded) to be clearly and utterly void, frustrate, and of none effect ; any pretence, color, feigned consideration, expressing of use, or any other matter or thing to the contrary, notwithstanding. § 16. Every conveyance, grant, charge, lease, estate, incum- brance, and limitation of use or uses, of, in, or out of any lands, tenements, or other hereditaments whatsoever, which may be SOUTH CAROLINA. 621 had or made, for the intent and of purpose to defraud and deceive such person or persons, bodies politic or corporate, as shall purchase in fee-simple, fee-tail, for life, lives, or years, the same lands, tenements, and hereditaments, or any part or parcel thereof, or to defraud and deceive such as have or shall purchase any rent, profit, or commodity in or out of the same, or any part thereof, shall be deemed and taken (only as against that person and persons, bodies politic and corporate, his and their heirs, successors, executors, administrators, and assigns, and against all and every other person and persons lawfully having or claiming by, from, or under them, or any of them, which have purchased, or shall hereafter so purchase, for money or other good consideration, the same lands, tene- ments, or hereditaments, or any part or parcel thereof, or any rent, profit, or commodity in or out of the same) to be utterly void, frustrate, and of none effect ; any pretence, color, feigned consideration, or expressing of any use or uses to the contrary, notwithstanding. § 18. Nothing contained in §§ 15, 16, and 17 ^ of this chapter shall extend or be construed to impeach, defeat, make void, or frustrate any conveyance, assignment of lease, assurance, grant, charge, lease, estate, interest, or limitation of use or uses of, in, to, or out of any lands, tenements, or hereditaments heretofore at any time had or made, or here- after to be had or made, upon or for good consideration and bona fide to any person or persons, bodies politic or corporate ; any thing therein mentioned to the contrary, notwithstanding. § 19. If any person or persons have heretofore made, or hereafter shall make any conveyance, gift, grant, demise, charge, limitation of use or uses, or assurance of, in, or out of any lands, tenements, or hereditaments, with any clause, pro- vision, article, or condition of revocation, determination, or alteration, at his or their will or pleasure, of such conveyance, assurance, grants, limitations of uses, or estates of, in, or out 1 This section provides for forfeitures and penalties only. I 622 PEATTD ON CREDITOES AND PTJECHASBES. of the said lands, tenements, or hereditaments, or of, in, or out of any part or parcel of them contained or mentioned in any writing, deed, or indenture of such assurance, convey- ance, grant, or gift ; and after such conveyance, grant, gift, demise, charge, limitation of uses or assurance so made or had, shall or do bargain, sell, demise, grant, convey, or charge the same lands, tenements, or hereditaments, or any part or parcel thereof, to any person or persons, bodies politic and corporate, for money or other good consideration paid or given (the said first conveyance, assurance, gift, grant, demise, charge, or limitation, not by him or them revoked, made void, or altered according to the power and authority reserved or expressed unto him or them in or by the said secret conveyance, as- surance, gift, or grant) ; then the said former conveyance, assurance, gift, demise, and grant, as touching the said lands, tenements, and hereditaments, so after bargained, sold, con- veyed, demised, or charged against the said bargainees, vendees, lessees, grantees, and every of them, their heirs, successors, executors, administrators, and assigns, and against all and every person and persons which have, shall, or may lawfully claim any thing by, from, or under them, or anj'^ of them, shall be deemed, taken, and adjudged to be void, frustrate, and of none effect : provided, that no lawful mort- gage made or to be made, bona fide, and without fraud or covin, upon good consideration, shall be impeached or im- paired by force of any thing in this chapter contained. TENNESSEE. 623 TENNESSEE. Code of 1858. § 1759. Conveyance to defraud creditors and purchasers, void. § 1760. Conveyance of goods and chattels, when to be deemed fraudu- lent. § 1761. Possessor of goods and chattels, when to be deemed owner. § 1762. Devise, when to be deemed fraudulent. § 1763. Several or joint suit against devisee and debtor's heirs. § 1764. Devisee selling, how liable. § 1759. Every gift, grant, conveyance of lands, tenements, hereditaments, goods, or chattels ; or of any rent, common, or profit out of the same, by writing or otherwise ; and every bond, suit, judgment, or execution, — had or made and con- trived, of malice, fraud, covin, collusion, or guile, to the intent or purpose to delay, hinder, or defraud creditors of their just and lawful actions, suits, debts, accounts, damages, penalties, forfeitures ; or to defraud or deceive those who shall purchase the same lands, tenements, or hereditaments, or any rent, profit, or commodity out of them, — shall be deemed and taken only as against the person, his heirs, succes- sors, executors, administrators, and assigns, whose debts, suits, demands, estates, or interests, by such guileful and covinous practices as aforesaid, shall or might be in any wise disturbed, hindered, delayed, or defrauded, to be clearly and utterly void ; any pretence, color, feigned consideration, expressing of use, or any other matter or thing to the contrary, notwith- standing. ^ 1 Peck V. Carmichael, 9 Yerg. 325 ; Hefner v. MetcafE, 1 Head, 577 ; Sugg V. Tillman, 2 Swan, 208 ; NeafEer ». Pardue, 3 Sneed, 191 ; Alley v. 624 FRAUD ON CEEDITOES AND PURCHASERS. § 1760. If a conveyance be of goods or chattels, and be not on consideration deemed valuable in law, it shall be taken to be fraudulent, unless the same be by will duly proved and recorded, or by deed acknowledged or proved and registered according to law, or unless possession remain with the donee.^ § 1761. Possession of goods and chattels continued for five years, without demand made and pursued by due process of law, shall, as to the creditors of the possessor or purchasers from him, be deemed conclusive evidence that the absolute property is in such possessor, unless the contrary appear by deed or will in writing, proved or acknowledged and registered.^ § 1762. All devises of lands, tenements, and hereditaments, or of any rent, profit, term, or charge out of the same, con- trived and made to defraud creditors of their just debts, shall be deemed and taken to be null and void only as against such creditors, their heirs, successors, executors, administrators, and assigns, and every of them. § 1763. And every such creditor may have and maintain his action or suit against such devisee, and, severally or jointly, against him and the heirs at law of the debtor in all cases, and in like manner as such action or suit could be brought or maintained against the debtor's heirs at law. § 1764. And if the devisee sell, alien, or make over the lands so devised before action brought or process sued out against him, he shall be answerable for such debt to the value of the lands so by him sold, aliened, or made over; and exe- cution shall be taken out upon the judgment or decree obtained Connell, 3 Head, 758 ; Brooks v. Caughran, lb. 464 ; McCasland v. Car- son, 1 Head, 117 ; Wade v. Green, 3 Humph. 547 ; Walker v. McConnico, 10 Yerg. 228 ; Gray v. Ferris, 7 Yerg. 155 ; Patrick ». Ford, 5 Sneed, 532 ; Wilson v. Beadle, 2 Head, 510 ; Croone v. Bivero, 3 Head, 339 ; Harrison v. Hallum, 5 Cold. 525 ; Nicholas v. Ward, 1 Head, 323 ; Grannis v. Smith, 3 Humph. 79 ; Hunter v. Foster, 4 Humph. 211. 1 Marshall v. Booker, 1 Yerg. 13 ; Nicholas v. Ward, 1 Head, 323. ' Walker v. Wynne, 3 Yerg. 62 ; Wade v. Green, 8 Humph. 547 ; Gunn V. Mason, 3 Sneed, 637. TENNESSEE. 625 against him to the value of said lands, as if the same were his own proper debt. § 1765. But lands, tenements, and hereditaments, bona fide aliened before the action brought, shall not be liable to such execution. 40 626 PKAUD ON CKBDITOES AND PTJRCHASBBS. TEXAS. Paschal's Digest (3d bd.)i p. 650, Article 3876. § 2. Every conveyance to defraud creditors void. § 2. Every gift, grant, or conveyance of lands, slaves, tene- ments, hereditaments, goods, or chattels, or of any rent, com- mon, or profit out of the same, by writing or otherwise, and every bond, suit, judgment, or execution had or made and contrived of malice, fraud, covin, collusion, or guile, to the intent or purpose to delay, hinder, or defraud creditors of their just and lawful actions, suits, debts, accounts, damages, pen- alties, or forfeitures, or to defraud or to deceive those who shall purchase the same lands, slaves, tenements, or heredita- ments, or any rent, profit, or commodity out of them, shaU be from henceforth deemed and taken only as against the person or persons, his or her or their heirs, successors, executors, administrators, or assigns, and every of them whose debts, suits, demands, estates, interests, by such guileful and covi- nous devices and practices as is aforesaid, shall or might be in any wise disturbed, hindered, delayed, or defrauded, to be clearly and utterly void ; any pretence, color, feigned con- sideration, expressing of use, or any other matter or thing to the contrary, notwithstanding ; and moreover, if any convey- ance be of goods or chattels or slaves, and be not, on consid- eration, deemed valuable in law, it shall be taken to be fraudulent within this act, unless the same be by wiU duly proved and recorded, or by deed in writing or other instru- ment acknowledged or proven ; if the same deed or instru- ment of writing include lands also acknowledged or proved in such manner as conveyances of lands are, by law, directed to be acknowledged or proved ; or if it be goods and chattels, TEXAS. 627 or slaves only, then acknowledged or proved by two or more witnesses, and recorded in the manner as now established by law, or may hereafter be established for the recording of deeds of conveyances of real estate in this republic ; or unless pos- session shall really and bona fide remain with the donee ; and in like manner, when any loan of goods and chattels or slaves shall be pretended to have been made to any person with whom, or those claiming under him, possession shall have re- mained by the space of three years, without demand made and pursued by due process of law on the part of the pre- tended lender ; or when any reservation or limitation shall be pretended to have been made of a use or property, by way of condition, reversion, remainder, or otherwise in goods and chattels, the possession whereof shall have remained in another as aforesaid ; the same shall be taken as to the creditors and purchasers, of the persons aforesaid so remaining in possession, to be fraudulent within this act, and that the absolute prop- erty is with the possession, unless such loan, reservation, or limitation of use or property were declared by will, or by deed in writing, proved and recorded as aforesaid. Article 3877. § 3. The second section explained, and made not to afEect lonafide gifts. § 3. The second section of this act shall not extend to any estate or interest in any lands, goods, chattels, slaves, or any rents, commons, or profit out of the same, which shaU be upon good consideration and bona fide lawfully conveyed or assured to any person or persons, bodies politic or corporate. 628 FBAtTD ON CEEDITOBS AND PURCHASERS. VERMONT. General Statutes of 1862, Chapter LXV. § 28. Fraudulent conveyances, &c., void. § 28. All fraudulent and deceitful deeds, conveyances, and alienations of lands, or of any estate or interest therein, £lnd every charge upon lands, or upon the rents and profits thereof, procured, made, or suffered, with intent to avoid any right, debt, or duty of any person, shall, as against such person whose right, debt, or duty shall be so intended to be avoided, his heirs or assigns, be utterly void.^ Chapter CXIII. § 32. Fraudulent conveyances and contracts void. § 32. All fraudulent and deceitful conveyances of houses, lands, tenements, or hereditaments, or of goods and chattels, all bonds, bills, notes, contracts, and agreements, all suitsj judgments, and executions, made or had to avoid any right, debt, or duty of any other person, shall, as against the party or parties only whose right, debt, or duty is attempted to be avoided, their heirs, executors, administrators, or assigns, be null and void.^ 1 Edgell ». Lowell, 4 Vt. 405 ; Root v. Reynolds, 32 Vt. 139 ; Irish v. Clayes, 10 lb. 81 ; Gregory v. Harrington, 33 lb. 241. •VTEGINIA AND WEST VIEGnaA. 629 VIRGINIA AND WEST VIRGINIA. Code of Virginia, 1873, Chapter CXIV. Code of West Virginia, Chapter LXXIV. § 1. As to fraudulent acts, proviso as to bona fide purchasers. § 2. Voluntary gifts. § 3. Loans and reservations of use or property to be recorded. § 11. Words " creditors " and " purchasers," how construed. § 1. Every gift, conveyance, assignment, or transfer of, or charge upon any estate, real or personal, every suit com- menced, or decree, judgment, or execution suffered or ob- tained, and every bond or other writing given with intent to delay, hinder, or defraud creditors, purchasers, or other per- sons of or from what they are or may be lavrfuUy entitled to, shall, as to such creditors, purchasers, or other persons, their representatives or assigns, be void. This section shall not affect the title *of a purchaser for valuable consideration, unless it appear that he had notice of the fraudulent intent of his immediate grantor or of the fraud rendering void the title of such grantor.^ § 2. Every gift, conveyance, assignment, transfer, or charge which is not upon consideration deemed valuable in law, shall be void as to creditors whose debts shall have been contracted at the time it was made, but shall not, on that account 1 Wright V. Hancock, 3 Munf. 521 ; Briscoe v. Clarke, 1 Rand. 213 ; Tate V. Liggal, 2 Leigh, 84 ; Sheppards v. Turpin, 3 Gratt. 373 ; Lang V. Lee, 3 lb. 410; Garlands. Rives, 4 lb." 282; Coleman v. Cocke, 6 lb. 618; Ruddle v. Ben, 10 lb. 475; Skipwith v. Cunningham, 8 Leigh, 272; Davis ». Christian, 15 Grattan, 12; Marks v. Hill, lb. 400; Brown v. Molineaux, 21 lb. 539 ; Penn v. Whitehead, 17 lb. 527 ; Pratt v. Cox, 22 lb. 330. 630 FEATJD ON CEEDITORS AND PURCHASERS. merely, be void as to creditors whose debts shall have been contracted or as to purchasers who shall have purchased after it was made ; and though it be decreed to be void as to a prior creditor, because voluntary, it shall not, for that cause, be decreed to be void as to subsequent creditors or pur- chasers.i § 3. Where any loan of goods or chattels is pretended to have been made to any person with whom, or those claiming under him, possession shall have remained five years without demand made and pursued by due process of law on the part of the pretended lender, or where any reservation or limita- tion is pretended to have been made of a use or property, by way of condition, reversion, remainder, or otherwise, in goods or chattels, the possession whereof shall have so remained in another as aforesaid, the absolute property shall be taken to be with the possession, and such loan, reservation, or limita- tion void as to creditors of and purchasers from the person so remaining in possession, unless such loan, reservation, or limi- tation be declared by will, deed, or other writing duly re- corded.2 [The laws of West Virginia contain the following addition to this section :] And if any sale be made of goods 1 Buck V. Copland, 2 Call, 183 ; Hunters v. Waite, 3 Gratt. 26 ; Staton V. Pittman, 11 lb. 99 ; Hutchison ». Kelly, 1 Rob. 123 ; Cochran v. Paris, 11 lb. 355; Dance v. Seaman, 11 lb. 778; Bank of Alexandria v. Patton, 1 Rob. 499; Cleggi). Lemessurier, 15 Gratt. 108 ; Chamberlayne v. Temple, 2 Rand. 384 ; Marks v. Hill, 15 lb. 400 ; Davis v. Payne, 4 lb. 332 ; Penn V. Whitehead, 17 lb. 527; Huston v. Cautril, 11' Leigh, 137; Williamson V. Goodwyn, 9 lb. 503 ; Mettert v. Hagan, 18 lb. 231 ; Pratt v. Cox, 22 lb. 330. 2 Fitzhugh V. Anderson, 2 H. & M. 289 ; Lacy v. Wilson, 4 Munf . 313; Pate v. Baker, 8 Leigh, 80; Dickinson v. Dickinson, 2 Gratt. 493 ; Beasley v. Owen, 3 lb. 449 ; Garth v. Barksdale, 5 Munf. 101; Lightfoot i>. Strother, 9 Leigh, 451 ; Boyd v. Stainback, lb. 305; Collins v. Lofftus, 10 lb. 5; Gamett v. Sam & Phellis, lb. 543 ; Rose v. Burgess, 10 lb. 186 ;* Taylor 0. Beale, 4 Gratt. 93; Stephen v. Swami, 11 lb. 403; McKenzie V. Macon, 5 lb. 379 ; Johnston v. Lane, 11 Gratt. 552 ; Carr v. Glasscock, 3 lb. 843; Wilson ». Buchanan, 7 lb. 334; Welles v. Cole, 6 lb. 645; Lewis V. Caperton, 8 lb. 149 ; Fones v. Rice, 9 lb. 568. VIEGINIA AND WEST VIRGINIA. 631 and chattels, reserving the title until the same is paid for, or otherwise, and possession be delivered to the buyer, such reservation shall be void as to creditors of, and purchasers without notice from, such buyer, unless a notice of such reservation be recorded in the office of the recorder of the county where the property is. § 11.^ The words " creditors " and " purchasers," where used in any previous section of this chapter, shall not be restricted to the protection of creditors of, and purchasers from the grantor, but shall extend to and embrace all creditors and purchasers who, but for the deed or writing, would have had title to the property conveyed, or a right to subject it to their debts.^ ^ Virginia and West Virginia. ^ Henderson v. Hepburn, 2 Call, 198; Thomas v. Gaines, 1 Gratt. 347 ; Land v. Jeffries, 5 Rand, 211 ; McCandlish v. Keen, 13 lb. 616 ; Dabney V. Kennedy, 7 lb. 317. 632 FRAUD ON CEEDITOKS AND PUECHASEES. WISCONSIN. Statutes op 1871, Chaptee CVI., Title 20. § 1. Fraudulent conveyances void. § 2. What not deemed a fraudulent conveyance. § 3. Conveyance containing power of revocation void. § 1. Every conveyaDce of any estate or interest in lands, or the rents and profits of lands, and every charge upon lands, or upon the rents and profits thereof, made or created with the intent to defraud prior or subsequent purchasers for a valuable consideration, of the same lands, rents, or profits, as against such purchasers, shall be void. § 2. No such conveyance or charge shall be deemed fraud- ulent in favor of a subsequent purchaser who shall have actual or legal notice thereof at the time of his purchase, unless it shall appear that the grantee in such conveyance, or person to be benefited by such charge, was privy to the fraud intended. § 3. Every conveyance or charge of or upon any estate or interest in lands, containing any provision for the revocation, determination, or alteration of such estate or interest, or any part thereof, at the will of the grantor, shall be void, as against subsequent purchasers from . such grantor for a valuable con- sideration, of any estate or interest so liable to be revoked or determined, although the same be not expressly revoked, determined, or altered by such grantor, by virtue of the power reserved or expressed in such prior conveyance or charge. "WISCONSIN. 633 Chapter CVII. § 1. Conveyances of personal property, when Toid. § 9. Mortgage of personal property not valid unless accompanied with possession or recorded. § 1. All deeds of gift, all conveyances, and all transfers or assignments, verbal or written, of goods, chattels, or things in action, made in trust for the use of" the person making the same, shall be void as against the creditors, existing or subse- quent, of such person.^ § 9. No mortgage of personal property hereafter made shall be valid against any other person than the parties thereto, unless possession of the mortgaged property be delivered to and retained by the mortgagees, or unless the mortgage, or a copy thereof, be filed in the office of the town clerk where the mortgagor resides, or, in case he does not reside in the State, in the town where the property mortgaged may be at the time of executing the same.; and such clerk shall indorse on such instrument or copy the time of receiving the same.^ 1 Beck V. Cole, 16 Wis. 95; Kneeland v. Cowles, 4 Chand. 46; Sey- mour V. Briggs, 11 Wis. 196 ; Dreutzer v. Bell, 11 Wis. 114; Schettler V. Brunettes, 7 lb. 197; Bond v. Seymour, 1 lb. 40; Howe v. Colby, 19 lb. 583; Hanleyc. Nugent, 13 lb. 283; Hamlin v. Jones, 20 lb. 536; Reynolds v. Vilas, 8 lb. 471; Gunn v. Blair, 9 lb. 352; Jones v. Lake, 2 lb. 210; LaCros.se & Milw. K. Co. v. Seeger, 4 lb. 268; Fargb v. Ladd, 6 lb. 106. 2 Single V. Phelps, 20 Wis. 398; Shepardson v. Green, 21 lb. 539; Cotton V. Marsh, 3 lb. 221. 634 FEAUD ON CKEDITOES AND PUECHASEES. Chaptee CVIII. § 1. Conveyances, &c., to delay creditors, void. § 3. Conveyances void as to creditors void as to heirs. § 4. Fraudulent intent a question of fact, &c. § 5. When purchaser without notice protected. ? 6. What " lands," &c., to include. §7. What " conveyance " to include. § 1. Every conveyance or assignment, in writing or other- wise, of any estate or interest in lands, or in goods, or things in action, or of any rents or profits issuing therefrom, and every charge upon lands, goods, or things in action, or upon the rents or profits thereof, made with the intent to hinder, delay, or defraud creditors or other persons of their lawful actions, damages, forfeitures, debts, or demands, and every bond or other evidence of debt given, actions commenced, order or judgment suffered, with the like iutent as against the persons so hindered, delayed, or defrauded, shall be void.^ § 3. Every conveyance, charge, instrument, or proceeding declared to be void, by the provisions of this title, as against creditors or purchasers, shall be equally void against the heirs, successors, personal representatives, or assignees of such creditors or purchasers. § 4. The question of fraudulent intent, in all cases arising under the provisions of this title, shall be deemed a question of fact, and not of law, nor shall any conveyance or charge be adjudged fraudulent as against creditors or purchasers, solely on the ground that it was not founded on a valuable consideration. 1 Gillet V. Phelps, 12 Wis. 393 ; Gornell v. Hichens, 11 Wis. 864 ; Gardinier v. Otis, 13 lb. 460 ; Eastman v. Schettler, 13 lb. 324 ; Grant V. Lewis, 14 lb. 487; Pilling v. Otis, 13 lb. 495; Sauntry v. Dunlap, 12 lb. 364. "WISCONSIN. 635 § 5. The provisions of this title shall not be construed in any manner to affect or impair the title of a purchaser for a valuable consideration, unless it shall appear that such pur- chaser had previous notice of the fraudulent intent of his immediate grantor, or of the fraud rendering void the title of such grantor. § 6. The term " lands " as used in this title shall be con- strued as coextensive in meaning with " lands, tenements, and hereditaments ; " and the terms " estate and interest in lands " shall be construed to embrace every estate and interest, freehold and chattel, legal and equitable, present and future, vested and contingent, in lands as above defined. § 7. The term " conveyance," as used in this title, shall be construed to embrace every instrument in writing except a last will and testament, whatever may be its form, and by whatever name it may be known in law, by which any estate or interest in lands is created, aliened, assigned, or sur- rendered.^ Laws of 1873, Chapter CXIII. § 1. Frauds in the sale of personal property. § ]. No contract or agreement for the sale of personal property, by the terms of which the title or right of property is to remain in the vendor, and the possession thereof in the vendee, until the purchase price is paid, or other conditions of sale are complied with, shall be valid against any other person than the parties thereto, unless such contract or agree- ment shall be reduced to writing, and the same, or a copy thereof, shall be filed in the office of the town clerk of the town, where said vendee resides, or, if he shall not be a resi- dent of the State, then in the town where such contract or agreement is made, and such town clerk shall file such con- 1 White V. Fitzgerald, 19 Wis. 480. 636 PEAtTD ON CEEDITOBS AND PtTECHASBES. tract or agreement in the same manner, and shall receive the same compensation therefor, as is provided by law for filing chattel mortgages ; provided, that the effect of such filing shall not extend beyond one year from maturity of the contract price, or consideration therein reserved. INDEX. INDEX. [The italic lines indicate the titles to sections.] A. ABUSE OF PROCESS, rights cannot be acquired by, 165. ACCOUNTS, required of servant in cases of collusion, 226. required of factor, when, 226, 227. of agents, 226-230. of partners, 232-236. of trustees, 236-250. of guardians, 260-254. of executors and administrators, 254-259, 496 note. lapse of time as to, 448. opened when, 468, 495, 496. impeachment of settled accounts, 495, 496. AGED PERSONS, dealings with, 278, 279-287, 504, 505. (See IixiTBRATB, Weak-minded, and Drunken Persons.) ALTERATION OF WRITTEN INSTRUMENTS, every thing presumed against a party who has altered a writing, 98. if an instrument be altered in a material point, no recovery generally upon it, in either its present or original form, 99. vendor of property, fraudulently altering a note given for the same, cannot recover even upon the original consideration, 99. material alteration of bill or note avoids it in hands of innocent in- dorsee for value, 99. the fact that the instrument has been restored by chemicals to its original form does not revive it, 99. even in favor of a bona fide indorsee for value, 99. what constitutes a material alteration, illustrated, 99-102. adding words concerning interest; 99, 100. alteration of date, 100. ■ assent of injured party, 100, 101, note. 640 • INDEX. ALTERATION OF WRITTEN INSTRUMENTS, — coniinaei. adding place of payment to note or bill, 100, 101. erasure of seal, 102. adding name of another party, 102. " I " changed to " We," 102. change of words " to order," 102. if alteration be not fraudulent, and the original form be clear, recovery can be- had thereon, 102. blanks fraudulently filled, 103. negligence in leaving spaces, 103. immaterial alterations, 103. tearing off a condition written below a promissory note, 103. distinction between effect of altering an executory and an executed written contract, 103, 104. alteration of a mortgage, 104. fraudulent intent, 104. practice as to sending altered instrument to jury, 104, 105. time of alteration, 105. various rules of presumption on this point, 106-107. alteration by stranger, 107. difference in ink, 107. alteration of one of several writings constituting one contract, 107. alteration of pecuniary legacy, 126. AMENDMENT, of record nunc pro tunc, 467, 468. fraud discovered, 468, ANIMALS, communication of disease by animals sold under false representations of soundness, 607, 608. ANTENUPTIAL CONVEYANCES, (See Husband and Wife.) ASSIGNEES, take non-negotiable contract on the title of assignor, 351. ATTACHMENTS, cannot be procured by fraud, 165. antedating, 166. example, 166. collusive, 166. examples, 166, 167. interference of equity in favor of attaching plaintiff as to transfers by defendant, 167, 168. ATTORNEY AND CLIENT, confidential relation between, 192, 222. presufJiptions against validity of transactions between, in interest of attorney, 192-222. (See Confidential Relations.) notice to client through attorney, 315-318. INDEX. • 641 ATTORNEY AND CLIENT, — continued. attorney's fees, when recoverable as damages, 606, note. AUCTIONS, (See Public Sales.) AWARDS, (See Judgments and Awards.) B. BANK, how far affected with knowledge by director, 369. when bound by settlement between directors and cashier, 369. BANK-NOTES, fraudulent issue of, 131. BANKRUPTCY, putting a partner into, 148. BILLS AND NOTES, misrepresentation of legal effect of note, 10. negotiating bill or note payable to bearer, or under blank indorsement of another, 36. fraud in obtaining execution, 77-79. payee cannot maintain deceit for being induced to indorse through fraud, until compelled to pay, 85, 86. alteration of bill or note, 98-107. may render the same void in the hands of a bona fide holder for value, 99. (See Alteration op Written Instruments.) fraud in, renders paper invalid between the parties, 128. but fraud by another party to the instrument does not necessarily de- stroy it, 128. examples, 128. fraud in bills and notes generally a personal defence, 128. otherwise, if it go to the extent of destroying the plaintiff's title, as in case of forgery, 128. no defence to maker of note that it was obtained from payee by false representations, 129. so of a plea that the paper was obtained from the payee by undue in- fluence, when, 129. taking note overdue after it has been obtained by fraud by one indorser against another, 129. fraud practised on the defendant by third person, 129. principal's fraud on surety, 129. effect of plea of fraud in putting paper into circulation, 129, 130. puts plaintiff to proof that he took it for value and without notice, or that some one before him did, 130. * fraud going to the very existence of the contract, 130. bars right of action even of bona fide indorsee for value, 130. general result of cases as to what constitutes such fraud, 130, 131. 41 642 • INDEX. BILLS AND "SOTKS,— continued. accommodation paper fraudulently diverted, 131. Si prima /acie defence only, 131. how presumption rebutted, 131. fraudulent issue of bank-notes, 131. BROKER, confidential situation of, 223, note. same of his clerk, 223, note. making himself principal, 225. selling property to principal in which broker secretly interested, 227. commissions of, 227, 228. BURDEN OF PROOF, in cases of constructive fraud, 493, 494. (See CONFIDKNTIAL RELATIONS ; EVIDENCE.) BY-BIDDING, (See Public Sales.) C. CARRIERS, notices by, in restriction of liability, 40-44. communication to carrier of value of articles, 40-42. notices contained in contract of shipment, 43. notices not in the contract, 43, 44. (See Concealment.) CAVEAT EMPTOR, (See Concealment ; TJeckit, passim.) CHARACTER, evidence of, 478. CHARITY, effect of mortmain act as to bequests to, 112. inadequacy of rent of charity estates as an indication of fraud, 139, 140. governor of charity cannot become lessee of charity estate, 140. CHASTITY, misrepresentations concerning, 4, 5, 49. CLERGYMEN, confidential situation of, 272. CLERK, confidential situation of, 223, note. CODISTRIBUTEES, not liable for each other's fraud not participated in, 383. COEXECUTORS, when liable for each other's frauds, 379-382. COMPOSITION WITH CREDITORS, fraud on, 311-346. CONCEALMENT, meaning of this term, 31. general rule of law as to mere passive concealment, 32. INDEX. 643 CONCEALMENT, — continued. buyer of goods not boand to communicate knowledge possessed by him affecting value, 32. silence by vendor as to defects, 32. putting up goods so as to deceive, 32. rule in Missouri and Mississippi concerning silence of vendor as to defects, 33, o-i. rule applied as well in favor of purchaser as vendor, 33. and in sales of real property as well as in those of personalty, 33. any active misconduct fatal, 33. sale of property not owned by vendor but to be purchased, 33, 34. silence as to opinions expressed by third persons, 34. non-disclosure in sales for special purpose, 34-36. implied warranties in such cases, 34, 35. inducing plaintiff to accept insolvent tenant, 36. sale of horse having secret malady, 36. mere insolvency of party purchasing goods on credit no ground for relief to vendor, 36, 37. otherwise if the purchaser actively mislead the vendor in this respect, 37. under what circumstances a debt is in this respect contracted by fraud so as to entitle the vendor to relief, 37. rule in Pennsylvania, 38. in California, 38. in Missouri, 38. in the Supreme Court of the United States, 38. failure to disclose that about which no inquiry is made, 38-40. examples, 39. doctrine of concealment in marine insurance, 39, 40. differs from that of fire and life insurance, 39. what constitutes a material fact in insurance, 40. duty of disclosure rests upon marine underwriter as well as upon assured, 40. duty not dependent upon turn of subsequent events, 40. all intelligence must therefore be disclosed, though it turn out to be false, 40. notices by common carriers in restriction of liability, 40-44. communication to carrier of value of articles, 40-42. notices designed to discharge carrier's liability and notices to simply insure good faith distinguished, 42. attempts by carriers to relieve themselves of their common-law liability, 42-44. notices contained in contract of shipment, 43. notices not in the contract, 43, 44. carrier must show actual knowledge of such notice, 44. ' concealment from surety of circumstances attending principal's lia- bility, 44. not necessary for creditor to disclose every material fact, 44. 644 INDEX. CONCEALMENT, — continued. presumed that principal debtor has disclosed to him the facts, 44. ■what the creditor is or is not bound to disclose, 45. sureties for good conduct, 45, 46. necessity of disclosure to, 46. security of an indorsement obtained without disclosing facts to in- dorser, 46. action maintainable by woman against man for fraudulently inducing her to contract void marriage with him, 46, 47. whether action survives, 47. fraud of one of several grantors of land, grantee being innocent pur- chaser for value, 48. deed obtained to facilitate immoral action, 48. separation deed obtained by a married woman to enable her to carry on adultery, 48, 49. legacy given to party under character falsely assumed, 49. fraud on husband's marital rights by secret antenuptial conveyance by wife, 49-56. antenuptial conveyances prima facie yalid, 49. doctrine of English courts, 50. meritorious object of conveyance, 50, 51. rule in North Carolina, 51, 52. antenuptial conveyances by husband, 56, 56. postnuptial conveyances by husband, 56. non-disclosure in cases of confidential relations, 66. (See Confidential Relations.) CONFIDENTIAL RELATIONS, misrepresentations of law in, 10, 247. presumption of fraud, 190 what constitutes such relation, 190, 191. principle of equity as to bounties in such cases, 191. trifling gifts, 191. principle of relief, 192. Attorney and Client, 192-222. a relation of close confidence, 192. gratuity by client to attorney generally invalid, 192. examples, 192-194. volunteer under the client may claim relief, 194, 195. residuary legatee of the client, also, 196. no absolute incapacity in attorney, 196. past services, 195. pending and prospective services, 195. what attorney must show to hold the bounty, 196. client need not prove undue influence in the first instance, 196. proof of debt for which client's securities are given, 196, note. how presumption of influence may be rebutted, 197. testimony of recipient of bounty, 197. INDEX. 645 CONFIDENTIAL RELATIONS, — continued. question of undue influence, as inferred from nature of the transaction, a question of law, 197. testamentary provision in fevor of attorney, 197, 198. whether gifts of legacies stand on same footing as gifts inter vivos, 198, 199. bequest in favor of attorney who writes will, 199, 200. what attorney must prove in such cases, 199. sales by client to attorney, 200-208. same presumption against attorney as in case of bounties, 200, 201. presumption not removed by recitals in deed, 201. purchasers with notice, 201. sales valid where grantee is not attorney in hoc re, 201. termination of relation, 201, 202. necessity of advice to client, 202. rule in America on this subject, 203. there must be damage to client, 203. relation differs from that of trustee to cestui que trust, 203. inadequacy of consideration, 204, 206. statement of consideration in deed, 204. purchase by attorney, even on speculation, may be sustained, 204-206. nature and extent of consideration closely scrutinized, 206, 207. purchases by attorney at public sales, 207-212. at judicial sales, 207, 208. inadequacy of price, 208. confirmation of sale by court, 208. whether attorney's incapacity to purchase at such sales is absolute, 208- 210. attorney engaged to prevent condemnation of land may purchase at sheriff's sale, 208, note. English rule in bankruptcy, 209. purchasing in fictitious name, 209, 210, note, attorney cannot purchase outstanding title against client, ^211. request by client to buy outstanding title for attorney's benefit, 211. request to buy client's property for sale for taxes, 211. purchase of equitable interests orchoses inaction of client, 211, 212. sales to third persons through influence of attorney, 212, 213. securities given attorney for fees, 213, 214. consideration closely scrutinized, 213. securities for debts of third persons, 214. attorney bound to advise client of misrepresentations of third persons, 214. assigning securities to client without advising bim as to them, 214, 215. releases and compromises obtained from clients, 215. how relation of attorney and client may be created, 215. litigation not necessary, 215, 216. when the relation ceases, 216. 646 INDEX. CONFIDENTIAL RELATIONS, —conWnMed. obtaining a grant to third person from which attorney is to derive a benefit, 216, 217. attorney purchasing interest of opposite- party, 217. , persons standing in relation of q^tasi attorneys, 217, 218. principle of the whole doctrine, 218, 219. attorney not precluded from contracting in advance for value of his services, 218, note, contest concerning counsel fefes, burden of proof, 219, 220. attempts of client to defraud attorney as to fees, 220. accounts between attorney and client, 220, 221. failure to proceed with litigation, when deemed fraudulent, 221. other circumstances indicative of fraud by attorneys, 221. confirmation of voidable act of attorney, 222. rights of client purely personal, 222. Principal and Agent, 222-231. agents occupy similar relation of trust, 222. no rule prohibiting dealings with principals, 223. but presumption against agent, 223. how position of agent differs from that of attorney as to damage, 223. damage unnecessary, 223, 224. when agent may buy from principal, 224. when agent may sell property bought for his principal, 224, 225. broker making himself principal, 226. agent leasing property corruptly for low rent, 225. his estate liable after his death, 225. purchase by agent at inadequate price, 225, 226. what agent must show in such cases, 225, 226. agent cannot take advantage of knowledge acquired by himself and use it against his principal, 226. agent taking tax-deed of principal's property, 226. lease obtained by agent or servant through false though innocent mis- representation, 226. stranger entering into corrupt bargain with servant, 226. factor charging his employer with mercantile profits, 226, 227. accounts granted in such cases, 226, 227. agent selling his own property to principal as belonging to third person, 227. broker so selling property in which he is secretly interested, 227. concealment of facts that cannot prejudice the principal not fatal, 227. broker engaging to find a purchaser may purchase himself, when, 227, 228. secretly acting as double agent, 228. recovery of services in these cases, 228. concealment by agent of offer of higher price than that obtained for property, 229. voluntary settlement by principal, 229, 230. INDEX. 647 CONFIDENTIAL RELATIONS, — continued. agent may receive gratuities, when, 230. no excuse that agent has obtained a good bargain for his principal when agent obtains secret advantage, 230. agent may purchase principal's property after termination of relation, when, 231. gratuitously interfering for another, 231. persons employed as mere instruments not subject to the rule pertaining to agents, 231 . Partners, 232-236. duty inter se to refrain from concealment, 232. all clandestine bargains by a partner forbidden, 232. object of the prohibition, 232. partner engaging in another business in conflict with his duties to the firm, 233. lease of premises where the joint trade is carried on, obtained by partner, 233. partner making secret profits out of the firm, 233. effect of counter fraud by the other partners, 233, 234. partners presumed to have equal access to books and business, 234. inter-alienations of their interests, 234, 235. joint purchasers of property, 235. 'Trustees, 236-250. duty of trustee to obtain advice for cestui que trust, 236. whether necessary information given, how determined, 236, 237. when a trustee may buy from his cestui que trust, 237. what disclosure required, 237, 238. how cestui que trust may repudiate sale, 238, 239. partial dissolution of trust relation, 238. trustee must purchase openly, 239. cestui que trust need not prove damage, 239. trustees of marriage settlement, 239, 240. creditor procuring his appointment as trustee, 239, 240. trustee cannot be compelled to criminate himself, 240. qualification of rule, 240. lessee of charity estate held a trustee, when, 240, 241. sales under trust for payment of money, 241. trustees joining coUusively with remainder-man in putting out tenant of trust estate, 241. trustees colluding with tenant for life, 241. trustees joining in destruction of contingent remainders, 241, 242. trustee joining with remainder-man to bar entail, 242. conduct of trustees towards infant cestuis que trust, 242. trustee renewing leasehold interest, 242. cannot obtain reversionary interest for their own use, 242. purchasers with notice, 242, 243. when the new lease may stand for the benefit of the trustee, 243. 648 INDEX. CONFIDENTIAL RELATIONS, — continued. conversion of trust property, how remedied, 243. trustee buying at his own sale, 244. sale may be treated as a nullity though trustee paid a fair price, 244. rule applies equally to sales under decree of court and other cases, 244. trustee protected as to outlays, when, 244, 245. rule on this subject in Mississippi, 245. when trust title absolutely fails, trustee may purchase^ 245. what trustee must show to validate his purchase, 245. long acquiescence by cestui que trust, 246, 447, 448. cestui que trust should act with reasonable promptness, 246. purchase by trustee from one to whom the trust property has been sold, 246, 247. there should be an understanding between the trustee and bidder at or before the s^le to render subsequent sale to trustee invalid, 24.7. ratification by cestui que trust, 247. what constitutes, 247. taking accounts between trustee and cestui que trust, 247. laches on part of cestui que trust, 247. releases by cestui que trust, 248. trustee of property conveyed in trust for creditors may purchase other property of the debtor, 248. officers and directors of corporations are trustees, 248. when transactions for their personal benefit may be supported, 249. director may deal in regard to his own shares, when, 249. making calls for the stockholders, 249. president and non-official stockholder, 249, 250. Ouardian and Ward, 250-254. property transactions between, 260. guardian may justify them, how, 250, 251. appropriating ward's property, 251. innocent purchasers, 251. conversion of ward's stock, 251. improvements made on land bought of ward, 251. will in favor of guardian, 251, 252. negotiable security obtained from ward, 262. acts of guardian on ward's attaining majority, 252, 253. when gifts in such cases valid, 253. voluntary guardian, 263. deeds of release to guardian, 253. settlements and allowances in probate, 254. Executors and Administrators, 254-259. subject to general rules governing persons in relations of confidence, 254. examples, 254, 265. cannot in general buy the trust property, 255. but may buy from purchaser, when, 255, 256. INDEX. 649 CONFIDENTIAL RELATIONS, — continued. purchase with assent of interested parties, 266. purchase from distributee just of age, 256. purchasers with notico, 256, 257. fraudulent settlements, 257. voluntary interference in estates, 257, 258. treating with heirs in such cases, 258. gifts to person transacting business for administrator, 258. sale to executor or administrator may be opened, and will be confirmed if no higher bid made, 258. composition of claim by executor or administrator, 258, 259. Mortgagor and Mortgagee, 259-261. right of redemption after conveyance of equity, 259. when sale of equity binding, 269. sale under power in a mortgage, 259, 260. mortgagee in such case a trustee, 260. may purchase, when, 260. mortgagee selling under power of attorney, 260. what will constitute evidence of fraud, 260, 261. mortgagee of leasehold premises obtaining renewal lease, 261. Parent and Child, 261-266. bounty by child to parent, how regarded, 261, 262. gifts by child shortly after majority, 263. burden of proof rests on parent, 263. only prima facie invalid, 263. what will invalidate the bounty, 264. gifts from parent to child stand on different footing, 264. family settlements in charge of child, 264, 265. relation between grantor and his son, grandson, or son-in-law, 265. gifts by parents when aged or infirm, 265. parent may favor one child over another though partially intoxicated at the time, 265, 266. son employed to procure deed disposing of father's property, 266. relation of son-in-law to mother-in-law, 266. Physician and Patient, 266, 267. gifts from patient to physician, 266. agreements between, 266, 267. when fraud not presumed, 267. Draftsman of Will taking Benefit, 199, 200, 267-270. presumption against such party, 267, 268. not conclusive, 268, 269. rule is independent of capacity or volition of testator, 268. bounty may be valid though testator a person of weak mind, 269. but increased scrutiny Required, 269. what sort of evidence required, 270. reading the will to testator, 270. Engagement to Marry, 271. 650 INDEX. CONFIDENTIAL RELATIONS, — continued. undue influence may be exerted under this relation, 271. Illegal Marriages or Relations, 271. marriage of widower and sister-in-law, 271. advice necessary as to property transactions if marriage be illegal, 271. existence of unlawful relation between testator and object of his bounty, 271. Spiritual Advisers, 272. procuring will to be drawn in favor of a church, 272. Volunteers, 272, 273. voluntary guardian, 253. voluntary administrator, 257, 258. taking advantage of project proposed, 272, 273. undertaking to aid another, 273. Cotenants and Tenants for Life, 273, 274. cotenants not in a relation of trust, 273. tenant for life not in a relation of trust to remainder-man or reversioner, 274. Joint Purchasers, 274. stand in relation of confidence to each other, 274. Expectant Heirs, 274-277. favored in equity, 275. sale of reversion by, 274. what necessary to render valid, 275, 276. valuation of expectant interest, 276. absence of actual fraud in purchaser, 276. effect of repeal of usury laws, 277. meaning of "fraud" in such transactions, 277. mortgage by heir with consent of owner, 277. sale of a fixed and absolute legacy, 277. Sailors, 278. under the special protection of the courts, 278. ' Aged Persons, 278. when transactions with, invalid, 278. Illiterate, Weak-minded, and Drunken Persons, 279-287. evidence of undervalue in transactions with illiterate persons, 279, 280. what will overturn presumption of fraud, 280. what the other party may show, 281. weak-minded persons can sell or give away their property, 281, 282. but presumption against grantee, 281, 282. when grantee allowed for improvements, 283. confession of judgment by weak-minded person, 283. general rule stated, 283. examples of imbecility, 284. what circumstances attending it sufficient to invalidate a transaction, 285, 286. INDEX. 651 CONFIDENTIAL RELATIONS, — co»i(in««rf. contracts with drunken persons, 286, 287. gifts by drunken persons, 286, 287. CONFIRMATION, (See Waiver.) voidable acts of attorney, 222. CONFUSION OF GOODS, person fraudulently mingling another's goods with his own may lose the whole, 97. Roman law on this subject, 97. mixture must be more than intentional, 97. where separation is practicable, 97, 98. where not, 98. CONSPIRACY, to obtain loan of money, 89. cross-suits for conspiracy, 173, 463. liability of one conspirator for acts of another, 378, 379. immaterial that some obtain no benefit, 378, 379. evidence of conspirators and joint trespassers against each other by acta or declarations, 483-485. (See Evidence.) CONSTRUCTIVE FRAUD, confidential relations, 190-287. (See CONFIDENTIAI, RELATIONS.) attorney and client, 192-222. {See Attorney and Client.) principal and agent, 222-231. (See Principal and Agent.) partners, 232-236. (See Partnership.) trustees, 236-250. (See Confidential Relations ; Trusts and Trustees.) guardian and ward, 250-254. (See Guardian and Ward.) executors and administrators, 254-259. (See Executors and Administrators.) mortgagor and mortgagee, 259-261. (See Mortgagor and Mortgagee.) parent and child, 261-266. (See Parent and Child.) physician and patient, 266, 267. {See Physician and Patient.) draftsman of will taking benefit, 267-270. (See Draftsman op Will.) engagement to marry, 271. (See Engagement to Marry.) illegal marriages or relations, 271. (See Illegal Marrugks.) 662 INDEX. CONSTRUCTIVE FRAVD,—eoniinued. spiritual advisers, 272. (See Spiritual Advisees.) volunteers, 272, 273; {See Volunteers.) cotenants and tenants for life, 273, 274. (See Cotenants; Tenants.) joint purchasers, 274. (See Joint Purchasers.) expectant heirs, 274-277. (See Expectant Heirs.) sailors, 278. (See Sailors.) aged persons, 278. (See Aged Persons.) illiterate, weak-minded, and drunken persons, 279-287. (See Illiterate, Weak-minded, and Drunken Persons.) notice, 288-318. (See Notice.) putting one on inquiry, 288-300. (See Notice.) lis pendens, 300-302. (See Lis Pendens.) registration of instruments, 302-307. (See Registration.) purchasers without value, 307-316. (See Purchasers for Value.) principal and agent, client and attorney, &c., 816-318. , (See Attorney and Client ; Principal and Agent.) CONSTRUCTIVE NOTICE, (See Notice.) ■ CONTRACTS, (See Confidential Relations; Deceit; Rescission; Specific Per- formance. CONTRIBUTION, not allowed in cases of combinations for fraud, 353. where fraud contrived against several is successful against only one, he cannot call for contribution to the damage, 868. COPYRIGHT, infringement of, 28, note. CORPORATIONS, false representations that stock is not assessable, 21. misrepresentations of solvency of, 24. director issuing prospectus containing false information, 60. representations contrary to the charter, 71, 72. prospectuses issued by the company, containing false representations, 90. majority of corporators cannot appropriate corporate property or avails, 161, 162. INDEX. 653 CORPORATIONS, —continued. nor can they ratify or condone an act of their own of such nature with- out restitution, 162. collusive transfer of shares to make a party eligible as director, 152. giving away stock to parties for fraudulent purposes, 152, 153. fraudulent issue of paid-up certificates of stock, 163. private arrangements by agents procuring subscriptions of stock, 163, 154. subscriptions to be binding when a certain sum shall be subscribed, fraudulent acts as to, 164. officers personally liable for acts intended to injure the corporation, 154. fraud in organizing a corporation, 154. cannot be collaterally set up, 164. acts of municipality procured by fraud, 154. officers and directors are trustees, 248. when transactions for their benefit are valid, 249. director may deal in regard to his own shares, when, 249. making calls for the stockholders, 249. president and non-official stockholder, dealings between, 249, 250. when stockholders may sue for wrongs to the corporation, 329, 330, 351, 352. directors not necessarily liable personally for acts of managing officers, 318, 368, 369. CORRECTION OF INSTRUMENTS, may be had in equity, when, 156. COSTS, when proper parties are omitted, 460. COTENANTS, relation between, 273. COTRUSTEES, when one trustee liable for fraud of his associates, 379. all parties to a breach of trust equally liable, 379. CROSS-ACTIONS, fraud not involving impeachment of former judgment may be ground of cross-action, 177, 429, 430, 463. recovery of judgment on a contract no bar to an action for deceit by which the contract was obtained, when, 177, 430. recovery back of money obtained under fraudulent judgment, 177, 178. to cancel contract pending suit thereon, 463. damages in, 513. D. DAMAGES, damage generally necessary in actions for fraud, 400. exceptions, 400. 654 ESTDEX. DAMAGES, — continued. general principle stated as to connection of damages with the wrong complained of, 506. examples, 606, 607. attorney's fees, 506, note. communication of disease by animals sold through fraud, 607, 508. measure of damages in actions of deceit or breach of warranty , 508. price paid for property as evidence of value, 508, 509. in suits on securities given for price of property, defendant may go back and show fraud in the sale, 509. recouping deceit in exchange, 609. false representations in sale of a partner's interest, 609. false representations in sale of corporation stock, 509, 510. market value of the stock, 510. falsely representing a note to be due and unpaid, 510. misrepresentations of the quantity of land conveyed by a deed, 510. valuation set upon property by the parties, 610. putting it out of one's power to convey property agreed to be sold, 510, 611. inducing an innocent party to convert the property of another, 511. interest in money cases, 511. promises obtained by fraud, and promises fairly obtained, part of the consideration of which is fraudijlent, 511. evidence of subsequent events in mitigation of trustee's fraud, 512. examples, 512. damages in allegations of fraud in actions ex contractu, 512, 513. in action ex contractu damages for fraud not recoverable, 513. damages in cross-action after contract has passed into judgment, 513. exemplary damages, 513. DECEIT, Introduction, 3. deceit the type of fraud, 3. the general rule stated as to redress for, 3. Nature of the Representation, including Concealment, 4-56. need not be in words, 4. acts sufficient, 4. procuring another to indorse note or bill, 4. representations concerning chastity need not be express, 4, 5. literal meaning of language not to be resorted to, 5. express affirmation of untruth not necessary, 6. criterion as to last point, 6. language to be generally understood in its ordinary sense, 5. examples for last point, 5, 6. false representations of meaning of language, 6. allegation of part of the truth only, 6, 7. representation must be material, 7. meaning of this rule, 7, 8. INDEX. 655 DECEIT, — continued. representation supposed to be material, but in reality not, 8. representation must bo of fact and not of law, 8. examples, 9. qualifications to this rule, 9, 10, 247. persons occupying superior situations for knowing the law, 9. persons in confidential relations, 10. misrepresentation that a note is " good," 10, 22, 23. misrepresentation as to legal effect of guaranty, 10. representation should be clear and certain, 10, 11. ambiguous and indefinite statements, 11. representation must relate to present or past fact, 11, 12. promise not suflicient, 12. dishonest expression of intention, 12. implied understanding in sale of good will, 12, 13. opinions, 13-26. statements as to operation and utility of inventions, 13. statements as to what a patent covers, 13. misrepresentations of quantity, quality, or situation of land, 13. no set rule on this point, 13, 14. misrepresentation by agent of railroad company, as to value of property, assets, &c., of the company, and the probable cost and profits of a road to be built, 14. representations concerning present and prospective advantages of a town, 14. representations of the quality and prospects of a mine, 14, 15. misstatements by seller of his chances of sale, 15. misstatements of party buying an interest in a firm as to what others would pay, 15. representations as to the nature and value of land at a distance, 16. honest statements of opinion as to boundary line of land, 16. dishonest statements thereof, 16. representations as to number of acres of land in a tract, 17. representations concerning capacity and condition of a mill, 17. rule in Massachusetts and Maine as to representations of value, or of certain facts pertaining thereto; 17, 18. representation concerning deposits of oil in land, 17. representations of amount of hay cut on land, 18. rule in New York as to statements of value, 18, 19. rule in England, 19. representations as to rental of land, 19. representations as to sums offered for property, 19. statements as to value of stock, 19. statements as to elements of fact pertaining to value, 20. representation that stock is not assessable, in opposition to terms of the charter of a corporation, 21, 22. Boman law concerning puffing one's wares, 2l, note. 656 INDBX. DECEIT, — continued. representations to sureties concerning extent of the principal's liabili- ties, 22. composition with creditors procured by false representations by debtor of amount of his property, 22. false statements that certain securities are good, 10, 22, 23. representations concerning solvency, 23-26. must be very definite, 23. generally required by statute to be in writing, 23, note. marriage on faith of false representations of pecuniary standing, 24. taking shares in company, on false statements as to its solvency, 24. whether extent of credit should be indicated, 24. representations concerning one's own pecuniary ability, 24, 37. not necessary to sue credited party, 25. opinions fraudulently expressed, 26. false representations made on Sunday, 26, 27. not necessary that the party should be bound to give information, 27. effect of collateral fraud upon agreement vesting estate in land, 27. representations made of a man or of his property, 28, 29. slander of title, 28. infringement of trade-mark, 28. infringement of patents or copyrights, 28, note. warranty in personal property, 29. what constitutes, 29, 30. visible defects, 30. warranty in real property, 30. right of action as to title without, 30. concealment of incumbrance, 30, 68, 306, 306. eviction, 30. limited warranty, 31. Concealment, 31-56. , meaning of this term, 31. general rule of law as to mere passive concealment, 32. buyer of goods not bound to communicate knowledge possessed by him affecting value, 32. silence by vendor as to defects, 32. putting up goods so as to deceive, 32. rule in Missouri and Mississippi concerning silence of vendor as to defects, 32, 33. rule applies as well in favor of the purchaser as of the vendor, 33. and in real property sales as well as in personal, 33. any active misconduct fatal, 33. sale of property not owned by vendor but to be purchased, 33, 34. silence as to opinions expressed by third persons, 34. non-disclosure- in the case of sales for special purpose, 34r-36. implied warranties in such cases, 34, 86. inducing plaintiff to accept insolvent tenant, 36. INDEX. 657 DECEIT, — continued. sale of horse having a secret internal malady, 36. selling negotiable paper without indorsement, 86. mere insolvency of party purchasing goods on credit no ground for relief to vendor, 36, 37. otherwise if the purchaser actively mislead the vendor in this particular, 37. under what circumstances a debt is in this respect contracted by fraud, so as to entitle the vendor to relief therefor, 37. rule in Pennsylvania, 38. in California, 38. in Missouri, 38. in the Supreme Court of the United States, 88. failure to disclose that about which no inquiry is made, 38-40. examples, 89. doctrine of concealment in marine insurance, 39, 40. different from that of fire and life insurance, 39. what constitutes a material fact in insurance, 40. duty of disclosure rests upon marine underwriter as well as upon the assured, 40. duty not dependent upon turn of subsequent events, 40. all intelligence must therefore be communicated, though the same turn out to be false, 40. notices by common carriers in restriction of liability, 40-44. communication to carrier of value of articles, 40-42. notices designed to discharge carrier's liability and notices to simply insure good faith distinguished, 42. attempts by carriers to relieve themselves of their common-law liability, 42-44. notices contained in contract of shipment, 43. notices not in the contract, 43, 44. carrier must show actual knowledge of such notice, 44. concealment from surety of the circumstances attending principal's liability, 44. not necessary for creditor to disclose every material circumstance, 44. assumed that principal debtor has acquainted him with facts, 44. what creditor is or is not bound to disclose, 45. sureties for good conduct, 45, 46. necessity of disclosure to, 46. security of an indorsement obtained without disclosing the facts to the indorser, 46. action maintainable by woman against man for fraudulently inducing her to contract a void marriage with him, 46, 47. whether the action survives against wrongdoer's representative, 47. fraud of one of several grantors of land, grantee being an innocent purchaser for value, 48. deed obtained to facilitate immoral action, 48. 42 658 INDEX. DECEIT, — continued. . separation deed to enable married woman to carry on adultery, 48, 49. legacy given to a person under a character falsely assumed, 49. fraud on husband's marital right by antenuptial conveyance of wife, 49-56. antenuptial conveyances prima facie valid, 49. doctrine of the English courts on this subject, 60. conveyance must be secret and made in contemplation of marriage, 50. meritorious object of the conveyance, 60, 61. rule in North Carolina, 51, 52. deception in such cases presumed, when, 52. conveyance of property of existence of which husband was ignorant, 52, 53. Lord Eldon explained on this point, 62, 53. secret settlement before marriage, 54. obligation of wife made on valuable consideration before marriage without knowledge of intended husband valid, 54. costs inflicted upon party or attorney inducing intended wife to make a conveyance in fraud of husband's marital rights, 54, 56. securities given by woman without value pending a treaty for marriage, 55. antenuptial conveyances by husband, 66, 66. postnuptial conveyances by husband in fraud of wife, 66. non-disclosure in cases of confidential relations, 66. Wrongdoer's Knowledge of the Falsity of the Representation, 66- 64. generally an honest statement of fact is not actionable, 67. defendant's knowledge of the falsity must be proved, 57. but it is otherwise of representations of fact concerning defendant's business, 67. misrepresentations, by one assuming to be an agent, of the extent of his authority actionable, though believed to be true by the defendant, 58, 59. telegraph company liable on this ground for delivering a message not sent, 58. if agent sets forth the facts touching his authority, he is not liable, 68, 59. diflference between agent's situation towards his principal and towards third persons, 69. similar misrepresentations by person assuming to be a partner in a firm, 59. misrepresentations by one professing to be an expert, 69, 60. by director of corporation, 60. innocent misrepresentations, whether redressible on grounds of fraud, 60-64. innocent misrepresentations by parties effecting insurance, 62, note, result of the cases stated, 63. INDEX. 659 DECEIT, — continued. suits to indemnify parties liable over, 64. Ignorance of the Complaining Party, and his Belief in the Truth of the Mepresen ation, 64-82. the complaining party must in general be ignorant of the facts, and believe the representation made to be true, 64, 65. burden of proof rests upon him in this respect, 65. doctrine in Vermont in sales, 66, note, purchaser of property making investigation himself, 65, 87. representations believed at first to be false, but afterwards believed true, 65. cases in which complaining party bound to know the facts, 66, 67. means of information directly at hand, 66. false statements as to pregnancy by woman with whom the complaining party had had intercourse, 66, 67. familiarity of purchaser with condition of property, 67. every contracting party not in fault may rely upon express statements of the opposite party, 67, 68. example in the case of false statements by a surety, 67, note, purchaser may rely on false representations as to title of land, though the facts appear in the record office, 68. eviction unnecessary in such case, 68. buyer of patent may rely on statements of what the patent covers, 68. party induced to abstain from making investigation, 68, 69, 87, 88. false explanation of visible defect, 69. acceptance and payment of goods obtained by fraud, 70. burden of proof in these cases, 70. sales at risk of purchaser must be without fraud on purchaser, 70, 71. parties not standing on an equal footing, 71. complaining party bound to know the state of his own business, 71. director of a corporation not bound to know the true condition of the company, 71. subscribers to stock bound to take notice of charter, how far, 71, 72. distinction in New York between facts of general knowledge and those known only to specialists, 72, 73. representations by men of skill, 73. persons able to read bound in general to know the contents of their contracts, 73-81. contracts containing technical or foreign terms, 73. persons who cannot read should require contract to be read over to them, 74, 75. persons able to read only with difficulty, 74, 75. party deceived by trick into signing an instrument not intended, 75, 78. negligence of the party signing, 76-79. false representations of the object of a contract, 76, note. ' 660 INDEX. DECEIT, — continued. application of this subject to negotiable instruments, 77-79. writing a contract over one's signature on fly-leaf or waste paper, 77, note. • presumption of negligence in not reading contract, 78. intervention of a custodian of the contract, 78. result of the authorities stated, 7H, 71). fraudulent use of signature to blank instruments, 79. degree of diligence required of persons not able to read, or able to read only with difficulty, 79, 80. failure to read deed in rough draft, 80. duty of reading to opposite party, 80, 81. omission to read part, 81. burden of proof in these eases, 81. acknowledgment before proper officer, 81. misrepresentations of law, 82. Intention that the Eepresentat'on should be acted upon, 82-85. rule on this point explained, 82-84. must be proved when the defendant was not party to a contract with the plaintiff, 82, 83. otherwise where there is a contractual relation between the parties brought about by the defendant's fraud, 84. not necessary always that there should have been an intent to injure the plaintiff, 85. Acting upon the Representation, 85-91. fundamental that the representation should have been acted upon to plaintiff's injury, 85. payee of note cannot maintain deceit for being induced to indorse the same by fraud, until compelled to pay, 85, 86. inducing party to subscribe to stock of insolvent corporation, 86. preventing party from levying an attachment on property, 86. preventing one from obtaining a gratuity, 86. fraudulently granting a verbal lease for two years, 86. party may rely on express representations, when, 86, 87. acting upon information obtained from third person, 87. preventing investigation, 68, 69, 87, 88. representation must have been made before the damage was sustained, 88. not necessary that plaintiff relied solely upon defendant's representa- tion, 88, 89. enough that the representation materially influenced plaintiff's con- duct, 89. who may act upon the representation, 89-91. prospectus issued to the public by a corporation, 90. stock bought on the market and not of the corporation, 90. representation made to A for B to act upon, 90, 91. statements made to a witness in the presence of a purcbaser, 91. INDEX. 661 DECEIT, — continued. letter marked " confidential," who authorized to act upon, a question of fact, 91. measure of damages in actions for deceit, 508-510. DECLARATIONS, (See Conspiracy; Evidbncb; Wills.) DELIVERY OF INSTRUMENTS, bill or note obtained by fraud, 78, 79, 129, 157. deed stolen from grantor, 156. fraud in obtaining delivery, 157. fraudulent retention of possession of deed, 157. intention to deliver essential, 157. DEMURRER, when proper to allegations of fraud, 456, 457. DESTRUCTION OF WRITINGS, by an heir, of deed or will of ancestor, 158, 505. proof of contents, 158, 159, 496, 497. indecent letters, 496, 497. DISCOVERY, equity will compel disclosure of fraud, 464, 465. DISTRIBUTEES, may maintain a bill to set aside fraudulent deed of gift of decedent, 351. fraud by one of several codistributees, 383. DIVORCE, pregnancy of wife by third person before marriage, 66, 67. statutory grounds of, do not exclude fraud, 92, 93. marriage brought about by fraud, 93. rule in Delaware as to fraud, 43, note. effect of cohabitation upon right to divorce for fraud, 95. DOMICIL, fraud in respect of, 168. 169. DOWER RIGHTS, fraud on, 56, 96, 470, 471. DRAFTSMAN OF WILL, taking benefit thereunder, 199, 200, 267-270. presumption against such party, 267, 268. not conclusive, 268, 269. capacity and volition of testator, 268, 269. what sort of evidence thereof required, 270. reading will to testator, 270. DRUNKEN PERSONS, (See Illiterate, Weak-minded, and Drunken Persons.) E. ECCLESIASTICAL COURT, jurisdiction of, 321, 322, 344, 345. 662 INDEX. EJECTMENT, not maintainable by defrauded grantor, 461, 462. by the grantee, 462. ENGAGEMENT TO MARRY, undue influence under this relation, 271. EQUITY, (See JuKisDiCTioN.) ESTOPPEL, whether doctrine of estoppelin pain for fraud applies to infants, 357, 358. whether it applies to married women, 358. in pais one of the methods of preventing consummation of fraud, 438. what necessary to raise an estoppel in pais, 438. correspondence to elements of deceit noticed, 438, 439. qu^fication of the rule as to knowledge, 439. representation must have reference to present or past facts, 439. may arise from passive conduct or concealment, 439, 440. forgetfulness, 440. acting upon the misrepresentation, 440. EVICTION, unnecessary to action for deceit, 30, 68, 305, 306. EVIDENCE, Courts of Law and Courts of Equity, 473, 474. whether any difference prevails as to rules of evidence in these courts, 472, 473. the only difference founded upon a difference in jurisdiction, 472, 473. Fraud in Law and Fraud in Fact, 474. how they differ, 474. Preponderating Evidence, 474. indisputable proof of fraud not required, 474. jury should be so instructed, 474. exception in cases of resulting trust, 474. evidence which satisfies conscience of common man sufficient, 475. circumstances consistent with honesty, 475. proof in civil actions of indictable fraud, 475, 476. Circumstantial Evidence, 476-478. the fraud charged must be proved, 476. evidence of other frauds, 476, 478-483. slight circumstances admissible, 476. direct evidence unnecessary, 476. general rule, 476, 477. examples, 477. evidence of good character, 478. Evidence of other Frauds, 478-483. general rule as to admissibility of evidence of, 478. examples, 478. ground of admissibility, 478. impeachment of writing as forged or fraudulent, 479. INDEX. 663 EVIDENCE, — contimced. examples, 479. representations of vendor of machine as to efficiency, 479, 480. pretended and fraudulent purchase of property, 480. other like cases, 480. evidence of other frauds not received unless forming part of scheme with the fraud complained of, 480, 481. rule in New York as to admissibility of evidence of other frauds, 481. rule in Connecticut, 481 , 482. fraud may be presumed, 482. Evidence of Conspirators and Joint Trespassers, 483-486. when evidence of one admissible against the rest, 483. declarations of one, 483, 484. conspiracy should be shown, 484. slight indications of, sufficient, 484. combination of partners to suborn witnesses, 484, 485. declarations of a partner, 485. Declarations of Defendant or his Predecessor, 485-487. • general rule of their admissibility, 485, 486. examples, 486. declarations subsequent to transaction in question, 486, 487. \ declarations of fraudulent grantor, 486. Parol Evidence, 487-490. admissible to prove fraud in written contract, 487. examples, 487, 488. misrepresentations made as inducement to the contract, 488. secondary evidence of writing, 488. notice to produce writing, 488. promise to do some additional act not contained in the writing, 488. deed absolute may be shown to have been intended for a mortgage, 116, 488, 489. evidence should be clear, 489. recitals of consideration in deed attacked for fraud, 207, note, 489. parol evidence to establish resulting trust, 489. examples, 489, 490. Statute of Frauds cannot be set up against evidence of fraud in identity of land sold, 490. Variance. Allegata et Probata, 490-493. if case based on fraud, relief cannot be given on other grounds, 61-63, 490. unnecessary allegations, 490. proof of mistake, 491. allegation of fraudulent representation, 491. proof of knowledge, 491. evidence of designed partial statements, 491. evidence of breach of warranty, 491, 492. allegation of fraud not supported by evidence of simple illegality, 492. 664 INDEX. EVIDENCE, —continued. sufficient to prove substance of allegation, 492. evidence of inadequacy, 492, 493. allegations as to the means employed to commit fraud, 493. example, 493. Burden of Proof, 493-497. general rule, 493. rule in cases of constructive fraud, 493, 494. examples in cases of actual fraud, 494. allegation that property bought by defendant from third person was obtained from plaintiff by fraud, 309, 494, 495. proof of fraud by defendant's vendor, 495. purchasers for value, without notice, 495. (See Notice.) cases of account, 495, 496. settled accounts, 495, 496. effect of destruction or alteration of instruments, 496, 497. destruction of indecent letters, 496, 497. depriving a person by fraud of possession of instruments, 497. Evidence in Bebtittal, 497, 498. in cases of deceit in exchange of property, 497. evidence of good reputation among tradesmen, 497. what the defendant in deceit had previously said, as evidence tending to repel fraud, 497, 498. evidence of lack of diligence in plaintiff, 498. what a party setting up laches should show, 498. Griminating One's Self, 498. non-criminal frauds must be disclosed, if desired, 240, 464, 498. Privileged Communications, 499. when communications or papers from client to attorney may be required in evidence, 499. conspiracy between client and attorney to defraud, 499. Failure of Proof of Fraud, 500. when fatal, 500. Fraud on Testators, 600-505. broad range of inquiry permitted when will is contested, 500. examples, 500. fact of testator's living in adultery with a beneficiary, 500. influence used for selfish purpose, 600. evidence of subsequent acts and declarations of testator, 501, 502. declarations before and at the time of executing will, 601, 502. what party offering declarations must show, .502. effect of Pennsylvania Statute of Wills, 503. facts tending to showa motive for the use of fraud or undue influence, 603. declarations of executor and legatee, 503. inquiry whether provisions of will are just and reasonable, 503, 601. fraud need not be proved by direct and positive testimony, 504. INDEX. 665 i;VIDENCE, — continued. slight circumstances, 504. old age, 604, 50.5. evidence of declarations against a party charged with destroying a will, 505. EXECUTORS AND ADMINISTRATORS, stand in relation of trust, and subject to general rule governing persons in confidential relations, 254. examples, 254, 255. cannot in general buy the trust property, 255. but may buy from purchaser, when, 255, 256. purchase with assent of interested parties, 256. purchase from distributee just of age, 256. purchasers with notice, 256, 257. fraudulent settlements, 257. voluntary interference in estates, 257, 258. treating with heirs in such cases, 258. gifts to person transacting business for administrator, 258. sale to executor or administrator may be opened, and will be confirmed if no higher bid is made, 258. composition of claim by executors and administrators, 258, 259. survivorship of actions, 349, 350, 382, 471. how far one executor or administrator is liable for the fraud of an associate, 379, 380. participation in the fraud must be proved, 380. payment of money by executor to his associate who misapplies it, 380. when an executor, in selling, is bound by the fraud of an interested party, 380. personal assets acquired by executor's breach of trust, 380. when one becomes a party to such wrong, 380, 381. examples, 381, 382. no implied warranty of title or soundness in sales, 382. proper remedy for actual fraud in such cases, 382. when decedent's estate liable, 382. EXPECTANT HEIRS, favored in equity, 275. sale of reversion by, 274. what necessary to render valid, 275, 276. valuation of expectant interest, 276. absence of actual fraud in purchaser, 276. effect of repeal of usury laws, 277. meaning of " fraud " in such transactions, 277. mortgage by heir with consent of owner, 277. sale of fixed and absolute legacy, 277. EXPERT, liability of, for false information, 69, 60, 72, 73. INDEX. F. FACTOR, charging his principal with mercantile profits, 226, 227. FALSE REPRESENTATIONS, (See Deceit.) FOREIGN JUDGMENTS, may be impeached for fraud, how far, 178, 179. FORGERY, (See Alteration of Instruments; Bills and Notes.) FRAUD, deceit the type of, 3. effected by acts and effected by words on same footing, 4. courts will not bind themselves by definitions of fraud, 13, 14. meaning of, in transactions with expectant heirs, 277. who may allege fraud, 336-354. particeps criminis, 337-346. (See Particeps CRnaiNis.) personal nature of fraud, 346-849. G. GUARANTY, misrepresentation as to legal effect of, 10, 76. GUARDIAN AND WARD, property transactions between, are prima facie fraudulent, 250. but guardian entitled to justify them, how, 250, 251. appropriating the ward's property, 251. innocent purchasers, 251. conversion of ward's stock, 251. improvements made on land bought of ward, 251. wills in favor of guardians by wards, 251, 252. negotiable security obtained from ward, 252. acts of guardian on ward's attaining majority, 252, 253. when gifts in such cases valid, 253. voluntary guardian, 253. deeds of release and acquittance to guardian, 253. settlements and allowances in probate, 254. H. HAY, misrepresentations concerning amount of, produced, 18. HEIRS, •expectant, dealings with, 274-277. (See Expectant Heirs.) INDEX. 66T HUSBAND AND WIFE, representations by intended wife as to chastity, 4, 5. action maintainable by woman against man for fraudulently inducing her to contract a void marriage with him, 46, 47. whether the action survives against wrongdoer's representative, 47. deed of separation obtained by wife to enable her to carry on adulter- ous intercourse with another, 48, 49. conspiracy of unchaste woman to marry herself as a virgin, 49. fraud on husband's marital rights by wife's antenuptial conveyance, 49-56. such conveyances prima facie valid, 49. doctrine of the English courts upon this subject, 50. conveyance must be secret, and made in contemplation of marriage, 60. meritorious object of the conveyance, 60, 51. rule in North Carolina, 51, 62. deception in such cases presumed, when, 62. conveyance of property of existence of which husband was ignorant, 62, 68. Lord Eldon explained on this point, 52, 63. secret settlement by wife before marriage, 64. obligation of wife made on valuable consideration before marriage, with- out knowledge of intended husband, valid, 54. costs inflicted upon party or attorney inducing intended wife to make a conveyance in fraud of husband's marital rights, 54, 55. securities given by woman without consideration pending treaty of mar- riage, 65. antenuptial conveyances by husband, 65, 66. postnuptial conveyances by husband in fraud of wife, 56, 96, 470, 471. statutory grounds of divorce do not exclude fraud as a ground, 92, 93. marriage brought about by fraud, 93. deception of a mature woman, 93. examples of fraud in this connection, 93-95. rule in Delaware as to fraud, 93, note. effect of cohabitation upon right to divorce for fraud, 95. third persons cannot object in these cases, 95. gifts by husband in favor of children, 95, 96. intent to defeat wife of dower, 95, 96. gifts of personalty by husband, 96. intent to defeat wife's rights, 96. wife may resort to courts for protection against abuse of her right of dower, 96, 97. purchaser by fraud of dowable lands liable to both husband and wife, 97. notice to husband not notice to wife, 318. converse also true, 318. wife's participation in husband's fraud, 360. husband cannot rescind wife's contract, 406. * fraud on dower rights, 66, 96, 470, 471. 668 INDEX. ILLEGAL CONTRACTS, will not be specifically enforced, 397. defendant need not set up the illegality ; the court will do so, 397. equity will not enforce a contract growing directly out of an illegal agreement, 367. example, 367. ILLEGAL MARRIAGES, contracting marriage through fraud, 46-49. (See Husband and Wife.) undue influence under, 271. ILLITERATE, WEAK-MINDED, AND DRUNKEN PERSONS, false reading of instrument to illiterate person, 155. to a blind man, 155. misstatement of legal effect, 156. contracts with drunken persons, 165. contrivance by producing drunkenness, 166. burden of proof, 156. independent advice, 156. when transactions with aged persons invalid, 278. evidence of undervalue, 279, 280. what will overturn presumption of fraud, 280. ■what the opposite party may show, 281. weak-minded persons may sell or give away their property, 281, 282. but presumption against grantee, 281, 282. when grantee allowed for improvements, 283. confession of judgment by weak-minded person, 283. general rule stated, 283. examples of imbecility, 284. what circumstances attending it sufficient to invalidate a transaction, 285, 286. contracts with drunken persons, 286, 287. gifts by drunken persons, 286, 287. INADEQUACY OF CONSIDERATION, (See Confidential Relations.) mere inadequacy not fraud, 136. - though party complaining was in poverty and distress, 136. undue influence and unfair means, 137. inadequacy shrfwing lack of understanding, 137. rule in Pennsylvania, 137, 138. examples, 138, 139. sales set aside for inadequacy on principle of redemption, 139. inadequacy in sales of charity estates, 139, 140. long leases of charity lands, 140. purchasing property above value, 140. INDEX. 669 INADEQUACY OF CONSIDERATION, — conWuucd. transactions with weak-minded persons, 279, 280. in cases of specific performance, 393, 391. INCUMBRANCES, misrepresentations as to the existence of, 11, 30, 68, 305, 306. INFANTS, suit by next friend protected in equity from abuse, 353, 354. infants not protected in committing pure tort, 355. but not liable if the action suppose a contract as the foundation of the claim, 355, 356. since infant's deceit in sales or contracts is not actionable, 356. contrary held in several cases, 356. whether doctrine of estoppel in pais for fraud applies to infants, 357, 358. INSOLVENCY, concealment of, in sales, 36-38. INSURANCE, doctrine of concealment in marine, 39, 40. (See Concealment.) agent of insurance company assisting applicant, 369-371. INTENTION, misrepresentations of, 11, 12. INVENTION, representations as to utility of, 13. J. JOINT PURCHASERS, relation of confidence between, 274. JUDGMENTS AND AWARDS, may be set aside for fraud, 170, 429. meaning of this rule, 170. fraud in obtaining jurisdiction, 171, 172. foreign judgments, procedure as to, 171. fraudulent detention of witnesses, 172. collusive litigation, 172. deceit practised upon the court, 172. obtaining judgment in violation of agreement, 172, 173. false testimony, 173, '463. cross-action impeaching judgment, 173. cross-suit for conspiracy, 173. opening decree of probate court, 173, note trustee or guardian consenting to collusive judgment, 174. fraud on third persons, 174, 175. strangers not bound by judgments, 175. qualification of rule, 175. creditors may attack judgment, when, 175. 670 INDEX. JUDGMENTS AND AW ARBS, — continued. concealment of facts, when ground for relief from judgments, 176, 176. mere suspicion of fraud, 176. distinction between frauds which render judgments void and frauds ren- dering them voidable, 176. fraud not involving an impeachment of a judgment may be shown, 176. the preferable proceeding in such cases, 177. recovery of judgment on a contract no bar to an action for the fraud by which contract was obtained, when, 177. recovery back of money obtained under a fraudulent judgment, 177. property attached by fraud and sold under judgment of court, 177, 178. foreign judgments in rem or in personam may be impeached for fraud, 178. meaning of this rule, 178. judgments of sister States, 178, 179. law as to, not fully settled, 178, 179. rule at law, 179. limitations as to, suggested, 179. fraud in awards, 179-183. award in pais cannot be set aside at law, 179, 180. it may be in equity, 180. awards under rule of court stand on footing of judgments, 180. practice as to, 180. fraud cannot be alleged in action on arbitration bond or on award, when, 180. award in pais a contract merely, 180, 181. fraud whereby the claim arbitrated was obtained, 181. cross-action therefor, 181. award assailable for corruption or misconduct of arbitrators, when, 181, 182. what constitutes evidence of corruption, 182. strong evidence required to impeach award, 182. when equity will restrain collection of amount of award, 183. arbitrators may open judgments submitted to them, when, 183. JUDICIAL SALES, (See Public Sales.) purchases by attorneys at, 207, 208. JURISDICTION, outlines of, as to fraud in the various courts, 321, 322. power of courts of equity as compared with that of courts of law, 322. one who acquires an estate by fraud liable in equity as trustee, 322, 323. what redress given, 323. fraud in ejectment, 323. undue influence in obtaining deed, 323. trustee's deed tainted with fraud, 323. conveyances in fraud of marital rights, 323. fraud upon a partner in settlement, 323, 324. INDEX. 671 JURISDICTION, —confinufrf. when assumpsit maintainable in such cases, 824. conspiracy to defraud one of land, 324. setting aside deed and oompelling account, 324. proceedings for partition, 324. judgment at law as to fraud conclusive in equity, when, 325. effect of suing first at law, where courts of law and of equity have con- current jurisdiction, 325. right of cross-action, 325. order of court obtained for fraudulent purpose may be set aside in equity, when, 325. when motion necessary, 325. equity having acquired jurisdiction for incidental purpose may give full relief, 326. when equity will interfere in proceedings at law, 326. specialty obtained by false representations not pleadable at law, 326. otherwise of execution of the deed, 326. ground of th^ rule, 327. rule not universal, 327. applies to conveyances, 327. what considered the /actum or execution of deed, 327, 328. matter discoverable upon reading deed, 328. plaintiff cannot show fraud in defendant in suit at law on deed of de- fendant, 329. bond may be annulled for fraud before any attempt to enforce it, 329. restraining railroad company having made track over plaintiff's land from using it, 329. actions by stockholders for benefit of the corporation, 329-331. not maintainable at law, 329. when in equity, 329, 330. suit by creditor against debtor for fraudulently disposing of his prop- erty, 331, 332. effect of false representations by debtor in such cases, 331, 332. agreements of a perpetual nature, 332. whether bill in equity maintainable for damages on account of deceit, 332, 333. if a further relief of equitable nature is sought, equity has jurisdiction, 333. when equity can grant relief as to wills, 833, 334. general result of authorities as to jurisdiction over fraud, 331, 835. deceit in sale of patent maintainable in State court, 335. K. KNOWLEDGE, of falsity in deceit, 66-82. (See Deceit.) 672 INDEX. LACHES AND STATUTES OF LIMITATION, courts of equity consider themselves bound by the Statutes of Limita- tion, 441. in some cases they act by analogy to them, 441. peculiar defences of equity as to lapse of time, 441. discouragement of stale demands, 441. examples of doctrine, 441-443. delay of cestui que trust, 441. of infant, 442. delay must amount to waiver of right, 442. or there must be impossibility of restoring the original status, 442. presumption of waiver, 442. delays for the purpose of fully testing property sold, 442, 443. when offer of rescission should be made, 443. fraud in obtaining subscription of stock, 443, 444. party induced to delay proceedings through fraud, 444. concealment of cause of action, 444-446. mere non-discovery of fraud, 445, 446. actual fraud necessary to remove bar of the statute, 446. constructive fraud not sufficient, 446. what length of time bars action for constructive fraud, 447. acts of trustees, 246-247, 447, 448. not to be treated as adverse to cestui que trust generally, 447, 448. express trusts, 448. trusts over which courts of law have jurisdiction subject to bar, 448. same true sometimes of express trusts, 448. examples, 448. reasonable time, when a question of law and when of fact, 448, 449. LANGUAGE, interpretation of, in deceit, 5. LAW, misrepresentations of, generally not relievable, 8, 9. exceptions, 10, 247. frauds on administration of the law, 165. fraudulent attachments, abuse of process, &c., 165-168. (See Attachments; Abuse of Process.) frauds on domicil, 168. sales with knowledge of intended fraud on the law, 169, 170. LAW AND FACT, questions of, 468-470, 474. LEGACY, obtained under false character, 49. {See CONFIDBNTIAL RELATIONS ; WlLLS.) INDEX. 673 LIEN, vendor of land does not lose his lien by taking worthless securities, 22. of innkeeper, 158. of carrier, 158. how affected by fraudulent acts, 168. LIS PENDENS, doctrine of, 300. applies only to purchaser deriving title from litigating party, 300. party purchasing adversely, 300. rule does not apply to tax-sales, 300, 301. ground of the doctrine, 301. burden of proof, 301. mere service of subpcena, 301. subsequent filing of bill or declaration, 301. question must relate to the estate in suit and not to securities, 301. failure of suit for defect of process, 301, 302. LOCATION OF LAND, misrepresentations as to, 16. (See Deceit.) M. MARITAL RIGHTS, (See Concealment ; Husband and Wife.) MARRIAGE, on faith of false representations as to pecuniary standing, 24. contracting void marriage through fraud, 46-49. conveyances in such cases to innocent parties, 48. (See Husband and Wife.) undue influence under engagement to marry, 271. marriage of widow and sister-in-law, 271. advice necessary as to property transactions, if marriage be illegal, 271. MARRUGE SETTLEMENTS, when a fraud on marital rights, 49-56. (See Concealment.) acts of trustees of, 240. refusal to perform agreement for, 390. MARRIED WOMEN, (See Concealment; Husband and Wipe.) separation deed to enable wife to carry on adulterous intercourse, 48, 49. antenuptial conveyances in fraud of husband's marital rights, 49-56. meritorious object of conveyance, 50, 61. how far liable for fraud, 358-361. whether estoppel in pais applicable to them, 358. examples of liability for fraud, 359. their estate may be bound, 369. participation in fraud of husband, 360. equitable interference with income, 360, 361. 43 674 INDEX. MILLS, misrepresentation of capacity of, 17. MISTAKE, whether provable under allegation of fraud, 61-64, 466. effect of, on bill for specific performance, 396, 397. of law, 9, 10, 22, 23, 247, note. MIXTURE OF GOODS, when title lost by, 97, 98. (See Confusion of Goods.) MORTGAGOR AND MORTGAGEE, sale of equity of redemption to mortgagee, 259-261. purchase by mortgagee under power of sale, 2S9, 260. mortgagee of leasehold obtaining renewal, 261. MORTMAIN ACT, effect of, on devises to charities, 112. N. ■newspaper, advertisements in, not notice, 289. NEW TRIAL, what sort of misconduct ground for, 430. where papers have been surreptitiously handed to the jury, 430, 431. where a party has improperly approached a juror, 430, 432. where there has been neglect to correct improper attempts to influence the jury, 430, 434. where indirect measures are employed to influence or prejudice the jury, 430, 434. where an attempt is made to mislead the court and jury, 430, 436. examples and qualifications of the rules under these heads, 430-437. misconduct of the judge, 437. NOTICE, by carriers, 40-44. (See Carriers.) Putting One on Inquiry, 288-300. purchasers with actual notice entitled to no consideration, 288. what is constructive notice, 288. examples, 288, 289. notice of unrecorded lien, 289. omission of indorsement of interest on note, 289. sale of crops on leasehold premises, 289. mere want of caution in not inquiring, 289. advertisements in newspaper, 289. facts must be definite, 290. rumor insufficient, 290. general reputation, 290. from whom notice must'proceed, 290. INDEX. 675 NOTICE, — continued. knowledge that public lands are reserved from sale, 290, 291. purchase with notice of another's contract for purchase of same prop- erty, 291. purchase of negotiable instrument with notice, 291. when purchasers are bound to inquire, 291, 292. unsuccessful inquiry, 292. between what parties the doctrine of constructive notice is applicable, 292. ■when agent's knowledge imputable to principal, 292, 293. agent's fraud or collusion, 293. possession as notice, 298-296, 306, 807. general rule, 293. possession of cestui que trust, 293. possession of tenant, 294. what sort of possession necessary as notice, 294. fraudulent sales and subsequent purchasers, 295. vendor remaining in possession, 295. adverse possession, 296. possession not taken by purchaser, 296. trustee of stock pledging the same, 296, 297. evidence should be strong against purchaser, 297. purchasing property from executor, 297. securities payable to guardians or agents, 297. property or paper of firm taken for private debt of a partner, 298. firm note in the hands of a partner, 298. purchasers of scrip 'dividends affected by issuance of certificates of debt, 298, 299. what purchaser, charged with notice, bound to show, 299. purchaser from one having only title-bond, 299, 300. Lis Pendens, 300-302. doctrine of, stated, 300. rule applies only to purchaser deriving title from litigating party, 800. party purchasing adversely, 300. rule does not apply to tax-sales, 800, 301. ground of the doctrine, 301. notice extends only to the facts of record at the time of the purchase, 801. burden of proof, 301. mere service of subpoena, 301. subsequent filing of bill or declaration, 301. question must relate to the estate in suit and not to securities, 301. failure of suit for defect of process, 301, 302. Registration of Instruments, 302-307. actual notice, 302. abstaining from inquiry, 802, 308. indexes, 303, 304. whether grantee must ascertain if previous grantors have made any other conveyances, 304. ' 676 INDEX. NOTICE, — continued. registered mortgage operates as notice until discharged, 305. nominal purchaser at administrator's sale conveying to administrator, 306. deed defectively acknowledged is not notice, 305. notice extends only to fraud on face of deed, 305. and affects only those claiming under the grantor, 305. doctrine of notice does not apply where there was a false representation of title, 305, 306. earlier registration of deed obtained in fraud of a grantee registering later, 306. what will constitute notice of prior deed, 306. possession as notice, 306, 307. purchaser without notice of deed can convey good title to another, with notice, 307. Purchasers without Value, 307-316. bonajide purchaser for value obtains a good title, 308. examples, 308, 309. qualification in case of purchaser of money raised on trust property, 309. vendor must have had a title, 308, note. innocent purchasers at judicial sales not affected by artifice of defend- ant, 308, note. otherwise, if he has himself been guilty of artifice, 308, note. burden of proof in cases of fraud, 309. who is a purchaser for value, 309, 310. rule in New York, 310. mere agreement to pay for property not sufficient, 310, note. execution creditor, 310, 311. attaching creditor, 311, 312. who are purchasers for value as against creditors, 312. inadequacy of consideration in such cases, 312. where an interest ad rem remains in the intermediate fraudulent vendor, the property can be followed, 312, 313. fraud of such a nature as to prevent title passing, 313, 314. to be a bona Jide purchaser, a party must have paid before notice, 314, 316. the purchaser must have acquired the legal title, 316. Principal and Agent, Client and Attorney, &c., 315-318. general principle of constructive notice restated, 315. notice to agent is notice to principal, when the presumption is reason- able, 316. no presumption of knowledge when agent himself commits a fraud on his principal, 316. presumption applies only in controversies between persons holding prior equitable rights and subsequent purchasers, .316. ■whether notice to agent or attorney must be in connection with the transaction for which he is employed, 316, 317. INDEX. 677 NOTICE, — continued. collusion of an agent with another agent to defraud either'a principal, 317. sale to joint owners through fraud of one of the purchasers, .317, 318. when directors of a corporation chargeable with notice of acts of man- aging officers, 318. notice to husband not notice to wife, 818. notice to wife not notice to husband, 318. constructive notice to agent of party residing in a distant State, 318. o. OIL, false representations of existence of deposits of, in land, 17. OPINION, misrepresentations concerning matters of, 13-27. (See Deceit.) OVERVALUATION, purchasing property at, 140, 393, 394. P. PARDON, procured by fraud, 168. PARENT AND CHILD, bounty by child to parent, how regarded, 261, 262. gift by child shortly after majority, 263. burden of proof rests on parent, 263. only prima facie invalid, 263. what will invalidate the bounty, 264. gifts from parent to child, 264. family settlements placed in charge of child, 264, 265. relation between grantor and his son, grandson, or son-in-law, 265. gift by aged or infirm parent, 265. parent may favor one child over another, though partially intoxicated, 265, 266. sou employed to procure deed disposing of father's property, 266. relation of son-in-law to mother-in-law, 266. PAROL EVIDENCE, , (See Evidence.) admissible to establish resulting trust in lands, 108, 117, 118, 489, 490. (See Resulting Trusts.) courts of equity disregard the literal terms of the Statute of Frauds, when, 385, 386. (See Specific Performance.) admissible to contradict terms of written contract obtained by fraud, 487. 678 INDEX. PAROL EVIDENCE, — continued. examples, 487. admissible to prove fraudulent representations, the inducement to a contract, 487. also to prove a promise to do some further act forming part of the con- sideration, 487. deed absolute may be shown to have been intended for mortgage, 487, 488. PARTICEPS CRIMINIS, one cannot in general set up his own fraud, 337. examples, 337, 338. one cannot show that he has been outwitted in fraud, 337. rule applicable whether the wrong was intentional or not, 338. but the rule is not universal, 338. evidence tending to show fraud in some other matter, 338. where the party is not in pari delicto with adverse party, 339. transactions contravening public policy, 339. effect of suppressing debt, 340. stakeholder under illegal contract, 340. contract to procure an office, 340. contract by agent to play false to principal, 340. combination to defraud government, 340, 341. insuring belligerent's property as neutral's, 341. party may show that a contract was made in fraud of creditors, 341, 342. notes made in such cases void, 342. securities given to effect composition with creditors, 342. effect of failure of the composition, 342, 343. composition itself made void by secret preference, 343. distinction between preferences to obtain composition and other cases, 343, 344. distinction between executed and executory contracts, 344. though conveyance cannot be impeached, security given for purchase price may be, 344-346. whether mortgagor can resist bill for foreclosure by showing mortgage to have been in fraud of creditors, 345, 346. criterion in Pennsylvania, 345, 346. PARTIES, (See Practice.) who may allege fraud, 336-354. damage to person not intended, 336. particeps criminis, 337-346. (See Particeps Criminis.) personal nature of fraud, 346-349. suits by personal representatives, 349. against personal representatives, 47. by distributees, 351. INDEX. 679 PARTIES, — continued. by assignees, 851. by stockholders on behalf of the corporation, 329, 330, 351, 352. by partners and joint contractors, 352. contribution between wrongdoers, 353. infant's suit by next friend, 353, 354. against whom fraud may be alleged, 355. wrongdoer's liability, 355. infants, 355-358. {See Infants.) married women, 358-361. (See Mabried Women.) agency, 361-371. partners, 371-377. conspirators, 378, 379. cotrustees, 379. coexecutora or administrators, 379-382. codistributees, 383. PARTNERSHIP, misrepresentation of partner's authority to bind the firm, 59. appropriation of partnership assets by one partner to pay his own debt, presumed fraudulent, 146. but the presumption may be rebutted, 146. persons dealing with a firm through a single member, without notice that his acts are fraudulent, 146, 147. party induced to join firm by fraud entitled to relief, 147. what relief equity will give, 147. party induced to sell his interest in a firm through fraud, 147. when equity will grant a dissolution for fraud, 147. strong evidence of actual or intended fraud required, 147. slight acts of misconduct, 148. fraudulently concerted commission of bankruptcy, 148. partners entering into contract to defraud creditors, 148. dissolution as affected by such cases, 148. retiring ostensible partner concealing his withdrawal, 148, 149. should give notice of his withdrawal, to whom, 149. dormant partner need not give notice, 149. attempts to deprive a partner of participation in the profits, 149. no defence to an action for breach of contract to form partnership that plaintiff had" defrauded a previous partner, 149, 160. duty of partners towards each other, 232-236. clandestine bargains, 232. engaging in business incompatible with.that of partnership, 233. making secret profits out of the firm, 233. counter fraud by other partners, 233, 234. partners presumed to have equal access to books and business, 234. interalienations of interests, 234, 235. 680 INDEX. PARTNERSHIP, — continued. joint purchasers of property, 235. joinder of partners in suits, 352. when firm bound by fraud of partner, 371-377. examples, 372. notice to opposite party, 373. misapplication of funds, 373. retiring partner's liability, 373, 374. waiver of misapplication, 374. burden of proof, 374, 376. partners need not be sued jointly for deceit, 377. when they cannot sue, 377. PATENTS, misrepresentations as to utility, 13. infringements of, 28, note. PERSONAL REPRESENTATIVES, actions against, for fraud of decedent, 47, 471. actions by, for fraud upon decedent, 349, 350, 471. PHYSICIAN AND PATIENT, gifts from patient to physician, 266. agreements between, 266, 267. when fraud not presumed, 267. PLEADING, Allegation of Fraud, 450-454. fraud must be distinctly alleged, 450. example, 460. allegation of breach of trust, 450, 451. setting out false representations, 451. connection between them and the damage, 461. general charges of fraud, 451. particular acts, 451. example, 461. where the ,facts alleged clearly show fraud no direct averment of fraud necessary, 452. alleging the substance of a misrepresentation, 452. objections in court of error, 452. charging fraudulent intent, 452, 453. scienter need not be averred in actions for breach of warranty, 463. allegation of immaterial facts, 453. allegations as to stale trusts, 453, 454. charges of fraud on information and belief, 464. count for damages inconsistent with count for rescission, 454. not necessary to set Out deed in a bill to enjoin collection of purchase price of property, 454. Denial of Fraud, 454-457. general denial of fraud insuificient in a bill, 454. when answer on remembrance or belief insufficient, 454, 465. INDEX. 681 PLEADING, — continued. waiver of objection, 455. plea in bar to action on note for land, 455. averment of tender, 455. plea to action against shareholder for shares, 465. absence of benefit from contract obtained by fraud, 455. plea of fraud to action on specialty, 455, 456. Demurrer, 456, 457. proper allegations of fraud must be answered, 456. when charges of fraud are demurrable, 466. demurrer cannot be good in part and bad in part, 466, 457. example, 466, 457. demurrer to plea of fraud in obtaining judgment should be special, 467. POSSESSION, of title-deeds, 157, 158. as notice, 293-296, 306, 307. ' POWERS, FRAUD ON, how committed, 132. appointment of fund subject to agreement to loan it to appointor, 132. giving benefit to appointor, 132. in certain cases not fatal, 132, 133. giving benefit to a stranger, 133. invalid though the stranger did not know of it, 133. principles applying to discretionary trusts in general are applicable to trusts of this kind, 134. mere suspicion of improper exercise of power, 134. property conveyed to separate use of married woman, with power of sale and investment, 134, 135. exercise of powers by parents, 136. purchaser under fraudulent appointment, 135. consideration ex post facto, 135. cases in which wrongful exercise of power is void in part only, 136. PRACTICE, Parties, 458-460. who should be made parties in equity, 458. bill by minority of stockholders of corporation to set aside a sale, 458. action against directors of insurance company for refusing to pay loss, 458. bill alleging that municipal bonds are invalid and calling for surrender of securities given for them should make the bondholders parties, 469. bill for impeachment of judgments should make the plaintiflfs therein parties, 459. bill by heirs to set aside deed of ancestor obtained by fraud, 469. bill to set aside fraudulent receipt obtained by administrator from distributee, 459. 682 INDEX. PRACTICE, — continued. sureties in bond of administrator may be joined in action for fraudulent administration, 459, 460. costs where proper parties are omitted, 460. exception to the rule that all interested persons should in equity be parties, 460. releases fraudulently obtained from one of several joint contractors, 460. Form of Remedy, 460-464. sale may be rescinded for fraud, or damages may be recovered, 460, 461. assumpsit lies to recover consideration, 461. remedy for mortgage fraudulently executed, 461. election to sue for damages, 461. election to rescind, 461. ejectment not maintainable by defrauded grantor, 461, 462. ejectment by the grantee, 462. example, 462. aiding party to abscond, 462. note given for goods obtained by false representations cannot be treated as an equitable demand, 462. practice where note of third person has been taken under false repre- sentations, 462, 463. cross-action to cancel contract pending suit thereon, 463. cross-action for fraud after judgment on the contract, 463. one not a party to judgment may sue for suborning false witnesses, • 463. failing to recoup damages, 463. ignorance of facts entitling one to file cross-bill, 463, 464. fraud as a collateral incident to a contract, 464. persons not competent to contract sued ex contractu when liable ex delicto, 464. Discovery, 464, 465. when equity will compel disclosure of fraud, 464, 465. Charges of Actual Fraud, 465-467. charge of actual fraud not established, 465. statement of other facts, 465. proof of constructive fraud, 465, 466. proof of mistake, 466. use of the word "fraud" immaterial, 466. bill founded on fraud will not justify an inquiry as to neglect of duty, 466. use of bill for secondary or inferior kind of relief, 467. example, 467. Denial of Fraud, 467. when answer conclusive, 467. specific charges followed by general denial, 467. fraudulent release to prejudice plaintiff, 467. INDEX. 683 PRACTICE, — continued. Amendment, 467, 468. amendment of record nunc pro tunc, 467, 468. fraud discovered after suit, 468. opening accounts, 468. permission to surcharge and falsify, 468. Law and Fact, 468-470. when fraud a question of law and when a question of fact, 468, 469. interpretation of written statements of fact, 469, 470. materiality of statements, 470. Verdict contrary to Evidence, 470. appellate courts do not readily set aside verdicts, 470. Fraud on Dower Rights, 470, 471. proper practice for, where widow's claim is sustained, 470, 471. Survivorship of Actions, 471. recommendations as to a man's solvency, 471. rule in equity, 471. damages at law, 471. Submission to Judgment, 471. equity will stop suit when defendants agree to submit to judgment, 471. eflFect of failing to discharge suit after such submission, 471. PREFERENCE OF CREDITORS, fraudulent and pleadable by debtor, 341-346. PRINCIPAL AND AGENT, agent's misrepresentation of extent of his authority, 58, 59. liability to principal, 59. agent occupies a relation of trust towards his principal, 222. how far dealings between them at the instance of the agent will be sup- ported, 222-281. (See Confidential Relations.) notice through agent, 316-318. (See Notice.) principle of employer's liability stated and considered in respect of fraud, 361-363. limitations to the rule of liability, 362, 363. no implied authority to commit fraud, 362, 363. limited agency, 364. agent engaged with principal in committing fraud liable with him, 364, 365. sheriff in execution not agent of defendant, 365. nor of plaintiff, 365. when equity will convert a party into an agent, 365, 366. example, 365, 366. effect of taking benefit from agent's fraud, 366, 367. treating third person as agent of vendor, 367. relation of joint owner, 367, 368. 684 INDEX. PRINCIPAL AND AG'E'ST,— continued. violation of duty by agent, 368. directors and stockholders not necessarily bound personally by acts of managing officers of a corporation, 368, 369. •when bank affected with knowledge by director, 369. when bound by settlement between directors and cashier, 369. position of insurance agent when assisting applicant for insurance, 369-371. conflict of authority on this point, 369-371. specific performance refused for agent's misconduct, 398, 399. PRIVILEGED COMMUNICATIONS, rule as to, does not apply to cases of collusion by client and attorney to defraud, 499. PROBATE COURT, jurisdiction of, 321, 322, 334, 346. (See Jurisdiction.) PROCEDURE, jurisdiction, 821-335. (See Jurisdiction.) who may allege fraud, 336-354. against whom fraud may be alleged, 355-383. defences to specific performance, 884-399. (See Specific Performance.) rescission, 400-427. (See Rescission.) cross-actions, 177, 428-430. (See Ckoss-Actions.) new trials, 428-440. (See New Trials.) laches, 441-449. (See Laches and Statutes of Limitation.) statutes of limitation, 441-449. (See Laches and Statutes of Limitation.) , pleading, 450-457. (See Pleading.) practice, 458-471. evidence, 472-606. damages, 606-613. (See Practice.) (See Evidence.) (See Damages.) PROCESS, abuse of, 165. PROMISSORY NOTES, (See Bills and Notes.) PROSPECTUS, effect of false representations in, 90. INDEX. 685 PUBLIC SALES, may be invalidated for combination and artiBce, when, 141. collusion to enable purchaser at partition sale to obtain property at undervalue, 141. combination of distributees of an estate, 141, 142. offering to divide property if another will not bid, 142. combination to which purchaser was not a party, 142. agreements concerning biddings not per se illegal, 142, 143. when not illegal, 142, 143. examples, 148. not necessary to the defeat of sales that competition should be stifled by bidders, 143. sufficient if done by auctioneer, 143, 144. courts strongly inclined to uphold judicial sales, 144. but they will not sustain them when conducted in bad faith, 144. examples, 144. participation of one of several parties having an interest in the property, 144. no one influenced by attempted fraud, 145. employment of puffers, 145. requesting one to act as under-bidder, when not illegal, 145. biddings of insolvent person, 146. liberty of parties in interest to bid, 145. sales without reserve, 146-147. PUFFING, (See PcBLic Sales.) PURCHASERS FOR VALUE, who are, 307-315. {See Notice.) R. READING CONTRACT, parties presumed to know contents of their written instruments, 73. qualifications of rule, 73-82. REGISTRATION, actual notice by, 302. abstaining from jnquiry, 302, 803. indexes, 303, 304. whether grantee must ascertain if previous grantors have made other conveyances, 304. registered mortgage operates as notice until discharged, 305. deed defectively acknowledged, 305. doctrine of notice does not apply in cases of false representation, 305, 306. earlier registration of deed obtained in fraud of a grantee registering later, 306. 686 INDEX. REGISTRATION, — continued. what will constitute notice of prior deed, 306. ' possession as notice of unrecorded deed, 306, 307. purchaser without notice can convey good title to purchaser with notice, 807. RELEASES, obtained by attorneys from clients, 215. obtained by trustees from cestuis que trust, 248. obtained by guardians from wards, 253. obtained by executors or administrators, 267. RELEASING JUDGMENT, fraudulent inducing one to, 159. RESCISSION, remedy for, to be sought inequity, 400. grantor cannot lawfully expel grantee after a conveyance for fraud, 400. Damage, 400,401. fraud must generally be attended with damage, 400. exception in cases of principal and agent, and cestui que trust and trustee, 400. damages not recoverable for care of property before rescission, 401. How and for What Rescission allowed, iQl-Ml . defrauded purchaser may act, how, 401. tender of a good title, 401. what will justify rescission by purchaser, 40l. defect of title, 402. deficiency in quantity, 402. conveyance without warranty, 402. misdescription, 402. raud in the kind of payment tendered, 402, 403. sale of goods obtained by fraud, 403. sale may be rescinded though property levied on as that of purchaser, 311, 812, 403. bona Jide purchaser may call for rescission in such cases, 403. surreptitious dealing with another's agent, 403, 404. defrauded grantor may rescind by making a new conveyance to another, 405, 406. rescission of sale of partnership interest, 406. husband cannot rescind wife's contract; 406. rescission against husband and wife, 406. right of rescission determined by state of things at time the contract was entered into, 406. rescission allowed in case of specialties as well as in case of simple con- tracts, 407. Compensation instead of Rescission, 407. party may be entitled to compensation though not to rescission, 407, 408. intervention of rights of third persons, 408. INDEX. 687 RESCISSION, — continued. existence of right of rescission does not bar action for damages, 408. Tender, 408-42i. party entitled to rescind need not first offer to perform contract, 408. in suit affirming contract no tender of consideration received necessary, 408. general principle as to tender stated, 408, 409. tender of consideration received should accompany offer of rescission, 409. ' married women not exempt from this rule, 409. nor infants, 409. except when consideration has been consumed, 409. failure to return consideration considered as affirmance, 410. tender in case of fraudulent exchange, 410. notes given in such cases, 410. in tender of money unnecessary that the very money received should be offered, 410. tender of certificates of stock to corporation, 410, 411. no objection to tender that property has fallen in value, 411. perishable goods, 411. running of the Statute of Limitations, 411. where the parties cannot be putira statu quo, 411. proceeds of property received cannot be tendered, 411. remedy in case of sale of the consideration, 411. the precise status need not be restored, 412. what may be required, 412. partial rescission allowed, when, 412-415. indivisible contracts, 412-414. divisible contracts, 413. examples of partial rescission, 414, 415. tender of railroad engine, 415. title revests at once on rescission in cases of personalty, 415. reconveyance necessary in cases of realty, 415. tender of deed at the trial sufficient, 416. when reconveyance thought unnecessary, 416. where wrongdoer receives money from injured party equal to the con- sideration paid, 416. conveyance of two parcels of land, one obtained by fraud, 416. tender rendered impossible by wrongdoer's misconduct, 416, 417. example, 416, 417. . act of wrongdoer need not have been for purpose of preventing restora- tion of status, 417. example, 417. when the judgment asked for will restore the status, that is enough, 417. examples, 417, 418. other cases in which tender is unnecessary, 418, 419. worthless securities, 418, 419. , INDEX. RESCISSION, — continued. tender of note of third person, 419, 420. tender of purchaser's own note, 420. things of no intrinsic or market value, 420. distinction between cases of actual and cases of constructive fraud as to return of money paid on purchase of property, 420-423. doubts as to the existence of any distinction, 422, 423. cases at variance with the distinction, 423. fraudulent payment for property by third person, 423, 424. when false representations no bar to an action on a contract, 424. Waiver of Right to Rescind, 424-427. general doctrine of, 424. slight acts not sufficient, 424, 425. knowledge of only part of the facts, 425. remaining in possession of land after knowledge of fraud in the sale, 425. defrauded party has but one election, 425. and he cannot keep open his election at will, 425. rule of law upon this point, 425, 426. rights of third persons, 426. change of position by wrongdoer, 426. what constitutes a change of position, 426. rescission not always necessary, though proper, 426. when rescission necessary, 426, 427. example, 427. action for damages, 427. RESULTING TRUSTS, equity relieves against fraudulent purchases by treating the purchassT " as a trustee for the injured party, 107, 108. examples, 108. advancing money for purchase of land, 108. parol evidence admissible to prove the facts, so as to raise the trust, 108. ground of the doctrine of resulting trusts, 108, 109. no trust if there be no payment, 109. subsequent advance after purchase of no eflfect, 109. agreement for joint purchase, 109. no trust where there is no agreement as to the purchase, 109. payment of money not necessary, 109, 110. payment of only part of purchase price, 110. part payment must be for some specific interest, 110. use by trustee of money loaned for the purpose of purchase, 110. taking of title in name of wife or child. 111. presumption of donation or advancement in such a case, 111. wife contributing of her own means to purchase by husband, 111. misleading one desirous of redeeming encumbered property, and then purchasing the same, 111, 112. INDEX. 689 RESULTING TRUSTS, — continued. lulling parties iato security, and taking advantage of the situation, 112. « no resulting trust which would violate the law, 112. secret trusts in favor of charities, 112. inducing a party to convey land to defendant when the grantor had promised, to defendant's knowledge, to convey it to plaintiff, 113. trust follows property into hands of purchasers with notice, 113. resulting trusts survive against heir of trustee, 113. simple breaches of parol promises to buy for another, 113-119. Pennsylvania rule, 113, 114. English rule, 114. doctrine considered, 115-117. where the promisee was already interested in the land, 115. parol evidence admissible to show that an absolute conveyance was meant for a mortgage, 116. mere breach of parol agreement considered insufficient to raise trust, 117. there should be evidence of fraud of some kind, 117, 118. gift or bequest to a volunteer on promise to hold for another, 119. same to two persons, one of whom did not so promise, 119, 120. REVERSION, sale of, by expectant heir, 274. (See Expectant Heirs.) S. SAILORS, dealings with, 278. SALES, (See Concealment; Confbdbntial Relations; Deceit.) public, 141-147. (See Public Sales.) with knowledge of intended fraud, 169, 170. SETTLEMENTS, (See Accounts ; Marriage Settlements.) with agent, 229, 230. with guardians, 254. with executors or administrators, 257. SHERIFF, not agent of plaintiff or of defendant in execution, 365. SILENCE, when fraudulent, 31-56. (See Concealment; Confidential Relations; Deceit.) SLANDER OF TITLE, stands on footing of ordinary misrepresentations, 28. SOLICITOR AND CLIENT, (See Attorney and Client.) 44 690 INDEX. SOLVENCY, misrepresentations as to, 23-25, 37. (See Deceit.) SPECIFIC PERFORMANCE, origin of jurisdiction for, 385. general principle stated, 385. Statute of Frauds. Parol Agreements. Part ' Performance, 385-S90. courts of equity disregard the literal terms of the statute as to verbal agreements concerning real estate, 385, 386. one who has entered land upon a verbal agreement to convey, and ex- pended money thereon, cannot be ejected, 386. what constitutes part performance, 386. possession sufficient if referable to the contract, 386. possession of tenant, 386. payment of money not part performance, 386. terms of the agreement must be certain, 387. agreement to buy and hold, for defendant, property of his levied upon, 387, 388. when such agreement will be enforced, 388. making improvements after knowledge that the vendor will not stand by his agreement, 389. mere refusal to perform agreement, 389, 390. refusal after marriage to perform antenuptial agreement for settlement, 390. agreements for the purchase of a certain quantity of land, 390. who may show that the terms of an agreement are not those made, 390. Tei-ms of Decree, 390, 391. rest in sound discretion, 391. party asking execution must be free of all blame, 391. examples, 391. Wills, 392. promise to coifform to testator's wish as to a particular intended legacy, 392. Taking Advantage of Weak-minded or Illiterate Persons, 392, 393. specific performance refused, though damages at law or rescission would be refused the opposite party, 392, 393. examples, 393. Inadequacy of Consideration, 393, 394. may induce the court to refuse specific performance, 393. Massachusetts rule, 393. parties in confidential relations, 394. distinction between jurisdiction for setting aside and refusing execution of contract, 394. hard or unreasonable contracts not executed, 394. I examples, 394. Family Arrangements, 395. not severely scrutinized as to consideration, 395. INDEX. 691 SPECIFIC PERFORMANCE, —con