2 F. Cas. 1143 | U.S. Circuit Court for the District of Rhode Island | 1821
A preliminary objection has been taken to the jurisdiction of the court, upon two grounds, 1. That the plaintiff claims as assignee of a chose in action, on which, independent of such assignment, no suit could be sustained in this court. 2. That there is a complete and adequate remedy at law, and therefore no reason for the interposition of a court of equity.
The suit is between citizens of different states, and plainly within the general jurisdiction of the circuit court, unless it falls within the restrictive clause of the 11th section of the judiciary act of 1789, c. 20, which declares, that the circuit court shall “not have cognizance of any suit to recover the contents of any promissory note, or other chose in action, in favor of an assignee, unless a suit might have been prosecuted in such court to recover the said contents, if no assignment had been made, except in cases of foreign bills of exchange.” The bills in which the transactions disclosed in the present case originated, were drawn by a person resident in one state, upon a person resident in another state, and whether they be foreign or inland bills in the sense of the statute, is a question worthy of serious deliberation, upon which much contrariety of opinion has been entertained. As this question has not been argued at the bar, and is not indispensable to a correct decision of this case, I pass it over with the single remark, that I do not wish to be understood as acquiescing in the doctrine, that bills drawn in one state upon drawees living in another state, are to be deemed inland bills. I entertain great doubts as to the correctness of that doctrine, and am not alone in these doubts, and before I come to a decision, I should choose to hear the question fully discussed with all the learning and principles that belong to it.
The present suit is not brought upon any bills of exchange, but at most upon a judgment rendered in favour of the plaintiff against Simon Smith, one of the defendants, upon certain protested bills of exchange, indorsed by Simon Smith, in the state court of Rhode-Island. The chose in action has therefore passed in rem judicatem; and so far as Simon Smith is concerned, is absorbed and extinguished by the judgment. The claim of the plaintiff is not now in virtue of any assignment, but of a direct judgment in his favor; and if the suit were now at law upon the judgment itself, there cannot be a doubt of the jurisdiction of this court to sustain it. In deciding on its jurisdiction, the court can only look to the immediate groundwork of the suit, not to any remote or collateral considerations in which it had its origin. It is no objection to the jurisdiction, that at some anterior period the transaction assumed a shape not within the reach of that jurisdiction. It is sufficient, if it has now become so modified by the act of the parties, or by the principles of law, that jurisdiction now rightfully attaches.
Taking, then, the case in the most favourable view for the argument of the defendants’ counsel, it is a suit upon a judgment between citizens of different states, and does not fall within the statute of prohibition. But in truth, the suit is not, strictly speaking, founded solely upon a judgment. The judgment is collateral. It forms an ingredient, and an essential ingredient, in the case; but it is not the whole of the case. The plaintiff seeks for relief against fraudulent conveyances of property, executed by the defendant Simon Smith, to the other co-defendants, for the alleged purpose of defeating the plaintiff of his just rights as a creditor under the judgment. It is these fraudulent conveyances which constitute the immediate ground-work of the suit, and so far as respects all the defendants, except Simon Smith, the sole ground-work of the suit. They were never liable, either upon the original bills or judgment, nor bad the plaintiff any claim against them, in his mere character as assignee. If they are liable to him at all, it is because they are parties to a meditated fraud to his injury, or as trustees holding property for his use. His right to sue them, is not a right which once vested in another person, and has passed to him by assignment. It is a right, which originally sprung up after the assignment to him, and from new transactions. And the same observations apply with equal force to Simon Smith. It is not his liability to the plaintiff under the original assignment of the bills of exchange indorsed by Simon Smith, that is now in question, and is now sought to be enforced; but a new right collateral to that, growing out of a direct judgment between the parties, and an asserted fraud injurious to the plaintiff, which has been devised to avoid the satisfaction of that judgment. It is perfectly clear, that the statute never contemplated an exclusion of jurisdiction in cases where a mere negotiable instrument, or chose in action, was mixed up in the ingredients of the case; but where that chose in action constituted the sole cause of action, and the assignment constituted the whole ground of the plaintiff’s right. I have no difficulty, therefore, in overruling this objection to the jurisdiction of the court, for the reasons already stated, although the other arguments of the plaintiff’s counsel would, in case of any doubt, have' been entitled to great consideration.
The other objection is not so much to the competency of the court, as in the nature of a demurrer to the bill for want of equity. Much stress has been laid upon that clause of the judiciary act of 1789, [1 Stat. 82.]
But I go yet farther in the case now before the court, and affirm not only that the bill presents a case of equitable jurisdiction; but that under the peculiar laws of Rhode-Island, which do not, except in a few specified cases, make lands liable for debts, there is no remedy, at least no adequate remedy at law; and that if the plaintiff be entitled to any relief, he must seek it exclusively in a court of equity. The case is wholly unlike that to which the supreme court alluded in the language cited at the bar, from Russell v. Clark. 7 Cranch, [11 U. S.] 69, 89. The language there used, supposes that the bill states no ease for equitable relief, but only asks for a discovery on which to found equitable relief; and if the answer discloses none, then as neither bill nor answer shews any title to such relief, the parties must be dismissed to their remedy at law. Here, the bill does state a case for equitable relief; and though the answers of some of the defendants deny the facts on which that relief is sought, that is a question, not of jui-is-diction but of proof. As to some of the parties the bill is confessedly true, for they claim under voluntary deeds of gift, which the law deems fraudulent as to creditors. We may then dismiss any farther consideration of the preliminary questions of jurisdiction, and pass to the merits of the case as they stand disclosed in the pleadings and evidence.
Before, however, proceeding to this discussion, it may be as well to dispose of another point urged at the bar, and which is of vast practical consequence; I mean the doctrine, that a bona fide purchaser for a valuable consideration, without notice, cannot protect the estate in his own hands, against creditors, where he derives his title to the estate through a grantee to whom it was originally conveyed for the purpose of defrauding the creditors of the first grantor. This doctrine is certainly supported by high authority of a recent date, and the cases cited at the bar are fully in point. Until I had perused these cases, I am free to confess, that I was not aware that there was in this respect any difference between the operation of the statute of 13th of Elizabeth, (chapter 5,) which avoids conveyances made in fraud of creditors, and that of the 27th of Elizabeth, (chapter 4,) which avoids conveyances made in fraud of subsequent purchasers. An unbroken current of authorities establishes beyond question, that a bona fide purchaser for a valuable consideration, without notice, shall hold the estate, notwithstanding he claims through a grantee to whom it had been conveyed in fraud of purchasers. 1 Fonbl. Eq. bk. 1, c. 4, § 13, note f, p. 278; Rob. Fraud. Conv. p. 496, c. 4, § 10; Prodgers v. Langham, 1 Sid. 133; Newport’s Case, Skin. 423, 3 Lev. 267; Doe v. Martyr, 1 Bos. & P. (N. S.) 332. But Mr. Chancellor Kent has held, in Roberts v. Anderson, 3 Johns. Ch. 371, that the same doctrine does not apply, where there has been a conveyance to defraud creditors. If this be so it is certainly a departure from the general doctrine of courts of equity, on the subject of bona fide purchasers without notice. So solicitous are courts of equity to preserve the rights of persons in this predicament, that Lord Chancellor Loughborough, in Jerrard v. Saunders, 2 Ves. Jr. 454, 458, (Coop. Eq. Pl. 281; and see Bassett v. Nosworthy, Finch, 102; 2 Fonbl. Eq. bk. 3, p. 307, c. 3, § 3,) emphatically declared, that against them the court would not take the least step imaginable. They are not only treated as favourites of courts of equity, but the common law in many instances, holds their titles good, although in the hands of the original grantees, the titles were infected with the taint of fraud, or other analogous infirmity. Com. Dig. “Covin,” B; Prodgers v. Langham, 1
Then as to the statutes of 13th and 27th of Elizabeth. In their most material provisions, they have, in modern times, been held as merely affirmative of the common law, (Cadogan v. Kennett, Cowp. 432, 434; Sands v. Codwise, 4 Johns. 536, 596; Hamilton v. Russel, 1 Cranch, [5 U. S.] 316;) and one should cautiously put upon them any construction, which implies a departure from that law. In the only ease, where such a
Then, as to the statute of 27th Elizabeth, c. 4. The first section declares all and every conveyance, gifts, grants, &c. of lands, &c. made for the intent to defraud and deceive such person or persons, &c. as have purchased, or shall thereafter purchase, in fee simple, &c. the same lands, &c. “shall be deemed and taken only as against that person or persons, &c. his and their heirs, &c. and against all and every other person and persons, lawfully having or claiming by, from, or under them, or any of them, which shall have purchased or shall thereafter so purchase for money, or other good consideration, the same lands, &c. to be utterly void, frustrate, and of none effect.” Then comes a proviso in the 4th section, “that this act or any thing therein contained, shall not extend, or be construed to impeach, defeat, make void, or frustrate, any conveyance, &c. assurance, grant, &c. estate, interest, &c. of any lands, &c. heretofore at any time had or made, or hereafter to be had or made, upon or for good consideration, and bona fide to any person or persons, &e.” And another proviso in the sixth section extends the same protection to every “lawful mortgage made or to be made bona fide, and without fraud or covin upon good consideration.” Now it is observable, that these enactments are substantially like those of the 13th of Elizabeth, as to their objects. In each, the fraudulent conveyance is declared “utterly void,” as to the persons intended to be defrauded, and is limited to those persons. In each, there is an exception of estates acquired bona fide, and upon good consideration; and the only marked difference of language is, that the proviso of the 27th of Elizabeth, drops the expression of the 13th of Elizabeth, as to notice of the fraud by such purchaser. In the proviso of the 27th of Elizabeth, there is no qualification or limitation as to the person, from whom the conveyance or estate is acquired; and it has been always held to apply equally to estates derived from the fraudulent grantor and grantee. And this, not upon any necessary construction of the statute, but upon the principles of the common law. Prodgers v. Langham, 1 Sid. 133. is a leading authority on this head. There the court agreed, that though a deed
I repeat it, that until I saw the case of Roberts v. Anderson, 3 Johns. Ch. 371, which professes, in no small degree, to be founded upon that of Preston v. Crofut. 1 Day, 527, note, the asserted distinction which we have been considering, between the operation of the statute of 13th Elizabeth, and that of 27th Elizabeth, was utterly unknown to me. I have searched with some diligence, to ascertain if that distinction has been recognized in any adjudged case, or in any elementary treatise in England. Hitherto my researches have been unsuccessful. In Wilson v. Wormal, Godb. 161, however, Lord Chief Justice Coke, than whom no man was probably better acquainted with the statute, or its true construction, lays down the doctrine that in terms denies the distinction. He says, that “if lessee for years assign over his term by fraud to defeat the execution (upon a judgment against him); and the assignee assigneth the same over unto another bona fide, that in the hands of the second assignee, it is not liable to execution.” In Gore v. Brazier, 3 Mass. 523, 541, Chief Justice Parsons manifestly understood the law in the same way. He says, “a bona fide alienation for a valuable consideration by a devisee, has been compared by the counsel for the defendant to a case, where a fraudulent purchaser has afterwards bona fide, and for a valuable consideration conveyed, in which case the last purchaser shall hold 'the land purged of the fraud. But the two cases are not alike in principle, for the consideration money received by the devisee, cannot be ‘personal assets in the hands of the executor.” The like doctrine is directly asserted by the supreme court of Massachusetts, in a recent case, (Inhabitants of Worcester v. Eaton, 11 Mass. 368. 378; Trull v. Bigelow, 16 Mass. 406;) and I may be justified in asserting, that such has been in that state the received law of the land. The reasoning of the court in Jackson v. Henry, 10 Johns. 185, and Jackson v. Walsh, 14 Johns. 407, would have strongly led to the same conclusion, illustrated as the doctrine there is, in analogous cases. In the latter case, the doctrine is broadly laid down, that “it has been a long and well settled principle that a purchaser for a valuable consideration, without notice, has a good title, though he purchase of one, who had obtained the conveyance by fraud.”
There is, too, the light of the civil law to guide our inquiries on this subject. The learned author of the treatise of equity has justly observed, that “by the civil law, whatever debtors do to defeat their creditors is void; and there is a great resemblance between the civil law in this matter, and the statute, of 13th Elizabeth: But in each of them, there was this exception, that it should not extend to avoid any estate or interest made upon good consideration, and bona fide.” 1 Fonbl. Eq. b. 1, p. 270, c. 4, § 12. And the learned author is well warranted in his assertion; and his reference to the civil law, where the very case now under discussion is put, shews, that he did not contemplate the existence of the present distinction. The case put in the Digest is, “Is qui a debitore, cujus bona possessa sunt, sciens rem emit, iterum alii bona fide ementi vendidit. Quae situm est an secundas emptor conveniri potest? Sed verior est Sabini sententia, bona fide emptorem non teneri; quia dolus ei dun-taxat nocere debeat qui eumadmissit. Quem-admodum diximus non teneri eum. si ab ipso debitare ignorans emerit. Is autem qui dolo malo emit, bona fide antem ementi ven-didit, in solidum pretium rei quod accepit tenebitur.” 3 Both. Pand. lib. 42, tit. 8, p. 195, art. 3, g 25. I trust that the doctrine of this latter clause is equally the doctrine of courts of equity with that, which is so persuasively stated in the former. And the like doctrine is recognized by Yoet in his commentaries. 2 Voet Com. lib. 42. p. 822, tit.. 8, g 10.
The case has thus far been reasoned upon,, as though it depended entirely on the statutes of Elizabeth; but in truth it turns upon-the statute of frauds of Khode-lsland. If' any doubt could rest upon the proposition,, that both those statutes should receive the-same construction, that doubt would vanish: upon an examination of the Iihode-Island act; for that in the same enacting clause embraces both descriptions of persons, creditors and purchasers, and as to them avoids all fraudulent conveyances, and contains no proviso of any sort. St. R. I. 1798, p. 473, g 2. The case of a bona fide purchaser must, under this statute, stand purely upon the principles of the common law.
The great deference, which I feel for the chancellor of New-York, and the supreme court of Connecticut, has occasioned no small solicitude on my part respecting this subject. I have weighed the reasoning, which has directed their judgment with care; and, how
There is another objection lying at the very foundation of this bill, which requires deliberate consideration. It is this. By the laws of Rhode-Island real estate is not subject to be taken in execution by a judgment creditor, except in a few cases specified in the statutes of that state. Where the debtor is alive and resides within the state, the laws do not authorize an attachment or levy upon his real estate, unless he conceals himself, so that neither his body nor personal estate can be come at to satisfy his debts. St. R. I. 1798, p. 202, § 5. The present case does not (as it is said) fall exactly within this description, and it is hence inferred, that however fraudulent may have been the conveyances sought to be set aside by the bill, the plaintiff is without remedy, since he had no lien on the real estate, and could not acquire any title to it by his judgment. If conveyances are acknowledgedly made in fraud of creditors, and in cases, circumstanced like the present, a judgment creditor can have no redress either at law or in equity, the jurisprudence of the country is most shamefully defective in the first principles of justice. Men must rely altogether upon the private honesty of their debtors for payment of their debts and not upon remedies by the law. A dishonest debtor may lock up a splendid fortune from the reach of his creditors, and by the facile contrivance of a conveyance to defraud his creditors secretly secure to himself or his family the whole profits of his corrupt conduct; and, if he can ■quiet his conscience, relieve himself after-wards from imprisonment under the plausible character of a poor prisoner. I am, however, of opinion, that the justice of the country does not deserve such a reproach. Here is a case, where the judgment creditor took the body of his debtor in execution, and had a right to retain him in imprisonment, unless he could discharge himself by taking the poor prisoner’s oath, that he had no property to support himself in prison or to pay prison charges, and that he had not conveyed any part of his estate to any persons with intent to secure the same, or to defraud his creditors. The laws of Rhode-Island contemplate, that a false oath taken by the prisoner on such an occasion incurs the penalty of perjury. St. R. I. 1798, pp. 229, 231. If, then, the debtor cannot, while he possesses property, be relieved from imprisonment, but his body is security for the debt; and he makes a fraudulent conveyance of his property, (the natural fund for the payment of that debt) for the express purpose of cheating his creditors, and depriving them of every means of satisfaction, it cannot be possible, that the law will authorise the party or his coadjutors in such conduct to reap the fruits of their dishonesty. If the property be not directly subjected to the judgment, it is indirectly liable, since the debtor can never be entitled to a discharge, without yielding it up to his creditors. And if the debtor does procure a fraudulent discharge of his person by a fraudulent transfer of that property, the law will hold the latter a substitute for the former by his own consent. It is by no means universally true, that, because there is no lien directly created on land or other property by a debt or decree in favour of a creditor, therefore he can never be entitled to any relief in respect to them. Herne v. Meeres, 1 Vern. 465. He may acquire it by the conduct of the debtor himself. A sequestration upon a decree in chancery is only personal process, and does not affect the land immediately like an extent or a judgment. The contempt in not performing a decree is the foundation for a sequestration, for the decree acts only in personam, and not in rem. Bligh v. Darnley, 2 P. Wms. 620, 621. And yet a conveyance made in fraud of a decree or of a sequestration will be set aside in equity. Self v. Madox, 1 Vern. 460, and cases cited; Simmonds v. Kinnaird, 4 Ves. 735; Colston v. Gardner, 2 Ch. Cas. 43; 1 Har. Ch. Pr. p. 142, c. 26. If the debtor, with the intent to defeat a particular judgment creditor, lend his money, this, though a mere chose in action, and on which the judgment did not attach as a lien, may yet be followed in equity by the creditor. Smithier v. Lewis, 1 Vern. 398; and see 1 Eq. Cas. Abr. 132, pl. 15. I know, that there are cases, in which equity has refused to interfere to follow personal property into the hands of a fraudulent grantee, unless execution was first taken out, which should bind that property. But this is not universally true, any more than the rule requiring, as to lands, the suing of an elegit. Angell v. Draper, 1 Vern. 399, and Raithby’s note 1; and 1 Vern. 463. In the case of collusion between an executor and a purchaser of leasehold assets, a creditor on a bond debt was permitted to reach . the purchase money in the hands of the purchaser, and in default of payment the leasehold estate was decreed to be sold, and payment ordered out of the proceeds of the sale. Crane v. Drake, 2 Vern. 616, Raithb'y’s note 1. See Hendricks v. Robinson, 2 Johns. Ch. 283. It is far from being necessary in all cases, that it should appear, that a creditor will sustain a loss unless a fraudulent conveyance be set aide. In Chamley v. Lord Dunsany, 2 Schoales & L. 690, 714, Lord Eldon in the house of lords declared, “it is
The principle is not new, that a party, who obtains an estate in fraud of the rights of another, shall be held the trustee of him, whom he has defrauded. The doctrine has been applied even to those, who claim as innocent parties, where it is directly through the fraud without any intervening acts or considerations of their own; for it is against conscience, that one person should hold a benefit derived through the fraud of another. Huguenin v. Baseley, 14 Ves. 273, 290. And the fraudulent procurement of the omission of an act has been visited upon the party with the same effects, as if the act had been done. Id., and cases there cited; Mestaer v. Gillespie, 11 Ves. 021, 638. It is familiar, that a person procuring a perfect legal title of property with notice of a prior title derived under the same party, and not yet perfected, shall be held a trustee of the prior purchaser, and compelled to surrender his own title. That is the common case of a second purchaser having knowledge of a prior unrecorded deed. The doctrine is carried yet further, so that a party enabling another to commit a fraud is made answerable for the consequences, either personally or in his estate, as the case requires. Evans v. Bicknell, 6 Ves. 174.
It appears to me that a court of equity may justly consider the grantees in this case, supposing the charges in the bill to be true, as holding the property conveyed to them in trust for the benefit of the judgment creditors, who have been defrauded by the conveyances. If the preceuent were to be made for the first time, I should have no difficulty in holding this doctrine upon the eternal principles of justice and morality. The debtor, who conveys his property for the purpose of defrauding his creditors, and upon the ground, that he has no property, procures a discharge of his person, (that pledge, which the law had given them for their debt,) ought to be estopped from denying, that the property so conveyed stands bound for his debts, and that the person, in whose hands it is deposited, holds it in trust for this purpose. If the justice of the case could not lie reached by this course, 1 should have as little difficulty in holding, that a fraudulent purchaser should be held to account to the creditors for the full value of the property without any allowance for any of the purchase money paid by him, upon the ground that such payment being fraudulent is void as to the creditors; and that the case would be the same, as if the whole purchase money still remained in his hands unpaid. In this latter case, there could be no doubt of the fitness of a remedy in equity in Rhode Island; for certainly personal estate (and such would be the purchase money) is completely bound by a judgment and execution. By the civil law fraud may also create obligations, where there is no direct agreement. For if debtor^ pass away their goods or estates to defraud creditors, it is declared by that law, that he that receives them shall be forced to return them to the creditors. Woods, Iris. Civ. Law, bk. 3, p. 248, c. 6, § 8. If such doctrines be new here, they are not elsewhere; and they are so consonant with reason, with equity, and with conscience, that little effort can be necessary to persuade us to adopt them.
We have now discussed the principal questions of law applicable to this case, and may well return to a consideration of the facts. And the material question here is, whether the conveyances by Simon Smith to the other respondents are, as charged in the bill, fraudulent. It appears, that the plaintiff was on the 22d of December, 1808, the holder of certain bills of the Farmers’ Exchange Bank, of which Simon Smith was a director; that he received in payment of those bills two drafts drawn on one Andrew Dexter by the cashier of the bank, in favour of Smith, and indorsed by Smith, and also by the president of the bank in blank, one for $3,003, and another for $1,500. These drafts being dishonored, the plaintiff afterwards on the 15th of March, 1809, brought two actions on the same drafts against Simon Smith in the state court of Rhode-Island, and at the March term, 1810, of the supreme court of that state recovered judgment in the same actions to the amount of $5,095, 34-100 damages, and $57.03 costs. Executions duly issued on these judgments, on which Simon Smith was committed to gaol in May, 1810, and afterwards on the 10th of May, 1813, he was discharged from gaol on taking the poor prisoner’s oath according to the laws of Rhode-Island. That oath, as has been already stated, supposes the party to be utterly without property sufficient to support himself in prison, or to pay prison charges; and he is expressly required to swear, that he has not, directly or indirectly, sold, conveyed, or disposed of, or entrusted any person with any of his estate, real or personal, to defraud his creditors or to receive any profit for himself.
During the pendency of the plaintiff’s suits, and before judgment, Simon Smith being then in possession of a very valuable real estate, by his own confession worth $12,000
It is deserving of observation, too, in this connexion, that Simon Smith by a deed purporting to be dated on the 7th of March, 1807,
It is material to state, that previous to this fraud, on the 15th day of May, 1807, Simon Smith for the asserted consideration of $1,000, “and other good considerations him thereunto moving,” executed a lease to his son Simon Smith. Jr., and “to his eldest male heir, and to the eldest male heir of him, and so to descend, &c.” for a term of 1000 years, a farm called the Absalona Hill farm, containing about 335 acres. On the same day he conveyed to his said son in fee, another tract of land containing about 40 acres, for the asserted consideration of $2,000; and also by a third deed on the same day he conveyed to him another tract of land in fee of 25 acres, for the asserted consideration of $1,000. These three deeds being all executed at the same time between the same parties, must be considered as one transaction; and they convey about 400 acres of land for $4,000, worth, as one of the witnesses declares, from $12,000 to $15.000. It is apparent, therefore, that paternal love and affection must have constituted a material inducement to the conveyance. In respect to his son Ziba, too, there is no reason to suspect the father’s want of liberality, for on the 12th of April, 1S00, in consideration of $1.500, and “more especially for the good settlement, well being, and advancement of Ziba in this world,” the father executed to him and his heirs male, a lease of three farms, containing about 380 acres, for the term of 1000 years. It may deserve a passing observation, that if, as the respondents now contend, the father was a man who had long been heavily oppressed with debts, and reputed much richer than he really was, and in truth having but little property beyond his debts, it seems somewhat extraordinary, that he should have been so very liberal to his children; and it would require more faith than I prpfess to have, to believe, that these prior conveyances did not meditate an evasion of the rights of creditors. No man has a right to be generous at the expense of his honest creditors.
We have now passed in review all the conveyances which were made during the pend-ency of the plaintiff’s suit, with a few explanations of the character which is attempted by the respondents to be impressed on them. To these deeds with a single excep
Upon the first blush of these transactions, it seems almost impossible not to pronounce the conveyances executed in September and November, 1809, as fraudulent; and made with the meditated design to injure and defeat creditors. The badges of fraud cluster about them in every direction. They were made pending suits brought for large sums of money due to creditors, after the failure of the bank, whose credit Simon Smith had lent his own personal security to support. They were all made to the children of Simon Smith, who appear to have been privies to' all tue conveyances. The consideration of several of the deeds is avowedly an inadequate consideration as against creditors, founded on mere love and affection;* and the property disposed of in this manner is of great value. The conveyances embrace the whole property, personal and real of the father; thus reducing him to absolute beggary, and including even his household furniture. No money was paid at the time, all rested in confidence, and the utmost that the children ever became bound to pay to creditors, or ever did paj', was short of $7,000, though the property then conveyed to them,' was in their own view worth more than double that amount; and beyond all question, upon the evidence, more than three times that amount. The remaining consideration for this property, was either love or affection or debts due, unliquidated debts due for services, from a father who had previously conveyed to the parties large and valuable farms, eimer confessedly or implicitly from parental affection, or for a very inadequate consideration. It is utterly impossible for a court of justice to sustain such conveyances as bona fide, unless it surrenders all judgment and discretion. The transactions can be viewed in no other light than that, which the father avowed to one of the witnesses who wrote several of the conveyances, as having no other objects but to give his estate to his children. The inference deducible from the facts, that this was the father’s whole property, that the conveyances are professedly in part voluntary, and that he was then indebted beyond the amount of his whole estate would alone be conclusive of the fraud. And if fraud applied to any of these transactions, it infected the whole. In a legal point of view, the mala tides which justly applies to one, infects by its contamination the whole. I have no doubt, that they must be declared fraudulent upon this broad and general examination of the case; and if there were any doubt here, a more thorough and minute sifting of the facts accompanying each conveyance, and the answers made in their support, would irresistibly lead to the same conclusion. I forbear, however, to dwell on these facts, as I cannot escape from that which stands so prominent on the face of the transactions. I have omitted to take any notice of the exception to the competency of Thomas Smith and Amasa Steere as witnesses, not because I am against that exception; but because it is not necessary to decide it. See Roberts v. Anderson, 3 Johns. Ch. 371, 375.
Taking this, then, to be the state of the case, for the reasons that have been already suggested, there do not appear to me to be any persons standing before the court as bona fide purchasers for a valuable consideration without notice, and consequently none entitled to protection as such. The next question that arises is, whether the con-
I have hesitated as to the nature of the decree, which ought to be made in this case, whether under all the circumstances to hold the respondents according to their respective interests liable to account to the plaintiff for the full value of the estates conveyed with interest, as a fund for the payment of his debt, leaving them in possession of their estates; or to decree the conveyances void, and the plaintiff’s debt a charge upon the land, and the rents and profits, which have accrued since the conveyances, giving them an election to pay the debt really due him, and in default, to order the land to be sold, and an account to be taken of the rents and profits, and out of these funds to give the plaintiff a priority of payment. I have concluded to adopt the latter course, not meaning to imply any doubt of the propriety of the former.
The only further point, on which I have paused, has been as to the extent of the plaintiff’s demand. It originated in Farmers’ Exchange bills, which at the time of the giving the drafts, on which the plaintiff’s judgment is founded, were at a great discount. At law I am aware, that the plaintiff might be entitled to the full amount of his judgment, notwithstanding any purchase of this sort. But I think a court of equity has a right to moderate his claim; and if he asks equity to compel him to do equity. All that
MEM., [from original report.] Since this opinion was delivered, the doctrine in Roberts v. Anderson, 3 Johns. Ch. 371, has been overruled in the court of errors. [See Anderson v. Roberts, 18 Johns. 515.] See, also, Astor v. Wells, 4 Wheat. [17 U. S.] 487.
DECREE. This cause came on to be heard on the bill, answer, pleadings, and evidence in the case, (the due execution of all the deeds in the case being admitted by the parties) and was argued by counsel, on consideration whereof,
It is ordered, adjudged, and decreed, as follows, to wit: That the conveyances made by the said Simon Smith mentioned in the bill and answers in this cause, bearing date the fifteenth day of September, in the year of our Lord one thousand eight hundred and nine, to the said Esther Steere and Elizabeth Foster, and William Steere and the said William Foster, for two certain farms lying in Gloucester and Foster in the county of Providence, within said district of Rhode-Island, containing three hundred and thirty-five acres of land, one called the Wells farm, and the other called the Rounds farm; and also the conveyances, in the said bill and answers mentioned, made by the said Simon Smith to the said Ziba Smith, bearing date the fifteenth day of September, in the year of our Lord one thousand eight hundred and nine, for a farm or lot of land, situate in Smithfield, in said district, and known by the name of the Waterman lot, containing fifty-four acres; and also the conveyances, in the said bill and answers mentioned, made by the said Simon Smith to Darius Smith, and to Darius Smith and the said Ahab Smith, bearing-date the fifteenth and eighteenth days of September, in the year of our Lord one thousand eight hundred and nine, for the farm on which the said Darius then lived, situate in Gloucester aforesaid, called the Daniel Eddy farm, lying on both sides of the turnpike road; and also the deed, in the said bill and answers mentioned, made by the said Simon' Smith to the said Ziba Smith, bearing date the eighteenth day of September, in the year of our Lord one thousand eight hundred and nine, for a lot of land situate in said Gloucester, containing twenty-six acres; and also the deed, in the said bill and answer mentioned, made by the said Simon Smith to the said Ziba Smith and Simon Smith. Jr. bearing date the twenty-second day of November, in the year of our Lord one thousand eight hundred and nine, for the farm whereon the said Simon Smith then lived, situate in said Gloucester, it being all the land he purchased-of John Eddy, Elijah Cooke, and Abel Potter, and is about three hundred acres, were made by the said Simon Smith with the intent to defraud his creditors, and particularly the plaintiff, and are, therefore, as to the plaintiff, utterly void.
But inasmuch as it appears to the court, that the real estate so as aforesaid conveyed to the said Darius Smith, and to the said Darius and Ahab Smith, has. with the exception of a life estate therein still held by the said Ahab, been conveyed to persons, who are not parties to the present bill, and the plaintiff seeks no relief against them, it is further ordered, adjudged, and decreed, that the said life estate of said Ahab only be subject to the debt of the plaintiff in this suit, in manner as hereinafter stated, without pre¿udice to the rights of persons not parties to this bill.
And it is further ordered, adjudged, and decreed, that the said conveyances before mentioned, having originated in a meditated fraud upon the creditors of the said Simon Smith, cannot be permitted to stand as a security for any debts then due to the grantees, or for any subsequent advances by them made in furtherance of the original intention of the parties thereto.
And it is further declared, and decreed, that the plaintiff has a right to be paid the principal debt due to him, with interest up to the time of this decree, and that the same ought to be, and is decreed to be, a charge on the same lands, and on the rents and profits (making all proper allowances) which have accrued to the respective respondents, or might have accrued to them without wilful default, since the estates contained in the same conveyances have come to their hands, possession, and use; and it is declared, and decreed, that the said lands, rents, and profits, are specifically holden for, and charged with, the payment of the plaintiff’s said debt.
And it is further declared, and decreed, that the respondents be permitted to pay in the proportion of the value of the estates respectively conveyed to them, to be ascertained by a master, the amount due to the plaintiff for principal and interest, with costs, if they shall elect so to do, within sixty days from the date of this decree, and in that event the plaintiff is to assign to them, by conveyances to be approved by a master, all his right and title to the judgments stated in his bill, and to the debts due, and his right and title under this decree; and the respondents shall be admitted to hold the same accordingly as a charge on the same lands; but if the respondents shall not pay the said debt and costs, within the period aforesaid, then the same master is to ascertain the rents and profits of the said estates as aforesaid, which are to be paid by the respondents respectively towards
And it is further declared, and decreed, that it be further referred to the same master to ascertain by an examination • of the plaintiff on oath and otherwise, what was the value at which the plaintiff received the Farmers’ Exchange bills for which the drafts, on which his judgments were founded, were given, at the time when he received or bought the same, and that the plaintiff is to be allowed that sum, the damages on said drafts at the rate allowed by law on the bills of the like nature, and his costs of suit, in the state courts of Rhode-Island, as his principal debt, and the interest is to be computed thereon as aforesaid; and the same master is to make his report as soon as may be, and in the mean time all further proceedings and orders are reserved for the consideration of the court