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fice, to sustain the purchase as against the seller's creditors: 1. The purchaser must purchase in good faith. 2. There must be a valuable consideration; and 3. That consideration must actually have been paid without notice of the seller's fraud."

$ 953. — Fraud of seller alone not enough. The seller's fraud alone is not therefore of itself enough to defeat the title of the purchaser for value. To accomplish that result, the purchaser must, to some extent at least, have known of or participated in the intention of the seller. How direct and full the purchaser's knowledge must be is a question upon which the authorities do not agree. The court in Massachusetts has required not only knowledge of the seller's fraud, but participation in it. In New York, Connecticut, Missouri, Oregon, and perhaps other States, actual knowledge by the buyer must

1 Tillman v. Heller, 78 Tex. 597, 14 118, 45 Am. R. 178; Stearns v. Gage, S. W. R. 700, 11 L. R. A. 628, 22 Am. 79 N. Y. 102; Bush v. Roberts (1888), St. R. 77; Galbreath v. Cook, 30 Ark. 111 N. Y. 278, Am. St. R. 741, 18 N. 417; Smith v. Selz, 114 Ind. 229, 16 E. R. 732. N. E. R. 524; Arnholt v. Hartwig, 73 4 Knower v. Cadden Clothing Co. Mo. 485; Stone v.

Spencer, 77 Mo. 356; (1889), 57 Conn. 202, 17 Atl. R. 580. Paul v. Baugh, 85 Va. 955, 9 S. E. R. 5 "The knowledge of facts which, 329; Beasley v. Bray, 98 N. C. 266, 3 if investigated and followed out, S. E. R. 497; Hedman v. Anderson, 6 would lead to knowledge of the Neb. 392; Beidler v. Crane, 135 Ill. fraud, is not deemed sufficient under 92, 25 Am. St. R. 349, 25 N. E. R. 655. the decisions of this court.” State v.

“The consideration must, in all Mason (1892), 112 Mo. 374, 20 S. W. R. cases, be actually passed before no- 629, 34 Am. St. R. 390; Van Raalte v. tice. Unless payment has been act- Harrington (1890), 101 Mo. 602, 20 Am. ually made in some shape, the au- St. R. 626, 11 L. R. A. 424, 14 S. W. R. thorities are quite clear that the 710. Compare Connecticut Mut. L. purchase will not be upheld.” Dixon Ins. Co. v. Smith (1893), 117 Mo. 261, v. Hill, 5 Mich. 404. Same: Arnholt 38 Am. St. R. 656, 22 S. W. R. 623. v. Hartwig, 73 Mo. 485.

See also Riley v. Vaughan, 116 Mo. 2 Foster v. Hall (1831), 12 Pick. 89, 169, 22 S. W. R. 707. 22 Am. Dec. 400; Ricker v. Ham, 14 6 Lyons v. Leahy (1887), 15 Oreg. 8, Mass. 137; Hill v. Ahern, 135 Mass. 13 Pac. R. 643, 3 Am. St. R. 133; 158; Bristol Savings Bank v. Keavy, Coolidge v. Heneky, 11 Oreg. 327, 8 128 Mass. 298.

Pac. R. 281. Participation seems also to be re- ? The same rule prevails in New quired in Kentucky. Brown v. Foree Hampshire. Seavy Dearborn (1847), 7 B. Mon. 357, 46 Am. Dec. 519. (1849), 19 N. H. 351. 3 Parker v. Conner (1883), 93 N. Y.

V.

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be shown. The majority of the courts, however, do not go so far,' and the rule sustained by the great weight of the authorities is that neither participation nor actual knowledge is required, but that notice of facts sufficient to put a prudent man

In Michigan it is held “that The same rule prevails in Iowa: knowledge of facts sufficient to put Williamson v. Wachenheim (1882), an ordinarily prudent man on in- 58 Iowa, 277, 12 N. W. R. 302; Jones quiry is all that is required, and that v. Hetherington (1877), 45 Iowa, 681; participation in the fraud is not nec- Lyons v. Hamilton, 69 Iowa, 47, 28 essary.” Bedford v. Penny, 58 Mich. N. W. R. 429; Spaulding v. Adams, 424, 25 N. W. R. 381; Hough v. Dick- 63 Iowa, 437, 19 N. W. R. 341. inson, 58 Mich. 89, 24 N. W. R. 809; In Nebraska: Bollman v. Lucas Eureka Iron Works v. Bresnahan, 66 (1888), 22 Neb. 796, 36 N. W. R. 465; Mich. 489, 33 N. W. R. 834. See also Temple v. Smith (1882), 13 Neb. 513, Treusch v. Ottenburg, 4 C. C. A. 629, 14 N. W. R. 527. See also Brittain v. 54 Fed. R. 867.

Crowthers, 4 C, C. A. 341, 54 Fed. R. In Texas, “knowledge of facts 295. sufficient to excite the suspicions of In Kansas: Gollober v. Martin a prudent man and to put him upon (1885), 33 Kan. 252, 6 Pac. R. 267. inquiry is sufficient.” Moseby v. In Minnesota: Holcombe v. EhrGainer, 10 Tex. 393; Edrington v. manntraut (1891), 46 Minn. 397, 49 N. Rogers, 15 id. 188; Mills v. Howeth, W. R. 191; Manwaring v. O'Brien, 75 19 Tex. 257, 70 Am. Dec. 331.

Minn. 542, 78 N. W. R. 1. In Mississippi, knowledge, "or, In Maryland : Biddinger v. Wiland what is the same thing, notice of such (1887), 67 Md. 359, 10 Atl. R. 202; Higfacts or circumstances as would lead gins v. Lodge (1887), 68 Md. 229, 6 a reasonable man to the conclusion Am. St. R. 437, 11 Atl. R. 846. that fraud in fact existed or was in- In California: Godfrey y. Miller tended." Tuteur v. Chase (1889), 66 (1889), 80 Cal. 420, 22 Pac. R. 290. Miss. 476, 6 S. R. 241, 14 Am. St. R. In Wisconsin: Hooser v. Hunt 577, 4 L. R. A. 832.

(1886), 65 Wis. 71, 26 N. W. R. 442. In New Jersey, “circumstances In Nevada: Greenwell v. Nash

.. of such a character as to (1878), 13 Nev. 286. awaken his suspicion and put him In Arkansas: Dyer v. Taylor (1887), upon inquiry” will charge a mort- 50 Ark. 314, 7 S. W. R. 258. gagee with knowledge. Moore v. In Virginia: Hickman v. Trout, Williamson (1888), 44 N. J. Eq. 496, 83 Va. 478, 3 S. E, R. 131; Batchelder 15 Atl. R. 587, 1 L. R. A. 336; De Witt v. White, 80 Va. 103. v. Van Sickle, 29 N. J. Eq. 209.

In Georgia: Smith v. Wellborn, In Alabama, knowledge, or notice 75 Ga. 799; Phillips v. Adair, 59 Ga. of such facts as would put a reason

370. able man upon inquiry, is sufficient. In Indiana: Sanders v. Muegge Smith v. Collins (1891), 94 Ala. 394, 10 (1883), 91 Ind. 214. S. R. 334; Stix v. Keith (1888), 85 Ala. In Illinois: Mathison v. Prescott 465, 5 S. R. 184.

(1877), 86 Ill. 493.

a

upon an inquiry which would have disclosed the truth will prevent the purchaser from becoming a bona fide purchaser within the statute.

$ 954.

Inadequacy of consideration.— “Adequacy of consideration is not usually indispensable to make it “valuable,” and this rule is applicable here; but at the same time it is unquestionable that an inadequate consideration may raise a presumption of bad faith on the part of the buyer, which will grow in conclusiveness as the inadequacy appears more and more gross.

In Pennsylvania: Dean v. Con- ance the property against the price nelly (1847), 6 Barr, 239.

as to leave no room for the ordinary In South Dakota : Shauer v. Alter- differences of opinion as to values, ton, 151 U. S. 607.

yet when the jury can see that the In England, the same rule is ap- disparity amounts to a gross inadeplied under the statute. National quacy their verdict should be against Bank v. Morris, [1892] 17 App. Cas. the transaction.” Mobile Sav. Bank 287.

V. McDonnell (1889), 89 Ala. 434, 8 1 The existence of the facts and S. R. 137, 18 Am. St. R. 137, 9 L. R. A. their sufficiency to constitute notice 645. The question here is different or knowledge are usually questions from the case in which the grantor to be determined by the jury, and a seeks to set aside a conveyance for wide range of evidence is ordinarily inadequacy. Here “inadequacy of adinissible. Lyons v. Leahy, 15 Oreg. price, when unreasonable, is evi8, 13 Pac. R. 643, 3 Am. St. R. 133; dence of a secret trust, and it is Hough v. Dickinson, 58 Mich. 89, 24 prima fucie evidence that a conveyN. W. R. 809; Tuteur v. Chase, 66 ance is not bona fide, if it is accomMiss. 476, 6 S. R. 241, 14 Am. St. R. panied with any trust.” Kuykendall 577, 4 L. R. A. 832; Judson v. Lyford, v. McDonald (1852), 15 Mo. 416, 57 84 Cal. 505, 24 Pac. R. 286; Helms v. Am. Dec. 212. “There is no doubt Green, 105 N. C. 251, 11 S. E. R. 470, that inadequacy of price in the sale 18 Am. St. R. 893; Heaton v. Nelson, of property by an insolvent debtor 74 Mich. 199, 41 N. W. R. 895; Nichols is a badge of fraud; but it is not rev. Nichols, 61 Vt. 426, 18 Atl. R. 153; garded as sufficient alone to raise a Van Raalte v. Harrington, 101 Mo. legal inference of fraud, unless so 602, 14 S. W. R. 710, 20 Am. St. R. grossly so as to 'strike the under626, 1-1 L. R. A. 424; State v. Mason, standing at once with the convic112 Mo. 374, 20 S. W. R. 629; Boyle tion that such a sale never could v. Maroney, 73 Iowa, 70, 35 N. W. R. have been made in good faith.'” 145, 5 Am. St. R. 657.

State v. Mason, 112 Mo. 374, 20 S. W. 2 In Alabama it is said that “while R. 629, 34 Am. St. R. 390. The in“the law will not weigh considerations adequacy was held to be so strikin diamond scales,' nor so closely bal- ingly great in Connecticut Mut. L

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$ 955. — Considerations other than pecuniary.— The consideration need not be a pecuniary one. It may be any. thing which the law in other cases regards as valuable. Satisfaction or security of a debt owing by the seller to the buyer will suffice, and the latter may thus lawfully secure a bona fide Ins. Co. v. Smith, 117 Mo. 261, 38 Am. 622, 40 Am. R. 617; Dugan v. Gittings, St. R. 656, 22 S. W. R. 623.

3 Gill (Md.), 138, 43 Am. Dec. 306]: The price paid may be so entirely National Exch. Bank v. Watson, 13 inadequate as to put a prudent man R. I. 91, 40 Am. R. 623, n. on his guard. Weber v. Rothchild Consideration of future support of (1887), 15 Oreg. 385, 15 Pac. R. 650, 3 grantor is not one which will susAm. St. R. 162.

tain the consequence as against cred. And while mere inadequacy may itors, at least unless he retains suffinot prove fraud, it is clear that if cient property to pay his present gross it may do so, and in any event debts. Johnston v. Harvy, 2 Pen. it is a proper matter for consideration & W. (Pa.) 82, 21 Am. Dec. 426; Sidby the jury. Kempner v. Churchill, ensparker v. Sidensparker, 52 Me. 8 Wall. (U. S.) 362; Jaeger v. Kelley, 481, 83 Am. Dec. 527; Woodall v. 52 N. Y. 274; Emonds v. Termehr, 60 Kelly, 85 Ala. 368, 5 S. R. 164, 7 Am. Iowa, 92, 14 N. W. R. 197; Shelton v. St. R. 57; Harting v. Jockers, 136 IIL. Church, 38 Conn. 416; McFadden v. 627, 27 N. E. R. 188, 29 Am. St. R Mitchell, 54 Cal. 628; Newman v. 341; Davidson v. Burke, 143 III. 139, Kirk, 45 N. J. Eq. 677, 18 Atl. R. 224; 32 N. E. R. 514, 36 Am. St. R. 367. Smith v. Boyer, 29 Neb. 76, 45 N. W. Conveyance by insolvent father to R. 265, 26 Am. St. R. 373; Philbrick son in consideration of wages of son v. O'Connor. 15 Oreg. 15, 3 Am. St. earned while unemancipated, and reR. 139, 13 Pac. R. 612; Weber v. ceived by father, is not valid as Rothchild, 15 Oreg. 385, 15 Pac. R. against father's creditors. Halliday 650, 3 Am. St. R. 162.

v. Miller, 29 W. Va. 424, 6 Am. St. R. 1 Thus a conveyance in considera- 653. tion of marriage is a valuable one, But a conveyance of land made in which will sustain it as against cred- pursuance of a parol trust — a promitors (marriage portion to grantor's ise to the devisor through whose will daughter). Cohen v. Knox (1891), 90 it was received — was upheld against Cal. 266, 27 Pac. R. 215, 13 L. R. A. creditors in Carver v. Todd, 48 N. J. 711 [citing Magniac v. Thompson, 32 Eq. 102, 21 Atl. R. 943, 27 Am. St. R. U.S. (7 Pet.) 348, 8 L. ed. 709; Prewit 466; and so was a conveyance made v. Wilson, 103 U. S. 22, 26 L. ed. 360; to perfect a parol gift, made by a Wood v. Jackson, 8 Wend. (N. Y.) 9, father then solvent but now insolv22 Am. Dec. 603; Herring v. Wick- ent, to a son who had made permaham, 29 Gratt. (Va.) 628, 26 Am. R. nent improvements. Dozier v. Mat405; Huston v. Cantril, 11 Leigh son, 94 Mo. 328. 7 S. W. R. 268, 4 Am. (Va.), 136; Sterry v. Arden, 1 Johns. St. R. 388; Willis v. McIntyre, 70 (N. Y.) Ch. 261; Brown v. Carter, 5 Tex. 34, 8 Am. St. R. 574, 7 S. W. R. Ves. Jr. 862; Otis v. Spencer, 102 Ill. 594.

debt even though the process exhausts the seller's property, leaving nothing for his other creditors.'

$ 956, Conveyance subject to secret lien or trust.- Lacking in the essential elements which alone sustain the convey

1 The transfer by a debtor of prop- Kinney, 93 Tenn. 428, 25 S. W. R. 100; erty, at a fair valuation, in pay- Matthews v. Reinhardt, 43 Ill. App. ment of an honest debt is, in the 169. absence of a statute making it so, Principal debtor may transfer propno fraud upon other creditors, ev en erty to indemnify a surety who asthough the debtor is insolvent and sumes the debt. Frees v. Baker, 81 such conveyance will prevent other Tex. 216, 13 L. R. A. 340, 16 S. W. R. creditors from getting their pay, as 900; Pollock v. Jones, 96 Ala. 492, 11 both grantor and grantee knew or S. R. 529. must have known. Covanhovan v. The same rule applies to a mortHart (1853), 21 Pa. St. 495, 60 Am. gage by a debtor, though insolvent, Dec. 57 (Summer's Appeal, 16 Pa. St. to secure one debtor for bona fide 169, and Ashmead v. Hean, 13 id. 584, debt, in the absence of a statute forbeing overruled); Crawford v. Kirk- bidding such preferences. Warner sey (1876), 55 Ala. 282, 28 Am. R. 704; v. Littlefield (1891), 89 Mich. 329, 50 Roswald v. Hobbie (1887), 85 Ala. 73, N. W. R. 721; Sheldon v. Mann (1891), 4 S. R. 177, 7 Am. St. R. 23; Bamberger 85 Mich. 265, 48 N. W. R. 573; First v. Schoolfield (Ala.), 160 U. S. 149, 16 National Bank v. Ridenour (1891), 46 S. Ct. R. 225, 40 L. ed. 374; Pollock v. Kan. 718, 27 Pac. R. 150, 26 Am. R. Meyer (1892), 96 Ala. 172, 11 S. R. 385; 167; McFadden v. Ross. 126 Ind. 341, Dawson v. Flash (1893). 97 Ala. 539, 12 26 N. E. R. 78; Turner v. Iowa Nat. S. R. 67; Powell v. Kelly (1888), 82 Bank, 2 Wash. 192, 26 Pac. R. 256. Ga. 1, 3 L. R. A. 139, 9 S. E. R. 278; And so where there is a conveyance Citizens' Bank v. Williams (1891), 128 of property in payment of a valid N. Y. 77, 28 N. E. R. 33, 26 Am. St. R. debt, though there is an agreement 454; Shelley v. Boothe (1880), 73 Mo. to reconvey upon payment of that 74, 39 Am. R. 481; Christian v. Green- debt. Carey Lumber Co. v. Cain, 70 wood (1861), 23 Ark. 258, 79 Am. Dec. Miss. 628, 13 S. R. 239. 104; York County Bank v. Carter It

may

be otherwise if the value (1861), 38 Pa. St. 446, 80 Am. Dec. 494; of the property is greatly in excess Hauser v. Beaty (1892), 93 Mich. 499, of the debt. Thompson v. Richard. 53 N. W. R. 628; Erdall v. Atwood, son Drug Co., 33 Neb. 714, 29 Am. St. 79 Wis. 1; Weaver v. Nugent, 72 Tex. R. 505, 50 N. W. R. 948. 272, 10 S. W. R. 458, 13 Am. St. R. 792; Statutes forbidding preferences Elwood v. May, 24 Neb. 375, 38 N. W. by insolvent debtors. · It is, of R. 793; Smith v. Boyer, 29 Neb. 76, course, competent by statute to for45 N. W. R. 265, 26 Am. St. R. 373; bid certain preferences to be made Bailey v. Kennedy, 2 Del. Ch. 12, 29 by insolvent debtors; but this is a Am. Dec. 351; Schram v. Taylor, 51 subject foreign to the present conKan. 547, 33 Pac. R. 315; Nelson v. sideration. But, for example, see

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