within the

Settlements tlement (z), a post-nuptial settlement (a), a voluntary assignment (b), a voluntary assignment after the comstatute. mission of felony, but before conviction (c), a volunVoluntary settlements. tary settlement reserving to the settlor a life estate determinable on bankruptcy (d), a voluntary settlement [32] which the settlor *has power to alter or revoke (e), and probably if it can be revoked with the consent of a person nominated by and "at the devotion of " the settlor (f), but not if that consent is of persons not under the control of the settlor (g), and a voluntary settlement by a guarantor of substantially all his property (h). It would seem that a voluntary settlement of an equity of redemption when the mortgagor covenants to pay the interest on the mortgage, and to pay off the principal, is within the statute (i).

Settlements for value.

A settlement, though made for valuable consideration, may be affected by mala fides, but those who undertake to impeach for mala fides such settlement, have a task of great difficulty to discharge (k). The mere fact that a bonâ fide creditor may be defeated is not of itself sufficient to set aside a deed founded on valuable consideration (1). So an ante-nuptial settlement has been held fraudulent and void (m), an assignment of a share in a partnership as against joint creditors (n), a sale of property by an insolvent trader (o), a sale by a father of all his property to his children, although in itself a fair family distribution (p), a separation deed (q), money paid for redemption of the land-tax of land

(z) Holmes v. Penney, 3 K. & J. 99.

(a) Taylor v. Coenen, 1 Ch. D. 636.

(b) Norcutt v. Dodd, Cr. &. P. 100; Stokoe v. Cowan, 29 Beav. 637. (c) Re Saunders, 4 Giff. 179.

(d) In re Pearson, 3 Ch. D. 807.

(e) Tarbuck v. Marbury, 2 Vern. 510; Smith v. Hurst, 10 Hare, 44.

(f) See 3 Rep. 826; Dav. Prec. 3rd ed. vol. 3, 679.

(g) See Buller v. Waterhouse, 2 Jo. 94, decided on 27 Eliz. c.

4; Sug. V. & P. 14th ed. 721.

(h) In re Ridler, 22 Ch. D. 74.

(i) Ex parte Huxtable, 2 Ch. D. 54.

(k) Harman v. Richards, 10 Hare, per Turner, L.J., 89.

(1) In re Johnson, 20 Ch. D. at p. 396.

(m) Bulmer v. Hunter, L. R. 8 Eq. 46.

(n) Ex parte Mayow, 11 Jur. (N.S.) 433.

(0) French v. French, 6 De G. M. & G. 95; Wakefield v. Gibbon,

3 Jur. (N.S.) 356.

(p) Cornish v. Clark, L. R. 14 Eq. 184; but see In re Johnson. 20 Ch. D. 389, S. C. 51 L. J. (N.S.) Ch. 503; Ex parte Eyre, 44 L. T. (N.S.) 922.

(q) Clough v. Lambert, 10 Sim. 174; Frampton v. Frampton, 4 Beav. 257.

settled by the settlor or himself and others (r), a trust to carry on a business for the benefit of creditors, if there be a resulting trust in favour of the debtor (s), but not if the trust be primarily for the purpose of selling the business (t). An assignment for the general benefit of creditors is not of itself within the statute (u), but it is if made for the purpose of defeating an expected judgment (v).

*

* The exercise of a general power of appoint- [ 33 ] Powers of ment by deed, either over land (w), or a sum of money appoint(x), may be fraudulent and void under the statute, ment. but where a man has only a limited or exclusive power of appointment of course it is different.

He never had any interest in the property himself which could have been available to a creditor, or by which he could have obtained credit (y).

A disposition of property is equally within the stat- Cause of the ute, whether it is by voluntary settlement or by gift, disposition of whether it is in anticipation of death or bankruptcy, or by the debtor the property by the free will of the donor, or whether it is at the immaterial. instance of the donees. The defect of such disposition

is that it removes the debtor's property out of the reach of all his creditors (z).

So in whatever way the disposition of property be effected, it will be held within the statute, which is general, for the suppression of fraud (a), and a man will not be allowed to do in one way that which he cannot do in another (b); so a voluntary post-obit bond (c) and an advancement have been held void (d). A judgment (f), Judgments. (r) Emly v. Guy, 3 Mer. 702.

(s) Owen v. Body, 5 A. & E. 28; Spencer v. Slater, 4 Q. B. D. 13.

(1) Boldero v. London and Westminster Loan and Discount Co.,

5 Ex. D. 47.

(u) Pickstock v. Lyster, 3 Mau. & Sel. 371.

(v) Reese River Silver Mining Co. v. Atwell, L. R. 7 Eq. 347.

(w) Townshend v. Windham, 2 Ves. 1.

(x) Pack v. Bathurst, 3 Atk. 269.

(y) See Sims v. Thomas, 12 Ad. & E. 536; Hockley v. Mawbey,

1 Ves. Jun. 143, 150; ante, p. 31.

(z) Cornish v. Clark, L. R. 14 Eq. 189. The same is the law in America: see Bump. Fr. Conv. (Ámer.), 2nd ed. 235.

(a) 3 Co. 82 a; see also Lord Mansfield in Cadogan v. Kennett,

Cowp. 434, and ante, p 4.

(b) Fitzer v. Fitzer, 2 Atk. 511.

(c) Adames v. Hallett, L. R. 6 Eq. 468.

(d) Christy v. Courtenay, 1 Beav. 96; Barrack v. M'Culloch, 3 Kay & J. 110.

(f) Clavey v. Hayley, 2 Cowp. 427.

34

Release of debts.

Fraudulent outlawry.

Forfeiture.

Family set

within statute.

WHAT SETTLEMENTS ARE WITHIN 13 ELIZ. c. 5.

therefore, or a confession of judgment, for a debt really due (g) and à fortiori where no real debt (h); a fraudulent judgment and execution (i); entering into a covenant not to enforce a bond (k); or a transfer or forgiveness of debts due to him by a person indebted (1), are within the statute; for as debts due to a debtor can now be made available for payment of bis debts (m), the release or alienation of them is an injury to his creditors.

*

But any process by which an alienation of property liable to debts is effected will be within the statute; so [*34] that where judgment was given against one in debt, and he suffered himself to be outlawed in felony to the intent to defraud his creditors, and afterwards purchased a pardon and had restitution, the creditor was allowed to sue out execution on account of the manifest fraud (n); and by the common law such circuitous evasions of justice were not allowed to take effect (o).

So where tenant for life,being in debt, colluded with the remainderman and committed a forfeiture, Sir Matthew Hale was of opinion that creditors were entitled to avoid this as much as any fraudulent conveyance (p).

Settlements which are honest family arrangements tlements not are regarded with favour by Courts of Equity (q), and generally are not within the statute, although not founded on actual valuable consideration, unless the rights of existing creditors are thereby directly interfered with (r). Such settlements, if founded on an inadequate consideration, will not therefore be held void (s); for the Court, in such a case, does not regard the inadequacy of consideration as a badge of fraud (t).

(g) Holbird v. Anderson, 5 T. R. 235; Meux v. Howell, 4 East 1. (h) Billiter v. Young, 6 E. & B. 1.

(i) Imray v. Magnay, 11 M. & W. 267; Hunt v. Hooper, 12 M. & W. 664; and see post, pp. 171 et seq.

(k) Slack v. Tolson, 1 Russ. 553.

(1) Sibthorp v. Moxom, 3 Atk. 581; Henderson v. Lloyd, 3 F. & F. 7; Belcher v. Prittie, 10 Bing. 408.

(m) Common Law Procedure Act, 1854 (17 & 18 Vict. c. 125),

ss. 60 et seq.

(n) Beverley's Case, 2 Dyer, (Vail. ed.), 245 b, n.

(0) Verney's Case, 2 Dyer, 245 b.

(p) Anon. Vent. 275; Vin. Abr. tit. Fraud (F.), pl. 14.

(q) Penhall v. Elwin, 1 Sim. & G. 258, 269.

Penhall v. Elwin, 1 Sm. & G. at p. 270.

Post, pp. 270 et seq.

(t) In re Johnson, 20 Ch. D. 389, S. C. 51 L. J. (N.S.) Ch. 503; post, pp. 271, 272.

WHAT VOLUNTARY CONVEYANCES ARE VOID AS

AGAINST EXISTING CREDITORS.

IN considering whether a conveyance is void under 13 CircumEliz. c. 5, all the circumstances at the time that the con- stance at the time the deed veyance is made must be looked at, and not subsequent is executed to events, except such as must be taken to have been in be looked at. the contemplation of the transferor at the time of transferring the property, and from which a fraudulent intention at that time may be gathered (†).

It is very important to keep this in mind, for on this principle, and on this principle alone can the cases be reconciled.

The subject, therefore, naturally divides itself into the following two heads.

What state of circumstances at the time of the transfer are fatal to the validity of a transfer?

What transfers are fraudulent against creditors, in which the fraudulent intention at the time of the transfer is shewn by subsequent acts or events which may in fact have been, or must, in law, be taken to have been, then in the transferor's contemplation? (u).

As to the first class of cases, it may be stated gener- All volunally that all voluntary transfers of property by a person tary convey"indebted" according to Lord Hardwicke's meaning, as ances by perexplained by subsequent cases, are void against credi- sons intors. The mere fact of a man "indebted" giving away against part of his estate is, by presumption and construction creditors. of law, a fraudulent act.

(t) Ante, p. 15, and see Mackay v. Douglas, L. R. 14 Eq. at p. 120; Ex parte Russell, 19 Ch. D. 588; In re Johnson, 20 Ch. Ď. 389, S. C. 51 L. J. (N.S.) Ch. 503; In re Maddever, 27 Ch. D. 523 ; Ex parte Mercer, 17 Q. B. D. 290.

(u) Post ch. iii.; and see pp. 51-45.

debted" void

The reason of the rule.

Settlements

by persons not "in

*

The principle, as stated by Lord Hatherley, L. C., in [* 36] Freeman v. Pope (u), on which the statute of 13 Eliz. c. 5, proceeds, is this that persons must be just before they are generous, and that debts must be paid before gifts can be made.

For where a man indebted gives all his goods to a son or cousin in consideration of natural affection, lest others should lose their debts, which are things of value, the intention of the Act was that the consideration should be valuable; for equity requires that that gift which defeats others should be made on as high and good consideration as the things which are thereby defeated are; and it is to be presumed that the father, if he had not been indebted, would not have dispossessed himself of all his goods, and subjected himself to his cradle; and therefore it shall be intended that it was made to defeat creditors (v).

The

But, on the other hand, a voluntary conveyance or settlement by a person not indebted, and not meaning a debted" and fraud, is clearly good against future creditors. not meaning law is perfectly settled that if a man is solvent at the a fraud good time and after the time of taking away the property though volwhich is put into the settlement he remains solvent, and untry. does not at the time contemplate doing anything which could lead to insolvency, that settlement will be good (w). Fraud, however, of course vitiates the transaction that is to say, where there is an express intent to defraud future creditors it is bad (x); but a settlement not fraudulent, by a party not indebted, is valid, though voluntary (y), and cannot be shaken by subsequent debts.

Agreement

It has never been decided whether a settlement by a man indebted, in pursuance of an agreement entered into when he was not indebted, would be good against when in debt. his creditors. If it were a binding agreement, which

when not indebted, performed

(u) L. R. 5 Ch. 540; and see Ex parte Williams, L. R. 10 Eq., per Bacon, C.J. B., 61.

(v) Twyne's Case, 3 Rep. 81 b.

(w) Mackay v. Douglas, L. R. 14 Eq., per Malins, V.C. 121; post, pp. 45, 53.

(x) Mackay v. Douglas, L. R. 14 Eq. 106; Ex parte Russell, 19 Ch. D. 588. The same is the law in Upper Canada: see Bank of British North America v. Rattenburg, 7 Chy. 383.

(y) Sir T. Plumer, in Battersbee v. Farrington, 1 Sw. 106; Hardwicke, L.C., in Russel v. Hammond, 1 Atk. 13; Townshend, Lord, v. Windham, 2 Ves. 11, 12.