It was held by Sir R. Malins, V.C., that the settlement was fraudulent and void, because it was made with a view to a state of things in which the settlor might become indebted at a future *time. That [* 66] was upon the broad ground that a man who contemplated going into trade could not, on the eve of doing so, take the bulk of his property out of the reach of those who might become his creditors in his trading operations (ƒ).

So in Ex parte Russell (g) where a trader, indebted Ex parte but not insolvent at the time, settled substantially the Russell. whole of his property on his wife and children before going into a new trade, it was held, following Mackay v. Douglas (h), that the settlement was void, because its object was to screen his wife and children from the risks of the unknown adventure, and to preserve his property from his future creditors.

One thing noticed by Lord Hardwicke in the case of Marks of Stileman v. Ashdown has since then been frequently fraudregarded as a mark of fraud against future creditors. 1. Generality He there said, "What can be more favourable for the of the conplaintiff than that every foot of the estate has been covered by these purchases? And unless I let him in upon these estates, the plaintiff has no possibility of being paid."

veyance.

In Ware v. Gardner (i) the generality of the gift Ware v. was considered a badge of fraud. In that case the set- Gardner. tlor was in trade, and by a post-nuptial settlement conveyed to trustees on trusts for his wife and children all his property, as well present as future. He continued to trade, and became bankrupt five years afterwards. Lord Justice James, then Sir W. M. James, V.C., said the question was whether by this deed he could have had any other intent than to delay and hinder his creditors and held that he did execute it with that intent, and that it was within the very words of the statute 13 Eliz. c. 5 (k).

(f) See In re Pearson, 3 Ch. D. 807.

(g) 19 Ch. D. 588.

(h) L. R. 14 Eq. 106; post, pp. 520, 521.

The same is the law

in America, and Upper Canada: see ante, p. 53.

(i) L. R. 7 Eq. 317.

(k) See also Henderson v. Lloyd, 3 F. & F. 7; and so by the civil law: see Dig. lib. 42, tit. 8, par. 17, sec. 1.

2. Continu

session.

Indeed, where a man about to contract debts denudes himself of all his property by a voluntary gift, the inference of a fraudulent intention is irresistible (1), for a [67] man has a no right by a mere *act of bounty to put himself in such a position that he cannot meet the just demands on him (m).

The case of Stileman v. Ashdown (n) may be considance in pos- ered an authority for supposing that, even where the property conveyed is real estate, the donor's continuance in possession is a mark of fraud against subsequent creditors. It was there said that if the father had taken an estate for life with remainder to the son in fee it would clearly be bad against the creditors. Subsequent decision has not upheld this as a general proposition, but it would be difficult to support even against subsequent creditors, a voluntary deed retained by a settlor who also kept possession of the property till his death (o). If the retainer of possession will sometimes make a conveyance for value void (p), à fortiori will it tend to vitiate a voluntary alienation: for a deed not fraudulent in itself at its execution may become so afterwards by being made use of in a manner prejudicial to the rights of creditors, and the settlor's. retaining possession of the settled property has been held to have this effect (q).

But this does not militate against the leading principle above adverted to (r), that under the statute 13 Eliz. c. 5, the fraud, if at all, must be taken to have

(1) See Freeman v. Pope, L. R. 5 Ch. 538, 541, 545; In re Ridler, 22 Ch. D. 80; supra, p. 47.

(m) Cornish v. Clark, L. R. 14 Eq. 184; Ex parte Bolland, L. R. 17 Eq. 115; ante, pp. 38, 51.

(n) 2 Atk. 481.

(0) See Ward v. Lant, Prec. Ch. 182; Loeffes v. Lewen, Prec. Ch. 370; Drakeford v. Wilks, 3 Atk. 539–40; Boughton v. Boughton, 1 Atk. 625. For then the property settled is, at the settlor's death, assets in his executor's hands; see post, p. 69; and see Bates v. Graves, 2 Ves. Jun. 292, where Lord Loughborough said, "There is, as to third parties, no change of ownership without possession." A debt on a voluntary bond, covenant, or promissory note is always postponed to creditors for value, at the death of the obligor, covenantor, or promisor; see Watson v. Parker, 6 Beav. 283; Fletcher v. Fletcher, 4 Hare, 67; Blount v. Doughty, 3 Atk. 481; Goldicutt v. Townsend, 28 Beav. 445; Lomas v. Wright, 2 My. & K. 769. See post, p. 398.

(p) See post, pp. 113 et seq.

(q) Stone v. Grubham, 2 Bulstrode, 225; Hungerford v. Earle, 2 Vern. 261; Russell v. Hammond, 1 Atk. 13, 16; Stileman v. Ashdown, 2 Atk. 481.

(r) Ante, pp. 15, 35.

existed in the settlor's mind at the time he made the settlement; for he is presumed to have had in view a subsequent fraudulent use of the deed when he executed it (s).

indebtedness before the

Where the contrivance or fraudulent intention ap- Where fraudpears there is no need to shew that there were [68] ulent intent, creditors existing at the time; it is enough if credany itor, whether existing before or after the transaction, is deed immaor may be defeated (t). So, in In re Pearson (u), a terial. man not then a trader, and owing no debts at the time, In re Pearson. made a voluntary settlement of £1000 in 1858. The trusts of the settlement were a life estate to the settlor determinable on his bankruptcy, then a life estate to his wife for her separate use, then trusts for their children, with the ultimate remainder to the settlor. Fifteen years after, in 1873, he engaged in trade for the first time, and in 1875 became a bankrupt. It was held by Sir J. Bacon, V.C., that the settlement was plainly fraudulent upon the face of it, because it was an attempt to deal with his property so as to put it out of the reach of possible creditors. This decision seems to proceed on the ground that the settlement was in reality a sham, by reserving to the settlor the first life estate, determinable on bankruptcy. For, if the trusts had been solely or primarily for the benefit of his wife and children, inasmuch as it was not proved that the settlor then contemplated going into trade fifteen years after, the settlement, it is conceived, would have been held valid (v).

A conveyance which is void against creditors within Fraudulent the statute is, when set aside, void only as against all conveyance the creditors of the settlor. It was said by Sir William void only as against Grant, M.R., in Curtis v. Price (w): "A settlement of creditors. this kind (that is, a voluntary settlement) is void only as against creditors; but only to the extent in which may be necessary to deal with the estate for their satisfaction, it is as if it had never been made.

it

To every

(8) See Freeman v. Pope, L. R. 5 Ch. 538; Crossley v. Elworthy, L. R. 12 Eq. 158; Mackay v. Douglas, L. R. 14 Eq. 106 ; Ex parte Russell, 19 Ch. D. 588.

(t) Graham v. Furber, 14 C. B. 410.

(u) 3 Ch. D. 807 and as to the Scotch law, see Learmouth v.

Miller, L. R. 2 H. L. Sc. 438.

(r) See Mackay v. Douglas, L. R. 14 Eq. at p. 121; In re Cross, 19 W. R. 153.

(w) 12 Ves. 103, 106; Smith v. Cherrill, L. R. 4 Eq. 390; Tanqueray v. Bowles, L. R. 14 Eq. at p. 157.

Same in
America.

The property so alienated

is assets for alienator's creditors after his death.

other purpose it is good. Satisfy the creditors, and the settlement stands." So it was said by Lord Cranworth, L.C., in French v. French (y): “In my opinion, if at any time hereafter the assets of the testator should be realized and found more than sufficient to meet all his liabilities, this Court would find the means of restoring the settlement and giving Mrs. French the benefit intended to be conferred upon her." It is believed that this point has never been expressly decided (y).

[ * 69 ] *The same principle, that a voluntary conveyance is good except as against creditors, and, when, void against them, only disturbed so far as is necessary in order to satisfy their claims, obtains in America (z).

So where a man makes a gift of goods which is fraudulent and void against his creditors, and dies, he is considered to have died in full possession with respect to the claim of the creditors, and the goods are just as much assets in the hands of his personal representative, as to creditors, but as to creditors only (a), as if no attempt to alienate them had been made (b). Thus, where A., being indebted to B., made C. his executor, and died; and C., the executor, promised B., on good consideration, that if he could discover any goods parcel of the testator's estate at the time of his death, he should have his debts satisfied thereout; and the question was, whether a lease for years conveyed to a stranger by the testator in his lifetime fraudulently, should, in law, be parcel of his estate at the time of his death or not, it was by the whole Court resolved to be parcel of the testator's estate at the time of his death, for the estate was void against creditors (c). So that the rule applies equally where the property consists of chattels real.

And as such a transfer is void at law the property becomes, at the death of the transferor, legal-and not

(y) 6 De G. M. & G. at p. 103.

(z) Story, Eq. Jur. 12th ed. ss. 371, 381; Bump. Fr. Conv. (Amer.), 2nd ed. 315, 481, 482.

(a) Curtis.v. Price, 12 Ves. 89; French v. French, 6 De G. M & G. 95; Cornish v. Clark, L. R. 14 Eq. 184.

(b) Shears v. Rogers, 3 B. & Ad. 362; O'Connor v. Bernard, 2 Jo. Ir. Rep. 654, 694, et seq.; and so as to conveyances void under 16 Ed. 4, c. 9; see Cary's Rep. 25; Vin. Abr. tit. Fraud (F.), pl. 2.

(c) Anonymous Case, 2 Roll. Rep. 173; Kitchin v. Dixson, Gouldsb. 116, pl. 12.

merely equitable-assets for creditors; for, the deed being treated as respects the creditors as if it had never existed, the property comes to the executor virtute officii (d).

session is

As any intermeddling with a testator's effects makes And fraudulent grantee the person so doing an executor de son tort (e), and as taking posgoods fraudulently alienated by a testator in his lifetime remain part of his estate at his death, possession executor de taken by the fraudulent grantee will make him executor son tort. de son tort (f); and he will be liable to be sued as * such if not the rightful executor, and a hus- [ * 70 ] band may in this way become executor de son tort of his wife, who, being sole, has made a covinous gift of goods (g).

But the fraudulent alienation is good against the rightful executor or administrator, for he is not a creditor, nor does he represent creditors, and therefore it is no devastavit for him to deliver the goods to the fraudulent grantee, who can be sued for them by creditors, but not by any other person (h).

sion was

It must be observed that all these are cases where Does this apthe donor has, consistently or inconsistently (i) with ply where the deed, remained in actual possession of the property the possesuntil his death. And it is apprehended the principle actually would not apply where the donor had in his lifetime changed? made an absolute immediate gift, followed by change of possession, so as to put the property out of his own power (k).

It is a circumstance inducing strong suspicion of Marks of fraud for a man to make a voluntary settlement, know. frauding at the time that he will shortly become indebted (1).

(d) Shee v. French, 3 Drew. 716.

(e) Padget v. Priest, 2 T. R. 97, 100.

(f) 2 Bac. Abr. 605; Hawes v. Leader, Cro. Jac. 271; Edwards v. Harben, 2 T. R. 587; Shears v. Rogers, 3 B. & Ad. 362; Rob. Fraud. Conv. 593; Shee v. French, 3 Drew. 716.

(g) Wilcocks v. Watson, 1 Cro. Eliz. 405.

(h) Hawes v. Leader, Cro. Jac. 271; Orlabar v. Harwar, Comb. 348; Vin. Abr. tit. Fraud (C.), pl. 12, p. 518.

(i) See O'Connor v. Bernard, 2 Jo. Ir. Rep. 654, where there was a conveyance to a daughter in fee; the land was taken under a sequestration, and the daughter set up no claim to it until her father's death.

(k) See also on this point Watts v. Thomas, 2 P. Wms. 364. (1) Walker, v. Burrows, 1 Atk. 93, 94; Richardson v. Smallwood, Jac. 552; Ware v. Gardner, L. R. 7 Eq. 317; and see In re Ridler, 22 Ch. D. 74.