Ante-nuptial But the mere fact of the intending husband, or of the settlements intending wife if the marriage is after December 31, good unless 1882 (m), being deeply indebted will not make an antethe marriage itself fraudu- [* 91 ] nuptial settlement void against *creditors, provided the marriage is entered into honestly and in good faith (n).

lent.

If marriage be honest question is can settle

ment be avoided without injury to innocent party?

Kevan v.
Crawford.

When the marriage itself is honest, the question must be, not whether the settlement is a fraud on the creditors, but whether it can be set aside without defrauding the wife, or, if the marriage is after December 31, 1882, the party to it who is innocent of the fraud (o). A settlement made in consideration of marriage cannot be set aside by creditors of the husband, or of the wife if the marriage is after December 31, 1882 (p), unless it be clearly proved that both the intending husband and wife were parties to the fraud (q). It is not enough to avoid such a settlement that the intending husband alone committed the fraud (q); nor, if the marriage is after December 31, 1882, that the intending wife alone committed the fraud. So even where there are strong circumstances shewing fraud against the creditors, such as a false recital that the property was the wife's a settlement entered into in consideration of marriage will be supported (r).

In Kevan v. Crawford (s), a settlement in contemplation of marriage was made by a settlor, then utterly insolvent, which contained a false recital that the intended wife was a creditor of the settlor's for £20,000. The intended wife executed the settlement without being actually aware of the falsity of the statement, or that there was any such statement at all. She believed the settlor to have been then wealthy. Sir G. Jessel, M. R., said : "Whether that recital were in or out of the settlement, the covenant to settle the £20,000 in

(m) 45 & 46 Vict. e. 75, ss. 1 (1), 2, 19, 25.

(n) Bulmer v. Hunter, L. R. 8 Eq. 46, 49; Keran v. Crawford, 6 Ch. D. 29; Parnell v. Siedman, 1 C. & E. 153.

(0) Frazer v. Thompson, 1 Giff. 49-62; for the innocent party is a purchaser, and if not a party or privy to the fraud, is within the proviso of the 6th section (ante, p. 78).

(p) 45 & 46 Vict. c. 75, ss. 1 (1), 2, 19, 25; and see Griffith, Married Women's Property Act, 5th ed. 129.

(q) Ante. p. 78. This is also the law in America: see Bump. Fr. Conv. 2nd ed. 290, 291, 294; and in Upper Canada; Mulholland v. Williamson, 12 Chy. 91, S. C. 14 Chy. 291.

(r) Campion v. Cotton, 17 Ves. 263.

(s) 6 Ch. D. 29, 39; Parnell v. Stedman, 1 C. & E. 153.

consideration of the marriage would have been a covenant for value, and would have prevailed against creditors. Why should the mere fact of the insertion of an inaccurate recital, or untrue recital, vitiate the settlement, as regards the wife, who was ignorant and innocent of the fraud? I cannot see why, and I [ * 92 ] entirely concur with the Vice Chancellor, that the settlement was for value given by the wife-namely, the consideration of marriage; and that she was no party to the fraud, and that it is unimpeachable on the part of the creditors."

In Hardey v. Green (t) Lord Langdale, M. R., up- Ante-nuptial held a mutual covenant by husband and wife on their contract to settle aftermarriage to settle all after-acquired property (u) on acquired prosuch trusts as the wife should appoint, and, in default perty upheld. of appointment, on certain trusts for the husband, wife, and children, although at the time of the covenant the husband was insolvent, and neither he nor the wife had any property.

So where (v) a man fraudulently obtained administration to an intestate's estate, and settled on his marriage the property thus acquired, being in debt at the time, an injunction was granted restraining the trustees from dealing with the capital of the property, but not interfering with their application of the income to the trusts of the settlement (w).

(t) 12 Beav. 182, but see Ex parte Bolland, L. R. 17 Eq. 115, where the covenant was by the husband alone.

(u) See 46 & 47 Vict. c. 52, s. 47.

(v) Gibson v. Head, 17 W. R. 986.

(w) See also Richardson v. Horton, 7 Beav. 112; post, pp. 165, 166.

upsetting a deed on valuable consideration.

[ * 93 ]

* CHAPTER V.

BADGES OF FRAUD IN CONVEYANCES FOR VALUE.

Difficulty of THOSE who undertake to impeach for mala fides a deed which has been executed for valuable consideration have a task of great difficulty to discharge (x). The fact that there is valuable consideration shews at once that there may be purposes in the transaction other than the defeating or delaying of creditors, and renders the case, therefore, of those who contest the deed more difficult (y).

Actual fraud must be proved.

No invariable rule as to

what is fraud.

No certain rules can be laid down as to what is an honest transaction or the opposite; and though it was at one time attempted to lay down rules that particular things are indelible badges of fraud, this cannot be so, for every case must stand on its own footing; and the Court or the jury (z) must consider whether, having regard to all the circumstances, the transaction was a fair one, and intended to pass the property for a good and valuable consideration (a).

It is a question of actual and express fraud, and, as actual fraud is always a question of fact more than of law, it is impossible to lay down any definite and exact rules as to what is or what is not fraud (b). To do so would be to give to persons fraudulently inclined the power of evading the jurisdiction of the Courts by fresh contrivances which might be invented to elude any invariable, inflexible rule (c). Fraud, in its legal sense, has been defined as an act unwarranted in law, 94] to the prejudice of a *third person,

[

*

66

and not

(x) Per Sir G. J. Turner, V.C., in Harman v. Richards, 10 Hare, 81, 89; and see Wakefield v. Gibbon, 1 Giff. 401.

(y) In re Johnson, 20 Ch. D. per Fry, J., 393.

(z) In re Johnson, 20 Ch. D. 389, S. C. 51 L. J. (N.S.) Ch. 503; and see post, p. 119.

(a) Per Sir R. T. Kindersley, V.C., in Hale v. Metropolitan, &c., Co., 4 Drew. 492; In re Johnson, 20 Ch. D. per Fry, J., 394. But see per Sir G. Bramwell, B., in Harris v. Rickett, 4 H. & N. 5. (b) Holmes v. Panney, 3 K. & J. 90; In re Johnson, 20 Ch. D., per Fry, J., 393, 394, and supra, p. 82.

(c) See Parkes' History of Court of Chancery, p. 508.

that crafty villainy or grossness of deceit to which it is applied in common language" (d): and there are certain circumstances which have always been looked But certain upon as "badges" of fraud; that is, their presence circumstanwill, unless satisfactorily explained, be evidence of bad ces are badges of faith, while, on the other hand, their absence will not fraud. necessarily rebut the existence of fraud.

The first mark of a fraudulent intention within the Badges of statute, mentioned in Twyne's Case (e), is the gener- fraud in conality of the gift; it included all his posessions and left veyances for nothing whatever for the payment of his debts.

value:
1. Generality
of gift.

It has long been clearly settled that a conveyance by Act of banka trader, and since the Bankruptcy Act, 1861, by a non- ruptcy. trader also (f), of his whole property, or what is sub- Conveyance stantially the whole of his property, to trustees for his of whole creditors generally was an act of bankruptcy (ƒ), and, property to when so declared, void.

Such a conveyance

The reason of this was twofold. was regarded as a declaration or admission of insolvency by the debtor, and it was an attempt by him to defeat the great principle of all bankruptcy lawnamely, the equal distribution of the debtor's assets among his creditors.

Under the Bankruptcy Act, 1869 (g), a conveyance or assignment in England or elsewhere of the whole of a debtor's property (whether a trader or non-trader) to a trustee or trustees for the benefit of his creditors generally was an act of bankruptcy, and, when so declared, void.

By the Bankruptcy Act, 1883 (h), this has been reenacted. The decisions, therefore, on the Act of 1869 will apply to cases under the Act of 1883.

An assignment by a debtor of his whole property, or

(d) Harman v. Fisher, Lofft, 472, 476.

(e) 3 Rep. 81 a: ante, p. 86.

(f) Worsley v. Demattos, 1 Burr. 467; Lindon v. Sharp, 6 Man. & Gr. 895; Stewart v. Moody, 1 C. M. & R. 777; Dutton v. Morrison, 17 Ves. 193; Smith v. Cannon, 2 E. B. 35; Robson, Bkcy. 5th ed. 154 et seq.; Yate Lee & Wace, Bkcy, 2nd ed. 23 et

seq.

(g) 32 & 33 Vict. c. 71, s. 6 (1).

(h) 46 & 47 Vict. c. 52, s. 4 (1) A.

trustees for creditors.

of whole property to secure past debt.

Assignment of the whole with a merely colourable exception, to a creditor as a security or in satisfaction or payment of [* 95] a past debt only, even if by a mortgage, has long been held to be fraudulent under the bankruptcy law and an act of bankruptcy, and, when so declared, void, whatever the motives of the parties may have been, because it prevented the other creditors from issuing execution (i). This rule now applies to nontraders as well as traders.

Assignment of all property for past debt

The ground of this is that the necessary effect of such an assignment must be to prevent the debtor (if a trader) carrying on his trade, and, whether a trader or nontrader, to defeat and delay his creditors. The debtor in this class of cases receives no present equivalent for such conveyance (k).

So an assignment by a trader of all his property by way of indemnity for which he receives no equivalent from which benefit may accrue to his general creditors has long been held an act of bankruptcy (1).

If such assignment is partly as security for a past debt, and partly as security for a substantial present (m) or future (n) advance or some other fair equivaand further lent, it is not necessarily an act of bankruptcy; and the intent of the parties must be proved in order to avoid the deed.

advance.

The question in determing this point is, not whether the advance is great or small, but whether there is a bonâ fide intention of carrying on the business. To shew this, the amount of the advance, or the value of the equivalent, is strong evidence to prove whether the parties really meant to enable the debtor to carry on his

(i) Smith v. Cannon, 2 E. & B. 35; Ex parte Foxley, L. R. 3 Ch. 515; In re Wood, L. R. 7 Ch. 302; Ex parte Ellis, 2 Ch. D. per Mellish, L.J., 798; Ex parte Field, 13 Ch. D. 106 n.; and sce cases cited in Twyne's Case, 1 Sm. L. C. 8th ed. pp. 12 et seq.

(k) Tomkins v. Saffrey, 3 App. Cas. 213; Ex parte Chaplin, 26 Ch. D. 319; see Robson, Bkey. 5th ed. 156 et seq.

(1) Worsley v. Demattos, 1 Burr. 467; Leake v. Young, 5¢E. & B. 955.

(m) Ex parte King, 2 Ch. D. 256; Ex parte Ellis, 2 Ch. D., per Mellish, L.J., 798; Ex parte Greener, 46 L. J. (N.S.) Bkey. 76; Ex parte Hauxwell, 23 Ch. D. 626.

(n) Ex parte Dann, 17 Ch. D. 27; Ex parte Wilkinson, 22 Ch. D. 788; Ex parte Fisher, L. R. 7 Ch., per Mellish, L.J., 642, and cases there cited; and see Robson, Bkcy. 5th ed. 161 et seq.