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contract was consummated by an absolute delivery and acceptance, and provided it was done in good faith, and not with the colourable design of favouring a particular creditor. He cannot rescind the contract after the transit has ceased, and the goods have been actually received into his possession, and the rights of other creditors have
attached.a *515 *(1.) On the subject of fraudulent sales, another
and a very vexatious question has arisen, as to the legal consequence and effect of an agreement between the parties at the time of the sale, that possession was not to accompany and follow the bill of sale of the goods. There is no doubt of its being evidence of fraud; but the great point has been, whether the fraud which was to be inferred in such a case, was an inference of law to be drawn by the court, and resulting inevitably from the fact, or whether the fact was only evidence of fraud to be drawn by the jury, and susceptible of explanation. The history and diversity of the decisions on this subject form a curious and instructive portion of our jurisprudence.
By the English statutes of 3 Flen. VII. and 13 Eliz. ch. 5, which have been re-enacted in New York,b and the essential provisions of which have been adopted generally throughout the United States, all conveyances of goods and chattels not made bona fide and upon good consideration, but in trust for the use of the person conveying them, or made to delay, hinder, or defraud creditors, are declared to be void ; and it is everywhere admit
• Barnes v. Freeland, 6 Term Rep. 80. Richardson v. Goss, 3 Bos. $ Pull. 119. Neate v. Ball, 2 East's Rep. 117. Dixon v. Baldwin, 5 Ibid. 175 Salter v. Field, 5 Term Rep. 211. In Neate v. Ball, Lord Kenyon said, it was much to be wished, that where goods continued in bulk, and discernible from the general mass of the trader's property at the time of bankruptcy, that they could be returned to the original owners who had received no compensation for them, but that it could not be done without breaking in upon the whole system of the bankrupt laws.
. Vide supra, p. 440.
ted, that the statutes of fraud of 13 and 27 Eliz. were declaratory of the principles of the common law; and the decisions of the English courts, are, therefore, applicable to questions of constructive fraud arising in this country.b
Twyne's case, which arose in the star chamber in the 44th Eliz., is the basis of the decisions on the question of fraud arising from possession being retained by the vendor.
Among other indicia of fraud upon which the court relied, "and adjudged the deed fraudulent in *516 that case, a prominent one was, that the vendor, after a bill of sale of chattels for a valuable consideration, to a creditor continued in possession, and exercised acts of ownership over the goods. Afterwards, in Stone v. Grubham,d upon a bill of sale of chattels, being a lease for years the vendor continued in possession ; but as the conveyance was only conditional upon payment of money, it was held, that the possession did not avoid the sale, as by the terms of the deed the vendee was not to have possession until he had performed the condition. The rule was explicitly declared in Sheppard's Touchstone, in the time of James I., that if a debtor secretly made a general deed of his goods to one creditor, and continued the use and occupation of the goods as his own, the deed was fraudulent, and void against a subsequent judgment and execution creditor, notwithstanding the
Lord Mansfield, Cowp. Rep. 434. Marshall, Ch. J., 1 Cranch's Rep. 316. Robertson v. Ewell, 3 Munf. Rep. 1. Story, J., 1 Gall. Rep. 423.
By constructive frauds are meant such contracts or acts, as, though not originating in any actual evil design or contrivance, to perpetrate a positive fraud or injury upon other persons, are yet, by their tendency to deceive or mislead other persons, or to violate public or private confidence, or to impair or injure the public interests, deemed equally reprehensible with positive fraud ; and therefore are prohibited by law, as within the same reason and mischief as contracts and acts done malo animo. Story's Comm. on Equity Jurisprudence, 261. • 3 Co. 87, S. P. Infra, p. 532, note.
2 Bulst. Rep. 225. Vol. II.
deed was made upon good consideration. Again, in Bucknal v. Roiston, a bill of sale of goods was given by way of security or pledge for money lent, and a trust in the vendor to keep the goods, and sell them for the benefit of the vendee, appeared on the face of the deed ; and for that reason it was held by the lord chancellor not to be fraudulent. One of the counsel in that case observed, that it had been ruled forty times in his experience at Guildhall, that if a man sells goods, and still continues in possession as visible owner of them, the sale was fraudulent and void as to creditors. The case of a mortgage of goods was afterwards held, in Ryall v. Rowles, not to form an exception to the general rule recognized in the former cases. It was declared by very strong authority in that case, that a mortgagee of goods, permitting the mortgagor to keep possession, had no specific lien against general assignees under a commission of bankruptcy ; and he was understood to confide in the personal credit
of the vendor, and not in any security. Though *517 *that case was decided upon the bankrupt act of
21 James I., and not upon the statutes of Elizabeth, the reasoning of the court relative to the distinction between absolute and conditional sales and mortgages, was founded on general principles applicable to every case. It was the doctrine of the case, that in a mortgage of goods the mortgagee takes possession; and that there was no reason, unless in very special cases, why an absolute or conditional vendee of goods should leave them with the vendor, unless to procure a collusive credit. There was no distinction, it was admitted, under the 13 Eliz., between conditional and absolute sales of goods, provided they were fraudulent; and continuance in possession by the mortgagor was fraudulent at common law, and void by the statute of Elizabeth.
The doctrine of that case was powerfully sustained by Lord Mansfield, in Worsely v. Demattos & Slader.a That case arose under the bankrupt act of 21 James I., and it was held by the K. B., that a mortgage of goods, with possession retained by the mortgagor, was fraudulent in law, equally as it would be upon an absolute sale. To give a creditor priority by such a mortgage, when the mortgagor is allowed to appear and act as owner, is enabling him to impose upon mankind by false appearances; for where possession is not delivered, goods may be mortgaged a hundred times over, and open a plentiful source of deceit. But in Cadogan v. Kennet,b where household goods, by settlement before marriage, in consideration of the marriage, and of the wife's marriage portion, were conveyed to trustees in trust for the settler for life, remainder to his wife for life, and remainder to the sons of the marriage, it was held, that those goods were protected from execution in favour of a creditor existing at the time of the settlement, though the grantor continued in possession of the goods. The transaction was fair and honest in point of fact, and it was part of the trust that the goods should continue in the house. *Other subsequent cases have establish- *518 ed the rule, that the wife's goods may, before marriage, be conveyed to trustees with her husband's assent, for her use during coverture, and such property will not be liable to his debts.c Again in Edwards v. Harben, the K. B. laid down the principle emphatically, that if the vendee took an absolute bill of sale, to take effect immediately by the face of it, and agreed to leave the goods in possession of the vendor for a limited time, such an absolute conveyance, without the possession, was such a circumstance per se as made the transaction fraudulent
• 1 Burr. Rep. 467. • Cowp. Rep. 432.
• Hasselinton v. Gill, 24 Geo. III. 3 Term Rep. 620. n. Jarman v. Woloton, 3 Ibid. 618.
d2 Term, 587.
in point of law. It was admitted, however, that if the want of immediate possession be consistent with the deed, as it was in Bucknal v. Roiston, and Lord Cadogan v. Kennet, and as it is if the deed be conditional, and the vendee is not to have possession until he has performed the condition, the sale was not fraudulent, for there the possession accompanied and followed the deed within the meaning of the rule.
After the English rule on this subject had been thus discussed, declared and settled, it was repeatedly held, that an absolute bill of sale of chattels, unaccompanied with possession, was fraudulent in law, and void as against creditors. The change of possession was required to be substantial and exclusive. But, on the other hand, there have been many exceptions taken, and many qualifications annexed to the general rule; and it has become difficult to determine when the circumstance of possession not accompanying and following the deed, are per se a fraud in the English law, or only presumptive evidence of fraud, resting upon the facts to be disclosed at the trial.
It certainly is not any thing more, if the purchaser *519 was not a creditor at the time, and the goods were
under execution, and the transaction was notorious, and not, in point of fact, either clandestine or fraudulent.
In Kidd v. Rawlinson, goods were purchased on execution by a stranger, and left in possession of the debtor for a temporary and honest, and humane purpose; and as the parties did not stand in the relation of debtor and creditor, Lord Eldon, as Ch. J. of the C. B., held, that the title was in the vendee. He admitted, that a bill of sale of goods might be taken as security on a loan of money, and the goods fairly and safely left with the
Paget v. Perchard, 1 Esp. N. P. Rep. 205. Wordell v. Smith, 1 Campb. N. P. Rep. 332. In Eastwood v. Brown, 1 Ryan f. Moody, 312, Lord Tenderden dissented from the doctrine in Wordell v. Smith, and he held non-delivery into possession to be only prima facie evidence of fraud.
2 Bos. f. Pull. 59.