8 4. beth; but if fraudulent under the latter Act, the transaction must necessarily fall within the former (o). An assignment of property may likewise be fraudulent at common law. The law as to fraudulent assignments or fraudulent gifts of property is of very ancient origin (oo). As an act of bankruptcy, such assignments did not come into existence under 13 Eliz. c. 5 and 27 4, but were introduced by 1 Jac. I. c. 15, described Eliz. c. thus: "If any trader shall make or cause to be made any fraudulent grant or conveyance of his lands, tenements, goods or chattels, to the intent or whereby his creditors shall or may be defeated or delayed for the recovery of their just and true debts, he shall be adjudged a bankrupt." It was frequently held that such grants or conveyances must have been by deed, and whether of lands or of chattels, so as to amount to an act of bankruptcy, and transfers not under seal were for the first time made capable of becoming acts of bankruptcy by 6 Geo. IV. c. 16, s. 3; until then such conveyances were only voidable as fraudulent preferences, thereafter they were made available as acts of bankruptcy. The following passage is taken from Williams' Bankruptcy, commenting on this section: "When fraudulent assignments not under seal become available as acts of bankruptcy one ground which has justified the invention of the judicial doctrine of fraudulent preference was removed, and the present Act (1869), by carrying back relation (see Sect. 11) to any act of bankruptcy committed within twelve months of the adjudication, provided there be a sufficient petitioning creditors' debt, has almost, if not entirely, put an end to the necessity for the doctrine of fraudulent preference, although the present Act seems by express enactment to incorporate the doctrine, but the construction put upon Sect. 92 by the Courts has materially altered the old law of fraudulent preference." The section of the present Act which corresponds with Sect. 92 is Sect. 48, which avoids certain transactions as fraudulent preferences (see notes to that section), and the trustee's title by relation back is defined in the 43rd section, corresponding to the 11th section of the Bankruptcy Act, 1869, such title now only relating back to three months prior to the presentation of the petition, and corresponding with the same limit under Sect. 48. (0) Ex parte Games re Bamford, L. R. 12 Ch. D. 314. (00) See 3 Hen. VII. c. 4, and also 50 Ed. III. c. 6. The Act of Elizabeth was not the first attempt of the legislature to foil covinous transactions, for by 3 Hen. VII. c. 4, "all deeds of gift of goods and chattels made or to be made of trust to the use of the person or persons that made the same deed of gift" are declared void and of none effect, and even prior thereto the statute of 50 Ed. III. c. 6, avoided in terms collusive gifts in favour of creditors. When, under the statute 13 Eliz. c. 5, it is sought to invalidate a transfer of goods, the question is always one of bona fides, and therefore proper for the consideration of the jury. In the leading case (p) decided upon this statute, the question being whether the gift was fraudulent and of no effect, the points resolved were (1.) That the gift had the signs and marks of fraud, because the gift is general without exception of apparel, or of anything of necessity (it was of everything). (2.) The donor continued in possession and used them as his own, and by reason thereof he traded and trafficked with others, and defrauded and deceived them. (3.) It was made in secret, et dona clandestina sunt semper suspiciosa. (4.) It was made pending the writ. (5.) It was coupled with a trust between the parties, and fraud is always clad with a trust, and trust is the cover of fraud. (6.) The deed alleged bona fules et clausula inconsuet semper inducunt suspicionem. (7.) That although made on a true and good consideration, yet it was not bona fide, because accompanied with a trust. A good consideration does not suffice, if it be not also bonâ fide. So when the facts are to be determined by the jury, all or any of the above elements would be properly left to them to ascertain whether they exist (q). Where a bill of sale of chattel property is executed by a debtor to his creditor purporting to convey the property to the vendee immediately, yet the vendor is after its execution suffered to remain in possession, a very strong presumption of fraud arises, for, as Lord Coke remarks in the principal case: (p) Tyne's Case, Smith's L. Ca. 7 Ed., vol. i., p. 1. (q) Martindale v. Booth, 3 B. & Ad. 498; Reed v. Blades, 5 Taunt. 212; Lindon v. Sharp, 6 Man. & G. 895; Pennell v. Dawson, 18 C. § 4. § 4. "Continuance in possession by the donor is a sign of a trust for his benefit;" and therefore where a creditor took an absolute bill of sale of the goods of his debtor, but agreed to leave them in his possession for a limited time, and in the meantime the debtor died, whereupon the creditor took and sold the goods, he was held liable to be sued as executor de son tort for the debts of the deceased (r). In this case the Court also said if there was nothing but the absolute conveyance without the possession, that in point of law was fraudulent (s); but it would scem that since these decisions the tendency of the Courts has been to qualify the doctrine laid down in Edwards v. Harben, and to leave the whole circumstances of each case to the jury, bidding them decide whether the presumption of fraud deducible from the absence of a transmutation of possession shall prevail (t). Notoriety of the transfer may negative this presumption, and is always strong evidence of the fact (u). Where the transaction is not, however, an absolute assignment, but is by way of mortgage, the absence of change of possession is no evidence of fraud; as, for instance, in the case of bills of sale, where by the very terms of the deed the grantor is to retain possession until some future time, this being consistent with the assignment. Such possession is said to accompany and follow the deed (x). A conveyance otherwise void as against particular persons under the statute of Elizabeth may still be good as against the person making it (y); and also against any other person privy and consenting to it (z), and also against strangers other than creditors or bona fide purchasers for valuable consideration (a). A sale of property for good consideration is not, either at common law or under the statute of Elizabeth, void merely because it is made with intent to defeat the expected execution of a judgment creditor (b). And an assignment immediately (r) Edwards v Harben, 2 T. R. 587. (8) And see Lord Ellenborough's remarks in Wordall v. Smith, 1 Camp. 333. (t) Smith's L. Ca., 7 Ed., vol. i., p. 14. (u) Latimer v. Batson, 4 B. & C. 652; Leonard v. Baker, 1 M. & S. 251. (x) Edwards v. Harben, supra. (y) Robinson v. M'Donnell, 2 B. & A. 134. (z) Steel v. Brown and Parry, 1 Taunt. 381. (a) Bessey v. Windham,6Q. B. 166. (b) Wood v. Dixie, 7 Q. B. 892; Hale v. The Saloon Omnibus Co., 4 Drew. 492; 28 L. J. Ch. 777; Darvill v. Terry, 6 H. & N. 807 ; 30 L. J. Ex. 355; but see Bott v. Smith, 21 Beav. 511. before conviction by a person guilty of felony, if made for a good consideration and bond fide, is good (c). A marriage settlement is void where there is an intent to defraud and delay creditors, and the marriage is only part of a scheme to protect the property from their claims (d). And although the marriage be bonâ fide, and the settlor solvent at the date of the settlement, a general covenant in an ante-nuptial settlement made by a trader to settle all after-acquired property upon the wife and children was held independently of Sect. 91 of the 1869 Act void as against creditors (e). And see as to settlements void under this Act, Sect. 47. So far as to assignments which are fraudulent at common law and under the statute of Elizabeth; but assignments or conveyances are also fraudulent, and, as such, acts of bankruptcy when they are either (1.) Fraudulent assignments of the whole of the debtor's property. (2.) Fraudulent assignments of part of a debtor's property. In both of the above cases the assignments are deemed to be legally fraudulent, and, as such, acts of bankruptcy, whenever they are preferences of particular creditors, and in contravention of the principles under which assets are distributable by the bankruptcy law. 8 4. of whole of As to what assignments of the whole of a debtor's property Assignment are deemed to be fraudulent within the bankrupt laws, it may effects. be said that (1.) Any transfer which is fraudulent within the meaning of the statute of Elizabeth is necessarily also fraudulent and an act of bankruptcy under the Bankruptcy Act, and void against the trustee, by virtue of the doctrine of relation back, if within the three months limited by the Act. (2.) An assignment is also fraudulent and void if in effect it tends to defeat and delay creditors, and although not otherwise fraudulent under the statute of Elizabeth, as for instance (a.) If the conveyance be of the whole, or substantially the whole, of a debtor's property. (b.) And if the consideration be a bygone and pre-existing debt (f). (c) Chowne v. Baylis, 31 Beav. 351. (d) Colombine v. Penhall, 1 Sm. & Giff. 228; Bulmer v. Hunter, L. R. 8 Eq. 46. (e) Ex parte Bolland re Clint, L. R. 17 Eq. 115; and Smith's L. Ca., 7 Ed., vol. i., p. 23. (f) Alton v. Harrison, L. R. 4 8 4. (c.) And if there be no fair present equivalent. Therefore, an assignment of the whole of a debtor's property for the benefit of one or of several creditors, to the exclusion of others, is deemed fraudulent in bankruptcy, even though there be no actual fraud, on the principle that the very nature of the transaction is such as to prevent the debtor carrying on his trade (g). This principle has been enunciated in numerous cases under former Bankruptcy Acts (h). As was stated by Lord Mansfield in Worsley v. De Mattos, as to such assignments, "They must either be fraudulently kept secret or produce an immediate absolute bankruptcy." And since the passing of the Act of 1869, it was held (i) that the Act had not in any way altered the law, and it was so notwithstanding the words "with intent to defeat or delay creditors" were omitted. Whether there is a surplus or none, the law is settled, said Mellish, L.J., "that such an assignment" (i.e., of substantially the whole of the property), "though to secure a valid debt, and though by mortgage, is a fraudulent transfer, because it prevents the other creditors from issuing execution." And this principle or rule was also held to be applicable whether the debtor were a trader or not. It is likewise immaterial, if there has been such an assignment, that the debtor was being pressed by the creditor in whose favour it has been made, or that he was under arrest for a just debt, and the deed was followed by immediate possession by the grantee (k). But it would seem that the question as to the necessity for the existence or otherwise of positive fraud in the transaction, so as to vitiate it, will depend upon the important doctrine of "relation back" of the title of the trustee to the specific assign Ch. Ap. 622; Ex parte Fisher re (g) Re Wood, L. R. 7 Ch. 302; Ex (h) Lindon v. Sharp, 7 Scott, 215; Siebert v. Spooner, 1 M. & W. 714; Pennell v. Reynolds, 11 C. B. N. S. 709; Worsley v. De Mattos, 1 Burr. 467; Lomax v. Buxton, L. R. 6 C. P. 107; Woodhouse v. Murray, L. R. 2 Q. B. 634; and Allen v. Bonnett, L. R. 5 Ch. 577. (i) Ex parte Lückes re Wood, L. R. 7 Ch. 302; 41 L. J. Bank. 21. (k) Johnson v. Fesenmeyer, 25 Beav. 88; and Newton v. Chantler, 7 East, 138. |