debtors making an assignment for their creditors, selected the son-in-law of one of their number, who lived with one of the debtors, and preferred him as a creditor to a considerable amount; they at first omitted large items from the schedules, and one of these was retained by the debtors for their own 'These circumstances of suspicion pressed upon the assignors for an explanation.'

use.

On the other hand great haste and the omission of the common preliminaries of negotiation and the common provisions, in any considerable transaction, are equally causes for suspecting the transaction; and especially is this true where a purchase of a stock in trade is thus made, and made at a gross sum, and with it unpaid accounts the extent or nature of which is unknown to the buyer. Indeed transfers not in the usual course of trade are, under insolvency statutes, presumptively fraudulent, a and under the statute of Elizabeth they might be badges of fraud.3

136.

1 Leinkauff v. Frenkle, 80 Ala. madge, 160 U. S. 383; Gollober v.

2 Godfrey v. Miller, 80 Cal. 420, 22 Pac. 290; Stevens v. Pierce, 147 Mass. 510, 18 N. E. 411; Buffum v. Jones, 144 Mass. 29, 10 N. E. 471; Alden v. Marsh, 97 Mass. 160.

3 Hoffer v. Gladden, 75 Ga. 532. See Root v. Potter, 59 Mich. 498, 508, 26 N. W. 682. [Kirby v. Tall

Martin, 33 Kan. 252, 6 Pac. 267; Snell v. Harrison, 104 Mo. 158, 16 S. W. 152; Lyon v. Bank, 15 S. D. 400, 89 N. W. 1017. It has been held that the purchase of an entire stock in trade is presumptively with knowledge of insolvency. Dokken v. Page, 147 Fed. 438.]

a Recent statutes of several states protect creditors against sales of merchandise in bulk and not in the usual course of trade, even when accompanied by change of possession. The Massachusetts statute (Acts, 1903, c. 415) is as follows:

Section 1. The sale in bulk of any part or the whole of a stock of merchandise, otherwise than in the ordinary course of trade and in the regular and usual prosecution of the seller's business, shall be fraudulent and void as against the creditors of the seller, unless the seller and purchaser, at least five days before the sale, make a full, detailed inventory, showing the quantity and, so far as possible with exercise of reasonable diligence, the cost price to the seller of each article to be included in the sale; and unless the purchaser demands and receives from the seller a written list of

But all these minor badges of fraud, that is, all badges insufficient to create a presumption, are upon a sliding scale of names and addresses of creditors of the seller, with the amount of indebtedness due or owing to each and certified by the seller, under oath, to be, to the best of his knowledge and belief, a full, accurate and complete list of his creditors and of his indebtedness; and unless the purchaser shall, at least five days before taking possession of such merchandise, or paying therefor, notify personally, or by registered mail, every creditor whose name and address are stated in said list, of the proposed sale and of the price, terms and conditions thereof.

Section 2. Sellers and purchasers under this act shall include corporations, associations, co-partnerships and individuals, but nothing contained in this act shall apply to sales by executors, administrators, receivers, assignees under a voluntary assignment for the benefit of creditors, trustees in bankruptcy, or by any public officer under judicial process. See Hart v. Brierly, 189 Mass. 598, 76 N. E. 286; Gallus v. Elmer, 193 Mass. 106, 78 N. E. 772.

Similar laws have been enacted in about half the states. See California, Code, sec. 3440, Am. of Mar. 10, 1903; Colorado, Mills Ann. Stats. 2034, a, b; Connecticut, Gen. Stats. secs. 4868, 4869; Delaware, Laws 1903, c. 387; District of Columbia, U. S. Stats. at Large, c. 1809; Georgia, Laws 1903, No. 457; Sampson v. Brandon Co., 127 Ga. 454, 56 S. E. 488; Idaho, Laws 1903, H. B. 18; Illinois, Laws 1905, p. 284; Indiana, Burns Ann. Stats. (1901) sec. 6637a; Sellers v. Hayes, 163 Ind. 422, 72 N. E. 119; Kentucky, Acts 1904, c. 22; Maine, Laws 1905, c. 114; Maryland, Laws 1906, c. 421; Michigan, Acts 1905, c. 223; Spurr v. Travis, 145 Mich. 721, 108 N. W. 1090; Musselman Co. v. Kidd, 151 Mich. 478, 115 N. W. 409; Pierson & Hough Co. v. Noret, 154 Mich. 266, 117 N. W. 644; Minnesota, Rev. Laws (1905) sec. 3503; Montana, Laws 1907, c. 145; Nebraska, Laws 1907, c. 62; New Jersey, Laws 1907, c. 237; New York, Laws 1902, c. 528; amended 1907, c. 722, Cons. Laws c. 45, § 44; North Dakota, Laws 1907, c. 221; Ohio, 1902, H. B. 334; Oklahoma, Sess. Laws, 1903, p. 249; Oregon, Billinger's Ann. Code and Stats. c. 7; Tennessee, Acts 1901, c. 133; Utah, Laws, 1901, c. 67; Vermont, Acts 1906, No. 140; Virginia, Code (1904) 2460a; Washington, Laws 1901, c. 109, Ball. Code, Supp. § 3102, Pierce's Code, sec. 5346; Kohn v. Fishbach, 36 Wash. 69, 78 Pac. 199; Wisconsin, Laws 1901, c. 463 (establishing merely a presumption of fraud. Fisher v. Herrman, 118 Wis. 424, 95 N. W. 392). In several of the above states, the statute has been held unconstitutional. Off v. Morehead, 235 Ill. 40, 85 N. E. 264; Wright v. Hart, 182 N. Y. 330, 75 N. E. 404, reversing 103 App. Div. 218, 93 N. Y. Supp. 60 (law of 1902 held unconstitutional. The amended law of 1907 is less sweeping in its provisions); Miller v. Crawford, 70 O. St. 207, 71 N. E. 631; Block v. Schwartz, 27 Ut. 387, 76 Pac. 22. In other states laws of the same general purport, but in some cases less stringent in their provisions have been sustained. Walp v. Mooar, 76 Conn. 515, 57 Atl. 277; Hart v. Roney, 93 Md. 432, 49 Atl. 661; Squire & Co. v. Tellier, 185 Mass.

values, for better or worse according to their own nature and according to the influence of accompanying facts. Indeed no line can be drawn between them and ordinary evidence; into that they imperceptibly shade; and there is no rule of law by which they can be said to emerge from the same. Any case may give rise to new ones."

18, 69 N. E. 312; Williams v. Bank, 15 Ok. 477, 82 Pac. 496; Neas v. Borches, 109 Tenn. 398, 71 S. W. 50; McDaniels v. J. J. Connelley Shoe Co., 30 Wash. 549, 71 Pac. 37; also cases cited above in connection with the statutes of the several states. The Connecticut statute, at least, is not in conflict with the Federal constitution. Lemieux v. Young, 212 U. S. 489. It has been held that such a statute includes fixtures necessary to the business. Parham v. Potts-Thomson Co., 127 Ga. 303, 56 S. E. 460. The Massachusetts and Minnesota statutes are not so interpreted. Adams v. Young, 200 Mass. 588, 590, 86 N. E. 942; Kolander v. Dunn, 95 Minn. 422, 104 N. W. 371. See Albrecht v. Cudihee, 37 Wash. 206, 79 Pac. 628, that a cash register is not within the statutes.

A restaurant and boarding-house was held to fall within the Washington statute (Plass v. Morgan, 36 Wash. 160, 78 Pac. 784), but not so of horses in a livery stable. Everett Produce Co. v. Smith, 40 Wash. 566, 82 Pac. 905.

The statute does not include mortgages. Hannah v. Richter Co., 149 Mich. 220, 112 N. W. 713. But a sale to a creditor in satisfaction of the debt is within the statute. Sampson v. Brandon Co., supra. If the goods are subject to a mortgage, of which the vendee takes an assignment, the valid mortgage does not merge in the invalid title to the equity, and can be enforced. Adams v. Young, supra.

The vendee has no lien for the purchase price, nor can the transaction be treated as a mortgage. Farrar v. Lonsby Co., 149 Mich. 118.

In Massachusetts, it is held that, the transaction being merely voidable (as the court interprets the word 'void '), a purchaser from the vendee in good faith, supposing that the statute was complied with, and for a valuable consideration, is protected. Kelly-Buckley Co. v. Cohen, 195 Mass. 585, 81 N. E. 297.

a Among other badges of fraud may be mentioned proof that two corporations involved in a transaction had the same directors. O'Connor Co. v. Coosa Co., 95 Ala. 614, 10 So. 290; Nixon v. Joshua Hendy Machine Works, 51 Wash. 419.

The following cases may be found useful as indicating the attitude of the courts toward miscellaneous badges of fraud, and the weight which such badges have been allowed to have in determining their decisions. First Nat. Bank v. Fitch, 99 Ind. 443; Roberts v. Radcliff, 35 Kan. 502, 11 Pac. 406; Elerick v. Braden, 38 Kan. 83, 15 Pac. 882; Wing v. Miller, 40 Kan. 511, 20 Pac. 119; Fuller v. Brewster, 53 Md. 538; Lansing Bank v.

Harrington, 151 Mich. 268, 114 N. W. 1030; Boyer v. Tucker, 70 Mo. 457; Lohmann v. Stocke, 94 Mo. 672, 8 S. W. 9; Hildreth v. Sands, 2 Johns. Ch. 35; Blaut v. Gabler, 77 N. Y. 461, affirming 8 Daly 48; Banner v. May, 2 Wash. 221, 26 Pac. 248; Martin v. Rexroad, 15 W. Va. 512; Norris v. Persons, 49 Wis. 101, 5 N. W. 224.

CHAPTER XVIII.1

THE SAVING:

VALUABLE CONSIDERATION.

§ 1. THE STATUTES: DEFINITION.

2

4

3

THE statute of 13th Elizabeth closes with a proviso or saving to the effect that the Act shall not extend to any estate or interest in lands or chattels had, made, conveyed, or assured, which estate or interest is upon good consideration and bona fide conveyed or assured to any persons or body politic or corporate, not having at the time of the conveyance or assurance to them any manner of notice or knowledge of the covin, fraud, or collusion. So far as concerns its effect as a declaration of substantive law, the statute is only a special enactment of the broad rule that purchase of the legal title 3 for value in good faith cuts off equities; a rule which would 1 See chapter 6. 4 As to the burden and order of proof see Zimmer v. Miller, 64 Md. 296, 1 Atl. 858; Houston v. Blackman, 66 Ala. 559; Whelan v. McCreary, 64 Ala. 319; Roswald v. Hobbie, 85 Ala 73, 4 So. 177; Letson v. Reed, 45 Mich. 27, 7 N. W. 231 (which is not entirely in accord with Starin v. Kelly, 88 N. Y. 418. See also Callan v. Statham, 23 How. 477; Lipscomb v. McClennam, 72 Ala. 151; Buchanan v. Buchanan, ib. 55; Neal v. Gregory, 19 Fla. 356; Cothran v. Forsyth, 68 Ga. 560; Booher v. Worrill, 57 Ga. 235. In some cases it is said that proof of fraud on the part of the vendor is not enough. Burdsall v. Waggoner, 4 Colo. 256. But it is clear that such proof makes

2 Zoeller v. Riley, 100 N. Y. 102, 2 N. E. 388. [Gaines v. White, 1 S. D. 434, 47 N. W. 524; Prather v. Hairgrove, 214 Mo. 142, 112 S. W. 552.]

3 Purchase of an equitable title is generally held not to be within the protection; 'qui prior in tempore, prior in jure' applying to such a case. Parker v. Clark, 30 Beav. 54; Wailes v. Cooper, 24 Miss. 208. But much may be said on the other side. 1 Harvard Law Rev. 1, by Professor Ames. And indeed there appears to be judicial authority against the rule. French v. Hope, Pump Court, vol. 4, p. 158, Kekewich, J. apparently denying Parker v. Clark, supra.