May, 1898.] Opinion of the Court-CORSON, P. J. tion confers upon Laird, the trustee, no authority to do any act in relation to the real property, or to the creation or revocation of any estate therein, or any charge thereon. The distinction between the creation of an express trust and a power in trust is thus stated by the court of appeals in Townsend v. Frommer, supra: "The object sought in the revision of the statute, as the revisors have stated in their notes, was to limit the creation of express trusts to those cases where the purposes of the trust seemed to require that the legal estate should pass to the trustee, and to give legal effect to a purpose, where such a necessity did not exist, by permitting its execution as a power in trust, if contemplating the performance of some act." The learned counsel for the appellants call our attention to Sections 3916, 3917 and 3918, Comp. Laws, and insist that the instrument in question comes clearly within the provisions of these sections. In all of these sections, as will be seen by a reading of them, reference is made to the former provisions on uses and trusts. These sections read as follows. "Sec. 3916. A trust may be created for any purpose for which a contract may lawfully be made, except as otherwise prescribed by the titles on uses and trusts and on transfers. Sec. 3917. Subject to the provisions of Section 2795, a voluntary trust is created as to the trustor and beneficiary, by any words or acts of the trustor, indicating with reasonable certainty: (1) An intention on the part of the trustor to create a trust; and (2) the subject, purpose and beneficiary of the trust. "Sec. 3918. Subject to the provisions of Section 2795, a voluntary trust is created, as to the trustee by any words or acts of his, indicating with reasonable certainty (1) his accept ance of the trust, or his acknowledgment, made upon sufficient consideration, of its existence, and (2) the subject, purpose and beneficiary of the trust." The provisions of these sections therefore do not qualify the provisions contained in the former sections. Our conclusions are that no estate was vested in the trustee by the so called trust deed, and that the instrument is invalid as a power in trust. No estate being vested in Laird, none, of course, could be vested in Murphey; and his deed to plaintiff was a nullity. The views here expressed render it unnecessary to discuss the other questions presented. The judgment of the circuit court is affirmed. SPRAGUE et al. v. RYAN. A debtor conveyed property to defraud creditors, receiving its value in cash and notes. The grantee, at the debtor's request, mortgaged the property, and used the money in paying a bonu fide debt of the debtor, who credited the grantees' notes with the amount. Held, that the grantee would be relieved from claims of other creditors, to the extent of such payment. (Opinion filed May 21, 1898.) Appeal from circuit court, Pennington county. Hon. WILLIAM GARDNER, Judge. Action by Albert A. Sprague and others against George W. Ryan, to recover the value of certain real estate. From an order overruling a demurrer, plaintiffs appeal. Affirmed. The facts are stated in the opinion. May, 1898.J Opinion of the Court-CCRSON, P. J. Wood & Buell, for appellants. Cited Byrnes v. Volz, 54 N. W. 942; Morris v. Nyswanger, 5 S. D. 307. Schrader & Lewis, for-respondent. In an action to cancel a deed for fraud all matters of accounting or growing out of the transfer are a part of the issues and cannot be re-litigated. Waite Fraud. Con., § 176; Gohan v. Crawford, 25 S. E. 123; Vance Sho. Co. v. Haight, 23 S. E. 553; Collumb v. Read, 24 N. Y. 505. Where a fraudulent grantee gives a mortgage to secure a creditor at the request of the grantor the mortgage is good and is as though made by the grantor before the fraudulent conveyance. Brooks v. Wilson, 6 N. Y. Sup. 116; Murphy v. Briggs, 89 N. Y. 446; Bump on Fraud. Con., 607 608. Even if the intent on the part of the defendant had been fraudulent yet the mortgage would have been good. Williams v. Harris, 4 S. D. 29; Comp. Laws, §§ 4653-4654. CORSON, P. J. This is an appeal from an order overruling a demurrer to the answer. The action was instituted by the plaintiffs, who were judgment creditors of a firm of which one Frease was a member, to the amount of about $5,500, to recover of the defendant the value of certain real estate (alleged to be about $3,500) that said Frease had conveyed to him with intent to hinder and defraud the creditors of said Frease, and to which fraudulent intent the defendant was a party, and which the defendant transferred to an innocent grantee, thereby preventing the plaintiffs from levying upon it to satisfy their judgment. The defendant, in effect, admitted the conveyance of the property to him, subject to a $2,500 Opinion of the Court-CORSON, P. J. [11 S. D. mortgage previously executed by Frease and wife in good faith, and denied that Frease's interest in the property exceeded $3,000 in value, which sum he had agreed to pay Frease therefor. He further alleged that, a short time after said conveyance to him, he, at the request of said Frease, mortgaged said property to certain bona fide creditors of said Frease for $2,250, subject to said $2,500 mortgage, and which said $2,250 was credited upon the notes given by him to said Frease for the purchase price of said property, and that he subsequently paid said Frease $750, the balance of said purchase price, in cash. He further alleges that the said two mortgages were foreclosed, and the property sold for the amount due upon said two mortgages, and was not redeemed from such sale. He further alleged that said plaintiffs commenced an action against this defendant to set aside the conveyance from Frease to him on the ground that the same was fraudulent and void as to the creditors of Frease, and a judgment was duly entered therein, vacating and setting aside said sale, and revesting the title to said property in said Frease, thereby subjecting it to levy under plaintiffs' said judgment. The plaintiffs contend that as the property was fraudulently conveyed to the defendant, and by him mortgaged to innocent mortgagees, thereby depriving the plaintiffs of the benefit of a levy upon said property under their judgment, he is liable to them for the full value of the same at the time of the transfer to him. The defendant, on the other hand, contends that as he appropriated the property to the payment of the debt of the said Frease, at his request, such appropriation constitutes a good defense to this action. He further contends that as the plaintiffs recovered a judgment against him, setting May, 1898.] Opinion of the Court-CORSON, P. J. As aside and vacating said conveyance from Frease to him, the title to said property was thereby revested in Frease, and was subject to execution upon the plaintiffs' judgment, and that any claim for an accounting could have been determined in that action; that matters of accounting growing out of the transfer were a part of the issues in that case, and that they cannot again be litigated. It would appear, therefore, from the answer, that the defendant applied $2,250 of the $3,000 he had agreed to pay for the property,' and which, it is conceded, was its value, over and above the $2,500 mortgage, to the payment of a valid and bona fide debt due the creditors of Frease. Frease could have preferred these creditors, and executed a mortgage to secure such debt due from him to them (Manufacturing Co. v. Max, 5 S. D. 125, 58 N. W. 15), it would seem to follow that the execution of the mortgage at the request of Frease should relieve the defendant, to the extent of such payment, from the claim of these plaintiffs; and this view seems to be sustained by authority. Mr. Bump, in his work on Fraudulent Conveyances, says: "The creditors, however, ought to receive their debts, and the law gives them a claim to the property, and charges the grantee as a trustee in consequence of his possession. The trust is not express, but arises by operation of law, in consequence of his having in his hands that which ought to be applied to the satisfaction of their demands. It depends, therefore, on the possession of the property. the grantee therefore devests himself in good faith of that which he could not retain without dishonesty before the right of the creditors to call him to an account accrues, there is nothing remaining upon which to raise a trust, and the relation of trustee ceases. The grantee for the same reason cannot be 1 |