is not in pari delicto with the grantee,16 as for example, where the transfer is made between parties in confidential relations similar to attorney and client." But it has been held that where a voluntary settlement in trust is executed, the cestui que trust is entitled to the aid of a court of equity to enforce the trust, but not to raise a trust upon an executory agreement without consideration.18 Where two owners in common have united in transferring property to be held in trust for them, and there were reasons for the transfer which would have satisfactorily accounted for it as to both, and it did not appear that the actual effect of the transfer was to delay the creditors of one of them, the fact that one of them thereby intended to defraud his creditors does not prevent the other from enforcing the trust as between him and the trustee, in the absence of satisfactory evidence that he intended to aid the other in carrying out his fraudulent intention.19 The fraudulent trust cannot be set up by the grantor to defeat an action on notes given in fraud of creditors and to enforce a lien on land for the amount of the notes.20 A surety of the grantor, at whose instance the conveyance was made, and who holds a declaration of trust subsequently made for his benefit, cannot set up the fraud to prevent the grantor or his heirs from asserting an equity in the premises." If the grantee voluntarily executes the trust he is bound by that execution.22

14. Purchase at execution sale for the benefit of debtor.Where a secret agreement or arrangement is entered into, between

16. Williams v. Williams, 180 Ill. 361, 54 N. E. 229. And see cases cited § 3, supra.

17. De Chambrun v. Schermerhorn, 59 Fed. 504, although the contract was given to prevent third parties from reaching the fund by means of inequitable and improvident contracts previously made with

them.

18. Bunn v. Winthrop, 1 Johns. Ch. (N. Y.) 329.

19. Bolton v. Pitney, 46 N. J. Eq. 610, 22 Atl. 56; Pitney v. Bolton, 45 N. J. Eq. 639, 18 Atl. 211.

20. Burke v. Burks, 12 Ky. L. Rep. 552, 14 S. W. 686, 953.

21. Irwin v. Longworth, 20 Ohio, 581.

22. Fargo v. Ladd, 6 Wis. 106.

a defendant in execution and a third person, that the latter shall purchase the property of the former at the execution sale and hold it upon a trust for the benefit of the defendant, the object being to remove the property from the reach of creditors and prevent their subjecting it to their claims, it is fraudulent under the statutes relating to fraudulent conveyances, and a court of equity will not grant relief upon the agreement by compelling the purchaser to convey to the defendant in execution,23 except where a creditor has made use of his power over the debtor and by misrepresentation induced him to enter into such a transaction in fraud of other creditors." Such an agreement when made with the plaintiff in execution will be enforced where, upon all the circumstances of the case, there is no reason to impute fraud, and it seems to be to the advantage of all the creditors.25 Where a person purchased land at sheriff's sale, under a parol agreement to hold it for the benefit of the debtor, which was made known to the sheriff, the agreement being void under the statutes of fraud, its existence would not be recognized, and the statement of the agreement at the sale would be deemed fraudulent, so as to give the debtor the benefit of the purchase."6

§ 15. Right to proceeds or profits.-The surplus of proceeds remaining or profits arising from the sale of property conveyed in fraud of creditors, after satisfying the claims of such creditors, belongs to the grantee or his heirs or representatives," and a judg ment setting aside the conveyance should provide that, on satisfy

Jenkins, 97 Mo. App. 27, 70 S. W. 1076.

24. Austin v. Winston, 1 Hen. & M. (Va.) 33, 3 Am. Dec. 583.

25. Marlatt v. Warnick, 19 N. J. Eq. 439.

26. McDonald v. May, 1 Rich. Eq. (S. C.) 91.

27. Burtch v. Elliott, 3 Ind. 99; Mallow v. Walker, 115 Iowa, 238, 88 N. W. 452, 91 Am. St. Rep. 158; Wheeler v. Wallace, 53 Mich. 355, 364, 19 N. W. 33, 37.

ing the creditors, the property be returned or the surplus of proceeds be paid to the grantee.28 A judgment providing for the return of the surplus to the grantor is erroneous.29 The grantor in a fraudulent conveyance, or one claiming under him, has no standing to maintain a bill in equity against the grantee for an account of such proceeds or profits,30 although there was an agreement between the parties to that effect.31 But where a conveyance was made by a debtor for the purpose of defrauding creditors, the grantee, after having reconveyed the property to the grantor and agreed to pay him a certain amount for profits received, while in possession, cannot escape liability under the contract on the ground of the fraud in the conveyance.

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16. Right to enforce payment of consideration.

It is held

by some authorities that, a sale fraudulent as to creditors being valid between the parties, it is no defense to an action against the purchaser for the price of the property sold and delivered that the sale was in fraud of the grantor's creditors. But other authorities

28. Metcalf v. Moses, 35 App. Div. (N. Y.) 596, 55 N. Y. Supp. 179; Comyns v. Riker, 83 Hun (N. Y.), 471, 31 N. Y. Supp. 1042.

29. Looney v. Bartlett, 106 Mo. App. 619, 81 S. W. 481; Maze v. Griffin, 65 Mo. App. 377.

30. Kahn v. Wilkins, 36 Fla. 428, 18 So. 584; Crowninshield v. Kittridge, 48 Mass. 520.

But where a bill of sale which was in fact a mortgage was declared by the mortgagor to be a sale for the purpose of delaying his creditors, it will not prevent the mortgagor from asserting in chancery his claim for an account as against the mortgagee, though it is otherwise as against a purchaser from the mortgagee without notice of the tacts. Ballard v. Jones, 25 Tenn. 455.

31. Kahn v. Wilkins, 36 Fla. 428,

18 So. 584; Cornell v. Pierson, 8 N. J. Eq. 478. And see cases cited in notes to § 13, supra.

32. Stillings v. Turner, 153 Mass. 534, 27 N. E. 671.

33. Allen v. Merriwether, 10 Ky. L. Rep. 600, 9 S. W. 807; Gary v. Jacobson, 55 Miss. 204, 30 Am. Rep. 514; Stanton v. Green, 34 Miss. 576. See Hall v. Richardson, 22 Hun (N. Y.), 444, where plaintiff released her claim to an interest as tenant of a farm belonging to an estate upon the executor orally promising to pay her a certain sum, the agreement was founded on a sufficient consideration and was binding, and it was no defense to an action on the agreement that the plaintiff took the title to the property in her own name to prevent her husband's creditors from seizing it.

hold that it is competent to allege and prove the fraud in defense of the action.3 34 A grantee cannot set up the fact that a conveyance was originally made to defraud creditors as a defense to a bill by his grantor seeking the specific performance of an agreement to purchase. Where one conveys his property to another for the purpose of delaying and defrauding creditors, and takes in return a purchase money note, which it is agreed shall never be paid, no vendor's lien enforceable in equity can arise from the transaction.36

§ 17. Enforcement of note given as consideration.—In some jurisdictions where a debtor conveys property in fraud of creditors in consideration of the grantee's promissory notes, he cannot enforce the collection of such notes against his grantee, if the grantee sets up the defense of fraud." In other jurisdictions, as between the parties, the maker of a note given as consideration for property conveyed in fraud of the grantor's creditors cannot set up the alleged fraud as a defense to the note.38 A sale fraudulent as to creditors is valid between the parties, and therefore the vendor

34. Heineman v. Newman, 55 Ga. 262, 21 Am. Rep. 279; Smith v. Hubbs, 10 Me. 71; McConaughy v. Farney (Neb. 1902), 89 N. W. 812, where the transferee participated in the fraud; Schroeder v. Kisselbach, 5 Ohio Dec. 158, 3 Am. L. Rec. 295. 35. Lynn v. Lyerle, 113 Ill. 128. 36. Glover v. Walker, 107 Ala. 540, 18 So. 251.

37. N. Y.-Starin v. Kelly, 36 N. Y. Super. Ct. 366; Nellis v. Clark, 4 Hill, 424, rev'g 20 Wend. 24.

Mo.-Fenton v. Ham, 35 Mo. 409; Hamilton v. Scull, 25 Mo. 165, 69 Am. Dec. 460; Clay County Bank V. Keith, 85 Mo. App. 409. But see Moore v. Thompson, 6 Mo. 353.

N. J.-Church v. Muir, 33 N. J. L. 318; Servis v. Nelson, 14 N. J. Eq.

94.

N. C.-Powell v. Inman, 52 N. C.

28, 53 N. C. 436, 82 Am. Dec. 426,* such a note is void in the hands of one to whom it was indorsed for collection.

Ohio.-Goudy v. Gebhard, 1 Ohio St. 262.

S. C.-Harvin v. Weeks, 11 Rich. 601; Balke v. Lowe, 3 Desauss. 263. Tex.-Arnold v. Peoples, 13 Tex. Civ. App. 26, 34 S. W. 755.

A note given to a creditor to induce him to consent to a composition of debts cannot be enforced. Cockshott v. Bennett, 2 T. R. 763, 1 Rev. Rep. 617.

38. Ala.-Giddens v. Bolling, 93 Ala. 92, 9 So. 427, note for rent executed for the purpose of hindering and delaying creditors of the tenant.

Cal.-Smith v. 49 & 56 Quartz Min. Co., 14 Cal. 242.

must pay his notes given for the price, though the property be taken from him by the grantor's creditors." Upon the principle that the courts will not aid either party to an executory contract tainted with fraud to enforce it, it may be shown by the maker or his representatives that a note given in payment was made without consideration, for the sole purpose of protecting his property from his creditors, and that it was agreed between the maker and the payee at the time of its execution that it should be cancelled whenever so desired. 40

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§ 18. Recovery by grantee of consideration paid. Where there is actual fraud on the part of both the grantee and grantor," or the property conveyed is seized and sold on execution against the fraudulent grantor,22 or the grantee's title has been avoided by the creditors of the grantor, the grantee is not entitled to be reimbursed on account of any payments made by him in the transaction. But if he received the conveyance in good faith, without any

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Ind. Stevens v. Songer, 14 Ind. 342; Findley v. Cooley, 1 Blackf. 262.

Ky.-Allen v. Meriwether, 10 Ky. L. Rep. 600, 9 S. W. 807; Drane v. Underwood, 1 Ky. L. Rep. 317.

La.-Landwirth v. Shaphran, 47 La. Ann. 336, 16 So. 839; Freeman v. Savage, 2 La. Ann. 269.

Me.-Butler v. Moore, 73 Me. 151, 40 Am. Rep. 348.

Mass.-Dyer v. Homer, 39 Mass. 253; Payson v. Whitcomb, 32 Mass. 212. But compare Gordon v. Clapp, 113 Mass. 335, as to note given for services rendered in carrying out the fraudulent transaction.

Miss.-Gary v. Jacobson, 55 Miss. 204, 30 Am. Rep. 514; Stanton v. Green, 34 Miss. 576.

Nev.-McCausland v. Ralston, 12 Nev. 195, 28 Am. Rep. 781.

Pa.-Harbaugh v. Butner, 148 Pa. St. 273, 23 Atl. 983, note given in

consideration of a confession of judgment.

Tenn.-Hamilton V. Gilbert, 49 Tenn. 680. Compare Walker v. McConnico, 18 Tenn. 228, a note given without consideration cannot be enforced by the payee against the

maker.

Vt.-Carpenter v. McClure, 39 Vt. 9, 91 Am. Dec. 370.

Wis.-Clemens v. Clemens, 28 Wis. 637, 9 Am. Rep. 520.

39. Stanton v. Greene, 34 Miss. 576. 40. McCausland V. Ralston, 12 Nev. 195, 28 Am. Rep. 781.

41. Tissier v. Wailes (Ala. 1905), 39 So. 924; Tickner v. Wiswall, 9 Ala. 305; Leach v. Tilton, 40 N. H. 473; Potter v. Stevens, 40 Mo. 229.

42. Surlott v. Beddow, 19 Ky. 109. 43. Connecticut Mut. L. Ins. Co. v. Smith, 117 Mo. 261, 22 S. W. 623, 38 Am. St. Rep. 656; Bartlett v. Decreet, 70 Mass. 111.