Section 41. Title to or control of property.

42. Retention or change of apparent title or control.

43. Weight and sufficiency of evidence generally.

44. Circumstantial evidence.

45. Evidence of plaintiff's right to sue.

46. Adjudication of creditor's claim.

47. Pleadings.

48. Nature and circumstances of transaction generally. \

49. Transactions between relatives.

50. Indebtedness and insolvency of grantor.

51. Consideration.

52. Intent of grantor to defraud creditors.

53. Knowledge and intent of grantee or purchaser from grantee.

Section 1. Presumptions and burden of proof generally.— The fact that the consideration for a transfer of property to one is paid by another, without other evidence, is presumptive proof of fraud, but it is not conclusive, and casts the burden upon the grantee to disprove a fraudulent intent in the defense of his title.1 So, the fact that a conveyance by one indebted is voluntary, the retention of possession of goods and chattels by the seller,3 the fact that there are reservations and trusts for the grantor in the conveyance, the fact that the relationship between the parties is husband and wife, etc., creates a rebuttable presumption that the conveyance or transfer is fraudulent as to creditors, and throws upon those seeking to uphold the transaction the burden of showing that it was bona fide and without fraudulent intent. The statutory presumption of fraud where a sale of part or all of a stock of merchandise is made out of the regular course of business, where no inventory of the goods is made, and the purchaser does not make

1. Dunlap v. Hawkins, 59 N. Y. 342, aff'g 2 Thomps. & C. 292; Lanahan v. Caffrey, 40 App. Div. (N. Y.) 124, 57 N. Y. Supp. 724; Wolford v. Farnham, 44 Minn. 159, 46 N. W. 295; Reich v. Reich, 26 Minn. 97, 1 N. W. 804. See also Purchase of property in name of third person, chap. II, § 5, supra.

2. Lawrence Bros. v. Heylman, 111 App. Div. 848, 98 N. Y. Supp. 121;

Vandeventer v. Goss, 116 Mo. App. 316, 91 S. W. 958. See Effect of want of consideration, chap. VIII, § 32,

supra.

3. See Retention of possession or apparent title, chap. XII, supra.

4. See Reservations and trusts for grantor, chap. X, supra.

5. See Husband and wife, chap. IX, § 4, supra.

6

7

inquiry as to the creditors of the seller, is not a conclusive but rebuttable presumption. Where the grantor's insolvency is shown, the grantee then has the burden of showing that the conveyance was upon a good consideration, and that he had no knowledge of the grantor's fraudulent intent. Since the law presumes that a resident householder will avail himself of his right to claim an exemption, where it appears that the debtor was a resident house holder of the state, and that all the property owned by him at the time of the transfer in question did not exceed the statutory exemption, the transfer will not be set aside. Where certain bankrupts made transfers of their property to various of their relatives, leaving themselves without sufficient means to satisfy their creditors, the transfers were prima facie fraudulent, and the burden was on the grantees to furnish strong proof that the transfers were made in good faith.9

§ 2. Burden of proof under pleadings. It is the general rule that the burden of proof rests on the plaintiff or complainant to prove all the allegations of his complaint not admitted by the answer,10 and that the burden rests on the defendant to prove affirmative defenses and matters of avoidance set up in the answer." The burden of proving fraud is on the party alleging it, whether the allegation be negative or affirmative in form,12 but a party interested to maintain a sale, which the vendor's creditor attacks

6. Hart v. Roney, 93 Md. 432, 49 Atl. 661.

7. Wadleigh v. Wadleigh, 111 App. Div. (N. Y.) 367, 97 N. Y. Supp. 1063. 8. Stark v. Lamb (Ind. 1907), 78 N. E. 668, 79 N. E. 895.

9. Horner-Gaylord Co. v. Miller & Bennett, 17 Am. B. R. 257, 147 Fed. 295.

10. Wright v. Wheeler, 14 Iowa, 8; Holmes Bros. v. Ferguson-McKinney Dry Goods Co. (Miss. 1905), 39 So. 70; Farmers' Bank v. Worthington, 145 Mo. 91, 46 S. W. 745; Hombs v.

Corbin, 34 Mo. App. 393; Mawry Nat.
Bank v. McAdams, 106 Tenn. 404, 61
S. W. 773.

11. Connecticut Mut. L. Ins. Co. v. Smith, 117 Mo. 261, 22 S. W. 623, 38 Am. St. Rep. 856; Robins v. Armstrong, 84 Va. 810, 6 S. E. 130.

12. Tompkins v. Nichols, 53 Ala. 197; Compton v. Marshall, 88 Tex. 50, 27 S. W. 121, 28 S. W. 518, 29 S. W. 1059, an allegation that the debt secured by a deed of trust was fictitious must be proved by the plaintiff.

14

as simulated because no price was paid, must prove its payment. The creditor cannot prove the negative.13 So an allegation that a judgment has been obtained fraudulently and without evidence, made by a third person, involves a negative, and throws the burden of proof on the judgment creditor. Where in a suit by a creditor, attacking what is alleged to be a voluntary conveyance of the debtor's land to a third person, such third person, a party defendant, answers, alleging that he is a bona fide purchaser thereof for value, the burden is on the complainant to establish the allegations of the bill.15 In a suit to set aside a deed as in fraud of creditors, an answer by the grantee alleging that the property was purchased by the grantor with the grantee's money, and that the former took the title in his name without the latter's consent, and that he made the conveyance merely to discharge his trust, states matters provable under a general denial, and the burden of proving the issue of fraud remains on the plaintiff.16 Where to a creditor's bill alleg ing that certain land conveyed by a husband to his wife was all the property he then had, he answered that he was then in good circumstances, with more than means enough to pay his debts, this was a mere statement of a legal conclusion, and did not relieve him of the burden of removing the presumption that the conveyance was fraudulent as to existing creditors.1

§ 3. Fraudulent character of transaction in general.-Fraud as against creditors is never to be presumed when the transaction may be fairly reconciled with honesty,18 especially as to a creditor who becomes such many years afterwards,19 or where it is alleged

13. Fisher v. Moore, 12 Rob. (La.) 95.

14. Judson v. Connolly, 5 La. Ann. 400; Fox v. Fox, 4 La. Ann. 135.

15. Verner v. Verner, 64 Miss. 184, 1 So. 52.

16. Bishop v. State, 83 Ind. 67. 17. Welcker v. Price, 70 Tenn. 666. 18. Tompkins v. Nichols, 53 Ala. 197; Fisher v. McInerney, 137 Cal.

28, 69 Pac. 622, 907, 92 Am. St. Rep. 68, a purchase, by an attorney, of his client's land at execution sale in the proceedings in which the attorney is employed, is not presumptively

fraudulent as to the client's creditors; Mey v. Gulliman, 105 Ill. 272; Dallam v. Renshaw, 26 Mo. 533.

19. Weckerly v. Taylor (Neb. 1905), 103 N. W. 1065.

to have occurred many years before the bringing of the suit.20 Where the circumstances tending to show fraud, and those repelling them, are nearly equal, fraud will not be presumed.21 Where the burden of proof is not governed by statute,22 a creditor who assails a conveyance of his debtor for fraud must show the fraud. It cannot be presumed.23 If the transaction is not fraudu

lent per se, the burden of showing fraud is on the party alleging it.24 The maxim, "Fraud must be proven, and is never presumed," is to be understood as affirming that a contract or conduct apparently honest and lawful must be regarded as such, until shown to be otherwise by evidence either positive or circumstantial.25 But where the facts appear sufficient to raise a presumption that a conveyance is in fraud of the grantor's creditors, the burden of showing good faith devolves upon the parties thereto. Fraud, or any other fact, may be presumed, if there be