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V.6 

The Encyclopasdia of evidence. 



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Cornell University 
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THE 



ENCYCLOPEDIA 



OF 



EVIDENCE 



EDITED BY 

EDGAR W. CAMP AND JOHN F. CROWE 



VOL. VI 



LOS ANGELES, CAL. 

L. D. POWELL COMPANY 

19D5 



COPYRIGHT 1905 
BY L. D. POWELL COMPANY 



TIMDS-MIRROR PRINTING AND BINDING HOUSE 
LOS ANGELES, CAL. 



TABLE OF TITLES. 

Fraud i 

Fraudulent Conveyances 8i 

Gaming i6r 

Gifts 201 

Grand Jury 243 

Guaranty 265 

Guardian and Ward 303 

Habeas Corpus 341 

Handwriting 2>jS 

Hearsay 442 

Highways 456 

Homesteads and Exemptions ,. 508 

Homicide 562 

Husband and Wife 803 

Identity 910 



FRAUD. 

By a. I. McCoRMiCK. 

I. IN GENERAL, 6 

1. Presumptions and Burden of Proof, 6 

A. In General, 6 

B. Strength of Presumption, 8 

C. Extent of Burden, 8 

T). No Presumption from Intent or Motive Alone, 8 

E. Validity of Contract or Transaction, 8 

F. When Party Charged Has Burden, 9 

a. Generally, 9 

b. Fiduciary and Confidential Relations, 10 

(i.) In General, 10 

(2.) After Relation Dissolved, il 

(3.) Extent of Rule, 11 

(4.) Limitations of Rule, 12 

G. Successor in Interest of 'Wrongdoer, 14 

2. Substance and Mode of Proof, 16 

A. Parol Evidence, 16 

a. To Prove Fraud, 16 

b. In Disproof of Fraud, 17 

c. Must Tend to Show Fraud, 18 

B. Direct Evidence — Testimony of Party, 18 

C. Circumstantial Proof, 18 

D. Opinion or Conclusion of Witness, 21 

3. Relevancy, 22 

A. Liberal Rule of Admissibility, 22 

B. Relevant Circumstances, 23 

a. In General, 23 

b. Individual Weight Immaterial, 23 

c. The Transaction Itself and Its Results, 24 

d. Acts, Conduct, and Declarations of the Parties, 25 

(i.) In General, 25 

(A.) Fraud of Vendee in Purchase, 27 
(B.) Admission of Fraud by Person Since 
Deceased, 28 

Vol. VI 



PRAUD. 

(C.) Newspaper Article or Printed Cir 
cular, 28 
(2.) Concealment or Suppression of a Material 
Pact, 28 
(A.) In General, 28 

(B.) Concealment of Insolvency by Vendee, 
29 
(3.) Undii^ Activity or Unusual Conduct, 31 
(4.) Conduct of Parties During Litigation, 32 
(A.) In Proof of the Charge, 32 
(B.) To Disprove the Charge, 32 
(C.) Praud in Parmer Proceeding, 32 
(5.) Oifer of Settlement, 33 
(6.) Other Praudulent Acts, 33 
(A.) Generally, 33 

(B.) Purposes for Which Competent, 35 
(C.) Reasons for Rule — Necessary Caution, 

36 
(D.) Same Motive Must Be Imputable to 

Both, 36 
(E.) Common Motive Mai Appear from 

Circumstances, 37 
(F.) Must Have Been Praudulent, 38 
(G.) Different Means of Accomplishment, 38 
(H.) Competency Against Assignee or 

Transferee, 39 
(I.) Order of Proof, 39 
(J.) Rebuttal — Acquittal in Criminal Pros- 
ecution, 39 
(7.) Other Transactions to Disprove Fraud, 30 

e. Statements to Mercantile Agency, 39 

(i.) In General, 39 

(2.) Ratings or Report of Mercantile Agency, 40 

f. Customs and Usages, 40 

g. Statutes and Relation of the Parties, 41 

(i.) In General, 41 
(2.) Friendship, Confidence, etc., 42 
(3.) Intelligence, Skill and Capacity, 42 
(4.) Mutual Course of Dealings, 42 
h. Financial Condition, 43 
(i.) In General, 43 



Vol. VI 



FRAUD. 2 

(2.) Fraud of Vendee in Purchase, 44 
(3.) When Irrelevant, 45 

i. Inadequacy of Consideration, 45 
(i.) In General, 45 

(2.) Relevancy With Other Circumstances, 45 
(3.) When Irrelevant, 46 
(4.) Deficiency in Quantity, 46 
(5.) Comparison of Values, 47 
(6.) Equivalent in Return, 47 
(A.) Generally, 47 
(B.) Cross-Petition, 48 

j. Character and Reputation, 48 

k. Interest of Alleged Wrongdoer in the Trans- 
action, 49 
4. Weight and SufUciency of the Evidence, 50 

A. In General, 50 

B. Question of Fact for Jury, 50 

C. Preliminary Question for Court, 50 

D. Character and Degree of Proof, 51 

a. In General, 51 

b. Strict Rule, 52 

c. Liberal Rule, 53 

d. In Equity, 55 

E. Reasonable Doubt, 56 

F. Exceptional Cases, 56 

a. In General, 56 

b. Where the Charge Involves a Crime — Conflict of 

Authority, 57 

n. PARTICULAR ELEMENTS OF FRAtlD, 57 

I. Intent and Scienter, 57 . 

A. Conflict of Authorities, 57 

B. Presumptions and Burden of Proof, 58 

a. In General, 58 

b. Scienter Not Presumed from Falsity, 59 

c. Former or Subsequent Knowledge, 59 

d. Intention Not to Perform a Promise, 59 

e. Exceptional Cases, 59 

C Substance and Mode of Proof, 60 
a. As to Intent or Motive, 60 

Vol. VI 



FRAUD. 

(l.) Direct Evidence — Testimony of Party, 60 
(A.) In General, 60 
(B.) When Incompetent, 61 
(a.) In General, 61 

(b.) Where Representations Are in 
Writing, 61 
(C.) Weight and Effect, 62 
(2.) Inferred from Circumstances, 62 
b. As to Scienter, 63 

(i.) Direct Evidence — Testimony of Party, 63 
(2.) Circumstantial Proof, 64 
(A.) In General, 64 
(B.) The Representation Itself, 64 
(C.) Inferred from Position of Party, 64 
(a.) In General, 64 
(b.) Financial Condition, 65 
(c.) Owner Representing His Property, 

65 
(d.) Manager of Corporation, 65 
'(3.) Admissibility, 66 
(A.) In General, 66 
(B.) Similar Representations to Others, 66 

2. Falsity of Representation, 67 

A. Burden of Proof, 67 

B. Substance and Mode of Proof, 67 

a. In General, 67 

b. Evidence Based on Experiment, 67 

c. Expert Evidence, 68 

d. Comparison, 68 

e. ludgment Record in Another Action, 68 

f. Time to Which Evidence Directed, 69 

3. Inducement and Reliance, 6g 

A. Presumptions and Burden of Proof, 69 

a. In General, 69 

b. When Burden on Wrongdoer, 70 

c. Representations Partly in Writing, 71 

d. Knowledge of Contents of Writifig, 71 

e. Knowledge of the Law, 71 

f. Investigation of Subject-Matter, 71 

g. Where Means of Knowledge Are Available, 71 
h. When Burden Shifted, J2 

Vol. VI 



FRAUD. 

B. Substance and Mode of Proof, y2 

a. Direct Evidence — Testimony of Party, 72 

b. Circumstantial Proof, 73 

(i.) In General, 73 

(2.) Common Knowledge, 74 

(3.) Position of Party, 74 

(4.) Information from Other Sources, 74 

c. To Whom Representation Made, 74 

(i.) In General, 74 

(2.) Representations to Agent, 75 

d. Time of Representation, 75 

C. Sufficiency of Evidence, 75 
4. Injury and Damages, 75 

A. /w General — Essential Proof, 75 

B. Burden of Proof, 75 

III. RELEVANCY TO PLEADINGS, 76 

1. In General, 76 ( 

2. Proo/ 0/ Scienter, 76 

3. Allegation of Specific Representations, 76 

4. Whole Conversation Competent, "jj 

5. Substantial Proof Sufficient, yy 

6. Proof of One of Several Alleged Representations, 78 

IV. WAIVER AND SATISFACTION OF FRAUD, 78 

1. Knowledge of Fraud Essential to Waiver, 78 

A. In General, 78 

B. Presumptions and Burden of Proof, 78 

a. Generally, 78 

b. When Burden on Party Charging Fraud, 78 

c. Constructive Knowledge from Record, 78 

C. Direct Evidence — Testimony of Party, 79 

2. Relevant Circumstances, 79 

A. Acts in Affirmance of Contract, 79 

B. Acceptance and Retention of Benefits, 79 

C. Delay, 79 

D. Newspaper Article, 79 

E. Not Conclusive, 79 

3. In Deceit for Damages, 79 

4. Satisfaction of Fraud, 80 

Vol. VI 



6 FRAUD. 

CKOSS-REFER£KCE$,°. 

Assignment for Benefit of Creditors; 

Cross-Examination ; 

Duress ; 

Elections ; 

Fraudulent Conveyances ; 

Guardian and Ward; 

Handwriting ; Husband and Wife ; 

Insolvency; Intent; 

Parol Evidence; Principal and Agent; 

Specific Performance; Spoliation; 

Undue Influence ; 

Vendor and Purchasor. 

I. IN GEITERAL. 

1. Presumptions and Burden of Proof. — A. In General. — In 
all cases, except those involving transactions between persons occu- 
pying fiduciary or confidential relations with each other ,^ where the 
right to relief is based upon the alleged commission of a fraud, the 
presumption is in favor of the fairness of the transaction and the 
innocence of the person accused, and the burden of proof is upon the 
party asserting the fraud to establish the same.^ 

1. Mathews v. Reinhardt, 149 111. v. White, 21 Cal. 495 ; Levy v. Scott, 
63s. 37 N. E. 85. IIS Cal. 39, 46 Pac. 892. 

2. United States. — United States Colorado. — Marsh v. Cramer, 16 
V. Iron Silver Min. Co., 128 U. S. Colo. 331, 27 Pac. 169; Allen v. El- 
673; Evans V. Mattsur, 87 Fed. 275; erick, 29 Colo. 118, 66 Pac. 891. 
United States v. King, 83 Fed. 188; Connecticut. — Dwight v. Brown, 
Michel V. Olmstead, 14 Fed. Z19; 9 Conn. 91. 

Walker v. Collins, 59 Fed. 70. Delaware. — Clayton v. Cavender, 

Alabama. — Wilk v. Key, 117 Ala. i Marv. 191, 40 Atl. 956; Freemar v. 

28s, 23 So. 6 ; Moses z/. Katzenberger, Topkis, i Marv. 174, 40 Atl. 948; 

84 Ala. 95, 4 So. 237. Terry v. Piatt, i Penn. 185, 40 Atl. 

Arkansas. — Bank of Little Rock 243. 

V. Frank, 63 Ark. 16, 37 S. W. 400, Florida. — White v. Walker, 5 

58 Am. St. Rep. 65 ; Stephens v. Op- Fla. 478. 

penheimer, 45 Ark. 492; Holt v. Georgia. — Robinson v. Donehoo, 

Moore, 37 Ark. 145. 97 Ga. 702, 25 S. E. 491; Lewin v. 

California. — Truett v. Onderdonk, Thurber, 62 Ga. 25. 

120 Cal. 581, 53 Pac. 26; McCarthy Illinois. — Uniop Nat. Bank v. 

Vol. VI 



FRAUD. 



State Nat. Bank, i68 III. 256, 48 N. 
E. 169; Dexter v. McAfee, 163 III. 
508, 45 N. E. IIS; compare 
Mathews v. Reinhardt, 149 111. 63s, 
37 N. E. 85 ; Schroeder v. Walsh, 120 
111. 403, II N. E. 70; Mey v. Gulli- 
man, 105 111. 277; Walker v. Hough, 
59 111. 37S ; Strauss v. Kranert, 56 111. 
254; Mitchell V. Deeds, 49 III. 476; 
Wright V. Grover, 27 III. 426; Barrie 
V. Frost, los III. App. 187 ; State Bank 
of Freeport v. Blake, 78 111. App. 166; 
Faulkner v. Elwood Mfg. Co., 79 111. 
App. 544. 

Indiana. — McCoy v. Able, 131 Ind. 
417, 30 N. E. 528, 31 N. E. 453; 
Adams v. Laugel, 144 Ind. 608, 42 
N. E. 1017 ; McLaughlin v. Ward, jy 
Ind. 383 ; Tenbrook v. Brown, 17 Ind. 
410; Baltimore & O. C. R. Co. v. 
Scholes, 14 Ind. App. 524, 43 N. E. 
1-56. 

Iowa. — Daugherty v. Hockman, 
74 N. W. 6; Lillie v. McMillan, 52 
Iowa 463, 3 N. W. 601 ; Drummond 
V. Couse, 39 Iowa 442; Schofield v. 
Blind, 33 Iowa 175. 

Kansas. — Railway Co. v. Good- 
holm, 61 Kan. 758, 60 Pac. 1066; 
Ferguson v. Willig, 57 Kan. 453, 46 
Pac. 936. 

Kentucky. — American Harrow Co. 
V. Tweddle, 19 Ky. L. Rep. 1356, 43 
S. W- 109 ; Kentucky Life & Ace. Ins. 
Co. V. Thompson, 18 Ky. L. Rep. 79, 
35 S. W. 5S0. 

Louisiana. — American Furn. Co. 
V. Grant- Jung Furn. Co., 50 La. Ann. 
931, 24 So. 182; Barlaw v. Harrison, 
51 La. Ann. 875, 25 So. 378; Lewis v. 
Western Assur. Co. of Toronto, 49 
La. Ann. 658, 21 So. 736. 

Maine. — Burleigh v. White, 64 
Me. 23; Nichols v. Patten, 18 Me. 
231, 36 Am. Dec. 713; Bartlett v. 
Blake, 37 Me. 124, 58 Am. Dec. 77S- 

Maryland. — Shaffer v. Cowden, 
88 Md. 394, 49 Atl. 786; Brewer v. 
Bowersox, 92 Md. 567, 48 Atl. 1060; 
Phelps V. George's Creek & C. R. R. 
Co., 60 Md. 536; Hill V. Reifsneider, 
46 Md. SSS- 

Massachusetts. — Wood v. Massa- 
chusetts Mut. Ace. Ass'n, 174 Mass. 
217, 54 N. E. 541 ; Beatty v. Fishel, 
100 Mass. 448 ; Page v. Bent, 2 Mete. 

.371. 

Michigan. — Bly v. Brady, 113 
Mich. 176, 71 N. W. 521 ; Gumberg 
V. Treusch, 103 Mich. 543, 61 N. W. 
872 ; Peaselee v. Collier, 83 Mich. 549, 



47 N. W. 353 ; Bostwick v. Benjamin, 
63 Mich. 289, 29 N. W. 714; Michels 
lA. Stork, 52 Mich. 260, 17 N. W. 833 ; 
Darling v. Hurst, 39 Mich. 765. 

Mississippi. — Parkhurst v. Mc- 
Graw, 24 Miss. 134. 

Missouri. — Nauman v. Oberle, 90 
Mo. 666, 3 S. W. 380; Muenks v. 
Bunch, 90 Mo. 500, 3 S. W. 63; 
Priest V. Way, 87 Mo. 16; Henry v. 
Buddicke, 81 Mo. App. 360; Mapes 
V. Burns, 72 Mo. App. 411; Redpath 
V. Lawrence, 48 Mo. App. 427. 

Nebraska. — Knapp v. Fisher, 58 
Neb. 651, 79 N. W. 553; Hampton v. 
Webster, 56 Neb. 626, JJ N. W. 50; 
Home Fire Ins. Co. v. Bredehoft, 49 
Neb. 152, 68 N. W. 400; Western 
Horse & Cattle Ins. Co. v. Putnam, 
20 Neb. 331, 30 N. W. 246; Ahlman 
V. Meyer, 19 Neb. 63, 26 N. W. 584. 

New Hampshire. — Griswold v. 
Sabin, 51 N. H. 167, 12 Am. Rep. 76. 

New York. — Pryor v. Foster, 130 
N. y. 171, 29 N. E. 123; Morris v. 
Talcott, 96 N. Y. 100; Cowee v. Cor- 
nell, 75 N. Y. 91 ; Marsh v. Falker, 
40 N. Y. 562; Ward v. Center, 3 
Johns. 271. 

North Carolina. — Atkins v. 
Withers, 94 N. C. 581 ; Tomlinson v. 
Payne, 53 N. C. 108. 

North Dakota. — Montgomery v. 
Fritz, 7 N. D. 348, 75 N. W. 266. 

Oregon. — Pisk v. Basche, 31 Or. 
178, 49 Pac. c^i. 

Pennsylvania. — Miller v. McAlis- 
ter, 178 Pa. St. 140, 35 Atl. 594. 

Rhode Island. — White v. Fitch, 19 
R. I. 687, 36 Atl. 425. 

South Carolina. — Habersham v. 
Hopkins, 4 Strob. L. 238. 

Tennessee. — Old Folks Society v. 
Millard, 86 Tenn. 657, 8 S. W. 851. 

Texas. — Carson v. Houssels 
(Tex. Civ. App.), 51 S. W. 290; Tur- 
ner V. Lambeth, 2 Tex. 365. 

Utah. — Deseret Nat. Bank v. Lit- 
tle R. & Co., 13 Utah 265, 44 Pac. 930. 

Vermont. — Sawyer v. Childs, 68 
Vt. 360, 35 Atl. 84. 

Virginia. — Todd v. Sykes, 97 Va. 
143, 23 S. E. 517; New York Life 
Ins. CS). V. Davis, 96 Va. 737, 32 S. 
E. 475. 44 L. R. A. 34s; Gregory v. 
Peoples, 80 Va. 355; Crebs v. Jones, 
70 Va. 381 ; Engleby v. Harvey, 93 
Va. 440, 25 S. E. 225. 

Washington. — Manhattan Trust 
Co. V. Seattle Coal & Iron Co., 19 
Wash. 493. 53 Pac. 951. 

Vol. VI 



8 



FRAUD. 



B. Strength of Presumption. — It has been Held that the pre- 
sumption against fraud is " a presumption approximate in strength 
to that of innocence in crime,"^ but the overwhelming weight of 
authority does not so hold it.* 

C. Extent of Burden. — The party alleging fraud takes upon 
himself the burden of proving every necessary element of the fraud. ^ 

D. No Presumption erom Intent or Motive Aeone. — Fraud 
will not be presumed from a showing merely that a motive" or 
intent^ to perpetrate the same existed. 

E. Validity of Contract or Transaction. — This rule is not 
varied or affected by the equally strong principle that a contract or 
transaction, in order to be enforced or to be made the foundation 
for relief, must be free from fraud. Thus, in an action on a con- 
tract, while it is incumbent on the plaintiff to show that the contract 
is a valid and binding obligation between the parties, this does not 
throw upon him the burden of showing an absence of fraud therein, 
but in such case it is incumbent on the defendant in the first instance 
to show the fraud affirmatively.* 



West Virginia. — Board of Trus- 
tees V. Blair, 45 W. Va. 812, 32 S. E. 
203; Wood V. Harrison, 41 W. Va. 
376, 23 S. E. 560; Armstrong v. Bai- 
ley, 43 W. Va. 778, z8 S. E. 766; 
Harden v. Wagner, 22 W. Va. 356. 

Wisconsin. — The Piano Mfg. Co. 
V. Bergmann, 102 Wis. 21, 78 N. W. 
157; Small V. Champeny, 102 Wis. 
61, 78 N. W. 407 ; Curtis v. Hoxie, 88 
Wis. 41, 59 N. W. s8i. 

3. Truett V. Onderdonk, 120 Cal. 
581, 53 Pac. 26, and see Willoughby 
V. Fredonia Nat. Bank, 52 N. Y. St. 
387, 23 N. Y. Supp. 46. 

4. See post, "Weight and Suffi- 
ciency of the Evidence," and espe- 
cially cases cited in notes 2 and 11 
thereunder. 

5. Illinois. — Dickinson v. Atkins, 
100 111. App. 401. 

Kansas. — Ferguson v. Willig, 57 
Kan. 4S3, 46 Pac. 936. 

Massachusetts. — Horton v. Weiner, 
124 Mass. 92; Springer v. Crowell, 
103 Mass. 65. 

New York. — Wakeman v. Dalley, 
SI N. Y. 27; Brackett v. Griswold, 
112 N. Y. 454, 20 N. E. 376. 

6. Moore v. Parker, 25 Iowa 355. 

7. Seward v. Seward, 59 Kan. 
387, S3 Pac. 63, in which it was said : 
" It is not the law that proof of an 
intent to perpetrate a fraud will jus- 
tify a finding that fraud was com- 
mitted." 

8. Stephens v. Oppenheimer, 45 

Vol. VI 



Ark. 492; Murray v. Supreme Lodge 
M. E. O. P., 74 Conn. 715, 52 Atl. 
722; Bly V. Brady, 113 Mich. 176, 71 
N. W. 521 ; Sloan v. Holcomb, 29 
Mich. 153 ; Briggs v. Humphrey, 5 
Allen (Mass.) 314; Sperling v. Boll, 
75 N. Y. St. 1256^ 41 N. Y. Supp. 
889. And see Carson v. Houssels 
(Tex. Civ. App.), SI S. W. 290. 

Wrong Instruction. — In an action 
upon a written lease, to which de- 
fendant pleaded fraud by plaintiff in 
its procurement, an instruction that 
the burden was upon plaintiff to 
prove that the lease was executed and 
delivered by defendant under such 
circumstances as to make it a valid 
contract, was held correct. But the 
further instruction (viz., that if the 
jury believed that the alleged fraudu- 
lent representations were made, or if 
they, on the whole testimony, could 
not say whether the lease had been 
executed and delivered under such 
circumstances as to make it a valid 
contract, as had been explained to 
them, the verdict should be for de- 
fendant) was held erroneous because 
the instruction implied that the bur- 
den was on plaintiff to prove the ab- 
sence of fraud in the transaction in- 
stead of upon the defendant to prove 
the contrary, and that the doubt of 
the jury should be resolved in favor 
of the defendant instead of the plain- 
tiff. Beatty v. Fishel, 100 Mass. 448 

Insurance Cases. — This rule is 



FRAUD. 



Adverse Possession. — Likewise, under a statute requiring good 
faith as an essential element in order to constitute valid adverse pos- 
session, the color of title under which such adverse possession was 
initiated is presumed to have been acquired in good faith." 

F. When Party Charged Has Burden. — a. Generally. — The 
circumstances may so shape themselves as to throw upon the party 
charged with the fraud the burden of proof in the first instance. 
Thus, where such party claims and is allowed the privilege of open- 
ing and closing the case, he thereby assumes the burden of proof.^" 
Likewise, where the misrepresentation charged as the basis of the 
fraud is admitted to have been made and to have been untrue, but 
facts are alleged as a justification, the burden of proof is upon the 



often invoked in actions upon insure 
ance policies where the insurer de- 
fends on the ground of fraudulent 
representations on the part of the in- 
sured, either in connection with the 
statements required in his application 
or in the policy. The rule is general 
in such cases that the burden is upon, 
the insurer to show such fraud in the 
first instance. 

Piedmont Ins. Co. v. Ewing, 92 U. 
S. 377; Lampkin v. Travelers Ins. 
Co., II Colo. App. 249, 52 Pac. 1040; 
State Ins. Co. v. DuBois, 7 Colo. App. 
214, 44 Pac. 756; Penn Mut. Life Ins. 
Co. V. Mechanics Sav. Bank & T. Co., 
72 Fed. 413; Sullivan v. Hartford 
Fire Ins. Co. (Tex. Civ. App.), 34 
S. W. 999; Mutual Benefit Ins. Co. 
V. Robertson, 59 III. 123, 14 Am. Rep. 
8 ; Fiske v. New England M. Ins. Co., 
IS Pick. (Mass.) 310; Jones v. 
Brooklyn Life Ins. Co., 61 N. Y. 79; 
and this is the rule, although the ap- 
plication in which the alleged false 
statements are contained is, by the 
very terms of the policy, made a 
part of the contract and the faith of 
such statements warranted. Supreme 
Lodge of Knights of Honor v. Woll- 
schlager, 22f Colo. 213, 44 Pac. 598; 
Grangers Life Ins. Co. v. Brown, 57 
Miss. 308. 

Contract of Blind or Illiterate 
Person. — In Robinson v. Donehoo, 
97 Ga._ 702, 25 S. E. 491, which was 
an action involving a written instru- 
ment, the party contending that 
when he signed the paper he was not 
fully acquainted with its contents, 
that he thought he was signing a 
paper of a different import, and it 
appeared that he was not an illiterate 
man, but that at the time when he. 



signed the paper his face was swollen, 
and, according to his own testimony, 
he could not clearly make out the 
writing, the trial judge charged the 
jury that one who attacks an instru- 
ment signed by himself, on such 
grounds, and that his signature was 
obtained by fraud, carries the burden 
of proving the truth of his allega- 
tions. The court held that this charge 
was proper, and distinguished the au- 
thorities holding that where the 
maker of an instrument is illiterate 
or blind the burden of showing that 
it was read over to him, and that he 
understood it, is on the person claim- 
ing rights therein. " Here the evi- 
dence is conflicting as to whether the 
defendant was able to read the instru- 
ment or not on the occasion in ques- 
tion; there is evidence strongly tend- 
ing to show that he was able to do 
so, and a significant fact is that he 
made an addition to It in his own 
handwriting. In view of this evi- 
dence it is certainly n'o cause for a 
new trial that the court failed to give 
in charge a rule of law applicable to 
persons confessedly blind or illiter- 
ate." 

9. Stumpf V. Osterhage, iii III. 
82; Sexson V. Barker, 172 111. 361, so 
N._ E. J09; Davis V. Hall, 92 III. 85; 
criticising Bowman v. Wettig, 39 111. 
416; Hardin v. Gouveneur, 69 111. 
140 ; Morrison v. Norman, 47 III. 477 ; 
Pagan v. Rosier, 68 111, 84. 

" When a party claims adversely, it 
is not necessary for him to show that 
he went into possession bona fide." 
Hall V. Gay, 68 Ga. 442; Evans v. 
Baird, 44 Ga. 64s. 

10. Armstrong v. Penn, los Ga. 
229, 31 S. E. 158. 

Vol. VI 



10 



FRAUD. 



party alleging such justification in the first instance. ^^ Proof of 
slight circumstances may also be sufficient to shift the burden to the 
party charged with the fraud.^^ 

b. Fiduciary and Confidential Relations. — (1.) In General. 
Transactions between persons occupying confidential or fiduciary 
relations with each other constitute exceptions to the general rule.^^ 
Thus, in transactions between persons occupying such relations, in 
which the stronger or superior party obtains a benefit or advantage, 
fraud is presumed, and the burden is cast upon the superior party 
to show fairness, adequacy and equity in the transaction." This 
rule has been held applicable to transactions between attorney and 
client,^^ guardian and ward,^' trustee and cestui que trust,^'' principal 
and agent,^* executor or administrator and heirs,\° spiritual adviser 
and dying person,^" physician and patient,^^ husband and wife,^^ 
parent and child,"' a young, inexperienced child and his grand- 



11. Winans v. Winans, ig N. J. 

Eq. 220. 

12. See Kelley v. Owens (Cal.), 
30 Pac. 596, atKrming on rehearing, 31 
Pac. 14; Gill V. Cfosby, 63 111. 190. 

13. See article " Undue Influ- 
ence." As to the application of the 
rule to particular relations, see the 
particular title. 

14. Thompson v. Lee, 31 Ala. 292; 
Lee V. Pearce, 68 N. C. 76; Atkins v. 
Withers, 94 N. C. 581. 

Overcomes Other Presumptions. 
The ordinary presumption (in Illi- 
nois) that the color of title, which 
is relied upon in adverse possession, 
was obtained in good faith, does not 
apply where such color of title con- 
sists of a deed obtained by an attor- 
ney from his client during the rela- 
tionship. The presumption of fraud 
in transactions between persons occu- 
pying confidential relations overcomes 
the presumption of good faith in the 
acquisition of color of title. Ross v. 
Payson, 160 111. 349, 43 N. E. 399. 

15. Attorney and Client. — Ross 
T. Payson, 160 III. 349, 43 N. E. 399; 
Rlmore v. Johnson, 143 111. 513, 32 
N. E. 413, 36 Am. St. Rep. 401, 21 
L. R. A. 366; Ziegler v. Hughes, 55 
111. 288 ; Paris v. Briscoe, 78 111. App. 
242. 

16. Guardian and Ward Wick- 

iser V. Cook, 85 111. 68; Goodrick v. 
Harrison, 130 Mo. 263, 32 S. W. 661. 

17. Trust and Cestui ftue Trust. 
Ward V. Armstrong, 84 111. 151 ; 
Jones V. Lloyd, 117 111. 597, 7 N. E. 
119; Smith V. Hewlett^ 47 N. Y. 
Supp. 1002, SI N. Y. Supp. 910. 

VoJ. VI 



Sale by Trustee to Third Person 
with Reconveyance. — Webb v. 
Branner, 59 Kan. 190, 52 Pac. 429. 

18. Principal and Agent Webb 

V. Marks, 10 Colo. App. 429, 51 Pac. 
S18; Alwood V. Mansfield, 59 III. 
496; Faust V. H'osford, 119 Iowa 97, 
93 N. W. s8; Brook v. Berry, 2 Gill 
(Md.) 83. 

Principal and Attorney In Fact. 
Rubidoex v. Parks, 48 Cal. 215. 

19. Executor or Administrator 
and Heirs — Branner v. Nichols, 61 
Kan. 356, 59 Pac. 633, 44 L. R. A. 
464; Humphreys v. Burleson, 72 
Ala. I. 

20. Spiritual Adviser and Dying 
Person — Ross v. Conway, 92 Cal. 
632, 28 Pac. 785. 

21. Cadwallader v. West, 48 Mo. 
483; Woodbury v. Woodbury, 141 
Mass. 329, s N. E. 27s, 55 Am. Rep. 
479- 

22. Brison v. Brison, 75 Cal. 525, 
17 Pac. 689; 90 Cal. 323, 27 Pac. 186, 
7 Am. St. Rep. i8g. 

Burden on Wife. —The burden 
may be upon the wife to disprove the 
fraud. See Disch v. Timm, loi Wis. 
179, 77 N. W. 196; Horton v. Dewey, 
S3 Wis. 410, 10 N. W. 599. 

23. Davis v. Strange, 86 Va. 793, 
II S. E. 406; Todd V. Sykes, 97 Va. 
143, 33 S. E. S17; Hickman v. Trout, 
83 Va. 478, 3 S. E. 131; Sands v. 
Sands, 112 III. 225; Doyle v. Welch 
TOO Wis. 24, 75 N. W. 400; Davis v 
Dean, 66 Wis. 100, 26 N. W. 737. 

Aged Father to Son. — Qard v 
Oard, 59 III. 46. 



FRAUD. 



11 



parents,^* aged relative and heir,-^ mortgagor and mortgagee,^^ 
partners,^' creditor and surety of debtor,^* stockholder and officer of 
corporation concerning corporate aflfairs,^^ joint purchasers of prop- 
erty,'" and to a party dealing with an expectant heir as to the 
expectant estate.'^ 

(2.) After Relation Dissolved. — This rule has been held applicable 
to transactions occurring within a short time after the relation has 
been dissolved-'^ 

(3.) Extent of Rule. — The application of this principle is not con- 
fined to the known and definite fiduciary relations, such as attorney 
and client, guardian and ward, etc., but it extends to any and all 
cases in which it is manifest from the facts and circumstances that 
confidence is reposed by one person in another who possesses con- 



24. Brown v. Burbank, 64 Cal. 99, 
27 Pac. 940. 

25. Zimmerman v. Bitner, 79 Md. 
IIS, 28 Atl. 820; Duncombe v. Rich- 
ards, 46 Mich. 166, 9 N. W. 149; 
Lansing v. Russell, 13 Barb. (N. Y.) 
510. 

26. Wygal v. Bigelow, 42 Kan. 
477. 22 Pac. 612, 16 Am. St. Rep. 495 ; 
Jones V. Franks, 33 Kan. 497, 6 Pac. 
789; Hall V. Lewis, 118 N. C. 509, 24 
S. E. 209; Whitehead v. Hellen, 76 
N. C. 99; McLeod v. Bullard, 84 N. 
C SiS> overruling Chapman v. 
Mull, 42 N. C. 292; Villa V. Rod- 
riguez, 79 U. S. 323 ; Perkins v. 
Drye, 3 Dana (Ky.) 170. 

27. Pomeroy v. Benton, 57 Mo. 
531 ; Caldwell v. Davis, 10 Colo. 481, 
15 Pac. 696, 3 Am. St. Rep. S99; 

Coggswell-Boulter & Co. v. Coggs- 
well (N. J. Eq.), 40 Atl. 213. 
Compare Stephens v^ Orman, 10 
Fla. 9. 

28. First Nat. Bank v. Mattingly, 
92 Ky. 650, 18 S. W. 940; Burks v. 
Wanterline, 6 Bush (Ky.) 20; Ben- 
ton Co. Sav. Bank v. Boddicker, 105 
Iowa 548, 7S N. W. 632, 79 Am. St. 
Rep. 310, 45 L. R. A. 321. 

29. Barbar v. Martin (Neb.), 93 
N. W. 722; Bristol v. Scranton, 63 
Fed. 218; Cumberland Iron Co. v. 
Parish, 42 Md. 598; Bent v. Priest, 
86 Mo. 475 ; Gorder v. Plattsmouth 
Canning Co., 36 Neb. 548, 54 N. W. 
830. Compare Horbach v. Marsh, 37 
Neb. 22, 55 N. W. 286. 

Contra. — Rule Not Applicable in 

Private Transaction It was held 

in Krumbhaar v. Griflfith, 151 Pa. St. 
223, 25 Atl. 64, that no confidential 
relation existed between the secretary 



of a corporation and a stockholder 
from whom he purchased stock in a 
private transaction which such stock- 
holder claimed to have been induced 
by the secretary's fraud. 

30. Joint Purchasers. — Bergeron 
V. Miles, 88 Wis. 397, 60 N. W. 783, 
43 Am. St. Rep. 911; and see Con- 
stant V. Lehman, 52 Kan. 227, 34 Pac. 

745- 

31. "The rule is well settled that 
a party dealing with an expectancy 
must prove that the bargain was upon 
an adequate consideration, was en- 
tered into carefully, deliberately and 
with a knowledge of all the circum- 
stances connected with it." Wells v. 
Houston, 29 Tex. Civ. App. 619, 69 
S. W. 183 ; Hale v. Hollon, 90 Tex. 
427, 39 S. W. 287, 59 Am. St. Rep. 
819, 36 L. R. A. 75, in which latter 
case, in speaking of this doctrine as 
being of ancient common law origin, 
the court say : " We find the doc- 
trine firmly established in said courts 
that, whether the suit be by the 
holder of the contract to enforce spe- 
cific performance, or by the expec- 
tant to be relieved from the terms 
thereof, the prima facie presumntion 
was that the same was a fraud both 
upon the expectant and the ancestor 
or party from whom the expectancy 
was to be derived, and therefore the 
burden was imposed upon the holder 
to rebut such presumption." Citing 
Earl Chesterfield v. Janssen, 2 Vcs. 
Sr. 158, and see also Clark v. Mal- 
pas, 31 Beav. 87; Golland v. De Pari?, 
17 Ves. 20. 

32. Goodrick v. Harrison, 130 Mo. 
263, 32 S. W. 661. 

Guardian and Ward A transac- 

Vol. VI 



12 



FRAUD. 



trolling influence over the former.''^ Thus, a person who occupies 
no definite confidential relation with another, if he clothe himself 
with a character which brings him within the range of the principle, 
e. g., an attorney acting for the executor in a transaction with a lega- 
tee,'* or a self-constituted agent,*"^ or confidential adviser,^' has the 
burden of proving a want of fraud in the transaction. 

(4.) limitations of Rule. — But the mere fact that the persons 
between whom the transaction takes place stand in a relation that is 
generally one of confidence is not of itself, in all cases, sufficient to 
raise the presumption of fraud. Thus, in all cases other than those 
of guardian and ward, attorney and client, trustee and cestui que 
trust, and the other known and definite fiduciary relations,^^ in which 
the superiority on the one side and the weakness on the other are 



tion occurring shortly after the ward 
attained his majority. Wright v. Ar- 
nold, 14 B. Mon. (Ky.) 638. 

33. England. — Dent v. Bennett, 
4 Myl. & C. 269. 

United States. — Taylor v. Taylor, 
8 How. 183. 

Alabama. — Thompson v. Lee, 31 
Ala. 292. 

Connecticut. — Nichols v. McCar- 
thy, S3 Conn. 299, 55 Am. Rep. 105. 

Illinois. — Ward v. Armstrong, 84 
III. isi. 

Maryland. — Zimmerman v. Bit- 
ner, 79 Md. 115, 28 Atl. 820. 

Michigan. — Wartemberg v. Spie- 
gel, 31 Mich. 400. 

New York. — Whelan v. Whelan, 

3 Cow. 576; Green v. Roworth, 113 
N. Y. 462, 21 N. E. 165. 

Pennsylvania. — Stepp v. Pramp- 
ton, 179 Pa. St. 284, 36 Atl. 177 ; Het- 
rick's Appeal, 58 Pa. St. 477. 

Te.vas. — Goar v. Thomnson, ig 
Tex._ Civ. App. 330, 47 S. W. 61. 

Virginia. — Francis v. Cline, 96 Va. 
201, 31 S. E. 10. 

Wisconsin. — Watkins v. Brant, 46 
Wis. 410, I N. W. 82. 

Rule Applies to "Trustees, Attor- 
neys, or Anyone Else." — Lord EI- 
don, in Gibson v. Jeyes, 6 Ves. 
(Eng.) 266, cited and quoted in Pish- 
burne v. Furguson's Heirs, 84 Va. 87, 

4 S. E. S7S. 

Rule Stated. — "And if the circum- 
stances disclose that the person under 
the infirmity, whether through choice, 
accident or otherwise, was as matter 
of fact for the time being in the place 
of ward of the other party, or was 
by his own consent, however brought 
about, in a state of submission to the 
Vol. VI 



judgment or opinion of the other, a 
presumption will arise adverse to the 
justice and equity of the bargain, and 
the bargainee will be required to 
show that no advantage was taken, 
and that in itself the arrangement 
was not only suitable, fair and con- 
scientious, but one expedient under 
the circumstances and conducive to 
the interests of the other." Jacox v. 
Jacox, 40 Mich. 473. 

34. Reed v. Peterson, 91 111. 288; 
and see Hixon v. Bryan Adm'r, 75 
Ga. 392. 

35. Casey v. Casey, 14 111. 112. 

36. See Mallory v. Leach, 35 Vt. 
156. 

Friend Acting as Attorney. ^This 
rule applies to a friend and confiden- 
tial adviser, who acts the part of an 
attorney in a proceeding before a 
court where attorneys do not appear. 
Buffalow V. Buflfalow, 22 N. C. 241. 

37. Fraud Presumed From Rela- 
tionship Alone. — In Atkins v. With- 
ers, 94 N. C. s8i, the court held that 
the relations of guardian and ward, 
trustee and beneficiary, principal and 
agent, mortgagor and mortgagee, at- 
torney and client, husband and wife, 
are the only ones in which fraud is 
presumed from the relation of the 
parties; and in McLeod v. Bullard, 
84 N. C. 515, the following are added 
as coming within the rule, to wit: 
partners, executors and administra- 
tors, and parent and child. And see 
Cowee V. Cornell, 75 N. Y. 91. 

In Lee v. Pearce,"68 N. C. 76, this 
question is thoroughly discussed, the 
court among other things saying: 
" After a full consideration of the au- 
thorities and 'the reason of the 



FRAUD. 



apparent, the trust and confidence, the superiority and weakness, 
must be clearly made out before the presumption of fraud is raised 
and the burden shifted.'' 



thing,' we are of opinion that only 
' the known and definite fiduciary re- 
lations,' by which one person is put 
in the power of another, are sufficient 
under our present judiciary system 
to raise a presumption of fraud, as a 
matter of law to be laid down by the 
judge, as decisive of the issue unless 
rebutted. For instances, and by 
way of illustration: (i.) Trustee and 
cestui que trust dealing in reference 
to the trust fund ; (2) attorney and 
client, in respect to the matter where- 
in the relationship exists; (3) guar- 
dian and ward, just after the ward 
arrives at age; (4) when one is the 
general agent of another and has en- 
tire management so as to be, in ef- 
fect, as much his guardian as the 
regularly appointed guardian of an 
infant. There may be other in- 
stances. Fiduciary relations that do 
not fall under the first class raise a 
presumption of fraud as a matter of 
fact, to pass before the jury for what 
it may be worth. For instance: (i) 
Family physicians; (2) a minister of 
religion; (3) parent and child; (4) 
when the only relation is that of 
friendly intercourse and habitual re- 
liance for advice and assistance, and 
occasional employment in matters of 
business as agent." 

38. Alabama. — Thompson v. Lee, 
31 Ala. 2p2. 

California. — McCarthy v. White, 
21 Cal. 49S, 82 Am. Dec 754. 

Connecticut — Looby v. Redmond, 
66 Conn. 444, 34 Atl. 102; Heming- 
way V. Coleman, 49 Conn. 390, 44 
Am. Rep. 343. 

Iowa. — Wheatley v. Wheatley, 102 
Iowa 737, 70 N. W. 689. 

Kansas. — Seward v. Seward, 59 
Kan. 387, S3 Pac. 63. 

Kentucky. — Waters v. Barral, 2 
Bush S98. 

Maryland. — Brown v. Mercantile 
T. & D. Co., 87 Md. 377, 40 Atl. 256, 
distinguishing Brooke v. Berry, 2 Gill 
8s, and Todd v. Grove, 33 Md. 188. 

New York. — Cowee v. Cornell, 75 
N. Y. 91. 

North Carolina. — Mauney v. Red- 
wine, 119 N. C. 534, 26 S. E. 52. 



Wisconsin. — The Piano Mfg. Co. 
V. Bergmann, 102 Wis. 21, 78 N. W. 
157; Small V. Champeny, 102 Wis. 
61, 78 N. W. 407. 

Defendant a Partner of Plaintiff's 
Husband. — The fact that the per- 
son charged with the fraud was the 
partner and banker of the plaintiff's 
husband, and that their relations had 
been satisfactory, does not show such 
relation of confidence between the 
wife and such party as to throw upon 
him the burden of proof. Warden 
V. Reser, 38 Kan. 86, 16 Pac. 60, 
citing Roach v. Kerr, 18 Kan. 529, 26 
Am. Rep. 788. 

Husband and Wife In Ken- 
tucky it is held that the wife, her 
husband joining her, can convey her 
property to a third person with the 
understanding that such person will 
reconvey it to the husband. A con- 
veyance thus made is valid, and if 
attacked for fraud or undue influence, 
the burden is upon the party attack- 
ing the deed to establish the facts 
justifying its rescission. Wicks v. 
Dean, 19 Ky. L. Rep. 1708, 44 S. W. 
397, citing Scarborough v. Watkins, 
9 B. Mon. (Ky.) 540, 50 Am. Dec. 
528; Todd's Heirs v. Wickliffe, 18 
B. Mon. (Ky.) 908. 

Parent and Child. — No pre- 
sumption of unfair dealing between 
parent and child is to be drawn solely 
from the fact 'of relationship. Ten- 
brook V. Brown, 17 Ind. 410; Jenk- 
ins V. Pye, 12 Pet. (U. S.) 241 ; Bax- 
ter V. Bailey, 8 B. Mon. (Ky.) 336; 
In re Flagg's Estate, 27 Misc. 401, 
59 N. Y. Supp. 167; Reehling v, 
Byers, 94 Pa. St. 316. 

Brother and Sister A deed from 

the married sisters of a decedent con- 
veying their interest in the estate to 
their brothers is not presumed to 
have been obtained by fraud from 
the fact that the parties are such 
near relatives. Goar v. Thompson, 
19 Tex. Civ. App. 330, 47 S. W. 61. 
But see Million v. Taylor, 38 Ark. 
428, and Boney v. Hollingsworth, 23 
Ala. 690, in which it is said that 
while it is generally true • that the 
mere relation of brother and sister 

Vol. VI 



14 



FRAUD. 



G. Successor in Interest of Wrongdoer. — It is not always 
essential that the party alleging fraud trace it to the person against 
whom it is urged. When fraud is once shown it affects all persons 
whose rights are dependent upon the transaction polluted by it, and 
the transaction itself, and all subsequent transactions growing out 
of it or dependent upon it, are prima facie fraudulent. Thus where 
it is shown by the original vendor that the purchase by his vendee 
was fraudulent and void, or where the execution of a promissory 
note is shown to have been originally obtained by fraud or deceit, 
the burden of proof in the former instance is upon the assignee of 
the fraudulent vendee,^' and in the latter instance upon the assignee 



does not impose a relation of confi- 
dence of itself, if there be nothing in 
the circumstances showing depend- 
ency and trust on the one hand, and 
a superiority or influence on the 
other, yet a transaction by which a 
sister divests herself of a valuable in- 
terest in favor of a brother is re- 
garded with suspicion, and until the 
act is satisfactorily accounted for 
the inference of fraud or abuse of 
confidence is so strong that equity 
should relieve against it. 

Conveyance Between Other Close 
Relatives. — Ditmas v. Ditmas, ii 
App. Div. 628, 41 N. Y. Supp. 108; 
Shaffer v. Cowden, 88 Md. 394, 49 
Atl. 786. 

Intimate Relations of Friendship. 
Intimate relations of friendship do 
not raise the presumption 'of fraud. 
Wells V. Houston, 29 Tex. Civ. App. 
619, 69 S. W. 183 ; s. c. on former ap- 
peal, 23 Tex. Civ. App. 629, 57 S. W. 
584; Miller v. Welles, 23 Conn. 21. 

Persons Who Have Agreed to 
Marry — The relations subsisting 
between a man and woman who have 
agreed to marry are not such as to 
raise a presumption of fraud in deal- 
ings between them, 'or to throw upon 
the man the burden of proof. Atkins 
V. Withers, 94 N. C. 581. 

39, Connecticut. — Lynch v. 
Beecher, 38 Conn. 490. 

Iowa. — Gardner v. Early, 72 Iowa 
518, 34 N. W. 311; Sillyman v. King, 
36 Iowa 207 ; Falconbury v. Mcllravy, 
36 Iowa 488; Rush V. Mitchell, 71 
Iowa 333, 32 N. W. 367; Starr v. 
Stevenson, 91 Iowa 684, 60 N. W. 
217. 

Kansas. — Wafer v. Harvey Co. 
Bank, 46 Kan. S97, 26 Pac. 1032; 
Kilpatrick-Koch Dry Goods Co. v. 
Kahn, S3 Kan. 274, 36 Pac. 327. 

Vol. VI 



Massachusetts. — Easter v. Allen, 8 
Allen 7;'Haskins v. Warren, 115 
Mass. 514. 

Michigan. — Durrell v. Richardson, 
119 Mich. 592, 78 N. W. 650; Whit- 
aker Iron Co. v. Preston Nat. Bank 
of Detroit, loi Mich. 146, 59 N. W. 
395. 

Mississippi — McLeod v. Nat. 
Bank, 42 Miss. 99. 

Missouri. — Strauss v. Hirsch, 63 
Mo. App. 95 ; Reid v. Lloyd, 52 Mo. 
App. 278. 

New York. — Devoe v. Brant, 53 
N. Y. 462. 

Mortgage by Fraudulent Vendee. 
The subsequent mortgagee of a 
fraudulent vendee must show mort- 
gage in good faith, without notice 
and for value. Cappon & B. Leather 
Co. V. Preston Nat. Bank, 114 Mich. 
263, 72 N. W. 180. 

Assignee's Participation or Intent 
is Immaterial. — Traywick v. Keeble, 
93 Ala. 498, 8 So. 573 ; Cohn Bros. v. 
Stringfellow, 100 Ala. 242, 14 So. z86. 

Rule in Alabama The plaintiff 

in the first instance must prove fraud 
in the original purchase. When this 
proof is made, the burden is then on 
the defendant, as sub-purchaser, to 
show that he paid value for the 
goods. The onus is then again 
shifted to the plaintiff, the original 
vendor, to prove that the defendant 
had notice of the fraud when he 
made the purchase. Wilk v. 
Key, 117 Ala. 285, 23 So. 
6; Kyle v. Ward, 81 Ala. 120, 
I So. 468; McCormick v. Joseph, 
77 Ala. 236; Loeb v. Flash, 65 Ala. 
526; Spira V. Hornthall, 77 Ala. 137; 
Roswald V. Imbs, 78 Ala. 315; Rob- 
inson V. Levi, 81 Ala. 134, 1 So. 554. 
This doctrine has also been applied in 
other courts. See Atlas Nat. Bank 



FRAUD. 



IS 



or indorsee of the original payee/" to prove that his rights were 
initiated in good faith and for value, and not upon the party relying 
upon the fraud to prove the contrary in the first instance. And the 
fact that the complainant alleges in his pleading that such sub- 



V. Holm, 71 Fed. 489, and cases cited. 

40. England. — Bailey v. Bidwell, 
13 M. & W. 73- 

United States. — Pana v. Bowler, 
107 U. S. 542; Stewart v. Lansing, 
104 U. S. 505; Atlas Nat. Bank v. 
Holm, 71 Fed. 489. 

California. — Jordan v. Grover, 99 
Cal. 194, 33 Pac. 889. 

Indiana. — Palmer v. Poor, 121 
Ind. 13s, 22 N. E. 984, 6 L. R. A. 
469; Giberson v. Jolley, 120 Ind. 301, 
22 N. E. 306; Zook V. Simonson, 72 
Ind. 83 ; Pope v. Branch Co. Sav. 
Bank, 23 Ind. App. 210, 54 N. E. 835. 

Iowa. — Union Nat. Bank v. Bar- 
ber, 56 Iowa SS9. 8 N. W. 890; Bank 
of Monroe v. Anderson Bros. M. & 
R. Co., 6s Iowa 692, 22 N. W. 929. 
Compare Swan v. Mathre, 103 Iowa 
261, 72 N. W. S22. 

Kansas. — Brook v. Teague, 52 
Kan. 119, 34 Pac. 347. 

Kentucky. — David v. Merchants 
Nat. Bank of C, 20 Ky. L. Rep. 263, 
45 S. W. 878. 

Maine. — Perrin v. Noyes, 39 Me. 
384, 63 Am. Dec. 633; Aldrich v. 
Warren, 16 Me. 465. 

Maryland. — Totten v. Bucy, 57 
Md. 46. 

Massachusetts. — Smith v. Living- 
ston, III Mass. 342; Smith v. Edge- 
worth, 3 Allen 233 ; Sistermans v. 
Field, 9 Gray 331 ; Tucker v. Morrill, 
I Allen 528. Compare Worcester 
Co. Bank v. Dorchester & M. Bank, 
10 Cush. 488, 57 Am. Dec. 120. 

Michigan. — Mace v. Kennedy, 68 
Mich. 389, 36 N. W. 187; Stevens v. 
McLachlan, 120 Mich. 285, 79 N. W. 
627. 

Minnesota. — Bank of Montreal v. 
Ricnter, 55 Minn. 632, 57 N. W. 61 ; 
First Nat. Bank v. Holan, 63 Minn. 
52s, 65 N. W. 952. 

Missouri. — Brown v. Hofflemeyer, 
74 Mo. App. 385. Compare Terry v. 
Hickman, i Mo. App. 119. 

Nebraska. — National Bank of Bat- 
tle Creek v. Miller, 51 Neb. 156, 70. 
N. W. 933 ; Violet v. Rose, 39 Neb. 
660, 58 N. W. 216. 

New York. — Vosburg v. Diefen- 



dorf, 119 N. Y. 357, 23 N. E. 801, 16 
Am. St. Rep. 836; Seymour v. Mc- 
Kinstry, 106 N. Y. 230, 12 N. E. 348, 
14 N. E. 94; First Nat. Bank v. 
Green, 43 N. Y. 298 ; Rogers v. Mor- 
ton, 12 Wend. 484. 

Oregon. — Owens v. Snell, 29 Or. 
483, 44 Pac. 827. 

, Vermont. — McCasker v. Enright, 
64 Vt. 488, 24 Atl. 249, 33 Am. St. 
Rep. 938. 

Virginia. — Vathir v. Zane, 6 
Gratt. 246. 

See article "Bills and Notes." 

Beason for Rule One of the 

reasons for this rule is that the fact 
that it was obtained by fraud af- 
fords a presumption that the guilty 
person would place the instrument in 
the hands of another person to sue 
upon it. Smith v. Livingston, iii 
Mass. 342; Bailey v. Bidwell, 13 M. 
& W. (Eng.) 73. 

Insufficient PToof to Shift Burden. 
The burden does not shift upon mere 
proof of the note and its execution 
and assignment, although this may 
constitute prima facie evidence that 
it was acquired in good faith and for 
value. Estabrook v. Boyle, i Allen 
(Mass.) 41Z; Palmer v. Poor, 121 
Ind. 13s, 22 N. E. 984, 6 L. R. A. 
4^g; Harbison v. Bank of State of 
Indiana, 28 Ind. 133, 92 Am. Dec. 308. 

Surety of Fraudulent Uaker. 
This rule applies where the indorsee 
or holder attempts to recover from 
the surety whose signature was ob- 
tained by the fraud of the maker. 
The Bank of Monroe v. The Ander- 
son Bros. M. & R. Co., 65 Iowa 692, 
22 N. W. 929. 

Proof Required to Overcome Pre- 
sumption The decisions are not 

entirely harmonious as to the extent 
of proof required on the part of the 
holder in order to overcome the pre- 
sumption. The general rule seems to 
be that the holder must show not only 
that he paid value for the instrument, 
but also that he took it in good faith 
and without notice. Bunting v. 
Mick, 5 Ind. App. 289, 31 N. E. 1055, 
31 N. E. 378; Giberson v. Jolley, 12a 

Vol. VI 



16 



FRAUD. 



purchaser or assignee had notice of the fraud and participated 
therein, which allegation is denied, does not affect the rule." 

2. Substance and Mode of Proof. — A. Parol Evidence. — a. To 
Prove Fraud. — It is always competent to prove fraud by parol evi- 
dence,^^ notwithstanding the fact that the contract or transaction 
assailed may have been reduced to writing.*^ This principle does 
not conflict with the rule excluding parol evidence to vary the terms 
of a written contract,^* nor is it at all afifected by the rule which 



Ind. 301, 22 N. E. 306; Hunter v. 
Batterson, 28 Misc. 479, 59 N. Y. 
Supp. 501 ; Stifter v. Boggs, 15 Misc. 
623, 37 N. Y. Supp. 219, while, on 
the other hand, a number of the de- 
cisions hold that he is only required 
to show that he paid value for the 
instrument, but not to go further and 
show affirmatively his want of notice 
or knowledge of the fraud, the onus 
'of proving this latter fact being upon 
the party charging the fraud. Mears 
V. Waples, 4 Houst. (Del.) fe, 
affirming 3 Houst. 581. See also 
Arnold v. Lane, 71 Conn. 61, 40 Atl. 
921, and Atlas Nat. Bank v. Holm, 
71 Fed. 489, and cases cited. 

This Unle Does Not Apply to Bank 
Bills, because they pass as money, and 
in most cases cannot be identified. 
Wyer v. Dorchester & M. Bank, 11 
Cush. (Mass.) SI, 59 Am. Dec. 137, 
and cases cited. 

Not Applicable Where Holder Is 

Party to Original Fraud In Potter 

V. Young, 90 Iowa 138, 57 N. W. 699, 
it is held that this rule does not ap- 
ply to an action where the holder of 
the note is not charged with being a 
sub-purchaser thereof, with notice of 
the original fraud 'of the payee, but 
as being one of the parties to the 
original fraud. And see also First 
Nat. Bank v. Getz, 96 Iowa 139, 64 
N. W. 799. 

41. Starr v. Stevenson, 91 Iowa 
684, 60 N. W. 217. 

42. The fraudulent representa- 
tions need not be in writing in order 
to be admissible. Sibley v. Hulbert, 
IS Gray (Mass.) 509. 

43. Nelson v. Wood, 62 Ala. 175 ; 
Hanger v. Evins, 38 Ark. 334; New- 
man V. Smith, 77 Cal. 22, 18 Pac. 791 ; 
Kerrick v. Van Dusen, 32 Minn. 317, 
20 N. W. 228. 

Rule TTniversally Recognized. 
"The right to prove fraud, in what- 
Vol. VI 



ever shape it may exist, to avoid 
written contracts, has been so uni- 
formly recognized that it can hardly 
be said to have been the subject of 
serious judicial discussion." Cum- 
mings V. Case, 52 N. J. L. 77, 18 
Atl. 972. 

" There is no contract, sealed Or un- 
sealed, that is sufficient of itself, un- 
aided by other circumstances, to 
cover and protect fraud. And rules 
of evidence which exclude parol 
proof, when offered to affect written 
instruments, will generally give way 
and allow the fraud to be proved." 
Feltz V. Walker, 49 Conn. 93 ; Indian- 
apolis, P. & C. R. Co. V. Tyng, 2 
Hun (N. Y.) 311. 

Fraud in Ackno'nrledg'ment. 
Parol evidence is admissible to show 
that a fraud was practiced not only in 
procuring execution of the deed, but 
also in the obtaining of the acknowl- 
edgment. Cover V. Manaway, 115 
Pa. St. 338, 8 Atl. 393, 2 Am. St. Rep. 
552. 

44. Alabama. — Dickson v. Bar- 
clay, 22 Ala. 370; Thompson v. Bell, 
37 Ala. 438 ; Pierce v. Wilson, 24 Ala. 
596; Tabor v. Peters, 74 Ala. 90. 

California. — Brison v. Brison, 75 
Cal. S2S, 17 Pac. 689. 

Connecticut — Fox v. Tabel, 66 
Conn. 397, 34 Atl. loi ; Feltz v. 
Walker, 49 Conn. 93. 

Illinois. — Anth v. Sexton, 137 III. 
410, 27 N. E. 691. 

Indiana. — Burns v. ThompsOr.., 91 
Ind. 146; Hines v. Driver, 72 Ind. 

125- 

Iowa. — Humbert v. Larson, 99 
Iowa 275, 68 N. W. 703; Sisson v. 
Kaper, 105 Iowa 599, 75 N. W. 490; 
Porter z'. Stone, 62 Iowa 442, 17 N. 
W. 6s4. 

Kansas. — Brook v. Teague, $2 
Kan. iig, 34 Pac. 347. 

Massachusetts. — Burns v. Dock- 
ray, 156 Mass. I3S, 30 N. E. SSI. 



FRAUD. 



17 



declares that all prior negotiations and transactions are deemed to 
have been merged in the written contract thereafter executed,*'' 
because the action in which the fraud is in issue is based on the deceit 
and not on the contract ;*" nor is the rule varied by the fact that the 
fraudulent representations which are sought to be proved relate to 
the title to real property ;" nor by the fact that the parties have, by a 
written contract, agreed that their rights and liabilities thereunder 
shall be finally and conclusively settled by the decision of some third 
person.** The fact that the parties have, in such contract, stipulated 
certain facts as true does not render parol evidence incompetent to 
prove the contrary for the purpose of showing fraud.*" 

b. In Disproof of Fraud. — Parol evidence is likewise admissible 
to disprove fraud in the transaction, although it may be evidenced 
by a written instrument.^" 



New York. — Sandford v. Handy, 
23 Wend. 259. 

North Carolina. — McLeod v. Bui- 
lard, 84 N. C. 515; Powell v. Hep- 
tinstall, 79 N. C. 206. 

Vermont. — Mallory v. Leach, 35 
Vt. 156; Dano v. Sessions, 65 Vt. 79. 

45. Hick V. Thomas, 90 Cal. 
289, 27 Pac. 208, 376; Tyler 
V. Anderson, 106 Ind. 185, 6 
N. E. 600; The Dowagiac 
Mfg. Co. V. Gibson, 73 Iowa 525, 35 
N. W. 603, S Am. St. Rep. 697; 
Leicher v. Keeney, 98 Mo. App. 394, 
72 S. W. 14s ; Burns v. Dockray, 156 
Mass. 13s, 30 N. E. SSI ; Gustafson 
V. Rustemeyer, 70 Conn. 12s, 39 Atl. 
104, 66 Am. St. Rep. 92, 39 L. R. A. 
644. And see Lovejoy v. Isbell, 73 
Conn. 368, 47 Atl. 682. 

In Weeks v. Currier, 172 Mass. S3i 
SI N. E. 416, the court said : " Fraud- 
ulent representations and oral mis- 
statements made with intent to de- 
ceive are not so merged in the writ- 
ten instrument procured by means of 
them that they may not be made the 
basis of a decree to set it aside." 

ImmateTial Effect of Express War- 
ranty. — Parol evidence is admissible 
to show other fraudulent representa- 
tions inducing the contract, although 
there was a written warranty in re- 
spect to certain representations other 
than those sought to be shown. Cuni- 
mings V. Cass, 52 N. J. L. 77, 18 Atl. 
972. 

Contract Silent As to Hepresenta- 

tlons Parol evUence is competent 

to establish fraudulent representations 
as an inducement to the contract, al- 
though the written contract itself is 

2 



silent on the subject to which the rep- 
resentations refer. Carvill Adm'r v. 
Jacks Adm'r, 43 Ark. 439; Antle v. 
Sexton, 137 111. 410, 27 N. E. 691; 
Davis V. Driscoll, 22 Tex. Civ. App. 
14, S4 S. W. 43; Mitchell v. Zim- 
merman, 4 Tex. 7S. 

46. Such Evidence Does Not Vary 
the Writing or add to it, but proves 
that it was void in its inception. 
O'Donnell v. Clinton, 145 Mass. 461, 
14 N. E. 747; McLeod V. Bullard, 84 
N. C. SIS. 

47. Whitney v. Allaire, i N. Y. 
30S. 

48. Baltimore & O. C. R. Co. v. 
Scholes, 14 Ind. App. S24, 43 N. E. 
IS6, s6 Am. St. Rep. 307; McCoy v. 
Able, 131 Ind. 417, 30 N. E. 528, 31 
N. E. 4S3. 

49. The Fact That the Insurance 
Policy is a " Valued " Policy and the 
demand therein liquidated does not 
render incompetent parol proof of the 
real value of the property insured 
for the purpose of proving a fraudu- 
lent overvaluation of the property in 
procuring the insurance. Sullivan v. 
Hartford Fire Ins. Co. (Tex. Civ. 
App.), 34 S. W. 999. 

50. Cameron v. Paul, 11 Pa. St. 
277. 

In defense to a charge that the 
defendant (grantor) fraudulently as- 
serted title to a piece of land con- 
veyed to plaintiff, parol evidence on 
the part of such defendant to show 
that the real transaction between the 
parties covered a different piece of 
land and that an erroneous descrip- 
tion thereof was placed in the deed 

' Vol. VI 



18 



FRAUD. 



c. Must Tend to Show Fraud. — But where the tendency of the 
parol testimony is simply to control or modify the effect of a written 
agreement, it is incompetent, although the object in offering it may 
have been to establish an alleged fraud.^^ 

B. Direct Evidence. — Testimony of Party. — The intent or 
motive^^ of a party in a transaction, whether he knew of the falsity 
of the representation,*^ and whether he relied upon the fraud 
charged,^* may be shown by the direct testimony of the party 
whose motive, belief or intent is in issue. 

C. CircumsTantiai, ProoE. — While a vast number of the decis- 
ions have adopted and used the expression that the law will never 
presume fraud, and that it must be proved,"^ this is but the mere 



by mistake, is competent. Taylor v. 
Leith, 26 Ohio St. 428. 

Where the grantor in a quitclaim 
deed is charged with deceit in that 
he had no title to convey, he may tes- 
tify that no representation was made 
by him as to the nature of the title 
at the time the deed was given, as 
this tends to show that no deceit was 
practiced. Walton v. Mason, 109 
Mich. 486, 67 N. W. 692. 

51. Paucett v. Currier, log Mass. 
79; Cowles V. Townsend, 31 Ala. 133. 

See McLeod v. Johnson, 96 Me. 
271, 52 Atl. 760, in which it was 
held that evidence of the language 
used by the parties during the con- 
versation at the time and place of 
the execution of the contract was not 
admissible. The particular language 
sought to be proved did not tend 
to prove fraud in the execution of 
the contract, in that it did not ap- 
pear that the supposed words, if 
spoken, were intended to induce 'or 
did induce the defendant to sign the 
contract, they being merely sugges- 
tions upon which the defendant 
might or might not act as he saw fit. 

" Proof of the Violation of an 
Alleged ContemporaneotLS Parol 
Agreement does not establish fraud 
in the procurement of the written 
contract." Slaughter v. Smither, 97 
Va. 202, 33 S. E. 544- 

52. See post II. i. C. a. (i.) 

53. See post II. i. C. b. (i.) 

54. See post II. 3. B. a. 

55. United States — Farrar v. 
Churchill, 135 U. S. 609; Gregg v. 
The Lessee of Sayre, 8 Pet. 244. 

Alabama. — Thames v. Rembert, 63 
Ala. 561. 

Arkansas. — Toney v. McGehee, 38 
Ark. 419. 

Vol. VI 



California. — Smith v. Yule, 31 
Cal. 180, 89 Am. Dec. 167. 

Delaware. — Meares v. Waples, 3 
Houst. 581 ; Boyce v. Cannon, 5 
Houst. 409; Kent Co. R. Co. v. 
Wilson, 5 Houst. 49. 

Illinois. — Dexter v. McAfee, 163 
111. 508, 45 N. E. lis; Wright v. 
Grover, 27 III. 426. 

Indiana. — Luce v. Shoflf, 70 Ind. 
152 ; Morgan v. Olvey, 53 Ind. 6. 

Iowa. — Kenosha Stove Co. v. 
Shedd, 82 Iowa 540, 48 N. W. 933. 

Massachusetts. — Wood v. Massa- 
chusetts Mut. Ace. Ass'n, 174 Mass. 
217, 54 N. E. 541- 

Michigan. — Allison v. Ward, 63 
Mich. 128, 29 N. W. 528; Michels 
V. Stork, 52 Mich. 260, 17 N. W. 833 ; 
Miller v. Finley, 26 Mich. 249. 

Mississippi. — Parkhurst v. Mc- 
Graw, 24 Miss. 134. 

Nebraska. — Hampton v. Webster, 
S6 Neb. 628, 77 N. W. 50; Alter v. 
Bank of Stockham, 53 Neb. 223, 73 N. 
W. 667 ; AVestern Horse & Cattle Ins. 
Co. V. Putnam, 20 Neb. 331, 30 N. W. 
246; Davidson v. Crosby, 49 Neb. 60, 
68 N. W. 338. 

New York. — Morris v. Talcott, 96 
N. Y. 100. 

Pennsylvania. — Thr'oop v. Griffin, 
180 Pa. St. 452, 36 Atl. 86s. 

C/fo/t. — Deseret Nat. Bank v. Lit- 
tle, 13 Utah 26s, 44 Pac. 930. 

West Virginia. — Wood v. Harri- 
son, 41 W. Va. 376, 23 S. E. 560. 

Fraud Cannot Be Assumed. 
" Fraud, it is sometimes said, may be 
inferred. But this expression must 
not be construed to warrant the mere 
assumption of a fact. This inference 
can only be drawn legitimately from 
some tangible fact in proof." Funk- 
houser v. Lay, 78 Mo. 458. 



FRAUD. 



19 



expression of the abhorrence with which the law regards fraud, and 
does not attempt to lay down any rule as to the mode of proof.^^ 
Indeed, this expression has been severely criticised, and an instruc- 
tion to that effect, in the absence of a proper qualification, held mate- 
rial error.^' It is not true that the law will never imply or infer 
fraud without direct and positive proof, but, on the contrary, it is 
always permissible to prove it by any circumstances from which it 



56. Delaware. — Sanders v. Clark, 
6 Houst. 46^. 

Illinois. — Reed v. Noxon, 48 111. 
323 ; Strauss v. Kranert, 56 111. 254. 

Indiana. — Farmer v. Calvert, 44 
Ind. 209. 

Michigan. — O'Donnell v. Segar, 
25 Mich. 367. 

Missouri. — State of Missouri ex 
rel. Erhardt v. Estel, 6 Mo. App. 6. 

Pennsylvania. — Stauffer v. Young, 
39 Pa. St. 455- 

Texas. — Sparks v. Dawson, 47 
Tex. 138. 

West Virginia. — Harden v. Wag- 
ner, 22 W. Va. 356. 

In Mathews v. Reinhardt, 149 III. 
63s. 37 N. E. 8s, the trial court in- 
structed the jury that " fraud cannot 
be presumed, but must be proved." 
It was held that the instruction was 
not obnoxious to the objection that 
it must have been understood by the 
jury as holding that fraud must be 
proved by direct evidence and not by 
circumstances. " It simply holds that 
fraud must be proved, but does not 
attempt to deal in the least with the 
question of the mode of proof." 

Distinction Between " Presumed " 
and " Inferred." — In Morford v. 
Peck, 46 Conn. 380, the charge to the 
jury that the plaintiffs must prove 
the fraud, and that it could not be 
inferred, was held erroneous, and was 
held not to mean the same as the 
maxim, " The law never presumes 
fraud " (which maxim itself was 
criticised) ; because the word " in- 
ferred " is a stronger word than 
" presumed " when preceded by the 
word " cannot," for the purpose of 
excluding indirect evidence. The 
court holds that while fraud cannot 
be presumed without proof, it may be 
inferred from circumstances. 

In Barndt v. Frederick, 78 Wis. i, 
47 N. W. 6, II L. R. A. 199, where 
the court had instructed the jury that 
fraud is not presumed, a further ad- 
dition to such instruction, viz. : " In 



this case, while you are not to pre- 
sume it, you may infer, if you find 
the evidence will warrant you in that 
presumption, the fraudulent character 
of this transaction," was held proper, 
and not in conflict with the former 
part of the instruction. 

57. Burch v. Smith, 15 Tex. 219; 
Spark V. Dawson, 47 Tex. 138; 
Lowry V. Beckner, S B. Hon. (Ky.) 
41, and see cases cited in note 56. 
. In Kaine v. Weigley, 22 Pa. St. 179, 
the court uses this language : " It is 
said that fraud must be proved, and 
is never to be presumed. This propo- 
sition can be admitted only in a quali- 
fied and very limited sense. But it is 
often urged at the bar, and sometimes 
assented to by judges, as if it were 
a fundamental maxim of the law, 
universally true, incapable of modifi- 
cation, and open to no exception; 
whereas it has scarcely extent enough 
to give it the dignity of a general 
rule; and, as far as it does go, it 
is based on a principle which has no 
more application to frauds than to 
any other subject of judicial inquiry. 
It amounts but to this : that a con- 
tract, honest and lawful on its face, 
must be treated as such until it is 
shown to be otherwise by evidence of 
some kind, either positive or circum- 
stantial. It is not true that fraud can 
never be presumed. Presumptions 
are of two kinds, legal and natural. 
Allegations of fraud are sometimes 
supported by 'one and sometimes by 
the other, and are seldom, almost 
never, sustained by that direct and 
plenary proof which excludes all pre- 
sumption. ... A resort to pre- 
sumptive evidence, therefore, be- 
comes absolutely necessary to protect 
the rights of honest men from this, 
as from other invasions." 

Error to Charge that Fraud Can- 
not be Presumed — In Granrud v. 
Rea, 24 Tex. Civ. App. 299, 59 S. W. 
841, the court says : " On the trial 
the court charged the jury, among 

Vol. VI 



20 



FRAUD. 



may follow as a legitimate inference, and in most cases such circum- 
stances are the only evidence available;^* 

V. Able, 131 Ind. 417, 3i N. E. 453; 
Parrish v. Thurston, 87 Ind. 437; 
Kelly V. Lenihan, 56 Ind. 448; 
Rhodes v. Green, 36 Ind. 7; Furry v. 
O'Connor, i Ind. App. 573, 28 N. E. 



other things, that ' fraud cannot be 
presumed, but must be proven to the 
satisfaction of the jury by compe- 
tent evidence.' The charge is er- 
roneous in two particulars: (i) The 
jury should never be charged that 
fraud can never be presumed, be- 
cause it can be presumed by the jury 
from facts and circumstances proved, 
and often the only way of establish- 
ing it is to presume its existence 
from other facts and circumstances 
proved to exist." 

58. United States. — Gregg v. 
The Lessee 'of Sayre, 8 Pet. 244; 
Mudsill Min. Co. v. Watrous, 61 
Fed. 163. 

Alabama. — Nelms v. Steiner, 113 
Ala. 562, 22 So. 435; Loeb v. Flash, 
65 Ala. 526; Pickett v. Pipkin, 64 
Ala. 520; Adams v. Thornton, 78 
Ala. 489. 

Arkansas. — Bank of Little Rock 
V. Frank, 63 Ark. 16, 37 S. W. 400, 
58 Am. St. Rep. 65; Gavin v. Armi- 
stead, 57 Ark. 574, Z2 S. W. 431, 
38 Am. St. Rep. 262; Hanger v. 
Evins, 38 Ark. 334. 

California. — McDaniel v. Baca, 2 
Cal. 32s, 56 Am. Dec. 339; Maxson 
V. Llewellyn, 122 Cal. 195, 54 Pac. 
732; Belden v. Henriques, 8 Cal. 88. 

Colorado. — Marsh v. Cramer, 16 
Colo. 331, 27 Pac. 169; Grimes v. 
Hill, IS Colo. 3S9, 25 Pac. 698. 

Connecticut. — Quinebaug Bank v. 
Brewster, 30 Conn. 559. 

Delaware. — Brown v. Dickerson, 
2 Marv. iig, 42 Atl. 421 ; Freeman 
V. Topkis, I Marv. 174, 40 Atl. 948; 
Slessinger v. Topkis, i Marv. 140, 40 
Atl. 717; Sanders v. Clark, 6 Houst. 
462. 

Florida. — Smith v. Hines, 10 Fla. 
258. 

Georgia. — Hoffer v. Gladden, 75 
Ga. 532. 

Idaho. — Sears v. Lydon, 5 Idaho 
358, 49 Pac. 122. 

Illinois. — Gill v. Crosby, 63 111. 
190; Reed v. Noxon, 48 111. 323; 
Bowden v. Bowden, 75 111. 143; Bul- 
lock V. Narroti, 49 III. 62 ; Strauss v. 
Kranert, 56 111. 254; Johnson v. 
Worthington, 30 III. App. 617. 

Indiana. — Timmis v. Wade, 5 
Ind. App. 139, 31 N. E. 827; McCoy 

Vol. VI 



103. 

Iowa. — Lindauer v. Hay, 61 Iowa 
663, 17 N. W. 98; Osweg'o Starch 
Factory v. Lendrum, 57 Iowa 573, 10 
N. W. 900, 42 Am. Rep. 53. 

Kentucky. — W3.T& v. Crutcher, 2 
Bush 87. 

Maine. — Franklin Bank v. Cooper, 
39 Me. 542. 

Maryland. — Keller v. Gill, 92 Md. 
190, 48 Atl. 69 ; Hiss V. Weik, 78 Md. 
439, 28 Atl. 400. 

Massachusetts. — Cook v. Moore, 
II Cush. 213. 

Michigan. — Ferris v. McQueen, 94 
Mich. 367, 54 N. W. 164. 

Minnesota. — Berkey v. Judd, 22 
Minn. 287. 

Mississippi. — Parkhurst v. Mc- 
Graw, 24 Miss. 134. 

Missouri. — Hopkins v. Sievert, 58 
Mo. 201; State of Missouri ex rel. 
Erhardt v. Estel, 6 Mo. App. 6. 

Nebraska. — Alter v. Bank of 
Stockham, 53 Neb. 223, 73 N. W. 667. 

New York. — Clark v. Baird, 9 N. 
Y. 183; Marsh v. Falker, 40 N. Y, 
562; Booth V. Powers, 56 N. Y. 22. 

Pennsylvania. — Kaine v. Weigley. 
22 Pa. St. 179; Staufler v. Young, 39 
Pa. St. 455- ' 

Texas. — Sparks v. Dawson, 47 
Tex. 138; Burch v. Smith, 15 Tex. 
219; Graham v. Roder, 5 Tex. 141; 
Briscoe v. Bronaugh, i Tex. 326. 

Virginia. — Todd v. Sykes, 97 Va. 
143. 33 S. E. 517; Saunders v. Par- 
rish, 86 Va. 592, 10 S. E. 748; Jones 
V. McGruder, 87 Va. 360, 12 S. E. 792 ; 
Ferguson v. Daughtrey, 94 Va. 308, 
26 S. E. 822; Hazlewood v. Forrer, 
94 Va. 703, 27 S. E. 507- 

Washington. — Tacoma v. Tacoma 
L. & W. Co., 16 Wash. 288, 47 Pac. 
738; Millar v. Plass, 11 Wash. 237, 
39 Pac. 956. 

West Virginia. — Bronson v. 
Vaughn, 44 W. Va. 406, 29 S. E. 
1022; Goshorn Ex'r v. Snodgrass, 17 
W. Va. 717 ; White v. Perry, 14 W. 
Va. 66. 
Wisconsin. — Bamdt v. Frederick, 



FRAUD. 



21 



D. Opinion or Conci,usion of Witness. — Fraud is an infer- 
ence or conclusion of fact to be drawn by the court or jury from all 
the evidence in a case,°* and the general rule is that the opinion or 
conclusion of a witness that a transaction was or was not fraudulent 
is incompetent."" Some of the decisions, however, seem to have 
digressed materially from this rule and have held such evidence 
competent.*^ 



78 Wis. I, 47 N. W. 6, II L. R. A. 
199. 

In Hennequin v. Naylor, 24 N. Y. 
139, the court said : " I accede to the 
proposition of the counsel for the de- 
fendant that fraud must be proved. 
It can never be presumed, in the 
absence of all evidence on the sub- 
ject. Nevertheless, the motive with 
which an act is done may be, and 
often is, ascertained and determined 
by inferences drawn from the proof 
of facts and circumstances connected 
with the transaction, and the parties 
to it. . . . In cases where there 
is no overt act of fraud it is often 
very difScult to prove a dishonest 
purpose. In all such cases, instead 
of proving false representations or 
other fraudulent purposes, resort is 
had to various incidents and circum- 
stances which are calculated to ex- 
hibit the hidden purposes of the 
actor's mind." 

Difficulty in Froving Traud. 
" It would, in most cases, be ex- 
tremely difficult, and in many cases 
absolutely impossible, to procure di- 
rect evidence of this nature. In all 
cases it is permissible to prove fraud 
by circumstances, and in most cases 
it is the only evidence available. In 
aid of the direct facts proved, legiti- 
mate inferences are permitted to be 
indulged to establish others not di- 
rectly in evidence." Maxson v. 
Llewellyn, 122 Cal. 195, 54 Pac. 732. 

Difficulty in laying Down Rule. 
Mears v. Waples, 3 Houst. (Del.) 
581. And see Gill v. Crosby, 63 III. 
igo. 

" Sometimes Negative Circum- 
stances Are ftuite as Cogent in mani- 
festing its influence as are affirma- 
tive and direct statements." Berger 
V. Bullock, 85 Md. 441, 37 Atl. 368. 

Circumstantial Proof Exclusively. 
For a strong case in which it was 
held that fraud was satisfactorily 
made out by circumstantial proof ex- 



clusively, see Mudsill Min. Co. v. 
Watrous, 61 Fed. 163. 

59. See post, "Weight and Suf- 
ficiency of the Evidence." 

60. Liveright v. Greenhouse, 61 
N. J. L. 156, 38 Atl. 697; Stone v. 
Denny, 4 Mete. (Mass.) 151; Sweet z;. 
Wright, 62 Iowa 215, 17 N. W. 468; 
Kipp V. Chamberlin, 20 N. J. L. 656; 
Bunting v. Mick, 5 Ind. App. 289, 31 
N. E. 378, 31 N. E. loss; Hoyle v. 
Southern Saw Wks., 105 Ga. 123, 31 
S. E. 137. 

The testimony of a witness that he 
had discovered that the representa- 
tion was absolutely false (Borone v. 
Titus, 30 N. J. L. 340), or that a 
person had misrepresented the facts 
(German Fire Ins. Co. v. Grunert, 
1 12 III. 68) , or that a person obtained 
certain property honestly (Johnson v. 
State, 3S Ala. 370), or that the wit- 
ness purchased in good faith (Pope 
V. Branch Co. Sav. Bank, 23 Ind. 
App. 210, 54 N. E. 83s), is a conclu- 
sion of the witness and is incompe-. 
tent. 

Incompetent to Contradict Wit- 
ness — The statement of a witness 
that the transaction " was a swindle," 
it being claimed that he had made 
such statement as a previous declara- 
tion, or admission, is incompetent 
even to contradict the testimony of 
such witness tending to show good 
faith in the transaction. It was the 
province of the jury, and not the wit- 
ness, to determine this question. Sun- 
berg V. Babcock, 66 Iowa S'S, 24 N. 
W. 19. 

61. See McLeod v. Bullard, 84 N. 
C. 51S ; Starr v. Stevenson, 91 Iowa 
684, 60 N. W. 217. 

Opinion that Fraud Had Been 
Practiced. — In McLean v. Clark, 47 
Ga. 24, which was an action by the 
vendor of property to set aside the 
sale thereof on the grounds that de- 
fendant had falsely represented to 
complainant that his life and prop- 

Vol. VI 



22 



FRAUD. 



3. Eelevancy. — A. Libe;rai, Rule of Admissibility. —The 
courts are a unit in allowing the greatest liberality in the method of 
examination, in the scope of the inquiry, and in the latitude of the 
direct and cross-examination of witnesses in all cases where the issue 
of fraud is involved.'^ It has been held, however, that this very 



erty were in danger by reason of the 
indignation of the people of the 
community for his having raised the 
British flag over his premises as a 
means of protection from the federal 
forces, whereby he was induced to 
convey his property for a sum far 
less than its value, it was held error 
for the court to rule out the testi- 
mony of a witness who was present 
at the transaction, and who had testi- 
fied as follows : " The sale in all its 
features was a compulsory one, and 
effected through the misrepresenta- 
tions of his (plaintiff's) legal adviser, 
who negotiated the whole transac- 
tion ; the sale was not of his own 
free will and accord, because Mr. 
Clark (plaintiff's legal adviser), 
made statements to plaintiff that if 
he did not sell the factory his life 
would be in constant danger," and 
further, " The impression on my mind 
was, and still is, that plaintiff would 
not have sold the property if he had 
not believed that his own life and 
the lives of his family were in dan- 
ger, and that this belief was caused 
by the persistent misrepresentations 
of Clark," and further that "The 
property was sold because the plain- 
tiff was fraudulently led to believe by 
Clark's representations that his life 
would be in danger." The court 
said that a witness who was present 
at the time of the transaction, and 
who testified to the general statement 
that McLean was alarmed, did not 
act of his own free will, and that his 
legal adviser misrepresented the facts 
(the legal adviser being one of the 
defendants and a partaker of the ben- 
efits of the fraud, if there was a 
fraud), was giving competent testi- 
mony; that he might, when ques- 
tioned, go into greater detail, and 
;that it was in the power of the 
other side to push the inquiry 
into those details. The testimony 
did go into some of those details, 
and the other portions of what 
he said were to be considered 
in determining the weight to be 

Vol. VI 



given to the general statements. The 
witness stated that he was present 
He stated that Clark negotiated the 
trade ; that Clark was McLean's lega' 
adviser ; that he deceived McLean ana 
put him in fear, so that he had no 
free will. He stated, in other parts 
of his testimony, the character of tht 
misrepresentations, etc. So far as 
this was a statement of facts it wa? 
surely competent. That it did not 
sufficiently go into details; that it 
was general ; that the witness stated, 
as facts, what other parts of the tes- 
timony showed he was mistaken in. 
or did not know ; these were objec- 
tions to its weight, and not to its 
competency. Some of it was matter 
of opinion ; but so far as the state of 
McLean's mind was concerned, 
whether he was 'or was not alarmed, 
and the cause of his alarm, were nec- 
essarily matters of opinion; and, un- 
der the law (Code, §3811), a 
witness may, in such matters, give his 
opinion, if he states the ground of 
that opinion. The whole goes to the 
jury for what it is worth. If the 
grounds stated show that the circum- 
stances were such as to justify the 
opinion, or if they show the contrary, 
the opinion has more or less weight 
with the jury. 

62. United States. — Castle v. 
Bullard, 23 How. 172; Butler v. Wat- 
kins, 80 U. S. 456; Spurr V. United 
States, 87 Fed. 701. 

Alabama. — Nelms v. Steiner, 113 
Ala. 562, 22 So. 435 ; Benning v. Nel- 
son, 23 Ala. 801; Snodgrass v. 
Branch Bank of Decatur, 25 Ala. 
161, 60 Am. Dec. 505. 

California. — Butler v. Collins, 12 
Cal. 4S7; Richards v. Fraser, 122 
Cal. 456, 55 Pac. 246. 

Colorado. — Grimes v. Hill, 15 
Colo. 359, 25 Pac. 698. 

Connecticut. — Hoxie v. Home Ins. 
Co., 32 Conn. 21, 8s Am, Dec. 240. 

Georgia. — Kidd v. Huff, 105 Ga. 
209, 31 S. E. 430; Robinson v. Wood- 
mansee, 80 Ga. 249, 4 S. E. 497; 
Roberts v. Neal, 62 Ga. 163, 



FRAUD. 



23 



latitude of evidence imposes upon the jury the duty of closest 
scrutiny."^ 

B. Relevant Circumstances. — a. In General. — Every fact or 
circumstance from which a legal inference of fraud may be drawn 
is relevant.^* 

b. Individual Weight Immaterial. — It is the "bearing" and not 
the independent force or weight of the particular fact or circum- 
stance upon which its relevancy depends, and although it may be of 
very little consequence intrinsically, still if it has a "breath of 
importance," it is relevant. and admissible.*^ 



Idaho. — Sears v. Lydon, s Idaho 
358, 49 Pac. IZ2. 

Illinois. — Vigus v. O'Bannon, 118 
III. 334, 8 N. E. 778. 

Kansas. — Smith v. Smidt, 5 Kan. 
30. 

Maryland. — McAleer v. Horsey, 35 
Md. 439 ; Cook v. Carr, 20 Md. 403. 

Michigan. — Kirschbaum v. Jass- 
pon, 119 Mich. 452, 78 N. W. 473; 
Barnett v. Farmers Mut. Fire Ins. 
Co., 115 Mich. 247, 73 N. W. 372; 
Dibble v. Nash, 47 Mich. 589, 11 N. 
W. 399; Gumberg v. Treusch, 103 
Mich. S43, 61 N. W. 872. 

Minnesota. — Pfefferkorn v. See- 
field, 66 Minn. 223, 68 N. W. 1072. 

Missouri. — Bank of North Amer- 
ica V. Crandall, 87 Mo. 208; Smalley 
V. Hale, 37 Mo. 102 ; Mosby v. Com- 
mission Co., gi Mo. App. soo; Hop- 
kins V. Sievert, 58 Mo. 201 ; Erfort v. 
Consalus, 47 Mo. 208. 

New York. — Townsend v. Felt- 
housen, 156 N. Y. 618, 51 N. E. 279; 
Benham v. Cary, 11 Wend. 83; White 
V. Benjamin, 150 N. Y. 258, 44 N. E. 
956; Viele V. Goss, 49 Barb. 96. 

Pennsylvania. — Cole v. High, 173 
Pa. St. 59°, 34 Atl. 292; Glessner v. 
Patterson, 164 Pa. St. 224, 30 Atl. 
355; Baltimore & O. R. Co. v. 
Hoge, 34 Pa. St. 214; Reinhard v. 
Keenbartz, 6 Watts 93 ; Winters v. 
Mowrer, 163 Pa. St. 239, 29 Atl. 916 ; 
Van Sciver Co. v. McPherson, 199 
Pa. St. 331, 49 Atl. 73 ; Cover v. Man- 
away, IIS Pa. St. 338, 8 Atl. 393, 2 
Am. St. Rep. 552. 

South Carolina. — Gist v. Mcjun- 
kin, 2 Rich. L. IS4- 

Texas. — Loftus v. Ivy, 14 Tex. 
Civ. App. 701, 37 S. W. 766; Burn- 
ham V. Logan, 88 Tex. i, 29 S. W. 

1067. 

Utah. — ht^Aom v. Earls Purn. & 
C. Co., 12 Utah 172, 42 Pac. 208. 



Virginia. — Piedmont Bank v. 
Hatcher, 94 Va. 229, 26 S. E. 505. 

Meaning of Uazim In Stauffer 

V. Young, 39 Pa. St. 455, the reason of 
the rule was fully and clearly stated : 
The meaning of the maxim that great 
liberality of evidence is to be allowed 
in the trial of questions of fraud is 
that every circumstance in the condi- 
tion and relation of the parties, and 
every act and declaration of the per- 
son charged with the fraud, shall be 
competent evidence, if in the opinion 
of the judicial mind it bears such a 
relation to the transaction under in- 
vestigation as in its nature is calcu- 
lated to persuade the reasonable men 
in the jury box to the belief that the 
allegation of fraud is or is not well 
founded. 

Cross-Examination of Party A 

wide latitude will generally be al- 
lowed in cross-examinations where 
the issue is fraud, especially of wit- 
nesses who are parties to the alleged 
fraudulent transaction. Altschuler 
V. Coburn, 38 Neb. 881, 57 N. W. 836. 

63. Freeman v. Topkis, i Marv. 
(Del.) 174, 40 Atl. 948. 

64. Cover v. Manaway, 115 Pa. 
St. 338, 8 Atl. 393, 2 Am. St.. Rep. 
552; Tillman v. Fountaine, 98 Ga. 
672, 27 S. E. 149. 

65. United States. — Castle v. 
Bullard, 23 How. 172; United States 
V. Kenney, 90 Fed. 257. 

Alabama. — Nelms v. Steiner Bros., 
113 Ala. 562, 22 So. 435. 

Colorado. — Grimes v. Hill, 15 
Colo. 359, 25 Pac. 698. 

Delaware. — Sanders v. Clark, 6 
Houst. 462. 

Indiana. — Robinson v. Reinhart, 
137 Ind. 674, 36 N. E. 519. 

Maine. — Franklin Bank v. Cooper, 
39 Me. 542 ; Walker v. Thompson, 61 
Me. 347, 

Vol. VI 



24 



FRAUD. 



c. The Transaction Itself and Its Results. — The form or intrinsic 
characteristics of the transaction or instrument itself,"® and all the 
circumstances, whether. preceding, accompanying, or following it, if 
bearing upon it or tending to throw any ligiit upon it, are relevant 
and admissible to prove or disprove fraud therein."^ The trans- 



Massachusetts. — Stebbins v. Mil- 
ler, 12 Allen 591. 

New York. — White v. Benjamin, 
ISO N. Y. 258, 44 N. E. 9S6. 

" It is a great error, generally in- 
sisted on by defendants, in cases in- 
volving questions of fraud, that each 
item of testimony is to be tested by 
its own individual, intrinsic force, 
without reference to anything else in 
the case; and if on such a test it 
does not prove fraud, it must be ex- 
cluded. . Courts have the 
power, and must prevent such a sys- 
tem of assault, otherwise fraud 
would ever after be victorious." 
Baltimore & O. R. Co. v. Hoge, 
34 Pa. St. 214. 

66. Colorado. — Lewis v. Dodge, 3 
Colo. App. S9, 31 Pac. 1022. 

Connecticut. — See Salmon v. 
Richardson, 30 Conn. 360. 

Illinois. — Bowman v. Wettig, 39 
111. 416. 

Iowa. — Terhune v. Henry & Car- 
michael, 13 Iowa 99. 

Maine. — Brown v. Blunt, 72 Me. 

415- 

Maryland. — Brooke v. Berry, 2 
Gill 83. 

Massachusetts. — Sullivan v. Lang- 
ley, 128 Mass. 435. 

Michigan. — Adams v. Bowman, Ji 
Mich. 189, 16 N. W. 373. 

Minnesota. — Goddard v. King, 40 
Minn. 164, 41 N. W. 659. 

New York. — Booth v. Powers, 56 
N. Y. 22. 

Texas. — Briscoe v. Bronaugh, i 
Tex. 326. 

Presumption — In Prazier v. Mil- 
ler, 16 111. 48, which was an action to 
set aside for fraud, a contract by 
which plaintiff had conveyed to de- 
fendant all of his real and personal 
property, constituting his whole for- 
tune, in consideration of defendant's 
agreement to support plaintiff and 
wife during their lives, the court 
said: "The bill is silent as to the 
ages of Miller and wife, and their 
constitutional vigor, but we might in- 
dulge a presumption, without vio- 

Vol. VI 



lence, of their age and feebleness, 
from the nature and character of the 
transaction." 

Extravagance of Representations. 
If the representations were so extrav- 
agant that a sensible, cautious person 
would not have believed them, this 
is a proper consideration for the jury 
in determining whether the plaintiff 
believed and relied upon them. 
Barndt v. Frederick, 78 Wis. i, 47 
N. W. 6, II L. R. A. 199, and see 
James v. Work, 54 N. Y. St. 166, 24 
N. Y. Supp. 49. 

Transaction Conclusively Disprov- 
ing Fraud. — See Binney's Appeal, 
116 Pa. St. 169, 9 Atl. 186, in which 
it was held that the face of the pub- 
lic record of a mortgage on which B, 
as an admjnistrator, had entered sat- 
isfaction of the mortgage, which his 
decedent had not owned, but such sat- 
isfaction on its face showing plainly 
a reference to the record of a mort- 
gage which his decedent did own, was 
sufficient and conclusive of itself to 
show that there was no fraud on the 
part of B in entering the satisfaction 
in the wrong place, and that it sim- 
ply amounted to a mistake. 

Exaggerated Represe ntations. 
The representation itself, when com- 
pared with the actual condition of 
the subject-matter, which has been 
viewed and examined by the party 
charging the fraud, may be so 
grossly exaggerated or false as to 
negative the claim that the party re- 
lied thereon. See Allison v. Ward, 
63 Mich. 128, 29 N. W. 528. 

67. Delaware. — Brown v. Dick- 
erson, 2 Marv. 119, 42 Atl. 421. 

Illinois. — Kingman v. Reinemer 
166 111. 208, 46 N. E. 786; Eames v. 
Morgan, 37 111. 260. 

Indiana. — Bloomer v. Gray, 10 
Ind. App. 326, Z7 N. E. 819. 

Louisiana. — Smith v. Berwick, 12 
Rob. 20. 

Massachusetts. — Sullivan v. Lang- 
ley, 128 Mass. 435; Smith v. Living- 
ston, HI Mass. 342, 



FRA UD. 



25 



action may, of itself and by itself, furnish the most satisfactory 
proof of fraud, so conclusive as to outweigh the answer of the party 
charged and even the evidence of witnesses.''* 

Result. — The result accomplished by the act charged as fraudu- 
lent may be relevant as clearly indicating the purpose or intent with 
which the act was done,"^ and a comparison between the actual result 
of an alleged fraudulent act and what would have been the result of 
a similar act if fair and equitable, is competent.'" 

d. Acts, Conduct, and Declarations of the Parties. — (l.) In General. 
The statements of the parties at the time of the transaction,'^ their 



Missouri — Smalley v. Hale, 37 
Mo. 102. 

New Hampshire. — Blodgett Paper 
Co. V. Farmer, 41 N. H. 398. 

Pennsylvania. — Cole v. High, 173 
Pa. St. 590, 34 Atl. 292. 

In an action by the vendor count- 
ing on the fraud of the vendee in de- 
livering to such vendor a false and 
fraudulent promissory note as the 
purchase price of the goods without 
any active misrepresentation, which 
note was signed " E. K. P.," evidence 
that there was only one person bear- 
ing that name in the county; that he 
was a man of great wealth; that the 
signature to the note resembled his 
signature and that the vendor be- 
lieved the signature to be his, when 
in reality the real maker was the 
vendee's brother residing in another 
county, and who was financially em- 
barrassed, is relevant and admissible 
to establish the fraudulent intent and 
as proof of the inducement. Parrish 
V. Thurston, 87 Ind. 437. 

68. Todd V. Sykes, 97 Va. 143, 33 
S. E. S17; Jones V. McGruder, 87 
Va. 360, 12 S. E. 792; Parr v. 
Saunders (Va.), 11 S. E. 981; Haz- 
lewood V. Forrer, 94 Va. 703, 27. S. E. 
507- 

Instrument from Execution Debtor 
to Sheriff. — In Gist v. Frazier, 
2 Litt. (Ky.) 118, in speaking of 
an instrument in and by which an 
execution debtor recited the holding 
by the sheriff of a number of execu- 
tions against him, and fully author- 
ized and directed such sheriff to sell 
the debtor's premises without com- 
plying with the ordinary requirements 
concerning such sales, the court said : 
"Although the present instrument 
may not be styled a contract, yet it 
is such a total dispensation of the 
duties of the officer on the one hand 



and such an annihilation of the legal 
rights and privileges of the debtor on 
the other, that it must have been pro- 
cured by the officer taking an undue 
advantage of the attitude in which he 
was placed, and was as injurious to 
the interest of the debtor as any ex- 
torted sacrifice by contract could be." 

69. United States v. Kenney, go 
Fed. 257; Kisterbock's Appeal, 51 Pa. 
St. 483- 

In Keller v. Gill, 92 Md. 190, 48 
Atl. 69, the court, in speaking of the 
effect of an act charged to have been 
fraudulent, said : " It is impossible 
to ascribe to an honest purpose a re- 
sult so obviously inequitable and un- 
just." 

Agent Making TTnnsual Profit. 
In an action involving the fraud of 
plaintiff's broker, whereby plaintiff 
was induced to enter into a transac- 
tion to his damage, although the evi- 
dence of the fraud was not as satis- 
factory as might reasonably have 
been expected, it was held that the 
fact that the agent made an unus- 
ually large profit out of the transac- 
tion had a strong tendency toward 
establishing the fraud and was prop- 
erly submitted to the jury. Wyeth 
V. Morris, 13 Hun (N. Y.) 338. 

70. Turnbull v. Boggs, 78 Mich. 
158, 43 N. W. 1050. 

Discrepancy Conclusive of Fraud. 
The discrepancy between the actual 
result of an act claimed to have been 
fraudulent and what the result would 
have been had no fraud been prac- 
ticed, may be so gross as to conclu- 
sively establish fraud in the act. See 
Cleveland Iron M. Co. v. Eastern R. 
.Co., 75 Minn. 505, 78 N. W. 84. 

71. Wollner v. Lehman, 85 Ala. 
274, 4 So. 643; Meek v. State, 117 
Ala. 116, 23 So. 15s; Milliken v. 
Thorndike, 103 Mass. 382; Miller v. 

Vol. VI 



26 



FRAUD. 



correspondence during the negotiations leading thereto/^ and their 
acts and declarations both precedent and subsequent thereto, if tend- 
ing at all to elucidate the motive or intent of the parties therein, are 
relevant and admissible.'" The acts and declarations of a party 
made at a former time may be relevant and competent to prove'* or 
disprove'^ his fraudulent intent in a subsequent transaction. Like- 
v^fise, the acts and declarations of a party subsequent to the trans- 



Barber, (6 N. Y. ss8; Lovejoy v. Is- 
bell, 73 Conn. 368, 47 Atl. 682. 

Self-Serving Declarations of Party 
Charging the Fraud. — The declara- 
tions of the party charging the fraud, 
accompanying the transaction, or so 
nearly connected therewith in time 
as to free them from suspicion of de- 
vice or afterthought, are relevant and 
admissible to explain the influences 
that moved him to enter into the 
transaction. McLean v. Clark, 47 
Ga. 24. And see Cook v. Carr, 20 
Md. 403, wherein it was held that the 
declarations of the party upon whom 
the fraud was practiced, and who had 
since died, to the effect that she had 
been induced to act by the fraud and 
intimidation of defendant, were held 
competent. 

72. Moses v. Katzenberger, 84 
Ala. 95, 4 So. 237. 

73. Alabama. — Wollner v. Leh- 
man, 8s Ala. 274, 4 So. 643. 

Connecticut. — Salmon v. Richard-^ 
son, 30 Conn. 360, 79 Am. Dec. 255. 

Georgia. — Kidd v. Hufif, 105 Ga. 
209, 31 S. E. 430. 

Kansas. — Elerick v. Reid, S4 Kan. 
■ 579, 38 Pac. 814. 

Massachusetts. — Brownell v. 
Briggs, 173 Mass. 529, S4 N. E. 251 ; 
Somes V. Skinner, 16 Mass. 348; 
Com. V. Jeffries, 7 Allen 548, 83 Am. 
Dec. 712. 

Michigan. — Stackable v. Estate of 
Stackable, 65 Mich. 515, 32 N. W. 
808. 

Missouri. — Smalley v. Hale, 37 
Mo. 102. 

New York. — Crary v. Sprague, 12 
Wend. 41 ; Hennequin v. Naylor, 24 
N. Y. 139; Hersey v. Benedict, 15 
Hun 282. 

74. Hicks V. Stevens, 121 III. 186, 
II N. E. 241; Dibble v. Nash, 47 
Mich. 589, II N. W. 399; Maxwell v. 
Brown Shoe Co., 114 Ala. 304, 21 So. 
loog. 

Previous Unguarded Declaration, 

Vol. VI 



The previous unguarded declaration 
of the person charged with fraud, 
that he was going home to live with 
his mother " until he made his 
scheme," leaves no room for doubt as 
to the motive that prompted him in 
obtaining a conveyance from his 
mother while he' was at home, after 
which he left her. Berger v. Bul- 
lock, 8s Md. 441, 37 Atl. 368. 

In an action for fraud in selling 
plaintiff a second mortgage, repre- 
senting it to be a first mortgage, evi- 
dence that at the time of the making 
of the mortgage defendant stated 
that he did not want it to contain an 
exception in the covenant against in- 
cumbrances, as it might prejudice its 
sale, is relevant. Cronkhite v. Dick- 
erson, 51 Mich. 177, 16 N. W. 371. 

Statements of Vendee to Person 
Secommending Him. — Everything 
occurring between the alleged fraud- 
ulent vendee (defendant) and the 
witness, at the time a letter was writ- 
ten by such witness, at the request of 
the defendant, to the plaintiff, to the 
effect that such vendee was entitled 
to credit, is admissible as tending to 
establish the fraud of such vendee in 
procuring the sale. Van Sciver Co. 
V. McPherson, 199 Pa. St. 331, 49 
Atl. 73. 

Reason for Rule "The only 

mode of showing a present intent is 
often to be found in proof of a like 
intent previously entertained. The 
existence in the mind of a deliberate 
design to do a certain act, when once 
proved, may properly lead to the in- 
ference that the intent once harbored 
continued and was carried into effect 
by acts long subsequent to the origin 
of the motive by which they were 
prompted." Cook v. Moore, 11 Cush. 
(Mass.) 213. 

75. The fact that the party 
charged with the fraud had, previous 
to the time he made the representa- 
tions complained of, and when he 



FRAUD. 



27 



action are often strong evidence to prove" or disprove" fraud 
therein. 

(A.) Fraud of Vendse in Purchase. — Thus, where a vendee of goods 
is charged with purchasing them with the intent not to pay there- 
for, the fact that immediately preceding such purchase he bought 
large and unusual quantities on credit,'* or that a short time there- 



could have had no motive to misrep- 
resent, made similar statements to 
another person, is relevant and com- 
petent to disprove his alleged fraud- 
ulent intent in making the represen- 
tations complained of. McCracken v. 
West, 17 Ohio 16. 

76. Colorado. — Brewster v. 
Crossland, 2 Colo. App. 446, 31 Pac. 
236. 

Connecticut. — Elwell v. Russell, 
71 Conn. 462, 42 Atl. 862. 

Illinois. — Honchett v. Mansfield, 
16 111. App. 407. 

Indian Territory. — Noble v. 
Worthy, i Ind. Ter. 458, 45 S. W. 
137. 

Iowa. — Bartlett v. Falk, no Iowa 
346, 81 N. W. 602. 

Massachusetts. — Lynde v. Mc- 
Gregor, 13 Allen 172; Packer v. 
Lockman, 115 Mass. 72; Kline v. 
Baker, 106 Mass. 61 ; Cheney v. Glea- 
son, I2S Mass. 166. 

Michigan. — Ross v. Miner, 64 
Mich. 204, 31 N. W. 185. 

Missouri. — Rennolds v. Insurance 
Co., 62 Mo. App. 104. 

r^^iraj. — O'Neill v. Willis Point 
Bank, 67 Tex. 36, 2 S. W. 75. Com- 
pare Mosler Safe Co. v. Hartog, 26 
Misc. 14, 55 N. Y. Supp. 624. 

Subsequent Contradictory State- 
ments — A subsequent declaration of 
the wrongdoer contradictory to or 
inconsistent with the representation 
complained of is admissible. Potter 
V. Mellen, 41 Minn. 487, 43 N. W. 
375; Meek v. State, 117 Ala. 116, 23 
So. 155. 

Subsequent Kepetltion of Misrep- 
resentation. _ The fact that the 
party charged subsequently repeated 
the alleged false representation at a 
time when he could not have been ig- 
norant of its falsity is relevant and 
competent to prove his bad faith from 
the beginning. Cummings v. Cum- 
mings, 5 Watts & S. (Pa.) 553. 

" In cases of this character, where 
fraud is alleged, it is always permis- 
sible to prove every act of the party 



charged, connected in any way with 
the subject-matter of the fraud; and 
sometimes the subsequent action of 
the party more clearly demonstrates 
the fraudulent intent than any or all 
of the circumstances that occurred 
prior to or at the particular time of 
the transaction that is alleged to be 
fraudulent." Minx v. Mitchell, 42 
Kan. 688, 22 Pac. 709. And see But- 
ler V. Collins, 12 Cal. 457. 

letters Written by the Wrong- 
doer to Third Persons tending to ex- 
plain the conduct charged to have 
been fraudulent are competent 
against such wrongdoer. Furry v. 
O'Connor, 1 Ind. App. 573, 28 N. E. 
103. 

Subsequent Admission Insufficient 
to Prove Prior Guilty Knowledge. 
Where an attempt is made to hold 
the defendant liable for moneys mis- 
appropriated by a guardian, evidence 
of a statement made by defendant 
five years after the misappropriation, 
to the effect that he (defendant) had 
sold the ward's property and paid the 
money to the guardian, who was 
financially embarrassed and guilty of 
fraud with respect to his creditors 
and with respect to his ward, is in- 
sufficient to raise the inference that 
the defendant knew or had reason to 
believe at the time of the misappro- 
priation that the guardian intended to 
commit a breach of his trust. Armit- 
age V. Snowden, 41 Md. 119. 

77. Sackett v. Stone, 115 Ga. 466, 
41 S. E. 564. 

Inconsistent Statements of Plain- 
tiff. — Shaffer v. Cowden, 88 Md. 
39a. 49 Atl. 786. 

The admissions of a parent, since 
deceased, that he had made a gift of 
his property to his son, made after a 
conveyance of such property to said 
son, are admissible to disprove the 
alleged fraud of such son in obtain- 
ing such conveyance. Howell v. 
Howell, 47 Ga. 492. 

78. Cox Shoe Co. v. Adams, 105 
Iowa 402, 75 N. W. 316; Kirschbaum 

Vol. VI 



28 



FRAUD. 



after he was insolvent and made an assignment to his creditors,'" 
is relevant and admissible. 

(B.) Admission op Fraud by Person Sincs Deceassd. — It has been 
held that the mere admission of a person, since deceased, that he 
had committed a fraud, standing alone, is incompetent against his 
representatives in an action in which such fraud is in issue.'" 

(C.) Newspaper Article or Printed Circular. — A newspaper arti- 
cle'^ or printed circular*^ containing the representation and shown 
to have been authorized by the party charged, is relevant and com- 
petent evidence to prove the fraud. 

(2.) Concealment or Suppression of a Material Fact (A.) In General. 

A positive, false affirmation is not the only foundation upon which 
fraud may be based.*^ The fraudulent intent may be inferred from 



V. Jasspon, 119 Mich. 452, 78 N. W. 
473; Jacobs V. Shorey, 48 N. H. 100, 
97 Am. Dec. 586. 

Unusual or extraordinary meth- 
ods of conducting business on the 
part of the vendee are relevant. 
Phelps, Dodge & Palmer Co. v. 
Sampson, 113 Iowa 145, 84 N. W. 
1051. 

79. Horton v. Weiner, 124 Mass. 
92; Haskins v. Warren, 115 Mass. 
514; Hersey v. Benedict, 15 Hun (N. 
Y.) 282; Cincinnati Cooperage Co. v. 
Gaul, 170 Pa. St. 545, 32 Atl. 1093; 
Rennolds v. Insurance Co., 62 Mo. 
App. 104; Noble V. Worthy, i Ind. 
Ter. 458, 4S S. W. 137. 

Prestunption. — " Every man may 
be presumed to have some knowledge 
of his pecuniary condition. If un- 
foreseen circumstances arrive which 
change his situation, he is the proper 
party to explain them. In the ab- 
sence of satisfactory explanations, it 
is not a violent presumption to in- 
fer that a man who stops payment to- 
day, because he is hopelessly insol- 
vent, must have known and contem- 
plated it six days before." Johnson 
V. Monell, 2 Keyes (N. Y.) 655, ex- 
plaining Nichols V. Pinner, 18 N. Y. 

But see New York & H. Cigar Co. 
V. Bernheim, 81 Ala. 138, i So. 470, 
and Thompson v. Peck, 115 Ind. 512, 
18 N. E. 16, I L. R. A. 201, in which 
it is held that mere proof of such 
assignment for the benefit of credit- 
ors does not warrant the inference of 
fraud in the previous ourchase. 

80. Declarations of Decedent In- 
competent. —" The evidence of an 
admission by the deceased that he 

Vol. VI 



had committed a fraud would be 
competent to be given in corrobora- 
tion of other and direct evidence of 
such fraud. But proof that the 
fraud was actually perpetrated must, 
in some manner, be shown. A mere 
declaration of a deceased person 
given in evidence, that he had per- 
petrated a fraud, unsupported by di- 
rect evidence, is not competent to es- 
tablish the fact of fraud, so as to 
avoid, for fraud in its inception, a 
written obligation sued upon by his 
personal representatives. The decla- 
ration of a deceased party to a writ- 
ten instrument made to a third per- 
son prior to the execution of the in- 
strument, and offered to be proved at 
the trial for the purpose of impeach- 
ing and annulling that instrument for 
the fraud of the deceased, but which 
was not communicated by the wit- 
ness to the other parties, is but 
hearsay evidence, and that, too, of an 
extremely dangerous character, and 
when standing alone, and not merely 
in aid of direct evidence, is incompe- 
tent to destroy the validity of the 
writing." Hard v. Ashley, 44 N. Y. 
St. 792, 18 N. Y. Supp. 413, afHrmcd 
136 N. Y. 64s, 32 N. E. 1015. 

81. Timmerman v. Bidwell, 62 
Mich. 205, 28 N. W. 866; Bradbury v. 
Bardire, 35 Conn. 577- 

82. Hicks V. Stevens, 121 III. 186, 
II N. E. 241, in which it is said: 
"The statements therein may be re- 
garded as of a more deliberate char- 
acter than if made in a conversation." 
See also Williams v. McPadden, 23 
Fla. 143, I So. 618, II Am. St. Rep. 
34K. 

83. In Devoe v. Brandt, S3 N. Y. 



FRAUD. 



29 



a suppression of the truth or the willful concealment of a material 
fact by a person who, by reason of the circumstances, is in duty 
bound to disclose the same.** And in such case, proof of such sup- 
pression or concealment is relevant and justifies the inference of 
fraud,"* but is not necessarily conclusive thereof.*" 

(B.) Concealment of Insolvency by Vendee. — The most common 
application of this principle occurs in transactions where an insolv- 
ent vendee purchases goods on credit without intending to pay for 
them, in which case his concealment of his known insolvency and 
intent raises the presumption of fraud in the purchase, and justifies 



462, the court, in speaking of the 
fraud of a vendee in the purchase of 
goods, said : " Such a fraud may be 
as easily consummated by a suppres- 
sion of the truth as by the suggestion 
of a falsehood. The law is guilty of 
no such absurdity as to require a 
false affirmation as the only basis on 
which to prove a fraud among mer- 
chants." ' 

84. Florida. — Stephens v. Orman, 
10 Fla. 9. 

Georgia. — Hoffer v. Gladden, 75 
Ga. 532; Gordon v. Irvine, 105 Ga. 
144, 31 S. E. 151; Southern Express 
Co. V. Wood, 98 Ga. 268, 25 S. E. 
436. 

Iowa. — Faust v. Hosford, 119 
Iowa 97, 93 N. W. 58. 

Kansas. — Webb v. Branner, 59 
Kan. 190, 52 Pac. 429; Wafer v. 
Harvey Co. Bank, 46 Kan. 597, 26 
Pac. 1032. 

Kentucky. — Singleton's Adm'r v. 
Kennedy, 9 B. Mon. 222; Ward v. 
Crutcher, 65 Ky. 87. 

Massachusetts. — Lobdell v. Baker, 

1 Mete. 193, 3S Am. Dec. 358. 
Minnesota. — Marsh v. Webber, 13 

Minn. 99. 

Missouri. — Morley v. Harrah, 167 
Mo. 74, 66 S. W. 942. 

Nebraska. — Forbes v. Thomas, 22 
Neb. 541, 35 N. W. 411. 

New York. — Viele v. Goss, 49 
Barb. 96; Devoe v. Brandt, 53 N. Y. 
462; Ward V. Center, 3 Johns. 271. 

Peckham, J., in Johnson v. Monell, 

2 Keyes (N. Y.) 655, in speaking of 
the fraud of a vendee in purchasing 
goods, said : " To my mind, there 
seems to be an absurdity in holding 
that such false statement is the 'only 
evidence that can establish the fraud. 
That is the simple principle upon 
which alone such a decision can be 



based, and there is no such principle 
in the law." 

Where No Obligation to Speak. 
But fraud cannot be estabHshed by 
proof of a party's mere silence where 
he is under rlo obligation to speak. 
May V. Dyer, 57 Ark. 441, 21 S. W. 
1064; Comer v. Grannis, 75 Ga. 277; 
Diggs V. Denny, 86 Md. 116, 37 Atl. 
1037; Crowell V. Jackson, 53 N. J. L. 
656-, 23 Atl. 426 ; Sankey v. McElevey, 
104 Pa. St. 265. 

85. Poullain v. Poullain, 76 Ga. 
420; Hall V. Naylor, 18 N. Y. 588; 
Ballard v. Fuller, 32 Barb. 68 ; Devoe 
V. Brandt, 53 N. Y. 462; Huber v. 
Wilson, 23 Pa. St. 178; Beatty v. 
Bulger, 28 Tex. Civ. App. 117, 66 S. 
W. 893 ; Stewart v. Wyoming Cattle 
Ranch Co., 128 U. S. 383. 

Concealment from Surety Proof 

that the obligee in a bond concealed 
facts material to the risk from the 
surety raises a presumption of fraud 
therein. First Nat. Bank v. Mat- 
tingly, 92 Ky. 650, 18 S. W. 940; 
Burks V. Wonterline, 6 Bush (Ky.) 
20; Franklin Bank v. Cooper, 39 Me. 
542; National Bank v. Fidelity & C. 
Co., 89 Fed. 819. 

86. Alabama. — Moses v. Katzen- 
berger, 84 Ala. 95, 4 So. 237. 

Georgia. — Robinson v. Woodman- 
see, 80 Ga. 249, 4 S. E. 497. 

Indiana. — Parrish v. Thurston, 87 
Ind. 437. 

Kansas. — Small v. Small, 56 Kan. 
I, 42 Pac. 323, 54 Am. St. Rep. 581, 
30 L. R. A. 243. 

Massachusetts. —. Tryon v. Whit- 
marsh, I Mete. I, 35 Am. Dec. 339. 

New York. — Hall v. Naylor, 8 N. 
Y. 588. 

North Carolina. — Lunn v. Sher- 
mer, 93 N. C. 164; Brown v. Gray, 
SI N. C. 103, 72 Am. Dec. 563. 

Vol. VI 



30 



FRAUD. 



a rescission by the vendor.^'' But the mere fact of concealment of 
insolvency, in the absence of proof of a fraudulent intent, is insuffi- 
cient,*' and it is held in some decisions that even when such conceal- 
ment and intent not to pay are proved, this does not justify the infer- 
ence of fraud in the purchase in the absence of proof of an affirma- 
tive, overt act of fraud.*' 



Texas. — Beatty v. Bulger, 28 Tex. 
Civ. App. 117, 66 S. W. 893. 

" Suppression of circumstances is 
evidence of insincerity, though not 
conclusive." Sharswood, J., in Huber 
V. Wilson, 23 Pa. St. 178. 

87. United States. — Donaldson v. 
Farwell, 93 U. S. 631. 

Alabama. — LeGrand v. Eufaula 
Nat. Bank, 81 Ala. 123, i So. 460, 60 
Am. Rep. 140; Maxwell v. Brown 
Shoe Co., 14 Ala. 304, 21 So. 1009; 
Hudson V. Bauer Grocery Co., 105 
Ala. 200, 16 So. 693. 

Arkansas. — Bugg v. Wertheimer- 
Schwartz Shoe Co., 64 Ark. 12, 40 S. 
W. 134. 

California. — Seligman v. Kalk- 
man, 8 Cal. 208. 

Connecticut. — Thompson v. Rose, 
16 Conn. 71, 41 Am. Dec. 121. 

Georgia. ■ — Johnson v. O'Don- 
nell, 75 Ga. 453. 

Iowa. — Reid, Murdock & T. Co. 
V. Cowduroy, 79 Iowa 169, 44 N. W. 
3SI, 18 Am. St. Rep. 359; Cox Shoe 
Co. V. Adams, 105 Iowa 402, 7$ N. 
W. 316. 

Maryland. — Powell v. Bradlee, g 

Gill & J. 220. 

Massachusetts. — Kline v. Baker, 
99 Mass. 253. 

Michigan. — Edson v. Hudson, 83 
Mich. 450, 47 N. W. 347. 

Minnesota. — Newell v. Randall, 32 
Minn. 171, 19 N. W. 972. 

Tennessee. — Belding v. Frank- 
land, 8 Lea 67, 41 Am. Rep. 630. 

Te.vas. — Aultman, M. & Co. v. 
Carr, 16 Tex. Civ. App. 430, 42 S. 
W. 614; Boaz V. Coulter Mfg. Co. 
(Tex. Civ. App.), 40 S. W. 866. 

Vermont. — Redington v. Roberts, 
25 Vt. 686. 

"If a purchaser of goods has 
knowledge of his own insolvency 
and of his inability to pay for them, 
his intent not to pay should be pre- 
sumed, but such inference may be re- 
butted by other facts and circum- 
stances." Talcott V. Henderson, 31 
Ohio St. 162, 27 Am. Rep. 507. 
Vol. VI 



The Vendor of Goods Is Author- 
ized to Presume that the vendee in- 
tends to and will pay for them ; and 
although no affirmative misrepresen- 
tations are made if the vendee does 
not intend to pay for the goods, and 
the proof shows that he concealed the 
fact, this justifies setting aside the 
sale for fraud. Oswego Starch Fac- 
tory V. Lendrum, 57 Iowa 573, 10 
N. W. 900, 42 Am. Rep. 53; Phelps, 
Dodge & P. Co. V. Sampson, 113 
Iowa 145, 84 N. W. 1051. And see 
Stewart v. Emerson, 52 N. H. 301. 

88. Alabama. — LeGrand v. Eu- 
faula Nat. Bank, 81 Ala. 123, i So. 
460, 60 Am. Rep. 140; Barnett v. 
Stanton, 2 Ala. 181. 

Delaware. — Mears v. Waples, 3 
Houst. 581. 

/mdiano. — Thompson v. Peck, 115 
Ind. 512, 18 N. E. 16, I L. R. A. 201. 

Maine. — Burrill v. Stevens, 73 
Me. 395, 40 Am. Rep. 366. 

Maryland. — Powell v. Bradlee, g 
Gill & J. 220; Diggs V. Denny, 86 
Md. 116, 37 Atl. 1037. 

Minnesota. — Sprague v. Kempfe, 
74 Minn. 465, 77 N. W. 412. 

Missouri. — Bidault v. Wales, ig 
Mo. 36. 

Jfew Hampshire. — Hanson v. Edg- 
erly, 2g N. H. 343. 

New York. — Phoenix Iron Co. v. 
" Hopatcong " and " Musconetcong," 
127 N. Y. 206, 27 N. E. 841 ; Nichols 
V. Pinner, 18 N. Y. 295 ; Hall v. Nay- 
lor, 8 N. Y. 588; Morris v. Talcott, 
96 N. Y. 100; Williams v. Hay, 21 
Misc.^ 73, 46 N. Y. Supp. 895. 

Ohio. — Talcott v. Henderson, 30 
Ohio St. 162, 27 Am. Rep. 501. 

Contra. — See Mooney v. Davis, 75 
Mich. 188, 42 N. W. 802, 13 Am. St. 
Rep. 425. 

89. Smith v. Smith, 21 Pa. St. 
367; Backentoss v. Speicher, 31 Pa. 
St. 324; see also Cincinnati Cooper- 
age Co. V. Gaul, 170 Pa. St. 545, 32 
Atl. 1093 ; Rodman v. Thalheimer, 75 
Pa. St. 232 ; Diggs v. Denny, 86 Md. 
116, 37 Atl. 1037. 



FRAUD. 



31 



(3.) trndne Activity or Unusual Conduct. — The acts and conduct of 
the alleged wrongdoer, evincing an unusual desire to bririg about 
the transaction,"" or to deter the other party from an examination of 
the subject-matter,""^ his extreme activity, indicative of a desire to 
make the transaction appear fair and equitable,''^ and his unreason- 
able delay,"^ or his urgent and undue haste in taking advantage of 
the results of the transaction,"* or in speedily disposing of the 
fruits thereof,"' are relevant circumstances, and are admissible as 
tending to establish his fraud in such transaction. 

On the other hand, the anxiety of the person charging the fraud 
and the reluctance of the party charged therewith to enter into the 



90. Perkins v. Embry, 24 Ky. L. 
Rep. 1990, 72 S. W. 788; Turnbull v. 
Boggs, 78 Mich. 158, 43 N. W. 1050 ; 
Patrick v. Leach, 8 Neb. 530. And 
see Jackson v. Armstrong, 50 Mich. 
65, 14 N. W. 702. 

The Alleged Fraudulent Vendor's 
representation that a third person 
had offered and stood ready to give 
a certain amount for the property if 
he purchased it is relevant and ma- 
terial. Ives V. Carter, 24 Conn. 391. 

Undue Haste to Procure Selease 
of claim for damages. Railway Co. 
V. Goodholm, 61 Kan. 758, 60 Pac. 
1066. 

91. Stubly V. Beachboard, 68 
Mich. 401, 36 N. W. 192. 

92. Keller v. Gill, 92 Md. 190, 48 
Atl. 69; Mann v. Parker, 6 N. C. 
262; Morehouse v. Northrop, 33 
Conn. 380, 89 'Am. Dec. 211. 

Wrongdoer's Insisting on Exam- 
ination by Plaintiff The undue 

acts of the wrongdoer in trying to 
induce the other party to examine the 
property misrepresented may have 
been for the very purpose of throw- 
ing such other party off his guard, 
and the jury may consider this fact 
in determining whether fraud was 
practiced. Wo'olenslagle v. Runals, 
76 Mich. S45, 43 N. W. 454. 

Attempt of Wrongdoer to Avoid 
Suit for Fraud — In an action by 
the vendee against his vendor for de- 
ceit in a sale, the plaintiff's testimony 
to the effect that defendant followed 
him into another state, where he hap- 
pened to g'o for a day, and there,_ in 
an action for the purchase price, 
caused his arrest, just as he was 
about to start for home, on the al- 
leged ground that he was about to 
leavr the state with intent to defraud 
his creditors, is relevant and admis- 



sible as tending to show that defend- 
ant was unwilling to submit his claim 
to the usual course of litigation and 
felt the need to resort to oppression 
to compel a settlement, and that he 
was conscious of some infirmity in 
his claim. Pearson v. Dover Beef 
Co., 69 N. H. 584, 44 Atl. 113. 

Statements made by one defend- 
ant after the fraudulent transaction, 
endorsing it and declaring it to be a 
good thing, are competent as tending 
to show his collusion with the other 
defendant who was an active party. 
Stubly V. Beachboard, 68 Mich. 401, 
36 N. W. 192. 

93. Woodbridge v. DeWitt, 51 
Neb. 98, 70 N. W. 506. 

Where, in a suit against an estate 
based on a check signed by the de- 
ceased, the defense alleged fraud in 
the procurement of such check, the 
fact that the plaintiff held the check 
for eighteen months and failed to 
present it, during which time he had 
frequent interviews with the execu- 
tors concerning his claim, is rele- 
vant. Terhune v. Henry, 13 Iowa 99. 

94. National Bank v. Fidelity & 
Casualty Co., 89 Fed. 819. 

95. Starr v. Stevenson, 91 Iowa 
684, 60 N. W. 217; Arnold v. Lane, 
71 Conn. 61, 40 Atl. 921 ; Morley v. 
Harrah, 167 Mo. 74, 66 S. W. 942; 
Wafer v. Harvey Co. Bank, 46 Kan. 
S97, 26 Pac. 1032; Wiggin v. Day, 9 
Gray (Mass.) 97; McCready v. Phil- 
lips, 56 Neb. 446, 76 N. W. 88s. 

Failure to Indorse Fraudulent 
Wote. — In an action charging the 
former holder of a note with fraud 
in procuring the same from the plain- 
tiff, evidence showing that such 
holder immediately disposed of the 
note, and carefully refrained from in- 
dorsing it, is competent to show 

Vol. VI 



32 



FRAUD. 



transaction,'" and the staleness of the demand of the party complain- 
ing,"' are relevant circumstances in disproof of the charge. 

(4.) Conduct of Parties During Litigation (A.) In Proof of thb Charge. 

Thus, the neglect or failure of the alleged wrongdoer to testify,'^ 
or to produce available evidence explanatory of suspicious circum- 
stances,"' or his conduct in destroying evidence that might be 
material,^ is a strong, circumstance tending to establish the charge 
against him. But it has been held that if the evidence not produced 
is equally as accessible to the party charging the fraud as to his 
adversary, no presumption of fraud is raised from its non-pro- 
duction.^ 

(B.) To Disprove the Charge.— The fact that the party charging 
the fraud prevented the attendance of the alleged fraudulent actor 
as a witness,^ or failed to produce the person to whom the repre- 
sentations are alleged to have been made,* has been held a relevant 
circumstance and competent evidence in disproof of the charge. 
The fact that the party charging the fraud employed a detective to 
hunt up evidence in the case is irrelevant and inadmissible." 

(C._) Fraud in Former Proceeding. — The fact that an action was 
submitted for decision upon an agreed statement of facts under 
stipulation of the respective attorneys,* or that no appeal was taken 



guilty knowledge on the part of such 
former holder. Glaspie v. Keator, 56 
Fed. 203. 

96. Curtis V. Hoxie, 88 Wis. 41, 59 
N. W. 581 ; Blackwell v. Cumtnings, 
68 N. C. 121. 

87. Nelson v. Steen, 192 Pa. St. 
581, 44 Atl. 247; Straight v. Wilson, 
176 Pa. St. 520, 3S Atl. 230. And 
see People v. Lott, 36 111. 447. 

98. Hess V. Weik, 78 Md. 439, 28 
Atl. 400; Zimmerman v. Bitner, 79 
Md. IIS, 28 Atl. 820; Berger v. Bul- 
lock, 85 Md. 443, 37 Atl. 368; Keller 
V. Gill, 92 Md. igo, 48 Atl. 69; 
Mooney v. Davis, 75 Mich. 188, 42 N. 
W. 802, 13 Am. St. Rep. 425. 

" When the charge of fraud is dis- 
tinctly made and is not denied by one 
who, if innocent, could truthfully re- 
pel it, his silence, when he ought to 
speak, becomes, if not convincing, at 
least persuasive evidence of the bad 
faith imputed to him." Berger z<. 
Bullock, 8s Md. 441, 37 Atl. 368. 

But it has been held that where 
defendant in equity answers under 
oath, specifically denying the fraud 
alleged, no presumption arises against 
him because of hU failure to offer 
himself as a witnes.s, inasmuch as 
the plaintiff can call and cross-exam- 
ine him. United States v. Budd, 144 
U. S. 154. 

Vol. VI 



99. Hoffer v. Gladden, 75 Ga. 532 ; 
Redfern v. Cornell, 6 App. Div. 436, 
39 N. Y. Supp. 656; Briscoe v. 
Bronough, i Tex. 326; Baldwin v. 
Whitcomb, 71 Mo. 651 ; Franklin 
Bank v. Cooper, 39 Me. 542. 

In Cheney v. Gleason, 125 Mass. 
166, the party charged with fraud 
failed to produce material evidence 
which was available to him, and it 
was held that this was a strong cir- 
cumstance against him. 

1. Baldwin v. Threlkeld, 8 Ind. 
App. 312, 34 N. E. 851. 

2. Nelms v. Steiner Bros., 113 
Ala. 562, 22 So. 433. 

3. Easter v. Allen, 8 Allen 
(Mass.) 7. 

4. The neglect of the party 
charging the fraud to call as a wit- 
ness the person to whom the alleged 
fraudulent representations were 
made, he being available, raises the 
presumption that nothing was said by 
the party charged with the fraud to 
this person which would show an in- 
tent to defraud. Kern v. Simpson, 
126 Pa. St. 42, 17 Atl. 523. 

5. Hudson v. Bauer Grocery Co., 
los Ala. 200, 16 So. 693. 

6. Wetherbee v. Fitch, 117 111. 67, 
7 N. E. 513- 



FRAUD. 



33 



from the judgment rendered therein/ does not raise any inference 
that fraud was practiced upon the losing party in such proceeding, 
and is irrelevant. 

(5.) Offer of Settlement. — The general rule is that evidence that 
the party charged with the fraud offered to settle or compromise 
the subject of controversy is irrelevant either to prove* or to refute' 
the charge, but there are exceptional cases in which this rule does 
not apply.^" 

(6.) Other rraudulent Acts. — (A.) Generally. — Where the fraudu- 
lent intent of a party in the performance of an act is in issue, proof 
of other similar fraudulent acts is relevant and admissible to estab- 
lish his intent or motive in the performance of the act in question, 
when it appears that there is such a connection between such other 
acts and the act in question as to authorize the inference that 
both are parts of one scheme or plan, in which the same motive is 
operative,^^ and it is immaterial whether such other fraudulent acts 



7. Doig V. Morgan Machine Co., 
89 Fed. 489. 

8. Cox V. Highley, 100 Pa. St. 
249. 

9. Carlisle v. State, 77 Ala. 71 ; 
Finky Brg. Co. v. Prost, iii Mich. 
63s, 70 N. W. 137. 

10. In Brown v. Shields, 6 Leigh 
(Va.) 440, in which the defendant 
was charged with fraud, a letter 
which contained an offer to settk and 
compromise the matter was held 
relevant and competent, and the rule 
which excludes offers of compromise 
from being given in evidence and the 
proper application thereof was con- 
sidered. 

Where a defendant charged with 
purchasing goods from plaintiff with 
the intent not to pay therefor claims 
that he had been ready to pay the 
debt whenever he could have got set- 
tlement of a claim as to the freight 
on the goods, it was held proper to 
allow plaintiff's counsel to ask de- 
fendant if he had not offered to al- 
low defendant this discount in full 
if defendant would settle. Whitney 
Wagon Wks. v. Moore, 61 Vt. 230, 
17 Atl. 1007. 

11. United States. — Jack v. 
Mutual Reserve Fund Life Ass'n, 113 
Fed. 39; United States v. Kenney, 90 
Fed. 257; Mudsill Min. Co. v. Wat- 
rous, 61 Fed. 163; Castle v. Bullard, 
23 How. 172 ; Wood v. United States, 
16 Pet. 342; New York Mut. L. Ins. 
Co. V. Armstrong, 117 U. S. S9i ; 
Butler V. Watkins, 13 Wall. 4S6; 
Lincoln v, Claflin, 7 Wall. 132; Penn 



Mut. Life Ins. Co. v. Mechanics Sav. 
Bank & Trust Co., 72 Fed. 413 ; Spurr 
V. United States, 87 Fed. 701 ; Amer- 
ican Surety Co. v. Pauly, 72 Fed. 
470. Compare United States v. 
Budd, 144 U. S. 154. 

Alabama. — Davidson v. Kahn, 119 
Ala. 364, 24 So. 583; Dent v. Port- 
wood, 21 Ala. 588. 

California. — Bancroft v. Heringhi, 
54 Cal. 120. 

Connecticut. — Hoxie v. Home Ins. 
Co., 32 Conn. 21, 85 Am. Dec. 240. 

Delaware. — Freeman v. Topkis, i 
Marv. 174, 40 Atl. 948. 

Florida. — West Fla. Land Co. v. 
Studebaker, 37 Fla. 28, 19 So. 176. 

Georgia. — Farmer v. State, 100 
Ga. 41, 28 S. E. 26. But see Wright 
V. Zeigler Bros., 70 Ga. 501. 

Illinois. — Huthmacher v. Lowman, 
66 111. App. 448; Gray v. St. John, 35 
111. 222; Lockwood V. Doane, 107 111. 

235- 

Iowa. — Foster v. Trenary, 65 Iowa 
620, 22 N. W. 898; Porter v. Stone, 
62 Iowa 442, 17 N. W. 654; Zim- 
merman V. Brannon, 103 Iowa 144. 
72 N. W. 439; Cox Shoe Co. v. 
Adams, 105 Iowa 402, 75 N. W. 316; 
State V. Brady, 100 Iowa 191, 69 N. 
W. 290, 62 Am. St. Rep. 560, 36 L. 
R. A. 693- 

Kansas. — Elerick v. Reid, S4 Kan. 
579, 38 Pac. 814. And see Minx v. 
Mitchell, 42 Kan. 688, 22 Pac. 709. 

Kentucky. — First Nat. Bank of 
Paducah v. Wisdom, 23 Ky. L. Rep. 
S30, 63 S. W. 461. 

Maine. — Cragin v, Tarr, 32 Me. 

Vol. VI 



34 



FRAUD. 



55; Nichols V. Baker, 75 Me. 334; 
Aldrich v. Warren, 16 Me. 465. But 
see Flagg v. Willington, 6 Me. 386. 
Maryland. — McAleer v. Horsey, 
3S Md. 439; Carnell v. State, 85 Md. 
I, 36 Atl. 117. 

Massachusetts. — Com. v. Shep- 
hard, I Allen 575 ; Horton v. Weiner, 
124 Mass. 92; Lynde v. Mc- 
Gregor, 13 Allen 172; Rowley v. 
Bigelow, 12 Pick. 306; Wiggins v. 
Day, 9 Gray 97; Com. v. Coe, 115 
Mass. 481 ; Brown v. Greenfield Life 
Ass'n, 172 Mass. 498, 53 N. E. 129. 
And see Poster v. Hall, 12 Pick. 89. 
Michigan. — Beard v. Hill, 131 
Mich. 246, 90 N. W. 1065 ; Beebe v. 
Knapp, 28 Mich. 65 ; People v. Sum- 
mers, IIS Mich. S37, 73 N. W. 818; 
Ross V. Miner, 67 Mich. 410, 35 N. 
W. 60; French v. Ryan, 104 Mich. 
62s, 62 N. W. 1016. Compare Par- 
ker V. Armstrong, 55 Mich. 176, 20 
N. W. 892. 

Minnesota. — Manwaring v. 
O'Brien, 75 Minn. 542, 78 N. W. 1; 
Berkey v. Judd, 22 Minn. 287. 

Mississippi. — Compare Uhler v. 
Adams, 73 Miss. 332, 18 So. 367, 654. 

Nevada. — Swinney v. Patterson, 
25 Nev. 411, 62 Pac. i. 

New Hampshire. — Blake v. White, 
13 N. H. 267; Whittier v. Varney, 
10 N. H. 291; Jacobs v. Shorey, 48 
N. H. TOO, 97 Am. Dec. 586. 

New York. — People v. Dimick, 
107 N. Y. 13, 14 N. E. 178; Mayer v. 
People, 80 N. Y. 364; Miller v. Bar- 
ber, 66 N. Y. SS8; Amsden v. Man- 
chester, 40 Barb. 158; The Nauga- 
tuck Cutlery Co. v. Babcock, 22 Hun 
481 ; Hersey v. Benedict, 15 Hun 282; 
Chisholm v. Eisenhuth, 69 App. Div. 
134. 74 N. Y. Supp. 496; Benham v. 
Cary, 11 Wend. 83; Hall v. Naylor, 
18 N. Y. s88; Hawthorn v. Hodges, 
28 N. Y. 485 ; People v. Garrahan, 19 
App. Div. 347, 46 N. Y. Supp. 497; 
Ballard v. Puller, 32 Barb. 68. 

Ohio. — Edwards v. Owen, 15 Ohio 
500. 

Pennsylvania. — Schofield v. Shiffer, 
156 Pa. St. 65, 27 Atl. 69; Catasau- 
qua Mfg. Co. v. Hopkins, 141 Pa. St. 
30, 21 Atl. 638; Wheeler v. Ahlers, 
189 Pa. St. 138, 42 Atl. 40. 

South Carolina. — Brown v. New- 
ell, 64 S. C 27, 41 S. E. 835. 

Vol. VI 



Texas. — Raby v. Prank, 12 Tex. 
Civ. App. I2S, 34 S. W. 777. 

Vermont. — Eastman v. Premo, 49 
Vt. 355 ; McCasker v. Enright, 64 Vt. 
488, 24 Atl. 249, 33 Am. St. Rep. 938 ; 
Bradley Fertilizer Co. v. Fuller, 58 
Vt. 315, 2 Atl. 162; Pierce v. Hoff- 
man, 24 Vt. 525. 

Virginia. — Trogdon v. Com., 31 
Gratt. 862; Piedmont Bank v. 
Hatcher, 94 Va. 229, 26 S. E. 505. 

Washington. — Stack v. Nolte, 29 
Wash. 188, 69 Pac. 753, distinguish- 
ing McKay v. Russell, 3 Wash. 378, 
28 Pac. 908, 28 Am. St. Rep. 44; 
Oudin V. Grossman, 15 Wash. 519, 46 
Pac. 1047. 

Insurance Cases. — In an action 
on an insurance policy where the in- 
surer defends on the ground of the 
insured's false and fraudulent repre- 
sentations, evidence that the insured 
had practiced frauds on other insur- 
ance companies in the procurement 
of other policies is competent when 
a like motive may be imputed to the 
other acts. Jack v. Mutual Reserve 
Fund Life Ass'n, 113 Fed. 49; Brown 
V. Greenfield Life Ass'n, 172 Mass. 
498, 53 N. E. 129; New York Mut. 
Life Ins. Co. v. Armstrong, 117 U. 
S. S91 ; Barnett v. Farmers Mut. Fire 
Ins. Co., IIS Mich. 247, 73 N. W. 
372. But see Supreme Lodge of 
Knights of Honor v. Wollschlager, 
22 Colo. 213, 44 Pac. 598. 

Cumulative or Corroborative Evi- 
dence — . It has been said that proof 
of the making of similar fraudulent 
representations to others is nothing 
more than cumulative evidence upon 
the question of the intent with which 
the representations in issue were 
made. Bach v. Tuch, 126 N. Y. 53, 
26 N. E. 1019; while in Schofield v. 
Shiffer, 156 Pa. St. 65, 27 Atl. 69, 
such evidence was denominated as 
corroborative. 

Contra. _ CoOT/iar^ the Gate City 
Land Co. v. Heilman, 80 Iowa 477, 45 
N. W. 760, in which it was said, in 
speaking of similar representations to 
others : " This testimony is clearly in- 
admissible, as such representations 
were not made to, and could not have 
influenced, the defendant to make 
the contracts." 



FRAUD. 



35 



occurred before or after the act in question, as remoteness in point 
of time affects only their weight.^^ 

(B.) Purposes for Which Competent. — Evidence of such other 
fraudulent acts is usually offered upon the issue of motive or 
intent/' and some of the decisions limit its competency to the proof 
of these issues.^* Such evidence, however, has been held competent 
to establish the party's knowledge of the falsity of his representa- 
tions/^ to prove a system of fraud^* or a fraudulent conspiracy," 



18. United States. — Mudsill Min. 
Co. V. Watrous, 6i Fed. 163; Penn 
Mut. Life Ins. Co. v. Mechanics Sav. 
Bank & T. Co., 72 Fed. 413; atHrmed 
73 Fed. 653; Wood v. United States, 
16 Pet. 342. 

Connecticut. — Hoxie v. Home Ins. 
Co., 32 Conn. 21, 85 Am. Dec. 240. 

Massachusetts. — Horton v. Wein- 
er, 124 Mass. 92 ; Rowley v. Bigelow, 
12 Pick. 307, 23 Am. Dec. 607. 

New York. — Sommer v. Oppen- 
heim, 19 Misc. 605, 44 N. Y. Supp. 
396; Allison v. Matthieu, 3 Johns. 
235- 

Pennsylvania. — White v. Rosen- 
thal, 173 Pa. St. 17s, 33 Atl. 1027. 

In Hoxie v. Home Ins. Co., 32 
Conn. 21, 85 Am. Dec. 240, the other 
transactions admitted extended over 
a period of five or six years. 

13. See cases cited in note 11, 
ante. 

14. People V. Peckens, 153 N. Y. 
576, 47 N. E. 883; Jordan v. Osgood, 
109 Mass. 457, 12 Am. Rep. 731. 

Contra. — The New York court, in 
Boyd V. Boyd, 164 N. Y. 234, 58 N. 
E. 118, in discussing evidence of 
other fraudulent acts, says : " The 
grounds upon which evidence of this 
character is admitted have not al- 
ways been stated by the courts in the 
same language, but I think there is 
neither reason nor authority to sup- 
port the proposition that it must be 
limited to cases where motive is ma- 
terial." 

15. Mudsill Min. Co. v. Watrous, 
61 Fed. 163; Hoxie v. Home Ins. Co., 
32 Conn. 21, ^S Am. Dec. 240 ; Zim- 
merman V. Brannon, 103 Iowa 144, 
72 N. W. 439; Kelley v. Owens 
(Cal.), 30 Pac. 596; Dwyer v. Bas- 
sett, I Tex. Civ. App. 513, 21 S. W. 
621 ; Oudin v. Crossman, ig Wash, 
519, 46 Pac. 1047 ; Com. v. White, 145 
Mass. 392, 14 N. E. 611. Compare 
Haskins v. Warren, 115 Mass. 514; 
Easter v. Allen, 8 Allen (Mass.) 7. 



Limited to Scienter and Intent. 

It has been held in Nebraska, where 
the scienter or intent of the person 
making a false representation is an 
immaterial issue in an action for de- 
ceit, that proof of other fraudulent 
acts is incompetent and immaterial 
for any purpose, because the only 
facts which they are relevant to 
prove — viz., the scienter and intent 
— are not in issue. Johnson v. Gu- 
lick, 46 Neb. 817, 65 N. W. 883, 5° 
Am. St. Rep. 629, and see Insurance 
Co. V. Wright, 33 Ohio St. 533. 

Incompetent to Prove Falsity. 
It was held in Dwyer v. Bassett, i 
Tex. Civ. App. 513, 21 S. W. 621, 
that evidence of other fraudulent acts 
was not admissible to prove that the 
representations in question were false 
in fact. 

16. Rafferty v. State, 91 Tenn. 
6ss, 16 S. W. 728. 

17. Edwards v. Warner, 35 Conn. 
S17; Raby v. Prank, 12 Tex. Civ. 
App. 125, 34 S. W. 777. 

Competency limited to Cases of 
Conspiracy. — In Knotwell v. Blanch- 
ard, 41 Conn. 614, the court said: 
" Suffice it to say that in cases of 
conspiracy to defraud, embracing_ a 
number of similar cases in which 
there is one common design, . . . 
the proceedings of the conspirators 
may be regarded as one continuous 
act. In such cases each part has an 
important relation to the whole and 
may throw light upon the entire 
transaction. There is a difficulty in 
carrying the principle further than 
cases of conspiracy and applying it 
to the case of an individual who 
should form a design by some fraud- 
ulent operation to cheat a number of 
persons successively. The difficulty 
of proving that the party had such 
design — that he had one object to 
accomplish by all the frauds, may be 
the reason why the principle is not 
extended to such cases." 

Vol. VI 



36 



FRAUD. 



and to identify the person charged as the fraudulent actor.^* By 
the great weight of authority, such evidence is not admissible to 
prove the fact of the making or utterance of the particular repre- 
sentations in suit/* although some of the decisions hold it compe- 
tent as affording a ground of presumption to prove the main 
charge.^" 

(C.) Reasons for Rule. — Necessary Caution. — This is an excep- 
tion to the general rule of evidence which prohibits proof of other 
acts or crimes to establish the act or crime in issue, and is justi- 
fiable only by reason of the difficulty, if not impossibility, of proving 
a guilty knowledge and purpose of mind by direct evidence." Care 
must be used in limiting such evidence to its proper effect." 

(D.) Same Motive Must be Imputable to Both. — Where the object 
in offering evidence of the commission of other fraudulent acts is 
to establish the motive or intent of a party in the act or transaction 



18. Boyd V. Boyd, 164 N. Y. 234, 
S8 N. E. 118. 

Identity — "Acts which are parts 
of one general scheme or plan of 
fraud, designed and put into execu- 
tion by the same person, are admissi- 
ble to prove that an act which has 
been done by some one was in fact 
done by the person who designed 
and pursued the plan, if the act in 
question is a necessary part of the 
plan." Fowle v. Child, 164 Mass. 
210, 41 N. E. 291, 49 Am. St. Rep. 
451. 

19. Iowa. — See Gardner v. Tre- 
nary, 65 Iowa 646, 22 N. W. 912. 

Kentucky. — Claus v. Evans, 17 
Ky. L. Rep. 1085, 33 S. W. 620. 

Maine. — Hawes v. Dingley, 17 
Me. 341. 

Massachusetts. — Jordan v. Os- 
good, 109 Mass. 457, 12 Am. Rep. 731. 

Minnesota. — Faribault v. Staer, 13 
Minn. 210. 

Nebraska. — Johnson v. Gulick, 46 
Neb. 817, 65 N. W. 883, SO Am. St. 
Rep. 629. 

New York. — Mayer v. People, 80 
N. Y. 364. 

Ohio. — Edwards v. Owen, 15 Ohio 
500. 

Pennsylvania. — Schofield v. Shif- 
fer, 156 Pa. St. 65, 27 Atl. 69. 

Vermont. — Eastman v. Premo, 49 
Vt. 3SS. 

Wisconsin. — Cahn v. Ladd, 94 
Wis. 134, 68 N. W. 52; Huganir v. 
Cotter, 92 Wis. i, 6$ N. W. 364. 
And see Birdseye v. Flint, 3 Barb. 
500. 

" It cannot be presumed that fraud- 
Vol. VI 



ulent representations are made to one 
person because the same or other 
fraudulent representations were made 
to another." Mather z;. Robinson, 47 
Iowa 403. 

20. Barbar v. Martin (Neb.), 93 
N. W. 722. And see Castle v. Bul- 
lard, 23 How. (U. S.) 172; Lock- 
wood V. Doane, 107 111. 235; Rowley 
V. Bigelow, 12 Pick. (Mass.) 307, 23 
Am. Dec. 607. 

In Porter v. Stone, 62 Iowa 442, 
17 N. W. 654, the court, in speaking 
of similar representations made by 
the vendors to other prospective pur- 
chasers, said: "Evidence that they 
had made such representations to 
those with whom they had negoti- 
ated, to induce them to enter into a 
contract, tends to support plaintiff's 
testimony to the effect that like rep- 
resentations were made to him for 
that purpose." 

21. Cook V. Moore, 11 Cush. 
(Mass.) 213; Cary v. Hotailing, i 
Hill (N. Y.) 311. 

The court, in Com. v. Stone, 4 
Mete. (Mass.) 43, in discussing the 
admissibility of this class of evi- 
dence, says : " This ts an exception 
to the general rule of evidence, but 
it must be considered that it is to 
prove a fact not provable by direct 
evidence — that is, guilty knowledfre 
and purpose of mind, which can rarely 
be proved by admissions or declara- 
tions. The rule can generally be 
proved only by extraordinary acts 
and conduct." 

22. Com. V. Shephard, i Allen 
(Mass.) 57S. 



FRAUD. 



37 



which forms the basis of the action, it must be shown that such 
other acts are so connected with the fraud, which is the subject of 
controversy, as to make it apparent that the same motive or purpose 
may be imputed to the party in both,''^ and if such other acts are 
distinct from and not connected with the fraud they are designed 
to prove, they are inadmissible.^* 

(E.) Common Motive May Appear From Circumstances. — The fact 
that the fraudulent act in issue and the other acts or transactions 
sought to be offered in evidence have a common motive or purpose 
need not be shown by direct evidence, but may be inferred from 
the circumstances, and if it appear that one reasonable explanation 
of the facts and circumstances is that they disclose such motive 



23. White v. Beal & Fletcher 
Grocer Co., 65 Ark. 278, 45 S. W. 
1060; Hardy v. Moore, 62 Iowa 65, 
17 N. W. 200: Williams v. Robbins, 
!■; Gray (Mass.) 590; Com. v. 
Damon, 136 Mass. 441 ; Hall v. 
Naylor, 18 N. Y. 588; Bradley 
Fertilizer Co. v. Puller, 58 Vt. 
.315, 2 Atl. 162; McKay v. Russell, 3 
Wash. 378, 28 Pac. 908, 28 Am. St. 
Rep. 44. 

In the leading cases of Jordan v. 
Osgood, 109 Mass. 457, 12 Am. Rep. 
731, the court said: "The question 
whether the evidence objected to 
was admissible under the second is- 
sue appears from some of the au- 
thorities to be one of more difBculty. 
The plaintiff's position is that the de- 
fendant obtained the goods with the 
intention not to pay for them. This, 
if proved, would authorize them to 
repudiate the sale. Dow v. Sanborn, 
3 Allen 181. It is obvious that the 
principal element involved in this is- 
sue is the intention of the defendant 
at the time of the transactions, and 
any evidence which directly tends to 
show such intention is competent. 
Therefore, contemporaneous frauds 
committed by the defendant are ad- 
missible if they tend to prove the 
motive or intention which actuated 
the defendant in the transaction un- 
der investigation. . . . We think 
the result of the authorities is, as 
stated in substance in Williams v. 
Robbins, 15 Gray (Mass.) Sgo, that 
the transaction proposed to be proved 
for the purpose of showing the fraud 
which is the subject of controversy 
must be shown by some evidence, di- 
rect or circumstantial, to be so con- 
nected with it as to make it apparent 
that the defendant had a common 



purpose in both; but if the transac- 
tion is distinct and with no connec- 
tion of design, it is not admissible." 

24. A I ah a ma. — Johnston v. 
Branch Bank of Montgomery, 7 Ala. 
379; Nelms V. Steiner Bros., 113 Ala. 
562, 22 So. 43S. 

California. — Cohn v. Mulford, 15 
Cal. SI. 

Connecticut. — Edwards v. Warner, 
35 Conn. 517. 

Illinois. — Henderson v. Miller, 36 
111. App. 232; Johnston v. Beeney, 5 
111. App. 601 ; Hanchett v. Riverdale 
Distillery Co., 15 111. App. 57; Bur- 
roughs V. Comegys, 17 111. App. 653. 

Iowa. — Hardy v. Moore, 62 Iowa 
6s, T7 N. W. 200. 

Kentuckv. — Perkin v. Embry, 24 
Ky. L. Rep. 1990, 72 S. W. 788. 

Maine. — Flagg v. Willington, 6 
Me. 386. 

Massachusetts. — Williams v. Rob- 
bins, IS Gray SQO; Com. v. Jackson, 
132 Mass. 16; Whiting v. Withington, 
3 Cush. 413. 

Mississippi. — Uhler v. Adams, 73 
Miss. 332, 18 So.. 367, 6S4. 

New York. — Compare Townsend 
V. Felthousen, 70 N. Y. St. 124, 35 
N. Y. Supp. 538; affirmed in is6 N. 
Y. 618, 51 N. E. 279. 

South Dakota. — Tootle v. Petrie, 
8 S. D. 19, 6s N. W. 43. 

" Proof of fraud in a transaction 
with one person is not even presump- 
tive proof of fraud in another and 
different transaction with another 
person." Simpkins v. Bergren, 2 111. 
App. loi, and see McKay v. Russell, 
3 Wash. 378, 28 Pac. 908, 28 Am. 
St. Rep. 44, wherein the court said : 
"The mere fact that a man has 
cheated his neighbor in some trans- 
action does not justify the inference 

Vol. VI 



38 



FRAUD. 



or purpose as common to both, this is sufficient.*' It has been 
held that this question is for the jury.^* 

(P.) Must Have Been Feaudui,ent. — Such other acts on the part 
of the party charged with the fraud, in order to be competent to 
show his intent in the transaction in suit, must have been tainted 
with fraud, and if this does not appear as an element of the offered 
evidence, it is immaterial and should be excluded.^' 

(G.) Different Means of Accomplishment. — In order to render 
evidence of such other fraudulent acts competent, it is not necessary 
that the means of accomplishing them should be the same as that 
practiced in the transaction. Thus, where the fraud counted on 
consists in the suppression or concealment of a material fact, it 



that he has formed a general scheme 
to cheat other men." 

Where the plaintiff, in a personal 
injury suit against a railroad com- 
pany, is charged with fraudulently 
prosecuting such suit against such 
company, evidence that plairitiff made 
other fraudulent claims against in- 
surance companies, arising out of ac- 
cidents, is inadmissible in the absence 
of proof of a common design. Hood 
V. Chicago & N. W. R. Co., 95 Iowa 
331, 64 N. W. 261. 

Beasons for Rule. — Other distinct 
acts of fraud, not shown to be con- 
nected with the fraud they are de- 
signed to prove, are excluded as in- 
troducing collateral issues and as 
tending to prejudice the jury by im- 
peaching the general character of the 
party charged, when he had no right 
to expect such an attack and could 
not be prepared to protect himself, 
however unimpeachable his conduct 
might have been. Somes v. Skinner, 
16 Mass. 348. 

25. Fowle V. Child, 164 Mass. 210, 
41 N. E. 2gi, 49 Am. St. Rep. 451; 
Lynde v. McGregor, 13 Allen 
(Mass.) 172; Stubly v. Beachboard, 
68 Mich. 401, 36 N. W. 192. 

"The plaintiff had the right to 
show, if he could, a fraudulent in- 
tent, purpose or motive on the part 
of the defendant. . . . Proof of 
other similar fraudulent acts is ad- 
missible when it appears that there 
is such a connection between the 
transactions as to authorize' the in- 
ference that both frauds are part of 
one scheme, and where transactions 
of a similar character by the same 
party are closely connected in point 
of time, and otherwise, the inference 
Vol. VI 



is reasonable that their purpose and 
origin are the same." Boyd v. Boyd, 
164 N. Y. 234, 58 N. E. 118. 

26. Nelms v. Steiner Bros., 113 
Ala. 562, 22 So. 43S. 

27. Alabama. — New York & H. 
Cigar Co. V. Bernheim, 81 Ala. 138, 
I So. 470. 

California. — Cohn v. Mulford, 15 
Cal. 51. 

Massachusetts. — Williams v. Rob- 
bins, IS Gray 590; Klein v. Baker, 
106 Mass. 61. 

Michigan. — Parker v. Armstrong, 
55 Mich. 176, 20 N. W. 892. 

New Hampshire. — Blake v. White, 
13 N. H. 267. 

New York. — Hall v. Naylor, 18 N. 
Y. 588. 

Ohio. — See Insurance Co. v. 
Wright, 33 Ohio St. 553. 

Te.vas. — • Tarkington v. Brunett 
(Tex. Civ. App.), 51 S. W. 274. 

It was held in West Fla. Land Co. 
V. Studebaker, 37 Fla. 28, ig So. 176, 
that statements of the vendor as to 
the character and quality of land 
which had been published in a news- 
paper as an advertisement to induce 
the sale thereof, but which were dif- 
ferent from the express representa- 
tions relied upon by the plaintiff in 
the purchase of the land, were inad- 
missible to show fraud in the sale, 
m the absence of proof that they 
were false and fraudulent. 

Similar Suits by Others Incompe- 
tent. _ in a replevin suit by the 
vendor to recover goods sold, count- 
mg on fraud of vendee in purchase, 
evidence of the institution of other 
similar suits by the other creditors 
IS inadmissible. White v. Beal & 
^'^t*er Grocer Co., 65 Ark. 278, 45 

M« VV • I ooo> 



FRAUD. 



39 



is c»mpeient to prove instances in which the fraud consisted in 
actual misrepresentation concerning the material facts.^® 

(H.) CoMPETSNCY Against Assignee or Transferee. — Evidence of 
such other fraudulent acts is admissible to prove the original fraud, 
although the action is against the subsequent purchaser or assignee 
of the original wrongdoer. ^'' 

(I.) Order of Proof. — Although the party claiming fraud has 
failed to introduce evidence of other frauds as a part of his afifirma- 
tive case, it may be competent in rebuttal.^" 

(J.) Rebuttai,. — Acquittal in Criminal Prosecution. — It has been 
held that where evidence of the commission of a similar fraudulent 
act has been admitted, an offer on the part of the alleged wrongdoer 
to prove that he had been acquitted of such charge on a criminal 
prosecution is incompetent as being res inter alias acta.^'^ 

(7.) Other Transactions to Disprove Fraud. — It has been held proper 
for a vendor charged with fraud in the sale, by preventing a fair 
examination of the goods, to prove that on a former occasion another 
person who was contemplating the purchase was accorded a full and 
fair examination.'^ 

e. Statements to Mercantile Agency. — (l.) In General. — A per- 
son furnishing information by statement or otherwise to a mercan- 
tile agency in relation to his financial condition is presumed to do 
so with the intent that the agency shall communicate such informa- 
tion to persons who may be interested in obtaining it, and that it 
will be relied upon by them in giving credit to such person there- 
after.^' Evidence showing the furnishing of such statement, 



28. Hall V. Naylor, i8 N. Y. s88. 
And see Hersey v. Benedict, IS Hun 
(N. Y.) 282. 

Statements to Commercial Agen- 
cies — Such other fraudulent acts 
may consist in statements made by 
a vendee to commercial agencies for 
the purpose of obtaining credit from 
other creditors. Bliss v. Sickles, 142 
N. Y. 647, 36 N. E. 1064. 

29. Howe V. Reed, 12 Me. 515; 
Hersey v-. Benedict, 15 Hun (N. Y.) 
282; McCasker v. Enright, 64 Vt. 
488, 24 Atl. 249, 33 Am. St. Rep. 938. 
Contra. —W right v. Zeigler Bros., 
70 Ga. SOI. 

Where the question at issue is 
whether a judgment confessed by a 
debtor in failing circumstances was 
confessed with the intent to defraud 
other creditors, or in good faith to 
secure future advances, evidence that 
soon after the confession of such 
judgment the debtor confessed an- 
other judgment to a third person for 
a fraudulent purpose is incompetent 
against the creditor in the former 
judgment in the absence of proof of 



his knowledge of such second judg- 
ment. Miller v. McAlister, 178 Pa. 
St. 140, 3S Atl. S94. 

30. Ankersmit v. Tuch, 114 N. Y. 
SI, 20 N. E. 819. 

31. Fowle V. Child, 164 Mass. 210, 
41 N. E. 291, 49 Am. St. Rep. 4S1. 

32. Salem India Rubber Co. v. 
Adams, 23 Pick. (Mass.) 256. 

33. Arkansas. — Triplett v. Rugby- 
Distilling Co., 66 Ark. 219, 49 S. W. 

975- 

Iowa. — Cox Shoe Co. v. Adams, 
105 Iowa 402, 75 N. W. 316. 

Michigan. — Genesee Sav. Bank v. 
The Michigan Barge Co., 52 Mich. 
164, 17 N. W. 790, 18 N. W. 206, 438; 
Hinchman v. Weeks, 85 Mich. 535, 48 
N. W. 790. 

Minnesota. — Stevens v. Ludlun, 
46 Minn. 160, 48 N. W. 771. 

New York. — Eaton C. & B. Co. v. 
Avery, 83 N. Y. 31 ; Naugatuck Cut- 
lery Co. V. Babcock, 22 Hun 481. 

Texas. — Aultman t). Carr, 16 Tex. 
Civ. App. 430, 42 S. W. 614. 

Wisconsin, — Nat, Bank of M. v. 

Vol. VI 



40 



FRAUD. 



knowledge thereof by the creditor and his reliance thereon, together 
with proof of its falsity, is competent in favor of a creditor of such 
person claiming to have been defrauded by relying thereon.^* The 
fact that such statement was made some time before it was relied 
upon does not aflfect the rule,*^ provided it was not too remote.^" 
It has been held that if the statement was true when made it con- 
stitutes no evidence of fraud in a subsequent transaction,^'' but there 
is authority to the contrary.^' 

(2.) Batings or Report of Mercantile Agency. — The authorities seem 
to distinguish between statements made by the person himself to 
the mercantile agency and their reports or ratings upon his financial 
condition based upon their own conclusions, and in the absence of 
proof that the party authorized or had knowledge thereof, such 
reports or ratings are irrelevant on the question of fraud.^® How- 
ever, it has been held that it is not necessary that the statement 
actually made or authorized by the party charged with fraud be 
shown to have been, itself, communicated to the creditor, but the 
rating or report of the agency, although in one sense its mere 
conclusion, if founded or based upon information derived from the 
debtor, or if referred to by him, is sufficient.^" 

f . Customs and Usages. — Custom cannot sanction a fraud either 
in fact or in law," but in many cases evidence of a general custom 



Illinois & W. L. Co., loi Wis. 247, 
77 N. W. 185. 

But see Macullar v. McKinley, gg 
N. Y. 3S3, 2 N. E. 9, and Curtis v. 
Hoxie, 88 Wis. 41, 59 N. W. 581. 

34. See Furry v. O'Connor, i Ind. 
App. S73. 28 N. E. 103; Kirschbaum 
V. Jasspon, 119 Mich. 452, 78 N. W. 
473 ; Soper Lumber Co. v. Halstead, 
73 Conn. 547, 48 Atl. 425; Robinson 
V. Levi, 81 Ala. 134, I So. SS4- And 
see cases cited in previous note. 

Best Evidence. — It is not neces- 
sary that the writing itself be pro- 
duced. See Triplett v. Rugby Distill- 
ing Co., 66 Ark. 219, 49 S. W. 975. 

In Schwartz v. Mittenthal (Tex. 
Civ. App.), so S. W. 182, the court, 
in speaking of statements made by a 
buyeK to a mercantile agency, said : 
" The burden was upon appellees to 
show these facts: That Mrs. S. 
made a statement to the agency as a 
basis for credit rating. Second. 
That the statement was materially 
fraudulent. Third. That the agency 
gave her a rating upon such false 
statement to which she was not en- 
titled upon a fair statement of her 
financial condition. Fourth. That 
such false rating was known to ap- 
pellees, and on the truth of it the 
credit was extended," Citing Bank 
Vol. VI 



V. Bamberger, 77 Tex. S4> I3 S. W. 
959, and other cases. 

35. Lindauer v. Hay, 61 Iowa 663, 
17 N. W. 98; Cox Shoe Co. v. Ad- 
ams, loj Iowa 402, 7S N. W. 316. 

36. Curtis V. Hoxie, 88 Wis. 41, 
59 N. W. 581 ; Treadwell v. State, 99 
Ga. 779, 27 S. E. 785. 

37. Reid v. Kempe, 74 Minn. 474, 
77 N. W. 413, and see Taylor v. Mis- 
sissippi Mills, 47 Ark. 247, 1 S. W. 
283. 

38. Boaz V. Coulter Mfg. Co. 
(Tex. Civ. App.), 40 S. W. 866, and 
see cases cited in note 35, ante. 

39. Henderson v. Miller, 36 111. 
App. 232; Curtis V. Hoxie, 88 Wis. 
41, 59 N. W. 581 ; Poska v. Stearns, 
56 Neb. 541, 76 N. W. 1078, 71 Am. 
St. Rep. 688; Kilpatrick-Koch Dry 
Goods Co. V. McPheely, 37 Neb. 800, 
56 N. W. 389; Richardson v. String- 
fellow, 100 Ala. 416, 14 So. 284. 

40. See Tindle v. Birkett, 171 N. 
Y. 520, 64 N. E. 210; Aultman z: 
Carr, 16 Tex. Civ. App. 430, 42 S. 
W. 614; Mooney v. Davis, 75 Mich. 
188, 42 N. W. 802, 13 Am. St. Rep. 
425; Cox Shoe Co. V. Adams, 105 
Iowa 402, 75 N. W. 316, 

41. See Plannery v. Jones, 180 Pa. 
St. 338, 36 Atl. 856, 57 Am. St. Rep. 



FRAUD. 



41 



or usage" in vogue in the community in which the transaction 
occurs, or of a violation thereof in the particular instance/'' may be 
relevant and competent as tending to establish the fraud or some 
of its constituent elements. And it seems that proof of a compli- 
ance with a uniform and reasonable custom may be competent to 
refute the fraud charged.** 

g. Status and Relation of the Parties. — (1.) In General. — Any- 
thing tending to show the relations existing between the parties 
to the transaction and the feelings likely to influence their actions 
therein is relevant.** 



648, which was a suit to set aside an 
auction sale of property on the 
ground that the owners ran up the 
price by puffing or fictitious bidding, 
and in which it was held that evi- 
dence that such puffing or fictitious 
bidding at public sales is and has 
been customary is incompetent and 
inadmissible. See also Fuller v. 
Robinson, 86 N. Y. 306. 

42. Where the fraud complained 
of was the acts and conduct of the 
seller in fraudulently inducing the 
purchaser to believe that a private 
letter mark on each of the articles 
purchased indicated the cost thereof 
to the seller, when in fact it indi- 
cated a price greatly in excess there- 
of, the testimony of merchants as to 
the custom of merchants in marking 
goods with private marks and figures, 
and that in their opinion it would not 
subserve any purpose in the ordinary 
way of transacting retail business, 
was held competent and proper. 
Elerick v. Reid, 54 Kan. 579, 38 Pac. 
814. 

To Prove Reliance. — Thus, the 
custom and usage of loan agencies 
(whose business it is to procure loans 
for the owners of property) to re- 
quire written applications from the 
party desiring the loan, stating the 
value and condition 'of the property 
offered for security, is a circumstance 
to be considered on , the question of 
whether a person making a loan 
through such agency relied on such 
application. It is presumed that 
these applications are made for the 
very purpose of giving investors re- 
liable information, and that such in- 
vestors relied thereupon. King v. 
Sioux City Loan & Investment Co., 
76 Iowa II, 39 N. W. 919. 

43. Thus, in Kaiser v. Hamburg- 
Bremen Fire Ins. Co., 59 App. Div. 



525, 69 N. Y. Supp. 344, evidence as 
to the general custom practiced in 
relation to appraising insurance 
losses by arbitration, and the viola- 
tion of such custom in the particular 
instance, was held competent to 
prove that the insured was defrauded 
in the appraisement in question. 

In an action involving the fraud of 
defendant in putting up wool in 
such a manner as from appearances 
to indicate that it was of good qual- 
ity, while the facts showed that the 
appearances were deceptive, and the 
interior was of poor quality and filled 
with tags, evidence of the custom 
of putting up wool in that section of 
the country is admissible on the 
question of a fraudulent intent in the 
manner in which the wool in question 
was put up. Willard v. Merritt, 45 
Barb. (N. Y.) 295. 

Contrary to Regular Course of 
Business. — In an action involving 
fraudulent intent of a vendee in the 
purchase of goods, evidence that he 
used and disposed of them in a man- 
ner contrary to the usual and cus- 
tomary course of business was held 
relevant and admissible to establish 
such fraudulent intent. Loeb v. 
Flash, 6s Ala. 526. And see Phelps, 
Dodge & P. Co. V. Sampson, 113 
Iowa 14s, 84 N. W. 1051. 

44. See Fuller v. Robinson, 86 N. 
Y. 306, and Jacobs v. Shorey, 48 N. 
H. 100, 97 Am. Dec. 586, in which 
it is implied that proof of a general 
custom and compliance therewith by 
the alleged wrongdoer may be com- 
petent to rebut the charge 'of fraud, 
but which evidence in those cases 
was held incompetent because the 
custom sought to be proved was ab- 
surd and unreasonable. 

45. Blodgett Paper Co. v. Par- 
mer, 41 N, H. 398; Somes v. Skin- 

Vol. VI 



42 



FRAUD. 



(2.) Friendship, Confidence, Etc. — The fact that defendant is an 
intimate friend*" or relative*' of plaintiff, or occupies a position of 
confidence** or advantage*^ over him, is relevant on the question of 
whether fraud was practiced in a transaction between them. 

(3.) Intelligence, Skill and Capacity. — Among the circumstances 
always pertinent to the inquiry is whether, in intelligence, skill and 
capacity, the parties are upon an equal footing, or whether the more 
wary has overreached the unwary.^" 

(4.) Mutual Course of Dealings. — Evidence of a course of dealings 
existing between the parties for a period of time may be relevant 
and competent as tending to prove the intent of the alleged wrong- 
doer,°^ or that the complaining party was justified in relying upon 



ner, i6 Mass. 348; Whitaker Iron 
Co. V. Preston Nat. Bank of Detroit, 
loi Mich. 146, 59 N. W. 395 ; James 
V. Work, 54 N. Y. St. 166, 24 N. Y. 
Supp. 149. 

As to confidential relations see ar- 
ticle "Undue Influence." 

In Equity. — " The attitude of the 
parties to a contract, in relation to 
each other, has often been made a 
conspicuous figure by the chancellor 
in testing the soundness of the 
transaction." Gist v. Frazier, 2 Litt, 
(Ky.) 118. 

46. Wells V. Houston, 29 Tex. 
Civ. App. 619, 69 S. W. 183, explain- 
ing s. c. in former appeal, 23 Tex. 
Civ. App. 629, 57 S. W. 584; Nolte 
V. Reichelm, 96 111. 425. 

47. Durrell v. Richardson, iig 
Mich. 592, 78 N. W. 650; Tucke v. 
Buchholz, 43 Iowa 415. 

48. Brooke v. Berry, 2 Gill (Md.) 

83. 
Defendant, Plaintiff's Physician. 

Dibble v. Nash, 47 Mich. 589, 11 N. 
W. 399. 

49. Gist V. Frazier, 2 Litt. (Ky.) 
118. 

Where a Deputy SheriiT Purchases 
at a sale made by his employer, al- 
though the sale may not be expressly 
illegal, _" equity will narrowly watch 
the actions of a person possessing 
such opportunities for questionable 
practices." Massey v. Young, 73 
Mo. 260. 

50. Alabama. — Thompson v. Lee, 
31 Ala. 292. 

California. — Hick v. Thomas, 90 
Cal. 289, 27 Pac. 208, 376. 

Illinois. — Nolte v. Reichelm, 96 

[11. 425; Frazier v. Miller, 16 111. 48. 

Indiana. — Bloomer v. Gray, 10 

Vol. VI 



Ind. App. 326, 37 N. E. 819; Wor- 
ley V. Moore, 77 Ind. 567. 

Massachusetts. — Somes v. Skin- 
ner, 16 Mass. 348. 

Missouri. — Beck & P. L. Co. v. 
Obert, 54 Mo. App. 240. 

Washington. — Tacoma v. Tacoma 
L. & W. Co., 17 Wash. 458, 50 Pac. 
SB- 
Distress of Kind; Nervousness. 
The fact that the party complaining 
was in great sorrow and distress of 
mind (Stewart v. Stewart, 7 J. J. 
Marsh. (Ky.) 183, 23 Am. Dec. 393), 
or was in a feeble and nervous condi- 
tion (Railway Co. v. Goodholm, 61 
Kan. 758, 60 Pac. 1066), at the time 
of the transaction, is relevant. 

The fact that the party complaining 
is a lawyer of experience is relevant 
on the question of whether he relied 
or had a right to rely upon the rep- 
resentations. Lucas V. Crippen, 76 
Iowa 507, 41 N. W. 205. 

Woman trnskilled ia Business. 
Woodbridge v. DeWitt, 51 Neb. 98, 
70 N. W. S06. 

Municipal Corporation. — " In the 
consideration of questions of fraud 
and misrepresentation arising upon a 
contract for the sale of property by a 
private corporation to a municipal 
• corporation, it is a fact properly for 
the consideration of the jury that the 
less expert business capacity, skill 
and experience may be with the mu- 
nicipal corporation." Tacoma 7^ Ta- 
coma L. & W. Co., 17 Wash. 458, 50 
Pac. 55, and cases cited. 

51. Nelms V. Steiner Bros., in 
Ala. 562, 22 So. 435 ; Johnson v. Mo- 
?fr";, ^ ^"^y^-^ CN. Y.) 655; O'Neil V. 
Wills Point Bank, 67 Tex. 36, 2 S. 
W. 754; rmlay Brg. Co. v. Frost, in 
Mich. 635, 70 N, W. 137. 



FRAUD. 



43 



the representations."^ Likewise, such course of dealings may be a 
strong circumstance in favor of the good faith of the alleged wrong- 
doer in the transaction,"' or to prove that the party complaining 
relied upon such course of dealings and not upon the particular 
representations complained of as the inducement."* 

h. Financial Condition. — (l.) In General. — The insolvency of 
either of the parties standing alone is not sufficient to justify the 
inference of fraud in a transaction between them,"® but the finan- 
cial condition of a party in connection with other facts is often 
relevant to prove"* or it may, by disclosing the ability of the 



I'Tandulent Tlse of Well-known 
"Brand," — The fact that the mer- 
chandise which is charged to have 
been fraudulently misrepresented to 
the purchaser was put onto the 
market under a "brand" previously 
well and favorably known, and was 
sold by the vendor without disclosing 
the fact, well known to him, that it 
was inferior to the former and usual 
make of the vendor sold under such 
"brand," is relevant. Singleton's 
Adm'r v. Kennedy, S. & Co., 9 B. 
Mon. (Ky.) 222. 

52. Johnson v. Monell, 2 Keyes 
(N. Y.) 6S5. 

53. In Monroe v. O'Shea, 27 N. 
Y. St. 91, 7 N. Y. Supp. 540, which 
was an action based upon the pur- 
chase of cattle in New Jersey by the 
defendant from the plaintiffs with the 
alleged intent of defrauding plaintiffs 
out of the purchase price, the facts 
showing that it was a cash transac- 
tion, but the sale being made on Oc- 
tober igth, the defendant, on the 
i6th, drew his check for the price upon 
a bank in New Jersey, which check 
was delivered to plaintiffs in Massa- 
chusetts, and was by them presented 
to the bank for payment on October 
20th, when payment was refused on 
account of shortage of funds; and it 
further appearing that defendant on 
the i6th had more than the amount 
of the check to his credit, but most of 
this amount had been drawn out be- 
fore the 20th ; and it further appear- 
ing that defendant, on October 19th, 
was insolvent and made a general as- 
signment, it was held that evidence 
of a previous course of dealings of 
the same description between the 
parties tending to show that it was 
their custom for defendant to send 
checks to plaintiffs in Massachu- 
setts and for them to be returned to 



New Jersey to be paid, was compe- 
tent to show that defendant had rea- 
son to believe in good faith that he 
would be able to sell the cattle, and 
thereby procure the necessary money 
to pay the check when returned to 
New Jersey. 

54. See Gregory v. Schoenell, 55 
Ind. loi. 

55. Edson V. Hudson, 83 Mich. 
450, 47 N. W. 347; Foster v. Brown, 
65 Ind. 234. 

Poverty of Plaintiff — In an ac- 
tion counting on defendant's fraud in 
inducing, plaintiff to exchange his 
land for a stock of goods, evidence 
adduced merely to show plaintiff's 
poverty is irrelevant and incompe- 
tent. DeWulf v. Dix, no Iowa 553, 
81 N. W. 779. 

56. Kingman v. Reinemer, 166 111. 
208, 46 N. E. 786. 

where plaintiff claims to have 
loaned deceased a large sum of 
money during his lifetime, for the 
recovery 'of which she has brought 
an action against his estate, proof of 
circumstances tending to show that 
plaintiff was without means and de- 
pendent upon deceased is relevant 
and competent to show fraud in her 
claim. Glessner v. Patterson, 164 
Pa. St. 224, 30 Atl. 3SS. 

Where an insolvent debtor con- 
fessed judgment in a large sum in 
favor of an alleged creditor and 
transferred valuable property in pay- 
ment of such iudgment, and the 
scheme is charged as fraudulent in an 
action by other creditors, evidence of 
the general financial condition of such 
alleged judgment creditor is rele- 
vant and competent, it appearing un- 
reasonable that a person of such 
small means would own such a large 
claim. Sanders v. Clark, 6 Houst. 
(Del.) 462. 

Vol. VI 



44 



FRAUD. 



party to respond in damages, tend to disprove"' the charge. 
(2.) Fraud of Vendee in Purchase. — Thus, in an action in which a 
vendor is charged with a fraudulent intent in the purchase of goods, 
evidence of the vendee's insolvency at the time of such purchase is 
always relevant and competent in connection with other facts and 
circumstances to establish such fraudulent intention,^' but does not 
of itself amount to conclusive proof thereof.** 



Evidence of insolvency may be 
relevant to prove the party's fraudu- 
lent motive in the transaction. Mos- 
by V. Commission Co., 91 Mo. App. 
SCO. 

Embarrassment of Party Com- 
plaining — The financial embarrass- 
ment of the party claiming fraud in 
the transaction may be relevant to 
prove the fraud when the opposite 
party avails himself of such embar- 
rassment. Stephens v. Orman, 10 
Fla. 9. 

57. Where the fraudulent repre- 
sentations relied upon consisted of 
false statements by defendant as to 
the value of a bond and mortgage 
which he had previously taken as se- 
curity for a debt owing to him, and 
which were purchased from him by 
plaintiff under such representations, 
the fact that the defendant was finan- 
cially responsible and had verbally 
agreed to guarantee the mortgage 
was held competent evidence from 
which the jury might infer a lack of 
fraudulent intent in the making of 
representations. Newell v. Chap- 
man, 56 N. Y. St. 380, 26 N. Y. 
Supp. 361. 

58. United States. — Castle v. Bul- 
lard, 23 How. 172. 

Alabama. — Johnston v. Bent, 93 
Ala. 160, 9 So. 581 ; Hudson v. Bauer 
Grocery Co., 103 Ala. 200, 16 So. 693. 

Arkansas. — Taylor v. Mississippi 
Mills, 47 Ark. 247, i S. W. 283; 
Gavin v. Armistead, 57 Ark. 574, 22 
S. W. 431, 38 Am. St. Rep. 262. 

Colorado. — Brock v. Schradsky, 6 
Colo. App. 402, 41 Pac. S12. 

Iowa. — Starr v. Stevenson, 91 
Iowa 684, 60 N. W. 217; Phelps- 
Dodge & P. Co. V. Sampson, 113 
Iowa 14s, 84 N. W. 1051; Reid Mur- 
dock & F. T. Co. V. Cowduroy, 71 
Iowa 169, 44 N. W. 351, 18 Am. St. 
Rep. 3S9. 

Massachusetts. — Watson v. Silsby, 
766 Mass. 57, 43 N. E. 1 1 17. 

Vol. VI 



Michigan. — Edson v. Hudson, 83 
Mich. 4S0, 47 N. W. 347. 

Minnesota. — Slagle v. Goodnow, 
45 Minn. S3i, 48 N. W. 402. 

Missouri. — Strauss P. &. Co. v. 
Hirsch, 63 Mo. App. 95. 

New Hampshire. — Jacobs v. Sho- 
rey, 48 N. H. 100, 97 Am. Dec. 586. 

New York. — BuUis v. Montgom- 
ery, 50 N. Y. 352; Hennequin v. Nay- 
lor, 24 N. Y. 139; Hersey v. Bene- 
dict, 15 Hun. 282. 

Pennsylvania. — Cincinnati Coop- 
erage Co. V. Gaul, 170 Pa. St. 54s, 
32 Atl. 1093; Rodman v. Thalheimer, 
7S Pa. St. 232. 

In Com. V. Jeffries, 7 Allen 
(Mass.) S48, 83 Am. Dec. 712, the 
court said : " The inability of the 
person making the false pretenses to 
pay for the goods which he has re- 
ceived becomes a significant circum- 
stance bearing on his intent, and 
tends to show that the pretense, 
which otherwise would be innocent 
or harmless, was made for the pur- 
pose of accomplishing a fraud. The 
insolvency of the party has a direct 
tendency to show the intent with 
which the false pretense was used. 
Indeed, it is evidence of the most 
stringent and satisfactory character. 
The law aflSrms that every man in- 
tends the natural and necessary con- 
sequence of his acts. ... If at 
the time of the transaction he was 
deeply insolvent, and was cognizant 
of his condition, the necessary conse- 
quence of the act was to deprive the 
vendor of his property without 
recompense or the chance of pay- 
ment, and leads to the just and al- 
most unavoidable inference that it 
was done with an intent to defraud." 

59. Alabama. —W\\k v. Key, 117 
Ala. 28s, 23 So. 6; Kyle v. Ward, 8r 
Ala. 121, I So. 468. 

Arkansas. — QzVm v. Armlistead, 
S9 Ark. 574, 22 S. W. 431, 38 Am. 
St. Rep. 262. 



PRAUD. 



45 



(3.) When Irrelevant. — But where a party is charged with having 
fraudulently obtained money or goods by a positive affirmation as 
to a specific fact, which is shown to have been false, his financial 
condition or ability to pay the debt is immaterial on the question of 
intent, and evidence thereof is incompetent."" 

i. Inadequacy of Consideration. — (1.)' In General. — Mere inade- 
quacy of price or consideration is not, of itself, sufficient to justify 
the inference of fraud in the transaction,"^ unless the inadequacy 
is so great as to impress every reasonable person with its grossness, 
in which case it may, per se, raise the presumption of fraud,"^ and 
it has been held to amount to conclusive evidence thereof."^ There 
is no certain rule as to the degree of grossness necessary to accom- 
plish this result."* 

(2.) Relevancy with Other Circumstances. — But, in all ordinary 
cases where fraud is involved, such inadequacy is always a relevant 
circumstance to be considered in connection with other facts and 
circumstances as tending to establish the fraud,"" and when the 



Colorado. — Brock v. Schradsky, 6 
Colo. App. 402, 41 Pac. 512. 

Indiana. — Sweet v. Campbell, 14 
Ind. App. 570, 43 N. E. 236. 

Iowa. — Starr Bros. v. Stevenson, 
91 Iowa 684, 60 N. W. 217. 

New York. — Williams v. Hay, 21 
Misc. 73, 46 N. Y. Supp. Sgs- 

Pennsylvania. — Cincinnati Coop- 
erage Co. V. Gaul, 170 Pa. St. S4S, 3^ 
Atl. 1093; Rodman v. Thalheimer, 75 
Pa. St. 232. 

60. Com. V. Coe, 113 Mass. 481. 
Hathcock v. State, 88 Ga. gi, 13 S. 
E. 959- 

Where the false representation 
counted upon was that defendant had 
money in the bank, and he is charged 
with obtaining goods under such 
false representation, evidence that he 
owned real estate is irrelevant and in- 
competent. Carnell v. State, 85 Md. 
I, 36 Atl. 117. 

61. Georgia. — Comer v. Grinnis, 
75 Ga. 277. 

Illinois. — Reed v. Peterson, 91 
111. 288. 

Indiana. — Cagney v. Cuson, 77 
Ind. 494. 

Kentucky. — Gist v. Frazier, 2 
Litt. 118. 

Nebraska. ^^ Hanson v. Berthelsen, 
19 Neb. 433, 27 N. W. 423. 

New York. — Fleming v. Slocum, 
l8 Johns. 403; Swett v. Colgate, 20 
Johns. 196. 

Texas. — Wells v. Houston, 29 
Tex. Civ. App. 619, 69 S. W. 183. 



Vermont. — Howard v. Edgell, 17 
Vt. 9. 

Virginia. — Moore v. Triplett, 
23 S. E. 6g. 

Wisconsin. — Risch v. Lillienthal, 
34 Wis. 250. 

62. Burch v. Smith, ij Tex. 219; 
Rennolds v. Insurance Co., 62 Mo. 
App. 104; Briscoe v. Bronaugh, i 
Tex. 326; Reed v. Peterson, gi 111. 
288; Zeigler v. Hughes, SS HI- 288; 
Parker Adm'r v. Glenn, 72 Ga. 637; 
Cagney v. Cuson, 77 Ind. 494. 

63. In Jones v. Galbraith (Tenn. 
Ch.), 59 S. W. 350, it is held that the 
mere inadequacy of the consideration, 
in certain cases, may be so great as 
to shock the conscience, and of itself 
to conclusively show the fraud. And 
see Burch v. Smith, 15 Tex. 219. 
But compare Wells v. Houston, 29 
Tex. Civ. App. 619, 69 S. W. 183, 
in which case it was held that al- 
though the inadequacy might be so 
great as, of itself, to justify the jury 
in finding fraud, yet it was error for 
the court to instruct that it was con- 
clusive evidence thereof. 

64. Howard v. Edgell, 17 Vt. 9. 

65. United States. — Baldwin v. 
National Hedge & Wire Fence Co., 
73 Fed. 574- 

Georgia. — Hoyle v. Southern Saw 
Wks., IDS Ga. 123, 31 S. E. 137. 

Illinois. — Miicoupin Co. v. People, 
58 111. 191 ; Reed v. Peterson, 91 111. 
288; Ross V. Payson, 160 111. 349, 43 
N. E. 399- 

Vol. VI 



46 



FRAUD. 



disparity is very great, it may, in connection with other circum- 
stances, amount to conclusive proof thereof.*" 

(3.) When Irrelevant. — It has been held that the question of 
whether inadequacy of price is admissible as evidence of fraud 
depends upon the facts known to the parties at the time of the 
transaction, and where the value of the subject-matter is known 
to neither of the parties and is open to the investigation of both, 
evidence of such inadequacy, no matter how great, is incompetent.'' 

(4.) Deficiency in Quantity. — A deficiency in the quantity of prop- 
erty received is not, of itself, sufficient to prove fraud, but if such 
deficiency is great in proportion to the whole, it is evidence of 



Iowa. — Tucke v. Buchholz, 43 
Iowa 415. 

Kentucky. — Gist v. Frazier, 2 Litt. 
118. 

Minnesota. — Christiansen v. Chi- 
cago, St. P., M. & O. R. Co., 67 
Minn. 94, 69 N. W. 640. 

Missouri. — Massey v. Young, 73 
Mo. 260. 

North Carolina. — Futrill v. Futrill, 
S8 N. C. 61; McLeod v. Bullard, 84 
N. C. 515; Hartly v. Estis, 62 N. C. 
167. 

Texas. — Wells v. Houston, 29 
Tex. Civ. App. 619, 69 S. W. 185; 
Burch V. Smith, 15 Tex. 219; Weekes 
V. City of Galveston, 21 Tex. Civ. 
App. 102, SI S. W. S44. 

Vermont. — Howard v. Edgell, 17 
Vt. 9. 

In Lloyd V. Higbee, 25 111. 495, the 
court said: "And where fraud is 
charged and it appears that the price 
given is much less than the real value 
of the property, it is a strong circum- 
stance to prove the fraud ; as the love 
of gain, and the disinclination of all 
men to abandon their property, is so 
strong that it is unusual for persons 
knowingly to part with property of 
great value for only a trifle." 

Settlement of Damages Where 

the question at issue is as to whether 
a certain alleged settlement of plain- 
tiff's claim for damages for personal 
injuries was obtained by defendant 
in fraud of the rights of plain- 
tiff, the gross inadequacy of the 
amount of the consideration for 
which the claim is alleged to have 
been settled is a circumstance mate- 
rial to the inquiry whether the settle- 
ment was procured by fraud. Feath- 
erstone v. Betlejewski, 73 111. App. 59. 

Shifts Bnrden of Proof. — The 
Vol. VI 



gross inequality of the bargain, fol- 
lowed by proof of other circum- 
stances justifying the inference of a 
confidential relation, shifts the bur- 
den of proof as to the fairness and 
equality of th.t transaction. Stepp v. 
Frampton, 179 Pa. St. 284, 36 Atl. 
177. 

Praudnlent Sale of Mortgaged 
Chattels. — The fact that the prop- 
erty covered by a chattel mortgage 
was sold thereunder in a lump, and 
brought much less than its actual 
value, is relevant as proof that the 
mortgagee, who purchased the prop- 
erty himself, did so with a fraudu- 
lent intent. Wygal v. Bigelow, 42 
Kan. 477, 22 Pac. 612, 16 Am. St. 
Rep. 49S. 

Where a person for the sum of 
$50 is induced to assume the re- 
sponsibility of worthless paper of the 
amount of over $5000, the inade- 
quacy of the consideration is strong 
evidence of fraud. Walker v. 
Thompson, 61 Me. 347. 

Sales on Execution This rule 

applies to sales under execution. 
Parker Adm'r v. Glenn, 72 Ga. 637. 

66. Burch v. Smith, 15 Tex. 219; 
Allore V. Jewell, 94 U. S. 506; Risch 
V. Lillienthal, 34 Wis. 250 ; Kuelkamp 
V. Kidding, 31 Wis. 503; Lester v. 
Mahan, 25 Ala. 445, 60 Am. Dec. 530. 

" That circumstance [inadequacy 
of price] taken in connection with 
others of a suspicious nature, may 
afford such a vehement presumption 
of fraud as will authorize the court 
to set it aside." Wormack v. Rog- 
ers, 9 Ga. 60. 

67. Wood V. Boynton, 64 Wis. 
265, 25 N. W. 42, 54 Am. Rep. 610; 
Mosher v. Post, 89 Wis. 602, 62 N. 
W. S16. 



FRAUD. 



47 



fraud/' and in cases where quantity is an essential part of the 
contract, gross deficiency alone raises the presumption of fraud.*"" 

(5.) Comparison of Values. — Evidence of the actual value of the 
property parted with by the alleged defrauded party/" and of a com- 
parison between such value and the value of the property received 
by him in the transaction/^ or between the actual value and the 
value as represented/^ may have and often has a relevant bearing 
on the question of the motives and intentions of the parties. 

(6.) Equivalent in Hetum (A.) Gbnseauy. — Where the proof 

shows that, if the false representations complained of had been true, 
the property received by the defrauded party would have been 
worth more or would have been difiFerent from its real value or 
condition, the fact that he has received an equivalent to that 



68. Griswold v. Gebbie, ia6 Pa. 
St. 3S3, 17 Atl. 673, 12 Am. St. Rep. 
878; Kreiter v. Bomberger, 82 Pa. 
St. 59. 

69. " In cases of gross deficiency, 
presumptive fraud is usually held to 

exist where quantity is an essential 
part of the contract." Carney v. 
Harbert, 44 W. Va. 30, 28 S. E. 712; 
Crislip V. Cain, 19 W. Va. 441. 

70. Bloomer v. Gray, 10 Ind. App. 
326, 37 N. E. 819; Weidner v. Phil- 
lips, 114 N. Y. 4S8, 21 N. E. ion. 

It is proper to prove the value of 
land given in exchange for other 
property where the contract of ex- 
change was procured by fraud. 
Johnson v. Culver, 116 Ind. 278, ig 
N. E. 129. 

To Disprove Praud and Reliance. 
In Likes v. Baer, 10 Iowa 8g, the de- 
fendant was charged with fraudu- 
lently representing the land ex- 
changed by him to plaintiff to be of 
a quality far superior and worth very 
much more than it really was, and it 
was held competent for the defend- 
ant to prove the actual value of the 
property received by him in the ex- 
change from the plaintiff, for the 
purpose of proving that he made no 
such representations, or that if he 
did, plaintiff did not rely upon them, 
it appearing that the actual value of 
the land exchanged by plaintiff was 
so small as to make it unreasonable 
that, for the purpose of obtaining 
such land, defendant would overesti- 
mate the quality of his own land to 
such an extent as was claimed by 
plaintiff. 

71. Cheney v. Gleason, 125 Mass. 
166 ; Lloyd v. Higbee, 25 111. 49s ; Le- 
grand v. Eufaula Nat. Bank, 81 Ala. 



123, I So. 460, 60 Am. Rep. 140; 
Stewart v. Stewart, 7 J. J- Marsh. 
(Ky.), 183, 23 Am. Dec. 393. 

Improbability of Making the Al- 
leged Misrepresentations. — Relative 
values of the two properties may be 
relevant to show the improbability of 
the making of the representation com- 
plained of. See Gustafson v. Rust- 
meyer, 70 Conn. 125, 39 Atl. 104, 66 
Am. St. Rep. 92, 39 L. R. A. 644. 

Fraudulent Issue of Corporate 
Stock — -Gross and obvious overval- 
uation of property given by stock- 
holders in payment for stock, which 
is claimed to have been " fully paid 
up," is strong evidence of fraud in 
payment for such stock in a suit by a 
creditor on a stockholder's liability. 
Coit V. Gold Amal'g Co., 119 U. S. 
343; Boynton v. Hatch, 47 N. Y. 22s. 

72. Where the fraudulent repre- 
sentations complained of consisted of 
statements of the vendor that a cer- 
tain lot pointed- out by him during the 
negotiations was included within the 
property he proposed to sell to the 
vendee by a sale thereafter consum- 
mated, and it subsequently appeared 
that such lot was not owned by the 
vendor, nor covered by the convey- 
ance, evidence of the value of that lot 
and its appearance and character is 
admissible and relevant on the ques- 
tion of fraudulent intent. Lovejoy v. 
Isbell, 73 Conn. 368, 47 Atl. 682, 

To Prove that Representations 
Caused the Damage. — Where the 
plaintiff (mortgagor) complains that 
by reason of the fraud of the defend- 
ant in making false representations to 
the mortgagee, which representations 
induced the mortgagee to take the 
property on grounds that, from the 

Vol. VI 



48 



FRAUD. 



with which he parted is immaterial, and evidence thereof is 
incompetent.'" 

(B.) Cross-Petition. — But where the defendant files a cross-peti- 
tion charging plaintiff with fraudulent representation as to the 
value of property exchanged by him with defendant in the same 
transaction, the real value of plaintiff's property is directly involved, 
and evidence thereof is competent.'* 

j. Character and Reputation. — Although fraud, to some extent, 



representations, he thought himself 
unsafe, evidence showing the value 
of the property to be amply sufficient 
to satisfy the mortgage is competent 
as tending to prove that the repre- 
sentations complained of were the di- 
rect cause of the damage. O'Horo v. 
Kelsey, 60 App. Div. 604, 70 N. Y. 
Supp. 14. 

Overvaluation of Insured Prop- 
erty ftnestion for Jury — Wheth- 
er the discrepancy between the actual 
value of the property insured and 
the amount for which it is in- 
sured is so great as to make it cer- 
tain that the overestimate was made 
with a fraudulent motive, is a ques- 
tion for the jury. Williams v. Phoe- 
nix Fire Ins. Co., 61 Me. 6y. 

73. Colorado. — Herfort v. Cra- 
mer, 7 Colo. 483, 4 Pac. 8g6. 

Connecticut. — Murray v. Jennings, 
42 Conn. I. 

Illinois. — Antle v. Sexton, 137 III 
410, 27 N. E. 691 ; distinguishing 
Hiner v. Richter, 51 111. 299. 

Maryland. — Pendergast v. Reed, 
29 J^^ 398, 96 Am. Dec. 539. 

m^'ouri. — Chase v. Rusk, 90 Mo. 
App.'2S. 

Nebraska. — Compare Hankins v. 
Majors, 56 Neb. 299, 76 N. W. 544. 

Pennsylvania. — Staines v. Share, 
16 Pa. St. 200. 

Wisconsin. — Bergeron v. Miles, 88 
Wis. 397, 60 N. W. 783, 43 Am. St. 
Rep. 911. 

Thus in an action counting on the 
fraud of the vendor in the sale of a 
business, the fraudulent representa- 
tions alleged being confined to the 
value of the stock of goods, the as- 
sets and liabilities of the firm, evi- 
dence of the value of the good will 
of the business is inadmissible on the 
part of the vendor to disprove the 
fraud. Hines v. Driver, 72 Ind. 125. 

Incompetent to Show Non-reli- 
ance — The value of the property 
parted with by the party complaining 
Vol. VI 



of the fraud is irrelevant and in- 
competent to prove that he did not 
rely upon the alleged false represen- 
tations where the property concern- 
ing which the representations were 
made was valued at a fixed price. 
Matlock V. Reppy, 47 Ark. 148, 14 S. 
W. 546; Lee V. Tarplin, 183 Mass. 
52, 66 N. E. 431. 

Plaintiff Having no Title. — In 
Watson V. Atwood, 25 Conn. 313, an 
offer on the part of the defendant 
charged with fraudulent representa- 
tions, inducing the exchange of prop- 
erties between himself and the 
plaintiff, to prove that the plaintiff at 
the time of such exchange had no 
title to the property which he con- 
veyed to defendant, was held irrele- 
vant and inadmissible. 

But see Carson v. Houssels (Tex. 
Civ. App.), SI S. W. 290, in which 
it was held that on the issue of the 
materiality of the alleged false rep- 
resentations as to the number of cat- 
tle in a herd, made by the vendor to 
the vendee, evidence that the cattle 
actually received by the vendee were 
worth more than the price paid was 
admissible. And see Springstead v. 
Lawson, 23 How. Pr. (N. Y.) 302, 
which was an action for deceit in the 
sale of a horse by the defendant to 
plaintiff, based on false representa- 
tions as to the health and condition 
of such horse, and in which it was 
held that, where the plaintiff had 
testified that the horse was worth 
only $125 when purchased, whereas 
it would have been worth $500 if as 
represented, defendant might prop- 
erly prove on plaintiff's cross-exami- 
nation that in less than three months 
plaintiff sold the horse for what he 
had paid for it — to wit, $400 — no 
change in the animal having been 
shown. 

74. Jackson v. Armstrong, 50 
Mich. 6s, 14 N. W. 702. 



FRAUD. 



49 



Aivolves moral turpitude, it is a general rule, supported by the great 
weight of modern authority, that evidence of the character or repu- 
tation of the party charged is irrelevant and inadmissible to prove 
or refute the fraud in a civil action in which it is in issue.'^ But 
there are authorities and exceptional cases where the contrary 
doctrine has been affirmed. '^^ 

k. Interest of Alleged Wrongdoer in the Transaction. — The fact 
that the party charged with the fraud or with the making of the 
fraudulent representations constituting the inducement had no inter- 
est of his own to subserve, does not exempt him from liability from 
the damages resulting from his acts,^^ nor is it sufficient proof of 
one's commission of a fraudulent act that it was to his interest 
and not that of any one else to have the act done/® But his interest 
or lack of interest in connection with the subject-matter may be 
relevant as a circumstance tending to prove his intent or motive 
in the transaction/' 



75. American Fire Ins. Co. v. 
Hazen, no Pa. St. 530, i Atl. 605; 
Brooke v. Berry, 2 Gill (Md.) 83. 
And see article "Charactbr," Vol. 
Ill, p. S, et seq. 

Especially is this true when the 
fraud is shown not merely by circum- 
stance, but the intent is conclu- 
sively presumed by the law from the 
facts of the transaction. McBean v. 
Fox, I 111. App. 177. 

In Rosenagle v. Handley, 151 Pa. 
St. 107, 25 Atl. 42, it was held error 
for a court to charge the jury to the 
effect that the reputation of the party 
charged with the fraud was at stake 
and that one's reputation is precious 
to him. 

That the Purchaser Kept a House 
of Ill-fame at the time of the pur- 
chase is irrelevant on the question 
of his good faith in making such 
purchase. Johnson v. Carnley, 10 N. 
Y. 570. 

76. Rule in Tennessee " But we 

think the rule is that, in cases where 
a party is charged with a great 
moral wrong [fraud], he may intro- 
duce evidence of good character and 
invoke the presumption of inno- 
cence." Continental Nat. Bank v. 
First Nat. Bank, 108 Tenn. 374, 68 

s. w. 497. 

Character of Counsel in Former 
Suit — Where a party attacks a 
judgment rendered against him in a 
former suit, on the grounds of fraud 
in the manner in which it was con- 
ducted, the character of counsel 



therein is relevant. Doig v. Morgan 
Mach. Co., 89 Fed. 489. 

Reputation Competent to Show 
Knowledge — The general reputa- 
tion that the fraudulent vendee was 
slow about paying his debts is 
admissible as tending to show knowl- 
edge of such fact, and of the in- 
solvency of the vendee, on the part 
of his subsequent purchaser. Hud- 
son V. Bauer Grocery Co., 105 Ala. 
200, 16 So. 693. 

See article " Character," Vol. 
Ill, p. s, et seq., and especially notes 
7 and g. 

77. United States. — United 
States V. Kenney, 90 Fed. 237 ; Hind- 
man V. First Nat. Bank, 112 Fed. 
931- 

Georgia. — James v. Crosthwaite, 
97 Ga. 673, 25 S. E. 754, 36 L. R. A. 
631. . 

Illinois. — Leonard v. Springer, 
197 111- 532, 64 N. E. 299. 

Kansas. — Wafer v. Harvey Co. 
Bank, 46 Kan. 597, 26 Pac. 1032; 
Carpenter v. Wright, 52 Kan. 221, 34 
Pac. 798. 

Maryland. — McAleer v. Horsey, 
35 Md. 439- 

Massachusetts. — Page v. Bent, 2 
Mete. '371; Fisher v. Mellen, 103 
Mass. 503. 

Missouri. — Brownlee v. Hewitt, i 
Mo. App. 360. 

New York. — Williams v. Wood, 
14 Wend. 127. 

78. Hanna v. Rayburn, 84 111. 533. 

79. Hanna v. Rayburn, 84 111. 533. 

Vol. VI 



^0 



PRAUD. 



4. Weight and Sufficiency of the Evidence. — A. In GbneIral. 
If the facts and circumstances in evidence are such as to lead a 
reasonable man to believe that fraud existed, this is all that the 
law requires.'" 

B. Question o^ Fact for Jury. — Actual fraud is a question 
of fact to be determined by the jury from a consideration of all 
the evidence before them,^"^ and where the evidence, upon the whole, 
to a reasonable degree of certainty, tends to sustain the charge of 
fraud, it should be submitted to the jury.*^ 

C. Preliminary Question for Court. — However, there is 
always a preliminary question for the court, not whether there is 
literally no evidence, but whether there is any that might reason- 
ably satisfy the jury that fraud is established, and if this question 



To prove that defendant was a 
party to the alleged fraudulent con- 
spiracy, evidence showing him to be 
interested in the fruits of the trans- 
action is competent. Hughes v. 
Waples-Platter Grocer Co., 25 Tex. 
Civ. App. 212, 60 S. W. 981. 

Defendant Acting for Third Per- 
son — In an action counting on the 
fraud of defendant in the purchase 
of a business from the plaintiff, evi- 
dence on the part of the defendant 
tending to show that the purchase, 
although made in his own name, was 
in fact made for a third person who 
advanced the consideration, and that 
defendant did not make anything out 
of the transaction, is competent, as 
it tends to show that he would be 
less liable to practice fraud if he 
were acting for another than if he 
were acting for himself. Hidden v. 
Hooker, 70 Vt. 280, 40 Atl. 748, 
citing Hadley v. Bordo, 62 Vt. 285, 
19 Atl. 476. 

In Refutation of Charge. 
Where the owners of a boat, sunk 
in navigation, in an action on an 
insurance policy covering the freight 
thereof, are charged with a fraudu- 
lent motive to destroy the boat, evi- 
dence showing that the boat was not 
insured, and that she was worth 
$5000, is competent on the part of 
such owners to disprove . such 
fraudulent motive. Louisville Ins. 
Co. V. Monarch, 98 Ky. 578, 36 S. W. 

563- 

80. White V. Perry, 14 W. Va. 
66; Williams v. Harriss, 4 S. D. 22, 
54 N. W. 926, 46 Am. St. Rep. 753- 

81. Delaware. — Mears v. Wap- 

Vol. VI 



les, 3 Houst. 581 ; Clayton v. Caven- 
der, I Marv. 191, 40 Atl. 956. 

Georgia. — Trice v. Rose, 80 Ga. 
408, 7 S. E. 109; Hickson v. Bryan, 
75 Ga. 392. 

Indiana. — Adams v. Langel, 144 
Ind. 608, 42 N. E. 1017; Luce v. 
Shoff, 70 Ind. 152; Baltimore & O. 
C. R. Co. V. Scholes, 14 Ind. App. 
524, 43 N. E. 156, 56 Am. St. Rep. 

307. 

Iowa. — Sunberg v. Babcock, 66 
Iowa 515, 24 N. W. 19. 

Maryland. — McAleer v. Horsey, 
35 Md. 439- 

Michigan. — Davidson v. Bennett, 
84 Mich. 614, 48 N. W. 279; Woolen- 
slagle V. Runals, 76 Mich. 545, 43 N. 
W. 454- 

Missouri. — Bidault v. Wales, 19 
Mo. 36. 

North Carolina. — Atkins v. With- 
ers, 94 N. C. 581. 

Texas. — Graham v. Roder, 5 Tex. 
141. 

Wisconsin. — Castenholz v. Heller, 
82 Wis. 30, 51 N. W. 432. 

82. United States. — lasigi v. 
Brown, 17 How. 183. 

California. — White v. Leszynsky, 
14 Cal. 166. 

Georgia. — Dooley v. Gorman, 104 
Ga. 767, 31 S. E. 203; Hixon v. 
Bryan Adm'r, 75 Ga. 392; Hoyle v. 
Southern Saw Wks., 105 Ga. 123, 31 
S. E. 137; James v. Crosthwaite, 97 
Ga. 673, 25 S. E. 754, 36 L. R. A. 
631. 

Kentucky. — Jackson v. HoUiday, 
3 Hon. 363; Ward v. Crutcher, 2 
Bush 87. 

Michigan. — T^r&wch v. Hurd, 113 
Mich. 250, 71 N. W. 582; Whitaker 



PRAUD. 



51 



is answered in the negative the case should be withdrawn from 
the jury.*' 

D. Character and Degree; of Proop'. — a. In General. — The 
courts are not in entire harmony as to the character or degree of 
proof required in order to establish a charge of fraud. The general 
rule is that the proof must be clear and strong, and amount to 
something more than a suspicion,^* and the party alleging the fraud 



Iron Co. V. Prestbn Nat. Bank, loi 
Mich, 146, 59 N. W. 395; Ferris v. 
McQueen, 94 Mich. 367, 54 N. W. 
164; Watkins v. Wallace, 19 Mich. 
57. 

Minnesota. — Haven v. Neal, 43 
Minn. 315, 45 N. W. 612; Berkey v. 
Judd, 22 Minn. 287; Christianson v. 
Chicago, St. P., M. & O. R. Co., 67 
Minn. 94, 69 N. W. 640. 

New York. — Devoe v. Brandt, S3 
N. Y. 462; Monroe v. O'Shea, 27 N. 
Y. St. 91, 7 N. Y. Supp. 540; Wyeth 
V. Morris, 13 Hun 338; Second Nat. 
Bank v. Dix, loi N. Y. 684, 5 N. E. 
563. And see Yates v. Alden, 41 
Barb. 172. 

North Carolina. — Quinn v. Pin- 
son, 25 N. C. 47. 

Pennsylvania. — Cincinnati 
Cooperage Co. v. Gaul, 170 Pa. St. 
545, 32 Atl. 1093; Cole v. High, 173 
Pa. St. 590, 34 Atl. 292. 

Virginia. — New York Life Ins. 
Co. V. Davis, 96 Va. 737, 32 S. E. 
475, 44 L- R- A. 345. 

Sligfht Circumstances Sufficient. 
Very slight circumstances will war- 
rant the submission of an issue in- 
volving fraud to the jury. Mosby v. 
Commission Co., 91 Mo. App. 500; 
Freedman v. Campfield, 92 Mich. 118, 
52 N. W. 630. 

Where the maker of a negotiable 
note, in an action thereon by the 
holder, shows that it was originally 
procured by fraud, the evidence of 
the holder alone as to the circum- 
stances attending his purchase and 
his knowledge of the party from 
whom he obtained it, although tend- 
ing positively to show good faith on 
his part in the purchase, is insuf- 
ficient of itself, he being the inter- 
ested party, to justify the court in 
taking the question of his good faith 
from the jury. Joy :;. Diefendorf, 
130 N. Y. 6, 28 N. E. 602; Cana- 
joharie Nat. Bank v. Diefendorf, 123 
N. Y. 191, 25 N. E. 402. 



83. Cover v. Manaway, 115 Pa. 
St. 338, 8 Atl. 393, 2 Am. St. Rep. 
552, citing Hyatt v. Johnston, 91 Pa. 
St. 196 ; Macullar v. McKinley, 99 N. 
Y. 353, 2 N. E. 9; Armstrong v. 
Penn, 105 Ga. 229; Wright v. Gro- 
ver, 27 111. 426; Hatch v. Spooner, 37 
N. Y. St. 151, 13 N. Y. Supp. 642. 
But see Freedman v. Campfield, 92 
Mich. 118, 52 N. W. 630. 

84. United States. — Lalone v. 
United States, 164 U. S. 255 ; United 
States V. Hancock. 133 U. S. 193; 
Colorado Coal & Iron Co. v. United 
States, 123 U. S. 307; Baltzer v. 
Railway Co., 115 U. S. 634; Farrar v. 
Churchill, 135 U. S. 609; Evans v. 
Mansur, 87 Fed. 275. 

Arkansas. — Holt v. Moore, 27 
Ark. 145. 

California. — Bryan v. Ramirez, 8 
Cal. 462; Union Trans. Co. v. Bas- 
sett, 118 Cal. 604, so Pac. 754; Truett 
V. Onderdonk, 120 Cal. 581, 53 Pac. 
26. 

Delaware. — Mears v. Waples, 3 
Houst. 581 ; Massey v. Stout, 4 Del. 
Ch. 274 ; Terry v. Piatt, i Penn. 185, 
40 Atl. 243; Boyce v. Cannon, 5 
Houst. 409; Freeman v. Topkis, i 
Marv. '174, 40 Atl. 948. 

Georgia. — Lewin v. Thurber, 62 
Ga. 25. 

Illinois. — Union Nat. Bank v. 
State Nat. Bank, 168 111. 256, 48 N. 
E. 169; Gubbins v. Bank of Com- 
merce, 79 111. App. 150. 

Iowa. — Druramon v. Couse, 39 
Iowa 442; Schofield v. Blind, 33 
Iowa 175. 

Kansas. — Wood v. Staudemayer, 
56 Kan. 399, 43 Pac. 760. 

Maryland. — Lynn v. Railway Co., 
60 Md. 404, 45 Am. Rep. 739; Hill v. 
Reifsnider, 46 Md. 555. 

Michigan. — Darling v. Hurst, 39 
Mich. 765. 

Minnesota. — Christianson v. Chi- 
cago, St. P., M. & O. R. Co., 67 
Minn. 94, 69 N. W. 640. 

Vol. VI 



52 



FRAUD. 



must assume the burden of proving it by a preponderance of 
evidence.*^ 

b. Strict Rule. — Numerous cases have adopted the rule that 
where the whole of the evidence is susceptible of a reasonable inter- 
pretation which makes it as consistent with the innocence of the 
party charged as with his guilt, the fraud is not proved.*® It has 



Mississippi. — Parkhurst v. Mc- 
Graw, 24 Miss. 134. 

Missouri. — Priest v. Way, 87 Mo. 
16; Waddingham v. Loker, 44 Mo. 
132; Mapes V. Bums, 72 Mo. App. 
411; Redpath Bros. v. Lawrence, 48 
Mo. App. 427. 

Nebraska. — Alter v. Bank of 
Stockham, 53 Neb. 223, 73 N. W. 
667 ; Davidson v. Crosby, 49 Neb. 60, 
68 N. W. 338. 

New York. — Myers v. Myers, 15 
App. Div. 448, 44 N. Y. Supp. 513; 
Swett V. Colgate, 20 Johns. 196. 

North Carolina. — Cobb v. Fogal- 
man, 23 N. C. 440. 

Pennsylvania. — Bierer's Appeal, 92 
Pa. St. 26s ; Nelson v. Steen, 192 Pa. 
St. ,s8i, 44 Atl. 247. 

Virginia. — Engleby v. Harvey, 93 
Va. 440, 2S S. E. 22s; Saunders v. 
Parrish, 86 Va. 592, 10 S. E. 748. 

Washington. — Kleeb v. Frazer, 15 
Wash. S17, 47 Pac. 11. 

West Virginia. — Armstrong v. 
Bailey, 43 W. Va. 778, 28 S. E. 766; 
Board of Trustees v. Blair, 45 W. 
Va. 812, 32 S. E. 203; Harden v. 
Wagner, 22 W. Va. 386. 

Wisconsin. — Pick v. MuUhoUand, 
48 Wis. 310, 4 N. W. 527. 

85. Alabama. — Moses v. I^tzen- 
berger, 84 Ala. 95, 4 So. 237. 

Colorado. — Allen v. Elerick, 29 
Colo. 118, 66 Pac. 891. 

/Hjnojj. — East St. L. P. & P. Co. 
V. Hightower, g 111. App. 297; Means 
V. Flanagan, 79 111. App. 296; Gene- 
ser V. Telgman, 37 111. App. 374; 
Walker v. Hough, 59 111. 375. 

Iowa. — Allison v. Jack, 76 Iowa 
20s, 40 N. W. 811. 

Kentucky. — Kentucky Life & Ace. 
Ins. Co. V. Thompson, 18 Ky. L. 
Rep. 79, 35 S. W. SSO. 

Maryland. — Shaffer v. Cowden, 
88 Md. 394, 49 Atl. 786. 

Balance In IMdence " And 

where two witnesses affirm and two 
others, no more interested in the sub- 
ject-matter, and, for all that appears, 
fully as creditable, deny the fraud, 
Vol. VI 



it is not proved." Allison v. Ward, 
63 Mich. 128, 29 N. W. 528. But 
see Hubbard v. Rankin, 71 111. 129, 
and Stevens v. Matthewson, 45 
Kan. S94, 26 Pac. 38, in the former of 
which cases it was held that a verdict 
finding fraud would not be disturbed, 
although the evidence as to fraud 
was confined to two witnesses testi- 
fying contradictorily to each other. 

86. United States. — Herring v. 
Richards, 3 Fed. 439; Conara v. 
NicoU, 4 Pet. 291; Gregg v. The 
Lessee of Sayre, 8 Pet. 244. 

Alabama. — Smith v. Branch 
Bank, 21 Ala. 125; Stiles v. Light- 
foot, 26 Ala. 443; Crommelin v. Mc- 
Cauley, 6r; Ala. 542 ; Thames v. Rem- 
bert, 63 Ala. 561. 

Connecticut. — Bulkley v. Morgan, 
46 Conn. 393. 

Delaware. — Kent Co. R. Co. v. 
Wilson, 5 Houst. 49. 

Illinois. — State Bank of Freeport 
V. Norton, 78 111. App. 174; Mey v. 
Gulliman, 105 111. 277; Bowden v. 
Bowden, 75 111. 143; McConnell v. 
Wilcox, 2 111. 344; Chicago Stamp- 
ing Co. V. Hanchett, 25 111. App. 198; 
Schroeder v. Walsh, 120 111. 403, 11 
N. E. 70. And see People v. Lott, 
36 111. 447. 

/oroa. — Connors v. Chingren, iii 
Iowa 437, 82 N. W. 934; Lyman v. 
Cessford, 15 Iowa 229; Schofield v. 
Blind, 33 Iowa 175; Druramond v. 
Couse, 39 Iowa 442; Kenosha Stove 
Co. V. Shedd, 82 Iowa 540, 48 N. W. 
933; Turner v. Hardin, 80 Iowa 6gi. 
45 N. W. 758. 

Kansas. — McPike v. Atwell, 34 
Kan. 142, 8 Pac. 118. 

Z,o««.siano. — Winter v. Davis, 48 
La. Ann. 260, 19 So. 263; Lewis v. 
Western Assur. Co. of Toronto, 49 
La. Ann. 658, 21 So. 736. 

Afoin^. — Burleigh v. White, 64 
Me. 23. 

Maryland. — Brewer 7'. Bowersox 
92 Md. 567, 48 Atl. 1060. 

Minnesota. — Sprague v. Kempfe, 
74 Minn. 465, 77 N. W. 412. 



FRAUD. 



S3 



also been held that the proof must be "clear and convincing,"'^ 
that it must be stronger than is required in ordinary cases ;'* and 
that the evidence must " necessarily tend " to establish the fraud.'' 
c. Liberal Rule. — On the other hand, there are many authorities 
holding that the rule is the same in actions involving fraud as in 
any other civil action,'" and that a preponderance of the evidence 



Missouri — Muenks v. Bunch, go 
Mo. 500, 3 S. W. 63; Funkhouser v. 
Lay, 78 Mo. 458; Page v. Dixon, 59 
Mo. 43. Compare Gay v. Gillilian, 
92 Mo. 250, s S. W. 7, I Am. St. 
Rep. 712. 

Nebraska. — Alter v. Bank of 
Stockham, 53 Neb. 223, 73 N. W. 
667. 

New Mexico. — First Nat. Bank 
of Albuquerque v. Lesser, 65 Pac. 
179, citing Dallam v. Renshaw, 26 
Mo. 533. 

New York. — Mclntyre v. Buell, 
132 N. Y. 192, 30 N. E. 396; Morris 
V. Talcott, 96 N. Y. 100. 

Washington. — Tacoma v. Tacoma 
L. & W. Co., 16 Wash. 288, 47 Pac. 
738; Roberts v. Washington Nat. 
Bank, 11 Wash. 550, 40 Pac. 225. 

Inconsistent with Integrity. 
" Something should be made to ap- 
pear inconsistent with integrity, so 
as to admit of no reasonable inter- 
pretation but meditated fraud." 
Slessinger v. Topkis, i Marv. (Del.) 
140, 40 Atl. 717. 

anestion of taw. — The court in 
Hatch :;. Spooner, 59 Hun 625, 13 
_N. Y. Supp. 642, in speaking of the 
inference of innocence when the facts 
were as consistent therewith as with 
fraud, said : " Such inference must 
be drawn as a matter of law; and a 
jury cannot be permitted to speculate 
upon the question as to whether 
fraud did or did not exist." 

" In this case, while there are cir- 
cumstances in and of themselves un- 
usual, or perhaps in their nature sus- 
picious — circumstances upon which 
respondent builds a somewhat plausi- 
ble ' theory ' of collusion and fraud 
— these circumstances comport 
equally with the theory of honesty 
and fair dealing, and there is noth- 
ing in them inconsistent with the 
claim that the transactions of plain- 
tiff, from beginning to end, were up- 
right and honorable." Levy v. Scott, 
115 Cal. 39, 46 Pac. 892. 



Presumption. — " It is a funda- 
mental principle that where an act 
may be traced to an honest intent as 
well as to a corrupt one, the former 
should be preferred." Dexter v. Mc- 
Afee, 163 111. 508, 45 N. E. 115; 
Massey v. Stout, 4 Del. Ch. 274. 

87. Hickman v. Trout, 83 Va. 
478, 3 S. E. 131. 

88. "We think it not contrary 
to any principle or rule of law for 
the judge to inform the jury that as 
the charge of fraud is a charge 
against a presumption of fact, per- 
haps often a slight one, yet the jury, 
in order to be satisfied, might re- 
quire somewhat stronger evidence 
than would suffice to prove the 
acknowledgment of an obligation 
or the delivery of a chattel." Shaw, 
C. J., in Hatch v. Bayley, 12 Cush. 
(Mass.) 27. Explained and distin- 
guished in Bullard v. His Creditors, 
56 Cal. 600. Compare Kline v. Ba- 
ker, 106 Mass. 61. 

89. Hatch v. Spooner, 37 N. Y. 
St. 151, 13 N. Y. Supp. 642. In Mor- 
ris V. Talcott, 96 N. ,Y. 100, the 
court said : " The fraud charged 
against the defendant herein is of the 
nature 'of a crime, and cannot be pre- 
sumed, but must be established by 
evidence. ... A party, therefore, 
relying upon the establishment of a 
cause of action, or a right to a rem- 
edy against another, based upon the 
alleged commission of a fraud by 
such a person, must show affirma- 
tively facts and circumstances neces- 
sarily tending to establish a proba- 
bility of guilt, in order to maintain 
his claim." 

90. Kline v. Baker, 106 Mass. 61 ; 
Reed v. Noxon, 48 111. 323. 

In Lea v. Pearce, 68 N. C. 76, the 
court said : " The rule is, if the evi 
dence creates in the mind of the 
jury a belief that the allegation is 
true, they should so lind." And see 
Smith V. Berwick, 12 Rob. (La.) 20. 

Vol. VI 



54 



FRAUD. 



is all that is required." Accordingly, instructions requiring that 
the evidence be " conclusive,"'^ or " irresistible,"'^ or that it be 
" most clear and satisfactory,"'^ or that the facts and circumstances 
in evidence must be such as to exclude any other hypothesis than 
that of fraud,'' or that the evidence must be inconsistent with 
honesty, '° or in any manner suggesting that fraud requires a differ- 



91. California. — Ford v. Cham- 
bers, 28 Cal. 13. 

Illinois. — Eames v. Morgan, 37 
III. 260. 

Indiana. — Baltimore & O. C. R. 
Co. V. Scholes, 14 Ind. App. 524, 43 
N. E. 156, 56 Am. St. Rep. 307. 

Iowa. — Lillie v. McMillan, 52 
Iowa 463, 3 N. W. 601. 

Massachusetts. — Gordan v. Par- 
melee, IS Gray 413. 

Nebraska. — Patrick v. Leach, 8 
Neb. 530. 

Ohio. — Str^der v. Mullane, 17 
Ohio St. 624. 

Pennsylvania. — Catasauqua Mfg. 
Co. V. Hopkins, 141 Pa. St. 30, 21 
Atl. 630. 

Texas. — Sparks v. Dawson, 47 
Tex. 138. 

Vermont. — Cutter v. Adams, 15 
Vt. 237. 

Here Fieponderance Sufficient. 
In Bullard v. His Creditors, 56 Cal. 
600, a lengthy instruction, the sev- 
eral parts of which, taken by them- 
selves, were perhaps correct state- 
ments of the law, was held erroneous 
because, taken as a whole, it con- 
veyed to the mind of the jury the 
idea that they were not authorized to 
find fraud upon a mere preponder- 
ance of evidence. 

Testimony of Single Wifness Suf- 
ficient.— "The plaintiff's claim that 
the evidence of a single witness is 
insufficient in law to prove fraud, if 
denied by the person against whom 
fraud is charged, has no foundation. 
The quality of the testimony given, 
as well as the number of the wit- 
nesses produced, must be considered 
in determining questions of credibil- 
ity or preponderance of evidence." 
Beckwith v. Ryan, 66 Conn. 589, 34 
Atl. 488. 

92. McDaniel v. Baca, 2 Cal. 326, 
56 Am. Dec. 339; Kingman v. Rei- 
nemer, 166 111. 208, 46 N. E. 786. 

Compare Turner v. Hardin, 80 
Iowa 691, 45 N. W. 758, in which an 
instruction informing the jury that 

Vol. VI 



the proof must be of " such a char- 
acter as to produce in the mind of 
the jury a conviction " of the fraud, 
was held not erroneous as requiring 
too high a degree of proof, although 
the word conviction was disapproved. 

93. In Carter v. Gunnels, 67 111. 
270, an instruction that in order to 
be sufficient to prove fraud the tes- 
timony should possess such a de- 
gree of force as to be irresistible, 
was held error, the court saying: 
" Had it been of sufficient force to 
produce in the mind nothing more 
than a mere preponderance of assent 
in favor of the fact in dispute, it 
could riot have been pronounced in- 
sufficient." 

94. Painter v. Drum, 40 Pa. St. 
467; Rider v. Hunt, 6 Tex. Civ. 
App. 238, 25 S. W. 314 

" Clear, Distinct and Positive." 
In Patrick v. Leach, 8 Neb. 530, an 
instruction to the jury that the evi- 
dence must "satisfy their minds 
thoroughly, and produce a clear, dis- 
tinct and positive conviction, in 
which they rest in confidence that 
they are right " was held properly re- 
fused as exacting too high a degree 
of proof. 

95. Phoenix Ins. Co. v. Moog, 81 
Ala. 335, I So. 108; Adams v. Thorn- 
ton, 78 Ala. 489; Seligman v. Kalk- 
man, 8 Cal. 208; Linn v. Wright, 18 
Tex. 337. 

Contra. — Tompkins v. Bennett, 3 
Tex. 36 ; Steele v. Kinkle, 3 Ala. 352 ; 
the latter case being overruled in 
Adams v. Thornton, ante. 

96. State of Missouri ex rel. Er- 
hardt v. Estel, 6 Mo. App. 6. 

In Diefenth.iler v. Hall, 96 111. 
App. 639, the court, in speaking of 
an instruction informing the jury, in 
effect, that where the circumstances 
are equally capable of two construc- 
tions—one that the transaction was 
fair and honest and the other that 
it was fraudulent — then the law is 
that the former construction must 
prevail, said: "Whether it be a 



FRAUD. 



55 



ent or higher degree of proof than any other civil issue,''^ have 
been disapproved and held erroneous. Indeed, it has been held 
that if there is a mere " scintilla " of evidence tending to establish 
the fraud the case is properly submitted to the jury, and the 
verdict will not be disturbed. °^ 

d. In Equity. — It is not safe to define what degree of proof will 
justify a court of equity in granting relief against fraud,*' but it 
seems that a lesser degree of proof is required to establish fraud in 
equity than in law.^ 



presumption of law or a presumption 
of fact that all men are presumed 
to be fair and honest or not, or 
whether, when a transaction is called 
in question equally capable of two 
constructions — one fair and honest 
and one that is dishonest — then the 
law is that the transaction called 
in question is presumed to be fair 
and honest, depends upon the evi- 
dence of the case. All that fol- 
lows the first sentence of the 
instruction is in no manner qual- 
ified by it, and seems to be 
wholly regardless of the evidence. 
The jury might well infer that while 
it was necessary to prove fraud af- 
firmatively, still the law is that, not- 
withstanding this and without re- 
gard to the evidence, the presump- 
tions are that men are fair and hon- 
est, and the transaction was equally 
capable of being considered honest or 
dishonest, and therefore must be 
deemed honest. The vice of the in- 
struction is that the law only pre- 
sumes all men honest until the evi- 
dence proves the contrary, the quali- 
fying clause having been omitted 
from the instruction. In every case 
where the burden of proof rests upon 
either party, it is because the pre- 
sumptions either of law or fact are 
against such party, and it is always 
error to assume that such presump- 
tion prevails if there is evidence to 
rebut it. This we think the instruc- 
tion under consideration did, and it 
was error to give it in the form in 
which it was given to the jury." 

97. Ferris v. McQueen, 94 Mich. 
367, 54 N. W. 164; Watkins v. Wal- 
lace, ig Mich. S7- 

In Granrud v. Rea, 24 Tex. Civ. 
App. 299, 59 S. W. 841, it is held er- 
ror to charge the jury that fraud 
must be proved " to the satisfaction 
of the jury by competent evidence." 



Same as Other Issues An in- 
struction to the effect that stronger 
proof was required to establish fraud 
than to prove an ordinary sale or 
agreement, was held properly refused 
in the absence of a further instruc- 
tion that the one reason which would 
entitle the jury to require extra 
clear proof of fraud was the mere 
presumption of honest dealings ; 
otherwise the instruction was held 
likely to mislead. Kline v. Baker, 
106 Mass. 61. 

" Clear Proof " — " Hearty Con- 
viction."— In Gumberg v. Treusch, 
103 Mich. 543, 61 N. W. 872, an in- 
struction stating that fraud could not 
be established except by " clear 
proof " that carries to the mind a 
" hearty conviction," was held er- 
roneous as exacting too high a de- 
gree of proof. 

9^ Freedman v. Campfield, 92 
Mich. 118, 52 N. W. 630. 

99. In Armstrong v. Lachman, 84 
Va. 726, 6 S. E. 129, this language is 
used : " It is not safe to define what 
degree of proof will justify a court 
of equity in granting relief against 
fraud, for the proof must satisfy the 
conscience of the court, and no man 
would deem it prudent to attempt to 
define the extent of that indispensa- 
ble qualification in the judge or 
court." 

1. Lester v. Mahan, 25 Ala. 445, 
60 Am. Dec. 530; Arnold v. Grimes, 
2 Iowa 77. And see Cheney v. 
Gleason, 125 Mass. 166. 

In Orton v. Madden, 75 Ga. 83, 
the court said : " The courts of equity 
more readily raise and act upon a 
presumption of fraud than courts of 
law, from facts pointing thereto." 

But a preponderance of evidence is 
required in equity as well as at law. 
Braddock v. Louchheim, 87 Fed. 287. 

Vol. VI 



56 



FRAUD. 



E. RSASONABLfi Doubt. — Although the charge of fraud involves 
moral turpitude, and is in the nature of a crime, it is not neces- 
sary that it be established beyond a reasonable doubt. ^ 

F. Exceptional Cases. — a. In General. — Owing to the gravity 
of the particular offense charged, the courts have, in certain cases, 
required a higher degree of proof than would have been sufficient 
if the fraud charged had not been so gross. This principle has 
been applied in an action involving the fraud of a notary public in 
taking an acknowledgment,' in a suit by the United States to cancel 
a pension,* or a patent to its public lands° on the grounds of fraud 
in the procurement thereof, in an action involving the fraud of 
public officials in the discharge of their duties," and where it was 
sought to set aside the award of an arbitrator, who was a disinter- 
ested employe of the party charging the fraud, and whose decision 
was made final by the contract.'' It has been held that a lesser 
degree of proof is required to prove the fraud of a third person not 
directly interested in the purchase than that of the vendor with 
whom the purchaser dealt at arm's length.^ Some of the decisions 
require exceedingly clear and strong proof where it is attempted 
to set aside or cancel an executed written instrument by parol 
evidence.® 



2. Alabama. — Wollner v. Leh- 
man, 8s Ala. 274, 4 So. 643. 

California. — Ford v. Chambers, 19 
Cal. 143. 

Illinois. — Bryant v. Simoneau, 51 
111. 324. 

Indiana. — Baltimore & O. C. R. 
Co. V. Scholes, 14 Ind. App. 524, 43 
N. E. 156, S6 Am. St. Rep. 307. 

Iowa. — Lillie v. McMillan, 52 
Iowa 463, 3 N. W. 601. 

Maine. — Knowles v. Scribner, 57 
Me. 49S. 

Massachusetts. — Schmidt v. New 
York U. M. F. Ins. Co., i Gray 529. 

Minnesota. — Burr v. Wilson, 22 
Minn. 206. 

Missouri. — Gay v. Gillilian, 92 Mo. 
250, S S. W. 7, I Am. St. Rep. 712; 
Shinnabarger v. Shelton & Lane, 41 
Mo. App. 147. 

New York. — Phoenix Iron Co. v. 
" Hopatcong " and " Musconetcong," 
127 N. Y. 206, 27 N. E. 841; Som- 
mer v. Oppenheim, 19 Misc. 605, 44 
N. Y. Supp. 396. 

Ohio. — Strader v. MuUane, 17 
Ohio St. 624. 

Pennsylvania. — Catasauqua Mfg. 
Co. V. Hopkins, 141 Pa. St. 30, 21 
Atl. 638. 

Texas. — Sparks v. Dawson, 47 
Tex. 138. 

And see Welch v. Jugenheimer, 56 
Vol. VI 



Iowa II, 8 N. W. 673, where the 
question of reasonable doubt, as ap- 
plied to civil cases, is exhaustively 
treated. 

3. Brady v. Cole, 164 111. 116, 43 
N. E. 438, and see Shell v. Holston 
Nat. B. & L. Ass'n (Tenn. Ch.), 52 
S. W. 909. 

4. Lalone v. United States, 164 U. 
S. 25s. 

5. United States v. San Jacinto 
Tin Co., I2S U. S. 273; Maxwell 
Land Grant Case, 121 U. S. 325 ; Col- 
orado Coal and Iron Co. v. United 
States, 123 U. S. 307; United States 
V. Iron Silver Min. Co., 128 U. S. 
673, distinguishing Moffatt v. United 
States, 112 U. S. 24. 

6. Kingsley v. City of Brooklyn, 
78 N. Y. 21s; Baird v. Mayor of 
New York, 96 N. Y. 593 ; Tacoma 7'. 
Tacoma L. & W. Co., 16 Wash. 288, 

47 Pac. 738; Pioneer Iron Co. v. City 
of Negaunee, 116 Mich. 430, 74 N. 
W. 700. 

7- Elliott V. Missouri, K. & T. R. 
Co., 74 Fed. 707. 

8. Medbury v. Watson, 6 Mete. 
(Mass.) 246, 39, Am. Dec. 726. 

9- Walton v. Blackman (Tenn. 
Ch._), 36 S. W. 195; De Douglass v. 
Union Traction Co., 198 Pa. St. 430, 

48 Atl, 262; Walker v. Hough, 59 



FRAUD. 



57 



b. Where the Charge Involves a Crime. — Conflict of Authority. 
Some decisions have held that where the offense charged as the 
basis of a civil action constitutes a crime it must be established 
beyond a reasonable doubt/" but later and seemingly better con- 
sidered opinions hold the contrary. ^^ 

II. PARTICULAE ELEMENTS OF FEAUD. 

1. Intent and Scienter. — A. Coni?i.ict op Authorities. — The 
question as to when and in what cases the intent and guilty 
knowledge of the party charged with fraud are essential elements, 
which must be, proved in order to establish the fraud, is one upon 
which the decisions are not in entire harmony.^^ But this question 
is one of substantive law and not of evidence, and consequently 
its treatment is not proper here. 



III. 375; Hand v. Waddell, 167 111. 
402, 47 N. E. 772. 

10. McConnell v. Delaware M. S. 
Ins. Co., 18 111. 228; Barton v. 
Thompson, 46 Iowa 30; Thayer v. 
Boyle, 30 Me. 475. 

In Lexington Ins. Co. v. Paver, 16 
Ohio 324, the court instructed the 
jury "that the belief of the defend- 
ants that the plaintiff fraudulently 
caused the said steamboat to be 
burned charged plaintiff with a 
crime, and that they ought not to 
find a verdict . . . unless the 
evidence . . . was so strong as to 
satisfy them of the fact beyond a rea- 
sonable doubt," and this instruction 
was held proper. See also Strader 
V. Mullane, 17 Ohio St. 624; Catasau- 
qua Mfg. Co. v. Hopkins, 141 Pa. St. 
30, 21 Atl. 638. See article" Burden 
OP Proof." 

11. Heiligmann v. Rose, 81 Tex. 
222, 16 S. W. 931 ; Gary v. Hotailing, 
I Hill (N. Y.) 311; Gordan v. Par- 
melee, IS Gray (Mass.) 413; Conti- 
nental Ins Co. V. Jachnichen, no Ind. 
59, 10 N. E. 636, 59 Am. Rep. 194; 
and cases cited. 

Fraud Involving Murder In a 

civil action it is not necessary to 
establish fraud beyond a reasonable 
doubt, although the proof of such 
fraud involves as an essential ingredi- 
ent the implication of the alleged 
wrongdoer in the crime of murder. 
Jack V. Mutual Reserve Fund Life 
Ass'n, 113 Fed. 49. 

Same Representations Constitut- 
ing False Pretenses. — Although the 
fraud charged may have been such as 
to subject the party to a criminal 



prosecution for the false and fraudu- 
lent representations, it is not neces- 
sary that the proof should be of such 
a degree or character as to warrant 
the conviction of thje defendant in a 
criminal prosecution for such false 
and fraudulent representations. 
Fames v. Morgan, 37 111. 260. 

12. Necessity of Proving Scienter. 
Conflict. — Thus, in Hubbard v. 
Weare, 79 Iowa 678, 44 ,N. W. 915, 
the court said : " We regard it as 
well settled in this state, that . . . 
the law will not afford relief on the 
grounds of false and fraudulent rep- 
resentations unless it be shown that 
the party making the representations 
knew them to be false, or that he 
made them under circumstances from 
which such knowledge will be infer- 
red;" and see Kountze v. Kennedy, 
147 N. Y. 124, 41 N. E. 414, 49 Am. 
St. Rep. 651, 29 L. R. A. 360; while in 
Field V. Morse, 54 Neb. 789, 75 N. 
W. 58, it is said: "It is the settled 
law of this state that to entitle a 
party to relief on the ground of false 
representations it is not necessary 
for him to allege or prove that the 
party making them, at the time, knew 
they were false; in other words, 
whether the defendant acted in good 
faith or not is immaterial." 

For leading and instructive cases 
in which the question is discussed 
I'ro and con, in addition to the cases 
hereinbefore cited, see the follow- 
ing: 

England. — Derry v. Peek, 14 App. 
Cas. 337; Peek v. Gurney, L. R. 6 
H. L. 377. 

United States. — Penn. Mut. Life 

Vol. VI 



58 



FRAUD. 



B. Presumptions and Burdbn of Proof. — a. In General. 
But, in all cases where the intent and scienter are material and 
essential elements, it is incumbent upon the party charging the 
fraud to establish either directly or by proof of facts from which 
the law will raise the presumption, the existence of a fraudulent 
intent'^ and of guilty knowledge^* on the part of the person 
charged with the fraud. 



Ins. Co. V. Mechanics Sav. Bank & T. 
Co., 73 Fed. 6S3. 

Alabama. — Brown v. Freeman, 7g 
Ala. 406 ; Sledge v. Scott, 56 Ala. 202. 

Comiecticut. — Scholfield G. & P. 
Co. V. Scholfield, 71 Conn, i, 40 Atl. 
1046. 

Indiana. — Kirkpatrick v. Reeves, 
121 Ind. 280, 22 N. E. 139. 

Iowa. — Boddy v. Henry, 113 Iowa 
462, 8s N. W. 771, S3 L. R. A. 769. 

Massachusetts. — Chatham Fur- 
nace Co. V. Moflfatt, 147 Mass. 403, i8 
N. E. 168, 9 Am. St. Rep. 726 ; Litch- 
field V. Hutchinson, 117 Mass. gs; 
Nash V. Minnesota Title Ins. & T. 
Co.. 163 Mass. 574, 40 N. E. 1039, 47 
Am. St. Rep. 489, 28 L. R. A. 753. 

Michigan. — Totten v. Burhans, 
91 Mich, 495, 51 N. W. 1119. 

Nebraska. — Hitchcock v. Gothen- 
burg Water P. & I. Co., 95 N. W. 
638; Johnson & Gulick, 46 Neb. 817, 
65 N. W. 883, 50 Am. St. Rep. 629. 

New Jersey. — Cummings v. Cass, 
52 N. J. L. 77, 18 Atl. 972. 

Pennsylvania. — Erie City Iron 
Works V. Barber, 106 Pa. St. 125. 

Texas. — Scale v. Baker, 70 Tex. 
283, 7 S. W. 742; Beatty v. Bulger, 
28 Tex. Civ. App. 117, 66 S. W. 893. 

13. Arkansas. — Taylor v. Missis- 
sippi Mills, 47 Ark. 247, i S. W. 283. 

Colorado. — Brock v. Schradsky, 6 
Colo. App. 402, 41 Pac. 512. 

Dclazvare. — Grier v. Dehan, 5 
Houst. 401. 

Louisiana. — Winter v. Davis, 48 
La. Ann. 260, 19 So. 263. 

Maine. — Burrill v. Stevens, 73 Me. 
395, 40 Am: Rep. 366. 

Maryland. — Phelps v. George's 
Creek & C. R. Co., 60 Md. 536; 
Melville v. Gary, 76 Md. 221, 24 Atl. 
604; McAIeer v. Horsey, 35 Md. 439. 

Massachusetts. — Page v. Bent, 2 
Mete. 371 ; Tryon v. Whitmarsh, i 
Mete. I, 35 Am. Dec. 339. 

New Hampshire. — Page v. Parker, 
43 N. H. 363, 80 Am. Dec. 172. 

Nciv York. ^-- Pryor v. Foster, 130 

Vol. VI 



N. Y. 171, 29 N. E. 123; Hemenway 
V. Keeler, 68 N. Y. St. 819, 34 N. 
Y. Supp. 808. 

Pennsylvania. — ■ Kern v. Simpson, 
126 Pa. St. 42, 17 Atl. 523; Cincin- 
nati Cooperage Co. v. Gaul, 170 Pa. 
St. 545, 32 Atl. 1093. 

14. England. — Derry v. Peek, 14 
App. Cas. 337. 

Alabama. — Bamett v. Stanton, 2 
Ala. 181. 

Arkansas. — Morton v. Scull, 23 
Ark. 289; Plant v. Condit, 22 Ark. 
454. 

California. — Kelley v. Owens, 
30 Pac. 596. 

Connecticut. — Morehouse v. 
Northrop, 33 Conn. 380, 89 Am. Dec, 
211. 

Delaware. — Grier v. Dehan, 5 
Houst. 401. 

Florida. — Williams v. McFadden, 
23 Fla, 143, I So, 618, II Am. St. 
Rep. 34S- 

Illinois. — Nolte v. Reichelm, 96 
111. 42s; Merwin v. Arbuckle, 81 111. 
501 ; Johnson v. Beeney, 9 111. App. 
64; Hiner v. Richter, 51 111. 299; 
Mitchell V. Deeds, 49 111. 416, 95 Am. 
Dec. 621 ; Hicks v. Stevens, 121 111. 
186, II N. E, 241; Goodrich v. Rey- 
nolds, 31 111. 490, 83 Am. Dec 240; 
White V. Watkins, 23 111. 482. 

Indiana. — Gregory v. Schoenell, 53 
Ind. loi. 

Iowa. — Shaw v. Jacobs, 8g Iowa 
713, S.S N. W, 333, 56 N, W, 684, 48 
Am, St, Rep, 411, 21 L. R. A. 440; 
Hubbard v. Weare, 79 Iowa 678, 44 
N. W, 915; Boddy v. Henry, 113 
Iowa 462, 85 N, W, 771, 53 L. R, 
A. 769; Holmes v. Clark, 10 Iowa 
423. 

Kansas. —'Pa.rmns' Stock Breed- 
ing Ass'n V. Scott, 53 Kan. 534, 36 
Pac. 978. 

Kentucky. — Campbell v. Hillman, 
15 B. Mon. 508, 61 Am. Dec. 195. 

Massachusetts. — Emerson v. Brig- 
ham, 10 Mass. 197, 6 Am. Dec. 109; 
Tryon V. Whitmarsh, i Mete, i, 35 



FRAUD. 



59 



b. Scienter Not Presumed from Falsity. — Proof of the fact that 
the representation was false raises no presumption that the maker 
thereof knew it was false/^ 

c. Former or Subsequent Knowledge. — Proof of knowledge 
of facts inconsistent with or contradictory to the facts as repre- 
sented, at some time before^" or after" the time of the representa- 
tion, does not necessarily raise the presumption of knowledge of 
the falsity of such representation at the time when made. 

d. Intention Not to Perform Promise. — It has been held that 
where a person has promised to do or perform an act, proof of his 
failure and refusal to perform such act justifies the inference that 
he made such promise with the intent not to perform it.^^ 

e. Exceptional Cases. — In some exceptional cases the rule is laid 
down that the burden is upon the alleged wrongdoer to prove that 
h,e had no guilty knowledge. Thus, it has been held that where the 
false representation was, in form, a warranty,'' or where it con- 
sisted of an assumption of authority to act for another,^" or where 
one is shown to have made a false statement, from the consequences 
of which he will be relieved if he honestly believed it to be true,^' 



Am. Dec. 339; Stone v. Denny, 4 
Mete. 151 ; Page v. Bent, 2 Mete. 371. 

Mississippi. — Selma, M. & M. R. 
Co. V. Anderson, 51 Miss. 829. 

Neiv Hampshire. — Page v. Parker, 
40 N. H. 47. 

New Jersey. — Cowley v. Smyth, 
46 N. J. L. 380, so Am. Rep. 432. 

Neiv York. — Hubbell v. Meigs, 50 
N. Y. 480; Marsh v. Falker, 40 N. 
Y. 562; Hemenway v. Keeler, 68 N. 
Y. St. 819, 34 N. Y. Supp. 808; Ar- 
thur V. Griswold, SS N. Y. 400; 
Meyer v. Amidon, 45 N. Y. 169; Ob- 
erlander v. Spiess, 45 N. Y. 175; 
Wakeman v. Dalley, 51 N. Y. 27, 
criticising and distinguishing Bennett 
V. Judson, 21 N. Y. 238; Townsend v. 
Felthousen, 156 N. Y. 618, 51 N. E. 
279; Hatch V. Spooner, 37 N. Y. St. 
151, 13 N. Y. Supp. 642; Duffany v. 
Ferguson, 66 N. Y. 482; Pryor v. 
Foster, 130 N. Y. 171, 29 N. E. 123; 
Daley v. Wise, 132 N. Y. 306, 30 N. 
E. 837, 16 L. R. A. 236. 

North Carolina. — Cobb v. Fogal- 
man, 23 N. C. 440. 

Ohio. — Taylor v. Leith, 26 Ohio 
St. 428. 

Pennsylvania. — High v. Berret, 
148 Pa. St. 261, 23 Atl. 1004; Gris- 
wold V. Gebbie, 126 Pa. St. 353, 17 
.A.tl. 673, 12 Am. St. Rep. 878; Hex- 
ter V. Bast, 125 Pa. St. 52, 17 Atl. 
252, II Am. St. Rep. 874; Staines v. 
Shore, 16 Pa. St. 200. 



Vermont. — Baker z: Sherman, 71 
Vt. 439, 46 Atl. 57. 

15. Southern Development Co. i'. 
Silva, 125 U. S. 248 ; Barnett v. Stan- 
ton, 2 Ala. i8r; McDonald v. Traf- 
ton, 15 Me. 225 ; Griswold z'. Sabin, 
51 N. H. 167, 12 Am. Rep. 76; An- 
derson V. MePike, 86 Mo. 293 ; Tryoh 
V. Whitmarsh, i Mete. (Mass.) i, 35 
Am. Dec. 339. 

16. Morgan v. Skiddy, 62 N. Y. 
319. 

17. Morriss v. Talcott, 96 N. Y. 
100; Nichols V. Pinner, 18 N. Y. 295. 
But see Johnson v. Monell, 2 Keyes 
(N. Y.) 6ss. 

18. Dowd V. Tucker, 41 Conn. 
203; Chicago T. & M. C. R. Co. v. 
Titterington, 84 Tex. 218, 19 S. W. 
472, 31 Am. St. Rep. 39. 

And see Porter v. Stone, 62 Iowa 
442, 17 N. W. 654, and Prazier v. 
Miller, 16 111. 48- 

19. Warranty — Presumption. 
" One will be presumed to know of 
the existence or non-existence of a 
fact which he undertakes to war- 
rant." Hexter v. Bast, 125 Pa. St. 
52, 17 Atl. 252, II Am. St. Rep. 874. 

20. Jackson v. Holliday, 3 Mon. 
(Ky.) 363. And see Mendenhall v. 
Stewart, 18 Ind. App. 262, 47 N. 
E. 943. 

21. Griswold v. Gebbie, 126 Pa. 
St. 353, 17 Atl. 673, 12 Am. St. Rep. 
878. 

Vol. VI 



60 



FRAUD. 



the burden of proof in each instance is upon the party charged 
with the fraud. 

C. SuBSTANCB AND MoDB OF ProoF. — a. As to Intent or Motive. 
(1.) Direct Evidence. — Testimony of Party (A.) In General. — When- 
ever a person is charged with a fraudulent motive or intent 
in a particular act or transaction, and such motive or intent becomes 
a material issue in the cause, it is competent for such person to tes- 
tify directly that he did or did not intend to cheat or defraud," and 
this is true, notwithstanding the diminished credit to which such 
testimony may be entitled as coming from an interested witness, and 
notwithstanding its unsatisfactory character^' or the difficulty in 



22. United States. — National Cash 
Register Co. v. Leland, 94 Fed. 502. 

Georgia. — Acme Brg. Co. v. Cen- 
tral R. & Bkg. Co., IIS Ga. 494, 42 
S. E. 8; Hale v. Robertson, 100 Ga. 
168, 27 S. E. 937- 

Indiana. — Shockey v. Mills, 72 
Ind. 288. Compare Curme v. Rauh, 
100 Ind. 247. 

Iowa. — Boddy v. Henry, 113 Iowa 
462, 8s N. W. 771, 53 L. R. A. 769; 
Warfield v. Clark, 118 Iowa 69, 91 N. 
W. 833; Frost V. Rosecrans, 66 
Iowa 405, 23 N. W. 89s; Watson v. 
Cheshire, 18 Iowa 202. 

Kansas. — Gentry v. Kelley, 49 
Kan. 82, 30 Pac. 186; Bice v. Rogers, 
52 Kan. 207, 34 Pac. 796; Gardom v. 
Woodward, 44' Kan. 758, 2S Pac. 199, 

21 Ain. St. Rep. 310. 

Maine. — Edwards v. Currier, 43 
Me. 474; Wheelden v. Wilson, 44 
Me. II. 

Maryland. — Phelps v. George's 
Creek &' C. R. Co., 60 Md. 536. 

Massachusetts. — Com. v. Wood- 
ward, 102 Mass. ISS ; Snow v. Payne, 
114 Mass. S20; Thacher v. Phinney, 
7 Allen 146. 

Michigan. — Spalding V: Lowe, 56 
Mich. 366, 23 N. W. 46. 

Missouri. — And see Van Sickle v. 
Brown, 68 Mo. 627. 

Nebraska. — Campbell v. Holland, 

22 Neb. 587, 35 N. W. 871. 

Nezv Hampshire. — See Delano v. 
Goodwin, 48 N. H. 203, 97 Am. Dec. 
601. See Norris v. Morrill, 40 N. 
H. 39S. 

New York. — Pope v. Hart, .33 
Barb. 630; McKown v. Hunter, 30 
N. Y. '625 ; Bullis v. Montgomery, 50 
N. Y. 352; Forbes v. Waller, 25 N. 
Y. 430 ; Seymour v. Wilson, 14 N. Y. 
567; Bedell v. Chase, 34 N. Y. 386; 
Starin v. Kelly, 88 N. Y. 418. 

Vol. VI 



Pennsylvania. — Cole v. High, 173 
Pa. St. S90, 34 Atl. 292. 

Texas. — Fox v. Robbins (Tex. 
Civ. App.), 70 S. W. S97- 

Financial Condition of Vendee. 
The vendee charged with fraud may 
testify that at the time of the pur- 
chase he considered himself responsi- 
ble, and was of good credit. " It 
seems to be conceded that it was 
proper to show his belief in his own 
pecuniary responsibility; and the 
question as to his credit does not dif- 
fer. Each was to the purpose of 
showing that he did not intend to 
obtain the property fraudulently, in- 
asmuch as, if he was responsible and 
of good credit, it needed not that he 
should have such purpose, or that he 
should falsely represent." Bullis v. 
Montgomery, 50 N. Y. 352. 

Contra. — Rule in Alabama. — " It 
is well settled in this state, whatever 
the rule may be elsewhere, that wit- 
nesses are not permitted to testify to 
their motive, belief or intention, 
when secret and uncommunicated ; 
such mental status, when relevant, 
being a matter of inference to be de- 
termined from the circumstances of 
the case by the jury." McCormick 
V. Joseph, 77 Ala. 236; Wheless v. 
Rhodes, 70 Ala. 419; Brewer 
V. Watson, 71 Ala. 299, 46 Am. Rep. 
318; Richardson v. Stringfellow, loo 
Ala. 416, 14 So. 284. 

23. Bullis V. Montgomery, so N. 
Y. 352; Watkins v. Wallace, 19 
Mich. 57. 

"A party, when charged with an 
intent to deceive or cheat or defraud, 
or with fraud and deceit, must be al- 
lowed to testify as a witness in his 
own behalf, that he did not intend to 
cheat, deceive or defraud, or to prac- 
tice any fraud or deceit in the trans- 



FRAUD. 



61 



directly contradicting it, which objections go to the credibiHty of 
the testimony — not its competency.^* 

(B.) When Incompetent.— (a.) In General. — But the intent to de- 
fraud is shown by acts and declarations, and where the law attaches 
to certain acts the conclusive presumption that they were done in bad 
faith, testimony of the party affected to contravene the legal imputa- 
tion is incompetent and inadmissible.^' 

(b.) Where Representations Are in Writing. — Where the fraudulent 
representations constituting the inducement have been reduced to 
writing, it has been held that the writing is the only proper evidence 
of such representations, and the intent of the person in making 
them, and testimony on his part, for the purpose of showing an intent 
different from that conveyed by the writing, is incompetent.^^ 

Exception. — It has been held that this rule does not apply where 
the representation was made by one having no direct interest in the 
subject-matter, and standing in the position of a mere gratuitous 
informer.^'' 



action wherein he is charged with 
having had such motive, however in- 
conclusive, unsatisfactory or incon- 
sistent his evidence may be." Pope v. 
Hart, 35 Barb. (N. Y.) 630. 

24. " Whether one has acted in 
good faith or not is better known to 
himself than anybody else; and in 
many cases the statement of a per- 
son whose conduct is in question that 
he did so act is the only way in 
which good faith can be proved. 
The objection sometimes made to 
such testimony, that it cannot be di- 
rectly contradicted, and therefore 
must be of little value, is one which 
might properly be urged to the cred- 
ibility of the testimony, but is not one 
which should render it incompetent." 
Hale V. Robertson, 100 Ga. 168, 27 S. 
E. 937. 

25. Colorado. — Bell v. Kaufman, 
9 Colo. App. 259, 47 Pac. 1035. 

Georgia. — ■ See Hale v. Robertson, 
100 Ga. 168, 27 S. E. 937. 

Kentucky. — See Drake v. Hol- 
brook, 23 Ky. L. Rep. 1941, 66 S. W. 
S12. 

Maryland. — Phelps v. George's 
Creek & C. R. Co., 60 Md. 536; 
Ecker V. McAllister, 45 Md. 290-309, 

Massachusetts. — Fisher v. Mellen, 
103 Mass. 503. 

Missouri. — Dulaney v. Rogers, 64 
Mo. 201. 

Nebraska. — See McCready v. 
Phillips, 56 Neb. 446, 76 N. W. 885. 

Nezv Jersey. — Cowley v. Smyth, 
46 N. J. L. 380, so Am. Rep. 432. 



North Carolina. — Cheatham v. 
Hawkins, 80 N. C. 161. 

Tennessee. — Tennessee Nat. Bank 
V. Elbert, 9 Heisk. 154. 

" In such case, his good or bad 
faith must be decided by what he did, 
and not by what he intended, and 
. . . the question of intent must 
be answered from his actions, and 
not from what he now says was his 
purpose." Forbes v. Thomas, 22 
Neb. 541, 35 N. W. 411. 

Intent of Party Uaking State- 
ment to Commercial Agency. 
Where the party charged with fraud 
has made a statement of his financial 
standing to a commercial agency, the 
fact that he did not have the person 
charging the fraud, and relying on 
such statement, in mind, when he 
made the statement, is of no conse- 
quence, and his testimony to that ef- 
fect is incompetent. Soper Lumber 
Co. V. Halstead, 73 Conn. 547, 48 
Atl. 425. 

Where Representations Constitute 

Warranty This rule applies where 

the defendant is sued on a warranty 
in a sale, although his fraudulent 
representations as to the subject of 
the warranty are also relied upon. 
Zimmerman v. Brannon, 103 Iowa 
144, 72 N. W. 439. 

26. Flower v. Brurabach, 131 111, 
646, 23 N. E. 33S ; Williams v. Wood, 
14 Wend. (N. Y.) 127. 

27. In Nash v. Minnesota Title 
Ins. & T. Co., 163 Mass. 574, 40 N. E. 
1039, 47 Am. St. Rep. 489, 28 L. R. A. 

Vol. VI 



62 



FRAUD. 



(C.) Weight and Effect. — The direct testimony of the part)- 
charged with the fraud that he acted in good faith and without any 
fraudulent intention is never conclusive of such fact,^^ even when 
given by such party as a witness for the party charging the fraud.^* 

(8.) Inferred from Circumstances. — But direct evidence of the 



7S3 (•'• c. on former appeal, 159 Mass. 
437. 34 N. E. 625), the court, after 
distinguishing between the case 
where a representation is made by 
a party in interest, and that where a 
representation is made by a gratui- 
tous informer having no interest in 
the subject, said : " Of course, one 
will be presumed to have intended 
his language to be understood ac- 
cording to its usual meaning, and in 
ordinary cases, in the absence of a 
reasonable explanation of his mis- 
take, his testimony that he meant 
something different from what he 
said will have but little, if any, 
weight. But inasmuch as the ques- 
tion involved is, What was his state 
of mind, and his actual intent, as dis- 
tinguished from his apparent intent? 
he is entitled to explain his language 
as best he can, if it is susceptible of 
explanation, and to testify what was 
in his mind in reference to the sub- 
ject to which the alleged fraud re- 
lates. In this respect his expressions, 
whether spoken or written, are not 
dealt with in the same way as when 
the question is. What contract has 
been made between two persons who 
were mutually relying upon the 
language used in their agreement? 
. . . In the present case we need 
not determine whether the excluded 
evidence on this subject was very 
important. It is obvious that, if the 
defendant's officers knew that their 
statement in regard to the title was 
false in the sense in which they sup- 
posed it would generally be under- 
stood, it is immaterial whether or 
not they had a purpose to do injury 
or cause loss to anybody who might 
rely upon it. It is enough to fur- 
nish the foundation for a liability if 
they used language in regard to the 
title which they intended should be 
understood as a representation that 
the title was perfect, when they knew 
it was not perfect. . . . But a 
majority of the court are of opinion 
that it was competent for them to 
testify what their understanding and 

Vol. VI 



intention were in regard to the mean- 
ing of the representation, and that 
the presiding justice gave too broad 
an interpretation to our former de- 
cision in the case." 

28. Georgia. — Royce v. Gazan. 
76 Ga. 79; Powell v. Watts, 72 Ga. 
770. 

Illinois. — Geneser v. Telgman, 37 
111. App. 374. Compare Shinn v. 
Shinn, 91 111. 477. 

Maine. — Edwards v. Currier, 43 
Me. 474. 

Maryland. — Phelps v. George's 
Creek & C. R. Co., 60 Md. 536. 

New York. — Thurston v. Cornell, 
38 N. Y. 281; Forbes v. Waller, 25 
N. Y. 430; More v. Deyoe, 22 Hun 
208. 

Wisconsin. — Anderson v. Wehe, 
62 Wis. 401, 22 N. W. 584; Wilson 
V. Noonan, 35 Wis. 355. 

When Immaterial " There are 

cases which present circumstances in 
themselves conclusive evidence of a 
fraudulent intent, and in which no 
proof of innocent motives, however 
strong, will overcome the legal pre- 
sumption." Seymour v. Willson, 14 
N. Y. 567. 

" The intent to defraud is shown 
by acts and declarations. If a party 
is guilty of an act which defrauds 
another, his declaration that his in- 
tentions were honest cannot be taken 
as sufficient to overthrow the act." 
Wafer v. Harvey Co. Bank, 46 Kan. 
597, 26 Pac. 1032. Citing Babcock v. 
Eckler, 24 N. Y. 623. 

Admission of Guilt Not Conclusive. 
Where a party charged with fraud 
in a transaction testifies to facts tend- 
ing to show that he was guilty of 
fraud, such testimony is not conclu- 
sive of such fact against the pur- 
chaser or assignee of such witness, 
or other person whose rights are af- 
fected by such fraud. Griffin v. Mar- 
guardt, 21 N. Y. 121. 

29. Ferguson v. Daughtrey, 94 
Va. 308, 20 S. E. 822; Barnum v. 
Hockett, 35 Vt. 77. 



FRAUD. 



6i 



fraudulent motive or intent is not necessary, as it may in all cases be 
proved by circumstances,^" and where it is shown that the party 
charged with the fraud knowingly made a false statement of a mate- 
rial fact calculated to induce the party to whom made to act, his 
fraudulent intent is presumed, and no further proof thereof is 
required.^^ 

b. As to Scienter. — (l.) Direct Evidence Testimony of Party. 

Where the scienter is directly in issue, the party charged may testify 
directly that he had no knowledge of the true state of the facts 
which he is charged with fraudulently representing.^^ 

Source of Information. — It is likewise competent for him to show 
what, if any, information he had on the subject, and the source from 
which he received it, in order to establish his good faith in making 
the representation.*^ 



30. Scholfield G. & P. Co. v. 
Scholfield, 71 Conn, i, 40 Atl. 1046; 
Lindauer v. Hay, 61 Iowa 663, 17 N. 
W. 98; Taylor v. Mississippi Mills, 
47 Ark. 247, I S. W. 283. And see 
infra, " Circumstantial Proof." 

" It [the fraudulent intention] may 
be shown by proof of its manifesta- 
tions. These are usually the acts 
done by the wrongdoer and the cir- 
cumstances surrounding him and the 
transaction." Oswego Starch Fac- 
tory V. Lendrum, 57 Iowa 573, 10 N. 
W. 900, 42 Am. Rep. S3- 

31. Illinois. — Endsley v. Johns, 
120 111. 469, 12 N. E. 247; Case V. 
Ayers, 65 111. 142; John V. Farwell 
Co. V. Nathanson, 99 111. App. 185; 
Reed & Co. v. Pinny, 35 111. App. 
610; McBean v. Fox, i 111. App. 177. 

Maryland. — McAleer v. Horsey, 
35 Md. 439. 

Massachusetts. — Cole v. Cassidy, 
138 Mass. 437, 52 Am. Rep. 284 ; Col- 
lins V. Denison, 12 Mete. 549; Arnold 
V. Teel, 182 Mass. I, 64 N. E. 413. 

Minnesota. — Haven v. Neal, 43 
Minn. 315, 45 N. W. 612; Humph- 
rey V. Merriam, 32 Minn. 197, 20 N. 
W. 138. 

New York. — Redfern v. Cornell, 
6 App. Div. 436, 39 N. Y. Supp. 656; 
Williams v. Wood, 14 Wend. 127. 

Pennsylvania. — Huber v. Wilson, 
23 Pa. St. 178. 

32. Beach v. Bemis, 107 Mass. 
498; Boddy V. Henry, 113 Iowa 462, 
8s N. W. 771, S3 L. R. A. 769. And 
see Norriss v. Morrill, 40 N. H. 39s V 
Elwell V. Russell, 71 Conn. 462, 43 
Atl. 862. 



33. Georgia. — See Hunt v. Hard- 
wick, 68 Ga. 100. 

Iowa. — Boddy v. Henry, 113 Iowa 
462, 8s N. E. 771, S3 L. R. A. 769. 

Massachusetts. ^ Beach v. Bemis, 
107 Mass. 498; Cole v. Cassidy, 138 
Mass. 437, 52 Am. Rep. 284. And 
see Cooper v. Lovering, 106 Mass. yj. 

Nebraska. — MoOre v. Scott, 47 
Neb. 346, 66 N. W. 441. 

New York. — Oberlander v. Spies, 
45 N. Y. 17s ; Weed v. Case, 55 Barb. 
534. But see Vines v. Chisolm, 15 
N. Y. St. 820, I N. Y. Supp. 102. 

North Carolina. — Hinson v. King, 
51 N. C. 393. 

Vermont. — ^^-Baker v. Sherman, 71 
Vt. 439, 46 Atl. 57. 

Advice of Counsel Where the 

secretary of a corporation is charged 
with fraudulently representing the 
condition of the company in a state- 
ment filed by him as a public record, 
testimony that he was acting under 
the advice of counsel and of the 
auditor of the state is competent. 
Warfield v. Clark, 118 Iowa 69, 91 
N. W. 833. And see Cole v. High, 
173 Pa. St. 590, 34 Atl. 292. 

Same Uepresentations Made to 
Defendant. —^ Where defendant 
(grantor) is charged with falsely and 
fraudulently representing the quality 
and condition of the land to the pur- 
chaser, it is competent for him to 
prove that a former owner of the 
land had described it to him as he 
described it to the plaintiff, the de- 
fendant never having seen the land 
himself. The court said : " It 
would have tended to show that 

Vol. VI 



64 



FRAUD. 



(2.) Circumstantial Proof (A.) In General. — Positive and direct 

proof of knowledge of the falsity of the representations by the per- 
son making them is not required ; such knowledge may be inferred 
from other facts and circumstances that are proved.'* 

(B.) The Representation Itsele. — The form or inherent char- 
acteristics of the representation itself may be such as to constitute, 
per se, strong evidence of the party's knowledge"" or lack of 
knowledge^" of its falsity. 

(C.) Inferred From Position oe Pasty. — (a.) In General. — The fact 
that the person making the false representation had knowledge of 
the falsity thereof may be inferred from proof of circumstances 
showing the position occupied by such person in relation to the sub- 
ject-matter of the representation.^^ 



plaintiff in error did not make the 
statement recklessly and without 
foundation, or that he had fabricated 
the representations. It would have 
tended to show the animus with 
which they were made, and, as fraud 
consists largely of intention, this evi- 
dence was proper, and should have 
been admitted. If Taylor made the 
statements to plaintiff in error, and 
he believed them, and had not been 
informed to the contrary, then it 
would be difficult to see in what man- 
ner he committed a fraud on defend- 
ant in error." Merwin v. Arbuckle, 
8i 111. SOI. 

Where the representations con- 
sisted of statements that flour was 
sound and sweet, when in reality it 
was unsound and sour, it was held 
proper for the defendants to show 
that the flour was received by them 
as part of a large consignment, the 
rest of which was sound, and the 
whole of which, so far as they knew, 
was all alike and kept in the same 
manner until the sale to plaintiff. 
Bowker v. Delong, 141 Mass. 315, 4 
N. E. 834. 

Remoteness. — Where the grantor 
in a sale of real estate is charged with 
having falsely and fraudulently rep- 
resented the condition and quality of 
the land at the time he sold to 
plaintiff, evidence of the representa- 
tions made to such grantor by the 
former owner from whom he pur- 
chased eleven years before may be 
relevant on the question of such 
grantor's honest belief, but, the rep- 
resentations in suit having been made 
as of his personal knowledge, and 
the statements of such former owner 
Vol. VI 



being directed to the condition of the 
land eleven years before, the offered 
evidence was of such little weight 
that its rejection was held not error. 
Drew V. Beall, 62 111. 164. 

Contra — When Rule Not Applica- 
ble This rule does not apply in 

those jurisdictions or in those cases 
where proof of a scienter is unneces- 
sary or immaterial. McCready v. 
Phillips, s6 Neb. 446, 76 N. W. 885 ; 
Mendenhall v. Stewart, 18 Ind. App. 
262, 47 N. E. 943 ; and see cases cited 
in note 25 immediately preceding. 

34. Hick V. Thomas, 90 Cal. 289, 
27 Pac. 208, 376; Hiner v. Richter, 51 
111. 299; Jacobs V. Marks, 83 111. App. 
156; Timmis v. Wade, S Ind. App. 
139. 31 N. E. 827; Baker v. Hallam, 
103 Iowa 43, 72 N. W. 419; Wafer v. 
Harvey Co. Bank, 46 Kan. 597, 26 
Pac. 1032. 

35. The Gate City Land Co. v. 
Heilman, 80 Iowa 477, 45 N. W. 760. 

Thus, if a person (a lawyer espe- 
cially) says that he owns a judgment 
to which he has no title whatever, 
no other proof of his guilty knowl- 
edge need be given. Goring v. 
Fitzgerald, 105 Iowa S07. 75 N. W. 
38s. 

36. Covenants in Deed Where 

the alleged fraud consists in the 
grantor's representing that he owned 
the whole title, when in fact he 
owned only an undivided portion of 
the land," the very fact that he con- 
veyed with full covenants is strong 
evidence that he believed the truth 
of the statement and did not know 
of its falsity." Tone v. Wilson, 8i 
111. 529. 

37. Gordon v. Irvine, 105 Ga. 144, 



FRAUD. 



65 



(b.) Financial Condition. — Thus, a person is ordinarily presumed 
to know the state of his financial condition which he undertakes to 
represent to another.'^ 

(c.) Owner Representing His Property. — It is likewise presumed 
that the owner knows the truth concerning the title^' and the quality 
and condition*" of his property, concerning which he makes state- 
ments. 

(d.) Manager of Corporation. — A person connected with the man- 
agement of a corporation and intimately identified with its interests 
is presumed to be acquainted with its affairs.*^ 

But it has been held that this rule does not apply where the party 



31 S. h. 151 ; Corbett v. Gilbert, 24 
Ga. 454; Van Velsor v. Seeberger, 59 
111. App. 322; Rabinowitz v. Cohen, 
44 N. Y. St. 123, 17 N. Y. Supp. 502. 

Personal Capacity Where one 

falsely represents himself to be an 
experienced well-digger, the presump- 
tion is that he knew the falsity of 
such representation. Davis v. Dris- 
coll, 22 Tex. Civ. App. 14, 54 S. W. 

43- 

Attorney's Knowledge of Client's 
Condition — It is not an irrebutta- 
ble presumption that an attorney 
knows the financial condition of his 
client. Evans v. Mansur, 87 Fed. 
275- 

88. Johnson v. Monell, 2 Keyes 
(N. Y.) 655; Cox Shoe Co. v. 
Adams, 105 Iowa 402, 75 N. W. 316. 
But see Quinebaug Bank v. Brew- 
ster, 30 Conn. 559; see article 
" Insolvency." 

39. Burns v. Dockray, 156 Mass. 
13s, 30 N. E. 551 ; Barns v. Union 
P. R. Co., 54 Fed. 87. 

40. Hoxie v. Home Ins. Co., 32 
Conn. 21, 85 Am. Dec. 240; Catling 
V. Newell, 12 Ind. 118; Velsor v. 
Seeberger, 35 111. App. 598; Simmons 
V. Horton, 51 N. C. 278; Mitchell v. 
Zimmerman, 4 Tex. 75. 

A vendor of a patented machine 
is presumed to have knowledge of 
the truth or falsity of his repres.enta- 
tions as to its manufacture, selling 
qualities and success. Scholfield G. 
& P. Co. V. Scholfield, 71 Conn, i, 
40 Atl. 1046. 

Value. — The owner of a mer- 
chandise store must be presumed to 
have known the value of his interest 
therein, which he is charged with 
falsely representing. Ward v. 
Crutcher, 2 Bush (Ky.) 87. 

5 



" The law presumes that the owner 
knows his property and that he truly 
represents it." Equitable Trust Co. 
V. Milligan, 31 Ind. App. 20, 65 N. 
E. 1044; and see Hanson v. Tomp- 
kins, 2 Wash. 508, 27 Pac. 73. 

41. Connecticut. — Shelton v. 
Healey, 74 Conn. 265, 50 Atl. 742. 

Iowa. — Hubbard v. Weare, 79 
Iowa 678, 44 N. W. 915. 

Kentucky. — Ward v. Trimble, 19 
Ky. L. Rep. 1801, 44 S. W. 450; 
Drake v. Holbrook, 23 Ky. L. Rep. 
1941, 66 S. W. 512. 

Minnesota. — Redding v. Wright, 
49 Minn. 322, 51 N. W. 1056. 

Nebraska. — Gerner v. Mosher, 58 
Neb. 135, 78 N. W. 384, 46 L. R. A. 
244. 

New York. — Gould v. Cayuga 
Co. Nat. Bank, 56 How. Pr. 505; 
Morgan v. Skiddy, 62 N. Y. 319; 
Yates V. Alden, 41 Barb. 172. 

Texas. — Scale v. Baker, 70 Tex. 
283, 7 S. W. 742. 

In Prewett v. Trimble, 92 Ky. 176, 
17 S. W. 3s6, 36 Am. St. Rep. 586, 
in speaking of the knowledge to be 
imputed to the president of a bank, 
as to the status of affairs of the 
bank, which he is alleged to have 
misrepresented, the court says : 
" For leaving out of view the ques- 
tion whether he did in fact know the 
statement was untrue, being in a sit- 
uation to know, and where it was 
his duty to know, he, in contempla- 
tion of law, did know it, and conse- 
quently such statement is to be held 
fraudulent." 

Contra. — It was held in Warfield 
V. Clark, 118 Iowa 69, 91 N. W. 833, 
that an instruction informing the 
jury that the secretary of a corpora- 
tion was charged with knowledge of 
fol. VI 



66 



FRAUD. 



making the representation is merely a director, and the action con- 
cerns him only as such.*^ 

(3.) Admissibility. — (A.) In General. — It may be laid down as a 
general rule that, for the purpose of proving that the person making 
the false representations knew them to be false, any evidence, direct 
or circumstantial, which tends to prove such knowledge or to place 
such person in a position from which such knowledge may reasona- 
bly and naturally be inferred is competent.*^ The scienter may be 
shown by eviHence of the party's admissions of facts contradictory to 
the statements relied upon, in his conversation with other persons,*'' 
or by evidence tending to show that other persons had previously 
informed him of facts inconsistent with the truth of those represen- 
tations.*^ 

(B.) Similar Representations to Others. — Evidence to show that 
the party charged with the fraud had previously made similar rep- 



the true condition of the company at 
the date he made and filed a public 
statement thereof, and that if the 
statement did not correctly report 
such condition it was untrue and 
false, "and so known to be by the 
defendant," was erroneous. This 
point was decided on the strict rule 
in Iowa, that in order to establish le- 
gal fraud, an active, conscious and 
intentional misrepresentation must be 
shown. And see Hubbard v. Weare, 
79 Iowa 678, 44 N. W. 915, and 
Boddy V. Henry, 113 Iowa 462, 85 
N. W. 771, S3 L. R. A. 769. 

42. Wakeman v. Dalley, 51 N. Y. 
27; and see Arthur v. Griswold, ss 
N. Y. 400; Reeve v. Dennett, 145 
Mass. 23, II N. E. 938. 

Burden of Proof The rule pre- 
suming knowledge of corporate af- 
fairs in the president or managing 
agent does not apply where the per- 
son is merely a director, and the ac- 
tion concerns him only as such. 
Held, therefore, in Ward v. Trim- 
ble, 19 Ky. L. Rep. 1801, 44 S. W. 
450, that where the representations 
complained of were made to the 
agent of plaintiff, who was a director 
and attorney of the corporation, the 
presumption that he knew the truth 
of the matters misrepresented and, 
therefore, could not have relied 
thereon, does not apply. But where 
the facts in addition show that the 
signature 'of such agent as a direc- 
tor was signed to the published 
statement concerning the affairs of 
the corporation, this raises a rebutta- 

Vol. VI 



ble presumption that he knew 
whether the same was true or false. 
And in this case the burden is upon 
him or his principal to show that he 
did not know that such statement 
was in fact untrue. 

43. For cases illustrating this 
rule, see the following: Shelton v. 
Healy, 74 Conn. 265, 50 Atl. 742; Sal- 
mon V. Richardson, 30 Conn. 360, 79 
Am. Dec. 255 ; Walker v. Thompson, 
61 Me. 347; Quimi v. Pinson, 25 N. 
C. 47, and see ante " Relevancy." 

The state of defendant's bank ac- 
count, and his mode of overdrawing 
a week or more before the purchase, 
is competent to show that he must 
have been aware of his financial con- 
dition at the time of the purchase. 
Haskins v. Warren, 115 Mass. 514. 

In order to show knowledge of 
defendant that his representation to 
the effect that one S. was in July 
solvent and able to pay his debts 
was false, a mortgage given by S. to 
the_ defendant in the previous March, 
which was undischarged at the trial 
and was held by defendant at the 
time of the representation, is compe- 
tent and admissible. Safford v. 
Grout, 120 Mass. 20. 

44. Parrish v. Thurston, 87 Ind. 
437; Cope V. Arberry, 2 J. J. Marsh. 
(Ky.) 296; Endsley v. Johns, 120 111. 
469, 12 N. E. 247, 60 Am. Rep. 572; 
Redding v. Godwin, 44 Minn. 355, 46 
N. W. 563. 

45. Safford v. Grout, 120 Mass. 
20; Allin V. MilHson, 72 111. 201; 
Walker v. Thompson, 61 Me. 347. 



FRAUD. 



67 



resentations to another is not competent to prove that he knew the 
representations in suit to have been false when made,*' although 
some of the courts, in particular cases, have held such evidence 
competent for such purpose.*'' 

2. Falsity of Eepresentation. — A. Burden ol' ProoI'. — It is 
incumbent upon the party charging the fraud to prove that the rep- 
resentations alleged to have been fraudulent and deceitful were, in 
fact, false." 

B. Substance and Mode of PROor'. — a. In General. — The 
liberal rule of admissibility applicable to the proof of fraud in gen- 
eral*^ applies with equal force to the proof of the truth or falsity of 
the representation. =" But such truth or falsity must follow as a 
reasonable inference from the offered evidence, and must not be too 
remote; otherwise, such evidence is inadmissible.^^ 

b. Evidence Based on Experiment. — The falsity of the represen- 



46. Johnston v. Beeney, S 111. 
App. 6oi. 

47. Edwards v. Owen, IS Ohio 
500. And see ante " Other Fraudu- 
lent Acts," and especially cases cited 
thereunder. 

In Insurance Co. v. Wright, 33 
Ohio St. 533, it is held that evi- 
dence of similar representations made 
to others is admissible " for no 
other purpose than to show that the 
representations made to the plaintiflf 
were known by the agent [person 
making them] to be false," and in 
the absence of proof showing that 
such other statements were false or 
known to be false, they were irrele- 
vant upon the point on which alone 
they were admissible. And see ante 
" Other Fraudulent Acts," and es- 
pecially cases cited in note 73. 

48. California. — Belden v. Hen- 
riques, 8 Cal. 88. 

Illinois. — Case v. Ayers, 65 III. 
142; Mitchell V. Deeds, 49 111. 416, 
9S Am. Dec. 621. 

Indiana. — Gregory v. Schoenell, 
55 Ind. loi. 

Iowa. — Allison v. Jack, 76 Iowa 
205, 40 N. W. 811. 

Michigan. — Hoeft v. Kock, 119 
Mich. 4S8, 78 N. W. 556. 

New York. — Sherling v. Boll, 10 
App. Diy. 290, 41 N. Y. Supp. 889. 

North Carolina. — Cobb v. Fogal- 
man, 23 N. C. 440. 

Pennsylvania. — Cox v. Highley, 
100 Pa. St. 249. 

Texas. — Dwyer v. Bassett, I Tex. 
Civ. App. 513, 21 S. W. 621. 



Wisconsin. — Mosher v. Post, 89 
Wis. 602, 62 N. W. 516. 

Poreigu laws as Part of Fraud. 
In Willoughby v. Fredonia Nat. 
Bank, 52 N. Y. St. 387, 23 N. Y. 
Supp. 46, it was said : " It was the 
plaintiffs who alleged that the de- 
fendant's representation that it had 
a lien for the amount of the three 
notes was false. The burden was 
upon them to prove it so, and, if its 
truth or falsity depended upon the 
laws of Pennsylvania, it was incum- 
bent upon them to make proof of 
those laws." 

49. See ante I. 3, "Relevancy," 
A. "Liberal Rule of . Admissibility." 

50. For cases illustrating this 
principle, see : Townsend v. Felt- 
housen, 156 N. Y. 618, 51 N. E. 279; 
Stubly V. Beachboard, 68 Mich. 401, 
2(> N. W. 192; Daniels v. Fowler, 123 
N. C. 35, 31 S. E. 598; Whitney 
Wagon Works v. Moore, 61 Vt. 230, 
17 Atl. 1007; Bradbury v. Bardin, 35 
Conn. 577; Louisville Ins. Co. v. 
Monarch, 18 Ky. L. Rep. 444, 36 S. 
W. 563. 

51. For cases in which the offered 
evidence, although having a possible 
bearing, was held too remote, see: 
Harmon v. Harmon, 61 Me. 222; 
Taylor v. Saurman, no Pa. St. 3, i 
Atl. 40 ; Bradbury v. Bardin, 34 Conn. 
4S2. 

The falsity of a representation that 
a man owned considerable land and 
was a man of means cannot be in- 
ferred from proof merely that shortly 
after the representation he was often 
borrowing money. Blackman v. 

Vol. VI 



68 



FRAUD. 



tation may be shown by the testimony of persons who, from experi- 
ment, have ascertained its falsity.^^ 

c. Expert Evidence. — Expert evidence is sometimes competent 
to prove the falsity^^ or to establish the truth^* of the representation. 

d. Comparison. — Where the representation relates to a state of 
facts not certain and definite, but changeable in their nature, such 
as the condition or profits of a business, evidence of a comparison 
between the subject-matter as it actually existed before or after the 
time to which the representation relates, and as it was represented, 
is competent on the question of the falsity of such representation.^' 
But the circumstances between which the comparison is drawn must 
be similar in all respects ; otherwise the evidence is inadmissible.'* 

e. Judgment Record in Another Action. — The judgment record 
of an action in which the maker of the representation was a party 
or participant, and in which the falsity of such representation was 
determined, is competent evidence of such falsity," and some decis- 



Wright, 96 Iowa S41, 6s N. W. 843. 

52. Nelson v. Wood, 62 Ala. 175, 
and see Merrillat v. Plummer, iii 
Iowa 643, 82 N. W. 1020. 

53. See Kelley v. Owens (Cal.), 
30 Pac. 596. 

In an action counting on defend- 
ant's fraudulent representations as 
to the soundness of a horse, the tes- 
timony of a veterinary surgeon as to 
the nature and character of the dis- 
ease which the horse had before and 
at the time of the trade is competent 
to establish the falsity. Bennett v. 
Gibbons, SS Conn. 450. 

54. In an action where the owners 
of a boat, lost by the perils of navi- 
gation, are charged by the insurance 
company with falsely representing its 
seaworthiness, testimony of an ex- 
pert that the boat was properly han- 
dled is admissible in answer to the 
charge that it was sunk because of 
the willful, fraudulent misconduct of 
its owners and crew. Louisville Ins. 
Co. V. Monarch, 18 Ky. L. Rep. 444, 
36 S. W. 563. 

65. Markel v. Moudy, 13 Neb. 
322, 14 N. W. 409; Markel v. 
Moudy, II Neb. 213, 7 N. W. 853. 

Profits of Business. — Where a 
business is purchased by plaintiff on 
the representation that it was large 
and remunerative and had a large 
custom, " if plaintiff in this case con- 
tinued the business under substan- 
tially the same conditions, and there 
was found to be a marked discrep- 
ancy between the amount and value 
thereof and the state of the case as 
Vol. VI 



represented by the defendants, it is a 
circumstance proper to be considered 
upon the question of the truth of 
their alleged representations." Potter 
ZK Mellen, 41 Minn. 487, 43 N. W. 

37S- 

56. Gathng v. Newell, 12 Ind. 118; 
Mosher v. Post, 89 Wis. 602, 62 N. 
W. 516; Linn V. Oilman, 46 Mich. 
628, 10 N. W. 46. 

Profits of Business. — In deceit to 
recover for defendant's false repre- 
sentations as to the income and 
profits of a business sold to plaintiff, 
the fact that the business had fallen 
off in the hands of the purchaser is 
no evidence that it was not as valua- 
ble as the defendant represented it to 
be, especially where such business 
was of a kind in which skill, judg- 
ment and tact are essential to suc- 
cess. Taylor v. Saurman, no Pa. 
St. 3, I Atl. 40. 

57. Burns v. Dockray, 156 Mass. 
13s, 30 N. E. 5Si; Bank of North 
America v. Crandall, 87 Mo. 208. 
Compare Hexter v. Bast, 125 Pa. St. 
52, 17 Atl. 252, ir Am. St. Rep. 874. 

Where the false representation of 
the defendant consisted of a state- 
ment that the property sold to the 
plaintiff was free and clear of incum- 
brances, and that the statement 
of D., made in the pres- 
ence of the parties at the 
time of the sale, that he held a 
mortgage on such property was 
false, a judgment subsequently ob- 
tained by D., foreclosing said mort- 
gage in an action in which the de- 



FRAUD. 



69 



ions have held such evidence competent, although the maker of the 
representation was not a party to nor at all represented in such 
other action.^* 

Legal Decision. — But, " a legal decision, adverse to an opinion 
expressed, cannot establish fraud for which a party can be held 
liable in an action."^' 

f . Time to Which Evidence Directed. — The evidence offered to 
prove the falsity*" or to establish the truth" of the representation 
should be directed to the time when the representation was made or 
to which it relates, but when the evidence shows such a condition of 
facts to have existed at some other time as to render it incredible 
with the facts as represented, it is competent and admissible."" 

3. Inducement and Reliance. — A. Presumptions and Burden 
OF PROOf. — a. In General. — In an action based on an alleged 
fraud, the plaintiff must show that the fraud was the immediate and 
proximate cause of the damage, and hence, proof that the plaintiff 



fendant was a party, is competent. 
Haight V. Hayt, 19 N. Y. 464. 

Former Judgment Conclusive. 
For a case in which such former 
judgment was held conclusive and 
the testimony of the party to the con- 
trary inadmissible, see Carvill v. 
Jack, 43 Ark. 439. 

58. Hersey v. Benedict, 15 Hun 
(N. Y.) 282; Hadcock v. Osmer, 
4 App. Div. 43S, 38 N. Y. Supp. 618; 
Cope V. Arberry, 2 J. J. Marsh. 
(Ky.) 296; but see Baldwin v. Threl- 
keld, 8 Ind. App. 312, 34 N. E. 851. 

Record Proof Not Essential. 
Where a suit is brought by the as- 
signee of a note for the fraud of the 
assignor in representing the maker 
to be solvent, the falsity of such 
representation may be shown by pa- 
rol, and evidence of a judgment ob- 
tained by the assignee against the 
maker is not essential. Cope v. Ar- 
berry, 2 J. J. Marsh (Ky.) 296. This 
rule applies to representations relat- 
ing to the title to real property. Cul- 
ver V. Avery, 7 Wend. (N. Y.) 380. 

59. Duffany v. Ferguson, 66 N. Y. 
482. 

60. Redding v. Wright, 49 Minn. 
322, SI N. W. 1056; Morris v. Peo- 
ple, 4 Colo. App. 136, 35 Pac. 188; 
Hemenway v. Keeler, ^ N. Y. St. 
819, 34 N. Y. Supp. 808. 

Proof that a horse had been dis- 
eased when a colt raises but a slight 
presumption of the falsity of a rep- 
resentation that such horse was sound 
when fully grown. Staines v. Shore, 
i6 Pa. St. 200. 



Evidence of the condition of prop- 
erty, at a time subsequent to the 
making of a false representation as 
to such condition, in order to be ad- 
missible, must be such as to render 
it incredible that the facts as alleged 
by the representation could have been 
true at the time to which the repre- 
sentation refers. The question then 
is one for the jury. Mason v. Rap- 
lee, 66 Barb. (N. Y.) 180. 

61. Catling v. Newell, 12 Ind. 118; 
Bradley v. Carter, 37 N. Y. St. 416, 
13 N. Y. Supp. 945. 

Financial Condition Before and 
After. — The fact that defendant had 
abundant means shortly before and 
shortly after the time when he ob- 
tained plaintiff's signature to the 
note, by false representation, is im- 
material, and in order to prove that 
plaintiff relied on . defendant's own 
responsibility, and not upon the par- 
ticular misrepresentation alleged, the 
evidence as to defendant's solvency 
should be directed alone to the time 
when he obtained the note. People 
V. Herrick, 13 Wend. (N. Y.) 87. 

62. Sledge v. Scott, 56 Ala. 202; 
Mason v. Raplee, 66 Barb. (N. Y.) 
180. 

The written statement of the cor- 
poration's condition upon April 1st, 
made by defendant as president and 
manager thereof, and duly filed July 
2nd, is competent to show the falsity 
of his alleged fraudulent representa- 
tion as to its condition on May 20th 
of the same year. Shelton v. Healy, 
74 Conn. 265, 50 Atl. 742. 

Vol. VI 



70 



FRAUD 



knew of the representations and relied upon them, and that they 
were the inducement which caused him to act, is essential.'^ No 
presumption that the representations were relied upon by the party 
complaining arises from proof merely that they were made to him 
immediately before he acted."* 

Standing and Reputation of Corporation. — A person dealing with a 
corporation is presumed to do so in reliance upon its financial stand- 
ing and reputation in the community.'^ 

b. When Burden on Wrongdoer. — It is held in some decisions 
that when representation is shown to have been material and false, 
and made under circumstances calculated to induce a reasonable 
person to act thereon, the burden is upon the party charged to show 
that such representation was not relied upon."" 



63. United States. — McHlost v. 
Earnshaw, SS Fed. 584. 

Alabama. — Robinson v. Levi, 81 
Ala. 134, I So. SS4; Darby v. Kroell, 
92 Ala. 607, 8 So. 384; Moses v. 
Katzenberger, 84 Ala. 95, 4 So. 237. 

Colorado. — Morris v. People, 4 
Colo. App. 136, 35 Pac. 188. 

Delaware. — Grier v. Dehan, 5 
Houst. 401 ; Mears v. Waples, 3 
Houst. ';8i. 

Illinois. — White v. Watkins, 23 
111. 426. 

Indiana. — Gregory v. Schonell, 55 
Ind. loi. 

Iowa. — Jandt v. Potthast, 102 
Iowa 223, 71 N. W. 216. 

Kansas. — White v. Smith, 39 Kan. 
752, 18 Pac. 931. 

Maryland. — Ranstead v. Allen, 85 
Md. 482, Z7 Atl. 15. 

Minnesota. — Humphrey v. Mer- 
riam, 32 Minn. 197, 20 N. W. 138. 

Mississippi. — Selma M. & M. R. 
Co. V. Anders'on, 51 Miss. 829. 

Missouri. — See Parker v. Marquis, 
64 Mo. 38. 

Nebraska. — Campbell v. Holland, 
22 Neb. 587, 35 N. W. 871; Upton 
V. Levy, 39 Neb. 331, 58 N. W. 95; 
State Ins. Co. v. New Hampshire T. 
Co., 47 Neb. 62, 66 N. W. 9, 1106; 
Stetson V. Riggs, 37 Neb. 797, 56 N. 
W. 628; Runge v. Brown, 23 Neb. 
817, 37 N. W. 660. 

Neiu York. — Brackett v. Griswold, 
112 N. Y. 454, 20 N. E. 376; Taylor 
V. Guest, 58 N. Y. 262; Newell v. 
Chapman, 56 N. Y. St. 380, 26 N. Y. 
Supp. 361. 

Pennsylvania. — Swazey v. Herr, 
II Pa. St. 278. 

Tennessee. — Continental Nat, 

Vol, VI 



Bank v. First Nat. Bank, 68 S. W. 
497. 

Insufficient Offer of Ptoof. 

An offer to prove that the represen- 
tations were false and that the offerer 
believed them to be true, was held 
insufficient because the party did not 
further propose to show that he re- 
lied on such representations. Ack- 
man v. Jaster, 179 Pa. St. 463, 36 
Atl. 324. 

Trandtaent Intent Alone Insuffi- 
cient. — It must be shown, not only 
that the representations were fraudu- 
lent and intended to deceive, but that 
they were successful in deceiving. 
Bennett v. Gibbons, 55 Conn. 450. 

64. Railway Co. v. Goodholm, 
61 Kan. 758, 60 Pac. 1066. 

Proof of Right ^to Rely, Insuffi- 
cient. — Plaintiff has the burden of 
showing not only that he had a right 
to rely, but that he did, in fact, rely 
upon the representations in question. 
Curtis V. Hoxie, 88 Wis. 41, 59 N. 
W. 581. 

65. A person .dealing with a cor- 
poration is presumed to rely upon 
the fact that its financial standing 
and reputation in the community are 
founded upon the amount of its pro- 
fessed and supposed capital, and does 
w on the faith of that standing and 
reputation, although, as a matter of 
fact, he may have no personal knowl- 
edge of the amount of its professed 
capital. Hospes v. Northwestern 
Mfg. & Car Co., 48 Minn. 174, 50 N 
W. 1 1 17, 31 Am. St. Rep. 637, 15 L. 
R. A. 470. But see Brackett v. 
Griswold, 112 N. Y. 454, 20 N E 
376. 

66. Fishback v. Miller, 15 Nev, 



FRAUD. 



71 



c. Representations Partly in Writing. — Although some of the 
representations were reduced to writing, there is no presumption 
that only those reduced to writing were relied upon.^' 

d. Knowledge of Contents of Writing. — It is presumed that a 
person who has signed a written instrument knows the contents 
thereof and understands its true legal import,"* but this presumption 
is not conclusive when it is claimed that such instrument by reason of 
fraud does not embrace the contract as actually made.°° 

e. Knowledge of the Law. — Where the representation affirms 
something not allowed by or contrary to the law, the presumption 
is conclusive that the party knows the law and consequently does 
not rely upon the false representation,'"' but there are decisions to 
the contrary.'"- 

f. Investigation of Subject-matter. — Likewise, proof that the 
complaining party investigated and examined the subject-matter of 
the representations or made inquiries of others from whom he 
obtained information concerning the same raises the presumption 
that he relied thereon and not upon the representation/^ 

g. Where Means of Knowledge Are Available. — It has been held 
that where the subject-matter of the representation is patent and 
open to investigation, and the means of acquiring knowledge thereof 
are easily available to the party complaining, he is presumed to have 
knowledge thereof ;'' but if such means are not easily available,'* or 



428; Hicks V. Stevens, 121 III. 186, 
II N. E. 241; Hiner v. Richter, 51 
111. 299; Holbrook v. Burt, 22 Pick. 
(Mass.) 546; Linhart v. Foreman, yy 
Va. 540; Grosh v. Ivanhoe Land & 
Imp. Co., 95 Va. 161, 27 S. E. 841. 
See also: Fargo Gas & C. Co. v. 
Fargo Gas & E. Co., 4 N. D. 219, 59 
N. W. 1066; Cabot V. Christie, 42 
Vt. 121; Neff V. Landis, no Pa. St. 
204, I Atl. 177; Triplett v. Rugby 
Distilling Co., 68 Ark. 219, 49 S. W. 
975- 

67. Jandt v. Potthast, 102 Iowa 
223, 71 N. W. 216. See also Cum- 
mings V. Cass, 52 N. J. L. 47, 18 Atl. 
972. 

68. Kingman v. Shawley, 61 Mo. 
App. 54 ; Beck v. O'Bert, 54 Mo. App. 
240.; 'Wood V. Massachusetts Mut. 
Ace. Ass'n, 174 Mass. 217, 54 N. E. 
541; Freyer v. McCord, 165 Pa. St. 
539, 30 Atl. 1024. 

69. Kingman v. Reinemer, 166 111. 
208, 46 N. E. 786; 'Ward v. Spelts, 39 
Neb. 809, s8 N. W. 426; Woodbridge 
V. DeWitt, 51 Neb. 98, 70 N. W. 506. 

70. Insurance Co. v. Reed, 33 
Ohio St. 283 ; Fish V. Cleland, 33 HI. 
237; 'Wight V. Shelby R. Co., 16 
B. Mon. (Ky.) 6, 63 Am, Dec. 522; 



Selma M, & M. R. Co. v. Anderson, 
51 Miss. 829; Beall v. McGehee, 57 
Ala. 438; TJpton v. Tribilcock, 91 \J. 
S. 45- , „ 

71. Hess V. Culver, 77 Mich. 598, 
43 N. W. 994, 18 Am. St. Rep. 421, 
6 L. R. A. .498; Motherway v. 'Wall, 
168 Mass. 333, 47 N. E. I3S- 

A person is not debarred from re- 
lying on false representations "be- 
cause he is presumed to know the 
law." Averill v. Wood, 78 Mich. 
342, 44 N. 'W. 381. 

72. Wakeman v. Dalley, 51 N. Y. 
27; Farrar v. Churchill, 135 U. S. 
609; Anderson v. McPike, 86 Mo. 
293; Fauntleroy v. 'Wilcox, 80 111. 
477- 

73. Van Velsor v. Seeberger, 35 
111. App. 598; Martin v. Harwell, 115 
Ga. 156, 41 S. E. 686; Castenholz v. 
Heller, 82 Wis. 30, 51 N. W. 432. 

74. In Fargo Gas & C. Co. :;. 
Fargo Gas & E. Co., 4 N. D. 219, 59 
N. 'W. 1066, it is held, citing Mead 
V. Bunn, 32 N. Y. 280, that every 
contradicting party has an absolute 
right to rely on the express state- 
ments of an existing' fact, the truth 
of which is known to the opposite 
party and is unknown to him, as a 

Vol. VI 



72 



FRAUD. 



if, for any reason, the complaining party has an absolute right to rely 
on the representation,''^ or if the party charged with fraud uses arti- 
fice to prevent such investigation, the presumption cannot be 
invoked.'" And, in any event, such presumption extends only to 
knowledge of facts which such an investigation would disclose/'' 

h. When Burden Shifted. — It has been held that when the party 
charging the fraud testifies directly that he relied upon the repre- 
sentation, the burden is shifted to his adversary to prove the con- 
trary.''* , 

B. Substance; and Mode of Proof. — a. Direct Evidence. 
Testimony of Party. — The fact that the representations complained 
of were the inducement which caused the party to act may be proved 
by his own testimony. He may testify directly that he believed the 
representations to be true, and in reliance upon them changed his 
position,^' or he may be asked by his adversary whether he would 



basis of mutual engagement, and he 
is under no obligation to investigate 
and verify the statements to the 
truth 'of which the other party has 
deliberately pledged his fate. Held, 
therefore, that an instruction inform- 
ing the jury that if the means were 
at defendant's hands to discover the 
truth or untruth of the plaintiff's 
statements, defendant must be pre- 
sumed to have had knowledge of the 
actual facts, was erroneous, the only 
means being an investigation requir- 
ing a great amount of time and 
trouble. The authorities are thor- 
oughly reviewed in this case. 

75. If from the character, situa- 
tion or surrounding of the thing 
traded for one party is compelled' to 
trust the representations of the other, 
and, reposing special confidence in 
him for that purpose, relies on such 
representations, the law will protect 
him in such trust, although it may 
have been possible for him to have 
ascertained for himself all that it 
was important for him to know. 
Chase V. Rusk, go Mo. App. 25, and 
Cahn V. Reid, 18 Mo. App. 115. 

76. Castenholz v. Heller, 82 Wis. 
30, SI N. W. 432. 

77. Risch V. Lillienthal, 34 Wis. 
250; Jackson v. Armstrong, 50 Mich. 
6s, 14 N. W. 702. And see Rhoda v. 
Annis, 75 Me. 17, 46 Am. Rep. 354. 

78. Sprague v. Taylor, 58 Conn. 
542, 20 Atl. 612. 

79. ///i;jou. — Miner v. Phillips, 
42 111. 123. 

Indiana. — Parrish v. Thurston, 87 
Vol. VI 



Ind. 437; Shockey ik Mills, 71 Ind. 
288. 

Iowa. — Boddy v. Henry, 113 Iowa 
462, 8s N. W. 771, S3 L. R. A. 769; 
Bartlett v. Falk, no Iowa 346, 81 
N. W. 602. 

Massachusetts. — Pedrick v. Por- 
ter, s Allen 324; Safford v. Grant, 
120 Mass. 20; Kline v. Baker, 106 
Mass. 61. 

Michigan. — Averill v. Wood, 78 
Mich. 342, 44 N. W. 381; Stubly v. 
Beachboard, 68 Mich. 401 ; 36 N. W. 
192; Berkey v. Judd, 22 Minn. 287. 

Nebraska. — Bennett v. Apsley 
Rubber Co., 54 Neb. 553, 74 N. W. 
821. 

New York. — Thorn v. Helmer, 2 
Keyes 27; Gould v. Cayuga Co. 
Nat. Bank, 56 How. Pr. SOS; Hardt 
V. Schulting, 13 Hun S37; Vines v. 
Chisholm, 15 N. Y. St. 820, i N. Y. 
Supp. 102. 

Pennsylvania. — Weaver v. Cone, 
174 Pa. St. 104, 34 Atl. SSI- 

Rhode Island. — Charbonnel v. 
Seabury, 23 R. I. S43, Si Atl. 208. 

Vermont. — Whitney Wagon Wks. 
V. Moore, 61 Vt. 230, 17 Atl. 1007. 

Wisconsin. — Castenholz v. Heller, 
82^ Wis. 30, SI N. W. 432. 

"There is no reason why a person 
claiming to be defrauded cannot tell 
how it was done and what he relied 
upon." Parker v. Armstrong, qs 
Mich. 176, 20 N. W. 892. 

Porm of ftuestion. _ The party 
complaining may be asked, "What 
mduced you to sign the papers and 
complete the trade?" Knight v. 
Peacock, 116 Mass. 362. 



FRAUD. 



73 



not have acted independent of the representations.'" 

Alabama Rule. — As in the case of proof of intent,*^ the courts of 
Alabama hold this character of evidence incompetent to prove reli- 
ance.*^ 

b. Circumstantial Proof. — (i.) in General. — It is not essential 
that the party complaining of the fraud produce direct evidence that 
he relied upon the representations. Such fact may be inferred from 
the nature of the transaction, the relation of the parties, and the 
circumstances surrounding the entire transaction,*^ in the absence 



"This is one of the facts which is 
always a part of the res gestae, and 
which it is always competent for the 
party to prove. And, now that the 
party is a witness, there is no sound 
reason why he should not prove it by 
his own testimony, so long as he is 
confined to the facts, and does not 
undertake to contradict his words or 
acts by an undisclosed motive or in- 
tent." Com. V. Julius, 173 Pa. St. 
322, 34 Atl. 21, distinguishing Spen- 
cer V. Colt, 89 Pa. St. 314, and other 
cases. 

Reasons for Reliance Where 

the plaintiff has testified that he was 
fraudulently induced to sign a note 
in favor of defendant, upon defend- 
ant's representation as to a certain 
specified fact, and that he did not 
rely upon the personal responsibility 
of the defendant, it is competent for 
him (plaintiff) to give the reason 
why he did not so rely upon defend- 
ant's responsibility, although this 
testimony is unnecessary. People v. 
Herrick, 13 Wend. (N. Y.) 87. 

Agent. — Where the transaction 
was had with the agent of the party 
defrauded, such agent may testify 
that he relied upon the representa- 
tions and that they induced the trans- 
action. Kline V. Baker, 106 Mass. 
61, s. c. on former appeal, 99 Mass. 
2S3 ; Jandt v. Potthast, 102 Iowa 223, 
71 N. W. 216. 

Contra. — Conclusion Incompetent. 
In Hoyle v. Southern Saw Wks., 105 
Ga. 123, 31 S. E. 137, the testimony of 
the party complaining of the fraud, 
that the purchase was made under a 
misunderstanding of the value of the 
goods, caused by misrepresentations 
of the defendant, was held properly 
excluded, as a conclusion of the wit- 
ness, it not appearing what the mis- 
representations were, or how they in- 
duced the purchase. 



One Cannot Speak for Several. 
One of several defrauded parties can- 
not be asked what effect the represen- 
tations had upon the minds of all 
of them; his testimony must be 
confined to himself. Fairbault v. 
Sater, 13 Minn. 210. 

80. Carson v. Houssels (Tex. Civ. 
App.), SI S. W. 290. 

But see Cabot v. Christie, 42 Vt. 
121, in which it is said, in speaking of 
an instruction that the jury must find 
that plaintiff would not have acted 
but for the representation : " What 
the plaintiff would have done but for 
the false representation is often a 
mere speculative inquiry, and is not 
the test of the plaintiff's right. Tf 
the false representation is often a 
terial and relied upon, and were in- 
tended to operate and did operate as 
one of the inducements to the trade, 
it is not necessary to inquire whether 
the plaintiff would or would not have 
made the purchase without this in- 
ducement." 

81. See ante, cases cited in note 
22 immediately preceding. 

82. Ball V. Farley, 81 Ala. 288, i 
So. 2S3 ; Sledge v. Scott, 56 Ala. 202. 

In McCormick v. Joseph, 77 Ala. 
236, it was held error to allow the 
vendor, seeking to avoid the sale on 
the grounds of fraud of the vendee 
therein, to state that he believed the 
vendee to be insolvent and that "he 
would not have sold had he known 
of such insolvency." 

83. Allin V. Millison, 72 111. 201 ; 
Nolte V. Reichelm, 96 111. 425; Tay- 
lor V. Guest, 58 N. Y. 262; Baker v. 
Hallam, 123 Iowa 43, 72 N. W. 419. 

Presumption. — The relation ex- 
isting between the parties and the 
circumstances surrounding the trans- 
action may be such as to raise the 
presumption that the party alleging 
fraud relied upon the representations 

Vol. VI 



/4 



FRAUD. 



of any direct evidence,^* and it has been held that such circum- 
stances afford much stronger and more satisfactory evidence of the 
inducement which moved the party than his direct testimony to 
the same effect.'^ 

(2.) Common Knowledge. — The fact that the truth of the matters 
misrepresented was generally known in the community may be con- 
sidered in determining whether the complainant had a right to rely 
on the representation.*" 

(3.) Position of Party. — Any evidence tending to show that the 
person charging the fraud occupied a position from which it may be 
inferred that he possessed knowledge or the means of knowledge 
of the subject-matter, is releyant to prove that he did not rely on the 
representation,*^ but is not conclusive thereof.** 

(4.) Information from Other Sources. — The party charged may show 
that the complainant had acquired knowledge concerning the sub- 
ject-matter from other sources than the representation.** 

c. To Whom Representation Made. — (1.) In General. — While 
some connection, direct or indirect, between the person making the 
representation and the person relying thereon must be shown,'" it is 
not essential that the representation be shown to have been made 
directly to the party claiming to have relied thereon in order to enti- 
tle him to prove that he had a right to and did rely thereon."^ 



where such reliance is material. 
Hicks V. Stevens, I2i III. i86, ll N. 
E. 241. 

84. Direct Testimony Not Essen- 
tial. — If from the nature of the 
transaction, the relation of the par- 
ties, or the surrounding circum- 
stances, it may fairly be presumed 
that the plaintiff relied upon the rep- 
resentations, and that they were 
the inducing cause, the mere 
fact that he has or has not 
sworn to the conclusion that he re- 
lied upon them is immaterial. 
Hatch V. Spooner, 57 N. Y. St. 151, 
13 N. Y. Supp. 642. 

85. Lucas V. Crippen, 76 Iowa 507, 
41 N. W. 205. 

86. Perkin v. Embry, 24 Ky. L. 
Rep. igpo, 72 S. W. 788. 

87. Gustafson v. Rustemeyer, 70 
Conn. 125, 39 Atl. 104, 66 Am. St. 
Rep. 92, 39 L. R. A. 644; Mires v. 
Summerville, 85 Mo. App. 183 ; Cahn 
V. Reid, 18 Mo. App. 115; Ranstead 
V. Allen, 8s Md. 482, 37 Atl. 15; 
M^eaver v. Shriver, 79 Md. S30. 3° 
Atl. 189; Allen v. Gibson, 53 Ga. 
600; Goring v. Fitzgerald, 105 Iowa 
507, 75 N. W. 385. 

88. Goring v. Fitzgerald, 105 Iowa 
507, 75 N. W. 385. And see Swin- 

Vol. VI 



ney v. Patterson, 25 Nev. 411, 62 
Pac. I. 

89. Mather v. Robinson, 47 Iowa 
403 ; High V. Kistner, 44 Iowa 79 ; 
Bowker v. Belong, 141 Mass. 315, 
4 N. E. 834; Cameron v. Paul, 11 
Pa. St. 277; Bennett v. Gibbons, SS 
Conn. 450, 12 Atl. 99; Byrd v. Tur- 
pin, 62 Ga. 591. 

90. Hindman v. First Nat. Bank, 
112 Fed. 931; Smither v. Calvert, 44 
Ind. 242; Phelps v. George's Creek 

& C. R. Co., 60 Md. 536. 

91. Carville v. Jack's Adm'r, 43 
Ark. 454; Brown v. Brown, 62 Kan. 
666, 64 Pac. 599 ; Alexander v. Beres- 
ford, 27 Miss. 747; Scholfield G. & 
P. Co. V. Scholfield, 71 Conn. i. 40 
Atl. 1046. And see Morse v. Swifts, 
19 How. Pr. (N. Y.) 275. 

Where a grantor in a deed, in 
which the name of the grantee is left 
blank, delivers such deed to another 
person, he is presumed to have known 
that he might thereby become the 
grantor of a person with whom he 
had no personal dealings, and by ac- 
companying the deed with an ab- 
stract, he is presumed to have in- 
tended to thereby represent to any 
person taking the title under hini 
that he believed the abstract to be 



FRAUD. 



75 



(2.) Representations to Agent. — The party complaining may show 
that the representations were made to his agent and were by such 
agent communicated to him, and that he relied thereon-'^ 

d. Time of Representation. — The false representation and the 
reliance thereon need not concur in point of time,'^ but the repre- 
sentation must have been the inducement which caused the party 
to act, and therefore evidence of a false representation made after 
the party had changed his position is incompetent on the question of 
reliance.®* 

C. Sufficiency oif Evidence. — It has been held that " it does 
not require very strong proof to establish " the fact of reliance,"^ and 
the question is ordinarily one for the jury.'* 

4. Injury and Damages. — A. In General. — Essential Proof. 
" In the absence of averment and proof to that effect, fraud cannot 
be presumed to have been injurious."" 

B. Burden of Proof. — It is incumbent upon the party charging 



correct, and such person is justified 
in relying thereon. Baker v. Hallam, 
123 Iowa 43, 72 N. W. 419. 

Public Record of Corporate Condi- 
tion — The reports and statements 
required by law to be filed by certain 
corporations with the state records 
are presumed to be filed for the pro- 
tection and perusal of the public, and 
a person may rely upon such reports 
as fully as he would were they per- 
sonal communications to him, and 
may treat them as frauds if he is de- 
ceived thereby. Warfield v. Clark, 
118 Iowa 69, 91 N. W. 833; Scale v. 
Baker, 70 Tex. 283, 7 S. W. 742. But 
see Hunnewell v. Duxbury, 154 Mass. 
286, 28 N. E. 267, 13 L. R. A. 733, 
and Hindman v. First Nat. Bank, 
112 Fed. 931. 

92. Sigafus V. Porter, 84 Fed. 430; 
Jandt V. Potthast, 102 Iowa 223, 71 
N. W. 216; Banner v. Schlessinger, 
109 Mich. 262, 67 N. W. 116; Schu- 
maker v. Mather, 38 N. Y. St. S42, 
14 N. Y. Supp. 411; Tate v. Watts, 
.42 111. App. 103. 

Contra — Compare Henderson v. 
Miller, 36 111. App. 232. 

93. Chilson v. Houston, 9 N. D. 
498, 84 N. W. 354- 

False representations inducing 
plaintiflf to purchase property at an 
. auction sale are admissible, although 
made after the property was struck 
off, if made before the final consum- 
mation of the sale by writings. 
Haight V. Hayt, 19 N. Y. 464. 

Representations in Former Trans- 
action. — Evidence of false repre- 



sentations made by defendant in a 
prior and similar transaction some 
months before may be competent as 
the grounds of reliance in a subse- 
quent transaction between the same 
parties. Reeve v. Dennett, 14s Mass. 
23, II N. E. 938. See also Chisholm 
V. Eisenhuth, 69 App. Div. 134, 74 
N. Y. Supp. 496. But see Morris v. 
Talcott, 96 N. Y. TOO. 

94. Matlock v. Reppy, 47 Ark. 
148, 14 S. W. S46; Farmers Stock 
Breeding Ass'n v. Scott, 53 Kan, 534, 
36 Pac. 978; Robinson v. Levi, 81 
Ala. 134, I So. SS4; Mahoney v. 
O'Neill, 36 Misc. 843, 74 N. Y. Supp. 
918; Birdseye v. Flint, 3 Barb. (N. 
Y.) SCO. And see Kline v. Baker, 
106 Mass. 61; Manhattan Brass Co. 
V. Reger,, 168 Pa. St. 644, 32 Atl. 64. 

95. Taylor v. Guest, 58 N. Y. 262. 

96. Indiana. — Ingalls v. Miller, 
121 Ind. 188, 22 N. E. 995. 

Iowa. — Warfield v. Clark, 118 
Iowa 69, 91 N. W. 833. 

Maryland. — McAleer v. Horsey, 
35 Md. 439. 

Massachusetts. — Nash v. Minne- 
sota Title Ins. & T. Co., 159 Mass. 
437, 34 N. E. 623. 

North Dakota. — Chilson v. Hous- 
ton, 9 N. D. 498, 84 N. W. 354. 

Vermont. — Whitney Wagon Wks- 
V. Moore, 61 Vt. 230, 17 Atl. 1007. 

Wisconsin. — Farr v. Peterson, 91 
Wis. 182, 64 N. W. 863; Barndt v. 
Frederick, 78 Wis. i, 47 N. W. 6, 
Ti L. R. A. 199. 

97. Missouri Valley Land Co. v. 
Bushnell, 11 Neb. 192, 8 N. W. 389- 

Vol, VI 



76 



FRAUD. 



the fraud to prove that the fraudulent conduct of his adversary 
resulted directly in loss or injury to himself.'* 

III. RELEVANCY TO PLEADINGS. 

1. In General. — The evidence of fraud must follow and corre- 
spond to the allegations in the pleading.*' 

2. Proof of Scienter. — Thus, where the pleading alleges positively 
that the defendant knew the representation to be false, this must 
be established affirmatively,^ and in order for plaintiff to recover on 
a showing of any facts short of positive knowledge of such falsity, 
such facts must be alleged.^ 

3. Allegation of Specific Representations. — Where the pleading 
alleges certain specific representations as the basis of the action and 
as the inducement, evidence of representations other than those 
alleged for the purpose of proving the inducement is incompetent.^ 



98. Illinois. — White v. Watkins, 
23 III. 426. 

Kansas. — Stinson v. Aultraan, 54 
Kan. 537, 38 Paa 788. 

Kentucky. — Wilson v. Lafifoor, I 
J. J. Marsh. 6. 

Maine. — Brown v. Blunt, 72 Me. 
415 ; Fuller v. Hodgdon, 25 Me. 243. 

Maryland. — Melville v. Gary, 76 
Md. 221, 24 Atl. 604. 

Massachusetts. — Packer v. Lock- 
man, IIS Mass. 72. 

Michigan. — Bristol v. Braidwood, 
28 Mich. 191. 

Mississippi. — Moss w. Davidson, i 
Smed. & M. 112. 

Texas. — Read v. Chambers (Tex. 
Civ. App.), 45 S. W. 742. 

99. Means v. Flanagan, 79 111. 
App. 296; Foster v. Kennedy, 38 Ala. 
359, 81 Am. Dec. 56; Hoxie v. Home 
Ins. Co., 32 Conn. 21, 85 Am. Dec. 
240; Cutter V. Adams, 15 Vt 237. 
And see Sills Stove Works v. Brown, 
71 Vt. 478, 45 Atl. 1040; Clark v. 
Ralls, 58 Iowa 201, 12 N. W. 260; 
Dudley v. Scranton, 57 N. Y. 424. 

1. Pearson v. Howe, i Allen 
(Mass.) 207; Corbett v. Gilbert, 24 
Ga. 454. And see Ross v. Mather, 
51 N. Y. 108, 10 Am. Rep. 562. 

2. Marshall v. Fowler, 7 Hun (N. 
Y.) 237. 

Contra. — In Kelly v. Allen, 34 
Ala. 663, it was held that although 
the pleading alleged that the defend- 
ant knew the falsity of the represen- 
tation, the evidence was sufficient if 
it merely proved that he -professed 
to know such facts. This was de- 

Vol. VI 



cided on the theory that where the 
representation was absolute, the sci- 
enter was immaterial. 

Belief of Defendant in Truth of 
Representation. — If the party 
charged with fraud intends to rely 
on his belief in the truthfulness of 
his representation it is incumbent 
upon him to frame his pleadings on 
such hypothesis; and if in his plead- 
ings he admits making representa- 
tions and positively alleges that they 
were true, he should not be per- 
mitted to introduce evidence merely 
that he believed them to be true. 
Brewster v. Crossland, 2 Colo. App. 
446, 31 Pac. 236. 

3. Nash V. Minnesota Title Ins. & 
T. Co., 159 Mass. 437, 34 N. E. 625; 
Meek v. State, 117 Ala. 116, 23 So. 
15s; Hubbard v. Lofig, 105 Mich. 442; 
62 N. W. 644. And see Pedrick v. 
Porter, 5 Allen (Mass.) 324; Hemen- 
way V. Keeler, 68 N. Y. St. 819, 34 N 
Y. Supp. 808. 

Where Representation Verbally 
Repeated. _ Where plaintiff's decla- 
ration in deceit was based upon al- 
leged written representations of the 
defendant which induced him to act, 
parol evidence that such representa- 
tions were verbally repeated is inad- 
missible where the declaration 
counts only on the written statement. 
Sills Stove Wks. v. Brown, 71 Vt. 
478, 45 Atl. 1040. 

Evidence Limited to Representa- 
tions Alleged as Fraudulent. — Tn 
Johnson v. Beeney, 9 111. App. 64, it 
was held that where the declaration 



PRAUD. 



77 



4. Whole Conversation Competent. — But none of the foregoing 
rules preclude proof of all the statements made by the party charged 
with the fraud at the time he made the representations complained 
of. The whole of such conversation is competent as illustrative and 
explanatory of the transaction and intent, although only the words 
relied upon are set forth in the pleading.* 

5. Substantial Proof Sufficient. — The party alleging the fraud is 
not bound to prove the same precisely as alleged in his pleading. It 
is sufficient if he prove such allegations substantially. ° 



sets forth several representations, 
only part of which are specifically al- 
leged to have been false and fraudu- 
lent, the evidence is confined to the 
representations which are alleged to 
have been false and fraudulent, and 
evidence offered to prove that the 
rest of the representations were 
false and fraudulent is inadmissible, 
the court saying : " He cannot be al- 
lowed to make one case by his plead- 
ing and another by his proof." 

Distinction. — In Thurman v. 
Mosher, i Hun (N. Y.) 344, it was 
held that there was a distinction be- 
tween those cases where specific 
charges of fraud are made the basis 
of recovery and those where a fraud- 
ulent intent constitutes the gravamen 
of the action. In the latter case any 
representations or statement of a 
fraudulent character bearing on the 
motive of the party is competent evi- 
dence; but where a specific fraudu- 
lent act or statement is alleged as 
the basis of the action, such act or 
statement must be proved substan- 
tially as alleged in the pleading, and 
evidence of other fraudulent repre- 
sentations is irrelevant and im- 
proper. 

4. Pedrick v. Porter, 5 Allen 
(Mass.) 324; Hick v. Thomas, 90 
Cal. 289, 27 Pac. 208, 376; Averill 
V. Wood, 78 Mich. 342, 44 N. W. 
381 ; Jones v. State, 99 Ga. 46, 25 S. 
E. 617; Scholfield G. & P. Co. v. 
Scholfield, 71 Conn, i, 40 Atl. 1046. 

" Representations differing from 
but tending to prove those alleged, 
may be shown, and to enable the 
court or jury to understand the 
meaning of the statements made by 
the defendant, and relied upon as 
proving the alleged representations, 
the plaintiff may often properly be 
permitted to prove the entire con- 
versation in which statements occur, 



even though representations materi- 
ally different from those alleged are 
thereby shown." Shelton v. Healy, 
74 Conn. 26s, SO Atl. 742. 

5. California. — Hick v. Thomas, 
90 Cal. 289, 27 Pac. 208, 376. 

Connecticut. — Shelton v. Healy, 
74 Conn. 265, 50 Atl. 742. 

Illinois. — Ladd V. Pigott, 1 14 111. 

647, 2 N. E. 503. 

Iowa. — Dashiel v. Harshman, 113 
Iowa 283, 8s N. W. 85. 

Maryland. — McAIeer v. Horsey, 
35 Md. 439- 

Massachusetts. — Packard v. 
Pratt, IIS Mass. 405; Cunningham v. 
Kimball, 7 Mass. 64; Com. v. Coe, 
IIS Mass. 481. 

New York. — James v. Work, 54 
N. Y. St. 166, 24 N. Y. Supp. 149; 
Craig V. Ward, i Abb. Dec. 184. 

language of Representation. — It 
is not necessary to prove the exact 
language of the representation as set 
out in the pleading, but proof of it in 
substance and legal effect is sufficient. 
Weaver v. Shriver, 79 Md. 530, 30 
Atl. 189; Endsley v. Johns, 120 111. 
469, 12 N. E. 247. 

In Ely V. Brady, 113 Mich. 176, 71 
N. W. S2I, where defendant alleged 
that the written instrument upon 
which suit was brought was obtained 
without any consideration, he was 
properly allowed to prove that he 
was induced to sign the instrument 
by reason of false representation. 

Representations Alleged, ITot Sole 
Inducement. — Although the decla- 
ration alleges that the plaintiff relied 
exclusively upon the representations 
set forth therein, the fact that the 
proof shows that they were not the 
sole inducement is not a material 
variance, if plaintiff mainly and sub- 
stantially relied upon the representa- 
tions alleged. Cook v. Gill, 83 Md. 
117, 34 Atl. 248. 

Vol. VI 



78 



FRAUD. 



6. Proof of One of Several Alleged Eepresentatlons. — Although 
several fraudulent representations are alleged in the pleading as the 
inducement upon which the party acted, proof of any one of them, if 
material, is sufficient." 

IV. WAIVER AND SATISFACTION OF FRAUD. 

1. Knowledge of Fraud Essential to Waiver. — A. In General. 
The acts or conduct on the part of the person charging the fraud, 
in order to be sufficient to preclude him from obtaining the desired 
relief, must be shown to have been done or performed after he had 
obtained knowledge or the means of knowledge of such fraud.'' 

B. Presumptions and Burden oe Prooe. — a. Generally. 
Intent is an essential element in waiver or acquiescence, and unless 
the facts show knowledge and are such as to make the inference of 
intent natural and free from doubt, no presumption of waiver arises,' 
and, in ordinary cases, the burden of proving knowledge of the fraud 
and the time of its discovery rests upon the person alleging the 
waiver or acquiescence.® 

b. When Burden on Party Charging Fraud. — It has been held 
that where the time prescribed by a statute of limitations has run 
since the commission of the fraud,^" or where the party charging 
the fraud has done or performed an act prima facie indicating his 
intent to abide by the transaction,^^ the burden of showing a lack of 
knowledge is upon him. 

c. Constructive Knowledge From Record. — Under a statute pro- 



Thus where the pleading alleges 
that the vendee, being insolvent, 
knowingly concealed his insolvency 
from the vendor, proof of false state- 
ments made by such vendee respect- 
ing his financial standing, whereby he 
represented himself to be possessed 
of a large amount of property over 
and above 'his liabilities, is admissi- 
ble, and does not constitute a vari- 
ance. First Nat. Bank. v. McKin- 
ney, 47 Neb. 149, 66 N. W. 280. 

6. Dashiel v. Harshman, 113 Iowa 
283, 8s N. W. 85 ; People v. Haynes, 
II Wend. (N. Y.) 557; Yates v. Al- 
den, 41 Barb. (N. Y.) 172. 

7. I.oeb V. Flash, 65 Ala. 526; 
Melick V. First Nat. Bank, 52 Iowa 
94, 2 N. W. 1021 ; Hays v. Midas, 
104 N. Y. 602, II N. E. 141. 

8. McLean v. Clark, 47 Ga. 24. 
Knowledge not Presumed Where 

a stockholder has been defrauded in 
the purchase of his stock, the fact 
that he has a 'right to examine the 
books of the corporation, from which 
he could have discovered the fraud, 
does not raise the presumption of 

Vol. VI 



knowledge of the fraud so as to 
start the running of the statute of 
limitations. Gerner v. Mosher, 58 
Neb. I3S, 18 N. W. 384, 46 L. R. A. 
244. And see cases cited in note 43 
under " Intent and Motive," ante. 
But see contra, Truett v. Onderdonk, 
120_ Cal. 581, S3 Pac. 26, in which 
it is held that where the party is 
shown to havebeen possessed of the 
means of acquiring knowledge, he is 
presumed to have such knowledge. 

9. Pence z: Langdon, 99 U. S. 
578; Wells V. Houston, 29 Tex. Civ. 
App. 619, 69 S. W. 183; Baker v. 
Lever, 67 N. Y. 304, 23 Am. Rep. 
117; Smith's Adm'r v. Smith, 30 Vt. 
139- 

Principal and Agent. — Where the 
transaction attacked is between prin- 
cipal and agent, the burden is on the 
agent to show plaintiff's knowledge 
of the fraud. Faust v. Hosford, 119 
Iowa 97, 93 N. W. 58. 

10. Teall V. Slaven, 40 Fed. 774; 
Wood V. Carpenter, loi U. S. 135. 

11. First Nat. Bank v. McKin- 
ney, 47 Neb. 149, 66 N. W. 280. 



FRAUD. 7<, 

viding that a recorded instrument is constructive notice of its con- 
tents to subsequent purchasers or incumbrancers, it has been held 
that an instrument, duly recorded, which bears the evidence of fraud 
on its face affords just as strong evidence of fraud to the parties 
defrauded as it does to such subsequent purchasers or incum- 
brancers.'^ 

C. Direct Evidence — Testimony oe Party. — The party 
charging the fraud may testify directly when he learned thereof.^' 

2. Relevant Circumstances. — A. Acts in Aeeirmance oe Con- 
tract. — Evidence of any acts or conduct on the part of the person 
charging the fraud, evincive of an intent to abide by the contract or 
transaction, is relevant and competent on the question of his waiver 
of the right to rescind.'* 

B. Acceptance and Retention oe Benefits. — Likewise, evi- 
dence of an acceptance and retention of the benefits of the transaction 
is relevant to establish the waiver.'^ ' 

C. Deeay. — Delay in rescinding the contract or transaction is a 
relevant circumstance tending to prove a waiver of the right to 
rescind.'" 

D. Newspaper Article. — A newspaper article, describing and 
publishing the fraud, has been held competent to show the party's 
knowledge thereof." 

E. Not Conclusive. — But evidence of such circumstances, while 
competent and relevant, is not conclusive of such waiver.'^ Evi- 
dence is admissible on the part of the person charging the fraud to 
explain such circumstances.'" 

3. In Deceit for Damages. — But where the action is brought, not 
to rescind, but in deceit for damages, evidence as to whether plain- 

12. Teall v. Slaven, 40 Fed. 774. the grounds of fraud. First Nat. 

13. Berkey v. Judd, 22 Minn. 287 ; Bank v. McKinney, 47 Neb. 149, 66 
Dean & Co. v. Zenor, 96 Iowa 752, N. W. 280. 

65 N. W. 410. 15. Pollock V. Smith, 49 Neb. 

14. United States. — Pence v. 864, 69 N. W. 312; Martin v. Butler. 
Langdon, 99 U. S. 578; Mudsill Min- iii Ala. 422, 22 So. 352; Brewer v. 
ing Co. V. Watrous, 61 Fed. 163. Keeler, 42 Ark. 289 ; Walker v 

California. — Ruhl v. Mott, 120 Thompson, 61 Me. 347 ; Cobb. v. Hatr 

Cal. 668, S3 Pac. 304. field, 46 N. Y. 533- 

Connecticut. — Bulkley v. Morgan, 16. Ruhl v. Mott, 120 Cal. 668, Si 

46 Conn. 393; Soper Lumber Co. v. Pac. 304; Blackman v. Wright, gS 

Halstead, 73 Conn. S47, 48 Atl. 42s- Iowa S4i. 65 N. W. 843 ; Wood v. 

Georgia. — Hunt v. Hardwick, 68 Staudemayer, 56 Kan. 399, 43 Pat. 

Ga. 100. 760. 

Indiana. — Gregory v. Schoenell, 17. Martin ?/. Butler, 11 1 Ala. 422, 

SS Ind. lOi. _ 20 So. 3S2. 

Kansas. — Evans v. Rothschild, S4 18. Hawthorne v. Hodges, 28 N. 

Kan. 747, 39 Pac. 701. Y. 486; Hinchman v. Weeks, 8s 

Becord of Action Brought on Con- Mich. S3S> 48 N. W. 790, and see 

tract. — The record of a former ac- cases cited in next note. But see 

tion brought by the vendor on the Evans v. Rothschild, S4 Kan. 747, 39 

contract of sale for the price of the Pac. 701. 

goods is admissible in evidence to 19. Soper Lumber Co. v. Hal- 
show a waiver of the fraud in a sub- stead, 73 Conn. 547, 48 Atl. 42s ; 
sequent action to rescind the sale on Morford v. Peck, 46 Conn. 380; 

Vol. VI 



80 



FRAUD. 



tiff had received or retained the fruits derived from the transaction 
or had ever offered to return the same is immaterial.^" 

4. Satisfaction of Fraud. — The defendant charged with fraud 
may prove that the damages occasioned by the fraud have been sat- 
isfied by another person,-^ or, that the plaintiff, by a subsequent 
agreement between the parties, agreed that a promise or obligation 
executed by defendant was taken in satisfaction of the original 
fraud.^'' 



Hoyle V. Southern Saw Wks., lOS 
Ga. 123, 31 S. E. 137- 

20. Arkansas. — Matlock v. Rep- 
py, 47 Ark. 148, 14 S. W. 546. 

Florida. — Williams v. McFadden, 
23 Fla. 143, I So. 618, II Am. St. 
Rep. 345. 

Indiana. — Johnson v. Culver, 116 
Ind. 278, 19 N. E. 129; St. John v.' 
Hendrickson, 81 Ind. 350. 

Maryland. — Weaver v. Shriver, 79 
Md. S30> 30 Atl. 189; McAleer v. 
Horsey, 35 Md. 439 ; Groff v. Hansel, 
33 Md. 160. 

Massachusetts. — Arnold v. Teel, 
182 Mass. I, 64 N. E. 413. 

Missouri. — Parker v. Marquis, 64 
Mo. 38. 

Nebraska. — Pollock v. Smith, 49 
Neb. 864, 69 N. W. 312. 

.Vol. VI 



No Presumption from Performance 
of Contract — In Pryor v. Foster, 
130 N. Y. 171, 29 N. E. 123, which 
was an action by a tenant to recover 
damages from his landlord on the 
grounds of fraudulent representa- 
tions made by such landlord, prior 
to the lease, as to the quality and 
condition of the premises, it was 
held that the fact that the tenant 
occupied the premises for the entire 
terra of the lease — to wit, fifteen 
months — and paid the rent thereon 
from month to month, did not raise 
the presumption of an intent to 
waive the fraud. 

21. Merchants Bank v. Curtiss, 37 
Barb. (N. Y.) 317. 

22. Tallant v. Stedman, 176 Mass. 
460, 57 N. E. 683. 



FRAUDULENT CONVEYANCES. 

By Clark Ross Mahan. 

I. RELATIONSHIP OF DEBTOR AND CREDITOR, 85 

1. Burden of Proof, 85 

A. In General, 85 

B. Validity of Claim and Judgment, 86 

2. Mode of Proof, 86 

II. THE CONSIDERATION FOR THE CONVEYANCE, 87 

1. Presumptions and Burden of Proof, 87 

A. In General, 87 

B. Subsequent Creditor, 90 

C. Subsequent Purchaser, 90 

D. Creditors Not Assenting to Assignment by Debtor, 91 

E. Conveyance in Payment of Pre-existing Debt, 91 

F. Grantor Remaining in Possession, 92 

G. Conveyances Between Relatives, 92 

a. In General, 92 

b. Conveyance Between Husband and Wife, 93 

(i.) Generally, 93 
(2.) Exempt Property, 95 
(3.) Voluntary Conveyance, 95 
(4.) Post-nuptial Settlements, 95 

c. Conveyance to Wife From Third Person, 96 

2. Mode of Proof, 97 

A. Parol Evidence, 97 

a. As Respects the Attacking Creditor, 97 

b. As Respects the Grantor, 98 

c. As Respects the Vendee or Grantee, 98 

(i.) Instrument Not Expressing Consideration, 

98 
(2.) Consideration Differing in Quantity or 
Amount, 99 

6 Vol. VI 



82 FRAUDVLEXT COXJ'BYANCES. 

(3.) Consideration Differing in Character or 

Species, 100 
(4.) Parol Evidence Negativing Secret Trust, loi 
(5.) Payment of Consideration Subsequent to 

Suit, loi 

B. Recitals, 102 

C. Admissions by Grantor, 102 

D. Circumstantial Evidence, 103 

a. Pecuniary Condition of Parties, 103 

b. Value of Property, 104 

III. FEAUDULENT INTENT, KNOWLEDGE, PARTICIPATION, 
INSOLVENCY, ETC., 105 

I. Presumptions and Burden of Proof, 105 

A. As Respects the Grantor, 105 

a. In General, 105 

b. Insolvency of Debtor, 108 

c. Cogency of Proof, 109 

B. As Respects the Grantee, iii 

a. In General, iii 

b. Vendee Taking Without Consideration, 114 

c. Mere Suspicion Insufficient, 114 

d. Knowledge of Insolvency, 114 

C. Rule as to Subsequent Creditors, 114 

a. In General, 114 

b. Actual Intent Not Necessary, 115 

c. Intent as an Independent Fact, 115 

d. Insolvency of Grantor, 116 

D. Rule as to Subsequent Purchaser, 116 

E. Circumstances Raising Presumption of Fraud, 116 

a. In General, 116 

b. Vendee's Knowledge of Vendor's Fraudulent De- 

sign, 119 

c. Misstatement as to Consideration, iig 

d. Preferences, 119 

e. Mortgage Exceeding Amount of Indebtedness, 119 

f. Voluntary Conveyance, 120 
Vol. VI 



FRAUDULENT CONVHVANCES. 83 

(i.) Generally, 120 

(2.) Necessity of Showing Insolvency of Debtor, 
121 

(3.) Subsequent Sale by Donor, 121 

(4.) Conveyance Between Husband and Wife, 
122 

(5.) Vendee's Knowledge of Vendor's Intent, 122 

(6.) Rule as to Subsequent Creditor, 123 
g. Retention of Possession by Vendor Subsequent to 

Sale, 123 

(i.) Generally, 123 

(2.) Conveyance of Real Estate, 125 

(3.) Rebuttal of Presumption, 125 
h. Conveyances Between Relatives, 126 

(i.) Generally, 126 

(2.) Conveyance Between Parent and Child, 127 

(3.) Conveyance Between Husband and Wife, 
127 
i. Presumption From Non-Production of Testimony, 
128 

2. Mode of Proof, 129 

A. Direct Evidence, 129 

a. As Respects the Grantor, 129 

(i.) Generally, 129 

(2.) Testimony of Grantor, 130 

(A.) Generally, 130 

(B.) Circumstances Surrounding Transfer, 

131 
(C.) Character of Transfer, 131 
(D.) Character of Vendor's Possession, 131 
(E.) Belief of Creditors as to Grounds for 

Attachment, 131 
(F.) Presumption of Fraud From Facts, 132 
(G.) Scope of Cross-Examination, 132 
(H.) Weight of Testimony, 133 
(3.) Testimony of Grantee, 133 

b. As Respects the Grantee, 133 

(i.) Testimony of the Grantee, 133 
(2.) Cross-Examination, 134 

Vol. \I 



84 FRAUDULENT CONVEYANCES. 

B. Indirect Evidence, 134 

a. Circumstances Surrounding Transaction, 134 

(i.) Generally, 134 
(2.) Scope of Inquiry, 139 
(3.) Evidence Supporting Validity of Convey- 
ance, 140 

b. Unduly Withholding Instrument Prom Record, 142 

c. Retention of Possession by Vendor, 142 

d. Subsequent Fraudulent Use of Instrument, 142 

e. Existence of Other Debts, 142 

f. Pendency of Actions Against Vendor, 143 

g. Claim of Vendee Barred by Statute of Limitations, 

143 
h. Mortgage Exceeding Amount of Indebtedness, 143 
i. Inadequacy of Consideration, 143 
j. Relationship of Parties, 143 
k. Character, 144 

1. Pecuniary Condition of Parties, 144 
(1.) Generally, 144 
(2.) As Respects the Grantor, 144 
(A.) Generally, 144 
(B.) Vendee's Knowledge, 145 
(3.) As Respects the Grantee, 146 
m. Other Conveyances, 146 

(i.) As Respects the Grantor, 146 
(A.) Generally, 146 

(B.) Fraudulent Character of Other Con- 
veyance, 148 
(C.) Other Independent Conveyances, 148 
(2.) ^j Respects the Grantee, 149 
n. i4cf^ owd Declarations of the Parties, 149 
(i.) Generally, 149 
(2.) ^j Respects the Grantor, 150 
(A.) Generally, 150 
(B.) TmJ 0/ Admissibility, 152 
(C.) ^J Evidence of Good Faith, 153 
(3.) As Respects the Grantee, 153 
(A.) Generally, 153 

(B.) Declaration by Grantor Subsequent to 
Conveyance, 153 
Vol. VI 



FRAUDULENT CONVBYANCBS. 85 

(C.) Grantor and Grantee Acting as Con- 
spirators, 155 

(D.) Grantor Remaining in Possession of 
Property, 156 

(E.) As Evidence of Good Faith, 157 

IV. aUESTIONS OF LAW AND FACT, 159 



CBOSS-KEEESENCES : 

Consideration ; Conspiracy ; 

Deeds ; 

Fraud ; ' 

Husband and Wife; 

Intent ; 

Vendor and Purchaser. 

I. RELATIONSHIP OF DEBTOR AND CREDITOR. 

1. Burden of Proof. — A. In Gen eraIv. — When a party claiming 

to be a creditor of the grantor in a conveyance alleged to be fraudu- 
lent seeks to set it aside, he must prove that the grantor is his 
debtor.^ 

1. Alabama. — Russell v. Davis, Weeks, 104 Ala. 331, 16 So. 165, the 

133 Ala. 647, 31 So. 514; Lawson v. court said: "The fact of primary 

Alabama Warehouse Co., 73 Ala. importance in such a proceeding — 

289; Deposit Bank of Frankfort v. whether it be to set aside the con- 

Caffee, 135 Ala. 208, 33 So. 152. veyance, as constructively fraudulent, 

Colorado. — Arnett v. Coffey, I and therefore voidable as against 

Colo. App. 34, 27 Pac. 614. past due debts, or actually fraudulent, 

Illinois. — Moritz v. Hoffman, 35 and voidable as to future as well as 

111. SS3; Merrill v. Johnson, 96 111. to past obligations — is the exist- 

224; Tunison v. Chamblin, 88 111. ence of a debt, for the payment of 

378. which, except for the conveyance, 

Kentucky. — Warren v. Hall, 6 the property transferred could be 

Dana 450. made liable. The grantee in the con- 

Michigan. — Bodine v. Simmons, veyance must have an opportunity 

38 Mich. 682. to dispute the debt, and may plead 

Minnesota. — Schmitt v. Dahl, 88 any defense, not merely personal, 

Minn. 506, 93 N. W. 665; Bloom v. which the grantor debtor could have 

Moy, 43 Minn. 397, 45 N. W. 715, made against it." 

19 Am. St. Rep. 243. Open Account as Proof of Dett. 

Nebraska. — Citizens State Bank In Pidcock v. Voorhies, 84 Iowa 

V. Porter, 93 N. W. 391. 705, 42 N. W. 646, 49 N. W. 1038, 

Texas. — Kerr v. Hutchins, 46 it was held that proof of an open ac- 

Tex. 384. count against the grantor, comraenc- 

Wisconsin. — Norton v. Kearney, ing at a date prior to said convey- 

10 Wis. 443 ; Jones v. Lake, 2 Wis. ance, and showing almost daily debits 

210. " and credits to a date subsequent 

Eule Stated. — In Yeend v. thereto, but not disclosing the 

Vol. VI 



86 



FRAUDULENT CONVEY ANCHS. 



An Attaching Creditor who seeks, prior to the recovery of a judg- 
ment, to have a conveyance or incumbrance set aside as fraudulent, 
has the burden of showing that he is a creditor of the defendant.^ 

B. Validity of Claim and Judgment. — Although a creditor 
attacking a conveyance by his debtor as fraudulent must establish 
the fact that the relationship of creditor and debtor existed between 
himself and the vendor prior to or at the time of the conveyance, it 
is not incumbent upon him to establish the fact that the claim on 
which his subsequent .judgment was rendered was lawful f nor is it 
incumbent upon him to show the character and validity of his judg- 
ment.* 

2. Mode of Proof. — Judgment, Pleadings, etc. — A judgment in 
favor of the creditor and against the grantor is competent evidence 
of the indebtedness at the time of the rendition of the judgment,^ but 
not for the purpose of proving the existence of a debt prior to the 
date of the judgment.* 



amount of the indebtedness at any 
time up to the date of certain notes 
given by the defendant in settlement 
subsequent to said conveyance, was 
not sufficient to establish such prior 
indebtedness of the defendant, 
though the plaintiff testified that be- 
fore the notes were given, and at 
other times, there were arrearages 
upon the account against said de- 
fendant. 

In an Action Against a Third 
Person by the Grantee in a Deed of 
Trust to recover the property con- 
veyed, it is not incumbent on the 
plaintiff to prove the consideration 
of the deed until the defendant has 
shown that he claims as a creditor 
of the grantor. Pennington v. 
Woodall, 17 Ala. 685. 

Sheriff Justifying Seizure TJnder 
Attachment — In Braley v. Byrnes, 
20 Minn. 435, an action in replevin 
by a chattel mortgagee against a 
sheriff who justified the seizure un- 
der a writ of attachment against the 
mortgagor, claiming that the mort- 
gage was fraudulent as to creditors, 
it was held incumbent upon the sher- 
iff to show that the attachment debt 
existed, and that it was not enough 
merely for the sheriff to show that 
the mortgagor was indebted to credit- 
ors other than himself against whom 
the mortgage would be fraudulent; 
that as only creditors of the mort- 
gagee could "be defrauded, so only 
a creditor can question the hona 
ades of the ttiortgage; and the re- 

Vol. VI 



spondent must therefore show that 
he is himself a creditor, or that he 
represents such a creditor, and not 
a mere general creditor, but one 
who has acquired a lien upon the 
mortgaged property either by pro- 
ceedings in equity, or by virtue of 
process by which such property, if 
the mortgagor's, might lawfully be 
seized." 

2. Cocks V. Varney, 45 N. J. Eq. 
72, 17 Atl. 108. See also Bogert v. 
Phelps, 14 Wis., 88; Remington v. 
Bailey, 13 Wis. 370; Blue v. Pennis- 
ton, 27 Mo. 272, wherein a third per- 
son intervened claiming the property 
attached as trustee for a wife of the 
defendant, by virtue of a deed exe- 
cuted and recorded two years prior 
to the date of the plaintiff's claim; 
and it was held incumbent upon the 
plaintiff to show that his debt was 
really due long before the note was 
given, and that evidence to that ef- 
fect was proper, notwithstanding that 
the note bore date subsequent to the 
execution of the trust deed. 

3. Schmitt V. Dahl, 88 Minn. 506, 
93 N. W. 665. 

4. Eller V. Lacy, 137 Ind. 436, 36 
N. E. 1088. 

5. Vogt V. Ticknor, 48 N. H. 242 ; 
Hunsinger v. Hofer, no Ind. 390, 11 
N. E. 463 ; Damon v. Bryant, 2 Pick. 
(Mass.) 401; Church v. Chapin, 35 
Vt. 223; Yeend v. Weeks, 104 Ala. 
331, 16 So. 165. 

6. Snodgrass v. Branch Bank, 25 
Ala. 161, 60 Am. Dec. 505 ; Bloom v 



FRAUDULENT CONVEYANCES. 



87 



The Pleadings In the Original Action in which judgment was ren- 
dered against the alleged fraudulent grantor are not competent evi- 
dence as against the grantee to show when the debt was created/ 

II. THE CONSIDERATION FOR THE CONVEYANCE. 

1. Presumptions and Burden of Proof. — A. In General. — The 
question as to who has the burden to prove the consideration for the 
conveyance attacked is one upon which the authorities do not agree. 
This disagreement, however, seems to correspond to a like disagree- 
ment as to whether or not the recital in such a conveyance regarding 
the consideration is competent evidence against attacking creditors, 
as will be shown in a subsequent portion of this article.* Accordingly 
on the one hand it is held that the attacking creditor has the burden 
of showing that the grantee paid no consideration,^ although it is 
said to be wholly immaterial by whom this proof is made.^" 



Moy, 43 Minn, 397, 45 N. W. 7iS> 
19 Am. St. Rep. 243; Schmitt v. 
Dahl, 88 Minn. 506, 93 N. W. 665; 
Citizens State Bank v. Porter 
(Neb.), 93 N. W. 391. See also 
Yeend v. Weeks, 104 Ala. 331, 16 
So. i6s, where the court, quoting 
from Lawson v. Alabama Ware- 
house Co., 73 Ala. 289, said : " It is 
not evidence of an indebtedness ex- 
isting at any time anterior to its ren- 
dition; and if the conveyance is 
impeached as merely voluntary, as 
wanting in a valuable consideration, 
if the time of rendition is subsequent 
to the conveyance, there must be 
other evidence than the judgment af- 
fords to show the existence of the 
debt when the conveyance is made. 
But if, as in the present case, the gift 
or conveyance is assailed as tainted 
with actual fraud, as having been 
made to hinder, delay or defraud ex- 
isting creditors, it is void, not only 
as to such creditors, but as to sub- 
sequent creditors; and the judgment, 
of itself, establishes the right of the 
creditor to impeach the gift of con- 
veyance.'' Compare State Ins. Co. v. 
Prestage, 116 Iowa 466, 90 N. W. 62. 

7. Arnett v. Cofley, i Colo. 
App. 34, 27 Pac. 614. 

8. See infra. " Substance and 
Mode of Proof," wherein the ques- 
tion of the competency of such re- 
citals is discussed. 

9. Indiana. — Andrews v. Flana- 
gan, 94 Ind. 383; American Varnish 
Co. V. Reed, 154 Ind. 88, 55 N. E. 
224. 



Iowa. — Johnson v. McGrew, 1 1 
Iowa 151, 77 Am. Dec. 137; Wright 
V. Wheeler, 14 Iowa 8; Eisfield v. 
Dill, 71 Iowa 442, 32 N. W. 420; 
Wolf V. Chandler, 58 Iowa 569, 12 
N. W. 601 ; Allen v. Wegstein, 69 
Iowa 598, 29 N. W. 625. 

Maryland. — Totten v. Brady, 54 
Md. 170; Crooks v. Brydon, 93 Md. 
640, 49 Atl. 921. 

Mississippi. — Brown v. Bartee, 10 
Smed. & M. 268. See also Hund- 
ley V. Buckner, 6 Smed. & M. 70. 

Exchange of Property. • — In Wat- 
erbury Lumb. & Coal Co. v. Hinck- 
ley, 75 Conn. 187, 52 Atl. 739, it ap- 
peared that the property in question 
had been conveyed to the grantee in 
exchange for property owned by the 
debtor, on which the grantee had a 
mortgage, and the grantee asserted 
that the conveyance to her was in 
consideration of her relinquishing her 
mortgage on the debtor's property; 
and it was held error for the court 
to impose upon the grantee the bur- 
den of proving that the property in 
question was conveyed to her upon 
a good consideration. 

10. Eisfield V. Dill, 71 Iowa 442, 
32 N. W. 420, where the conveyance 
in question was made by a husband 
to his wife at a time when he was 
likely to be called upon to pay debts 
as surety for his son, and the wife, 
to show the consideration for the 
conveyance to her, introduced a 
written contract signed by herself 
and her husband, which bore date of 
thirty years previous, at which time 

Vol. VI 



88 



FRAUDULENT CONVBYANCBS. 



On the other hand many of the courts hold that the grantee has 
the burden of showing that his conveyance Was executed upon an 
adequate and valuable consideration \'^'^ that the recitals in the instru- 
ment of conveyance as to the consideration therefor are not compe- 
tent evidence of that fact against creditors/^ and that production and 
proof of a mere formal transfer of property by the debtor is not 



they both testified it was executed; 
which contract was an agreement on 
the part of the wife to furnish the 
husband with certain moneys and an 
agreement on his part to repay them, 
which moneys so furnished, they 
testified, formed the consideration for 
the conveyance ; but the paper ap- 
peared on its face to have been re- 
cently written and experts testified to 
that eflfect. It was held that the con- 
veyance was properly set aside as 
being without consideration and in 
fraud of creditors. 

11. Alabama. — Dolin v. Gard- 
ner, 15 Ala. 758; Houston v. Black- 
man, 66 Ala. SS9, 41 Am. Rep. 756; 
Yeend v. Weeks, 104 Ala. 331, 16 So. 
165; Miller v. Rowan, 108 Ala. 98, 
19 So. 9; Wooten v. Steele, log Ala. 
563, 19 So. 972; McCain v. Wood, 4 
Ala. 258; Gordon v. Tweedy, 71 
Ala. 202; Lipscomb v. McCIellan, 72 
Ala. 151 ; McTeers v. Perkins, 106 
Ala. 411, 17 So. 547; Schall v. Weil, 
103 Ala. 411, IS So. 829; Chipman v. 
Glennon, 98 Ala. 263, 15 So. 822; 
Sparks V. Rawls, 17 Ala. 211; Smith 
V. Collins, 94 Ala. 394, 10 So. 334; 
Roswald V. Hobbie, 85 Ala. yz, 4 So. 
177 ; Stix V. Keith, 85 Ala. 465, 5 So. 
184; Norwood V. Washington, 136 
Ala. 657, 33 So. 869. 

New Hampshire. — Kimball v. 
Fenner, 12 N. H. 248. 

Pennsylvania. — Redfield & R. 
Mfg. Co. V. Dysart, 62 Pa. St. 62. 

Virginia. — Flynn v. Jackson, 93 
Va. 341, 25 S. E. I. 

West Virginia. — Rogers v. Ver- 
lander, 30 W. Va. 619, 5 S. E. 847. 
See also Harrington v. Johnson, 7 
Colo. App. 483, 44 Pac. 368, an ac- 
tion to set aside a mortgage as hav- 
ing been given in fraud of creditors, 
wherein the fraudulent character of 
the original transaction was fully 
established ; and it was held that the 
burden of proof was upon the de- 
fendant holder of the note to show 
that he was a bona fide purchaser 
for value before maturity. 
Vol. VI 



A Transfer of Property Hade by a 
Debtor Upon a Secret Trust is 

prima facie fraudulent as against 
creditors, and as against them the 
burden of proof is upon the party 
claiming under it to show adequacy 
of consideration and good faith in 
the transaction. Ferguson v. Gil- 
bert, 16 Ohio St. 88, so holding on 
the ground that the facts in respect 
to the consideration were peculiarly 
within the knowledge of the grantee 
and the grantor. 

On a trial of a right of property 
in a stock of goods, between a 
plaintiff in attachment and a pur- 
chaser from the debtor, the burden is 
on the plaintiff, in the first instance, 
to show that the goods belonged to 
the defendant at the time of the levy ; 
but, when he has proved that his 
debt antedates the claimant's alleged 
purchase; that the defendant was in- 
solvent at the time; that the sale 
conveyed substantially all of his 
property, in payment of an ante- 
cedent debt, the burden is shifted to 
the claimant to establish the validity 
of his purchase. Waxelbaum v. 
Bell, 91 Ala. 331, 8 So. S7i. 

12. Leonhard v. Flood, 68 Ark. 
162, 56 S. W. 781. See also Foster 
V. Haglin, 64 Ark. 505, 43 S. W. 763. 

In Prescott v. Hayes, 43 N. H. 
593. the court, in holding that a re- 
cital acknowledging a consideration 
received is'not evidence of that fact 
against existing creditors, and that 
the conveyance is presumed to be 
fraudulent as against them until 
proof of consideration is made, said : 
"The party who alleged that a deed 
was made mala Me and without con- 
sideration, and is consequently void 
as to him as a creditor, upon the 
ordinary principles of evidence 
would be required to prove the fact. 
But the rules of evidence are sub- 
ject to exceptions based upon princi- 
ples of public policy, and designed to 
throw the burden of proof upon the 
party who, from the nature of the 



FRAUDULENT CONrEYANCES. 



89 



enough to cast upon antecedent creditors the burden of showing a 
want of a valualDle consideration.^' Other courts, however, hold 
that this burden is not imposed until the attacking creditor has 
shown that the conveyance was made by the debtor with a fraudu- 
lent intent." 

A Prima Facie Case is made and the burden of proof put upon the 
attacking creditor by the production of the securities recited in the 



transaction, has the best means of 
knowing the facts, and of showing 
that his own conduct has been honest 
and free from fraud. The question 
as to this point was early raised 
and considered in this State, in the 
case of Kimball v. Fenner, 12 N. H. 
248, where it was held that the ac- 
knowledgment in a deed of the re- 
ceipt of a consideration is not of 
itself evidence against existing 
creditors that a consideration was in 
fact received. As to creditors who 
have levied on the land, the deed is 
to be regarded as a mere voluntary 
conveyance, and presumed to be 
fraudulent until some evidence is of- 
fered of the consideration; and that, 
even if the admission contained in 
the deed were held to be prima facie 
evidence of a showing, that evidence 
would be sufficiently rebutted by 
showing that a person" who had 
levied on the land was a creditor 
when the deed was made. This de- 
cision goes far beyond any natural 
construction of the statutes, which 
merely provide that if deeds are 
made without good faith, or with- 
out a valuable consideration, they 
shall be void as to creditors ; yet it 
was competent for the court, for the 
purpose of carrying into effect the 
policy of these statutes, to prescribe 
a rule of presumption different from 
that existing in ordinary cases. The 
rule established in this case is dis- 
tinctly recognized in Belknap v. 
Wendell, 21 N. H. 184, where it is 
said, by Gilchrist, C. J., that there 
is no doubt that the general rule is 
that a party claiming under a deed 
must show, as against existing 
creditors, that the deed was made 
upon good consideration. And the 
same point was held in Ferguson v. 
Clifford, 37 N. H. 97-" 

13. Ferguson v. Gilbert, 16 Ohio 
St. 88. 

14. Jones v. Simpson, 116 U. S. 
609; Leonhard v. Flood, 68 Ark. 162, 



S6 S. W. 781 ; Ross v. Wellman, 102 
Cal. I, 36 Pac. 402; Rogers v. Ver- 
lander, 30 W. Va. 619, 5 S. E. 847; 
Knight V. Nease, S3 W. Va. 50, 44 
S. E. 414; First National Bank v. 
Prager, 50 W. Va. 660, 41 S. E. 363 ; 
Blackshire v. Pettit, 35 W. Va. 547, 
14 S. E. 133. 

In Texas a statute declares in ef- 
fect that a conveyance intended to 
defraud creditors is void as to them, 
and provides also among other things 
that " this article shall not affect the 
title of a purchaser for a valuable 
consideration, unless it appear that 
he had notice," etc. And in Tillman 
V. Heller, 78 Tex. 597, 14 S. W. 700, 
the court held that the order of these 
several provisions seems to indicate 
how it was intended the burden of 
proof should shift during the prog- 
ress of the trial: (l) The creditor, 
in order to defeat the conveyance, 
is bound to show the fraudulent in- 
tent; (2) when such intent is shown, 
the purchaser, in order to sustain the 
transaction, must show that he has 
paid value; (3) this being shown, 
the burden again shifts, and the 
creditor, in order to prevail . in the 
action, must prove that at the time 
of the payment the purchaser had 
notice of the fraud. "This seems to 
us the most reasonable and satis- 
factory rule. Another argument in 
its favor is that the payment of the 
purchase money is a fact peculiarly 
within the knowledge of the pur- 
chaser. I Stark. Ev. 421! This rea- 
son is especially applicable to the 
present case. The appellee testified 
in his own behalf that he gave two 
notes for the agreed price of the 
goods, but did not say whether they 
were negotiable or not. The appel- 
lant did not know the truth of the 
matter. Under such circumstances 
it would be unreasonable to place 
the burden of proof upon the 
creditor and compel him to go to 
his adversary for his evidence." See 
Vol. VI 



90 FRAUDULENT CONVEYANCES. 

conveyance without showing the considerations upon which securi- 
ties were based or executed.^^ 

The Attacking Creditor May Admit the Sufficiency of the Consideration, 
or he may introduce evidence himself to show it, and when he does 
this he cannot be permitted to say, by way of exception, that the 
grantee was bound to prove the consideration." 

Application of Proceeds. - — If the grantee undertakes to relieve him- 
self from liability by showing that he has applied the property to the 
discharge of the debts of his grantor, or paid to the creditors a sum 
of money equal to the value of the property, the burden of proof 
rests upon him not only to show such an appropriation by him of the 
property, or the payment of a sum of money equal to its value, but 
also to show that the debts discharged were subsisting, legal, bona 
ade demands against his grantor.^' 

B. Subsequent Creditor. — So also the recital in the instrument 
as to the consideration therefor is not any evidence thereof as against 
a subsequent creditor, and the burden of proof as to the considera- 
tion is upon the grantee.^* 

C. Subsequent Purchaser. — The mere fact that a deed, 
attacked as voluntary and fraudulent as against subsequent pur- 
chasers, expresses no consideration, does not affect its validity; the 
deed itself imports a consideration, and to avoid it the party object- 
ing must prove that no consideration was given.^° 

also Martel v. Somers, 26 Tex. 551 ; assailing such deed as voluntary. 

King V. Russeli, 40 Tex. 124; Comp- The real basis of these decisions 

ton-Ault & Co. V. Marshall, 88 Tex. would seem to be that, if the pay- 

50, 27 S. W. 121, 28 S. W. 518, 29 ment of a valuable consideration is a 

S. W. 1059. fact essential to the maintaining a 

15. Hempstead v. Johnston, 18 claim, this fact must be proven as 
A.rk. 123, 6s Am. Dec. 458. See also other facts are proven. This ac- 
Hundley v. Buckner, 6 Smed. & M. knowledgment of the receipt of a 
(Miss.) 70. valuable consideration for a deed 

16. Belknap v. Wendell, 21 N. H. made by the grantor in the body of 
^75, where the attacking creditor of- his deed, should have the weight of 
fered the statement of one of the a like acknowledgment made by 
grantees in a disclosure that the con- him in writing in any other manner, 
sideration of the conveyance was as by a receipt signed by him. It is, 
money advanced. after all, nothing but an admission 

17. Cottingham v. Greeley-Barn- by the grantor that he has received a 
ham Grocery Co., 129 Ala. 200, 30 So. valuable consideration for the land 
560. conveyed. And, on general princi- 

18. Rogers v. Verlander, 30 W. pies, declarations or admissions made 
Va. 619, S S. E. 847, where the court, by a person out of the presence of 
in so holding, said: "While, then, another cannot prejudice such other, 
there can be no doubt that, as against when there is no relation of privity, 
a grantor and his heirs, the ac- mutual interest, or agency between 
knowledgment in a deed that a con- the person making such declaration 
sideration has been paid is prima or admission and such third person." 
facie evidence of the truth of the 19- Boynton v. Rees, 8 Pick, 
fact recited, yet the decided weight (Mass.) 329, 19 Am. Dec. 326. 

of the authorities is that such a re- The Grantee of a Wife, to whom 

cital in a deed is not any evidence property had been conveyed by her 

of such fact, as against a stranger, or husband, has not the burden in a 

as against a creditor of the grantor, u. contest with a creditor of the hus- 
Vol, VI 



FRAUDULENT CONVEYANCES. 



91 



D. Creditors Not Assenting to Assignment by Debtor. — In 
the case of an assignment by an insolvent debtor in trust for some 
of his creditors by a conveyance to which the others are not parties, 
nor assenting, , it is incumbent on the grantees to show a valuable 
consideration."" 

E. Conveyance in Payment of Pre-Existing Debt. — The 
same conflict among authorities seems to exist in the case of a con- 
veyance claimed to have been made in payment of a pre-existing 
debt, some courts holding that the attacking creditor must show that 
the conveyance was not made to pay a debt justly due."^ On the 
other hand some courts hold that the burden is on the purchasing 
creditor to show by clear and satisfactory evidence not only a bona 
Me debt, but also that the amount thereof was not materially less 
than the fair and reasonable value of the property."^ But it is not 
necessary in such case that each of the items involved should also be 
separately proved to the satisfaction of the jury; it is enough if they 



band to establish the hona fides of 
the conveyance to the wife by that 
positive and cogent proof which 
would be required of her, but the 
burden of proof is upon the .party 
seeking to itnpeach the conveyance. 
Hooser v. Hunt, 65 Wis. 71, 26 N. 
W. 422. 

20. Widgery v. Haskell, 5 Mass. 
144, 4 Am. Dec. 41. See also 
article "Assignment for Benefit op 
Creditors," Vol. I. 

21. Coates v. Miller, 99 111. App. 
227; Hasie v. Connor, 53 Kan. 713, 
37 Pac. 128; Nichols v. Bancroft, 74 
Mich. 191, 41 N. W. 891. Compare 
Krolik V. Graham, 64 Mich. 226, 31 
N. W. 307. 

22. Buford v. Shanon, 95 Ala. 
205, 10 So. 263; Penney v. McCul- 
lough, 134 Ala. 580, 33 So. 665 ; Rob- 
ert Graves Co. v. McDade, 108 Ala. 
420, 19 So. 86; Mitcham v. Schues- 
sler, 98 Ala. 635, 13 So. 617; Thomp- 
son V. Tower Mfg. Co., 104 Ala. 140, 
16 So. 116; Calhoun v. Hannan, 87 
Ala. 277, 6 So. 291 ; Murray v. 
Heard, 103 Ala. 400, 15 So. 565. See 
also Wright v. Wheeler, 14 Iowa 8. 
Compare Goodgame v. Cole, 12 Ala. 
77- 

Note. — A grantee claiming the 
consideration for a conveyance to 
be the delivering up of a note held 
by him against his grantor must, as 
against existing creditors of his 
grantor, show that the note evidenced 
a real debt. McCaskle v. Amarine, 
12 Ala. 17. See also Valley Dis- 



tilling Co. V. Atkins, 50 Ark. 289, 7 
S. W. 137, where the only evidence 
of a consideration aside from the re- 
cital in the bill of sale attacked as 
fraudulent was evidence of a de- 
livery by the vendee to the vendor of 
a note which the witness supposed 
to be the one described in the bill 
of sale. It was held that, conceding 
that this established the fact that the 
vendee surrendered to the vendor 
the note executed by the latter, it 
was not sufficient to prove an honest 
debt between the parties as against 
the attaching creditor. " It was no 
better evidence than the vendor's re- 
ceipt as for money paid, or what the 
parties said about the transaction at 
the time, and was insufficient to es- 
tablish the payment of a good con- 
sideration." 

Where the Validity of a Deed of 
Trust is Assailed by a creditor whose 
debt existed at the time of its exe- 
cution, the burden is on the grantee 
to show the existence of the alleged 
debt, and the statements in the note 
and deed are not available for this 
purpose. Howell v. Garden, 99 Ala. 
100, 10 So. 640. 

A Creditor Taking: a Mortgage 
From His Debtor's Grantee, with 
knowledge of the fraud in the origi- 
nal conveyance, has the burden of 
showing, as against existing creditors 
at the time of the original convey- 
ance, the existence of his debt be- 
fore such conveyance. Rilling v. 
Schultze, 93 Tex. 352, 67 S. W. 401. 

Vol. VI 



92 



FRAUDULENT CONVEYANCES. 



are satisfied from the evidence that the amount of the debt as claimed 
was due and allowed on a settlement between the parties.^' 

F. Grantor Remaining in Possession. — In the case of a con- 
veyance of land or transfer of chattels, where the grantor retains 
possession of the property after the conveyance and exercises acts 
of ownership over it, the burden is on the grantee as against existing 
creditors to show the existence and payment of the consideration 
named in the conveyance.^* 

G. Conveyances Between Relatives. — a. In General. — It is 
held by some courts that the burden of proving that such a convey- 
ance is voluntary and fraudulent is upon creditors assailing the con- 
veyance on that ground ;^^ but by others that although the deed 
recites a valuable consideration and the allegations of fraud are 
denied and a valuable consideration asserted, the grantee has the 
burden of showing that the consideration was paid, and that the 
recital in the instrument is no evidence of that fact against the 
creditor.^* 

Cogency of Proof Rectuired. — And it is held also that when a near 
relationship exists between the grantor and grantee, the burden rest- 
ing upon the grantee to show a valuable consideration must be dis- 



Where a Husband Undertakes to 
Prefer His Wife to the exclusion of 
other creditors, the proof should be 
clear and satisfactory that the wife 
has a valid subsisting debt, one 
which is to be enforced and payment 
exacted regardless of the fortune or 
misfortune of the husband. Frank 
V. King, 121 111. 250, 12 N. E. 720. 

23. Buford v. Shannon, 95 Ala. 
20s, 10 So. 263. 

24. Neal v. Gregory, 19 Fla. 356; 
Phillips V. Reitz, 16 Kan. 396; Hay- 
den V. Smith, 31 Mo. 566. 

25. Hasie v. Connor, 53 Kan. 713, 
37 Fac. 128; Williamson v. Wil- 
liams, II tea (Tenn.) 355; King v. 
Russell, 40 Tex. 124. 

Rule Stated. — In Klay v. McKel- 
lar, 122 Iowa 163, 97 N. W. 1091, 
wherein the conveyance expressitig a 
valuable consideration was made to 
a brother of the grantor, the court 
said : " It is true that dealing be- 
tween parties intimately related, re- 
sulting in delay or hindrance to 
creditors, will be scrutinized closely, 
and promptly be set aside if fraud be 
established ; but, so far as we are 
aware, that rule has never been so 
far extended as to hold that a deed, 
fair in form, from one brother to 
another, is presumptively fraudulent 
or voluntary. Bump on Fraud. Gon. 

Vol. VI 



54; Wait on Fraud. Con. §§ 242, 271. 
The creditor may, however, allege 
the fraudulent or voluntary character 
of the conveyance, and if the charge 
be made good by proof, may subject 
the property to the payment of his 
claim." 

26. Georgia. — Scott v. Winship, 
20 Ga. 429; Kelly v. Simmons, y$ 
Ga. 716. 

Nebraska. — Plummer v. Rummel, 
26 Neb. 142, 42 N. W. 336; Bartlett 
V. Cheesebrough, 23 Neb. 767, yj N. 
W. 652; Lusk V. Riggs, 91 N. W. 
243; Knudson v. Parker, 91 N. W. 
850; Nat. Bank of Commerce v. 
Chapman, 50 Neb. 484, 70 N. W. 39. 

Oregon. — Mendenhall v. Elwert, 
36 Or. 37S, 59 Pac. 805. 

West Virginia. — Himan v. Thorn, 
32 W. Va. 507, 9 S. E. 930; Stauffer 
V. Kennedy, 47 W. Va. 714, 35 S. E. 
892. 

Emancipation of Hinor Son In 

Crary v. Hoffman, 115 Iowa 332, 88 
N. W. 833, an action to set aside a 
conveyance by a parent to an in- 
fant son on a purported considera- 
tion of the payment by the infant son 
of his wages to the parent grantor, 
it was held that the burden of prov- 
ing the emancipation of the infant 
was upon the defendants. 

The Purchase of land by a Parent 



FRAUDULENT CONVBYANCBS. 



93 



charged by clearer and more convincing proof than when the parties 
are strangers.^' 

b. Conveyance Betiveen Husband and Wife. — (l.) Generally. 
Again, some of the courts hold that a conveyance from a husband to 
his vifife which purports to have been made for a valuable considera- 
tion is not presumptively a gift, and a creditor who attacks the 
conveyance as fraudulent has the burden to show a want of con- 
sideration f^ and that this burden is not sustained by mere inference 
based on the presumption that the testimony of the wife is untruth- 
ful.*' The majority of the courts, however, hold that the fact of a 
conveyance between husband and wife of itself raises a suspicion of 
unfairness whenever the result is to throw a loss upon the creditors 
of the husband, and that in all cases of contest between the creditors 
of the husband and wife there is a strong presumption against her 
which must be overcome by affirmative proof.'" But when these 

terms are commonly used, is that the 
former may be, the latter must be, 
regarded by the trier.' Ward v. 
Metropolitan Life Ins. Co., 66 Conn. 
227-239, 33 Atl. 902, 50 Am. St. Rep. 
80. We are not aware of the exist- 
ence in the law of this state of any 
such legal presumption as the plain- 
tiffs claim." 

29. Gilbert v. Glenny, 75 Iowa 
513, 39 N. W. 818. 

30. United States. — Sehz v. 
Mitchell, 94 U. S. 580. 

Alabama. — Noble v. Gilliam, 136 
Ala. 618, 33 So. 861. 

Florida. — Claflin v. Ambrose, ig 
So. 628. 

Georgia. — Richardson v. Subers, 
82 Ga. 427, 9 S. E. 172. 

Indiana. — Gable v. Columbus Ci- 
gar Co., 140 Ind. 563, 38 N. E. 474- 

Maryland. — Levi v. Rothschild, 
69 Md. 348, 14 Atl. S3S; Hinkle v. 
Wilson, 53 Md. 287. 

Minnesota. — Minneapolis Stock 
Yards & Pack. Co. v. Halonen, 56 
Minn. 469, 57 N. W. 1135. 

Nebraska. — Citizens State Bank 
V. Porter, 93 N. W. 391 ; Lusk v. 
Riggs, 91 N. W. 243 ; Lynch v. Engel- 
hardt-Winning-Davison Merc. Co., 
96 N. W. 524. 

New Jersey. — Adoue v. Spencer, 
62 N. J. Eq. 782, 49 Atl. 10. 

Pennsylvania. — Winter v Walter, 
37 Pa. St. 15s ; Gault v. SafBn, 44 Pa. 
St. 307; Keeney v. Good, zi Pa. St. 
349; Wilson zr. Silkman, 97 Pa. St. 
S09. 

Virginia. — Runkle v. Runkle, 98 
Va. 663, 37 S. E. 279; Spence v. 

Vol. VI 



in the Name of a Child is presump- 
tively an advancement. Brown v. 
Burke, 22 Ga. 574. 

27. I,ehman-Durr & Co. v. Green- 
hut, 88 Ala. 478, 7 So. 299; Thoring- 
ton V. Montgomery, 88 Ala. 548, 7 
So. 363. 

28. Meredith v. Schaap (Iowa), 
85 N. W. 628; Stephenson v. Cook, 
64 Iowa 265, 20 N. W. 182; Rhodes 
V. Wood, 93 Tenn. 702, 28 S. W. 294; 
Cox V. Scott, 9 Baxt. (Tenn.), 305. 

RiUe Stated. — In Fishel v. Motta 
(Conn.), 56 Atl. 558, it was in- 
sisted that as to conveyances between 
husband and wife, there is, in the ab- 
sence of evidence to the contrary, a 
legal presumption of want of con- 
sideration. The court said: "Such 
a rule makes the mere relation of 
husband and wife in such cases, as 
matter of law, in the absence of any 
evidence to the contrary, prima facie 
proof of want of consideration. 
That the relation of husband and 
wife gives special opportunities for 
fraudulent transfers of property, and 
that conveyances between them 
' should be subject to a rigorous 
scrutiny,' are considerations to be ad- 
dressed to the trier in passing upon 
the question of want of consideration. 
Gilligan v. Lord, 51 Conn, 567; 
Norwalk v. Ireland, 68 Conn. 2, 35 
Atl. 804; Throckmorton v. Chapman, 
6s Conn. 441, 32 Atl. 930. Any pre- 
sumption of want of consideration in 
such cases is one of fact, having 
simply the force of an argument. 
'The difference between a presump- 
tion of fact and one of law, as these 



94 



FRAUD VLBNT CONVBYANCBS. 



Repass, 94 Va. 716, 27 S. E. 583; 
Robinson v. Bass, 100 Va. 190, 40 S. 
E. 660. 

West Virginia. — Rogers v. Ver- 
lander, 30 W. Va. 619, 5 S. E. 847; 
Burt V. Timmons, 29 W. Va. 441, 
2 S. E. 780. 

Wisconsin. — Le Saulnier v. Krue- 
ger, 8s Wis. 214, 54 N. W. 774; 
Evans V. Rugee, 57 Wis. 623, 16 N. 
W. 49 ; Hoey v. Pierron, 6y Wis. 262, 
30 N. W. 692. 

Rule Stated — " All transactions 
between the husband and the wife 
relative to the property of the for- 
mer must be regarded with suspicion, 
when the object of such transactions 
is to create a preference over other 
creditors in favor of the wife, and 
when such preference comes in com- 
petition with the actual claims of 
such other creditors. In such cases, 
when these transactions are attacked 
for fraud and collusion, it is in- 
cumbent on the wife to show the 
truth and genuineness of the claim 
upon which her judgment against her 
husband is founded. The burthen of 
proof is upon her to show that her 
judgment was fairly obtained. De- 
blanc V. Deblanc, 4 La. 19; Malone 
V. Kitching, 10 Annual 83 ; Phelps v. 
Rightor, IS Annual 33." Darcy v. 
Labennes, 31 La. Ann. 404. 

Where Improvements Are Erected 
by the Husband With His Own 
Money, on lands belonging to his 
wife, the presumption is that such 
improvements are intended as a gift 
to the wife ; and on a contest be- 
tween her and existing creditors of 
her husband seeking to subject such 
improvements to the payment of 
their debts, the burden is on the wife 
to overcome this presumption by 
evidence that it was in payment of a 
debt. Seasongood v. Ware, 104 Ala. 
212, 16 So. 51. 

Conveyance to Trustee — In Cru- 
ger V. Tucker, 69 Ga. 557, where a 
husband, being heavily involved, had 
conveyed his property to a trustee for 
his wife and children, alleging as a 
consideration therefor that he was 
indebted to the trust estate, and that 
the funds of such estate had been 
invested therein, it was held that in 
a contest with creditors who ob- 
tained their judgments after the con- 

Vol. VI 



veyance, the burden of proving the 
existence of the debt was on the 
trustee, notwithstanding the recitals 
in the conveyance. 

Wisconsin Rule. — In Semmens v. 
Walters, 55 Wis. 67s, I3 N. W. 889, 
the court, in qualifying the rule as 
stated in Horton v. Dewey, S3 Wis. 
410, 10 N. W. 599; Fisher v. Shelver. 
S3 Wis. 498, 10 N. W. 681, said: 
"When these opinions speak about 
the onus of showing the bona fides 
or good faith of her purchase from 
her husband being cast upon the wife, 
reference is had to the question of 
the consideration as her separate 
property, upon which the presump- 
tion of the law is against her. These 
facts clearly established by her, the 
question of whether the conveyance 
or mortgage fronr her husband was 
taken in good faith, or with the in- 
tent to defraud, rests upon the same 
general principle as between other 
parties, and the burthen of showing 
the fraud is upon the party alleg- 
ing it. The onus of proving 
the fraud being thus upon the 
party attacking the conveyance 
or mortgage on that ground, 
and the onus of showing that the 
consideration thereof arose from 
some other source than her husband, 
and consisted of her separate estate 
being cast upon her, then the princi- 
ple laid down in Hoxie v. Price, 31 
Wis. 82, that, on account of their pe- 
culiar relationship, 'the transactions 
should be closely examined and scru- 
tinized to see that they are fair and 
honest,' may have full force. To 
illustrate, the language of the statute 
in respect to cases where the de- 
fendant is an officer alleging fraud in 
the mortgage by which the plaintiff 
claims the property levied on or at- 
tached, §2319, R. S., is, 'then the 
burden of proof shall be upon the 
plaintiff to show that such mortgage 
was given in good faith, and to se- 
cure an actual indebtedness and the 
amount thereof.' In respect to this 
statute Mr. Justice Taylor says, in 
James v. Van Duyn, 45 Wis. 512: 
I We do not think the statute was 
intended to put upon the plaintiff the 
burden of proof throughout the whole 
case, and compel him to prove af- 
firmatively that his mortgage was not 
in fact fraudulent and void as to 



FRAUDULENT CONVEYANCES. 



9S 



facts are clearly established the burden of showing fraud in the 
conveyance is upon the party alleging it.^^ 

(2.) Exempt Property. — But this rule does not apply where the 
property conveyed was exempt from execution while held by the 
husband.^'' But where the grantor claims the property to be exempt 
from execution, he has the burden of showing that fact.^^ 

(3.) Voluntary Conveyance. — The rule just stated imposing the 
burden of proof upon a creditor is not recognized where the convey- 
ance is upon its face partly or wholly voluntary.^* 

(4.) Post-Nuptial Settlements. — Where the husband is indebted at 
the time post-nuptial settlements are made, they are, as against his 
creditors, fraudulent and void, and will be conclusively presumed to 
be voluntary in the absence of proof by those claiming under them 
that they were made for a valuable consideration.^" 



creditors. Where the mortgagee has 
proved that the mortgage was given 
to secure an actual indebtedness and 
the amount thereof, he has in fact 
established prima facie that it was 
given in good faith, unless there be 
something on the face of the mort- 
gage which shows it to be fraudu- 
lent.' So, wherever general language 
is used in any opinion which asso- 
ciates good faith or bona fides with 
the fact of consideration or separate 
property, as the burden of proof 
which is thrown upon the wife, proof 
of her separate property, and that it 
constituted the consideration of the 
conveyance or mortgage, is proof of 
the good faith and bona fides used in 
this sense." 

Relationship of Debtor and Cred- 
itor. — A conveyance from husband 
to wife in prejudice of the rights of 
creditors of the husband cannot be 
sustained without satisfactory evi- 
dence of contractual relations be- 
tween them with reference to the 
wife's separate money or property; 
in other words, the relationship of 
debtor and creditor must be shown. 
Woods V. Allen, 109 Iowa 484, 80 
N. W. 540. 

In the case of a conveyance be- 
tween husband and wife, if the con- 
veyance was "made under suspicious 
circumstances, as where the husband 
was insolvent and failed to meet his 
pressing obligations, and the wife 
was not previously known to have 
or possess any sufficient separate 
means or estate with which to ac- 
quire an estate in her right — under 



such and like circumstances, the wife 
is called upon to show by affirmative 
proof that the property she claims 
under deeds to herself, made under 
such circumstances, was purchased 
and paid for out of her own separate 
means and estate as against the cred- 
itors of the insolvent husband. The 
relation of husband and wife, and 
the suspicious circumstances of the 
case, imposed this burden of proof 
upon the wife. This is the principle 
established by the case of Seitz v. 
Mitchell, 94 U. S. s8o, the first au- 
thoritative exposition of the Married 
Woman's Act of April 10, 1869, Ch. 
23 (16 Stat. 45), relating to this dis- 
trict, which we have to guide us." 
Turner v. Gottwals, 15 App. D. C. 43. 

31. Semmens v. Walters, 55 Wis. 
675, 13 N. W. 889. 

32. Allen v. Perry, 56 Wis. 178, 
14 N. W. 3- 

33. Pace v. Robbins (Ark.), 54 S. 
W. 213; Blythe v. Jett, 52 Ark. 547, 
13 S. W. 137. See also Graham v. 
Culver, 3 Wyo. 639, 29 Pac. 270, 30 
Pac. 957. 

34. Ruppert v. Hurley (N. J. 
Eq.), 47 Atl. 280; Baldwin v. Tuttle, 
23 Iowa 66, holding that in such case 
the burden is on the party claiming 
under the conveyance to show that 
it was made for a valuable considera- 
tion. 

35. Flynn v. Jackson, 93 Va. 341, 
25 S. E. i; DeParges v. Ryland, 87 
Va. 404, 12 S. E. 805 ; Yates v. Law, 
86 Va. 117, 9 S. E. 508, where the 
court, quoting from Seitz v. Mitchell, 
94 U. S. 580, said : " Purchases of 

Vol. VI 



% 



FRAUDULENT CONVEYANCES. 



c. Conveyance to Wife from Third Person. — Again, it is held 
that one who alleges that a conveyance to the wife of a debtor was 
paid for with money of the debtor and was fraudulent, has the bur- 
den of proof.^* Other courts, however, hold that purchases of 
property by the wife of an insolvent debtor during coverture are 
regarded with suspicion, unless it clearly appears that the considera- 
tion was paid out of her separate estate, and that in a contest between 
her and creditors of her husband the burden is on her to overcome 
(he presumption which the law in such case raises." Nor has the 



either real or personal property, made 
by the wife of an insolvent debtor 
during coverture, are justly regarded 
with suspicion, unless it clearly ap- 
pears that the consideration was paid 
out of her separate estate. Such is 
the community of interest between 
husband and wife — such purchases 
are so often made a cover for a 
debtor's property, so frequently re- 
sorted to for the purpose of with- 
drawing his property from the reach 
of his creditors, and preserving it for 
his own use, and they hold forth 
such temptations for fraud, that they 
require close scrutiny. In a contest 
between the creditors of the husband 
and the wife there is, and there 
should be, a presumption against her 
which must be overcome by affirma- 
tive proof." Citing numerous cases. 

36. Richardson v. Subers, 82 Ga. 
427, 9 S. E. 172; Wolf V. Chandler, 
58 Iowa 569, 12 N. W. 601; Osborne 
V. Wilkes, 108 N. C. 651,. 13 S. E. 
285. See also Stephenson v. Cook, 
64 Iowa 265, 20 N. W. 182. 

Under the Minnesota Statute giv- 
ing a married woman absolute con- 
trol over her own personal property, 
and authorizing her to carry on busi- 
ness on her own account, and, except 
as respects her own real estate, to 
constitute her husband her agent, and 
authorizing husband and wife to con- 
tract with each other as fully as if 
the marriage relation did not exist be- 
tween them, a controversy between 
the wife and her husband's creditors 
as to whether certain personal prop- 
erty belonged to her or her husband 
is, as in other cases, to be determined 
upon the fair preponderance of the 
evidence. Laib v. Brandenburg, 34 
Minn. 367, 25 N. W. 803. See also 
Ladd V. Newell 34 Minn; 107, 24 N. 
W. 366. 

Vol. vx 



In Maine it is held that since the 
passage 'of the statute authorizing a 
married woman to hold property ex- 
empt from the payment of her hus- 
band's debts, if a creditor of the hus- 
band would impeach her title to 
any property conveyed to her, the 
burden is on such creditor to prove 
that it came to her directly or indi- 
rectly from her husband after cover- 
ture. Winslow V. Gilbreth, 50 Me. 
go. 

37. Alabama. — Kelley v. Connell, 
no Ala. 543, 18 So. 9; Wimberly v. 
Montgomery Fertilizer Co., 132 Ala. 
107, 31 So. 524. 

Mississippi. — Mangum v. Finu- 
cane, 38 Miss. 354. 

Missouri. — Hoffman v. Nolte, 127 
Mo. 120, 29 S. W. 1006; Patton v. 
Bragg, 113 Mo. S9S, 20 S. W. 1059; 
Sloan V. Torrey, 78 Mo. 623. 

Pennsylvania. — Seeds v. Kahler, 
76 Pa. St. 262. 

Virginia. — Grant v. Sutton, 90 Va. 
771, 19 S. E. 784; Yates v. taw, 86 
Va. 117, 9 S. E. S08. 

West Virginia. — Burt v. Tim- 
mons, 29 W. Va. 441, 2 S. E. 780; 
Rose V. Brown, 11 W. Va. 122. 

Wisconsin. — Gettelmann v. Gitz, 
78 Wis. 439, 47 N. W. 660. 

Rule Stated. — In Kelley v. Con- 
nell, no Ala_. 543, 18 So. g, the court 
said : " While in ordinary cases (in 
all cases except where the relation ot 
husband and wife exists between the 
debtor and the grantee) it is upon 
the complainant to prove, as a matter 
of fact, that the consideration moved 
from the debtor (Bank v. Kennedy, 
91 Ala. 470, 472, 8 So. 652), a dis- 
tinction is taken where that relation 
does exist, and it is well established 
that in such case the presumption is 
that tlie consideration moved from 
the husband, and to overcome this 



FRAUDULENT CONVEYANCES. 



97 



effect of a statute as to married women and their property rights 
been to change this rule.^' 

The Introduction of the Deed to the Wife from such third person is 
not of itself sufficient proof that the property did not come to her in 
some way from the husband during coverture.^" 

A Voluntary Conveyance for the Benefit of a Wife or child when the 
grantor is largely indebted at the time of its execution is presump- 
tive evidence of fraud.*" 

2. Mode of Proof. — A. Paroi, Evidence. — a. As Respects the 
Attacking Creditor. — As has been stated elsewhere herein," it is 
competent to receive evidence on behalf of a creditor attacking a 
conveyance by his debtor to show the actual consideration, whatever 
consideration may be expressed in the instrument, or that the con- 
sideration expressed was not in fact paid, where the purpose of such 
evidence is to establish the fact that the conveyance was executed 
to defraud creditors.*^ 



presumption the wife (grantee in the 
conveyance from a third person) 
must affirmatively show that the con- 
sideration moved from her — that 
she paid the purchase money with 
her own funds, and not with the 
funds of her husband, directly or in- 
directly. Thus it is said by the su- 
preme court of the United States : 
' Such is the community of interest 
between husband and wife, such pur- 
chases are so often made a cover for 
a debtor's property — are so fre- 
quently resorted to for the purpose 
of withdrawing his property from the 
reach of his creditors and preserving 
it for his own use, and they hold 
forth such temptations for fraud — 
that they require close scrutiny. In 
a contest between creditors and the 
wife, there is and there should be a 
presumption against her, which she 
must overcome by proof.' Seitz v. 
Mitchell, 94 U. S. 580, And this 
court has fully committed itself to 
this view. Booker v. Waller, 81 Ala. 
S49, 8 So. 22s ; Bangs v. Edwards, 88 
Ala. 382, 6 So. 764; Lammons v. Al- 
len, 88 Ala. 417, 6 So. 915. The bur- 
den thus resting on the grantee, Mrs. 
E. E. Kelley, in the case at bar, was 
not discharged. She offered no evi- 
dence in rebuttal of the presumption 
that the land conveyed to her by the 
third person was paid for with the 
money of her husband, who is debtor 
to the complainants." 
Judgment Confessed In Wilson 



V. Silkman, 97 Pa. St. 509, where a 
husband had confessed a judgment 
to a trustee in favor of his wife, it 
was held that on a controversy with 
existing creditors of her husband it 
was incumbent on the wife to show 
that the judgment given to her was 
to secure a hona fide debt due from 
the husband to her out of her sepa- 
rate estate. 

38. Sikking v. Fromm, 23 Ky. L. 
Rep. 2138, 66 S. W. 760. See also 
Smith V. Curd, 24 Ky. L. Rep. i960, 
72 S. W. 744, where the evidence was 
held insufficient to establish that the 
consideration for the purchase of the 
property was derived from the wife's 
separate estate. 

39. Eldridge v. Preble, 34 Me. 
148. 

40. Moritz v. Hoffman, 35 111. 553, 
holding, however, that this presump- 
tion is rebutted where it appears that 
the debtor retained in his possession 
property sufficient to discharge all 
debts existing at the time of making 
the conveyance. 

41. See article " Consideration," 
Vol. Ill, p. 399. 

42. Alabama. — Graham v. Lock- 
hart, 8 Ala. 9. 

Arkansas. — ■ Clinton v. Estes, 20 
Ark. 216. 

Kentucky. — Staton v. Com., 2 
Dana 397. 

Louisiana. — Testart v. Belot, 31 
La. Ann. 795. 

Vol. VI 



98 



FRAUDULENT CONVEYANCES. 



b. As Respects the Grantor. — It is also proper to permit d 
grantor to show, as against the grantee, that the conveyance was 
executed for the purpose of defrauding creditors of the former.*^ 

c. As Respects the Vendee or Grantee. — (l.) Instrument Not 
Expressing Consideration. — Where the instrument of conveyance 
attacked expresses no consideration, the vendee may, for the pur- 
pose of rebutting the presumption arising from the grantor's reten- 
tion of possession after the sale, show what consideration passed.** 



Massachusetts. — Rogers v. Ab- 
bott, 128 Mass. 102. 

Mississippi. — Leach v. Shelby, 58 
Miss. 681. 

Nebraska. — Karll v. Kuhn, 38 
Neb. 539, 57 N. W. 379. 

New Jersey. — Silvers v. Potter, 48 
N. J. Eq. 539. 22 Atl. 584. 

See also Crawford v. Beard, 12 
Or. 447, 8 Pac. 537; Hirsch v. Nor- 
ton, 115 Ind. 341, 17 N. E. 612. 

Defeasance — It is competent for 
a creditor attacking a conveyance by 
his debtor as fraudulent, to show by 
parol that the conveyance, a deed ab- 
solute on its face, was in fact in- 
tended to operate only as a mortgage. 
Hartshorn v. Williams, 31 Ala. 149. 

Books of Account. — Where the is- 
sue was whether or not a conveyance 
was made in payment of a pre-exist- 
ing debt, books of account of the 
grantee, since deceased, properly 
proved, may be received in evidence 
against those claiming under him for 
the purpose of showing the state of 
accounts existing between him and 
the grantor. Archer v. Long, 38 S. 
C. 272, 16 S. E. 998. And in Loos v. 
Wilkinson, no N. Y. 195, 18 N. E. 
99, where the issue was as to whether 
or not a bond, the amount of which 
was claimed to be the consideration 
for the conveyance in question, was 
ever a subsisting obligation, and 
whether there was anything due on 
it, it was held proper to permit evi- 
dence that books Of account kept by 
the grantors as bankers, in which 
their financial transactions were en- 
tered, contained no entry of indebt- 
edness from them to the grantee 
upon any such bond or any other 
debt. 

Tax lists Returned by Grantee. 
On an issue as to the validity of a 
mortgage claimed to have been given 
in consideration of a pre-existing 

Vol. VI 



debt, it is competent for the purpose 
of showing that the grantor was not 
indebted to the grantee, to introduce 
in evidence tax lists for several years 
in the county and town of the resi- 
dence of the grantee in which were 
listed no solvent credits. While this 
may not be absolute and convincing 
proof, it is surely some evidence com- 
petent to go to the jury upon that 
issue. Allen v. McLendon, 113 N. 
C. 321, 18 S. E. 206. 

43. Demerit v. Miles, 22 N. H. 
523, an action on a promissory note 
secured by mortgage, in which the 
mortgagor defendant was permitted 
to make such proof. And it was 
also held that the fact that the mort- 
gagor made oath to the mortgage, 
that it was intended to secure the 
debt therein specified, and for no 
other purpose, did not preclude him 
from making this proof. The court 
said : " The oath made upon the 
mortgage by both parties can have no 
effect in depriving the defendant of 
his defense. The parties merely 
added perjury to fraud." 

" As between the parties to a writ- 
ten instrument and their privies, its 
recitals are conclusive, and neither 
can contradict them by parol evi- 
dence; but this rule does not apply 
to a note and mortgage executed by 
husband and wife to her father, so as 
to estop them from showing, in a 
subsequent contest with a creditor of 
the husband attacking a conveyance 
to the wife as fraudulent, that the 
money for which they were given 
was intended by the father as an ad- 
vancement to his daughter, to be in- 
vested in the purchase of the land." 
Robinson v. Moseley, 93 Ala. 70, 9 
So. 372. 

44. Howell V. Elliott, 12 N. C. 
66, wherein proof was permitted to 
be made to the effect that the con- 



FRAUDULENT CONVEYANCES. 



99 



(2,) Consideration Differing in Quantity or Amount. — As shown in the 
article just referred to, the true or real consideration of a convey- 
ance may be supported by the grantee by evidence showing the con- 
sideration to be different in quantity or amount from that expressed 
in the instrument,*' provided the consideration so shown is not 
inconsistent with the consideration expressed.*" 

Nominal Consideration Recited. — So, also, where the conveyance 
recites a mere nominal consideration it has been held competent for 
the grantee to support the conveyance by evidence showing an ade- 
quate pecuniary consideration,*^ 

Pre-Existing Debt. — Where the conveyance in question recites a 
money consideration, the grantee may support it by parol evidence 



sideration was in fact the payment, 
by the vendee, of a debt as surety for 
the vendor. 

45. United States. — Hinde v. 
Longworth, ii Wheat. 199. 

Alabama. — Miller v. Ro.wan, 108 
Ala. 98, 19 So. 9 ; Troy Fertilizer Co. 
V. Norman, 107 Ala. 657, 18 So. 201 ; 
Gordon v. Tweedy, 71 Ala. 202; 
Graham v. Lockhart, 8 Ala. 9. 

Maryland. — Cole v. Albers, i Gill 
412; Glenn v. McNeal, 3 Md. Ch. 
349; Clagett V. Hall, 9 Gill & J. 80; 
Anderson v. Tydings, 3 Md. Ch. 167. 

South Carolina. — Garrett v. 
Stuart, I McCord 514. 

46. Buford v. Shannon, 95 Ala. 
20s, 10 So. 263; Helfrich v. Stem, 17 
Pa. St. 143; Hamburg v. Wood, 66 
Tex. 168, 18 S. W. 623; Barnes v. 
Black, 193 Pa. St. 447, 44 Atl. 550; 
Pomeroy v. Bailey, 43 N. H. 118. 

Kortgage Given to Secure Ad- 
vances — Where the consideration 
stated in the mortgage in controversy 
is money in hand paid, and the mort- 
gage is taken to secure that sum, it 
may be shown that the mortgage was 
given in part or wholly to secure ad- 
vances made or to be made. Such 
evidence does not affect the nature 
of the conveyance ; it is still founded ' 
on a money consideration. Cole v. 
Albers, i Gill (Md.) 412; Lawson v. 
Alabama Warehouse Co., 80 Ala. 341. 

Liability as Indorser. — In Mc- 
Kimster v. Babcock, 26 N. Y. 378, 
the mortgage attacked recited a 
present, absolute indebtedness, and it 
was held that although no such debt 
existed, and no money was ad- 
vanced when the mortgage was exe- 



cuted, the mortgagee could introduce 
evidence that he had indorsed cer- 
tain notes in reliance upon the mort- 
gage as security therefor, and that 
the purpose of the mortgage was to 
secure such liabilities. 

In Morse v. Powers, 17 N. H. 287, 
the mortgage attacked was condi- 
tioned to save the mortgage harmless 
from certain liabilities, and also to 
save a third person harmless from a 
certain note to which he, with the 
mortgagor, was a party, but which 
was in reality the debt of the mort- 
gagor. It was held that the note re- 
ferred to was admissible in evidence 
for the purpose of repelling an in- 
ference of fraud which might other- 
wise have been drawn from its non- 
production. 

47. Cunningham v. Dwyer, 23 Md. 
219. Compare Ogden State Bank v. 
Barker, 12 Utah 13, 40 Pac. 765, 
where the court said : " In the ab- 
sence of mistake or fraud, the writ- 
ten instrument speaks for itself, and, 
when attacked by creditors, its stip- 
ulations are conclusive as to the 
grantor and grantee; and the instru- 
ment cannot be supported by falsify- 
ing its recitals, because they must be 
presumed to have been made and ac- 
cepted deliberately, and to express 
the intention of the parties thereto. 
The law presumes that every man in- 
tends the necessary and natural con- 
sequences of his own acts, and where 
the proximate and natural results of 
a debtor's acts are to hinder, delay or 
defraud creditors, it will be presumed 
that he intended his acts to produce 
such results." 

Vol. VI 



100 



FRAUDULENT CONVEYANCES. 



showing that the consideration was a pre-existing debt due to him 
from the grantor.*' 

(3.) Consideration Differing in Character or Species. — Again, as shown 
in the same article, the grantee cannot support the conveyance by 
parol evidence showing a consideration differing in character or 
species from that recited in the instrument,*' although there are 



48. Cunningham v. Dwyer, 23 Md. 
2ig. See also Howell v.- Garden, 99 
Ala. 100, ID So. 640. 

And in Waters v. Riggin, 19 Md. 
S36, where the grantee under the deed 
in question offered in evidence copies 
of certain bills obligatory and judg- 
ments against him, and the_^ testimony 
of their payment by the grantee un- 
der the first deed, and their assign- 
ment to him to show the payment of 
the consideration set forth in the 
deed in question, it was held that the 
evidence so offered proved nothing 
inconsistent with the consideration in 
the deed ; that the claims paid by 
the defendant will be considered as 
paid by the grantor himself. 

In Baze v. Arper, 6 Minn. Z20, an 
action of ejectment wherein the de- 
fense was that the title of the plain- 
tiff was founded on a conveyance to 
his grantor in fraud of the creditors 
of the first grantor, it was held per- 
missible for the defendant to show 
that the conveyance to the plaintiff 
was in consideration of a pre-existing 
debt from his grantor, and not for a 
new and valuable consideration ad- 
vanced by the plaintiff at the time 
of the purchase, inasmuch as, if the 
plaintiff had merely relinquished a 
precedent debt for the property, he 
would not occupy the position of a 
bona Me purchaser, and the defend- 
ant would be relieved from the ne- 
cessity of convicting him of notice of 
the fraud. It was held, however, 
that the exclusion of such evidence 
did not, under the peculiar circum- 
stances of that case, constitute fatal 
error. 

In Credle v. Carrawan, 64 N. C. 
422, the consideration as recited in 
the conveyance was an agreement be- 
tween the grantor and his wife, who 
was the grantee, made prior to their 
marriage. Evidence was offered in 
support of the conveyance to explain 
and render more specific the consid- 
eration thus recited, and to show that 

Vol. VI 



the agreement referred to constituted 
a bona Me and valuable considera- 
tion. The evidence offered tended to 
show that the grantor had purchased 
the land from the trustee of the de- 
fendants; that a large part of the 
purchase money was still due, and 
that a mortgage had been taken to 
secure it and had existed for some 
time, and that the property was. then 
of less value than the debt. Under 
these circumstances the grantor and 
his intended wife entered into an 
agreement that the debt and mort- 
gage should be canceled, and for this 
consideration the grantor should exe- 
cute a deed to the defendants. It 
was held that this parol agreement 
was afterwards executed before the 
marriage by the cancellation of the 
debt and mortgage, and constituted 
a valuable consideration for the deed 
afterwards executed to the defend- 
ants, and that the evidence offered 
should have been admitted. 

In Connelly v. Walker, 45 Pa. St. 
449, an action by an execution cred- 
itor against a sheriff for a false re- 
turn, wherein the latter was per- 
mitted in defense to assert title in the 
assignee of the debtor under a bill 
of sale which was executed and pos- 
session delivered thereunder before 
the levy, it was held that evidence 
of an indebtedness by the debtor to 
the vendee as a consideration for the 
sale was relevant and admissible on 
the part of the defendant. 

49. Arkansas. — Carmack v. Lov- 
ett, 44 Ark. 180; Galbreath v. Cook, 
30 Ark. 417. 

Maryland. — Anderson v. Tvdings, 
3 Md. Ch. 167; Cole v. Albers, i Gill 
412; Glenn v. McNeal, 3 Md. Ch. 349. 

Pennsylvania. —'Qvizi^y's Appeal, 
48 Pa. St. 491, 88 Am. Dec. 468. 

See also article " Consiberation," 
Vol. Ill, p. 399. 

Rtde Stated. — In Houston v. 
Blackman, 66 Ala. 559, 41 Am. Rep. 
7S6, where the conveyance in ques- 



FRAUDULENT CONVBYANCBS. 



101 



cases which hold to the contrary.'^'' 

(4.) Parol Evidence Negativing Secret Trust. — Where a deed of 
assignment is not fraudulent on its face, it is competent to show by 
parol evidence that no secret fraud was intended to be consummated 
by it." 

(5.) Payment of Consideration Subsequent to Suit. — The grantee can- 
not, in support of the conveyance, introduce evidence showing pay- 
ment of the consideration after the commencement of the action 
attacking the conveyance."^ 



tion recited a consideration of love 
and affection and one dollar, it was 
held that the grantee could not be 
permitted to introduce evidence that 
it was founded on a valuable con- 
sideration. The court said: "It is, 
at all times, dangerous to relax the 
conservative principle of law which 
declares that when parties enter into 
a contract, and reduce its stipulations 
to writing, the written memorial is 
the sole expositor of the contract, 
and cannot, in the absence of fraud, 
be varied by parol evidence. Mis- 
takes may occur requiripg a court of 
equity to intervene and correct, SO 
that the contract may conform to the 
intention the parties proposed ex- 
pressing. But, without fraud or mis- 
take, as between the parties, the writ- 
ten contract is conclusive. When 
assailed by creditors, it must be 
taken, as to the parties to it, as it 
may be written. It cannot be sup- 
ported by falsifying express recitals, 
which, it must be presumed, were de- 
liberately made, and deliberately ac- 
cepted. ... A valuable, as dis- 
tinguished from a good, considera- 
tion is necessary to support a bar- 
gain and sale; while a good consid- 
eration is essential to support a cove- 
nant to stand seized. -.When either 
of these considerations singly is ex- 
pressed in a conveyance of lands, to 
receive parol evidence that the other 
was the real consideration would al- 
ter the character of the conveyance." 
See also Potter v. Gracie, 58 Ala. 
303, 29 Am. Rep. 748; Murphy v. 
Branch Bank of Mobile, 16 Ala. 90; 
Maigley v. Hauer, 7 Johns. (N. Y.) 
341 ; Wilkinson v. Wilkinson, 17 N. 

c. 377. 

50. Ferguson v. Harrison, 41 S. 
C. 340, 19 S. E. 619; Leach v. Shelby, 
58 Miss. 681, where the court, in 



holding that a grantee of a convey- 
ance, assailed for fraud, may show 
a consideration different from that 
expressed in the instrument, said : 
"Truth is the proper object of in- 
vestigation, and both parties stand on 
the same footing and have equal op- 
portunity to establish it." 

51. Abercrombie v. Bradford, 16 
Ala. 560, where the court said: 
" When a deed is vojd because of 
fraudulent provisions incorporated in 
it, parol testimony cannot be received 
to expunge from the deed these 
fraudulent provisions ; for inasmuch 
as they exist in the deed and form a 
part of it, they could not be stricken 
out by parol proof, and if the deed 
is fraudulent on its face, no parol 
evidence can be received to avoid the 
legal consequences that attach to the 
deed in consequence of such provis- 
ions. The construction of a deed is 
a question of law, and if by the terms 
of the instrument it is void, no other 
judgment can be pronounced than 
that it is null and void. To sustain 
a deed void on its face, by resorting 
to parol proof, would in my judg- 
ment be to create a new instrument 
and then to give effect to its validity. 
See Grover v. Wakeman, 11 Wend. 
187; Gazzam v. Poyntz, 4 Ala. 374. 
But as the deed is not fraudulent on 
its face, the admission of the parol 
proof, showing under what circum- 
stances the provision was inserted, 
and the intent that governed the par- 
ties in inserting it, is not an error of 
which the plaintiff in error can com- 
plain, for the deed being prima facie 
good, the plaintiff had the right to 
show by parol proof that no secret 
fraud, not apparent on the deed, was 
intended to be consummated by it." 

52. Angrave v. Stone, 45 Barb. 
(N. Y.) 35, where the court said: 

Vol. VI 



102 



FRAUDULENT CONVEYANCES. 



B. Recitals. — Recitals in a conveyance as to the consideration 
therefor are regarded as mere hearsay, and are not competent evi- 
dence against the creditors,^^ although there is authority to the effect 
that they are prima facie proof of the consideration.^* 

C. Admissions by Grantor. — The admissions of the grantor to 
third persons before the conveyance was made to the effect that he 
was indebted to the grantee, are admissible in evidence to show that 
fact,^" although they are held to be entitled to little or no weight as 
proof of consideration as against a creditor whose debt was in exist- 
ence at the time of the sale."^ 



" The payment of the consideration 
after the commencement of the suit 
could not change the character of the 
transaction. The defendants cannot 
make evidence to purge the fraud 
and at so late a period." 

53. Alabama. — Schall v. Weil, 
103 Ala. 411, IS So. 829; Chipman v. 
Glennon, 98 Ala. 263, 15 So. 822; 
McCain v. Wood, 4 Ala. 258. 

Arkansas. — Valley Distilling Co. 
V. Atkins, 50 Ark. 289, 7 S. W. 137. 

Georgia. — Cruger v. Tucker, 69 
Ga. SS7- 

Kentucky. — Jarboe v. Colvin, 4 
Bush 70. 

New Hampshire. — Vogt v. Tick- 
nor, 48 N. H. 242. 

Pennsylvania. — Redfield & R. Mfg. 
Co. V. Dysart, 62 Pa. St. 62. 

Virginia. — Flynn v. Jackson, 93 
Va. 341, 25 S. E. i; William & 
Mary College v. Powell, 12 Gratt. 
372; Blow V. Maynard, 2 Leigh 29; 
Massey v. Yancey, 90 Va. 626, 19 S. 
E. 184; DeFarges v. Ryland, 87 Va. 
404, 12 S. E. 805. 

West Virginia. — Childs v. Hurd, 
32 W. Va. 66, 9 S. E. 362. 

The recitals are admissible to 
prove the fact of the existence of the 
instrument recited as the considera- 
tion, so as to show that, as between 
the grantor and grantee, there had 
been an effectual transfer of title to 
the property claimed; and the instru- 
ments themselves are admissible, in 
connection with other evidence after- 
wards adduced, as tending to show a 
valuable consideration. Howell v. 
Carden, 99 Ala. 100, 10 So. 640. 

54. Moore v. Blondheim, 19 Md. 
172. 

55. Moss V. Dearing, 45 Iowa 530. 
Compare McKane v. Wood, 4 Ala. 
258. 

Vol. VI 



Admissions Toy a.n Alleged Traudu- 
lent Vendor that he was indebted to 
the vendee, if made at a time pre- 
vious to contracting the debt with 
the creditor attacking the sale, are 
admissible, where it is shown that 
the consideration of the sale was 
notes due from him to his. vendee. 
Goodgame v. Cole, 12 Ala. 77. It was 
also held in this case that admissions 
to the same effect made at the time 
of the sale were admissible as part 
of the transaction. 

On an issue as to the bona fides 
of a conveyance alleged to have 
been executed without consideration, 
but claimed by the grantee to have 
been given in consideration of a pre- 
existing debt due from the grantor, 
evidence of declarations by the 
grantee^ since deceased, showing that 
he knew and had spoken of the in- 
debtedness, is admissible as being 
evidence^ of declarations against in- 
terest. Byrne v. Reed, 75 Cal. 277, 
17 Pac. 201. 

On an issue as to the considera- 
tion of a mortgage attacked as being 
in fraud of creditors, declarations of 
the mortgagor before the execution 
of the mortgage, made in the pres- 
ence of the mortgagee and while they 
were apparently in the act of settling 
accounts for which the mortgage was 
claimed to have been given, rela- 
tive to the result of such settlement, 
are admissible as part of the res 
gestae. Cook v. Swan, 5 Conn. 140. 

56. Goodgame v. Cole, 12 Ala. 77. 

In Bicknell v. Mellett, 160 Mass. 
328, 35 N. E. 1 130, an action by an 
assignee in insolvency to recover the 
value of the insolvent's stock in trade 
from the holder of a mortgage upon 
it, alleged to have been made in 
fraud of the insolvent laws, declara- 



FRAUDULENT CONVEYANCES. 



103 



Want of a Consideration, for a conveyance cannot be shown by 
evidence of ex parte statements or admissions of the grantor made 
subsequent to the conveyance.^' 

D. Circumstantial Evidence. — a. Pecuniary Condition of 
Parties. — The pecuniary condition at and about the time of the 
conveyance, of the parties thereto, is competent and important 
proof.^* 

Thus, evidence of the financial ability of the grantee to purchase, 
loan money and the like, at and about the time of the conveyance, 
i.^ relevant and admissible, not only on behalf of the grantee,^' but 



tions of the insolvent that he had re- 
ceived full consideration for the 
mortgage are not admissible. The 
court said : " In cases of this sort, 
where a voluntary petition is filed 
shortly after making a mortgage, 
and the good faith of the mortgagor 
is the very question in issue, it is im- 
possible to assume that his state- 
ments bearing on that question have 
been disinterested, or have appeared 
to him to be against his interest, at 
least without something more than 
the naked fact that they have been 
made. Whether they are not inad- 
inissible for another reason we need 
not decide. They are not like decla- 
rations as to boundary by a mort- 
gagor in possession (Flagg v. Ma- 
son, 141 Mass. 64, 67), or by a seem- 
ing owner showing that he holds 
only by a conditional title. Holt v. 
Walker, 26 Me. 107. They are ad- 
dressed primarily to a collateral 
matter, the receipt of a certain sum 
of money, and although logically this 
statement is a step toward showing 
that the mortgage is valid, and so 
toward an admission adverse to the 
insolvent's title, it is a degree more 
remote than a direct admission." 

57. Silva V. Serpa, 86 Cal. 241, 24 
Pac. 1013. See also Hicks v. Sharp, 
89 Ga. 311, IS S. E. 314, where it 
was held that evidence of declara- 
tions of the grantor to the effect that 
the real consideration was for value 
as to one-half of the property and 
for a good consideration as to the 
other half, were not admissible, the 
declarations having been made when 
the grantees were in sole possession. 

58. In Covanhovan v. Hart, 21 Pa. 
St. 495, 60 Am. Dec. 57, where the 
consideration for the conveyance- was 
alleged to be a prior indebtedness of 



the vendor to the vendee for money 
loaned, it was held competent to 
show in support of the allegation of 
the loan that the vendor, who had 
commenced business about the time 
of the loan, was possessed 'of little 
or no means of support. 

59. Allen v. Kirk, 81 Iowa 658, 47 
N. W. 906; Brickley v. Walker, 68 
Wis. 563, 32 N. W. 773; Schaible v. 
Ardner, 98 Mich. 70, 56 N. W. 1105; 
Waxelbaum v. Bell, 91 Ala. 331, 8 
So. 571, wherein it was held that as 
tending to show such ability, a note 
and mortgage executed by grantee to 
a bank for a loan of about the same 
amount, or executed by his agent for 
him and in his name, was relevant. 

Assignment to Employee. — In 
Winfield v. Adams, 34 Mich. 437, 
wherein an assignment to an em- 
ployee, claimed to have been given 
in consideration of a debt from the 
employer, partly for money loaned 
and partly for wages earned, was at- 
tacked as being fraudulent, it was 
held error to refuse to permit the 
employee to show that the money 
loaned was money belonging to her 
before entering the service of the 
employer. The court, in holding 
thus, said : " As bearing 'on the 
question of fraud, it was a very im- 
portant circumstance if the woman 
had money of her own at a time 
when there could be no suspicion of 
a purpose on the part of the debtor 
to make use of her as a cover for his 
property. A loan by a servant to 
the employer is likely to be more or 
less suspicious, and whatever would 
fairly tend to show whether it was 
real or simulated, ought to be re- 
ceived. It is true, as the circuit judge 
said, that when 'one loans money it 
is presumed that it is his own: but 

Vol. VI 



L04 



FRAUDUIBNT CONVBYANCBS. 



also on behalf of the attacking creditors."" 

•b. Value of Property. — The value of the property embraced in 
the conveyance is a material subject of inquiry." 

But evidence of such value at the time of the trial several years 
after the conveyance is not relevant, especially where it appears 



the presumption in a case like this 
would be greatly strengthened by 
such evidence as was proposed." 

Upon an Issue as to the Fraudu- 
lent Character of a Purchase by a 
Wife of the property of a corpora- 
tion, of which her husband was pres- 
ident, in payment and satisfaction of 
moneys loaned by her to the corpo- 
ration, it is proper to permit her to 
show that she had at about the time 
of her loans ■ to the company bor- 
rowed various sums of money, this 
being relevant to show that she was 
possessed of a separate estate, and 
had the control of large sums of 
money. Ragland v. McFall, 137 111. 
81, 27 N. E. 75- 

60. It is proper to permit the at- 
tacking creditor to show that at the 
time of the loan and payment claimed 
the grantee was possessed of but lit- 
tle property, and that what property 
he did possess was mortgaged to its 
full value. Hoyt v. Olmsted, II 
Conn. 376; overruling Cook v. Swan, 
5 Conn. 140, and following Jackson 
V. Mather, 7 Cow. (N. Y.) 301. 

Indebtedness of Grantee. — In 
Hannis v. Hazlett, S4 Pa. St. 133, 
where the issue was as to the bona 
■fides of a conveyance to the wife of 
the debtor, it was held that letters 
from herself to the administrator of 
an estate from which she claimed to 
have derived the funds with which 
she purchased the property, and his 
letters in response thereto about the 
time of the conveyance in question, 
and showing that she received larger 
loans from the estate than she 
claimed, were held to be competent 
evidence as to her ability to pur- 
chase. 

Selling Property at Saorifloe In 

Demeritt v. Miles, 22 N. H. 523, it 
was held that for the purpose of 
showing that a mortgagee was not 
financially so situated as to loan 
money, evidence that fifteen months 

Vol. VI 



before the date of the mortgage he 
sold property very cheap and stated 
that he was pressed for money, was 
not too remote to be admissible. 

61. Weadock v. Kennedy, 80 Wis. 
449, SO N. W. 393 ; Seals v. Robin- 
son, 7S Ala. 363 ; Howell v. Carden, 
99 Ala. 100, 10 So. 640; Baze v. Ar- 
per, 6 Minn. 220. 

The Value of the Property a Short 
Time Subsequent to a conveyance 
assailed as fraudulent is proper mat- 
ter for inquiry where it is made to 
appear that there was no material 
change in the property in the inter- 
val. Goldstein v. Morgan (Iowa), 
96 N. W. 897. 

Inadequacy of Price. . — For the 
purpose of showing that a sale of 
property of long credit is fraudulent 
by reason of the inadequacy of the 
price agreed to be paid, it is admissi- 
ble to show that the price stipulated 
is less than the property would have 
commanded at the time given. Bor- 
land V. Mayo, 8 Ala. 104. 

On a proceeding to set aside a 
conveyance for inadequate considera- 
tion, the fact that the land trans- 
ferred had been held under a tax 
title only is relevant, the purpose of 
the inquiry being to ascertain how 
the amount paid Compares with the 
market value of the interests sold. 
West V. Russell, 48 Mich. 74, 11 N. 
W. 812, 

Evidence as to the value of prop- 
erty involved when offered by either 
party is relevant and admissible, but 
its rejection is not an error of which 
the plaintiffs in attachment can com- 
plain when they fail to recover a 
judgment, since it could not have in- 
jured them, yet if they assailed the 
validity of the conveyance under 
which the claimant derived title, both 
being creditors of the same debtor, 
the value of the goods is material 
and the exclusion of the evidence is 
reversible error. Roswald v. Hobbie, 
85 Ala. 73, 4 So. 177. 



FRAUDULENT CONVEYANCES. 



105 



that property in the same vicinity had for various reasons greatly 
enhanced in value.°^ 

And evidence of the value of the property without specification as 
to time or of its value at the time of the trial is not admissible 
on an issue as to the bona fides of a conveyance made many years 
before.'^ 

That the value of the property included in a chattel mortgage is 
out of all proportion to the mortgage debt is a circumstance to be 
considered by the jury."'' 

in. FRAUDULENT INTENT, KNOWLEDGE, PAETICIPATION, 
INSOLVENCY, ETC. 

1. Presumptions and Burden of Proof. — A. As Resphicts the 
Grantor. — a. In General. — The general rule is that fraudulent 
intent on the part of the debtor will not be presumed*^' — that the 



62. B'owden v. Achor, 95 Ga. 243, 
22 S. E. 254. See also Norwegian 
Plow Co. V. Hanthorn, 71 Wis. 529, 

37 N. W. 825, where it was held that 
evidence of what the vendor had 
paid to his former partner for the 
latter's interest in the property is ir- 
relevant in the absence of evidence 
connecting the vendee with that 
transaction, or showing his knowl- 
edge of its particulars. 

Subsequent Sale. — Where a sale 
of goods by an insolvent debtor in 
payment of an alleged indebtedness 
is assailed on the ground of under- 
valuation, the amount the claimant 
received for the goods at a private 
sale, subsequently made to third per- 
sons, is not legal evidence against 
the attacking creditor of the value 
of the goods. H. B. Claflin Co. v. 
Rodenberg, loi Ala. 213, 13 So. 272. 

63. Zerbe v. Miller, 16 Pa. St. 488. 

64. Ganong v. Green, 71 Mich, i, 

38 N. W. 661. Citing Olmstead v. 
Mattison, 45 Mich. 617, 8 N. W. 555 ; 
Allen V. Kinyon, 41 Mich. 281, i N. 
W. 863; Loomis V. Smith, 37 Mich. 
595- 

65. In Hatch v. Bayley, 12 Cush. 
(Mass.) 27, the jury were charged 
that it was necessary that there 
should be adduced stronger proof to 
establish fraud than is necessary to 
prove a debt or a sale; that the pre- 
sumption was that every man con- 
ducted his business honestly without 
fraud; and when fraud was alleged, 
the proof must not only be sufficient 



to establish an innocent act, but to 
overcome the presumption of honesty. 
The court in sustaining this charge 
said : " As we understand them, the 
judge intended to say that he who al- 
leges fraud against another is bound 
to prove it. That every man is pre- 
sumed to act honestly until the con- 
trary is proved; that he who charges 
another with an act involving moral 
turpitude or legal delinquency must 
prove it; that as this is an allegation 
against a presumption of fact, it re- 
quires somewhat more evidence than 
if no such presumption existed. It 
carried no direction as to the amount 
of evidence required, or as to the 
nature of evidence, whether posi- 
tive or circumstantial, but only that, 
on the whole, it must be somewhat 
stronger; and we cannot perceive 
that such a direction is incorrect. 
The ordinary direction to the jury is 
that he who charges fraud must 
prove it to the satisfaction of the 
jury. We think it not contrary to 
any rule or principle of law for the 
judge to inform the jury that as the 
charge of fraud is a charge against a 
presumption of fact, perhaps often a 
slight one, yet the jury, in order to 
be satisfied, might require somewhat 
stronger evidence than would suffice 
to prove the acknowledgment of an 
obligation or the delivery of a chat- 
tel." 

In Lewis v. Rice, 61 Mich. 97, 27 
N. W. 867, the court said that the 
law does not prohibit " honest sales 

Vol. VI 



106 



FRAUDULENT CONVEYANCES. 



burden of proving it is upon the creditor attacking the conveyance ;°° 
but if the evidence establishes a prima facie case of fraud the bur- 
den of showing that the transaction was fair is then imposed upon 



of goods on credit merely because a 
merchant owes debts. A very large 
share of business is necessarily done 
in that way, and it has never been 
supposed- that the purchaser could be 
held responsible for a dishonest pur- 
pose of his vendor on that account. 
The statute in regard to frauds 
against creditors makes fraud in all 
cases a question of fact, and has laid 
down no rules showing presump- 
tions of fraud from sales on credit. 
Such presumptions may arise from 
failure to change possession, and 
some express deviations from the or- 
dinary course of business, but not 
from mere failure to pay cash down. 
A large majority of business sales 
would fail if any such rule prevailed. 
There must be fraud in fact." 

66. Alabama. — ■ Howell v. Garden, 
99 Ala. 100, ID So. 640; Shealy v. 
Edwards, 75 Ala. 411 ; Jordan v. Col- 
lins, 107 Ala. 572, 18 So. 137; Yeend 
V. Weeks, 104 Ala. 331, 16 So. 165; 
Tompkins v. Nichols, 53 Ala. 197. 

Arizona. — Rochester v. Sullivan, 
II Pac. 58. 

Arkansas. — Clinton v. Estes, 20 
Ark. 216. 

C^^Mfornia. — Visher v. Webster, 8 
Cal. log; Thornton v. Hook, 36 Cal. 
223; Cohen V. Knox, 90 Cal. 266, 27 
Pac. 215; Ross V. Wellman, 102 Cal. 
I, 36 Pac. 402. 

Colorado. — Smith v. Jensen, 13 
Colo. 213, 22 Pac. 434; Arnett v. 
Coffey, I Colo. App. 34, 27 Pac. 614; 
Grimes v. Hill, 15 Colo. 359, 25 Pac. 
698. 

Delaware. — Brown v. Dickerson, 
2 Marv. 119, 42 Atl. 4^1. 

District of Columbia. — McDaniel 
V. Parish, 4 App. D. C. 213. 

Georgia. — Colquit v. Thomas, 8 
Ga. 258. 

Illinois. — Edwards v. Story, 105 
111. App. 433; Bear v. Bear, 145 111. 
21, 33 N. E. 878; Davis V. Kennedy, 
los 111. 300; May v. Gulliman, 105 
111. 272; Mathews v. Reinhardt, 149 
111. 63s, 37 N. E. 85; Reed v. Noxon, 
48 111. 323- 

Indiana. — Andrews v. Flanagan, 
94 Ind. 383; Hogan v. Robinson, 94 

Vol. VI 



Ind. 138; Morgan v. Olvey, 53 Ind. 
6; American Varnish Co. v. Reed, 
IS4 Ind. 88, 55 N. E. 224; Levi v. 
Kraminer, 2 Ind. App. 594, 28 N. E. 
1028. 

Iowa. — Fifield v. Gaston, 12 Iowa 
218; Hardy v. Moore, 62 Iowa 65, 17 
N. W. 200; Jones v. Brandt, S9 Iowa 
332, ID N. W. 854, 13 N. W. 310; 
Adams v. Ryan, 61 Iowa 733, 17 N. 
W. 159; Chase v. Walters, 28 Iowa 
460; Kuhn V. Gustafson, 73 Iowa 633, 
33 N. W. 660; Bixby v. Carskaddon, 
70 Iowa 726, 29 N. W. 626; Eherke 
V. Hecht, 96 Iowa 96, 64 N. W. 652; 
Shaffer v. Rhynders, 1 16 Iowa 472, 
89 N. W. logg. 

Kansas. — Gleason v. Wilson, 48 
Kan. SCO, 29 Pac. 698. 

Kentucky. — Casteel v. Baugh, 13 
Ky. L. Rep. 916, 18 S. W. 1023 ; Redd 
V. Redd, 23 Ky. L. Rep. 2379, 67 S. 
W. 367. 

Louisiana. — Martin v. Drumm, 12 
La. Ann. 494; Chaffe v. DeMoss, 27 
La. Ann. 186; Chaffe v. Lisso, 34 
La. Ann. 310. 

Maine. — Rice v. Perry, 61 Me. 
14s ; Hartshorn v. Eames, 31 Me. 
93; Blaisdell v. Cowell, 14 Me. 370. 

Maryland. — Powles v. Dilley, 9 
Gill 222; Cooke V. Cooke, 43 Md. 
522; Anderson v. Tjdings, 3 Md. 
Ch. 167; Glenn v. Grover, 3 Md. Ch. 
29, .s. c. 3 Md. 212. 

Massachusetts. — Elliott v. Stod- 
dard, 98 Mass. 14s; Marsh v. Ham- 
mond, II Allen 483. 

Michigan. — Bodine v. Simmons, 
38 Mich. 682; Whitfield v. Stiles, 57 
Mich. 410, 24 N. W. 119; Brace v. 
Berdan, 104 Mich. 356, 62 N. W. 
568; Blanchard v. Moors, 85 Mich. 
380, 48 N. W. 542; Bendetson v. 
Moody, 100 Mich. 553, 59 N. W. 252. 

Minnesota. — Derby v. Gallup, 5 
Minn. 119; McMillan v. Edfast, 50 
Minn. 414, 52 N. W. 907; Hathaway 
V. Brown, 18 Minn. 414. 

Mississippi. — Parkhurst v. Mc- 
Graw, 2 Cushm. 134; Mclnnis v. 
Wiscassett Mills, 78 Miss. 52, 28 So. 
725; Brown v. Bartee, 10 Smed. & 
M. 268. 

Missouri.— A\hert v. Besel, 88 Mo. 



FRAUDULENT CONVEYANCES. 



107 



the party who seeks to uphold it."' And this burden of proving 
fraudulent intent is not changed because of the fact that the 
evidence to rebut the grantee's prima facie title comes in part or 
wholly from his witnesses on cross-examination.*' 

An Intent to Defraud a Particular Creditor need not be shown."® 
Where a Creditor Purchases from an Insolvent or Failing Debtor 
goods or other property in payment of his debt, paying a fair and 
reasonable price, and other creditors assail the transaction as fraud- 
ulent on the ground that there was a reservation of a benefit to the 
debtor, the burden of proof rests upon the attacking creditors.'" 



150; Martin v. Pox, 40 Mo. App. 664; 
Deering & Co. v. Collins, 38 Mo. 
App. 73; Thompson v. Cohen, 24 S. 
W. 1023. 

Nevada. — Gregory v. Prothing- 
ham, I Nev. 253. 

North Carolina. — Feimester v. 
McRorie, 34 N. C. 287; Ferree v. 
Cook, 119 N. C. 161, 25 S. E. 856; 
Morgan v. Bostic, 132 N. C. 743, 44 
S. E. 639; Madal v. Britton, 16 S. E. 
914. 

Pennsylvania. — Evans v. Kilgore, 
147 Pa. St. 19, 23 Atl. 201. 

Texas. — Edwards v. Anderson, 31 
Tex. Civ. App. 131, 71 S. W. 555; 
Talcott V. Rose (Tex. Civ. App.), 64 
S. W. 1009. 

IVest Virginia. — Burt v. Timmons, 
29 W: Va. 441, 2 S. E. 780. 

Wisconsin. — Mehlhop v. Petti- 
bone, 54 Wis. 652, II N. W. SS3, 12 
N. W. 443; James v. VanDuyn, 45 
Wis. 512. 

In Maury Nat. Bank v. McAdams, 
104 Tenn. 404, 61 S. W. 773, the or- 
iginal bill was filed by the complain- 
ant as a judgment creditor to reach 
certain promissory notes alleged to 
be the property of the judgment 
debtor, in which he and the makers 
of the notes were made defendants. 
Subsequently the complainant filed 
an amended bill charging a transfer 
of the notes by the judgment debtor 
soon after the filing of the original 
bill, and that the transfer was a de- 
vice of the parties for the purpose of 
hindering, delaying' and defrauding 
the complainant, which the defend- 
ants denied; and it was held that the 
complainant had the burden of prov- 
ing his case. 

In Sawyer v. Bradshaw, 125 111. 
440, 17 N. E. 812, where the alleged 
fraudulent grantee had executed a 



deed of trust to secure a note given 
for an amount largely in excess of 
the actual debt, it was held that in 
the absence of proof of an intent to 
protect the property from other cred- 
itors, the difference between the ap- 
parent and real amouijt of the in- 
cumbrance was not enough of itself 
to stamp the deed of trust as fraud- 
ulent as against creditors. 

An admission that a conveyance, 
absolute on its face, was in fact a 
mortgage only does not change the 
burden of proof as to the good faith 
of the transaction. Fifield v. Gaston, 
12 Iowa 218. 

67. Goshom v. Snodgrass, 17 W. 
Va. 717; Leach v. Fowler, 22 Ark. 
143; Smith V. Reid, 34 N. Y. St. 
489, II N. Y. Supp. 739; Grambling 
V. Dickey, 118 N. C. 986, 24 S. E. 
671 ; Lyman v. Tarbell, 30 Vt. 463. 

68. Poster v. Hall, 12 Pick. 
(Mass.) 89, 22 Am. Dec. 400, 
wherein the court in so holding said 
that the attacking creditors might 
rely on such evidence solely, or 
strengthen it by further evidence ad- 
duced on their part; still, the burden 
of proof was upon them to prove the 
conveyance fraudulent, and that it 
was a question for the jury on the 
whole evidence to determine whether 
it was fraudulent so as to rebut the 
grantee's legal title. 

69. Jordan v. Collins, 107 Ala. 
572, 18 So. 137. 

70. Wood V. Clark, 121 111. 359, 12 
N. E. 271. See also Cook v. Thorn- 
ton, 109 Ala. 523, 20 So. 14. Com- 
pare Demarest v. Terhune, 18 N. J. 
Eq. 532. 

Where a Preference is Created 
by an Insolvent Debtor by a Sale, 
the parties claiming the preference as 
against existing creditors must sup- 

Vol, VI 



108 



FRAUDULENT CONVBYANCBS. 



In Attacking an Assignment for Creditors as Fraudulent it is incum- 
bent upon the attacking parties to establish only the fraudulent intent 
of the assignor.'^ 

b. Insolvency of Debtor. — Some of the courts state the rule to 



port it when assailed by proving its 
consideration, that the debt preferred 
is a just debt of legal obligation, and 
that the property taken in payment 
does not materially exceed in value 
the amount of the debt; and upon 
these facts being shovirn the sale will 
be supported, unless it is shown that 
there was a secret trust for the bene- 
fit of the debtor or a reservation of 
some benefit to him which is not the 
mere incident of the sale itself. Na- 
tional Bank of the Republic v. Dick- 
inson, 107 Ala. 26s, 18 So. 144. 

Eule Under Wisconsin Statute. 
In Kalk v. Fielding, 50 Wis. 339, 7 
N. W. 296, the court, after quoting 
from James v. VanDuyn, 45 Wis. 512, 
to the eifect that they did not think 
the Wisconsin statute was intended 
to put upon the plaintiff the burden 
of proof throughout the whole case 
and compel him to prove affirmatively 
that his mortgage was not in fact 
fraudulent and void as to creditors, 
and that when a mortgagee has 
shown that the mortgage was given 
to secure an actual indebtedness to 
the amount thereof a prima facie 
case of good faith is made unless 
something on the face of the mort-. 
gage shows otherwise, said : " We 
are still inclined to give this con- 
struction to the statute, notwithstand- 
ing the very able argument made by 
the learned counsel for the appellant 
in favor of a different construction. 
We think the object of the statute 
was to negative the presumption 
which arises under the statute con- 
cerning chattel mortgages. By that 
statute the filing of a chattel mort- 
gage in the proper clerk's office is 
declared to be equivalent to the de- 
livery to, and the continued posses- 
sion thereof retained by, the mort- 
gagee, of the property described in 
the mortgage. Under this statute a 
mortgagee would make out a prima 
facie case in his favor against any 
one claiming under the mortgagor by 
simply proving the execution of his 
mortgage, and the filing of it in the 

Vol. VI 



proper office, and the burden of 
proof to show that the mortgage was 
not given to secure a real indebted- 
ness would be upon the party claim- 
ing under the mortgagor. This stat- 
ute made it difficult for the party at- 
tacking the mortgage to prove affirm- 
atively that there was no bona fide 
debt due to the mortgagee from the 
mortgagor, or to show that the debt 
was not as great as that specified in 
the mortgage. These facts were 
generally known only to the mort- 
gagor and mortgagee, and conse- 
quently the party attacking the valid- 
ity of the mortgage would be com- 
pelled to call upon the parties hostile 
to him, as his witnesses, to attack the 
mortgage, especially if he sought to 
attack it on the ground that there 
was no bona fide debt from the 
mortgagor to the mortgagee, or that 
the real debt was less than that 
stated in the mortgage. The section 
of the statute removes this difficulty 
when an officer is a party, and re- 
quires the mortgagee to assume the 
affirmative upon these questions, and 
show that there is a debt due from 
the mortgagor to him, and the 
amount thereof, and that the mort- 
gage was given to secure that debt; 
and when he has done this, we think 
he has done all that is necessary to 
make out a prima facie right to re- 
cover. We do not think that the mort- 
gagee is bound to establish the nega- 
tive upon all other issues in the case, 
which, if established affirmatively, 
would tend to show the mortgage 
fraudulent and void as to creditors." 
71. Loos V. Wilkinson, no N. Y. 
19s, 18 N. E. 99, holding that if this 
be shown the assignment is void, and 
the assignee, however innocent he 
may be of the fraud, will not be pre- 
sumed to act under it, and the cred- 
itors may then pursue their remedies 
as if the assignment had not been 
made. See also more fully on this 
case the article " Assignment for 
Benbmt of Creditors." 



FRAUDULENT CONVBYANCBS. 



109 



be that before a conveyance will be set aside as being fraudulent 
against creditors of the grantor, it is incumbent upon the attacking 
creditors to show that at the time of the conveyance as well as 
of bringing the action the debtor did not have sufficient property 
subject to execution from which their debts could be paid;" and 
the fact that insolvency existed at the time the action is brought 
raises no presumption of the existence of insolvency prior to that 
time, and does not extend it back to the time when the conveyance 
was made." 

c. Cogency of Proof. — Where a conveyance prima facie vests 
the title in a grantee, the creditor w'ho attacks it as fraudulent should 
not leave the court or jury to act upon mere conjecture,'* nor upon 
proofs loose and indeterminate in their character. The rule of the 
criminal law requiring proof beyond a reasonable doubt does not 
apply in such actions,''^ and a charge to the effect that in order to 
justify the imputation of fraud the facts must be such that they are 
not explicable on any other reasonable hypothesis exacts too great 



72. Nevers v. Hack, 138 Ind. 260, 
Z7 N. E. 791; Boyd v. Vickrey, 138 
Ind. 276, 37 N. E. 972 ; Eiler v. CruU, 
112 Ind. 318, 14 N. E. 79; Hogan v. 
Robinson, 94 Ind. 138; Evans v. 
Hamilton, 56 Ind. 34; Bishop v. 
State ex rel. Lord, 83 Ind. 67. See 
also Erb v. Cole, 31 Ark. 554; Lewis 
V. Boardman, 78 App. Div. 394, 79 
N. Y. Supp. 1014; following Kain v. 
Larkin, 131 N. Y. 300, 30 N. E. 105, 
and refusing to follow Smith v. 
Reid, 134 N. Y. 568, 31 N. E. 1082. 
Compare Wright v. Wheeler, 14 
Iowa 8. 

73. Nevers v. Hack, 138 Ind. 260, 
Z7 N. E. 791. Compare Strong v. 
Lawrence, 58 Iowa 55, 12 N. W. 74; 
Carlisle v. Rich, 8 N. H. 44. 

74. Urdangen v. Doner (Iowa), 
98 N. W. 317; Miller v. Beadle, 65 
Mich. 643, 36 N. W. i6s; McDaniel 
V. Parish, 4 App. D. C. 213. 

Where notes and a mortgage given 
for their security are fair on their 
face, the presumption is that they are 
valid and binding until that presump- 
tion is overcome by satisfactory 
proof. To create a mere suspicion 
of fraud is not sufficient. But if it 
exists it must be satisfactorily shown. 
The policy of the law is opposed 
to overturning solemn written instru- 
ments and deeds and conveyances on 
slight evidence. The law designs 
that such instruments shall stand un- 
til overcome by evidence that con- 



vinces the understanding that they 
have been entered into for a purpose 
that is prohibited by the law. Whilst 
courts are vigilant in relieving 
against fraud, they are careful to 
protect fair and honest transactions. 
Pratt V. Pratt, 96 111. 184. 

In Casey v. Leggett, 125 Cal. 664, 
58 Pac. 264, the court, quoting from 
Levy V. Scott, iiS Cal. 39, 46 Pac. 
892, said : " It is quite true that 
evidences of fraud are not left lying 
patent in the sunlight; that fraud it- 
self is always concealed, and that the 
truth is to be discovered more often 
from circumstances, from the inter- 
ests of the parties, from the irregu- 
larities of the transaction, coupled 
with injury worked to an innocent 
party, than from direct and primary 
evidence of the fraudulent contriv- 
vance itself. Nevertheless the evi- 
dence of these matters, facts and 
circumstances, taken together, must 
amount to proof of fraud, and not to 
a mere suspicion thereof, for the pre- 
sumption of the law, except where 
confidential relations are involved, is 
always in favor of the fair dealing of 
the parties." 

75, Hough V. Dickinson, 58 Mich. 
89, 24 N. W. 809. Compare Wilson 
V. Cunningham, 24 Utah 167, 67 Pac. 
118, where the court said that the 
proof must be by testimony, clear, 
plain, convincing, and beyond a rea- 
sonable controversy. 

Vol. VI 



no 



FRAUDULENT CONVEYANCES. 



a measure of proof, and is erroneous.'^ But in such actions fraud 
may be established by a preponderance of the evidence/'^ although 
some of the courts hold that because of the rule that where all 
the facts bearing upon the question of the intent with which the 
conveyance was made will as well consist with honesty as with 
dishonesty and fraud therein, fraud cannot be imputed;''* proof 
of the fraud should accordingly be clear, direct and satisfactory." 



76. Adams v. Thornton, 78 Ala. 
489, 56 Am. Rep. 49, overruling 

Steele v. Kinkle, 3 Ala. 352; and 
Tompkins v. Nichols, 53 Ala. 197. 
The court said : " Fraud requires no 
higher measure of proof for its es- 
tablishment in any civil proceeding 
than is required in many other cases 
where the presumption of honesty, 
official uprightness, or kindred pre- 
sumption is to be overcome. The as- 
sailing party encounters the pre- 
sumption of honesty and fair deal- 
ing; but it is a disputable presump- 
tion, the burden of overcoming 
which rests on him. When he pro- 
duces facts and circurnstances in ev- 
idence which not only cast a sus- 
picion on the transaction, but show 
a state of facts which are not fairly 
or reasonably reconcilable with fair 
dealing and honesty of purpose, then 
he has overcome the presumption of 
purity of intention and is entitled to 
a judgment of condemnation." 

77. Lilly V. McMillan, 52 Iowa 
463 ; Krolik v. Graham, 64 Mich. 226, 
31 N. W. 307; Doxsee v. Waddick 
(Iowa), 98 N. W. 483. 

In Schroeder v. Walsh, 120 III. 
403, II N. E. 70, the court said : " By 
the words 'preponderance of evi- 
dence ' is meant the greater weight of 
evidence, and it is difficult to see 
how any disputed question of fact 
can be found except by the greater 
weight of evidence. The difference 
in the weight may be slight, but un- 
less it preponderates on one side, or 
has greater weight than on the other, 
the matter in dispute cannot be said 
to be proved. If the evidence, in its 
weight, is equally balanced between 
the contending parties, the one hold- 
ing the affirmative of the issue must 
fail ; and the same may be said when 
he has less than a preponderance of 
the evidence." 

78. Dallam v. Renshaw, 26 Mo. 
533; Rumbolds v. Parr, 51 Mo. 592; 

Vol. VI 



Shaffer v. Rhynders, 116 Iowa 472, 
89 N. W. 1099; Eichstaedt v. Moses, 
IDS 111. App. 634, See also Stauffer 
V. Kennedy, 47 W. Va. 714, 35 S. E. 
892. 

79. Fifield v. Gaston, 12 Iowa 
218; Palmer v. Palmer, 62 Iowa 204, 
17 N. W. 463; Rice V. Jerensen, 54 
Wis. 248, II N. W. 549; Edwards v. 
Story, IDS 111. A.pp. 433; McDaniel 
V. Parish, 4 App. D. C. 213; Danner 
Lumb. & Land Co. v. Stonewall Ins. 
Co., 77 Ala. 184. See also Blanchard 
V. Moors, 8s Mich. 380, 48 N. W. 

542, where the court said that the 
evidence must " show such a combi- 
nation of facts and circumstances as 
will lead an unbiased mind to be- 
lieve that fraud has been perpe- 
trated." 

In Pogodzinskj v. Kruger, 44 Mich. 
79, 6 N. W. 116, the court said, in 
speaking of the degree of proof nec- 
essary to establish fraud, that " it 
was necessary to adduce a species 
and amount of proof so convincing 
as to cause a very hearty and firm 
belief of the fact. It was not suf- 
ficient to entangle the mind in per- 
plexity, or generate mere doubt or 
suspicion. A party charging fraud 
is not entitled to succeed unless his 
proof creates a clear and full im- 
pression that the charge is true. It 
is unnecessary to write out a discus- 
sion of the evidence in the record. 
Upon close examination it fails to 
satisfy the understanding that the 
mortgage was a mere sham. It may 
have been, but there is too much 
room for thinking it may not have 
been." 

In Gumberg z'. Treusch, 103 Mich. 

543, 61 N. W. 872, the jury were 
charged as follows: "The proof to 
establish fraud should be clear and 
convincing. If the circumstances are 
equally as consistent with honesty 
and fair dealing as with fraudulent 
and dishonest transactions, then it 



PRAUDULENT CONVEYANCES. 



Ill 



Equivalent of Testimony of Two Witnesses Not Necessary. — The cred- 
itor has the burden of proof to make out his case under the rules 
of evidence applicable in actions at law, but he is not required to 
do so under the rules of equity that the equivalent of the testimony 
of two witnesses is necessary to overcome the responsive answer to 
the fact averred in the bill.*" 

B. As RespficTS THE Grantee. — a. In General. — Although it 
is not incumbent upon creditors to show a fraudulent intent upon 
the part of the grantee, they have the burden of showing that he 
had knowledge of the fraudulent intent or purpose on the part of 
the grantor, or that he had notice of such facts as would have put 
him upon an inquiry leading to knowledge of, or that he participated 
in, such fraudulent intent.*^ And it is not error on the part of the 



must be said that the fraud is not 
established. The presumption of law 
is in favor of honesty and fair deal- 
ing, and that presumption must be 
overcome; and where it is sought to 
overcome it by circumstances, in the 
absence of direct or positive proof of 
fraudulent acts, the proof must be 
clear and convincing. It is not suf- 
ficient to prove facts and circum- 
startces, or a combination of facts and 
circumstances, that create doubt and 
suspicion in the mind as to the hon- 
esty and fairness of the transaction, 
but the proof must be of the kind 
and amount as to create in the mind 
a hearty conviction that the charge 
is true. Fraud is never to be pre- 
sumed, neither is it to be lightly in- 
ferred, but the proof should be clear 
and convincing. It is not necessary 
to establish it by proof beyond a 
reasonable doubt, but it must be 
proof, as I have said, that carries 
to the mind a conviction — a hearty 
conviction — that the charge is true." 
It was held that under the rule laid 
down in Ferris v. McQueen, 94 
Mich. 3&7, S4 N. W. 164, the court 
was not justified in the use of the 
language given. " The words ' clear 
proof ' and ' hearty conviction ' are 
apt to mislead. Proof of facts and 
circumstances is sufficiently clear if it 
creates a belief that a fraud has been 
perpetrated, and a conviction so pro- 
duced is sufficiently hearty to predi- 
cate a verdict upon." 

In Ferris v. McQueen, 94 Mich. 367, 
S4 N. W. 164, where the jury had 
been told that fraud could " be proved 
by circumstantial evidence as well as 
positive proof," but that these facts 



and circumstances must not be slight 
and the inferences could only be 
drawn from strong presumptive cir- 
cumstances which must amount to 

clear proof, it was held that the lan- 
guage used had a tendency to mis- 
lead the jury into a belief that more 
stringent proof was necessary than 

the law requires. See also Watkins 
V. Wallace, 19 Mich. 57. 

80. Miles V. Lewis, 115 Pa. St. 
580, 10 Atl. 123. 

81. United States. — Van Sickle 
V. Wells-Fargo & Co., 105 Fed.^ 16. 

Alabama. — Tompkins v. Nichols, 
S3 Ala. 197; Norwood v. Washing- 
ton, 136 Ala. 657, 33 So. 869; Jor- 
dan V. Collins, 107 Ala. 572, 18 So. 
137; Shealy v. Edwards, 75 Ala. 411; 
Lipscomb V. McClellan, 72 Ala. 151. 

Arkansas. — Stephens v. Oppen- 
heimer, ,45 Ark. 492; Erb v. Cole, 31 
Ark. SS4. 

California. — Casey v. Leggett, 125 
Cal. 664, s8 Pac. 264; Ross 1:/. Well- 
man, 102 Cal. I, 36 Pac. 402; Cohen 
V. Knox, 90 Cal. 266, 27 Pac. 215. 

Colorado. — Smith v. Jensen, 13 
Colo. 213, 22 Pac. 434; Grimes v. 
Hill, IS Colo. 3S9, 25 Pac. 698. 

Connecticut. — Partelo v. Harris, 
26 Conn. 480. 

Georgia. — Claflin v. Ballance, 91 
Ga. 411, 18 S. E. 309; Scott V. Win- 
ship, 20 Ga. 429. 

Illinois. — Johnston v. Hirschberg, 
8s 111. App. 47; Schroeder v. Walsh, 
120 III. 403, II N. E. 70; Eichstaedt 
V. Moses, 105 111. App. 634. 

Indiana. — American Varnish Co. 
V. Reed, 154 Ind. 88, 55 N. E. 224; 
Scott V. Davis, 117 Ind. 232, 20 N. E. 
139- 

Vol. VI 



112 



FRAUDULENT CONVEYANCES. 



trial judge to withdraw from the consideration of the jury evidence 
of fraud on the part of the grantor offered against the grantee in 



Iowa. — Aulman v. Aulman, 71 
Iowa 124, 32 N. W. 240;- Hughes v. 
Monty, 24 Iowa 499; Ray v. Tea- 
bout, 6s Iowa IS7, 21 N. W. 497; Fi- 
field v. Gaston, 12 Iowa 218; Spauld- 
ing V. Adams, 63 Iowa 437, 19 S. W. 
341 ; Chase v. Walters, 28 Iowa 460 ; 
Thompson v. Zuckmayer, 94 N. W. 
476. 

Kansas. — LaClef v. Campbell, 3 
Kan. App. 756, 45 Pac. 461. 

Kentucky. — Barker v. Boyd, 24 
Ky. L. Rep. 1389, 71 S. W. 528. 

Maine. — Spear v. Spear, 97 Me. 
498, S4 Atl. 1 106; Tolman v. Ward, 
86 Me. 303, 29 Atl. 1081. 

Massachusetts. — Lincoln v. Wil- 
bur, 125 Mass. 249; Bridge v. Eggles- 
ton, 14 Mass. 245, 7 Am. Dec. 209. 

Michigan. — Hough v. Dickinson, 
58 Mich. 89, 24 N. W. 8og; Bedford 
V. Penny, 58 Mich. 424, 25 N. W. 
381; Fisher v. Hall, 44 Mich. 493, 7 
N. W. 72; Bauermann v. Van Buren, 
44 Mich. 496, 7 N. W. 67; Hill v. 
Bowman, 35 Mich. 191 ; Loomis v. 
Smith, 37 Mich. 595; Jordan v. 
White, 38 Mich. 253; Eureka Iron & 
Steel Wks. v. Bresnahan, 66 Mich. 
489, 33 N. W. 834. 

Minnesota. — Hathaway v. Brown, 
18 Minn. 414; Leqve v. Smith, 63 
Minn. 24,_ 65 N. W. 121. 

Mississippi. — Verner v. Verner, 64 
Miss. 184, I So. S2. 

Missouri. — Hurley v. Taylor, 78 
Mo. 238. 

Nebraska. —7 Grandin v. First 
Nat. Bank, 98 N. W. 70. 

Nevada. — Gregory v. Frothing- 
ham, I Nev. 253. 

New Hampshire. — Currier v. Tay- 
lor, 19 N. H. 189. 

New Jersey. — New York F. Ins. 
Co. V. Tooker, 35 N. J. Eq. 408. 

New York. — Jaager v. Kelley, 52 
N. Y. 274 ; Starin v. Kelly, 4 Jones & 
S. 366; Beals v. Guernsey, 8 Johns. 
446, 5 Am. Dec. 348. 

North Carolina. — Beasley v. Bray, 
98 N. C. 266, 3 S. E. 497; Nadal v. 
Britton, 112 N. C. 180, 16 S. E. 914. 

Pennsylvania. — Benson v. Max- 
well, 14 Atl. 161. 

South Carolina. — Wemges v. Cash, 
IS S. C. 44. 

Vol. VI 



r^.ra.j. — Hadock v. Hill, 75 Tex. 
193, 12 S. W. 974. 

West Virginia.' — ^ Bishoff v. Hart- 
ley, 9 W. Va. 100. 

Wisconsin. — Mehlhop v. Petti- 
bone, 54 Wis. 652, II N. W. 553, 12 
N. W. 443. 

Rule Stated. — Although the 
grantee did not have such knowledge, 
he may have made his p"urchase un- 
der such circumstances as will pre- 
vent him from being deemed a bona 
fide purchaser. If he had knowledge 
of facts and circumstances which 
were naturally and justly calculated 
to excite suspicion in the mind of a 
person of ordinary care and pru- 
dence, and which would naturally 
prompt him to pause and inquire be- 
fore consummating the transaction, 
and such inquiry would have neces- 
sarily led to a discovery of the fact 
with notice of which he is sought to 
be charged, he will be considered to 
be affected with such notice, whether 
he made inquiry or not. But, while 
the fact of notice may be inferred 
from circumstances as well as proved 
by direct evidence, yet the proof must 
be such as to affect the conscience of 
the purchaser, and must be so strong 
and clear as to fix upon him the im- 
putation of mala fides. Ferguson v. 
Daughtrey, 94 Va. 308, 312, 26 S. E. 
822; Fischer v. Lee, 98 Va. 159, 35 S. 
E. 441, and cases cited. 

"If the Creditor Is Guilty of 
Praud it is because he is a partici- 
pant in the fraudulent intent of the 
debtor. To charge that he is such 
a participant is to charge him with 
fraud. Upon him who diarges fraud 
rests the burden of proof. The fact 
that another is guilty of fraud in the 
same transaction cannot, in the na- 
ture of things, shift the burden of 
such proof." State ex ret. Robert- 
son V. Hope, 102 Mo. 410, 14 S W 
985. 

Under the National Bankruptcy 
law a preferential transfer by an in- 
solvent debtor four months before the 
filing of the petition in bankruptcy is 
voidable at the suit of the trustee 
in bankruptcy, if the preferential 
transferee shall have had reasonable 



FRAUDULENT CONVBYANCBS. 



113 



the absence of evidence connecting the grantee with such fraud. '^ 
But such knowledge need not be shown by the testimony of two 
witnesses, or one witness with corroborating circumstances, but 
it may be shown from all the circumstances surrounding the trans- 
action.** 

Knowledge of Each Particular Act. — The rule requiring proof of 
knowledge or participation on the part of the grantee does not 
render it necessary, however, to prove his knowledge of every par- 
ticular act or declaration on the part of the grantor from which 
such fraudulent intent is to be inferred.'* 

Preferred Creditor. — Where it is claimed that a preferred creditor 
participated in the fraudulent designs of the debtor, the burden is 
upon the other creditors attacking the conveyance to prove such 
participation by a preponderance of the evidence.'" 



cause to believe that the transfer was 
intended to give him a preference; 
and in Cullinane v. State Bank of 
Waverley (Iowa), 98 N. W. 887, an 
action by a trustee in bankruptcy to 
recover from a mortgagee of a bank- 
rupt on the ground that the mortgage 
was a preference, it was held that the 
burden was on the plaintiff to show 
that the mortgagee had reasonable 
cause) to believe not only that in- 
solvency existed as a fact, but that 
a preference was intended by the 
mortgage. See also Pirie v. Chi- 
cago, 182 U. S. 438; Deland v. Miller 
& C. Bank, 119 Iowa 368, 93 N. W. 
304. 

82. Mathews v. Reinhardt, 149 
III- 63s, 37 N. E. 85. 

83. Cooke V. Cooke, 43 Md. 522. 

84. Holmes v. Braidwood, 82 Mo. 
610. 

" Such a Requirement would ren- 
der futile and impracticable all at- 
tacks upon fraudulent transfers, in 
perhaps ninety-nine out of every one 
hundred cases, in which it might be 
attempted to assail their validity. It 
would put a facile means within the 
reach of parties to destroy the force 
and admissibility of evidence by the 
artifice of management. Hence, the 
law does not require more than a 
knowledge of facts, which, however 
general in their nature, are sufficient 
to put the grantee on inquiry, by 
reasonably exciting a just suspicion 
in his mind as to the honesty or bona 
fides of the alleged fraudulent trans- 
action." Shealy 7'. Edwards, 75 Ala. 
411. The specific point ruled upon 

8 



in this case was that it was not 
proper to permit evidence of the 
transfer by one of the grantors sev- 
eral days after the conveyance of the 
notes taken for the purchase-money 
of the property, which transfer was 
shown to have been made without the 
knowledge of the grantee and subse- 
quent to their purchase. 

85. Steinburg v. Buffum, 61 Neb. 
778, 86 N. W. 491, where the court 
in so holding said that the preferred 
creditor "could only maintain his 
case by proof that he was a creditor 
of the vendor, and purchased the 
property in satisfaction of the debt. 
This done, the law presumes the 
transaction was honest, and fairly 
consummated. The defendant may 
disprove these facts, and defeat 
plaintiff's right to the property, or, 
as he attempted to do, may avoid 
the transfer by proving a fraud on 
the rights of other creditors in the 
sale of the property, and that the 
plaintiff, by reason of his actions in 
connection with the transaction, was 
chargeable with such fraud. To suc- 
ceed in this aspect of the case, it was 
incumbent upon him to establish his 
defense by a preponderance of the 
evidence. Having charged the plain- 
tiff with fraudulent acts on his part 
sufficient to void the transaction, he 
was required to make the charge 
good by evidence in support thereof 
preponderating in his favor. It is 
not, we think, the law that when he 
proves the fraudulent intent of the 
vendor, and that the vendee had no- 
tice of it, the burden is on the vendee 

Vol. VI 



il4 



FRAUDULENT CONVEYANCES. 



b. Vendee Taking Without Consideration. — Where the fraudu- 
lent design of the vendor is shown, it is not necessary, in addition 
to proof that the vendee took without consideration, to show his 
fraudulent participation.^" 

c. Mere Suspicion Insufficient. ■ — In order to affect a vendee with 
knowledge of the vendor's fraudulent design, the attacking cred- 
itors must show more than the possession of facts calculated to 
create a mere suspicion of such design f they must show facts and 
circumstances not fairly and reasonably reconcilable with fair deal- 
ing and honesty of purpose.^* 

Actual Relief. — It has been held necessary to show that the ven- 
dee had an actual belief that the vendor made the transfer with 
such intent.^' 

d. Knowledge of Insolvency. — Nor is it sufficient to show merely 
that the vendee had knowledge of the vendor's insolvency.*" 

C. Rule as to Subsequent Creditors. — a. In General.. — The 
general rule is that where subsequent creditors seek to set aside a 



to prove that he did not participate 
in the fraud. The defendant is re- 
quired to proceed one step further, 
and prove also that the plaintiff was 
a participant in the fraud complained 
of. Blumer v. Bennett, 44 Neb. 873, 
63 N. W. 14. The rule is well set- 
tled in this state that, as to a bona 
Me creditor of a fraudulent vendor, 
buying property or obtaining secu- 
rity for the satisfaction of his de- 
mand, the transaction cannot be 
avoided as to him by other creditors, 
except it is shown that he shared in 
the fraudulent designs of his vendor, 
and received the property or security 
for other purposes than protecting 
himself from loss by reason of his 
demand against the vendor. Jones v. 
Loree, 37 Neb. 816, 821, 56 N. W. 
390; Grosshans v. Gold, 49 Neb. 599, 
68 N. W. 1031; Bank v. Bunn 
(Neb.), 8s N. W. 527." 

86. Preston v. Cutter, 64 N. H. 
461, 13 Atl. 874. 

87. Hooks V. Paflford (Tex. Civ. 
App.), 78 S. W. 991, where the court 
said : " If he did not know of the in- 
tent, then, to constitute notice, he 
must be in possession of facts and 
circumstances such as would put an 
ordinarily prudent person upon in- 
quiry, which, by the use of proper 
diligence on his part, would lead to 
a knowledge of such intention. A 
purchaser might be in possession of 
facts that would create a suspicion 

Vol. VI 



as to the seller's fraudulent intent, 
but which by the use of proper dili- 
gence would not lead to a knowledge 
of such intention. Of course, if he 
knew facts which would excite the 
suspicion of a man of ordinary pru- 
dence, and put him upon inquiry, and 
by the use of diligence would dis- 
cover the fraudulent intent, then he 
would be charged with notice. The 
charge was calculated to mislead, in 
that it did not fully state the law, 
as indicated." 

88. Smith v. Collins, 94 Ala. 394, 
10 So. 334; Keller v. Taylor, 90 Ala. 
289, 7 So. 907. 

In an action by an assignee in in- 
solvency to recover the property sold 
by the; assignor in violation of the in- 
solvent laws, it is not sufficient, in 
order to establish the fact that the 
vendee had at the time of the pur- 
chase reasonable cause to believe the 
debtor to be insolvent, that the cred- 
itor had some cause to suspect such 
insolvency, but it must be shown that 
he had such a knowledge of facts as 
would induce a reasonable belief of 
the debtor's insolvency. Cutler v. 
Dunn, 68 N. H. 394, 44 Atl. 536. 

89. Knower v. Cadden Clothing 
Co., 57 Conn. 202. 

90. Meyer Bros. Drug Co. v. Dur- 
ham (Tex. Civ. App.) , 79 S. W. 860 ; 
Vickers v. Buck Stove & Range Co., 
60 Kan. 598, S7 Pac. 517; Cannon v. 
Young, 89 N. C. 264. 



FRAUDULENT CONVEYANCES. 



115 



conveyance, the burden is upon them to show that the conveyance 
was made with intent to defraud them;'^ and an intent to defraud 
subsequent creditors is not to be presumed from the fact of an 
intent to defraud existing creditors.^^ 

b. Actual Intent Not Necessary. — But a subsequent creditor does 
not have the burden of showing an actual intent to defraud; it is 
sufficient for him to show facts affording a reasonable ground to 
presume fraud.'^ 

c. Intent as an Independent Fact. — Nor need the fraudulent 
intention be proved as an independent fact. It may be gathered from 



91. Alabama. — Elyton Land Co. 
V. Iron City Steam Bottling Wks., 109 

Ala. 602, 20 So. SI ; Seals v. Rob- 
inson, 75 Ala. 363; Stoutz v. Huger, 
107 Ala. 248, 18 So. 126; Stiles v. 
Lightfoot, 26 Ala. 443; Wilson v. 
Stevens, 129 Ala. 630, 29 So. 678. 

Arkansas. — May v. State Nat. 
Bank, 59 Ark. 614, 28 S. W. 431. 

Illinois. — Tunison v. Chamblin, 88 
111. 378; Lamont v. Regan, 96 111. 
App. 359. 

Maine. — Knight v. Kidder, i Atl. 
142. 

Massachusetts. — Winchester v. 
Charter, 97 Mass. 140; s.c. 12 Allen 
606. 

Mississippi. — Wynne v. Mason, 72 
Miss. 424, 18 So. 422. 

Missouri. — Ziekel v. Douglass, 88 
Mo. 382. 

Nebraska. — Ayers v. Wolcott, 
92 N. W. 1036; modifying 62 Neb. 
805, 87 N. W. 906. 

New Jersey. — Kinsey v. Feller 
(N. J. Eq.), 51 Atl. 485; Carpenter 
v. Carpenter, 27 N. J. Eq. 502; Ha- 
german v. Buchanan, 45 N. J. Eq. 
292, 17 Atl. 946, 14 Am. St. Rep. 732 ; 
Boquet v. Heyman, 50 N. J. Eq. 114, 
24 Atl. 266. 

Oregon. — Crawford v. Beard, 12 
Or. 447. 

Texas. — O'Neal v. Clymer (Tex. 
Civ. App.), 61 S. W. 545. 

West Virginia. — Rogers v. Ver- 
lander, 30 W. Va. 619, S S. E. 847; 
Cohn V. Ward, 32 W. Va. 34, 9 S. 
E. 41. 

92. Lawton v. Gordon, 34 Cal. 36, 
91 Am. Dec. 670; Evans v. David, 98 
Mo. 405, II S. W. 975; Stevens v. 
Morse, 47 N. H. 532; Harton v. Ly- 
ons, 97 Tenn. 180, 36 S. W. 851. 
Compare Hudnal v. Wilder, 4 Mc- 
Cord (S. C.) 294. 



93. Snyder v. Free, 114 Mo. 360, 
21 S. W. 847, where the court said: 
" Sometimes it has been loosely said 
that, in order for a subsequent pur- 
chaser to successfully attack a vol- 
untary conveyance on the ground of 
fraud, it is necessary that he show 
an ' actual intent ' to defraud ; but 
this phrase is inaccurate and mis- 
leading. The statute uses no such 
expression. It is satisfied with 'the 
intent to defraud,' and courts ought 
to require no more. In the highest 
grade of crime proof of an 'actual 
intent ' is not required, and, if re- 
quired, convictions would rarely oc- 
cur. So it would be in regard to 
instances like the present. It would 
be, indeed, a vain and hopeless task 
to set aside a voluntary conveyance 
if a subsequent purchaser had to 
prove an ' actual intent ' to defraud. 
But, if such an intent were required, 
this case would furnish as strong 
proof of it as it is ordinarily possible 
to obtain. But such a high degree of 
proof is not necessary. Fraud under 
the statute is nowise different from 
that found elsewhere. Whatever sat- 
isfies the mind and conscience of the 
existence of fraud is sufficient. . . . 
A similar view of the law is taken in 
New Jersey. Clafiin v. Mess, 30 N. 
J. Eq. 211, in which, after declaring 
that 'fraud in fact' must be shown 
by future creditors, it is explained 
that such 'may be considered found 
when it appears that, after deducting 
the property which is the subject of 
the gift, the grantor has not retained 
sufficient available assets for the pay- 
ment of his debts.' This view ap- 
pears to be that entertained by the 
learned author of a recent work on 
the subject now in hand. 2 Bigelow 
on Fr. IDS, et seq." 

Vol. VI 



116 



FRAUDULBNT CONVEYANCES. 



the deed itself, and from the acts of the parties and the surrounding 
circumstances.'* 

d. Insolvency of Grantor. — A subsequent creditor has the bur- 
den of showing insolvency of the grantor at the time of the convey- 
ance.°^ 

D. RuivE AS TO Subsequent Purchaser. — As the Attacking 
Creditor. — A subsequent purchaser has been held to stand upon 
the same footing as a subsequent creditor. He can only attack a 
previous conveyance by showing that it was made with intent to 
defraud him.°° 

Against Attacking Creditors. — Although there may have been a 
fraudulent intent on the part of both the vendor and vendee, it is 
incumbent upon creditors attacking the conveyance to show that 
a purchaser from the vendee had actual knowledge of the first 
vendee's fraudulent intent.'^ 

E. Circumstances Raising Presumption oe Fraud. — a. In 
General. — The broad rule is sometimes laid down that fraud is 
never presumed.'' This is not strictly true, however, because where 
badges of a fraudulent conveyance appear,'' bona ftde creditors 



94. Baltimore High Grade Brick 
Co. V. Amos, 95 Md. 571, 53 Atl. 148, 
52 Atl. 582. 

95. Lewis V. Boardman, 78 App. 
Div. 394, 79 N. Y. Supp. 1014. 

96. Prestige v. Cooper, 54 Miss. 
74- 

97. Thornton v. Hook, 36 Cal. 
223; Paige V. O'Neil, 12 Cal. 483; 
Hodges V. Coleman, 76 Ala. 103; 
White V. Million, 102 Mo. App. 437, 
76 S. W. 733, holding that knowledge 
of such facts as would put a prudent 
man on inquiry may be submitted as 
evidence tending to show actual 
knowledge, but that such knowledge 
it not 'itself the same as actual knowl- 
edge. See also Maddox v. Reynolds, 
69 Ark. 541, 64 S. W. 266. Compare 

Schaible v. Ardner, 98 Mich. 70, 56 
N. W. 1 105, holding otherwise in the 
case of a conveyance presumptively 
fraudulent as to creditors. 

98. In Sedgwick v. Tucker, 90 
Ind. 271, it was held that the phrase 
" Fraud is never presumed," when 
used by the court in charging the 
jury, is not available error if it be 
used under such circumstances as to 
be understood by the jury as mean- 
ing merely that fraud cannot be 
found as a fact without some evi- 
dence of its existence. 

In Kendall v. Hughes, 7 B. Mon. 
(Ky.) 368, it was held misleading to 

Vol. VI 



charge the jury that " fraud cannot 
be presumed, but must be proved like 
any other fact," because fraud may 
be presumed if there be sufficient ev- 
idence of other facts which will au- 
thorize the inference of fraud. 

In Cooper v. Friedman, 23 Tex. 
Civ. App. s8s, 57 S. W. 581, it was 
held error for the court to charge 
the jury that fraud is never pre- 
sumed, but must be proved like any 
other fact. " Of course it is true that 
fraud must be proven like any other 
fact, and, as a matter of law, in the 
absence of proof it may not be pre- 
sumed ; but, from fhe existence of 
certain facts which have a tendency 
to establish fraud, the jury might be 
warranted in indulging in the pre- 
sumption that fraud existed in the 
transaction complained of." 

99. " A badge of fraud has been 
defined to be a fact which is calcu- 
lated to throw suspicion upon a 
transaction, and calling for an ex- 
planation. Peebles v. Horton, 64 N. 
C. 374. In Terrell v. Green, 11 Ala. 
213, it was said to be an ' inference 
drawn by experience from the cus- 
tomary conduct of mankind.' These 
badges of fraud do not in themselves, 
or per se, constitute fraud, but are 
rather signs or indicia from which its 
existence may be properly inferred as 
matter of evidence. They are more 



FRAUDULENT CONVEYANCES. 



117 



have the right to require that these shall be explained, and all 
unfavorable presumptions arising from them be repelled by evidence 
of good faith on the part of those claiming under the conveyance.^ 



or less strong or weak according to 
their nature and number concurring 
in the same case. They are as in- 
finite in number and form as are the 
resources and versatility of human 
artifice. The present case presents 
numerous illustrations of many such 
badges, which are enumerated in the 
various rulings of the court with ex- 
planations as to their legal force and 
effect, which seem correct except in 
one particular. The court erred in 
charging the jury as to the rule gov- 
erning the burden of proof in such 
cases. The weight which is to be 
given badges of fraud is a matter 
usually for the determination of the 
jury. ' In some cases,' as observed 
by a learned author, ' fraud is self- 
evident; and when so, it is the 
proper province of the court to ad- 
judge upon it.' Bigelow on Fr., p. 
468. But it cannot be asserted, as a 
general rule, that everything which 
casts suspicion upon the good faith 
of a transaction shifts the burden of 
proof upon the grantee or interested 
party, so as to require him to explain 
it, and that, in the absence of ex- 
planation, such transaction is neces- 
sarily to be pronounced fraudulent. 
There are numerous badges or in- 
dicia of fraud which might, although 
without explanation, entirely fail to 
satisfy the minds of a jury that the 
transaction to which they relate had 
its origin in a fraudulent intent. 
There may be a suspicion, in other 
words, falling far short of satisfac- 
tory proof." Shealy v. Edwards, 75 
Ala. 411. 

1. Wimberley v. Montgomery 
Fertilizer Co., 132 Ala. 107, 31 So. 
524. See also Harrell v. Mitchell, 61 
Ala. 270; Watts v. Burgess, 131 Ala. 
333, 30 So. 868; Orr v. Peters, 197 
Pa. St. 606, 47 Atl. 849. See also 
Cincinnati Tobacco Warehouse Co. 
V. Matthews, 24 Ky. L. Rep. 2445, 
74 S. W. 242, where the grantor ex- 
ecuted the conveyance within a few 
days after suits were threatened, con- 
veying all his property to his son and 
son-in-law for the recited considera- 
tion of $500, the land itself being 



probably worth $1500, and there was 
no change of possession or use of the 
land following the execution of the 
deed. O'Conner M. & M. Co. v. 
Coosa F. Co., 95 Ala. 614, 10 So. 290, 
36 Am. St. Rep. 251. 

Sales in BiUk. — In Maryland a 
statute provides that "'A sale of 
any portion of a stock of merchan- 
dise otherwise than in the ordinary 
course of trade in the regular and 
usual prosecution of the seller's busi- 
ness, or a sale of an entire stock of 
merchandise in bulk, will be pre- 
sumed to be fraudulent and void as 
against the creditors of the seller, 
' unless the seller and the purchaser 
shall, at least five days before the 
sale, make an inventory as therein 
provided, and unless the purchaser 
shall in good faith make certain in- 
quiries as to the creditors of the 
seller, and give them notice of such 
proposed sale. The seller is also re- 
quired to fully and truthfully an- 
swer in writing each and all the in- 
quiries to be made of him.' " In Hart 
V. Roney, 93 Md. 432, 49 Atl. 661, it 
was held that the presumption re- 
ferred to in this statute was a re- 
buttable presumption, and that in that 
particular case the presumption was 
rebutted by the testimony of the 
seller to the effect that he purchased 
the stock to secure his rent, and to 
have the business conducted in a 
more profitable way, as the building 
occupied by the seller belonged 
to him and adjoined his own busi- 
ness, and that he did not suspect 
that the seller had any motive in 
selling beyond going out of business ; 
and also proof that he had inquired 
as to whether a certain judgment 
existed against the seller. The court 
said : " Prior to the passage of 
the act, the presumption was that 
such a transaction was bona fide, 
and the burden was on the one at- 
tacking it to prove fraud; but the 
statute shifts the burden of proof un- 
less its provisions are complied with. 
The difficulty in proving fraud was 
doubtless known to the members of 
the legislature, and, as those endeav- 

Vol. VI 



118 



FRA UD ULEN T CONl 'B Y AN CBS. 



Thus, when the necessary result of a debtor's act is to place his 
property beyond the reach of legal process it will be presumed 
that he did so with a fraudulent intent.^ 

Debtor Paying Consideration. — The presumption of fraudulent intent 
arising by reason of a statute of uses and trusts, of one who pays 
the consideration for a grant to another, casts upon the grantee 
the bufden of disproving a fraudulent intent.^ 

Secret Reservation of Benefit to Debtor. — So also without reference 
to the actual intention of the parties the law condemns as ofifending 
the rights of existing creditors an absolute conveyance made by 
an embarrassed debtor when there is a secret reservation for his 
benefit.* 

Conveyances Between Corporations Having Same Directors. — Where 
property of a corporation is conveyed to another corporation repre- 
sented by the same directors, the fact of such relationship is a 
circumstance calculated to arouse suspicion, and calls for a rigid 
and severe scrutiny in the examination of such transaction when 
assailed by creditors."* 



oring to do so were frequently with- 
out evidence unless they made the 
parties to the alleged fraud their wit- 
nesses, it is apparent that the legis- 
lature thought it would lessen, if not 
relieve, the difficulty by casting the 
burden on the parties to establish the 
bona fides of such transactions. To 
have made such sales absolutely void 
and conclusively fraudulent unless 
the parties complied with such pro- 
visions as are contained in the law 
might in some cases have worked 
great injustice.*' 

2. Crawford v. Beard, 12 Or. 447, 
8 Pac. 537. See also Cook v. Burn- 
ham, 3 Kan. App. 27, 44 Pac. 447. 

3. This presumption may be over- 
come by proof that the one paying 
the consideration was at the time 
neither insolvent nor contemplating 
insolvency, but had, aside from the 
consideration paid for the property 
so granted, ample funds to pay his 
debts, and that an inability to meet 
his obligations was not and could not 
reasonably have been supposed to 
have been in his mind. Dunlap v. 
Hawkins, 59 N. Y. 342, where the 
court said : " By proving the pe- 
cuniary circumstances and condition 
of the grantor, or him who pays for 
and procures a grant from others, 
his business and its risks and. con- 
tingencies, his liabilities and obliga- 
tions, absolute and contingent, and 
his resources and means of meeting 

Vol. VI 



and solving his obligations, and 
showing that he was neither insolvent, 
nor contemplating insolvency, and 
that an inability to meet his obliga- 
tions was not and could not reason- 
ably be supposed to have been in the 
mind of the party, is the only way in 
which the presumption of fraud, aris- 
ing from the fact that the convey- 
ance is without a valuable considera- 
tion, can be repelled and overcome, 
except as the party making or pro- 
curing the grant may, if alive, testify 
to the absence of all intent to hinder, 
delay or defraud creditors." 

4. The intent in such case is de- 
duced from the transaction itself, the 
inevitable consequence being to hin- 
der, delay or defraud creditors. A 
conveyance, absolute in form, but in- 
tended as security for a debt, operates 
a secret reservation, for the benefit of 
the debtor, of a valuable right and 
property — the equity of redemption 
which is capable of being subjected to 
the payment of his debts. On this 
ground rests the settled doctrine of 
this court, that such conveyances, 
when made by an embarrassed or in- 
solvent debtor, are obnoxious to the 
provisions of the statute, which de- 
clares void as against creditors all 
conveyances " made in trust for the 
use of the person making the same." 
Hill V. Rutledge, 83 Ala. 162, 4 So. 
I3S. 

5, When such a relationship is 



FRAUDULENT CONVEYANCES. 



119 



b. Vendee's Knoivledge of Vendor's Fraudulent Design. — Where 
the circumstances surrounding a fraudulent conveyance by an insolv- 
ent debtor are out of the usual course of business, and are such as 
to excite the suspicions of a reasonably prudent man, knowledge 
on the part of the vendee of the fraudulent design of the vendor 
may be presumed." 

c. Misstatement as to Consideration. — It has been held that a 
misstatement of the consideration in the bill of sale attacked as 
fraudulent is presumptive evidence of fraudJ 

d. Preferences. — The law does not presume that a transfer of 
all of a debtor's property in payment of the claim of one creditor 
is fraudulent merely because the debtor retains nothing wherewith 
to pay other creditors.^ 

e. Mortgage Exceeding Amount of Indebtedness. — The fact that 
a mortgage is taken for more than is due from a person known 
to be insolvent is presumptive evidence of fraud, and imposes upon 
the mortgagee the burden of showing good faith and to satisfactorily 
explain why the excess was thus secured.® 



shown to exist between the contract- 
ing parties, clearer and fuller proof 
must be given of a valuable and ade- 
quate consideration, and of the good 
faith of the parties, than would be re- 
quired if the transferee or grantee 
had been ^ stranger. When, however, 
such examination is made, and such 
proof is forthcoming, and the result 
is that no fraud or unfair dealing is 
shown, and it appears that the trans- 
action was not vitiated by any in- 
firmity of which a creditor has the 
right to complain, then the transac- 
tion must stand, and it is as valid, as 
against the creditor, as if the cor- 
poration had dealt with a stranger 
who was not involved in any way 
with the corporate representatives. 
O'Conner M. & M. Co. v. Coosa, 95 
Ala. 614, 10 So. 290, 36 Am. St. Rep. 
251- 

G. Haskett v. Auhl, 3 Kan. App. 
744, 45 Pac. 608. See also Urdangeti 
V. Doner (Iowa), 98 N. W. 317, 
where the court held that if a sus- 
picion of fraud exists and is based 
upon facts and circumstances known 
to the vendee or grantee, it is then 
a question for the jury to determine 
whether the knowledge of such facts 
and circumstances would have put a 
man of ordinary prudence upon in- 
quiry, which, if made with diligence, 
would have led to knowledge of the 
vendor's intention ; in other words, it 
is the facts known to the vendee 



which require him to act, and not his 
suspicions. 

Conveyance by Insolvent Debtor 
Not Kade in Course of Business. 

In Metcalf v. Munson, 10 Allen 
(Mass.) 491, it was held that a Mas- 
sachusetts statute, providing that a 
conveyance of property by an in- 
solvent debtor not made in the usual 
and ordinary course of business was 
prima facie evidence that the grantee 
had reasonable cause to believe him 
insolvent, applied to conveyances 
made to pre-existing creditors as 
well as to other conveyances. 

7. Cottingham v. Greely-Barnham 
Grocery Co., 129 Ala. 200, 30 So 560. 

8. Meachem v. Hahn, 46 111. App. 
144. Citing Schroeder v. Walsh, 20 
111. 403, II N. E. 70. 

9. Henry v. Harreld, 57 Ark. 569, 
22 S. W. 433; Carson, Peery, Scott 
& Co. V. Byers, 67 Iowa 606, 25 N. 
W. 826; Wallach v. Wylie, 28 Kan. 
138; Worrell v. Vickers, 30 La. Ann. 
202; Taylor v. Wood (N. J. Eq.), 
5 Atl. 818;. Liver v. Thielke, 115 
Wis. 389, 91 N. W. 975. Compare 
Brace v. Berdan, 104 Mich. 356, 62 
N. W. 568, holding that this fact, al- 
though amounting to fraud in law 
if the mortgage was made for the 
purpose of hindering or delaying 
creditors, does not impose upon the 
mortgagee the burden of proving 
that there was no fraud, but that 

Vol. VI 



120 



FRAUDULENT CONVBYANCBS. 



f . Voluntary Conveyance. — (1.) Generally. — If a vendor be in- 
debted at the time of a voluntary conveyance of his property, the 
conveyance is presumed to be fraudulent as to those debts/" and 
it is not incumbent upon the attacking creditor to show that the 
debtor contemplated a fraud in making it, or that it was an immoral 
or corrupt act,^^ or that the debtor was actually insolvent at the 



the burden still rests on the party at- 
taching the mortgage. 

If a chattel mortgage is executed 
for a valuable consideration and in 
good faith, and not for the pur- 
pose of defrauding the creditors of 
the mortgagor, the fact that it is 
given to secure a larger sum than 
is actually due does not affect its 
validity (Nazaro v. Ware, 38 Minn. 
443, 38 N. W. 3S9) ; but where the 
mortgage on its face secures a sum 
greatly in excess of the true amount 
due to the mortgagee, it is an im- 
portant circumstance to be taken into 
consideration in determining whether 
or not the mortgage was made in 
good faith and not for the purpose 
of defrauding the creditors, and the 
burden is on the mortgagees to es- 
tablish the bona fides of the mort- 
gage. Heim v. Chapel, 62 Minn. 338, 
64 N. W. 825. 

10. Spear v. Spear, 97 Me. 498, 
54 Atl. 1 106. Young v. White, 3 
Cushm. (Miss.) 146, where the court 
said : " The law presumes a volun- 
tary conveyance as to such creditors 
to be fraudulent and void, and the 
party claiming under it must, by 
clear and satisfactory proof, rebut 
this presumption. It will not be suf- 
ficient merely to show the fair in- 
tentions of the grantor, and that by 
good management the property by 
him retained was sufficient to pay 
his debts. The proof must show that, 
by the ordinary course of human 
transactions, the deed could not 
operate to hinder, delay, or to defeat 
the claims of prior creditors." 

That a Conveyance Between Rela- 
tives is Without Consideration does 
not establish it fraudulent, as a mat- 
ter of law, in an attack upon it by 
creditors ; it but casts the burden of 
proof of its good faith upon the 
parties who desire to sustain it. 
Boldt V. First Nat. Bank, 59 Neb. 
283, 80 N. W. 90s. 

Vol. TI 



H. ' Alabama. — Early v. Owens, 
68 Ala. 171. 

Arkansas. — Hershey v. Latham, 
46 Ark. 542. 

Florida. — McKeown v. Allen, 37 
Fla. 490, 20 So. 556. 

Indiana. — Heaton v. Shanklin, 115 
Ind. 595, 18 N. E. 172. 

Massachusetts. — Blake v. Sawin, 
10 Allen 34a. 

Missouri. — Potter v. McDowelJ, 
31 Mo. 62. 

Nebraska. — Smith v. Schmitz, 10 
Neb. 600, 7 N. W. 329. 

New Jersey. — Boquet v. Heyman, 
SO N. J. Eq. 114, 24 Atl. 266. 

Rhode Island. — McKenna v. 
Crowley, 16 R. I. 364, 17 Atl. 354. 
Compare Burdsall v. Waggoner, 4 
Colo. 256. 

Wliere a Parent Immediately Be- 
fore a Judgment Conveys all of his 
property, not exempt, to a son who 
is absent and who does not appear to 
have the means to purchase, it is suf- 
ficient to impose upon the grantee 
the burden of proving that it was a 
purchase upon an actual considera- 
tion and in good faith. Leach v. 
Fowler, 22 Ark. 143. 

In Malcom Brg. Co. v. Wagner (N. 
J. Eq.), 45 Atl. 260, a debtor con- 
veyed to her son immediately after a 
threat to enforce payment of the 
debt by her creditor, and the son im- 
mediately thereafter reconveyed to 
his step-father for a recited con- 
sideration of $1 ; the conveyance also 
recited that the first conveyance was 
given in order to have the latter exe- 
cute and place the whole title to the 
lands _ described in such step-father, 
and it was held that the circum- 
stances under which the conveyances 
were made, in connection with the 
consideration expressed in the two 
instruments and the clause recited, 
made out a prima facie case for the 
attacking creditor and cast on the 
grantee the burden of showing a 
good and valuable consideration paid. 



FRAUDULENT CONVBYANCBS. 



121 



time he executed it," but the burden of proof to show that the con- 
veyance was not fraudulent falls upon those claiming under it.^^ 
And there is authority to the effect that this presumption of fraud 
in such case is conclusive.^* 

A Debtor's Insolvency at the Time a Judgment Against Him is ren- 
dered will be considered as relating back beyond a voluntary 
conveyance of his property made during his indebtedness, unless 
the contrary is shown, and the burden is on the party claiming 
under the conveyance to show that at the time it was made his 
donor had other property amply sufficient to pay all his debts.^'^ 

(2.) Necessity of Showing Insolvency of Debtor. — There is authority, 
however, to the effect that merely proving that the conveyance is 
voluntary does not of itself impose upon the parties to the convey- 
ance the burden of disproving fraudulent intent, but that the 
creditor nevertheless has the burden of showing the insolvency of 
the grantor, or such facts and circumstances as would authorize 
the presumption of insolvency .^^ 

(3.) Subsequent Sale by Donor. — The subsequent sale of the prop- 
erty by the donor under a voluntary conveyance without notice to 



To invalidate a voluntary convey- 
ance, a fraudulent intent must be 
shown, and this is shown when it 
appears that a debtor makes a gift 
of such an amount or under such 
circumstances, taking into account 
all existing conditions, as must neces- 
sarily hinder, delay or defraud his 
creditors. In such case the donor 
intends to defraud, in legal contem- 
plation, because he deliberately, in- 
tentionally, does an act which does 
hinder, delay or defraud his credit- 
ors, and which he must see will have 
that effect. Whitehouse v. Bolster, 
95 Me. 458, so Atl. 240. 

12. O'Kane v. Vinnedge, 21 Ky. L. 
Rep. 1551, SS S. W. 711- 

13. United States. — Pratt v. Cur- 
tis, 2 Low. 87, 19 Fed. Cas. No. 11,- 
375- 

Alabama. — Harrell v. Mitchell, 61 
Ala. 270. 

Arkansas. — Norton v. McNutt, SS 
Ark. S9, 17 S. W. 362. 

Florida. — McKeown v. Allen, 37 
Fla. 490, 20 So. 556; Claflin v. Am- 
brose, 37 Fla. 78, 19 So. 628. 

Georgia. — Cothran v. Forsythe, 68 
Ga. 560. 

Maryland. — Ellinger v. Crowl, 17 
Md. 361. 

Mississippi. — Young v. White, 25 
Miss. 146; Wynne v. Mason, 72 
Miss. 424, 18 So. 422. 



Missouri — Clark v. Thias, 173 
Mo. 628, 73 S. W. 616; Walsh v. 
Ketchum, 84 Mo. 430; Hoffman v. 
Nolte, 127 Mo. 120, 29 S. W. 1006; 
Snyder v. Free, 114 Mo. 360, 21 S. 
W. 847. 

Ohio. — Oliver v. Moore, 23 Ohio 
St. 473. 

Pennsylvania. — Woolston's Ap- 
peal, 51 Pa. St. 452. In re Mc- 
Kowan's Estate, 198 Pa. St. 96, 47 
Atl. nil. 

South Carolina. — Martin v. Evans, 
2 Rich. Eq. 368; Footman v. Pen- 
dergrass, 3 Rich. Eq. 33. Compare 
Hyde v. Chapman, 33 Wis. 391, 
holding that under the Wisconsin 
statute there must be proof affording 
an inference of fraud, other than that 
of the mere voluntary character of 
the conveyance. 

14. Hutchison v. Kelly, I Rob. 
(Va.) 123, 39 Am. Dec. 250. 

15. Strong V. Lawrence, 58 Iowa 
SS, 12 N. W. 74. 

16. Kalish v. Higgins, 70 App. 
Div. 192, 75 N. Y. Supp. 397; Multz 
V. Price, 82 App. Div. 339, 81 N. Y. 
Supp. 931. See also Woods v. Al- 
len, 109 Iowa 484, 80 N. W. 540; 
Merrill v. Johnson, 96 111. 224 ; Moritz 
V. Hoffman, 35 111. 553. Compare 
Baker v. Potts, 73 App. Div. 29, 76 
N. Y. Supp. 406. 

Vol. VI 



123 



FRAUDULENT CONVBYANCBS. 



the purchaser is also presumptive evidence of fraud in the prior 
conveyance.^' 

(4.) Conveyance Between Husband and Wife. — Where the effect of a 
voluntary conveyance by a husband to his wife is to defraud his 
creditors, it is not incumbent upon them to show an actual intent 
to defraud.^^ 

(5.) Vendee's Knowledge of Vendor's Intent. — In the case of a volun- 
tary conveyance which operates to the injury of creditors, it is 
immaterial whether or not the vendee participated in the fraud- 
ulent design.^® 

In the Case of a Conveyance to a Wife From a Third Person, if the 
husband's intent was actually fraudulent, it is not incumbent upon 



17. Footman v. Pendergrass, 3 
Rich. Eq. (S. C), 33- 

18. Felker v. Chubb, 90 Mich. 
24, SI N. W. no. 

In Baker v. Hollis, 84 Iowa 68z, 51 
N. W. 78, a husband conveyed to his 
wife all of his property without con- 
sideration and without change of 
possession. Some tini'e thereafter 
the wife reconveyed the property to 
her husband, who, while the property 
was so held, became indebted to the 
plaintiff. The husband being pressed 
for a settlement of such indebtedness 
again conveyed the property to his 
wife without consideration. On the 
trial both husband and wife testified 
that the reconveyance from the wife 
to the husband was in trust and that 
the last conveyance back to the wife 
was merely an execution of that trust. 
This testimony was not contradicted 
by any witness. It was held that 
the circumstances attending the exe- 
cution of the conveyance rebutted 
the claim that there was any trust 
created, and that the last conveyance 
was fraudulent as against the hus- 
band's creditors. The court said that 
the last conveyance " was without 
consideration and to the prejudice of 
the plaintifif. It is presumptively 
fraudulent and it is incumbent upon 
appellant (the wife) to make some 
showing upon which the conveyance 
can be sustained in equity. That the 
conveyance is presumed to be fraud- 
ulent is one of the recognized and 
elementary principles which does not 
demand the citatiop of authority in 
its support." 

Under the Michigan Statute (3 
Conip. Laws, 1897, § 10,203) the bur' 

Vol, VI 



den of proving the bona fides of a 
voluntary conveyance from husband 
to wife is, as to creditors of the 
husband attacking the conveyance, 
upon the husband, and this burden 
■can only be satisfied by evidence that 
at the time of the transfer he had 
sufficient property remaining in his 
hands to pay his indebtedness. Wil- 
cox V. Hammond, 128 Mich. 516, 87 
N. W. 636. 

19. Schaible v. Ardner, 98 Mich. 
70, 56 N. W. 1105; Farmers Nat. 
Bank v. Thomson, 74 Vt. 442, 52 Atl. 
961 ; Ross V. Wellman, 102 Cal. i, 36 
Pac. 402; Pickett v. Pipkin, 64 Ala. 
520; Bishop V. State ex rel. Lord, 
83 Ind. 67. 

Rule Stated "A deed of gift 

made by the grantor for the purpose 
of defrauding his creditors is none 
the less fraudulent because the 
grantee took no part in the fraud. 
. . . It is well settled that it is the 
motive of the grantor, and not the 
knowledge of the grantee, that de- 
termines the validity of the transfer. 
The grantee, however innocent, can- 
not retain the fruits of a voluntary 
fraudulent transfer. (Swartz v. 
Hazlett, 8 Cal. 128; Lee v. Figg, 37 
Cal. 336; Peek v. Peek, 77 Cal. in; 
Bump on Fraudulent Conveyances, 
§239)." Bush V. Helbing, 134 Cal. 
676, 66 Pac. 967. 

Knowledge on the Part of a Wife 
as to Her Husband's Intent in con- 
veying the property to her is im- 
material and not necessary to be 
shown where she gave no valuable 
consideration for the property con- 
veyed. Threfel v- Scott (Cal.), 34 
P^c. 851. 



FRAUDULENT CONVEYANCES. 



123 



a creditor attacking the conveyance to show that the wife partici- 
pated in the intent if she paid ho part of the consideration.^" 

(6.) Kule as to Subsequent Creditor. — A subsequent creditor, how- 
ever, attacking a prior conveyance by his debtor, cannot rely upon 
the voluntary character of the conveyance alone, but it is incum- 
bent upon him to also show circumstances justifying the presump- 
tion that the intent of the conveyance was fraudulent.^^ 

g. Retention of Possession by Vendor Subsequent to Sale. 
(1.) Generally. — Formerly it was the rule that the retention by a 
vendor of the property subsequent to an absolute sale thereof was 
conclusive evidence of fraud as to creditors of the vendor.^'^ 

Conclusive Presumption Under Statute. — Sometimes by virtue of an 
express provision in the statute relating to fraudulent conveyances, 
the fact that the vendor of personal property remains in possession 
after the sale thereof is conclusive evidence of fraudulent intent 
on his part.^ 

Modern and Statutory Doctrine. — The former rule, however, has 
been greatly relaxed, not only by the courts in modern times, 
but also by express statutory enactment, and the rule is at the 
present day, in the absence of statutes to the contrary, that the 
fact of possession by the vendor subsequent to the sale is merely 
prima facie evidence of fraud,^* and that failure on the part of the 



20. Clarke v. Chamberlain, 13 Al- 
len (Mass.) 257. 

21. United States. — Hinde v. 
Longworth, 11 Wheat. 199. 

Alabama. — Heinz v. White, 105 
Ala. 670, 17 So. 185. 

Connecticut. — Converse v. Hart- 
ley, 31 Conn. 372. 

Indiana. — Barrow v. Barrow, 108 
Ind. 34S, 9 N. E. 371. 

Maine. — Laughten v. Harden, 68 
Me. 208. 

Missouri. — Boatmen's Sav. Bank 
V. Overall, 90 Mo. 410, 3 S. W. 64. 

New Jersey: — Boquet v. Heyman, 
SO N. J. Eq. 114, 24 Atl. 266. 

North Carolina. — Messick v. 
Fries, 128 N. C. 450, 39 S. E. 59. 

Ohio. — Evans v. Lewis, 30 Ohio 
St. II. 

Oregon. — Crawford v. Beard, 12 
Or. 447, 8 Pac. 537. 

West Virginia. — Lockhard v. 
Beckley, 10 W. Va. 87. 

Under the Kentucky Statute pro- 
viding that a conveyance without 
valuable consideration therefor shall 
not on that account alone be void as 
to creditors whose debts or demands 
are thereafter contracted, a subse- 
quent creditor who assails a volun- 



tary conveyance must show in addi- 
tion circumstances justifying the pre- 
sumption that the conveyance was 
fraudulent. " It is the intent and 
purpose with which the grantor acts 
which renders the conveyance fraud- 
ulent, and this must be determined 
by the facts of each particular case." 
Rose V. Campbell, 25 Ky. L. Rep. 
88s, 76 S. W. SOS. See also O'Kane 
V. Vinnedge, 21 Ky. L. Rep. issi, SS 
S. W. 711; Enders v. Williams, I 
Mete. (Ky.) 346. 

22. Jackson v. Timmerman, 7 
Wend. (N. Y.) 436; Seward v. Jack- 
son, 8 Cow. (N. y.) 406; Hamilton 
V. Russel, I Cranch (U. S.) 309. 

23. As for example in California. 
Stevens v. Irwin, is Cal. 503. 76 
Am, Dec. SOO- See also Kennedy v. 
Conroy (Cal.), 44 Pac. 793. 

24. Alabama. — Ward v. Shirley, 
131 Ala. s68, 32 So. 489; Teague v. 
Bass, 131 Ala. 422, 31 So. 4. 

Arkansas. — Cocke v. Chapman, 
7 Ark. 197, 44 Am. Dec. 536; Field 
V. Simco, 7 Ark. 275; s. c. 7 Ark. 
269. 

Florida. — Volusia Co. Bank v. 
Bertola, 33 So. 448; Briggs v. 
Weston, 36 Fla. 629, 18 So. 852. 

Vol. VI 



124 



FRAUDULENT CONVEYANCES. 



grantee to overcome this justifies the presumption that the interest 
of the vendor in the goods sold, indicated by his actions, contin- 
ued to exist notwithstanding the sale.^^ 

Valid Excuse for Retention of Possession. — A vendee of personal 
property under such a sale must show in addition to proof of the 



Georgia. — Ross v. Cooley, 113 Ga. 
1047, 39 S. E. 471 ; Fleming v. Town- 
send, 6 Ga. 103, 50 Am. Dec. 318. 

Indiana. — Pennington v. Flock, 93 
Ind. 378; Kane v. Drake, 27 Ind. 
69s; Higgins V. Spahr, 145 Ind. 167, 

43 N. E. II. 

Iowa. — Wright v. Wheeler, 14 
Iowa 8 ; Osborn v. Ratliffe, 53 
Iowa 748, S N. W. 746. 

Louisiana. — Yale v. Bond, 45 La. 
Ann. 997, 13 So. 587; A. Baldwin & 
Co. V. Bond, 45 La. Ann. 1012, 13 
So. 742; Payne v. Buford, 106 La. 
83, 30 So. 263. 

Maine. — Hartshorn v. Eames, 31 
Me. 93- 

Minnesota. — Leqve v. Smith, 63 
Minn. 24, 6$ N. W. 121. 

Mississippi. — Comstock v. Ray- 
ford, 12 Smed. & M. 369. 

Missouri. — Hartman v. Vogel, 41 
Mo. 570. 

Nebraska. — Snyder v. Dangler, 

44 Neb. 600, 63 N. W. 20; Marcus 
V. Leake, 94 N. W. 100. 

New Jersey. — Runyon v. Gro- 
shon, 12 N. J. Eq. 86. 

New York. — Sidenbach v. Riley, 
III N. Y. 560, 19- N. E. 275. 

North Carolina. — Howell v. Elli- 
ott, 12 N. C. 66. 

Pennsylvania. — Baltimore & O. R. 
Co. V. Hoge, 34 Pa. St. 214. 

Texas. — Mills v. Walton, 19 Tex. 
271 ; Perry v. Patton (Tex. Civ. 
App.), 68 S. W. 1018. 

Virginia. — Curd v. Miller, 7 
Graft. 185. 

Wisconsin. — Kayser v. Hartnett, 
67 Wis. 250, 30 N. W. 363 ; Williams 
V. Porter, 41 Wis. 422; Mayer v. 
Webster, 18 Wis. 393 ; Grant v. 
Lewis, 14 Wis. 528. 

Rule Stated — "Every sale by a 
vendor of goods and chattels in his 
possession or under his control, un- 
less the same is accompanied by an 
immediate delivery, and followed by 
an actual and continued change of 

Vol. VI 



possession, of the things sold, is 
presumed fraudulent and void as 
against the creditors of the vendor, 
unless those claiming under the sale 
make it appear that the same was 
made in good faith, and without any 
intent to hinder, delay or defraud 
such creditors. Gen. St. 1878, ch. 41, 
§ 15." Murch V. Swensen, 40 Minn. 
421, 42 N. W. 290. 

The Fact That a Mortgagor of 
Personal Property Remains in Pos- 
session of the property after the exe- 
cution of the mortgage is prima 
facie evidence of fraud, but may be 
explained; it is a mere rule of evi- 
dence calculated to shift the burden 
of proof from the creditor to the 
vendee. Runyon v. Groshon, 12 N. 
J. Eq. 86, wherein the court said: 
" There ought to be some protection 
to third parties where the chattels 
are permitted to remain in the pos- 
session of the vendor. Such posses- 
sion should be considered prima 
facie evidence of fraud, and the party 
who claims the benefit of a mortgage 
under such circumstances should 
have the burthen thrown upon him 
of proving the bona £des of the 
transaction. He should be com- 
pelled to prove not only that his 
debt is a just one, but give reasons 
satisfactory to the tribunal who is to 
decide upon the validity of the deed 
for the non-delivery of the property." 

Sign Remaining Over Door. In 

Seavy v. Dearborn, 19 N. H. 351, it 
was held that where a purchaser of 
a stock of goods permitted the sign 
of the vendor to remain over the 
door, that fact was evidence that the 
vendor remained in possession after 
the sale and was so far evidence of 
fraud,_ although it admitted of ex- 
planation by evidence of a custom or 
usage to permit signs to so remain 
after such sales. 

25. Teague v. Bass, 131 Ala. 422, 
31 So. 4. 



FRAUDULENT CONVEYANCES. 



125 



bona fides of the sale that there was a valid excuse for leaving the 
property in the vendor's possession.^* 

Test as to Change of Possession — Whether there has been a delivery, 
and an actual change of possession, so as to avoid the presumption 
of fraud, depends largely on the nature and kind of chattels, the 
situation of the parties to the sale, and other circumstances peculiar 
to each case ; no arbitrary test or rule can be laid down.^^ 

(2.) Conveyance of Real Estate. — This rule that retention of pos- 
session by the vendor, subsequent to the conveyance, is presumptive 
evidence of fraud has been held in some cases^^ not to apply to the 
conveyance of real estate.^^ 

(3.) Rebuttal of Presumption. — Although possession of property by 
the vendor subsequent to the sale, wholly unexplained, raises the 
presumption of fraud, as will be shown with more particularity, 
this presumption may be rebutted by such a disclosure of the circum- 
stances as will make the possession innocent,^" as where the pos- 



26. Mitchell v. West, 55 N. Y. 107, 
so holding on the authority of Han- 
ford V. Artcher, 4 Hill (N. Y.) 271. 

27. Tunell v. Larson, 39 Minn. 
269, 39 N. W. 628. 

28. Where the deed postpones the 
day of payment for an unreasonable 
length of time after the maturity of 
the debts secured by it, and provides 
that the grantor shall retain the pos- 
session and use of the property until 
default of payment, a fraudulent in- 
tent to cover up the property for the 
use of the grantor, and hinder and 
delay creditors, may be presumed. 
Hafner v. Irwin, 23 N. C. 490; Can- 
non V. Peebles, 24 N. C. 453; Ben- 
nett V. Union Bank, 5 Humph. 
(Tenn.) 612. But if the time fixed 
for payment and sale upon default be 
reasonable, under all the circum- 
stancs, fraud is not to be inferred. 
Hempstead v. Johnston, 18 Ark. 123, 
6s Am. Dec. 458. But this rule does 
not apply to mortgages and deeds of 
trust where the grantor, by the terms 
of the deed, is permitted to retain 
possession of the property until de- 
fault of payment. 

29. Miller v. Rowan, 108 Ala. 98, 
19 So. 9; Tompkins v. Nichols, S3 
Ala. 197. Compare Neal v. Gregory, 
19 Fla. 3S6. 

The Reason for this Rule is said 
to be that to hold possession of real 
estate by the grantor presumptive 
evidence of fraud would be in effect 
to abolish the distinction known and 



acknowledged between real and per- 
sonal property, and to lose sight of 
the different methods of transferring 
the title to the two kinds of property. 
Rochester v. Sullivan (Ariz.), 11 
Pac. 58. 

30. Norton v. McNutt, 55 Ark. 
59, 17 S. W. 362. 

In Scott V. Winship, 20 Ga. 429, 
where personal property was abso- 
lutely conveyed, and a verbal agree- 
ment entered into that the property 
should remain in the possession of 
the vendor until the performance of 
certain conditions, it was held that 
although the stipulation might not 
amount to a valid contract, still it 
was sufficient to explain the con- 
tinued possession and rebut the pre- 
sumption therefrom. 

A father may contract with his 
minor son to pay the latter wages 
for his services, and may in satisfac- 
tion of the debt deliver to him per- 
sonal property, and in such case the 
possession of the vendor becomes 
that of the son and does not of itself 
raise any presumption that the trans- 
action was fraudulent. Hargrove v. 
Turner, 112 Ga. 134, 37 S. E. 89. 

In Hinton v. Greenleaf, 118 N. C. 
7, 23 S. E. 924, a father had pur- 
chased property at a sale under a 
mortgage given by his son and al- 
lowed it to remain in the possession 
of his son, and it was held that pos- 
session under such circumstances did 
not raise a presumption of fraud so as 
to impose upon the father the burden 

Vol. VI 



126 



FRAUDULENT CONVBYANCBS. 



session is inconsistent with the terms of the conveyance,'^ or the 
vendor holds possession merely as agent for his vendee.^'' 

Proof of the Payment of a Valuable Consideration rebuts the presump- 
tion of fraud arising from the continued possession by the vendor 
after the sale.'' 

The Notoriety of a Sale or other transfer is always strong evidence 
to rebut the inference of fraud from possession by the vendor.'* 

h. Conveyances Between Relatives. — (1.) Generally. — Although 
there is authority supporting the proposition that transfers between 
relatives, if creditors are thereby delayed, hindered or defeated in 
the collection of their debts, should be closely scrutinized, and that 
those claiming under the transfers have the burden of showing the 
bona fides of the transaction,'^ the weight of authority is that the 
mere fact of relationship between the grantor and grantee^ in a 
conveyance, assailed as fraudulent against other creditors, without 
other facts and circumstances indicating fraud, affords no presump- 



of proving the bona tides of his pur- 
chase. 

In Easly v. Dye, 14 Ala. 158, it 
was held that for the purpose of re- 
pelling the inference arising from 
the subsequent possessipn of a donor 
it was competent to show that such 
donor took possession of the prop- 
erty by advice. The court, in hold- 
ing as stated, said : " The fact that 
the possession was not taken simul- 
taneously with the advice given 
does not furnish a test of its admissi- 
bility; for it would, notwithstanding, 
serve to show quo animo the one 
party parted with and the other re- 
ceived the possession. True, it 
might not be conclusive, yet it was 
proper for the consideration of a 
jury, if material. The competency of 
such evidence does not depend upon 
the principle upon which a declara- 
tion is admitted as part of the res 
gestae; but it is enough if the act 
follow in some reasonable time. It 
is still more clear that if the evidence 
be important, the donees might 
show that the money received for the 
hire was appropriated for their 
benefit." 

In Mauldin v. Mitchell, 14 Ala. 
814, it was held that the presumption 
of fraud arising from the fact of re- 
tention of possession by the grantor 
after the transfer was not repelled 
or explained by proof that the vendee 
was a man of fortune, and the_ ven- 
dor, his brother, poor and with a 
family dependent upon him. 

Vol. VI 



ITnder the Wisconsin Statute, pro- 
viding that the retention of posses- 
sion of chattels by a vendor after a 
sale is presumptive evidence of fraud 
as against creditors, this presump- 
tion is overcome by evidence that the 
consideration for the transfer had 
been credited upon an existing bona 
tide indebtedness from the vendor to 
the vendee. Griswold v. Nichols, 
117 Wis. 267, 94 N. W. 33. 

31. Footman v. Pendergrass, 3 
Rich..,Eq. (S. C.) 33- 

32. Troy Fertilizer Co. v. Nor- 
man, 107 Ala. 667, 18 So. 201, where 
the grantors held the property, not 
as their own, but as the agents of 
the vendee, for the latter's conve- 
nience, or for the purpose of sale on 
account of the principal. 

33. Scott V. Winship, 20 Ga. 429; 
Rose V. Coher, 76 Ind. 590. 

34. Walcott V. Keith, 22 N. H. 
196. 

35. Connecticut. — Thomas v. 
Beck, 39 Conn. 241. 

Minnesota. — Shea v. Hynes, 8g 
Minn. 423, 95 N. W. 214. 

Nebraska. — Marcus v. Leake, 94 
N. W. 100; Fisher i;. Herron, 22 Neb. 
183, 34 N. W. 36s; Heffley v. Hun- 
ger, 54 Neb. 776, 7S N. W. 53 ; Lusk 
V. Riggs, 91 N. W. 243; Ayers v. 
Wolcott, 92 N. W. 1036, modifying 
62 Neb. 80s, 87 N. W. 906; Plum- 
mer v. Runimel, 26 Neb. 142, 42 N. 
W. 336; Bartlett v. Cheesebrough, 23 
Neb. 767, 37 N. W. 652. 



FRAUDULENT CONVEYANCES. 



127 



tion of law against the bona Mes of the conveyance ; that the only 
effect of this relationship is to excite suspicion and require a less 
degree of proof on the part of the attacking creditor to show fraud.^° 

(2.) Conveyance Between Parent and Child. — Conveyances between 
parent and child are to be treated as are the transactions of other 
people; and if the bona Mes of such conveyances is attacked, the 
fraud will not be presumed, but must be established.^^ 

(3.) Conveyance Between Husband and Wife. — But in the case of a 
conveyance from husband to wife, although there is authority to 
the effect that in a contest between the wife and her husband's 
creditors the mere fact of relationship does not raise a presumption 
of fraud,^* the weight of authority is to the effect that the burden of 



North Carolina. — Hinton v. 
Greenleaf, Il8 N. C. 7, 23 S. E. 924; 
Tredwell v. Graham, 88 N. C. 208. 

West Virginia. — Reynolds v. 
Gawthrop, 37 W. Va. 3, 16 S. E. 364. 
Compare Bierne v. Ray, 37 W. Va. 
S7I, 16 S. E. 804. 

A Brother-in-law is a relative 
within the contemplation of the rule 
requiring the bona fides 'of a con- 
veyance between relatives to be es- 
tablished by affirmative evidence on 
the part of a grantee. Marcus v. 
Leake (Neb.), 94 N. W. 100. 

36. United States. — QoitWeh v. 
Thatcher, 151 U. S. 271. 

Alabama. — Teague v. Lindsey, 
106 Ala. 266, 17 So. S38; Smith v. 
Collins, 94 Ala. 394, 10 So. 334. 

Arkansas. — Hempstead v. John- 
ston, 18 Ark. 123, 65 Am. Dec. 458. 

District of Columbia. — Clark v. 
Krause, 2 Mackey 559. 

Illinois. — Schfoeder v. Walsh, 120 
111. 403, II N. E. 70; Martin v. Dun- 
can, 156 111. 274, 41 N. E. 43 ; Nelson 
V. Smith, 28 111. 495; Wightman v. 
Hart, 37 III. 123; Waterman v. Don- 
alson, 43 111. 29; Meachem v. Hahn, 
46 111. App. 144. 

Indiana. — Rockland Co. v. Sum- 
merville, 139 Ind. 695, 39 N. E. 707. 
Iowa. — Oberholtzer v. Hazen, 92 
Iowa 602, 61 N. W. 36s; Wilcox v. 
Williamson Law Book Co., 92 Iowa 
21S, 60 N. W. 618. 

Kentucky. — Redd v. Redd, 23 Ky. 
L. Rep. 2379, 67 S. W. 367. 

Minnesota. — Shea v. Hynes, 89 
Minn. 423, 95 N. W. 214. 

Missouri. — Martin v. Fox, 40 Mo. 
App. 664. 

New Jersey. — Demarest v. Ter- 
hune, 18 N. J. Eq. 45. 



Pennsylvania. — Reehling v. Byers, 
94 Pa. St. 316. 

Tennessee. — Bumpas v. Dotson, 7 
Humph. 310, 6 Am. Dec. 81. 

West Virginia. — Burt v. Tim- 
mons, 29 W. Va. 441, 2 S. E. 780; 
Bierne v. Ray, 37 W. Va. 571, 16 S. 
E. 804; Farmers Transp. Co. v. 
Swaney, 48 W. Va. 272, 37 S. E. 
592. See also Fry Fertilizer Co. v. 
Norman (Ala.), 18 So. 201. 

iThe fact that a vendee was a 
brother-in-law of the vendor is not 
in itself sufficient to establish fraud. 
Transactions between members of a 
family or others in close confidential 
relations will be scrutinized closely, 
but the law gives a relative or friend 
the same right to protect himself in 
the collection of a claim, and the 
same right to purchase property 
which is enjoyed by a stranger, and 
in order to justify such a transac- 
tion being set aside as fraudulent 
against creditors the burden rests on 
the creditor alleging such fraud to 
prove it. Thompson v. Zuckmayer 
(Iowa), 94 N. W. 476. 

37. Curry v. Lloyd, 22 Fed. 258; 
Gray v. Galpin, 98 Cal. 633, 33 
Pac. 72s; State ex rel. John- 
son V. True, 20 Mo. App. 176; 
Weaver v. Wright, 13 Rich. L. (S. 
C.) 9; Bleiler v. Moore, 88 Wis. 438, 
60 N. W. 792. See also Douglass v. 
Douglass, 41 W. Va. 13, 23 S. E. 671. 

38. Allen v. Perry, 56 Wis. 178, 
14 N. W. 3; Grant v. Ward, 64 Me. 
239. Virden v. Dwyer, 78 Miss. 515, 
30 So. 45, where the court, quoting 
from Kaufman v. Whitney, so Miss. 
103, said : " Such dealings, though to 
be carefully scrutinized on account of 
the temptation to give an unfair ad- 

Vol. VI 



128 



FRAUDULENT CONVEYANCES. 



proof is on the wife to show by clear and satisfactory evidence the 
bona fides of the transaction; that in all such cases the presump- 
tions are in favor of the Creditors and not in favor of the wife.^'' 

i. Presumption From NonrProduction of Testimony. — On an 
issue as to the bona fides of a conveyance, the omission of the 
grantee to testify/" or to produce the debtor when it is not 



vantage to the wife over other credit- 
ors, must be tested by the same prin- 
ciples as a conveyance by a debtor 
to a stranger when brought into 
question as fraudulent against credit- 
ors." Citing numerous Mississippi 
cases. 

39. Alabama. — Wedgworth v. 
Wedgworth, 84 Ala. 274, 4 So. 149; 
McTeers v. Perkins, 106 Ala. 411, 
17 So. 547. 

Iowa. — Elwell V. Walker, 52 Iowa 
256, 3 N. W. 64. 

Nebraska. — Glass v. Zutavern, 43 
Neb. 334, 61 N. W. 579. 

North Carolina. — Woodruff v. 
Bowles, 104 N. C. 197, 10 S. E. 482. 

South Dakota. — Williams v. Har- 
ris, 4 S. D. 22, S4 N. W. 926, 46 Am. 
St. Rep. 753. 

Virginia. — Baker v. Watts, 44 S. 
E. 929. 

West Virginia. — Maxwell v. Han- 
shaw, 24 W. Va. 405. 

" The Keasons for Distinguishing 
Transactions Between Husband and 
Wife from those between other near 
relatives are obvious. The financial 
relation and the community of inter- 
est existing between husband and 
wife are entirely different from those 
existing between other relatives. 
While their respective rights and re- 
lations, as existing at common law, 
have been greatly changed and modi- 
fied by statute, the confidential rela- 
tion is still preserved and protected. 
Contracts between them with respect 
to the sale of real estate are pro- 
hibited, and each is charged with 
knowledge of the contracts and debts 
of the other. The same is not true 
as to other near relatives." Shea v. 
Hynes, 89 Minn. 423, 95 N. W. 214. 

In Neighbor v. Hoblitcel, 84 Iowa 
598, SI N. W. 53, where a hus- 
band, pending litigation against him 
and just before trial, conveyed to 
his wife, on demand, certain prop- 
erty in payment of his indebtedness 
to her, exceeding the value of the 

Vol. VI 



property, it was held that in the 
absence of evidence that the con- 
veyance was taken in part to hinder 
the creditors of the husband, it was 
not fraudulent. 

40. Whitney v. Rose, 43 Mich. 
27, 4 N. W. 557, where the court 
said : " If the transaction were an 
honest one on his part, he should not 
have permitted any doubtful matter 
of right to have stood in his way of 
making a full explanation. A per- 
son certainly is not obliged to an- 
swer vague and indefinite charges, 
but when made a party defendant in 
a litigation where the question at 
issue is the bona fides of a purchase 
made by him, and evidence is given 
tending to show that the sale was 
made with an evident intent to de- 
fraud creditors, silence under such 
circumstances may well prevent the 
court from presuming too much in 
favor of the honesty of the transac- 
tion. The inferences from the facts 
proved against the validity of the 
sale should be allowed to have their 
full force and effect where the party 
defendant was called upon to remove 
them, had an opportunity s'oto do, 
and did not avail himself of it." 

First Nat. Bank v. Prager, 50 W. 
Va. 660, 41 S. E. 363, was to the 
effect that failure of the alleged 
fraudulent grantee and grantor to 
go upon the stand and testify and to 
explain the many acts charged and 
proved against them were circum- 
stances tending strongly to support 
the allegations of fraud. The court 
said : " If the transactions had been 
honest and square, they could have 
been well explained. Truth is con- 
sistent in all its parts and in har- 
mony with all its surroundings. It 
antagonizes nothing but error. It is 
in perfect accord with every other 
truth ; while falsehood comes in con- 
flict with everything that is true, and 
is inconsistent with itself. A fair, 
square transaction is always suscep- 



FRAUDULENT CONVEY AN CBS. 



129 



shown to be impossible,^'- or other important witnesses, or evi- 
dence in support of the conveyance, is ground for an unfavorable 
presumption, and frequently exercises an important influence upon 
the final determination of the issue.*^ 

2. Mode of Proof. — A. Direct Evidence. — a. As Respects the 
Grantor. — (l.) Generally. — Whether or not a conveyance by a 
debtor was executed with a fraudulent intent on his part is ulti- 
mately a question for the jury, and one that cannot be proved by 
the opinions or conclusions of witnesses.*^ 



tible of satisfactory explanation. In- 
deed, as a rule it needs no explana- 
tion. There were evidently large 
sums of money taken in by the firm 
shortly before the assignment which 
were never accounted for, and which 
could only be accounted for by the 
Pragers, Keller, and Katzenstein, or 
some of them, and why they failed 
to appear as witnesses can only be 
explained on one theory, and that is 
that they were each and every one 
unable to make an explanation of 
their transactions consistent with the 
truth, and show that they were free 
from the fraud and conspiracy 
charged in the bill, and of which 
there was so much convincing proof." 

41. Ptesumption from MTon-Pro- 
duction of Debtor. — Smith v. Bige- 
low (Iowa), 99 N. W. 590, where 
the record presented the alleged 
fraudulent grantor sitting in the 
court rpom during the trial, but with- 
out being heard as a witness. See 
also McDaniel v. Parish, 4 App. D. 
C. 213. 

42. Goshorn v. Snodgrass, 17 W. 
Va. 717. See also Glenn v. Glenn, 
17 Iowa 498. 

When fraud is proven and sus- 
picious circumstances are shown 
which implicate a grantee, and those 
circumstances are peculiarly within 
his knowledge, an unfavorable pre- 
sumption of fact is raised if he fails 
to offer some affirmative proof that 
his part in the transaction is an hon- 
est one. " If he has acted honestly 
he should not permit his conduct to 
wear a doubtful aspect, when, by 
making a statement, he can clear up 
the whole matter." Dawson v. 
Waltemeyer, 91 Md. 328, 46 Atl. 994. 

Failure to Produce Inventory. 
Failure of the vendees to file notice 
of the inventory of the stock of 



goods taken at the time of the sale, 
when questioned as witnesses and in- 
vited by the attacking creditors to do 
so, warrants the inference that its 
production would have been preju- 
dicial to their case. Carter v. Rich- 
ardson, 22 Ky. L. Rep. 1204, 60 S. 
W. 397. 

In Shealy v. Edwards, 78 Ala. 176, 
where the alleged fraudulent vendee 
had given his notes for the purchase 
price, it was held that failure on his 
part to produce such notes was not 
ground for an unfavorable presump- 
tion as to whether the contract of 
sale was valid or invalid as to credit- 
ors. 

43. Cullers v. Gray (Tex. Civ. 
App.), S7 S. W. 30s; Ward v. Shir- 
ley, 131 Ala. 568. 32 So. 489; Mc- 
Knight V. Reed, 30 Tex. Civ. App. 
204, 71 S. W. 318, wherein the court 
said it would have been proper for 
the witnesses to state the conduct of 
the grantor and what was said, if 
anything, by him concerning his pur- 
pose and intention prior to the time 
when the deeds were intended to 
take effect. 

Testimony of an Attorney Who 
Drew a Bill of Sale, which has been 
assailed as being fraudulent, to the 
effect that he regarded the transac- 
tion as an honest one, is not admis- 
sible on the question of the bona 
fides of the conveyance; that is an 
ultimate question of fact for the jury. 
Sweet V. Wright, 62 Iowa 215, 17 N. 
W. 468. 

Efforts of Debtor to Fraudulently 
Convey Property. — On an issue as 
to the wrongful suing out of an at- 
tachment it is not competent to ask 
a witness what efforts were being 
made by the defendant in attach- 
ment to convey his property with in- 
tent to defraud his creditors. Carey 

Tol. TI 



130 



FRAUDUIHNT CONVEYANCES. 



A Conclusion Keached by a Judicial Officer ITpon Ex Parte Affidavits 
to the effect that they contained sufficient evidence to prove the 
perpetration of fraud on the part of the debtor in incurring the 
debt is not competent evidence in an action between third persons 
to establish the fraud.** 

Knowledge of Surrounding Circumstances. — It has been held proper 
to ask a witness if a subsequent purchaser knew, at the time of 
his purchase, of certain specific circumstances attending the original 
sale.*^ 

Appearance as to Control Subsequent to Sale. — Where the issue is as 
to the bona Udes of a sale of personal property, it is proper to ask 
a witness whether he observed any difference in the management 
of the property subsequent to the sale.** 

(2.) Testimony of Grantor. — (A.) Generally. — The grantor may tes- 
tify, as a witness, as to what his intent in fact was.*^ Nor does 



V. Gunnison, 51 Iowa 202, i N. W. 
510. The court said: "It is very 
plain that in replying to the question 
the witness determined in his own 
mind whether the acts of defendant 
were or were not with the intention 
to defraud creditors. His answer 
was an expression of his opinion as 
to the fraudulent character of the 
acts and intentions of defendant. 
He could not have answered the 
question negatively as he did, nor 
affirmatively, without expressing an 
opinion upon all the acts of defend- 
ant upon which he based his reply." 

44. Bookman v. Stegman, 105 N. 
Y. 621, II N. E. 376, where the 
court, in so holding, said : " Such 
proof derives no force from the ju- 
dicial order and is merely hearsay, 
having no greater effect as proof of 
the facts stated therein than ex parte 
affidavits made under any other cir- 
cumstances. No statute makes them 
evidence and no rule of common- 
law evidence justifies their admis- 
sion." 

45. Hodges v. Coleman, 76 Ala. 
103. 

46. Gallagher v. Williamson, 23 
Cal. 332. Compare Richardson Bros. 
V. Stringfellow, 100 Ala. 416, 14 
So. 283, wherein the statement of 
a witness that " it seems " the as- 
signor was in control of the business 
after the assignment, was a mere 
conclusion of the witness. 

47. Colorado. — Brown v. Potter, 
13 Colo. App. 512, 58 Pac. 785. 

Tol. TI 



Indiana. — Sedgwick v. Tucker, 90 
Ind. 271. 
Iowa. — Selz V. "Belden, 48 Iowa 

451- 

Kansas. — Gardom v. Woodward, 
44 Kan. 758, 25 Pac. 199. 

Maine. — Law v. Payson, 32 Me. 

S2I. 

Massachusetts. — Thatcher v. 
Phinney, 7 Allen 146. 

Michigan. — Hart v. Newton, 48 
Mich. 401, 12 N. W. 508; Angell v. 
Pickard, 61 Mich. 561, 28 N. W. 680. 

Nebraska. — Hackney v. Raymond 
Bros. & Clark Co., 94 N. W. 822. 

South Carolina. — McGhee v. 
Wells, 57 S. C. 280, 35 S. E. 529- 

Texas. — Wade v. Odle, 21 Tex. 
Civ. App. 656, 54 S. W. 786. See 
also Acme Brewing Co. v. Central 
R. & Bkg. Co., 115 Ga. 494, 42 S. 
E. 8. 

Rule Stated. — In Love v. Tom- 
linson, i Colo. App. 516, 29 Pac. 666, 
the court, quoting from Seymour v. 
Wilson, 14 N. Y. 567, said : " In this 
case the party who made the alleged 
fraudulent transfer was a competent 
witness, and he was examined as to 
the facts of the transaction by the 
plaintiff, who sought to set aside the 
conveyance. It may be that the cir- 
cumstances disclosed by him would 
lead to the conclusion that the as- 
signment was fraudulent, notwith- 
standing anything which he might 
say as to his motives in making it. 
That was a question for the referee 
to determine after he had heard all 
the testimony respecting it, and it 



FRAUDULENT CONVEYANCES. 



131 



such testimony come within the rule excluding evidence of the 
declarations of a vendor, made after the sale and with the knowl- 
edge of the vendee, offered to defeat the vendee's title to the prop- 
erty conveyed." 

(B.) Circumstances Surrounding Transfer. — And it is proper to 
permit the alleged fraudulent vendor to testify directly to the facts 
and circumstances connected with the transfer, tending to show the 
fraudulent character thereof.*' 

(C.) Character of Transfer. — So on an issue as to the fraudulent 
character of a sale of personal property, it is competent for the 
vendor to state whether the transfer, which was evidenced by a 
writing, was an absolute sale, and whether there were any reserva- 
tions outside of it.^" 

(D.) Character of Vendor's Possession. — Where the issue is 
whether or not there had been a change of possession of property 
alleged to have been conveyed for the purpose of defrauding cred- 
itors, it is proper to permit the grantor to testify that he continued 
in possession of the property after the conveyance merely as an 
employe of his grantee.^'^ 

(E.) BEtreF op Creditors as to Grounds for Attachment. — The rule 
permitting a party charged with fraud to testify as to his intent 
does not apply where the issue is whether the attaching plaintiffs 
had reasonable grounds to believe at the time of the attachment 
that the witness was disposing of his property with intent to defraud 
creditors."* 



is one upon which we express no 
opinion. There are cases which pre- 
sent circumstances in themselves 
conclusive evidence of a fraudulent 
intent; and there, no proof of inno- 
cent motives, however strong, will 
overcome the legal presumption. 
. . . But where the facts do not 
necessarily prove fraud, but only 
tend to that conclusion, the evidence 
of the party who made the convey- 
ance, when he is so circumstanced 
as to be a competent witness, should 
be received for what it may be con- 
sidered worth." 

48. Schmitt v. Jacques, 26 Tex. 
Civ. App. 125, 62 S. W. 956. 

49. Schmitt v. Jacques, 26 Tex. 
Civ. App. 125, 62 S. W. 956, where 
the court, in so holding, said : " In- 
stances are not numerous where the 
parties to the fraud, or either of 
them, will testify to the facts con- 
stituting it, but there is no rule con- 
travening the right of either to tes- 
tify when the facts indicate that both 
parties to a contract were parties to 



the fraud." See also Drake v. 
Steadman, 46 S. C. 474, 24 S. E. 4S8. 
On an issue as to the hona fides 
vel non of an assignment for credit- 
ors, it is competent for the assignor 
to detail all the circumstances under 
which the instrument was executed, 
including the fact that it was made 
after taking legal advice. Richard- 
son V. Stringfellow, 100 Ala. 416, 14 
So. 283. 

50. Angell v. Pickard, 61 Mich. 
S6i, 28 N. W. 680. 

51. Benjamin v. McElwaine- 
Richards Co., 10 Ind. App. 76, 37 N. 
E. 362. 

52. Selz V. Belden, 48 Iowa 451, 
where the court, in so holding, said : 
" The object of the testimony intro- 
duced was not to set aside the sale, 
but to enable the defendants to re- 
cover on their counter-claim, because 
of the alleged fact that the attach- 
ment had been wrongfully sued out; 
the gist of the issue being whether 
the plaintiffs at that time had reason- 
able grounds to believe the defend- 

Vol. VI 



132 



FRAUDULENT CONVEYANCES. 



(F.) Presumption of Fraud From Facts. — The rule permitting a 
witness to testify to his own intent does not apply where the law 
conclusively presumes fraud from a certain state of facts.^^ 

(G.) Scope oe Cross-Examination. — Where a grantor testifies as to 
his intent, his cross-examination at the instance of the attacking 
creditors is not subject to the usual limitation of cross-examination, 
but a wide, latitude within the range of material facts should be 
allowed."* 



ants had disposed of their property 
with intent to defraud their creditors. 
It was immaterial what the intent 
of the defendants in fact was; they 
may have acted with the utmost 
good faith. The true question is, 
had they so conducted themselves as 
to give the plaintiffs reasonable 
grounds to believe their intent was 
fraudulent?" 

53. Selz V. Belden, 48 Iowa 451. 
Citing Seymour v. Wilson, 14 N. Y. 
567; Forbes v. Waller, 25 N. Y. 430. 
See also Hale v. Robertson, 100 Ga. 
168, 27 S. E. 937- 

In Snyder -v. Free, 114 Mo. 360, 
21 S. W. 847, the court said : " If the 
necessary consequence of a conceded 
transaction was defrauding another, 
then, as a party must be presumed to 
have foreseen and intended the 
necessary consequences of his own 
act, the transaction itself is conclu- 
sive evidence of a fraudulent intent, 
for a party cannot be permitted to 
say that he did not intend the neces- 
sary consequence of his own volun- 
tary act. Intent or intention is an 
emotion or operation of the mind, 
and can usually be shown only by 
acts or declarations, and, as acts 
speak louder than words, if a party 
does an act which must defraud an- 
other, his declaring that he did not 
by the act intend to defraud is 
weighed down by the evidence of his 
own act." 

54. Bixby v. Carskaddon, 70 Iowa 
726, 29 N. W. 626; Chapman v. 
James, 96 Iowa 233, 64 N. W. 795 ; 
Clark V. Reiniger, 66 Iowa 507, 24 N. 
W. 16; Kalk V. Fielding, 50 Wis. 
339, 7 N. W. 296; Ganong v. Green, 
71 Mich. I, 38 N. W. 661 ; Weadock 
V. Kennedy, 80 Wis. 449, 50 N. W. 
393, where the court said : " Fraud, 
as a question of fact, depends gener- 

Vol. VI 



ally upon circumstantial evidence 
alone, and on a great variety of 
minor facts, and the court should 
not be technical or illiberal in sus- 
taining objections to questions hav- 
ing the least bearing upon the issue. 
If there is any doubt about their ma- 
teriality, they ought to be answered 
rather than rejected as immaterial. 
If the questions are immaterial they 
injure no one. To reject seemingly 
doubtful questions, in such a case, 
might sometimes result in great in- 
justice by shutting out important 
facts." 

In Robinson v. Woodmansee, 80 
Ga. 249, 4 S. E. 497, where the 
debtor had testified that he applied to 
a third person for a loan of money, 
who introduced him to the mort- 
gagee in the first mortgage given, 
and which was attacked in the bill, 
and took part in obtaining the loan 
for him and a subsequent extension 
of time, it was held that the debtor 
might be asked on cross-examination 
whether or not the person to whom 
he had applied for the loan had not 
shortly thereafter failed and had 
made him a preferred creditor. 

An alleged fraudulent grantor 
may, upon cross-examination, be 
asked if he conveyed the property 
in question in order to prevent its 
being seized on attachment. Hal- 
lock V. Alvord, 61 Conn. 194, 23 
131- 



Atl. 



Statements Contradicting Testi- 
mony in Chief — In Beuerlien v. 
O'Leary, 149 N. Y. 33, 43 N. E. 417, 
where the vendor had testified as a 
witness for the vendee and in sup- 
port of the good faith of the sale, it 
was held that he might be asked, on 
cross-examination, as to his having 
made statements out of court and in 
the absence of the vendee, to the 
effect that the sale was colorable 



FRAUDULENT CONVEYANCES. 



133 



(H.) Weight op Testimony. — Where the facts and circumstances 
show a conveyance to be fraudulent as against creditors, the testi- 
mony of the grantor that the conveyance was made in good faith 
and without fraudulent intent will avail but little.^^ 

(3.) Testimony of Grantee. — An alleged fraudulent grantee is not 
a competent witness to testify concerning the intent of the grantor 
in making the conveyance.^® 

b. As Respects the Grantee. — (1-) Testimony of the Grantee. 
An alleged fraudulent grantee is a competent witness to testify 
that he did not know that the conveyance was made by the grantor 
with intent to defraud his creditors," and that in taking the con- 
veyance he had no intent to defraud the creditors of his grantor.^' 



only. And in Whittle v. Bailes, 6s 
Mich. 640, 32 N. W. 874, an action 
to recover the value of property sold. 
on execution brought by an alleged 
purchaser from the judgment debtor, 
it was held that the defendant should 
have been permitted' to show by the 
debtor, on cross-examination, that 
he was insolvent and had trans- 
ferred all of his property with in- 
tent to defraud his creditors. 

55. Bell V. Devore, 96 111. 217. 
See also Pickett v. Pipkin, 64 Ala. 
520, where the parties to the trans- 
action professed their good faith and 
vigorously disclaimed all purpose to 
defraud, yet it was held that these 
professions were but their own esti- 
mate of their conduct and transac- 
tions, and could not relieve them 
from offering a reasonable and just 
explanation of facts which are in- 
consistent with their opinions. 

In Personette v. Cronkhite, 140 
Ind. 586, 40 N. E. 59, it was held 
that although the alleged fraudulent 
grantor had testified positively that 
he did not intend or design that the 
conveyance should operate as a fraud 
upon all of his creditors, but that 
he had made the conveyance in order 
to hinder or defraud a particular 
creditor, he must be charged with 
the probable and necessary conse- 
quences of his own acts, and the re- 
sult of his fraud must be attributed 
to him. 

56. Manufacturers & Traders 
Bank v. Koch, 105 N. Y. 630, 12 N. 
E. 9. See also Cothran v. Porsythe, 
68 Ga. 560, to the effect that the 
grantee is not a competent witness 
to testify as to the intention of the 



grantor without giving facts to show 
the basis for such conclusion. 

57. Frost V. Rosecrans, 66 Iowa 
405, 23 N. W. 89s; Richolson v. 
Freeman, 56 Kan. 463, 43 Pac. 772; 
Lincoln v. Wilbur, 125 Mass. 249. 
In Wade v. Odle, 21 Tex. Civ. App. 
656, 54 S. W. 786, an alleged fraud- 
ulent trustee was held to have been 
properly permitted to testify that 
" he had no knowledge whatever of 
any fraudulent intent or of any in- 
tent on the part of Odle Bros, to 
hinder or delay their creditors in 
making the deed of trust. There 
was no secret agreement or under- 
standing between them and him 
that he was to handle the property 
and become the owner of it. Neither 
was there any secret understanding 
or agreement between them by which 
any of their property was to be 
covered up or secreted. His inten- 
tion in accepting the position of trus- 
tee was to endeavor to go ahead and 
execute the trust, and to sell the 
property for every dollar he could, 
and, if possible, make it pay every 
dollar they owed." 

58. California. — Byrne v. Reed, 
75 Cal. 277, 17 Pac. 201. 

Colorado. — Brown v. Potter, 13 
Colo. App. 512, 29 Pac. 666; Love v. 
Tomlinson, i Colo. App. 516, 58 Pac. 

78s. 

Indiana. — Wilson v. Clark, i Ind. 
App. 182, 27 N. E. 310. 

Iowa. — Frost v. Rosecrans, 66 
Iowa 40s, 23 N. W. 895. 

Kansas. — Gentry v. Kelley, 49 
Kan. 82, 30 Pac. 186. 

Michigan. — Bedford v. Penny, 58 
Mich. 424, 25 N. W. 381 ; Blanchard 

Vol. VI 



134 



FRAUDULBNT CONVEYANCES. 



(2.) Cross-Examination. — The court should permit a wide latitude 
in the cross-examination of the grantee.^* 

B. Indirect Evidence. — a. Circumstances Surrounding Trans- 
action. — (1.) Generally. — As Respects the Grantor. — While the bur- 
den of proving a deed fraudulent in fact as to creditors is upon the 
creditors, positive evidence of fraudulent intent on the part of the 



V. Moors, 8s Mich. 380, 48 N. W. 
S42- 

New York. — Bedell v. Chase, 34 
N. Y. 386. Compare Hathaway v. 
Brown, 18 Minn. 414. 

RiUe Stated. — In Hamburg v. 
Wood, 66 T^x. 168, 18 S. W. 623, 
the court said : " The motive which 
actuated the witness in a given act 
was not opinion or legal conclusion, 
but knowledge as direct as that de- 
rived from the senses. Such testi- 
mony lacks some of the sanctions of 
an oath. It would perhaps be im- 
possible to convict the witness of 
perjury; he cannot be directly con- 
tradicted in what he states. But he 
is allowed to testify, and knows the 
truth, known absolutely only to him- 
self; and authority, almost without 
dissent, holds such testimony ad- 
missible. Abb. Tr. Ev. 739; Bump 
Fraud. Conv. 5741 i Whart. Ev. 
§§ 482, S08, and cases cited in the 
notes ; Wait Fraud. Conv. § 205. 
That the truth of the testimony can- 
not be tested in the usual methods, 
and the witness cannot be detected 
and disgraced, or convicted and pun- 
ished, in the usual or in fact in any 
way, affects the weight, and not the 
competency, of the evidence. The 
evil can be remedied by the legisla- 
ture, but not by the courts. Wheel- 
den V. Wilson, 44 Me. 18; Berkey v. 
Judd, 22 Minn. 297." 

Alabama Rule. — In Richardson v. 
Stringfellow, 100 Ala. 416, 14 So. 283, 
an action by a creditor attacking an 
assignment for creditors as being 
fraudulent, wherein a witness had 
testified to a conversation, occurring 
shortly before the assignment, be- 
tween him and the assignor concern- 
ing certain failures, in which the lat- 
ter remarked that he did not know 
but that he might be forced to make 
an assignment himself — that if it 
were not for the name of the thing he 
would do so — it was held that the 
assignor might, in rebuttal, testify to 

Vol. VI 



any reasonable explanation of such 
remark, but that he could not state 
the uncommunicated intention or pur- 
pose which actuated him to make the 
statement, because such purpose or 
intention was to be arrived at from 
what he then said and all then exist- 
ing circumstances throwing light on 
the conversation. 

59. Allen v. Kirk, 81 Iowa 658, 
47 N. W. 906; Weadock v. Kennedy, 
80 Wis. 449, 50 N. W. 393; Wood- 
ruff V. Wilkinson, 73 Ga. 115; Krolik 
V. Graham, 64 Mich. 226, 31 N. W. 
307 ; Bowersock v. Adams, SS Kan. 
681, 41 Pac. 971 ; Nicolay v. Mallery, 
62 Minn. 119, 64 N. W. 108. 

In Trumbull v. Hewitt, 65 Conn. 
60, 31 Atl. 492, an action to set aside 
conveyances made by a husband to 
his wife, as being fraudulent, the 
wife had testified on her own behalf 
that at the time of the conveyance she 
had no knowledge that her husband 
was in embarrassed circumstances, 
and knew nothing about his business 
or of any intent to defraud creditors, 
and it was held, as bearing on this 
question of knowledge, that she 
might properly be inquired of on 
cross-examination respecting trans- 
fers of other property made to her 
by her husband about a year previ- 
ous. 

In Hathaway v. Brown, 18 Minn. 
414, where the issue was as to the 
good faith of a sale by a debtor to 
the plaintiff, attacked by the defend- 
ant as having been made in fraud of 
creditors, it was held that the plain- 
tiff, while testifying as a witness on 
his own behalf, might be asked on 
cross-examination what reasons the 
debtor gave for wishing to sell out 
when he proposed the sale. 

In Urdangen v. Doner (Iowa), 98 
N. W. 317, the testimony of the al- 
leged fraudulent vendee relative to 
his having been offered another stock 
of goods at a certain price was 
brought out on his cross-examination 
and was held competent. 



FRAUDULENT CONVEYANCES. 



135 



grantor is not required,*" but it may be inferred from the circum- 
stances surrounding the transaction, and the relation and situation 
of the parties to it and to each other.*^ This circumstantial evi- 
dence, if adequate to satisfy the court or jury of such fraudulent 



60. " Where a fraud is contem- 
plated and committed upon creditors, 
concealment of it is the first and 
generally the most persistent effort 
of those who re engaged in it. 
Publicity would render their acts 
vain and useless. Leaving direct 
and positive evidence accessible to 
those injured by it would be the 
equivalent of a confession of the 
culpable intent, and of the defeasible 
character of the transaction. There 
are numerous circumstances, so fre- 
quently attending sales, conveyances 
and transfers, intended to hinder, de- 
lay and defraud creditors that they 
are known and denominated badges 
of fraud. They do not constitute — are 
not elements of — fraud, but mere- 
ly circumstances from which it may 
be inferred. So there are many cir- 
cumstances from which crime and the 
identity of the criminal agent may be 
inferred, yet no one of them, in it- 
self, criminal. When a fact is proved, 
or to be proved, by circumstantial 
evidence, the concurrence of a num- 
ber of independent circumstances, 
each tending to prove it, increases 
and strengthens the probability of 
its truth. They may be, each and 
all, explained, and their probative 
force lessened, if not destroyed. But 
the absence of evidence in explana- 
tion or weakening or neutralizing 
their force adds to the probability of 
the truth of the conclusion to which 
they point." Thames v. Rembert, 
63 Ala. s6i. 

In Schroeder v. Walsh, 120 111. 403, 
II N. E. 70, the jury were charged 
as follows : " Fraud is never to be 
presumed, but must be affirmatively 
proved by the party alleging the 
same. The law presumes that all 
men are fair and honest — that their 
dealings are in good faith, and with- 
out intention to disturb, cheat, hin- 
der, delay or defraud others ; and if 
any transaction called in question is 
equally capable of two constructions 
— one that is fair and honest, and 
the other that is dishonest — there 



the law is that the transaction ques- 
tioned is presumed to be honest and 
fair." To the objection that this in- 
struction required fraud to be shown 
by affirmative testimony, and ex- 
cluded all circumstantial evidence, the 
court said : " We do not think it 
does so, by any fair and reasonable 
construction. Fraud in fact, as con- 
tradistinguished from fraud in law, 
is never presumed without evidence, 
but must be proved by either direct 
or indirect evidence. The instruction 
does not undertake to say what kind 
of evidence must be adduced, but its 
drift and purpose is to show that the 
party charging fraud has the affirma- 
tive of the issue, and must sustain 
the charge by proof on his part. He 
may do this by showing facts or cir- 
cumstances from which fraud is in- 
ferred, and thiis establish fraud af- 
firmatively. This instruction is not 
obnoxious to the objection made to 
it." See also Mathews v. Reinhardt, 
149 111. 635, 37 N. E. 85. 

" The proposition that ' fraud must 
be proved and not presumed ' is to 
be understood only as affirming that 
a contract honest and lawful on its 
face must be treated as such until it 
is shown to be otherwise by evi- 
dence either positive or circumstan- 
tial. Fraud may be inferred from 
facts calculated to establish it. If 
the facts established afford a suffi- 
cient and reasonable ground for 
drawing the inference of fraud, the 
conclusion, to which the proof tends, 
must in the absence of explanation 
or contradiction be adopted. A 
deduction of fraud may be made not 
only from deceptive assertions and 
false representations, but from facts, 
incidents and circumstances which 
may be trivial in themselves, but may 
in a given case be often decisive of a 
fraudulent design." Goshorn v. 
Snodgrass, 17 W. Va. 717. 

61. Heath v. Koon, 130 Mich. 54, 
89 N. W. 559; Meyer v. Baird, 120 
Iowa 597, 94 N. W. 1 129; Burrill v. 
Kimbell, 65 ^lich. 217, 31 N. W. 

Vol. VI 



136 



FRAUDULENT CONVEYANCES. 



intent, is sufficient, and, indeed, is often the only evidence attaina- 
ble."^ Thus, it is proper to receive evidence tending to show 
transactions contemporaneous with the conveyance in question indi- 



842; New York Store Merc. Co. v. 
West (Mo. App.), 80 S. W. 923; 
Merrill v. Meachura, 5 Day (Conn.) 

341- 

" In every transaction where fraud 
is imputed, it must be conceded to 
be of essential importance that the 
jury should be put in possession of 
every fact and circumstance tending 
to elucidate the question. It is im- 
possible to say the same conclusion 
would arise in the mind of any one, 
of the validity of a transaction car- 
ried on by parties secretly and 
without any known motive, and one 
which was transacted at the instance 
or on the advice of another." Good- 
game V. Cole, 12 Ala. 77. 

The entire antecedents of the 
dealings between a principal defend- 
ant and a garnishee and their agents, 
and all transactions regarding the 
property and its disposal, are admis- 
sible in evidence on an issue as to 
the fraudulent character of the deal- 
ings of the garnishee as against the 
principal defendant's creditors. Cum- 
min gs V. Fearey, 44 Mich. 39, 6 N. 
W. 98. 

In an action by a fraudulent 
grantee to quiet the title in himself 
against a subsequent purchaser in 
good faith and for value, a contract 
between the fraudulent grantor act- 
ing as attorney in fact for the plain- 
tiff and the defendant for the pur- 
chase of the property in controversy, 
is admissible. Hurley v. Osier, 44 
Iowa 642. 

On an issue as to the fraudulent 
intent on the part of a vendor it is 
competent to show that at the place 
where the sale was negotiated he 
went to a hotel and registered under 
an assumed name as if to conceal his 
identity. Preese v. Kemplay, 118 
Fed. 428. 

The fact that an alleged fraudu- 
lent grantee did not return the prop- 
erty conveyed for taxation is some 
evidence that he did not consider 
himself as the owner thereof, and is 
admissible to establish fraud. Shober 

Vol. VI 



V. Wheeler, 113 N. C. 370, 18 S. E 
328. 

On an issue as to whether a debtor 
was attempting to fraudulently con- 
vey his property, it is competent to 
show that he tried to collect certain 
garnished claims and offered to give 
receipts for payments therefor ante- 
dating the garnishment. Milwaukee 
Harvester Co. v. Tymich, 68 Ark, 
225, 58 S. W. 252. 

"The purpose or intent of the par- 
ties to a sale of goods must be 
judged of by the conduct of the par- 
ties and by all the circumstances con- 
nected with and surrounding the 
transaction. Circumstances appar- 
ently trivial or unimportant in them- 
selves when considered singly, may, 
when taken in connection with others, 
form important links in the chain of 
evidence that fixes the character of 
the transaction." Kane v. Drake, 27 
Ind. 29. 

62. United States. — Vansickle v. 
Wells-Fargo & Co., 105 Fed. 16. 

Alabama. — Constantine v. Twelves, 

29 Ala. 607; Whelan v. McCreary, 64 
Ala. 319; Pickett v. Pipkin, 64 Ala. 
520; Coal City & C. Co. v. Hazard 
Powder Co., 108 Ala. 218, 19 So. 392. 

Arkansas. — Erb v. Cole, 31 Ark, 
SS4. 
Delaware. — Brown v. Dickerson, 

2 Marv. 119, 42 Atl. 421. 

Georgia. — Colquit v. Thomas, 8 
Ga. 258. 

Illinois. — Reed v. Noxon, 48 111. 
323; Bear v. Bear, 145 111. 21, 33 N. 
E. 878; Schroeder v. Walsh, 120 111. 
403, II N. E. 70. 

Indiana. — Levi v. Kraminer, 2 
Ind. App. 594, 28 N. E. 1028. 

Iowa. — Zimmerman v. Heinrichs, 
43 Iowa 260; Turner v. Hardin, 80 
Iowa 691, 45 N. W. 758; Craig v. 
Fowler, 59 Iowa 200, 13 N. W. 116. 

Kansas. — LaClef v. Campbell, 3 
Kan. App. 756, 45 Pac. 461. 

Louisiana. — King v. Atkins, 33 
La. Ann. 1057; Worrell v. Vickers, 

30 La. Ann. 202. 

Maryland. — Anderson v. Tydings, 

3 Md. Ch. 167; Powles v. Dilley, g 



FRAUDULENT CONVEYANCES. 



137 



eating a general purpose of fraud."' So also the manner in which 
the debtor had recently obtained goods from his creditors, as well 



Gill 222; Kolb V. Whitely, 3 Gill & 
J. 188. 

Massachusetts. — Sweetser v. Bates, 
117 Mass. 466; O'Donnell v. Hall, 
157 Mass. 463, 32 N. E. 666; Mansir 
V. Crosby, 6 Gray 334. 

Michigan. — Ferris v. McQueen, 94 
Mich. 367, 54 N. W. 164; Judge v. 
Vogel, 38 Mich. 569; Carew v. 
Mathews, 49 Mich. 302, 13 N. W. 
600. 

Minnesota. — Blackman v. Whea- 
ton, 13 Minn. 326; Filley v. Reg- 
ister, 4 Minn. 391, 77 Am. Dec. 522. 

Mississippi. — Parkhurst v. Mc- 
Graw, 2 Cushm. 134. 

Missouri. — New York Store Merc. 
Co. V. West (Mo. App.), 80 S. W. 
923; Deering v. Collins, 38 Mo. App. 
73; Peters-Miller Shoe Co. v. Case- 
beer, S3 Mo. App. 640; Thompson v. 
Cohen, 24 S. W. 1023. 

Virginia. — Knight v. Nease, 53 W. 
Va. so, 44 S. E. 414- 

63. Debtor Taking Notes for Out- 
standing Accounts in Wife's Name, 
etc. — In Dyer v. Taylor, 50 Ark. 
314, 7 S. W. 258, where the issue 
was as to the bona Udes of a sale by 
a merchant, in embarrassed circum- 
stances, to his brother-in-law, it was 
held that evidence showing that at 
about the time of the sale the mer- 
chant took notes in his wife's name 
in settlement of accounts, that his 
books were mutilated, that dates were 
altered, and that balances on the 
books were changed, was admissible, 
as it tended to prove transactions in- 
dicating a general purpose of fraud, 
and thus to show the motive which 
actuated the debtor in making the 
sale. In Chapman v. James, 96 Iowa 
233, 64 N. W. 795, an action by a 
mortgagee against attaching credit- 
ors who attacked the mortgage as 
being in fraud of their rights, and 
also claimed that a bill of sale by one 
of the mortgagors to the other was 
fraudulent, the defendant called the 
vendee under the bill of sale and in- 
quired of him as to the disposition 
made by him of his property, includ- 
ing that embraced in the bill of sale 
made soon after such sale. It was 
claimed by the plaintiffs that this 



evidence came within the rule that 
evidence of acts and declarations of a 
grantor, after he has parted with 
title, are not admissible against his 
grantee. But the court held that as 
it was alleged that the mortgagors 
had considered that the mortgage 
was voluntary and without considera- 
tion, the evidence offered tended to 
support the charge of conspiracy, and 
the transactions proved were so con- 
nected in point of time and circum- 
stances as to constitute a part of the 
res gestae, and were hence admis- 
sible. 

In Gumberg v. Treusch, 103 Mich. 
543, 61 N. W. 872, the principal de- 
fendant and the garnishees had been 
engaged in the same kind of business. 
The principal defendant had been at 
one time an employe of the gar- 
nishees, and later a partner with 
them, and later still had purchased 
from them the stock owned by the 
firm, and another broken stock be- 
longing to a branch store which the 
garnishees had operated for a time 
at a loss. The theory of the plain- 
tiffs was that the principal defendant 
had transferred a large amount of 
goods to the garnishees in payment 
of an indebtedness which was not 
bona fide, and which goods were pro- 
cured for that purpose pursuant to a 
fraudulent scheme entered into by the 
principal and garnishee defendants. 
And it was held competent for the 
plaintiffs to show whether orders for 
goods given by the garnishees were 
filled in the usual course of business 
Or otherwise; and that, immediately 
after the sale of the stock of goods 
by the garnishees to the principal de- 
fendant, he sent out a number of 
letters to different dealers, asking for 
quotations and samples, it appearing 
that he was without capital, and, 
according to the claim of the gar- 
nishees, his indebtedness equaled, if 
it did not exceed, his assets. 

In Rosenthal v. Bishop, 98 Mich. 
.527, .S7 N. W. 573, an action involv- 
ing the bona Mes of a chattel mort- 
gage given by a retail dealer to a 
firm with whom he had dealt for sev- 
eral years, to secure the existing in- 
debtedness and the price of a bill of 

Vol. VI 



138 



FRAUDULENT CONVEYANCES. 



as the manner in which he had disposed of them, is proper to be 
shown. °* 

As Respects the Grantee. — Again, on an issue as to the knowledge 
and intent of the grantee, it is proper to show what preceded and 
followed the transaction, the relations of the parties prior and sub- 
sequent thereto, and all the facts and circumstances surrounding the 
principal event. °° 



goods which the mortgagees claimed 
had been ordered by him, but which 
the mortgagor denied, and testified 
that the mortgage was given for a 
larger amount in fraud of other cred- 
itors, it was held competent for the 
assailants of the mortgage to show in 
what quantities the mortgagor had 
usually ordered g'oods from the mort- 
gagees, and that the alleged order 
was an unusual one, and out of all 
proportion to the business carried on 
by him. 

Unusual Extension of Credit. — In 
Spaulding v. Adams, 63 Iowa 437, 19 
N. W. 341, where the property em- 
braced in the conveyance attacked 
had been sold under an agreement for 
an unusual extension of credit to the 
purchaser, it was held that that fact 
might be considered by the jury in 
determining the good faith of the 
transaction ; and that it was error 
for the court to charge the jury as a 
matter of law that such fact should 
have no tendency to show an intent 
on the part 'of the vendor to defraud 
his creditors in case they should find 
an intent on his part to apply the pro- 
ceedings of the sale, when collected, 
to the payment of his debts. 

64. Gray v. St. John, 35 111. 222. 

65. Craig v. Fowler, 59 Iowa 200, 
13 N. W. 116; Zimmerman v. Hein- 
richs, 43 Iowa 260; Buckingham v. 
Tyler, 74 Mich. loi, 41 N. W. 868; 
Showman v. Lee, 86 Mich. 556, 49 N. 
W. 578; Erfort V. Consalus, 47 Mn. 
207; Reynolds v. Cawthrop, 27 W. 
Va. 3, 16 S. E. 364; Knower v. Cad- 
den Clothing Co., 57 Conn. 202. 

In Levi V. Kraminer, 2 Ind. App. 
S94, z8 N. E. 1028, the alleged fraud- 
ulent vendee claimed that he had 
bought the property of his vendor to 
prevent its sale at a sacrifice and thus 
injure the local market ; and it was 
held that newspaper advertisements 
published at the instance of the ven- 
dee, advertising the property for sale 

Vol. VI 



at a sacrifice as a bankrupt stock, 
were properly received in evidence as 
tending to show that he at once ad- 
vertised and sold the stock in the 
manner in which he pretended to be 
fearful it would be sold by his ven- 
dor. 

In First Nat. Bank v. Marshall, 56 
Kan. 441, 43 Pac. 774, it was held 
on a controversy between a chattel 
mortgagee and a sheriff claiming pos- 
session by virtue of an attachment 
wherein it was claimed that the mort- 
gage was fraudulent, that letters writ- 
ten by the managing officer of the 
chattel mortgagee to creditors while 
the rights of the parties remained un- 
determined, calculated to influence 
their action v/ith reference to the col- 
lection of their claims, as well as 
telegrams sent by creditors to the 
mortgagee with reference thereto, 
were admissible in evidence, although 
written and sent after the execution 
of the mortgage, and after the levy 
of the attachment. The court said: 
" Although the chattel mortgages had 
been executed and attachments had 
been levied on the goods, the rights 
of the parties had not been deter- 
mined. The bank was still seeking 
to hold the property as against cred- 
itors, and its communications with 
them, through its president, with ref- 
erence to litigation pending or pros- 
pective, and with reference to the ac- 
tion they might or ought to take for 
the protection of their interests, and 
with reference to the claims of the 
bank, were all properly admissible 
in evidence.'' 

In Bridge v. Eggleston, 14 Mass. 
24s, 7 Am. Dec. 209, it was held that 
as a fraudulent intent of the grantor 
and_ a knowledge thereof or partici- 
pation therein by the grantee are 
both to be proved, the evidence may 
apply separately to the two branches 
of the case. To prove the fraud of 
the grantor, his conduct and declara- 



FRA UD ULBN T CON J 'B Y AN CBS. 



139 



(2.) Scope of Inquiry. — Great latitude is generally allowed in the 
admission of evidence tending to prove the fraud.®' 



lions before the conveyance may be 
the best evidence of his fraudulent 
purpose. And if this be proved, the 
knowledge of it on the part of the 
grantee may be proved by circum- 
stances tending to show a knowledge 
of the designs of the grantor. 

On an issue as to whether or not 
an assignment of a bank deposit was 
fraudulent, evidence that the assignee 
knew of the creditor's claim against 
his assignor, and that they were at- 
tempting to hold the fund repre- 
sented by the deposit, is admissible 
to aid in determining whether the 
assignment was made in good faith, 
for a good consideration. Sullivan v. 
Langley, 124 Mass. 264. 

6G. Alabama. — Shealy v. Ed- 
wards, 75 Ala. 411. 

Florida. — Armour v. Doig, 34 So. 
249. 

Iowa. — McNorton v. Akers, 24 
Iowa 369; Price v. Mahoney, 24 
Iowa 582; Kelliher v. Sutton, 115 
Iowa 632, 89 N. W. 26. 

Louisiana. — Chaffe v. Lisso, 34 
L,Sl. Ann. 310. 

Maryland. — Cooke v. Cooke, 43 
Md. 522. 

Michigan. — Hart v. Newton, 48 
Mich. 401, 12 N. W. 508; Fury v. 
Strohecker, 44 Mich. 337, 6 N. W. 
834; Flanigan v. Lampman, 12 Mich. 
58; Gumberg v. Treuesch, 103 Mich. 
543. 61 N. W. 872. 

Minnesota. — Ladd v. Newell, 34 
Minn. 107. 24 N. W. 366. 

Missouri. — Field v. Liverman, 17 
Mo. 218. 

Pennsylvania. — Heath v. Slocum, 
IIS Pa. St. 549, g Atl. 259; Zerbe v. 
Miller, 16 Pa. St. 488; Garrigues v. 
Harris, 17 Pa. St. 344; Snayberger v. 
Pahl, 195 Pa. St. 336, 45 Atl. 1065. 

Rhode Island. — Sarle v. Arnold, 7 
R. I. 582. 

South Carolina. — Archer v. Long, 
38 S. C. 272, 16 S. E. 998. 

Texas. — Cox v. Trent, i Tex. Civ. 
App. 639, 20 S. W. 1 118. 

Utah. — Ogden State Bank v. 
Barker, 12 Utah 13, 40 Pac. 765. 

Parties committing such frauds 
usually seek to conceal the direct and 
positive evidence of their guilt. 



Hence, resort may generally be had 
to proof of circumstances somewhat 
remotely connected with the trans- 
action. Circumstances, however 
slight, relating to the transaction 
and tending to throw light upon its 
character are competent evidence so 
far as the same are connected with 
the parties. Grimes v. Hill, 15 Colo. 
359, 25 Pac. 698. 

As a general rule, great latitude is 
allowed in the range of evidence, 
when the question of fraud is in- 
volved. It is indispensable to truth 
and justice that it should be so; for 
it is hardly ever possible to prove 
fraud, except by a comprehensive and 
comparative view of the actions of 
the party to whom the fraud is im- 
puted, and his relative position a 
reasonable time before, at and after 
the time at which the act of fraud is 
alleged to have been committed. No 
more precise general rule can be laid 
down in such cases. Snodgrass v. 
Branch Bank, 25 Ala. 161, 60 Am. 
Dec. 505. 

In Loos V. Wilkinson, no N. Y. 
195, 18 N. E. 99, wherein it was 
claimed that the consideration for 
the conveyance was a balance due on 
a bond then held by the grantee, exe- 
cuted by the grantors, and the ques- 
tion was as to whether the bond was 
ever a subsisting obligation, and 
whether there was anything due on 
it. It appeared that the grantors 
kept books of account as bankers, in 
which their financial transactions 
were entered. On the trial, evidence 
was received that those books con- 
tained no entry of indebtedness of 
the grantors to the grantee upon any 
such bond or any other indebtednes";. 
The court, in holding that this evi- 
dence was properly received, said : 
" The scope of the inquiry where 
fraud is under investigation may be 
a very broad one, and the inquiry 
may, subject to some control of the 
trial judge, extend over a wide field, 
and it should not be limited, as it 
must be in an action by a creditor 
simply to recover his debt from his 
debtor." 

In Robinson v. Woodmansee, 80 

Vol. VI 



140 



FRAUDULENT CONVEYANCES. 



(3.) Evidence Supporting Validity of Conveyance. — And the rule per- 
mitting a wide latitude of inquiry applies with equal force to evi- 
dence to support the conveyance,"^ and the grantee has a full and 
perfect right to prove any fact or circumstance, not otherwise objec- 
tionable, which will in any way tend to avoid the actual fraud and 
prove the real intention of the parties."' Thus, it is proper to permit 



Ga. 249, 4 S. E. 497, where a bill 
had been filed by creditors against a 
debtor, alleging that the latter had 
made a fraudulent sale of his property 
to his brother and others, and an in- 
junction was granted, it was held 
that it was not error to receive in 
evidence on the trial a petition filed 
by the complainants against the 
debtor and his vendee, praying for 
an attachment for contempt against 
them for violating the injunction 
and their answer thereto ; that 'one of 
the questions in the case was whether 
or not the debtor had made a fraudu- 
lent sale, and these documents tend- 
ing to show that he persisted in try- 
ing to give effect to such sale were 
admissible against him. 

67. Heath v. Slocum, 115 Pa. St. 
S49, 9 Atl. 259; Barnett v. Vincent, 
69 Tex. 68s, 7 S. W. 525. 

Evidence that an alleged fraudu- 
lent vendor of chattels was in ill- 
health and required a change of cli- 
mate is admissible to show the good 
faith of the transaction. Vyn v. Kep- 
pel, 108 Mich. 244, 65 N. W. 966. 

It is proper to permit the trans- 
feree to show that he was advised by 
a third person to come to the debtor's 
place of residence for the purpose of 
securing a debt due to him, and that 
he came for that purpose. His pur- 
pose in coming is a part of the res 
gestae. Goodgame v. Cole, 12 
Ala. 77. 

On a controversy between attach- 
ing creditors and an alleged fraudu- 
lent grantee it is proper to permit the 
latter to introduce evidence showing 
that the grantors, within four months 
preceding the execution of the con- 
veyance in question, had paid out to 
their creditors and expended in their 
business a large sum of money. 
Troy Fertilizer Co. v. Norman, 107 
Ala. 667, 18 So. 201, where the court 
said : " They reduced their actual 
indebtedness by the amount they paid 
their creditors, and if they expended 

Vol. VI 



the money in their business, these 
facts were competent to be considered 
by the jury, together with all the 
evidence in the cause tending 'to show 
that defendants were' not contemplat- 
ing a failure and closing up of their 
business and defrauding their cred- 
itors at the time." 

In Evans v. Lewis, 30 Ohio St. II, 
an action by a subsequent creditor to 
set aside a voluntary conveyance on 
the ground that it was made with 
intent to defraud the plaintiff, which 
intent the plaintiff had offered evi- 
dence to disprove, it was held error 
to exclude evidence offered by the 
defendant tending to show that some- 
time prior to the conveyance in ques- 
tion, and before the cause of action 
for which the plaintiff's judgment 
vvas recovered has accrued, the 
grantor had promised his wife that 
he would convey the property in 
question to her. 

Applying Proceeds to Payment of 
Debts — It is proper to show that 
the entire proceeds of the sale in 
question were immediately applied by 
the vendor in payment of his debts. 
Bedell v. Chase, 34 N. Y. 386. 

68. Filley v. Register, 4 Minn. 
391- 

In Rice v. Bancroft, 11 Pick. 
(Mass.) 469, an action of trespass 
for seizing the plaintiff's property 
wherein the defendant relied on evi- 
dence that a debtor in failing circum- 
stances fraudulently conveyed the 
property to his son and that the 
plaintiff with knowledge of the fraud 
received it from the son in exchange 
for other property, it was held 
proper for the plaintiff to rebut evi- 
dence of such knowledge by intro- 
ducing evidence that before the 
debtor was in failing circumstances 
he had been heard to speak of ex- 
changing property with the plaintiff. 

On a controversy between a vendee 
of personal property under a bill of 



FRAUDULENT CONVEYANCES. 



141 



an alleged fraudulent grantee to show that he had insured the prop- 
erty,"® and had used it as his ownJ" 



sale, absolute on its face, and a cred- 
itor of the vendor, the fact that the 
vendee filed the bill of sale in the 
proper recording office is relevant 
upon the claim made by him that 
the transfer was absolute and not by 
way of security. Wessels v. Bee- 
man, 87 Mich. 481, 49 N. W. 483, 
where the court said: "It was 
proper for the jury to consider the 
fact in determining whether it was 
an absolute sale, as claimed by plain- 
tiff, or intended as a security, as 
claimed by defendants. If the jury 
found that there was an absolute 
sale, then the question of delivery 
and actual and continued change of 
possession was important, for, if there 
was no actual delivery, followed by a 
continued change of possession, the 
burden of proof was upon the plain- 
tiff to show that the sale was made 
in good faith, and without any ititen- 
tion to defraud creditors; but if it 
was intended as a security, and the 
affidavit was not filed as required by 
the statute, then it would be void as 
against such creditors as should ac- 
quire a lien after the expiration of a 
year and before the filing of the re- 
newal affidavit; and in this case it 
is conceded that no renewal affidavit 
was filed. The act of the party in 
filing a bill of sale had some sig- 
nificance upon the question as to 
whether it was an absolute transfer 
or only a security." 

Rebutting Presumption r r m 

Grantor's Acts On an issue as to 

the fraudulent character of a deed of 
trust it is competent for the trustee 
to show that his actions, with refer- 
ence to the trust property, have been 
in accordance with the deed for the 
purpose of rebutting any presump- 
tion which might arise from the acts 
of the grantor. Graham v. Lockhart, 
8 Ala. 9. 

On an issue as to whether or not 
a transfer of a stock of goods was 
fraudulent, the fact that the goods 
had been delivered to the transferee 
and that sales therefrom had been 
made by his clerk in due course of 
trade prior to the levy of attachments 
issued against his vendor, is relevant 



evidence as tending to show his bona 
Ude ownership of the goods. Shealy 
V. Edwards, 75 Ala. 411. 

Purchase of Property Under Ad- 
vice to Secure Debt In Goodgame 

V. Clifton, 13 Ala. 383, a purchase 
made by a ward from his former 
guardian was attacked for fraud; it 
was held that the ward might show 
that he was advised to come to the 
guardian's place of residence and se- 
cure the debt by a purchase of the 
property in controversy, and that he 
did come within a very short time 
and make the purchase. This was 
for the purpose of explaining the 
transaction and the motives which 
prompted the purchase. But in Bick- 
nell V. Mellett, 160 Mass. 328, 35 N. 
E. 1130, an action by an assignee 
in insolvency to recover the value of 
the insolvent's stock in trade from 
the holder of a mortgage upon it al- 
leged to have been made in fraud 
of the insolvent laws, it was held that 
the defendant could not introduce ev- 
idence of what he had been told by 
counsel with reference to his legal 
right to make the mortgage loan. 

If the debtor intended a fraud on 
the insolvent laws, all that is neces- 
sary to be proved against the de- 
fendant is that he had reasonable 
cause to believe that the debtor was 
insolvent and had such an intent. 
This depends on the opinion of the 
jury or court, as the case may be, as 
to what conclusion a prudent busi- 
ness man would draw from the facts 
known by the defendant, and the only 
matter for evidence, therefore, is as 
to what facts were known. 

B9. Brickley v. Walker, 68 Miss. 

563- 

70. Hall V. Moriarty, 57 Mich. 
34S, 24 N. W. 96. 

In Flood V. Clemence, 106 Mass. 
299, the plaintiff proved the convey- 
ance to him by mortgage and sale of 
the property in question and offered 
evidence to show that before the at- 
tachment of it by the defendant he 
took possession of the property and 
the building thereon. These convey- 
ances the defendant alleged to be 
fraudulent, and produced evidence 

Vol, VI 



142 



FRAUDULENT CONVEYANCES. 



b. Unduly Withholding Instrument from Record. — The circum- 
stance of unduly withholding the instrument of conveyance in ques- 
tion from record is undoubtedly indicative of a fraudulent design 
and proper to be shown; although, like other facts, it may be 
explained.'^ 

c. Retention of Possession by Vendor. — The fact that after the 
transfer alleged to be fraudulent the vendor retained possession of 
the property may be shown on an issue as to whether or not the 
conveyance was made in fraud of creditors.''^ 

d. Subsequent Fraudulent Use of Instrument. — Although a deed 
which at the time of its execution may be fair and valid as against 
creditors cannot become fraudulent and void by matters occurring 
subsequently, yet, in determining the intent with which the deed was 
made, it is competent, as against the parties to it, to show the use to 
which they applied it subsequently.'' 

e. Existence of Other Debts. — It may be shown as against an 
alleged fraudulent vendee that the vendor had creditors at the time 
of the alleged fraudulent conveyance, and that their claims were so 
large as to furnish a probable motive to defraud,'* and that the 
vendee knew of such indebtedness.™ 



that there was no change in the 
building inside or outside after the 
sale up to the time of the trial, and 
that the business was carried on ap- 
parently by the same person and in 
the same manner as before. In reply 
the plaintiff offered to prove that be- 
fore the final sale to him the former 
owner offered to sell to another 
party who applied to him for his 
consent, and that after the attachment 
other stock was purchased for the 
store by the plaintiff in his own 
name. It was held that even though 
the evidence rejected would materi- 
ally contradict the evidence to which 
it was offered in reply, it was not so 
significant in character as to make 
its rejection error. 

Evidence 'on the part of an alleged 
fraudulent grantee to the effect that 
after the conveyance he had put im- 
provements upon the property, is ad- 
missible. Stewart v. Penner, 8i Pa. 
177. 

71. McDaniel v. Parish, 4 App. D. 
C. 213. 

72. Moog V. Benedicks, 49 Ala. 
S12. See also Ashcroft v. Simmons, 
163 Mass. 437, 40 N. E. 171, and 
Cowles V. Coe, 21 Conn. 220. 

73. Kelliher v. Sutton, 115 Iowa 
632, 89 N. W. 26; Lynde v. Mc- 
Gregor, 13 Allen (Mass.) 172; Ship- 

Vol. VI 



man v. Seymour, 40 Mich. 274; Far- 
mers Bank v. Douglass, 11 Smed. & 
M. (Miss.), 469. See also Tolerton 
V. First Nat. Bank, 63 Neb. 674, 88 
N. W. 865. 

74. Helfrich v. Stem, 17 Pa. St. 
143 ; Stewart v. Fenner, 81 Pa. St. 
177. See also Ross v. Wellman, 102 
Cal. I, 36 Pac. 402. 

Records of Judgments against the 
party whose property has been pur- 
chased at a sheriff's sale, one ob- 
tained before the sale and others 
soon thereafter, are competent evi- 
dence to establish the fact of the ex- 
istence of creditors who might be in- 
jured by the sale. McMichael v. Mc- 
Dermott, 17 Pa. St. 353, 55 Am. Dec. 
560. 

75. Hallock v. Alford, 61 Conn. 
194, 23 Atl. 131, where the court said: 
" Considering the relationship of the 
parties [mother and son], it was a 
circumstance bearing upon the prob- 
ability that there was an actual sale 
of the property, a question upon 
which it was the right of the de- 
fendant to turn all the light which 
the surrounding circumstances would 
afford." 

The fact that a vendor of property 
was largely in debt for it, and that 
that fact was known to his vendee, 
on a purchase of most of the prop- 



Fraudulent convbyances. 



143 



f. Pendency of Actions Against Vendor. — It is competent for the 
attacking creditor to prove the pendency of actions against his debtor 
at the time of the execution of the conveyance/" 

g. Claim of Vendee Barred by Statute of Limitations. — The fact 
that some of the items of the claim of indebtedness relied on to 
constitute the consideration for a conveyance were barred by the 
statute of limitations may be shown as a circumstance proper to be 
considered on the question of good faithJ'' 

h. Mortgage Exceeding Amount of Indebtedness. — The fact that 
a mortgage attacked as fraudulent was given for a greater sum than 
the amount due is a circumstance proper to be shown." 

i. Inadequacy of Consideration. — Inadequacy of consideration, 
although of itself not sufficient to invalidate a deed as against the 
grantee, is a circumstance affording inferences upon the question of 
bona ftdes more or less strong, according to the circumstances of 
the particular case f^ and there are cases in which it has been given, ' 
much weight." 

j. Relationship of Parties. — The relationship existing between 
the vendor and the vendee is a fact proper to be shown and con- 
sidered.*^ 



erty on a credit extending beyond 
the time when the vendor's original 
indebtedness for the property should 
become due, may be shown for the 
consideration of the jury in connec- 
tion with other evidence in determin- 
ing the question of fraud. Hughes v. 
Monty, 24 Iowa 499, where the court 
said : " It cannot be true that the law 
will presume fraud from the fact that 
property is bought on credit, and es- 
pecially so when such party pur- 
chased it for the purpose of sale. If 
this proposition was true, it would be 
dangerous for any one to deal wiih 
a person indebted. The sale of prop- 
erty on credit is often made, and 
such sale being fully legal, the law 
ought not to be held to presume fraud 
from it. Of c.ourse, if there are un- 
usual circumstances attending a sale 
on credit, or for cash even, such cir- 
cumstances may be proper to go to 
and be considered by the jury in de- 
termining the fraudulent intent on 
the part of the vendor or the knowl- 
edge of such intent on the part of 
the vendee." 

76. Barber v. Terrill, 54 Ga. 146; 
Evans V. Hamilton, 56 Ind. 34 ; Sher- 
man V. Hogland, 73 Ind. 472; 
Wright V. Nostrand, 94 N. Y. 31. 

77. Vansickle v. Wells-Fargo & 
Co., 105 Fed. 16. 



78. Brace v. Berdan, 104 Mich. 
356; 62 N. W. S68. 

79. Stix V. Keith, 85 Ala. 463, S 
So. 184, Urdangen v. Doner (Iowa), 
98 N. W. 317; Downs V. Miller, 95 
Md. 602, S3 Atl. 445 ; Feigley v. Feis- 
ley, 7 Md. 537, 61 Am. Dec. 375^; Ful- 
ler V. Brewster, 53 Md. 358; Wood- 
ruflf V. Bowles, 104 N. C. 197, 10 S. E. 
482; Fisher v. Shelver, 53 Wis. 498, 
10 N. W. 681. 

80. McNeal v. Glenn, 4 Md. 87; 
Worthington v. Bullitt, 6 Md. 172. 

81. United States. — ■ Vansickle v. 
Wells-Fargo & Co., 105 Fed. 16. 

Alabama. — Tompkins v. Nichols, 
S3 Ala. 197. 

Illinois. — Schroeder v. Walsh, 120 
111. 403, II N. E. 70; Rindskoph v. 
Kuder, 14s III. 607, 34 N. E. 484. 

Indiana. — Sherman v. Hogland, 
73 Ind. 472; Adams v. Ryan, 61 Iowa 
733, 17 N. W. isg. 

Kansas. — Hasie v. Connor, S3 
Kan. 713, 37 Pac. 128; Hough v 
Dickinson, s8 Mich. 89, 24 N. W. 
809. 

Missouri. — Martin v. Fox, 40 Mo. 
App. 664. 

In Davis v. Zimmerman, 40 Mich. 
24, a controversy between a wife and 
creditors of her husband as to the 
bona tides of an alleged gift of prop- 
erty from him to her, the court said: 

Vol. VI 



144 



FRAUDULENT CONVEYANCES. 



k. Character. — Evidence of good character and reputation for 
honesty and fair dealing is not admissible on the part of the alleged 
fraudulent vendee on a controversy between himself and creditors 
of his vendor.*'' 

1. Pecuniary Condition of Parties. — (l.) Generally. — It has been 
held that under some circumstances evidence as to the pecuniary 
circumstances of both parties is a proper subject of inquiry.'' 

(2.) As Respects the Grantor. — (A.') Generally. — Thus, it is compe- 
tent to show that the grantor was insolvent at the time of the con- 
veyance;** or that he had or retained no other property than the 
property embraced in the conveyance,*" and that the vendee knew 
of such insolvency.** And it is error to exclude evidence of such 



" No doubt the circumstances of the 
relation, and the facility with which 
• frauds may be accomplished under 
the pretense of sales or gifts between 
husband and wife, ought to be care- 
fully weighed in determining whether 
or not a gift has been made, but 
when all are considered, the one 
question and the only question is, 
whether the wife has established her 
right by a fair preponderance of ev- 
idence; if she has, no court has any 
business to require more." 

82. Simpson v. Westenberger, 28 
Kan. 756, 42 Am. Dec. 19S ; Heywood 
V. Reed, 4 Gray (Mass.) S74- 

83. Miller v. Hanley, g4 Mich. 
253, S3 N. W. 962, where the debtor 
had undertaken to assign and con- 
vey his property in recognition of a 
debt due to his wife, originating 
twenty-five years previously, n'o ac- 
count of which had been kept, no 
evidence thereof given, and no in- 
terest or principal paid or requested. 

On an issue as to the knowledge 
on the part of the grantee of the 
grantor's insolvency at the time of 
the conveyance in question, it is 
proper to permit a witness to testify 
that a short time previous the 
grantee had told him that the 
grantor's father-in-law wished to see 
him in respect to his liability on cer- 
tain notes which he had signed for 
the grantor and which the latter 
could not take care of, and that the 
father-in-law afterward did see the 
witness. Lynde v. McGregor, 13 
Allen (Mass.) 172. 

84. Goldstein v. Morgen (Iowa), 
96 N. W. 897 ; Vickers v. Buck Stove 
& Range Co., 60 Kan. 598, 57 Pac. 

Vol. VI 



S17; Helfrich v. Stem, 17 Pa. St. 
143; Martin v. Fox, 40 Mo App. 
664; Beeson v. Wyley, 28 Ala. 575; 
Price V. Mazange, 31 Ala. 701 ; over- 
ruling Stanley v. State, 26 Ala. 26. 

In Marsh v. Hammond, 11 Allen 
(Mass.) 483, it was held that for the 
purpose of establishing the grantor's 
fraudulent intent it is proper to prove 
his pecuniary condition; and that evi- 
dence that he obtained an extension 
of certain notes about to fall due a 
few months before the conveyance in 
question, by representations to the 
holders that he should not be able 
to pay them at maturity, tended to 
prove that he knew himself to be 
insolvent at that time. 

85. Dumangue v. Daniels, 154 
Mass. 483, 28 N. E. 900; Bristol Co. 
Sav. Bank v. Keavey, 128 Mass. 298; 
Boyd V. Jones, 60 Mo. 454; Threl- 
kel V. Scott (Cal.), 34 Pac. 851. 

The fact that a grantor by the 
conveyance attacked as being fraudu- 
lent strips himself of all visible, tan- 
gible property subject to execution 
at law, retaining only choses in ac- 
tion bf uncertain, doubtful value, 
while not in itself conclusive (but, 
it may be, weak and inconclusive) 
evidence of fraud, will awaken sus- 
picion and add strength to other cir- 
cumstances which may also be, in 
themselves, insufficient to establish a 
fraudulent intent. Seals v. Robinson, 
75 Ala. 363. 

86. Helfrich v. Stem, 17 Pa. St. 
143- 

The fact that an alleged fraudu- 
lent grantor was slow in paying his 
debts is admissible as some evidence 
of insolvency; and the fact that 



FRAUDULENT CONVBYANCES. 



14S 



insolvency merely because it cannot also be shown by direct testi- 
mony that the grantee had knowledge thereof."'' / 

(B.) Vendee's Knowledge. — The transferee may, for the purpose 
of showing that he had no reasonable cause to believe the vendor 
insolvent, show inquiries by him, and what he had been told, as to 
the financial standing of the vendor f^ and whether these were made 
in the presence or absence of the vendor is immaterial."* 

Exempt Property. — In the case of a conveyance oT property 
exempt from seizure under execution, evidence that the grantee had 



he had the reputation of being slow 
in that regard, while not admissible 
to prove insolvency, is admissible as 
tending to show the grantee's knowl- 
edge of his embarrassed condition at 
the time of the conveyance as shown 
by other evidence. Hudson v. 
Bauer, 105 Ala. 200, 16 So. 693. 

87. Bernheim v. Dibrell, 66 Miss. 
199, 5 So. 693. 

88. Hough V. Dickinson, 58 Mich. 
89, 24 N. W. 809. 

bi Carpenter v. Leonard, 3 Allen 
(T^ss.) 32, an action by the assignee 
of an insolvent debtor to set aside a 
mortgage alleged to have been given 
as a preference to the defendant, it 
was held competent for the defend- 
ant, for the purpose of showing that 
he had no ground for believing the 
mortgagor to be insolvent, to intro- 
duce evidence of representations and 
statements made to him long prior 
to the mortgage by the mortgagor as 
to his means and ability to carry on 
business, in reply to inquiries made 
by him prior to forming a copartner- 
ship with the mortgagor, provided 
such evidence was coupled with other 
evidence that subsequent to the rep- 
resentations neither the firm nor the 
mortgagor had met with losses; but 
that it was not competent to put in 
evidence the opinion of one who had 
examined the books and papers of the 
firm, and cast up the receipts and 
disbursements, having no knowledge 
as to their correctness or complete- 
ness except by information from the 
mortgagee, for the purpose of show- 
ing that there had been no losses in 
the business. The court, in speaking 
of the declarations, said : " It is 
true that they were hearsay, and in 
the trial of an ordinary issue would 
have been for that reason incompe- 
tent. But they were declarations 

10 



made directly to the tenant, under 
circumstances calculated to impress 
his mind, at a time when his atten- 
tion was especially turned to the sub- 
ject of the mortgagor's pecuniary 
condition, and of such a nature that 
they might properly affect the belief 
of any reasonable man concerning the 
solvency of the mortgagor. They 
were made, too, ante litem motam, 
not for the purpose of influencing the 
mind of the tenant to induce him to 
take the mortgage, the validity of 
which is now called in question, but 
to effect an entirely different object. 
Indeed, if it be competent to offer in 
evidence the declarations and opin- 
ions of third persons concerning the 
solvency and credit of a party, as has 
been decided in the cases above cited, 
a fortiori it would seem to be proper 
to admit the declarations of the 
debtor himself, as having a tendency 
to create a reasonable belief in the 
mind of an honest and reasonable 
man that he was not insolvent. To 
the objection that the declarations of- 
fered in evidence were made long 
previous to the execution of the 
mortgage in question, and that there- 
fore they were too remote to have 
any legitimate bearing on the issue 
before the jury, we think there is an 
obvious and decisive answer. The 
tenant did not rely on proof of the 
declarations alone. If he had, the 
objection would have been entitled to 
some weight. But he coupled his of- 
fer to prove his statements of the 
mortgagor in October, 1856, with the 
additional fact, which he was also 
ready to prove, that the tenant had 
suffered no loss in his business from 
that date down to the time of the 
execution of the mortgage." 

89. Boardman v. Kibbee, 10 Cush. 
(Mass.) 545. 

Vol. VI 



146 



FRAUDULENT CONVEYANCES. 



knowledge of the grantor's condition as to insolvency is irrelevant."" 
(3.) As Respects the Grantee. — It is competent to show the pecu- 
niary condition of the grantee at the time of the conveyance,"^ that 
he was insolvent/^ and his character for honesty and fair dealing 
bad,°^ even though the purchase was made on time."* 

m. Other Conveyances. — (l.) As Respects the Grantor. — (A.) 
Generai,i,y. — On an issue as to the fraudulent intent of a grantor 
it is proper to show that other fraudulent conveyances had been 
made by him about the same time and as a part of the same scheme 
to defraud."' And it is not necessary to the admissibility of such 



90. Pollak V. McNeil, lOO Ala. 
203, 13 So. 937, where the court said 
in so holding that the grantor had 
the right to sell exempt property 
whether he was solvent or insolvent. 

91. Jones v. Meyer Bros. Drug 
Co., 25 Tex. Civ. App. 234, 61 S. W. 
553; Sherman v. Hogland, 73 Ind. 
472; Bernard v. Guidry, 109 La. 451, 
33 So. 5S8. 

In Dale v. Gower, 24 Me. 563, it 
was held that declarations of the 
plaintiff tending to show that he was 
not in a condition to have paid the 
consideration named in the convey- 
ance were admissible. 

92. Robinson v. Woodmansee, 80 
Ga. 249, 4 S. E. 497- 

In Rowland v. Plummer, 50 Ala. 
182, where the issue was as to the 
hona fides of a transfer of a promis- 
sory note by a husband to a trustee 
for his wife, it was held that attack- 
ing creditors could hot show the in- 
solvency of the trustee at the time of 
the transfer, since the fact of his in- 
solvency in no way affected the va- 
lidity of the transfer nor the rights 
of the party under it. 

93. Holmberg v. Dean, 21 Kan. 
67, where the court in so holding said : 
" If the assignee be so deficient in 
business capacity or standing, in pe- 
cuniary responsibility or character 
for integrity, that a prudent man, 
honestly looking to the interest of the 
creditors alone, would not likely se- 
lect him as a proper person for the 
performance of the trust, then his 
selection will furnish an inference, 
more or less strong, according to the 
circumstances, that the assignor in 
making the selection was actuated by 
some other motive than the desire to 
promote the interest of creditors ; in 
other words, an inference of intent 

Vol. VI 



to hinder, delay, or defraud his cred- 
itors. If the assignment was made 
with this intent, the transaction was 
fraudulent." 

94. Borland v. Mayo, 8 Ala. 104, 
where the court said : " Such testi- 
mony, it is true, might not establish 
a fraud, yet, in connection with other 
facts, the indebtedness 'of the claim- 
ant might exert a controlling influ- 
ence. No matter what may be the 
extent of one's property, prudent 
men, who are indebted, are less Ws- 
posed to make heavy purchases, even 
on time; especially if they do not ex- 
pect or intend to realize by a re-sale." 

95. United States. — Wilson v. 
Prewett, 3 Woods 631, 30 Fed. Cas. 
No. 17,828, 103 U. S. 22. 

California. — Landecker v. Hough- 
taling, 7 Cal. 391. 

Connecticut. — Thomas v. Beck, 39 
Conn. 241 ; Knower v. Cadden Cloth- 
ing Co., 57 Conn. 202. 

Iowa. — Gollobitsch v. Rainbow, 84 
Iowa 567, 51 N. W. 48; Doxsee v. 
Waddick, 98 N. W. 483; Kelliher v. 
Sutton, 115 Iowa 632, 89 N. W. 26. 

Maine. — Howe v. Reed, iz Me. 
515- 

Massachusetts. — Stockwell v. Sil- 
loway, 113 Mass. 384; Lynde v. Mc- 
Gregor, 13 Allen 174; Taylor v. Rob- 
inson, 2 Allen 562. 

Michigan. — Krolik v. Graham, 64 
Mich. 266, 31 N. W. 307. 

New Hampshire. — Hills v. Hoitt, 
18 N. H. 60s. 

New York. — Angrave v. Stone, 45 
Barb. 35; Loos 7'. Wilkinson, no N. 
Y. 195, 18 N. E. 99; Beuerlien v. 
O'Leary, 149 N. Y. 33, 43 N. E. 4I7- 

North Carolina. — Brink v. Black, 
77 N. C. 59. 

Penmylvania. — Deakers v. Tem- 
ple, 41 Pa. St. 234. 



PRAUDULHNT CONVEYANCES. 



141 



evidence as against the vendor that there be also proof that the 
vendee had knowledge of or participated in the fraudulent purpose 
of such other conveyances."® But where two transactions are 
claimed to be fraudulent, only one of which, however, is attacked, it 



Rhode Island. — Sarle v. Arnold, 
7 R. I. 582. 

South Carolina. — Thorpe v. 
Thorpe, 12 S. C. 154. 

Texas. — Day v. Sloan, 59 Tex. 
612. 

In Bernheim v. Dibrell, 66 Miss. 
199. 5 So. 693, it was held proper 
to permit proof that the debtor had 
on the day following the conveyance 
in question conveyed other property 
with the intent to defraud creditors. 
The court said : " It is not essential 
to the competency of such evidence 
that it should relate to transactions 
contemporaneous with the one inves- 
tigated. If they are so closely re- 
lated in time that the intent that gov- 
erned in the one may fairly and rea- 
sonably be inferred to be the intent 
that controlled the other, then the 
one sheds light upon the other, and 
is therefore a relevant subject of in- 
vestigation. If Mrs. Pollard, on the 
night of the day on which she sold 
the goods levied on to the claimants, 
made transfers of other portions of 
her estate for the fraudulent purpose 
of defeating her creditors, it is for 
the jury to say whether such was 
the purpose of the transfer to the 
claimants. The intervening time was 
too short for the court to say as 
matter of law that the one act could 
not shed light upon the other." 

In Engraham v. Pate, 51 Ga. S37> 
it was held error to reject evidence 
that at about the time of the con- 
veyance in question the debtor had 
sold to the same grantee, who was 
his son-in-law, all his other real es- 
tate. The court said : " The fact, 
if it be so, that about the same time 
he sold to the same son-in-law prop- 
erty in a different locality — in fact, 
all his real estate — is surely some 
evidence going to cast suspicion 
upon the transaction at present 
under investigation. It is a cir- 
cumstance which, from its very na- 
ture, will affect the mind in com- 
ing to a conclusion upon the matter 
in issue. As a matter of course, it 
is but one fact, and did it stand alone 



it would not amount to much. But 
the evidence in this case leaves the 
transaction open to strong suspicion, 
and the verdict is by no means de- 
manded by the evidence. Perhaps, 
had this additional fact gone to the 
jury the verdict would have been dif- 
ferent." 

96. In Foster v. Hall, 12 Pick. 
(Mass.) 89, 22 Am. Dec. 400, evi- 
dence of other fraudulent convey- 
ances made at or about the same 
time with the conveyance in question 
had been held inadmissible, unless 
some evidence was offered that the 
grantee knew of these particular con- 
veyances or of a general purpose of 
the grantor to convey away his prop- 
erty to the injury of his creditors. 
The appellate court, in holding the 
ruling to be incorrect, said that the 
law does not hold a conveyance to be 
void on proof that it was made with 
a fraudulent intent to delay or de- 
feat the creditors of the grantor, un- 
less there was a fraudulent intent in 
both parties, nor that the grantee's 
estate could be defeated by showing 
a fraudulent intent in the grantor, 
unless it was also shown that the 
grantee participated therein or by his 
concurrence promoted it. " The 
proposition to be established, then, by 
the attaching creditor, who seeks to 
vacate a prior conveyance on the 
ground of fraud, is that the grantor 
made his conveyance with the in- 
tent and for the purpose of defraud- 
ing his creditors by a pretended 
and colorable sale, or by a sale with- 
out consideration, or upon a secret 
trust contrary to good faith, and that 
the grantee knew of this intent and 
purpose, and participated in it. These 
propositions are in some measure in- 
dependent of each other, inasmuch as 
there may be a fraudulent intent on 
the part of the grantor, but not 
known to the grantee, though proof of 
both must concur to make out a case 
for the creditor. But the evidence to 
prove these several propositions may 
be of different kinds and drawn from 
different sources."' 

Vol. VI 



148 



FRAUDULENT CONVUYANCES. 



must be shown that they are so connected as to evince a common 
purpose before the transaction not attacked can be admitted in evi- 
dence for the purpose of establishing the fraudulent character of the 
other." 

Other Attachments. — On an issue as to the fraudulent character of 
a conveyance, evidence that other creditors of the grantor had sued 
out an attachment, on hearing of the conveyance in question, is not 
admissible for the purpose of proving the fraudulent character of the 
conveyance.'* 

Best Evidence Rule Not Applicahle. — The rule in regard to the pro- 
duction of the best evidence does not apply in such cases in a way 
requiring the written evidence of such other conveyance, because the 
inquiry in such case relates to a fact collateral to the main issue.*" 

(B.) pRAUDULfiNT Character op Other Conveyance. — Inorder to jus- 
tify the admission of such evidence it must appear that the other 
transactions were in fact fraudulent; thus, evidence of such other 
conveyance cannot be received where it does not appear that at the 
time when they were executed the grantor had any creditors to be 
defrauded.^ 

(C.) Other Independent -Conveyances. — But evidence tending 'to 
show fraud on the part of the vendor in other conveyances, inde- 
pendent of and having no connection with the conveyance in contro- 
versy, is not competent.^ Nor is evidence of other transfers 
between the same parties, but apparently valid and not shown to 
have been in any way connected with the transfer in controversy, 
admissible.* 



97. Hardy v. Moore, 62 Iowa 65, 

17 N. W. 200. 

98. Miner v. Phillips, 42 111. 123, 
where the court, in so holding, said: 
" The fact that other creditors had 
sued out attachments is not evidence 
of fraud. To so hold would enable 
creditors in any case to defeat the 
fairest transaction and a sale made 
in the utmost good faith. It would 
only be necessary for one creditor to 
sue out an attachment, and for other 
creditors to prove that fact, to estab- 
lish a fraud that would impeach the 
fairest sale that could be made." 

99. In Phinney v. Holt, 50 Me. 
570, where the grantor was a witness 
to disprove any fraudulent intent, it 
was held that he might be asked on 
cross-examination if he had not on 
the same day made a conveyance of 
other property to a third person. 

1. McAulay v. Earnhart, 46 N. C. 

502. 

2. Ufcler V. Adams, J^ Miss. 332, 

18 So. 6S4; Staples' t/. Smith, 48 Me. 

Vol. VI 



470. See also Clark v. Reiniger, 66 
Iowa 507, 24 N. W. 16. 

3. Cocke V. Carrington Shoe Co. 
(Miss.), 18 So. 683; Holmesly v. 
Hogue, 47 N. C. 391. 

Williams v. Robbins, 15 Gray 
(Mass.) 590, where the court, in so 
holding, said: "To allow proof of 
the design and purpose of the par- 
ties in the latter for the purpose of 
showing that the former, which 
otherwise appears to be perfectly le- 
gal and valid as having been made 
upon a just and sufficient considera- 
tion, was infected by the fraudulent 
intention of the parties to hinder and 
delay the creditors of the grantor in 
the collection of their respective 
claims and demands, would authorize 
an effect to be given to it to which it 
is in no respect entitled. There was in 
fact no connection whatever between 
them. Each was the result, so far 
as is known from anything disclosed 
upon the trial, or then offered to be 
proved, of a distinct, separate and 
independent negotiation; and the one 



FRAUDULENT CONVEYANCES. 



149- 



(8.) As Respects' the Grantee. — Evidence of other frauds committed 
by a grantor in which his grantee did not participate, and of which 
he had no notice, cannot be received for the purpose of defeating the 
title of his grantee.* Nor is it permissible to show that the grantor 
proposed to others fraudulently to convey the property to them, 
unless it is also shown that the grantee had knowledge thereof, and 
of the object and motive of the grantor in making them."* Nor is 
evidence of other fraudulent transactions between the grantor and 
third persons admissible, even if the grantee had knowledge thereof 
before the conveyance, unless the two transactions were so connected 
as to evince a common fraudulent purpose.* But evidence that an 
alleged fraudulent grantee had, in other transactions about the time 
of the transaction in question, aided and advised the grantors in 
preventing their creditors from availing themselves of their legal 
remedies, is competent.'' 

n. Acts and Declarations of the Parties. — (1.) Generally. — On 
an issue as to the bona £des of a conveyance, whatever is said by 
the parties in the progress of the negotiations and contemporaneous 
therewith, and having a tendency to give character to the transaction, 
and which derives credit from it, is admissible.* And such evidence 



had therefore no tendency to charac- 
terize or to evince the purpose and 
design of the parties in the other." 

4. Alabama. — Shealy v. Edwards, 
75 Ala. 411; Moog v. Farley, 79 Ala. 
Z46 ; Schroeder v. Walsh, 120 111. 403, 
II N. E. 70. 

Illinois. — Mathews v. Reinhardt, 
149 111. 63s, 37 N. E. 85. 

Iowa. — Hardy v. Moore, 62 Iowa 
6s, 17 N. W. 200; Doxsee v. Wad- 
dick, 98 N. W. 483. 

Maine. — Blake v. Howard, 11 Me. 
202. 

Michigan. — Keating v. Ritan, 80 
Mich. 324, 4S N. W. 141. 

New Hampshire — Blake v. White, 
13 N. H. 267. 

New York. — Ford v. Williams, 13 
N. Y. 577, 67 Am. Dec. 83. 

Pennsylvania. — Wolf v. Koler, 
133 Pa. St. 13, 19 Atl. 284. 

Wisconsin. — Rozek v. Redzinski, 
87 Wis. 525, s8 N. W. 262. 

A creditor attempting to impeach 
a conveyance as fraudulent will not 
be permitted to give evidence of other 
conveyances by the same grantor of 
other land at other times without 
connecting it with proof of privity or 
knowledge on the part of the grantee 
upon whom the testimony is intended 
to bear. Blake v. Howard, 11 Me. 
2Q2. See also Flagg v. Wellington, 



6 Me. 386; Grant v. Libby, 71 Me. 
427; Staples V. Smith, 48 Me. 470. 

5. Reed v. Smith, 14 Ala. 380. 

6. Bixby v. Carskaddon, 70 Iowa 
726, 29 N. W. 626. 

7. Adams v. Kenney, S9 N. H. 
133. Citing Whittier v. Varney, 10 
N. H. 291 ; Lee v. Lamprey, 43 N. 
H. 13; Pomeroy v. Bailey, 43 N. H. 
118. 

In an action to set aside a convey- 
ance as fraudulent, the plaintiff is not 
confined to evidence of the one trans- 
action, but has a right to give evi 
dence of the general course of busi- 
ness between the grantor and 
grantee, as well as of distinct trans- 
actions. Hunsinger v. Hofer, no Ind. 
390, II N. E. 463. 

In Dent v. Portwood, 21 Ala. s88, 
it was held that for the purpose of 
showing a bill of sale to be fraudu- 
lent, a deed for land executed by the 
vendor, on the same day, to the 
vendee, is admissible as tending to 
show that the vendor was disposing 
of his whole estate, and thus adding 
to the other proof of the mala tides 
of the bill of sale. 

8. California. — Eppinger v. 
Scott, 112 Cal. 369, 42 Pac. 301, 44 
Pac. 723 ; Tevis v. Hicks, 41 Cal. 123. 

Connecticut. — Lesser v. Brown, 
S4 Atl. 205. 

Vol. VI 



ISO 



FRAUDULENT CONVEYANCES. 



is not only competent to show fraud, but to rebut it, its object being 
not to vary or alter the terms of the written contract representing 
the transaction, but to show its good faith.* 

Subsequent Acts of the Parties to the conveyance may be submitted 
to the jury as they may reflect light back upon the original intent 
and help to characterize and discern it more correctly.^" 

Declarations by Agent. — So, also, are declarations admissible which 
are shown to have been made by a duly authorized agent at or prior 
to the consummation of the transfer.*^ 

(2.) As Respects the Grantor (A.) Gbnerahy. — Fraudulent intent 

on the part of the grantor may be shown by his acts and declarations 
so immediately connected with the transaction as to throw light upon 
or illustrate its nature.^^ This evidence often consists of a series of 



Iowa. — Hurley v. Osier, 44 Iowa 
642 ; Bener v. Edgington, 76 Iowa 105, 
40 N. W. 117; Moss V. Dearing, 45 
Iowa 530 ; Whitney v. Brownewell, 71 
Iowa 251, 32 N. W. 285. 

Maine. — Littlefield v. Getchell, 32 
Me. 390. 

Maryland. — Cooke v. Cooke, 43 
Md. 522. 

Massachusetts. — Elliott v. Stod- 
dard, 98 Mass. 145. 

Michigan. — Leland v. Collver, 34 
Mich. 418; Gutnberg v. Treuesch, 103 
Mich. 543, 61 N. W. 872. 

Nebraska. — Bennett v. McDonald, 
60 Neb. 47, 82 N. W. no. 

New Hampshire. — Banfield v. 
Parker, 36 N. H. 353. 

9. Angell v. .Pickard, 61 Mich. 
S6i, 28 N. W. 680. 

10. Messick v. Pries, 128 N. C. 
450, 39 S. E. 59- 

11. Grimes v. Hill. 15 Colo. 359, 
25 Pac. 698; Potts V. Hart, 99 N. Y. 
168, I N. E. 60s. See also Kaufman 
V. Burchinell (Colo. App.), 63 Pac. 
786, where it was hefd that state- 
ments of a_ creditor's agent, who was 
in possession of the property and 
packing it up for shipment, as to the 
disposition that was being made of 
the property, were admissible against 
the creditor. Compare Reed v. 
Noxon, 48 111. 323, wherein it was 
held that declarations of a mortgagee 
made at a time when he was not act- 
ing as the mortgagor's agent were 
not admissible in evidence in an at- 
tachment by a creditor against the 
mortgagor alone charging the mort- 
gage to have been made with intent 
to defraud creditors. 

Vol. VI 



12. England. — Phillips v. Eames, 
I Esp. 357. 

United States. — Freese v. Kemp- 
lay, 118 Fed. 428. 

Alabama. — Shealy v. Edwards, 75 
Ala. 411. 

Arkansas. — Hiner v. Hawkins, 59 
Ark. 303, 27 S. W. 65. 

California. — Visher v. Webster, 8 
Cal. 109; Landecker v. Houghtaling, 
7 Cal. 391; Threlkel v. Scott, 34 
Pac. 851. 

Connecticut. — Cook v. Swan, 5 
Conn. 140. 

Florida. — Hardee v. Langford, 6 
Fla. 13. _ 

Georgia. — Pearson v. Forsyth, 61 
Ga. 537. 

Illinois. — Reed v. Noxon, 48 111. 
323. 

Indiana. — Hunsinger v. Hofer, no 
Ind. 390, II N. E. 463; Benjamin v. 
McElwaine-Richards Co., 10 Ind. 
App. 76, 37 N. E. 362. 

Iowa. — Chapman v. James, 96 
Iowa 233, 64 N. W. 795; Risser v. 
Rathburn, 71 Iowa 113, 32 N. W. 
198. 

Kansas. — LaClef v. Campbell, 3 
Kan, App. 756, 45 Pac. 461 ; Hasket't 
V. Auhl, 3 Kan. App. 744, 45 Pac. 
608. 

Maine. — White v. Chadbourne, 41 
Me. 149; Fisher v. True, 38 Me. 
534- 

Maryland. — Sanborn v. Lang, 41 
Md. 107; Kolb V. Whitely, 3 Gill & 
J. 188. 

Massachusetts. — Winchester v. 
Charter, 97 Mass. 140. 

Michigan. — Wyckoff v. Carr, 8 
Mich. 44; Heath v. Koon, 130 Mich, 



FRAUDULENT CONVEYANCES. 



151 



acts and declarations more or less significant antecedent to,^' con- 



54, 89 N. W. ssg; Sweetzer v. Mead, 
5 Mich. 107; Krolik v. Graham, 64 
Mich. 226, 31 N. W. 307. 

Missouri. — Blue v. Penniston, 27 
Mo. 272; Gage V. Trawick, 94 Mo. 
App. 307; 68 S. W. 85; Potter v. 
McDowell, 31 Mo. 62; Gamble v. 
Johnston, 9 Mo. 605 ; Holmes v. 
Braidwood, 82 Mo. 610. 

Nevada. — Gregory v. Frothing- 
ham, I Nev. 253. 

New Hampshire. — Pomeroy v. 
Bailey, 43 N. H. 118. 

North, Carolina. — Harshaw v. 
Moore, 34 N. C. 247. 

Pennsylvania. — Helf rich v. Stem, 
17 Pa. St. 143; Stewart v. Fenner, 
81 Pa. St. 177. 

Tennessee. — Carney v. Carney, 7 
Baxt. 284. 

Vermont. — McLane v. Johnson, 
43 Vt. 48. 

In Taliaferro v. Evans, 160 Mo. 
380, 61 S. W. 18s, the courtj in hold- 
ing it error to exclude evidence of 
statements made by the vendor, who 
was a party defendant, although sev- 
eral months after the conveyance in 
question, to the effect that he was 
then insolvent, that he would not pay 
anything, that he had nothing to pay 
with, and that he was rendered in- 
solvent by the making of the deed in 
question, said : " There could have 
been no better way of proving his in- 
solvency than by his own admissions 
or statements to that effect. He be- 
ing one of the defendants, and one of 
the parties to the conveyance, his ad- 
missions that he was insolvent, and 
had no property, were admissible in 
evidence as against himself, although 
made after the execution of the deed 
from him to his wife." 

Admissions of the vendor in the 
presence 'of the vendee and before the 
latter parted with the consideration, 
as to the intent with which the sale 
was made, were competent, though 
coming after the vendee had taken 
possession, since they tend to show 
notice of the vendor's intent to the 
vendee. Bender v. Kingman, 62 Neb. 
469, 87 IJ. W. 142. 

In an action by an assignee in in- 
solvency to recover the value of the 
insolvent's stock in trade from the 
holder of a mortgage upon it, al^ 



leged to have been made in fraud of 
the insolvent laws, it is proper to re- 
ceive in evidence the insolvent's 
books of account in his own hand- 
writing as tending to show at least 
what he thought his condition was 
at the time of making the mortgage. 
Bicknell v. Mellett, 160 Mass. 328, 35 
N. E. 1 130. 

In Merrill v. Meachum, 5 Day 
(Conn.) 341, the attacking creditor 
was permitted to show that at the 
time of the execution of the de.ed the 
grantor declared to the witness that 
a certain named creditor was "about 
to attach the land, but he intendedto 
let him know he would be quick 
enough for him" ; and also 'other dec- 
larations of the grantor tending to 
show that the deed was executed for 
the purpose of securing the land 
against the attachment of his credit- 
ors. 

13. Hiner v. Hawkins, 59 Ark. 
303, 27 S. W. 65; Threlkel v. Scott 
(Cal.), 24 Pac. 851; Seeleman v. 
Hoagland, 19 Colo. 231, 34 Pac. 99s; 
C. B. Rogers Co. v. Meinhardt, 37 
Fla. 480, 19 So. 878; McKinnon v. 
Reliance Lumber Co., 63 Tex. 30; 
O'Hare v. Duckworth, 4 Wash. 470, 
30 Pac. 724. 

Declarations by Grantor When 
Purchasing Property. — Upon an is- 
sue as to whether or not a convey- 
ance is fraudulent and void, evidence 
of statements made and language 
used by the grantor when he pur- 
chased the goods of the creditor at- 
tacking the conveyance, tending to 
show a fraudulent intent on his part, 
is admissible. Spalding v. Adams, 63 
Iowa 437, 19 N. W. 341. And in Kalk 
V. Fielding, 50 Wis. 339, 7 N. W. 296, 
wherein it was held that such state- 
ments tended to show the fraudulent 
intent of the mortgagor, the court 
said : " His intent was a material 
fact in issue, and for that purpose the 
evidence was admissible, although the 
fraudulent intent on the part of the 
mortgagor would not prejudice the 
mortgagee unless he were privy to 
such intent, and aided in its execu- 
tion. The objection being general, if 
the evidence was admissible for any 
purpose it should have been received, 
and the court should have instructed 

Vol. VI 



152 



FRAUDUIBNT CONVHYANCES. 



temporaneous with,^* and even sometimes immediately subsequent 
to the principal fact.^' 

(B.) Test of Admissibiuty. — It has been held that whether decla- 
rations of a vendor showing an intent on his part to defeat an execu- 
tion creditor are relevant to the issue or not, depends on whether 
they were made before or after the conveyance, and where the evi- 
dence is conflicting as to when the declarations were made, the evi- 



the jury as to how far it would 
affect the rights of the plaintiff." 

In Picket v. Garrison, 76 Iowa 347, 
41 N. W. 38, for the purpose of 
avoiding a conveyance to the plain- 
tiff of certain property, on the ground 
that it was made with a fraudulent 
intent on the part of the grantor to 
defeat a claim made by his wife for 
alimony, evidence was admitted that 
on the day previous to the convey- 
ance he had consulted an attorney 
about the matter. This was also be- 
fore the action for divorce had been 
begun, and the plaintiff was not at 
the conference with the attorney. It 
was held that this evidence was, not- 
withstanding properly admitted in 
connection with other matters for the 
purpose of showing the grantor's mo- 
tive in the whole proceeding. 

14. In Bussard v. Bullitt, 95 
Iowa 736, 64 N. W. 658, the contro- 
versy was between an attaching cred- 
itor and an intervening mortgagee as 
to whether or not the mortgage was 
given in fraud of creditors; it was 
held proper for the court to compel 
the mortgagor to testify, as bearing 
on his intent in making the mortgage, 
whether he did not tell the mortgagee 
when he made it that he had con- 
veyed his homestead to his wife. The 
court said that it was true that the 
mortgagee had the right to secure his 
debt if he took all the property, pro- 
vided he did so in good faith, but that 
as the question of intent with which 
the parties acted was being tried, the 
amount of property which the mort- 
gagor had and the way it was being 
used was proper to be considered as 
bearing on that question, and to the 
extent that the mortgagee knew such 
facts they could be considered in de- 
termining his intent. 

15. Hogan v. Robinson, 94 ' Ind. 
138; Exchange Bank v. Russell, 5° 
Mo. S31 ; Burbank v. Wiley, 79 N. C. 

Vol. VI 



501. Hardee v. Langfqrd, 6 Fla. 13, 
where it was held that a few days or 
even a week did not constitute such a 
remoteness of time as would of itself 
be ground for excluding such evi- 
dence. See also Landecker v. Hough- 
taling, 7 Cal. 391. 

The Reason for This Exception 
to the general rule is that one fact 
to be established by the defense was 
his fraudulent intent in making the 
conveyance, which might be inferred 
from his declarations respecting it, , 
tir respecting other sales made by him 
about the same time. Fisher v. True, 
38 Me. 534. 

A proposal by an alleged fraudu- 
lent grantor, made long after the con- 
veyance in question, to a creditor, 
enumerating certain debts owed by 
him, and in which he proposes to 
mortgage certain property standing in 
his wife's name, is not competent evi- 
dence against the wife in an action 
by her against the husband's credit- 
ors to quiet her title. In Jones v. 
Snyder, 117 Ind. 229, 20 N. E. 140, 
the court said that as it did not ap- 
pear, nor was it proposed to show, 
that the debts spoken of in the letter 
were subsisting claims against the 
husband at the time the conveyances 
complained of were made, or that 
they had not been contracted since, 
the letter could cast no light upon the 
financial condition of the writer at 
any time material to the inquiry be- 
fore the court. 

In Marsh v. Hammond, 11 Allen 
(Mass.) 483, where the alleged 
fraudulent grantor had testified that 
he had no fraudulent intent in mak- 
ing the conveyance in question, and 
in removing with his goods from the 
state, it was held that the letters 
written by 'him or on his authority 
shortly after reaching the place of 
his destination, and tending to show 
that he had such fraudulent intent, 
were admissible. 



FRAUDULENT CONVEYANCBS. 



153 



dence is properly admitted.^" Nor is it necessary to the admissibility 
of such evidence that the acts or declarations should have been done 
or made in the presence of the vendee.^^ Nor is the presence of the 
vendor in court, when such evidence is offered, any objection to it.^* 
(C.) As Evidence oe Good Faith. — The good faith of a vendor 
whose sale of property is assailed as fraudulent cannot be proved by 
the evidence of his declarations that he honestly owed certain debts 
and intended to pay them.^" 

(3.) As Respects the Grantee. — (A.) Geneeahy. — Declarations of an 
alleged fraudulent vendee prior to the conveyance, tending to show 
knowledge on his part, are admissible in evidence.^" 

(B.) Declarations by Grantor Subsequent to Conveyance. — It is a 
settled rule in 'the law of evidence that acts or declarations of a 
grantor made after a conveyance or sale by him, and after he has 
parted with the possession to his grantee, and in the absence and 
without the knowledge of the latter, cannot be received in evidence 
against the grantee for the purpose of affecting or impeaching the 
bona Mes of the conveyance or sale, or of defeating the title on the 
ground that the transaction was in fraud of creditors." And it is 



16. Clark v. Reiniger, 66 Iowa 507, 
24 N. W. 16. 

17. White V. Chadbourne, 41 Me. 
149; Buckingham v. Tyler, 74 Mich. 
101, 41 N. W. .868; Covanhovan v. 
Hart, 21 Pa. St. 495, 60 Am. Dec. 57. 

18. White V. Chadbourne, 41 Me. 
149. 

19. Hai-wick v. Weddington, 73 
Iowa 300, 34 N. W. 868. 

20. Hunsinger v. Hofer, no Ind. 
390, II N-. E. 463. 

21. England. — Roberts v. Justice, 
I Car. & K. 93, 47 E. C. L. 93- 

Alabama. — Reed v. Smith, 14 Ala. 
380; H. B. Claflin Co. v. Rodenberg, 
loi Ala. 213, 13 So. 272; Strong v. 
Brewer, 17 Ala. 706; Moog v. Farley, 
79 Ala. 246; Poote v. Cobb, 18 Ala. 
585. 

California. — Garlick v. Bowers, 66 
Cal. 122, 4 Pac. 1 138; Eppinger v. 
Scott, 112 Cal. 369, 42 Pac. 301, 44 
Pac. 723; Jones v. Morse, 36 Cal. 
205; Ross V. Wellman, 102 Cal. i, 36 
Pac. 402. 

Connecticut. — Partelo v. Harris, 
26 Conn. 480; Beach v. Gatlin, 4 Day 
284, 4 Am. Dec. 221 ; Redfield v. 
Buck, 35_ Conn. 328, 95 Am. Dec. 241. 

Georgia. — James v. Kerby, 29 Ga. 
684 ; Bowden v. Achor, 95 Ga. 243, 22 
S. E. 254; Oatis V. Brown, S9 Ga. 
711; Roberts v. Neale, 62 Ga. 163. 

Idaho. — Deasey v. Thurman, i 



Idaho 775- Compare Perbracher v. 
Martin, 3 Idaho 573, 32 Pac. 252. 

Illinois. — Meachem v. Hahn, 46 
111. App. 144; Durand v. Weightman, 
108 111. 489; Nichols V. Wallace, 31 

111. App. 408; Sawyer v. Bradshaw, 
125 111. 440, 17 N. E. 812. 

Indiana. — Bishop v. Redmond, 83 
Ind. 157; Gamer w. Graves, 54 Ind. 
188. 

Iowa. — Neuffer v. Moehn, 96 Iowa 
731, 6s N. W. 334; Bixby v. Cars- 
kaddon, 70 Iowa 726, 29 N. W. 626; 
Chapman v. James, 96 Iowa 233, 64 
N. W. 795 ; Benson v. Lundy, 52 Iowa 
265; Turner v. Hardin, 80 Iowa 6gi, 
45 N. W. 758; Urdangen v. Doner, 
^ N. W. 317. 

Kansas. — Crust v. Evans, 37 Kan. 
263. IS Pac. 214; Stickel v. Bender, 
37 Kan. 457, 15 Pac. 580. 

Kentucky. — Nelson v. Terry, 22 
Ky. L. Rep. in, 56 S. W. 672. 

Louisiana. — Burg v. Rivers, 105 
La. 144, 29 So. 482. Compare Car- 
rollton Bank v. Cleveland, 15 La. 
Ann. 616. 

Maryland. — Sanborn v. Lang, 41 
Md. 107; Hall V. Hinks, 21 Md. 406. 

Massachusetts. — Tapley v. Forbes, 
2 Allen 20; Horrigan v. Wrigrht, 4 
Allen 514; Parry v. Libbey, 166 Mass. 

112, 44 N. E. 124; Lincoln v. Wil- 
bur, 125 Mass. 249; Roberts v. Med- 
bery, 132 Mass. lOo; Holbrook v. 

Vol. VI 



154 



FRAUDULENT CONVEYANCES. 



error for the court to admit evidence of such subsequent declara- 
tions.^^ Nor can evidence of declarations by a grantor prior to the 
sale and not connected with it, and in the absence and without the 
knowledge of the grantee, be received to involve the transaction in 
fraud as against the grantee,^^ although such evidence may be 
received if it be shown that he had notice thereof.^* 



Holbrook, 113 Mass. 74; O'Donnell v. 
Hall, 154 Mass. 429, 28 N. E. 349; 
Taylor v. Robinson, 2 Allen 562. 

Michigan. — Blanchard v. Moors, 
85 Mich. 380; 48 N. W. 542; Merritt 
V. Stebbins, 86 Mich. 342, 48 N. W. . 
1084; Ganong v. Green, 71 Mich, i, 
38 N. W. 661; Hedstrom v. Kings- 
bury, 40 Mich. 636. 

Minnesota. — Derby v. Gallup, 5 
Minn, ijg; Shaw v. Robertson, 12 
Minn. 44s ; Adler v. Apt, 30 Minn, 
45, 14 N. W. 63 ; Hathaway v. Brown, 
18 Minn. 414. 

Mississippi. — Taylor v. Webb, 54 
Miss. 36. 

Missouri. — Boyd v. Jones, 60 Mo. 
454; Wall v. Beedy, 161 Mo. 625, 61 
S. W..864; Peters-Miller Shoe Co. 
V. Casebeer, 53 Mo. App. 640; Sam- 
mons V. , O'Neill, 60 Mo. App. 530 ; 
Albert zj. Besel, 88 Mo. 150; Wein- 
rich'i'. Porter, 47 Mo. 293. 

Nebraska. — Sirnpson v. Arm- 
strong, 20 Neb. 512, 30 N. W. 941. 

Nevada. — Hirschfield v. William- 
,son, 18 Nev. 66, i Pac. 201. 

New Hampshire. — Banfield v. 
Parker, 36 N. H. 353. 

Neiv York. — Multz v. Price, 82 
App. Div. 339, gi N. Y. Supp. 931 ; 
Kalish V. Higgins, 70 App. Div. 192, 
75 N. Y. Supp. 397; Burnham v. 
Brennan, 74 N. Y. 597; Plannery v. 
VanTassel, 127 N. Y. 631, 27 N. E. 
393; Kain V. Larkin, 131 N. Y. 300, 
30 N. E. 105; Bush V. Roberts, in 
N. Y. 278, 18 N. E. 732. 

North Carolina. — Burbank v. 
Wiley, 79 N. C. 501. 

Oregon. — Crawford v. Beard, 12 
Or. 447, 8 Pac. 537. 

Pennsylvania. — Widdall v. Qar- 
sed, 125 Pa. St. 358, 17 Atl. 418. 

South Carolina. — McLemore v. 
Powell, 32 S. C. 582, 10 S. E. 287. 

Texas. — Hinson v. Walker, 65 
Tex. 103. 

Vermont. — Eaton v. Cooper, 29 
Vt. 444. 

Virginia. — Thornton v- Gaar, 87 
Va. 31S, 12 S. E. 753. 
Vol. VI 



Wisconsin. — Norton v. Kearney, 

10 Wis. 443; Bogert v. Phelps, 14 
Wis. 88 ; Grant v. Lewis, 14 Wis. 528 ; 
Rindskopf v. Myers, 71 Wis. 639, 38 
N. W. 185. 

22. Strauss v. Murray, 31 Misc. 
69, 63 N. Y. Supp. 201. 

23. Murphy v. Butler, 75 Ala. 381 ; 
Hodge V. Thompson, 9 Ala. 131; 
Simpkins v. Smith, 94 Ind. 470; Ben- 
son V. Lundy, 52 Iowa 265, 3 N. W. 
149; McEIfatrick v. Hicks, 21 Pa. 
St. 402. 

In Bush V. Rogan, 65 Ga. 320, 38 
Am. Rep. 785, an action of ejectment 
by a vendee against one claiming un- 
der his vendor, it was held that dec- 
larations by the vendor, whether 
made before or after the execution of 
the deed, as to his embarrassed con- 
dition, and that the deed to the plain- 
tiff was made to defraud the grantor's 
creditors, were not admissible against 
his grantee. 

24. Farmers Bank v. Douglass, 11 
Smed. & M. (Miss.) 469. 

Knowledge on the part of an al- 
leged fraudulent grantee of declara- 
tions and statements by his grantor 
indicating a fraudulent intent on the 
part of the latter need not be estab- 
lished by positive and direct proof. 
It may be inferred from circum- 
stances. Farmers Bank v. Douglass, 

11 Smed. & M. (Miss.) 469. 

In Armor v. Doig (Pla.), 34 So. 
249, an action by a creditor of an as- 
signor for the benefit of creditors at- 
tacking the assignment as fraudulent, 
it was held that declarations made by 
the assignor within six months prior 
to the date of the assignment tending 
to show that he had a much larger 
amount of property than he had 
turned over to his assignee, it also 
appearing that he had suffered no 
rnaterial losses between the date of 
his_ declarations and the date of his 
assignment, were competent evidence 
upon the questions whether he did 



FRAUDULENT CONVEYANCES. 



155 



The Object of the Rule prohibiting evidence of acts or declarations 
by a grantor subsequent to the conveyance is to prevent prejudice to 
the title of an innocent grantee from acts or declarations of the 
vendor subsequent to the transaction.^" 

Voluntary Conveyance. — The rule prohibiting evidence of subse- 
quent acts or declarations of a grantor applies not only where the 
object of the conveyance is to prevent the property from going to 
satisfy existing debts, but in the case of a voluntary conveyance 
sought to be impeached by subsequent creditors.^* 

Conveyance Between a Husband and Wife. — And this rule has also 
been applied to a case where the husband, who was the grantor, and 
the wife, who, through the intervention of a third person, had 
acquired the title, were both parties to the record and pleaded 
jointly.^' 

(C.) Grantor and Grantee Acting As Conspirators. — The rule 
excluding evidence of the acts or declarations by a grantor subse- 
quent to the conveyance does not apply where the parties to the 
instrument entered into the conspiracy to defraud the grantor's 
creditors, and the acts or declarations in question were done or made 
by the grantor while engaged in the furtherance of the conspiracy,^' 



turn over all his property to his as- 
signee, and whether the assignment 
was fraudulent. 

25. Derby v. Gallup, S Minn. 119. 

26. Winchester v. Charter, 97 
Mass. 140. 

27. Aldrich v. Earle, 13 Gray 
(Mass.) 578. 

In Barnes v. Black, 193 Pa. St. 447, 
44 Atl. 550, where the conveyance was 
from a husband to his wife, who 
claimed that the consideration for 
the conveyance was an antenuptial 
agreement, it was held that declara- 
tions by the husband before and at 
the time of the agreement to the ef- 
fect that he was in debt at that time 
were admissible as against the wife 
on a subsequent controversy between 
her and his creditors. The court 
said: "The fact inquired into was 
whether the husband was in debt to 
the parties named at the time referred 
to, which was long prior to his mar- 
riage to the plaintiff and to the ante- 
nuptial agreement. At the time they 
were made they were adverse to his 
own interestj and his future wife had 
no interest in the matter. His dec- 
larations, therefore, even as against 
her, stand on the same footing as 
those of a grantor before he has 
parted with his title," 



28. Cox V. Vise, 5° Ark. 283. 7 
S, W. 134; Borland v. Mayo, 8 Ala. 
104; Higgins V. Spahr, 145 Ind. 167, 
43 N. E. II ; Hunsinger v. Hofer, no 
Ind. 390, II N. E. 463; Sherman v. 
Hogland, 73 Ind. 472 ; Benjamin v. 
McElwaine-Richards Co., 10 Ind. 
App. 76, 37 N. E. 362; Cowles V. 
Coe, 21 Conn. 220. 

"The general rule that the decla- 
rations of a grantor made after the 
execution of a grant cannot be used 
to impeach it has been so far modi- 
fied that, when the good faith of a 
transfer has been attacked by cred- 
itors, and some evidence has been 
advanced to show a common purpose 
or design by the parties to hinder, 
delay or defraud creditors, subse- 
quent declarations by the grantor 
are admissible. Hartman v. Diller, 
62 Pa. 37; Souder v. Schechterly, 91 
Pa. 83." Boyer v. Weimer, 204 Pa. 
St. 29s, S4 Atl, 21, 

In Little v. Lichkoff, 98 Ala. 321, 
12 So. 429, where there was evidence 
of a conspiracy between the debtor 
and another to defraud creditors by 
false transfers or sales shortly before 
the attachment, it was held proper to 
ask the debtor on cross-examination 
if such other person had not changed 
the labels on a quantity of goods ob- 
tained from him. 

Vol. VI 



1S6 



FRAUDULBNT CONVEYANCES. 



even though the acts or declarations in question were done or made 
subsequent to the execution of the transfer itself.^' 

Existence of Conspiracy. — But as in cases of other conspiracy proof 
must be given of the existence of such, conspiracy"" by evidence 
other than the declarations themselves before evidence thereof can 
be received." 

Declarations Narrating Past Events. — But even on -the theory of a 
conspiracy between the grantor and grantee, declarations of the for- 
mer subsequent to the conveyance and independent of it come within 
the rule that a mere recital or narrative of past events not made in 
furtherance of the conspiracy and not connected with the transaction 
in question are not admissible against co-conspirators."^ 

(D.) Grantor Remaining in Possession op Property. — The rule that 
the declarations of a grantor subsequent to the conveyance cannot 
affect the title of his grantee does not apply where he remains in 
possession of the property after the conveyance, and in such case his 
statements explanatory of such possession and of the relation which 
he holds to the property are admissible as original evidence for the 
purpose of showing fraud in the sale if they have that tendency ;"" 



29. " It _ cannot be assumed that 
the execution of the transfer was a 
consummation of the fraudulent con- 
spiracy, and that, therefore, no dec- 
larations made after the transfer are 
admissible, for there is no consum- 
mation of the conspiracy until the 
purpose thereof has been accom- 
plished." Benjamin v. McElwaine- 
Richards Co., lO Ind. App. 76, 37 N. 
E. 362. 

30. Hathaway v. Brown, 18 Minn. 
414. See also Nicolay v. Mallery, 62 
Minn. 119, 64 N. W. 108, 

31. Wall V. Beedy, 161 Mo. 625, 
61 S. W. 864; Boyd V. Jones, 60 Mo. 
4S4; Exchange Bank v. Russell, 50 
Mo. 531. 

32. Clinton v. Estes, 20 Ark. 216; 
Smith V. Jensen, 13 Colo. 213, 22 Pac. 
434; Knower & Cadden Clothing 
Co., 57 Conn. 202; Allen v. Kirk, 81 
Iowa 658, 47 N. W. 906; Adler v. 
Apt, 30 Minn. 45, 14 N. W. 63. 

33. United States. — United States 
V. Griswold, 8 Eed. 556. 

Alabama. — Byrd v. Jones, 84 Ala. 
336, 4 So. 37S ; Reed v. Smith, 14 Ala. 
380; Goodgame v. Cole, 12 Ala. yj; 
Price V. Branch Bank, 17 Ala. 374. 

Arkansas. — Bowden v. Spellman, 
59 Ark. 251, 27 S. W. 602. 

California. — Murphy v. Mulgrew, 
102 Cal. 547, 36 Pac. 837. 

Vol. VI 



Connecticut. — Redfield v. Buck, 35 
Conn. 328, 95 Am. Dec. 241. 

Georgia. — Williams v. Hart, 65 
Ga. 201. 

Indiana. — Skelley v. Vail, 27 Ind. 
App. 87, 60 N. E. 961; Tedrowe v. 
Esher, 56 Ind. 443; Higgins v. Spahr, 
145 Ind. 167, 43 N. E. II. 

Iowa. — Hardy v. Moore, 6z Iowa 
6s, 17 N. W. 200. 

Minnesota. — Cortland Wagon Co. 
V. Sharvy, 52 Minn. 216, 53 N. W. 
II47- 

New Hampshire. — Walcott v. 
Keith, 22 N. H. 196. 

New York. — Loos v. Wilkinson, 
no N. Y. 19s, 18 N. E. 99, I L. R. A. 
250. 

North Carolina. — Woodley v. 
Hassell, 94 N. C. 157; Marsh v. 
Hampton, 50 N. C. 382; Hilliard v. 
Phillips, 81 N. C. 99. 

Texas. — Hamburg v. Wood, 66 
Tex. 168, 18 S. W. 623; Cooper v. 
Friedman, 23 Tex. Civ. App. 585, 57 
S. W. 581. 

Wisconsin. — Grant v. Lewis, 14 
Wis. 528. 

Rule Stated. — In Murch v. Swen- 
sen, 40 Minn. 421, 42 N. W. 290, the 
court said : " As proof' of continued 
possession of the vendor is competent 
evidence to impeach the transfer, it 
logically follows that any acts or 
declarations of the possessor, while 



FRAUDULBNT CONVBYANCES. 



157 



even though the declarant is not a party to the action.^* There is 
authority, however, that such evidence is not admissible, even if the 
grantor was in possession at the time of making the declarations.^" 

Delivery Doubtful. — Declarations by the vendor, fnade after the 
sale, may be given in evidence against his vendee, if it appears that 
the delivery of the property in question is doubtful.^" 

Possession as Agent. — Declarations of a vendor subsequent to the 
conveyance, but whilst in possession of the property, to the efifect 
that he had conveyed his property beyond the reach of his creditors 
are admissible, notwithstanding it is shown that his possession was 
merely as that of agent for the vendee.^' 

Possession Consistent with Terms of Conveyance. — Evidence of such 
declarations is not admissible when the possession of the grantor is 
consistent with the terms of the conveyance.^' 

(E.) As Evidence of Good Faith. — The declarations of a vendor, 
whether living or dead, as to the purpose he had i in view in making 
the conveyance, are self-serving, and cannot be used to show the 
good faith of the parties in making the sale when it is attacked by 
creditors as fraudulent,^* especially if they were no part of the res 



so retaining the property, must also 
be competent as characterizing his 
possession. These are received in 
such cases upon the ground that they 
show the nature and object of the act 
which they accompany, and which is 
the subject of the inquiry. They are 
admitted as part of the res gestae, 
for, so long as the debtor remains in 
possession of property which once be- 
longed to him, the res gestae of the 
fraud, if any, may be considered as 
in progress, and his declarations, 
though made after he has parted 
with the formal paper title, may be 
given in evidence in favor of the 
creditor, and against the vendee, by 
reason of the continuous possession 
which accompanied them." 

In Kendall v. Hughes, 7 B. Mon. 
(Ky.) 368, where the vendee left the 
property in the possession of a son 
of the vendor on the same farm, it 
\yas held that the acts and declara- 
tions of the vendor in regard to the 
property might be considered by ihel 
jury in determining the character of 
the transaction, and that the fact 
that the vendee was ignorant of such 
acts and declarations did not neces- 
sarily prevent them from being evi- 
dence against him if they were 
known to his agent and acquiesced 
in by him. 

34. Burlington Nat.' Bank v. 



Beard, SS Kan. 773, 42 Pac. 320, 
where the declarations were made 
at or about the time of the transfer, 
and there had been no open and 
visible change of possession. 

35. Smith v. Tarbox, 70 Me. 127; 
Gates V. Mowry 15 Gray (Mass.) 
564, where the grantor afterward 
conveyed part of the land in his 
own name to a third person and pro- 
cured a release of that part from the 
first grantee. 

36. Helfrich v. Stem, 17 Pa. St. 
143- 

37. Hamburg v. Wood, 66 Tex. 
168, 18 S. W. 623. 

38. Williamson v. Williams, 11 
Lea (Tenn.) 355. 

39. Johnson v. Burkus (Mo. 
App.), 77 S. W. 133; Fisher v. True, 
38 Me. 534; Colquit v. Thomas, 8 
Ga. 258; Heywood v. Reed,' 4 Gray 
(Mass.) 574. 

Buckingham v. Tyler, 74 Mich. 
loi, 41 N. W. 868, wherein a debtor 
had exchanged his stock of goods 
for a farm, expecting, as he claimed, 
to get a loan from his vendee which 
the vendee refused to make after 
the levy of attachments on the goods 
by creditors, and on the trial of an 
action brought by the vendee for the 
value of the goods he sought to 
show the statements of the debtor 
made to him after the attachments 

Vol. VI 



158 



FRAUDULBNT CONVBYANCBS. 



gestae of the conveyance ;*" although of course if a grantor's state- 
ments have been received against the vendee, whatever else the 



as to his efforts to secure the loan 
from other persons. 

In Tucker v. Tucker, 32 Mo. 464, 
the court said : " No assertions or 
protestations of the maker of the 
deeds, of their honest intent, can be 
stronger than those implied in his 
execution of the deeds; and there- 
fore his declarations were properly 
excluded." 

In Wheeler v. McCorristen, 24 111. 
40, wherein the issue was whether or 
not certain property, which had been 
seized by creditors, was owned by 
the execution debtor or by the plain- 
tiff in replevin, it was held that the 
only evidence of a sale from the 
debtor to the plaintiff was the bill of 
sale executed, as was proved, after 
the commencement of the action, 
which the court said could not af- 
fect the right of an execution 
creditor, and that such evidence 
would amount to no more than a 
parol declaration of the debtor after 
other rights had accrued, and to 
receive the written or oral declara- 
tions of a vendor after a sale under 
such circumstances would be open- 
ing the door to fraudulent combina- 
tions between vendors and vendees 
which would be of the most danger- 
ous tendency. 

Upon the question of the good 
faith of a deed alleged to have been 
made in fraud of a contemplated 
marriage, what the husband, who 
was the grantor. Said in favor of 
the deed even before the marriage 
is not admissible because the wife 
claims by act of law paramount to 
the husband. Pinner v. Pinner, 47 
N. C. 398. 

40. Borland v. Mayo, 8 Ala. 104. 

In Carter v. Gregory, 8 Pick. 
(Mass.) i6s, a note had been made 
by a failing debtor upon which the 
payee immediately caused an attach- 
ment to be made of the debtor's 
property. Part of the alleged con- 
sideration for the note was an ac- 
ceptance made by the payee of an 
order drawn on him by the debtor 
in favor of another creditor. In an 
action on the note in which a sub- 
sequent attaching creditor was ad- 

Vol. VI 



mitted under the statute to defend, 
it was held that the plaintiff payee 
could not introduce evidence of his 
own declarations made on the date 
when the note was given to show 
that the acceptance was made before 
the attachment, inasmuch as they 
were not part of the res gestae, but 
Were mere naked assertions of a 
fact. 

In Barber v. Terrill, 54 Ga. 146, 
where it was held that as the dec- 
larations of an alleged fraudulent 
grantor cannot be used in evidence 
on behalf of the grantee, a memo- 
randum and schedule of debts made 
out by the grantor and attached to 
his petition in bankruptcy, executed 
after the conveyance in question and 
after the attacking creditor had ob- 
tained his judgment, were not ad- 
missible in evidence for the grantee 
to show that the grantor was in- 
debted to him. 

Book Entries as Res Gestae In 

Fleming v. Yost, 137 Ind. 95, 36 N. 
E. 70s. an action to set aside a con- 
veyance as fraudulent, it was held 
that the grantee was properly per- 
mitted to introduce in evidence book 
entries of the various amounts of 
money paid to the grantor, at various 
times, the entries being made at the 
time of payment, such evidence be- 
ing admissible as a part of the res 
gestae, to illustrate and bring out 
fully the whole transaction in regard 
to the transfer and the consideration 
therefor, and that it made no dif- 
ference in regard to the admissibility 
of such evidence that the entries 
were made in the absence of the at- 
tacking creditor. The court said : 
" In a suit of this character, where 
the creditors of the grantor assail a 
conveyance, if the grantee could not 
show both the manual and verbal 
acts of the grantor and himself re- 
specting both the consideration and 
the transfer, except such as were 
done in the presence of the attacking 
party, the grantee would have no 
chance of retaining his property hon- 
estly acquired. It would place him 
at the mercy of any one who might 
confront him and challenge his 



FRA UD ULEN T COMVE Y AN CBS. 



1S9 



vendor said at the same time and in the same conversation, even in 
his favor, is legal testimony for him.*^ 

Previous Offer to Sell. — On an issue as to whether or not a convey- 
ance was made to defraud creditors, evidence that the alleged fraud- 
ulent grantor previously offered to sell the property to other persons 
is not admissible to disprove fraud.*^ 

Subsequent Honest Act. — It is not permissible for an alleged fraud- 
ulent vendee to show that the vendor, after the conveyance, had 
performed an honest act relative to the same subject-matter.*' 

Public Statements by the Owner of Property, of his intent and purpose 
to dispose of it, are competent evidence to show that a subsequent 
sale of the property by him was made in good faith and without 
intent to defraud creditors.'** 

IV. dUESTIONS OF LAW AND FACT. 

The definition of fraud is a question of law.*^ But the existence 
of fraud, whether actual or constructive, is, at least in the_ absence 
of a statute to the contrary, a question of fact to be established by 
the evidence in each particular case,*' and courts are not permitted 



right." See also Pollak v.. Searcy, 
84 Ala. 259, 4 So. 137; Beaver v. 
Taylor, i Wall. (U. S.) 637- 

"The creditors were not parties to 
the transfer in any way, and if they 
subsequently bring suit to set aside 
the conveyance, the position they 
thereby take against the grantee is 
that they are entitled to judgments 
on their claims against the grantor, 
which shall be declared liens against 
the land, because the conveyance 
thereof is fraudulent and void. That 
is, they proceed against the grantee 
through and under the grantor, and 
the grantee, in his defense, may in- 
troduce all the acts and declarations 
which are connected with the trans- 
action." Fleming v. Yost, 137 Ind. 
95, 36 N. E. 70S- 

41. Brown v. Upton, 12 Ga. 505. 

In Martin v. Duncan, 181 111. 120, 
54 N. E. 908, the alleged fraudulent 
grantee had previously been in pos- 
session as agent of his brother, the 
mortgagor, and it was held proper 
to permit him to show certain acts 
of his own in dealing with the prop- 
erty after he took possession of it 
under the mortgage, as tending to 
prove a change in the character of 
his possession, and that he then 
openly claimed, treated, and dealt 
with the property as his own. 



42. Tufts V. Bunker, 55 Me. 178. 
See also Fisher v. True, 38 Me. 534. 

43. Law V. Payson, 32 Me. 521, 
where the evidence in question was 
that subsequent to the commence- 
ment of that action the grantor had 
offered to turn over to a creditor 
the note given by the grantee for the 
purchase price of the property in 
question, and the court said that 
" fraud can not be purged by subse- 
quent honesties." 

44. Heywood v. Reed, 4 Gray 
(Mass.) 574. 

45. Whitehouse v. Bolster, 95 Me. 
458, so Atl. 240. 

46. United States. — Knowlton v. 
Mish, 17 Fed. 198; Morse v. Riblet, 
22 Fed. 501. 

Alabama. — Jordan v. Collins, 107 
Ala. 572, 18 So. 137- 

California. — Threlkel v. Scott, 
34 Pac. 851. 

Delaware. — Brown v. Dickerson, 
2 Marv. 119, 42 Atl. 421. 

Indiana. — Personette v. Cronk- 
hite, 140 Ind. 586, 40 N. E. 59; 
Pence v. Croan, 51 Ind. 336; Bishop 
V. State ex rel. Lord, 83 Ind. 67 ; 
Rose z). Colter, 76 Ind. 590. 

Maine. — Whitehouse v. Bolster, 
95 Me. 458, 50 Atl. 240. 

Massachusetts, — O'D o n n e 11 v. 

Vol. VI 



160 



FRAUDULENT CONVEYANCES. 



to indulge in presumptions of fraud and therefrom conclusive)}' 
judge as a matter of law that a particular conveyance is fraudu- 
lent.*' So, also, whether or not the alleged fraudulent vendee par- 
ticipated in the fraudulent intent of the grantor is a question of 
fact.''8 



Hall, iS4 Mass. 429, 28 N. E. 349. 

Michigan. — State Bank v. Chap- 
elle, 40 Mich. 447; Bedford v. Pen- 
ney, 65 Mich. 667, 32 N. W. 888; 
Johnson v. Crispell, 43 Mich. 261, 5 
N. W. 299; Partlow v. Swigart, 90 
Mich. 61, SI N. W. 270; Ferris v. 
McQueen, 94 Mich. 3^, 54 N. W. 
164. 

Missouri. — Potter v. McDowell, 
31 Mo. 62; Hungerford v. Green- 
gard, 95 Mo. App. 653, 67 S. W. 602. 

Nebraska. — Pope v. Kingman & 
Co., 96 N. W. 519. 



New Hampshire. — Pomeroy v. 
Bailey, 43 N. H. 118. 

Pennsylvania. — McMichael v. Mc- 
Dermott, 17 Pa. St. 353, 55 Am. Dec. 
S6o. 

Wisconsin. — Hoey v. Pierron, 67 
Wis. 262, 30 N. W. 692; Weadock 
V. Kennedy, 80 Wis. 449, 50 N. W. 
393 ; Hooser v. Hunt, 65 Wis. 71, 26 
N. W. 442. 

47. Personnette v. Cronkhite, 140 
Ind. 586, 40 N. E. 59. 

48. Landecker v. Houghtaling, 7 
Cal. 391. 



FUTURES. — See Gaming. 



Vol. VI 



GAMING. 

By Clarence Meily. 

I. Crvn EIGHTS AND LIABILITIES, 163 

I. Stock and Produce Gambling, 163 

A- Intent as Essence of Illegality, 163 

B. Presumptions and Burden of Proof, 166 

C. Evidence Admissible in General, 168 

a. Party's Evidence cw to His Own Intent, 168 

b. Declarations of Agent, 169 

D. SigniUcance of the Contract, 169 

a. Conclusiveness, 169 

(i.) In General, 169 

(2.) Admissibility of Parol Evidence, 170 

(3.) Brokers' Memoranda and Accounts, 170 

b. Form and Circumstances of the Contract, 171 

(i.) In General, 171 

(2.) Purchase for Future Delivery, lyi 

(3.) Option Contracts, 173 

» (4.) Effect of Requiring Margin, 174 

(5.) Nature of Commodity Dealt in, 175 

(6.) Place Where Transaction Occurs, 175 

E. Circumstances and Conduct of the Parties, 176 

a. Importance in General, 176 

b. Course of Dealing Between Parties, 177 

c. Delivery, 177 

(i.) In the Course of Dealing, 177 

(2.) In the Particular Transaction, 178 

(3.) Preparations for Receipt or Delivery of 

Commodity, 180 
(4.) Delivery by Broker to Client, 180 
(5.) Validity of Broker's Transaction With Third 

Person, 181 

d. Pecuniary Responsibility of Purchaser, 182 
tt Vol. VI 



162 GAMING. 

e. Residence, 183 

f. Occupation, 183 

g. Broker's Failure to Demand Purchase Money, 183 
h. Broker's Statements and Accounts, 184 

i. Correspondence, 184 

j. Method and Appliances of Broker's Business, 184 
k. General Character of Broker's Business, 185 
2. Recovery of Money Wagered, 185 

A. Actions by Winner, 185 

a. Burden of Proof, 185 

b. Evidence Relevant to Defense of Wagering Trans- 

action, 185 

B. Actions by Loser, 186 

a. Presumptions and Burden of Proof, 186 

b. Competency and Relevancy of Evidence, 187 

II. CRIMINAl BESPONSIBHITY, 187 

1. General Rules, 187 

A. Circumstantial Evidence, 187 

B. Expert and Opinion Evidence, 188 

C. Proof of Value, 189 

D. Evidence of Other Offenses, 189 

2, Evidence in Particular Cases, 190 

A. Prosecutions for Gambling, 190 

a. Presumptions, Burden of Proof and Matters to Be 

Proved, 190 
(i.) In General, 190 
(2.) Necessity of Showing Wager, 190 

b. Competency and Relevancy of Evidence, 191 

c. Testimony of Accomplice, 191 

B. Prosecutions for Gaming at Particular Place, 192 

a. Burden of Proof and Matters to Be Proved, 192 

(i.) Fact of Bet, 192 

(2.) Character of Place, 192 

b. Competency and Relevancy of Evidence, 193 

C. Prosecutions for Being a Common Gambler, 194 

D. Prosecutions for Keeping or Permitting Gaming 

House or Device, 194 
Vol. VI 



GAMING. 163 

a. Burden of Proof and Matters to Be Proved, 194 

(i.) In General, 194 

(2.) Character of House or Device, 195 

(3.) Scienter, 196 

(4.) Permission, 196 

(5.) Participation, 197 

(6.) Permitting Minor to Play at Billiard Table, 

197 
(7.) Keeping Pool Room, 197 

b. Statutory Rules as to Prima Pacie Evidence, 198 

c. Competency and Relevancy of Evidence, 198 

(i.) In General, 198 
(2.) Character of House, 198 
(3.) Scienter and Participation, 199 
(4.) Opinion Evidence, 199 
(5.) Permitting Minor in Pool Room, 199 
Prosecution for Renting House for Gambling Pur- 
poses, 199 

a. Burden of Proof and Matters to Be Proved, 199 

b. Statutory Rule as to Sufficiency of Evidence, 200 

c. Relevancy of Evidence, 200 



CROSS-KEFEBEHCE : 
Disorderly House. 

I. CIVIL RIGHTS AND LIABILITIES. 

1. Stock and Produce Gambling. — A. Intent As Essence of 
Illegality. — The character of a speculative purchase or sale of 
commodities as a wagering transaction is determined by the inten- 
tion of the parties,^ and it is to the ascertainment of this intent that 
the evidentiary inquiry is directed. 

1. United States. — Kirkpatrick v. New York. — Yerkes v. Salomon, 

Adams, 20 Fed. 287. 11 Hun 471. 

Illinois. — Pixley v. Bojmton, 79 Pennsylvania. — Fareira v. Gabell, 

111. 351. 89 Pa. St. 89. 

Michigan. — Ort-sory v. Wendell, And see also Hentz v. Miner, 58 

39 Mich. 337, J. c. 40 Mich. 433. Hun 428, 12 N. Y. Supp. 474; Grize- 

Mississippi. — Clay v. Allen, 63 wood i". Blane, 11 C. B. 526, 73 E. C. 

Miss. 426. L. 525, and Williams v. Tiedemann, 6 

Af iwoMn. — Cockrill v. Thompson, Mo. App. 269, where the different 

85 Mo. 510. varieties of contracts of sale are 

Vol. VI 



164 



GAMING. 



carefully analyzed and the impor- 
tance of the element of intent is made 
apparent. 

In Gregory v. Wendell, 40 Mich. 
432, Justice Cooley said that the 
question of legality was one of fact 
depending on intent. 

It has been held that in determin- 
ing the validity of a purchase of 
stocks through a broker, as between 
him and a client as principals, the 
real question is not whether the lat- 
ter secretly intended to receive the 
stock or not, but whether he in- 
tended to obligate himself to do so. 
Winward if. Lincoln, 23 R. I. 476, 51 
Atl. 106. 

Rule in Missouri It was for- 
merly held in Missouri that merely an 
illegal intent was insufficient to in- 
validate a contract as a wagering 
transaction, but that a positive 
agreement that an actual delivery 
should not take place was necessary. 
Kent V. Miltenberger, 13 Mo. App. 
503. But afterward this doctrine 
was repudiated and the unlawful in- 
tention or understanding of the par- 
ties that the contract should consti- 
tute a wagering transaction was held 
sufficient to invalidate it. See Hill 
V. Johnson, 38 Mo. App. 383, for a 
discussion of the decisions in which 
the rule was changed. 

Somewhat in conformity with the 
former rule in Missouri it has been 
held that the mere expectation on 
the part of a broker and his client 
that the third person with whom the 
broker dealt would be willing to ad- 
just the transaction by a payment of 
differences, would not render the 
contracts illegal where there was no 
agreement to that effect, or to the 
effect that the broker should protect 
the client from actual delivery. 
Barnes v. Smith, 159 Mass. 344, 34 
N. E. 403. 

Time When Intent is Entertained. 
It is the intent of the parties at the 
time when the contract is made 
which fixes its invalidity. Lehman v. 
Strassberger, 2 Wood (U. S.) SS4. 
15 Fed. Cas. No. 8216; Melchert v. 
American Union Tel. Co., 11 Fed. 
193; Kingsbury v. Kirwan, 77 N. Y. 
612. 

Character of Intent. — The intent 
must be not merely to make a specu- 

Vol. VI 



lative profit, but to avoid an actual 
transfer of the property. 

United States. — Kirkpatrick v. 
Adams, 20 Fed. 287. 

Connecticut. — Hatch v. Douglas, 
48 Conn. 116, 40 Am. Rep. 154. 

Michigan. — Gregory v. Wendell, 
40 Mich. 432. 

Minnesota. — Mohr v. Miesen, 47 
Minn. 228, 49 N. W. 862. 

Missouri. — Kent v. Miltenberger, 
13 Mo. App. 503. 

North Dakota. — Dows v. Glaspel, 
4 N. D. 251, 60 N. W. 60. 

Pennsylvania. — Sm.ith v. Bouvier, 
70 Pa. St. 32s; Kirkpatrick v. Bon- 
sall, 72 Pa. St. iSS; Peters v. Grim, 
149 Pa. St. 163, 24 Atl. 192; Wagner 
V. Hildebrand, 187 Pa. St. 136, 41 
Atl. 34- 

Rhode Island. — Winward v. Lin- 
coln, 23 R. I. 476, SI Atl. 106. 

Wisconsin. — Barnard v. Backhaus, 
52 Wis. 593, 6 N. W. 252, 9 N. W. 

595- 

And the fact that one who buys 
for future delivery resolves, before 
making the purchase, that he will 
resell before the day of delivery, 
does not tend to show that the 
transaction was illegal as a gambling 
transaction. Sawyer v. Taggart, 77 
Ky. 727, 

Mutuality of Intent A transac- 
tion which is legitimate on its face is 
not invalidated by showing that one 
party thereto understood and meant 
it to be a wagering contract; but the 
proof must go further and show that 
both so understood it. 

United States. — Irwin v. Williar, 
no U. S. 507; Bibb v. Allen, 149 U. 
S. 481 ; Lehman v. Strassberger, 2 
Woods SS4, 15 Fed. Cas. No. 8216; 
Hentz V. Jewell, 20 Fed. 592; Ward 
V. Vosburgh, 31 Fed. 12; Edwards v. 
Hoeffinghoff, 38 Fed. 635; Sampson 
V. Camperdown Cotton Mills, 82 Fed. 
833; Hill V. Levy, 98 Fed. 94; Boyle 
V. Henning, 121 Fed. 376. 

Illinois. — Pixley z\ Boynton, 79 
111. 351 ; Carroll v. Holmes, 24 111. 
App. 453; Jamieson r. Wallace, 167 
111. 388, 47 N. E. 762; Benson v. 
Morgan, 26 111. App. 22; Staninger z: 
Tabor, 103 111. App. 330. 

Indiana. — Whitesides v. Hunt, 97 
Ind. 191. 

Iowa. — First Nat. Bank of Lyons 



GAMING. 



165 



V. Oskaloosa Pack. Co., 66 Iowa 41, 
23 N. W. 3SS ; Counselman v. Reich- 
art, 103 Iowa 430, 72 N. W. 490. 

Louisiana. — Conner v. Robertson, 
37 La. Ann. 814. 

Michigan. — Gregory v. Wendell, 
40 Mich. 432. 

Minnesota. — Mohr v. Miesen, 47 
Minn. 228, 49 N. W. 862. 

Missouri. — Crawford v. Spencer, 
92 Mo. .498, 4 S. W. 713, I Am. St. 
Rep. 745- 

Mississippi. — Clay v. Allen, 63 
Miss. 426. 

Nebraska. — Rogers v. Marriott, 59 
Neb. 759, 82 N. W. 21. 

North Dakota. — Dows v. Glaspel, 
4 N. D. 251, 60 N. W. 60. 

And see Kingsbury v. Kirwan, 43 
N. Y. Super. Ct. 451. The rule that 
all parties to a contract, in order to 
invalidate it, must have intended a 
wagering transaction, is altered by 
statute in Missouri (Rev. St. 1889, 
§§ 3931, 3936), so that if one party 
does not intend a delivery, and the 
other is aware of such intent, the 
contract is invalid whether the lat- 
ter shares in the intent or not. 
Schreiner v. Orr, 55 Mo. App. 406. 
Where a customer entertaining an il- 
legal intent engages in fraudulent 
transactions through a broker, and 
the broker is aware of his illegal 
purpose, the intention of the third 
persons with whom the broker deals 
is immaterial when the question of 
the legality of the contract arises be- 
tween the broker and the client. 
First Nat. Bank of Lyons v. Oska- 
loosa Pack. Co., 66 Iowa 41, 23 N. 
W. 2SS; Dows V. Glaspel, 4 N. D. 
251, 60 N. W. 60; Coffman v. Young, 
20 111. App. 76 ; Carroll v. Holmes, 24 
111. App. 4S3; Miles v. Andrews, 40 
111. App. iss; Hill V. Johnson, 38 Mo. 
App. 383. 

But in Missouri this rule does not 
obtain. See Teasdale v. McPike, 25 
Mo. App. 341 ; Cockrill v. Thompson, 
85 Mo. Sio. In this latter case the 
court said : "If a party, actuated 
by the spirit of a gambler, authorizes 
his agent to buy or sell an article for 
him as a trader, and the agent does 
so, at the same time knowing that his 
principal does not mean to receive 
or deliver the commodity, as the case 
may be, but means, when the proper 



time comes, to settle the business 
by paying losses or receiving gains, 
according to tke fluctuations of the 
market, still the contract is valid 
and binding, unless the other party 
made it as, or understood it to be, 
a wagering arrangement, a good 
contract in form, but, in fact, a mere 
wager upon the future state of the 
market." 

See also Ward v. Bosburgh, 31 
Fed. 12; and Kirkpatrick v. Adams, 
20 Fed. 237, in which the intention 
of the brokers' customers was held 
immaterial, the only important evi- 
dence being the intentions of the 
brokers and the third persons with 
whom they deal. 

When the question of the legality 
of the contract arises between the 
broker and his client, it is not neces- 
sary to prove that the broker had 
express notice of his client's illegal 
intention. Mohr v. Miesen, 42 Minn. 
228, 49 N. W. 862. 

Intent of Agent. — In statutory 
actions (as authorized in Massachu- 
setts) against brokers to recover 
money paid out on speculative deals, 
the intent of the agent of the client 
through whom the contracts with the 
brokers were made becomes a mate- 
rial factor in determining their le- 
gality. Crandall v. White, 164 Mass. 
54, 41 N. E. 204. 

Intent of Both Principal and 
Agent — To enable a person to re- 
cover money paid out through an 
agent to brokers on speculative 
transactions in stocks, he must prove 
that neither he nor his agent intended 
to perform the contracts made by the 
brokers, by the actual receipt and 
delivery of the securities and pay- 
ment of their prices. ' Davy v. Bangs, 
174 Mass. 238, 54 N. E. 536. 

Intent of Agent Controls Where 

it appears that an agent dealing with 
brokers had no intention that the 
contracts made at his direction by 
the brokers should be actually per- 
formed, the fact that his principal 
had an undisclosed intention to en- 
gage in real transactions is immate- 
rial to her recovery of money paid 
out to the brokers on the deals. 
Marks v. Metropolitan Stock Ex- 
change, 181 Mass. 251, 63 N. E. 410. 

Vol. VI 



166 



GAMING. 



B. Presumptions and Burden of Proof. — Contracts of pur- 
chase or sale for future delivery are presumed to be valid.^ And 
the burden of showing that a sale or purchase for future delivery is 
illegal as a gaming transaction rests on the party attacking it, where 
the contract is valid on its face.* 



2. United States. — Irwin v. Wil- 
liar, no U. S. 507; Bibb v. Allen, 
139 U. S. 481; Edwards v. Hoeffing- 
hoflf, 38 Fed. 635; HilL T/. Levy, 98 
Fed. 94; Boyle v. Henning, 121 Fed. 
376. 

Kentucky. —Beadles v. M'Elrath, 
8 Ky. L. Rep. 848, 3 S. W. 152. 

Louisiana. — Conner v. Robertson, 
37 La. Ann. 814. 

Mississippi. — Clay v. Allen, 63 
Miss. 426. 

Missouri. — Cockrill v. Thompson, 
85 Mo. Sio; Kent v. Miltenberger, 
13 Mo. App. 503 ; Williams v. Tiede- 
mann, 6 Mo. App. 269. 

New York. — Kenyon v. Luther, 
SO Hun 602, 4 N. Y. Supp. 498; 
Story V. Salomon, 71 N. Y. 420; 
Dykers v. Townsend, 24 N. Y. 57. 

And see Bennett v. Covington, 22 
Fed. 816, where the evidence relat- 
ing to cotton futures in general, to 
the usual customs of persons speculat- 
ing in them, and to an alleged ex- 
pectation or understanding that 
such contracts were to be settled 
without an actual delivery, was held 
insuflScient to take the issue of the 
illegality of such a contract to the 
jury, the court saying that if it held 
otherwise it would be compelled to 
presume contracts for future deliv- 
ery were illegal. 

In Bangs v. Hornick, 30 Fed. 97, 
the only evidence to show that con- 
tracts for the purchase and sale of 
stock for future delivery were wager- 
ing contracts, was the testimony of 
defendant that he left orders with 
his brokers to purchase or sell, de- 
positing a margin, and that if a profit 
was made his account was credited, 
less a commission, and if a loss re- 
sulted it was in like manner debited, 
defendant never receiving any cer- 
tificates of stock, never having seen 
any, and not knowing if any were 
bought or sold. This was held not 
sufficient to invalidate the contracts, 
the court saying: "Counsel for de- 
fendant insist that it is the absolute 

Vol. VI 



duty of the court to denounce this 
transaction, unless it clearly appears 
that it was valid and honest. I think 
the duty of the court is precisely the 
reverse, and that it is the duty of the 
court to uphold it, unless it appears 
that it was an invalid and dishonest 
one." 

3. United States. — Irwin v. Wil- 
liar, no U. S. 507: Bibb v. Allen, 
149 U. S. 481 ; Bennett v. Covington, 
22 Fed. 816; Ward v. Vosburgh, 31 
Fed. 12; Boyd v. Hanson, 41 Fed. 
174; Sanipson v. Camperdown Cot- 
ton Mills, 82 Fed. 833 ; Hill v. Levy, 
c^ Fed. 94; Boyle v. Henning, 121 
Fed. 376. 

Georgio. — Forsyth Mfg. Co. v. 
Castlen, 112 Ga. 199. 37 S. E. 485- 

Illinois. — Benson v. Morgan, 26 
111. 22; Pixley V. Boynton, 79 111. 
351; Carroll v. Holmes, 24 111. App. 
453; Marvel v. Marvel, 96 111. App. 
609. 

Kentucky. — Beadles v. M'Elrath, 
8 Ky. L. Rep. 848, 3 S. W. 152. 

Louisiana. — Conner v. Robertson, 
37 La. Ann. 814. 

Mississippi. — Chy v. Allen, 63 
Miss. 426. 

Missouri. — Crawford v. Spencer, 
92 Mo. 498, 4 S. W. 713, I Am. St. 
Rep. 745; Williams v. Tiedemann, 6 
Mo. App. 269. 

New Jersey. — Pratt v. Boody, 55 
N. J. Eq. I7S, 35 Atl. in3. 

New York. — Bigelow v. Benedict, 
70 N. Y. 202; Harris v. White, 81 
N. Y. 532; Mackey v. Rausch, 60 
Hun 583, IS N. Y. Supp. 4. 

North Dakota. — Dows v. Glaspel, 
4 N. D. 251, 60 N. W. 60. 

In a suit by a client against his 
brokers to recover money lost on 
wager contracts on the price of grain, 
the rule is the same, and the burden 
is on the plaintiff to prove that the 
contract, which in form is a genuine 
one, was in fact made with the intent 
to gamble. Peck v. Doran-Wright 
Co., 57 Hun 343, 10 N. Y. Supp. 401. 
And he must make out his case by 



GAMING. 



167 



Presumption As to Conduct of Broker. — But where a broker is 
directed to make a deal to be settled upon differences alone, and 



a fair preponderance of the evidence. 
Post V. Leland, 184 Mass. 601, 69 
N. E. 361. 

In Edwards v. Hoeffinghoflf, 38 
Fed. 63s, the court said : " The de- 
fendant having denied all the allega- 
tions of the petition, goes on to state 
affirmatively . . . that his trans- 
actions . . . were not real or 
bona fide transactions at all; that 
they were nothing more than wager- 
ing contracts, having the form and 
semblance of reality, but being in 
fact nothing more than bets upon the 
prices of the markets. This is an 
affirmative defense . . . and the 
burden of making that out devolves 
upon the defendant, not only for the 
reason that I have stated, but for 
another reason: that the presump- 
tion of law is in favor of the validity 
of contracts and not in favor of their 
invalidity, and therefore he who sets 
up the invalidity is bound to 
prove it." 

In Dwight V. Badgley, 60 Hun 144, 
14 N. Y. Supp. 498, which was an 
action by brokers to recover ad- 
vances from a client, the court said : 
" In this case it is sought to stamp 
a transaction as illegal, as being in 
contravention of the provisions of the 
revised statutes against wagers or 
gaming. The statute is penal in its 
nature, and the burden of proof is 
upon the defendant to establish the 
illegality of the contract." And in 
Dykers v. Townsend, 24 N. Y. 57, it 
was held that under i Rev. Stat., p. 
710, § 6, providing that contracts for 
the sale of stocks are void unless the 
seller has at the time actual posses- 
sion of the certificates or is other- 
wise entitled thereto in his own 
right, or duly authorized to sell the 
shares contracted for, the burden of 
proof is upon the purchaser seeking 
to invalidate a transaction under the 
statute to show that the seller did 
not have the stocks contracted to be 
sold; and hence evidence on the pur- 
chaser's part that the seller had other 
outstanding contracts to sell the 
same stock is inadmissible, without 
further proof that this was all the 



stock the seller owned. In this case 
the court disapproved. Stebbins v. 
Leowolf, 3 Cush. (Mass.) I37- 

And the burden is on the party 
asserting it to prove that a sale of 
stocks was within Mass. Gen. Stat., 
ch. 105, § 6, making void sales of 
stocks where the seller does not own 
or is not authorized to sell them. 
Wyman v. Fiske, 3 Allen (Mass.) 
238. Or within the Illinois statute 
prohibiting option deals. Jackson v. 
Foote, 12 Fed. 37; Barnett v. Bax- 
ter, 64 111. App. 544. 

But in Cobb v. Prell, 15 Fed. 774, 
the court said : " It is the duty of 
the courts to scrutinize very closely 
these time contracts, and if the cir- 
cumstances ye such as to throw 
doubt upon the question of the inten- 
tion of the parties, it is not too much 
to require a party claiming under 
such a contract to show affirmatively 
that it was made with actual view to 
delivery and receipt of the grain." 
See also First Nat. Bank of Lyons 
V. Oskaloosa Pack. Co., 66 Iowa 41, 
23 N. W. 2SS; Mohr v. Miesen, 47 
Minn. 228, 49 N. W. 862; Sprague v. 
Warren, 26 Neb. 326, 41 N. W. 1 113, 
3 L. R. A. 679. 

In Bartlett v. Collins, 109 Wis. 477, 
85 N. W. 703, the court expressly ap- 
proved the rule as to the burden of 
proof laid down in Barnard v. 
Backhaus, 52 Wis. 593, 6 N. W. 252, 
9 N. W. 595, saying: "This rule 
has not been departed from, so far 
as we can ascertain, by this court. It 
is not, in our judgment, unreasona- 
ble. It is based on the well-known 
fact that a very large majority of 
the transactions on such boards (as 
the Chicago board of trade) are not 
really transactions, but simply bet- 
ting on future prices. . . . We 
are aware that many courts do not 
approve of this rule, but it has been 
definitely approved by respectable 
courts." It was als(? held that stat- 
utes 1898, § 2319a, passed after this 
decision, did not change the rule. In 
this case Chief Justice Cassoday and 
Justice Dodge dissented as to the 
burden of proof. See also Wheeler 
V. McDermid, 36 III. App. 179. 

ypi. vj 



168 



GAMING. 



does make the deal, the presumption is that he made it as directed.'' 
But the broker has. a right to assume that orders given him con- 
template real transactions, and he is presumed to have expected his 
clients to execute the contracts which he made for them."^ 

Presumption As to Illegal Participation. — Where it is shown that 
the broker and his client intended to engage in a fictitious sale, the 
presumption has been held to obtain that all the parties to such sale 
entered into it with a like view;" but it has also been held that the 
burden of proof is on the client seeking to invalidate transactions 
negotiated for ,him by his broker, to show that the third persons 
with whom the broker dealt intended to enter into illegal trans- 
actionsJ 

C. Evidence Admissible in General. — a. Party's Evidence as 
to His Own Intent. — A party may testify to his own intent 
in making a contract for future delivery,^ and this has been said 



4. Phelps V. Holderness, 56 Ark. 
300, 19 S. W. 921. 

It is presumed that a cotton broker, 
employed to purchase " cotton fu- 
tures " for the purpose of specula- 
tion, understood the terms of the 
employment as they were delivered, 
and that he executed the orders ac- 
cording to the client's illegal intent. 
Hill V. Johnson, 38 Mo. App. 383. 

5. Williar v. Irwin, II Biss. 57, 
30 Fed. Cas. No. 17,761 ; Kirkpatrick 
V. Adams, 20 Fed. 287; but see Dows 
V. Glaspel, 4 N. D. 251, 60 N. W. 60, 
in which it was said that if the 
brokers were aware of their clients' 
illegal purpose when negotiating 
transactions for them, it was the in- 
evitable inference that the brokers 
participated in the gambling project 
and aided the clients therein. 

6. Beveridge v. Hewitt, 8 111. 
App. 467. 

In Dows V. Glaspel, 4 N. D. 251, 60 
N. W. 60, which was an action by 
commission merchants against a 
client to recover money advanced in 
transactions in grain, the court said: 
" There is no direct evidence as to 
the intention of the other parties to 
the several purchases and sales. The 
transactions on both sides appear to 
have been precisely alike, and it is a 
fair inference that the transactions 
which defendant intended should be 
mere wagers, which the plaintiffs, 
with knowledge of such intention, 
entered into on behalf of defendant, 
and which were in the form in which 
gambling in all kinds of commodities 

Vol. VI 



is carried on, were in fact intended 
by all the parties thereto — principals 
and agents on both sides — to be 
mere bets with reference to the fu- 
ture price of wheat." 

7. Kent v. Mittenberger, 13 Mo. 

503- 

In Bennett v. Covington, 22 Fed. 
816, it was held that a party seeking 
to invalidate transactions had through 
his broker, in a suit between them, 
must not only show the illegal intent 
of the parties with whom the broker 
dealt, but also that the broker him- 
self was privy to the general unlawful 
design. Contra. — Holding that the 
burden of proof was on the broker to 
show the innocence of the persons 
with whom he dealt. Beveridge v. 
Hewitt, 8 III. App. 467. 

8. Yerkes v. Salomon, 11 Hun 
(N. Y.) 471; Kenyon v. Luther, 50 
Hun 602, 4 N. Y. Supp. 498; Waite 
V. Frank, 14 S. D. 626, 86 N. W. 
645 ; Counselman v. Reichart, 103 
Iowa 430, 72 N. W. 490. 

Dwight V. Badgley, 60 Hun 144, 14 
N. Y. Supp. 498. In this case the 
court said that while the party's 
answer to his own intent would not 
have conclusively shown what the 
intention of the opposite parties was 
in entering upon the course of deal- 
ing, it involved an answer which the 
first party was entitled to have pre- 
sented to the jury, and which might 
have aided them in determining what 
was the real intention of the parties. 

In an action to recover money paid 
out on speculative deals in stocks, the 



GAMING. 



169 



to be the best evidence.' But circumstantial evidence may be 
adduced.^" 

b. Declarations of Agent. — Evidence of what was said by the 
agent of a party to a contract for future delivery at the time he 
negotiated it, is admissible on the issue of whether or not it was a 
gambling transaction.^^ 

D. SiGNiMCANCE OP THe CONTRACT. — a. Conclusiveness. 
(1.) In General. — It is the real intention of the parties to a con- 
tract for future delivery and not the form a contract may take, or 
the designation the parties may give it, that is controlling.^^ 



testimony of plaintiffs that they did 
not intend any stocks to be in fact 
bought, though incompetent on di- 
rect examination, is admissible and 
may be considered by the jury when 
called out by the defendants them- 
selves on cross-examination. Allen 
V. Fuller, 182 Mass. 202, 65 N. E. 31. 

Where in a suit to recover money 
lost in speculating in provisions the 
plaintiff testifies that defendant's 
agent, when urging him to speculate, 
stated that if he wanted him to buy 
one thousand bushels of wheat he 
had to pay ten dollars, and if the 
market went up a cent he would 
make ten dollars, and if it went down 
a cent he would lose that amount, 
and also stated there was no delivery 
on it, but that defendants dealt 
merely on margins, it is not error to 
permit plaintiff to then testify that 
he himself had no intention of 
actually receiving or delivering his 
purchase or sales, but intended to 
settle by the payment of difference. 
Staninger v. Tabor, 103 111. App. 330. 

But it has been held in an action 
by a broker to recover a balance due 
on a contract to purchase wheat, 
made for him by the defendant, in 
which the defense was that the 
transaction was a gambling deal, 
that defendant's evidence that he did 
not intend to make an actual pur- 
chase is rendered inadmissible by the 
accompanying admission of counsel 
that he did not expect to prove that 
such intention was known to the 
plaintiff. Amsden v. Jacobs, 75 Hun 
311, 26 N. Y. Supp. 1000. 

9. Crandell v. White, 164 Mass. 
54, 41 N. E. 204; First Nat. Bank of 
Lyons v. Oskaloosa Pack. Co., 66 
Iowa 41, 23 N. W. 2SS- 

But in Dows v. Glaspel, 4 N. D. 
251, 60 N. W. 60, in speaking of the 



proof of commission merchants' 
knowledge of their clients' intention 
to gamble in grain transactions, the 
court said that they insisted that the 
sales were genuine and that they did 
not know of such purpose, but that 
" courts are not bound by the testi- 
mony of interested parties, but may 
look to the surrounding circum- 
stances to ascertain the true character 
of the transactions." 

And in Melchert v. American Un- 
ion Tel. Co., II Fed. 193, the court 
said that in seeking to ascertain the 
intentions of parties to alleged grain- 
gambling transactions it would not 
do to place any great stress on their 
own declarations, whether under 
oath or not ; and that all its experi- 
ence admonished it to receive with 
extreme caution, if not with absolute 
distrust, what parties charged with 
transactions apparently illegal say 
respecting the innocence of their own 
intentions. 

10. Edwards v. Hoeffinghoff, 38 
Fed. 635. 

11. Cassard v. Hinman, 6 Bosw. 
(N. Y.) 8. 

In Dows V. Glaspel, 4 N. D. 251, 
60 N. W. 6a, evidence of the state- 
ment of an agent of commission mer- 
chants to a client, that his transac- 
tions would be mere wagers on the 
price of wheat, was held admissible to 
show the client's intention to gam- 
ble, and that he had ground for be- 
lieving that that was all he was do- 
ing, notwithstanding the contention of 
the commission merchants that the 
agent had no authority to represent 
them in illegal transactions. 

12. United States. — WiWiar v. 
Irwin, II Biss. 57, 30 Fed. Cas. No. 
17,761 ; Melchert v. American Union 
Tel. Co., II Fed. 193; Kirkpatrick v. 

Vol. VI 



170 



GAMING. 



(2.) Admissibility of Parol Evidence. — Parol evidence is admissible 
to show that a contract for future delivery, though in writing and 
apparently legal, is a mere gambling transaction.^^ 

(3.) Brokers' Memoranda and Accounts. — Memoranda of transac- 
tions upon the board of trade and entries on brokers' books are 
not conclusive evidence of the legitimate character of the trans- 



Adams, 20 Fed. 287; Embrey v. 
Jemison, 131 U. S. 336. 

Illinois. — Jamison v. Wallace, 167 
III. 388, 47 N. E. 762; Tenney v. 
Foote, 4 111. App. 594; Coffman v. 
Young, 20 111. App. 76; Carroll v. 
Holmes, 24 111. App. 453; Beveridge 
V. Hewitt, 8 111. App. 467; Staninger 
V. Tabor, 103 111. App. 330. 

Indiana. — Whitesides v. Hunt, 97 
Ind. 191. 

Maine. — Morris v. Western Union 
Tel. Co., 94 Me. 423, 47 All. 926. 

Maryland. — Stewart v. Schall, 65 
Md. 289, 4 Atl. 399, S7 Am. Rep. 327. 

Massachusetts. — Barnes v. Smith, 
159 Mass. 344, 34 N. E. 403. 

Michigan. — Gregory v. Wendell, 
37 Mich. 337. 

Minnesota. — Mohr v. Miesen, 47 
Minn. 228, 49 N. W. 862. 

Missouri. — Crawford v. Spencer, 
92 Mo. 498, 4 S. W. 713, I Am. St. 
Rep. 745 ; Kent v. Miltenberger, 13 
Mo. App. 503; Ream v. Hamilton, 
15 Mo. App. 577; Schriener v. Orr, 
55 Mo. App. 406. 

Nebraska. — Sprague v. Warren, 
26 Neb. 326, 41 N. W. 1 1 13, 3 L. R. 
A. 679. 

New York. — Amsden ' v. Jacobs, 
75 Hun 311, 26 N. Y. Supp. 1000; 
Yerkes v. Salomon, 11 Hun 471. 

Pennsylvania. — Kirkpatrick v. 

Bonsall, 72 Pa. St. 155; Brua's Ap- 
peal, 55 Pa. St. 294; Gaw v. Ben- 
nett, 153 Pa. St. 247, 25 Atl. 1114. 

Rhode Island. — Winward v. Lin- 
coln, 23 R. I. 476, 51 Atl. 106. 

South Dakota. — Waite v. Frank, 
14 S. D. 626, 86 N. W. 645. 

Wisconsin. — Barnard v. Backhaus, 
52 Wis. 593, 6 N. W. 252, 9 N. W. 

595- 

And see Press v. Duncan, lOO Iowa 
355. 69 N. W. 543- 

In Dews V. Glaspel, 4 N. D. 251, 
60 N. W. 60, the court said : " Mere 
wagering contracts invariably wear 
the garb of bona Ude sales. This is 
common knowledge. Myriads of 

Vol. VI 



gambling operations are daily arrayed 
by two interested brokers, who fatten 
on the folly of their dupes, in the 
decent and decorous habiliments of 
lawful business transactions. The 
naivete of a tribunal which in such 
cases should unquestioningly take the 
semblance for the substance would 
indeed be pitiable, if it did not excite 
derision and contempt. The courts 
have always sought to pierce the dis- 
guise and ascertain the real intention 
of the parties." 

13. Beadles v. M'Elrath, 8 Ky. L. 
Rep. 848, 3 S. W. 152; Peck v. Doran, 
57 Hun 343, 10 N. Y. Supp. 401; 
Counselman v. Reichart, 103 Iowa 
430, 72 S. W. 490. 

The Rule Excluding Parol Evi- 
dence to vary written contracts only 
protects valid transactions. Cassard 
V. Hinman, i Bosw. (N. Y.) 207, 
and see Cassard v. Hinman, 6 Bosw. 
(N. Y.) 8. But in Porter v. Veits, 
I Biss. 177, 19 Fed. Cas. No. 11,291, 
it was held that parol evidence was 
inadmissible to show that a contract 
for future delivery, valid on its face, 
was vitiated by a contemporaneous 
oral agreement that it should be 
closed out by a payment of differ- 
ences, the court saying : " No doubt 
all contracts which are illegal may be 
attacked, but no case has been shown 
which authorizes a party to prove 
verbally that another contract (in 
itself illegal) existed, and so get rid 
of a written contract on its face un- 
exceptionable." 

Evidence of Previous Conversa- 
tions. — In an action by grain 
brokers against their clients to re- 
cover advances made on a purchase 
of grain, the order for which called 
for a certain number^ of bushels 
" more ' of January wheat, it was 
permissible to prove previous con- 
versations between the parties to ex- 
plain what was meant by such order 
and whether or not the transaction 



GAMING. 



171 



actions; but the surrounding circumstances and the conduct of the 
parties may be looked to." 

b. Form and Circumstances of the Contract. — (l.) in General. 
Failure to Reduce Contract to Writing. — The fact that the contract has 
not been reduced to writing, when, without at least a written memo- 
randum, the sale would be invalid, is a circumstance showing that 
commission merchants knew their cUent's intent to engage in wager- 
ing transactions.^* 

1Jnintelligil)le Business Methods. — The fact that the method of con- 
ducting the business is not intelligible to the court is a suspicious 
circumstance.^' 

Interpretation of Contract. — Where a contract for future delivery 
is susceptible of two interpretations, it must be accorded that which 
renders it lawful." 

(2.) Purchase for Future Delivery. — The fact that a purchase is 
made for future delivery does not ipso facto invalidate it as a wager- 
ing transaction,^* while on the other hand the fact that the contract 



was a gambling deal. Brand v. 
Henderson, 107 111. 141. 

Evidence of TTsage is admissible to 
fix the meaning of a technical phrase 
used in an order to a stock broker to 
purchase stock, as bearing on the is- 
sue of the legality of the transaction. 
Also expert evidence is admissible to 
show the meaning of the expression : 
"I want to buy, say, 100 shares Un- 
ion Pacific stock on margin," con- 
tained in an order to a stock broker. 
Hatch V. Douglas, 48 Conn. 116, 40 
Am. Rep. 154. 

14. KuIIman v. Simmens, 104 
Cal. S9S, 38 Pac. 362. See also 
Boyd V. Hanson, 41 Fed. 174; In re 
Green, 7 Biss. 338, 10 Fed. Cas. No. 
57SI. In this last case the court 
said : " The fact that the parties 
charged the bankrupt with the price 
of the grain when he ordered it pur- 
chased, and credited him with the 
price sold for, when sold, does not 
prove what the real transaction was. 
That only represents the form, not 
the nature of the transaction. It was 
as well to keep the account in that 
way when the real intention was to 
speculate and pay only the difference, 
as when the sale was of the article it- 
self." 

But in Winward v. Lincoln, 23 R. 
I. 476, 51 Atl. 106, the court, in 
speaking of a broker's account 
which showed items of interest 
charged to and dividends credited to 



his client, said: "The bookkeeper 
who kept the account had no sus- 
picion that the entries did not rep- 
resent real transactions. The ac- 
count appears to be a record of gen- 
uine purchases and sales, and belongs 
to a class of evidence which is given 
much weight by our court." 

15. Dows V. Glaspel, 4 N. D. 251, 
60 N. W. 60. 

16. Lowry v. Dillman, 59 Wis. 
197, 18 N. W. 4, in which the court 
said that after reading over more 
than once the testimony of the 
broker and his clerk, no member of 
the court was certain that he under- 
stood how the business was trans- 
acted. 

17. Clay V. Allen, 63 Miss. 426. 
For an instance of a contract held to 
show on its face that it contemplated 
a wager, see Marks v. Metropolitan 
Stock Exchange, 181 Mass. 251, 63 
N. E. 410. 

18. United States. — Edwards v. 
Hoeffinghoff, 38 Fed. 635. 

Illinois. — Cole v. Milmine, 88 111. 
349- 

Maine. — Pumsey v. Berry, 65 Me. 
570. 

Michigan. — Gregory v. Wendell, 
40 Mich. 432. 

Minnesota. — Mohr v. Miesen, 47 
Minn. 228, 49 N. W. 862. 

Mississippi. — Clay v. Allen, 63 
Miss. 426. 

Missouri. — Crawford v. Spencer, 

Vol. VI 



172 



GAMING. 



is in the form of immediate instead of future purchases and sales 
does not entitle it to be viewed in a more favorable light.^" 

And so the fact that one selling goods for future delivery does 
not have them in his possession, and has not arranged for them, does 
not affect the validity of the contract.'" 



92 Mo. 498, 4 S. W. 713, I Am. St. 
Rep. 745- 

Pennsylvania. — Brua's Appeal, 55 
Pa. St. 294; Wagner v. Hildebrand, 
187 Pa. St. 136, 41 Atl. 34; Smith v. 
Bouvier, 1 70 Pa. St. 325 ; Peters v. 
Grim, 149 Pa. St. 163, 24 Atl. 192. 

Vermont. — Noyes v. Spaulding, 
27 Vt. 420. 

In Logan v. Musick, 81 111. 415, 
the court said : " The statute [pro- 
hibiting options] does not prohibit a 
party from selling or buying grain 
for future delivery. Such was not 
the purpose of the statute." 

But in Barnard v. Backhaus, 52 
Wis. 593, 6 N. W. 252, 9 N. W. 595, 
the court said that it was the mani- 
fest duty of courts to scrutinize 
closely time contracts, and determine 
whether they were really intended to 
be what their language imported — 
real contracts for the future sale 
and delivery of grain — or whether 
in fact that were simply wagers. 

19. In Flagg V. Gilpin, 17 R. I. 
10, 19 Atl. 1084, the court remarked 
that the case of stock-gambling pre- 
sented by the proof differed from a 
contract for future delivery in that 
it was the understanding of the par- 
ties, a client and his broker, that the 
client should order the broker to buy 
stock and that the broker should then 
be treated as having bought, and that 
the client should order the broker to 
sell and he should then be treated as 
having sold, at which time the dif- 
ferences between the market price as 
it then was, and as it was when the 
purchase was made, should be set- 
tled between them. But the court 
said that it did not see any essential 
difference, for in the one case, as in 
the other, the cause of action was 
merely a wager masked under the 
semblance of a sale, or of a sale and 
resale. 

20. United States. — Irwin v. Wil- 
liar, no U. S. 507; Porter v. Viets, 
I Biss. 177, 19 Fed. Cas. No. 11,291. 

Vol. VI 



Illinois. — Logan v. Musick, 81 

111. 41S. 

Indiana. — Whitesides v. Hunt, 97 
Ind. 191. 

Kentucky. — Sawyer v. Taggart, 
77 Ky. 727. 

Louisiana. — Conner v. Robertson, 
57 La. Ann.- 814. 

Michigan. — Gregory v. Wendell, 
39 Mich. 337, .?. c. 40 Mich. 432. 

Minnesota. — Mohr v. Miesen, 47 
Minn. 228, 49 N. W. 862. 

Mississippi. — Clay v. Allen, 6z 
Miss. 426. 

Missouri. — Crawford v. Spencer, 
92 Mo. 498, 4 S. W. 713, I Am. St. 
Rep. 74S; Williams v. Tiedman, 6 
Mo. App. 269; Kent v. Miltenberger, 
13 Mo. App. 503 ; Cockrill v. Thomp- 
son, 8s Mo. 510. 

Nebraska. — Rogers v. Marriott, 
59 Neb. 759, 82 N. W. 21. 

New York. — Bigelow v. Bene- 
dict, 70 N. Y. 202; Stanton v. Small, 
3 Sand. 230; Cassard v. Hinman, i 
Bosw. 207. 

Ohio. — Kahn v. Walton, 46 Ohio 
St. 195, 20 N. E. 203. 

Wisconsin. — Barnard v. Back- 
haus, 52 Wis. 593, 6 N. W. 252, 9 
N. W. 595. And see Whitehead v. 
Root, 2 Mete. (Ky.) 584; Dickson 
V. Thomas, 97 Pa. St. 278. 

The contrary doctrine announced 
in some early English cases (see 
Bryan v. Lewis, R. & M. 386, 21 E. 
C. L. 467) has been long since over- 
ruled. See cases cited above. 

A sale "short," while evidence of 
a wager transaction, is not ipso facto 
a wager, but there must be other 
facts to characterize the transaction 
and show the illegal intent of the 
parties. , Maxton v. Gheen, 75 Pa. 
St. 166. 

From the rule in the text it fol- 
lows that on an issue as to whether 
contracts for future delivery were 
legal, questions asked of parties 
whether at the time of making such 
sales they had the commodities on 
hand, may be properly excluded. 



GAMING. 



173 



So also the fact that goods sold for future delivery are not identi- 
fied is, of course, not significant of illegality.^^ 

(3.) Option Contracts. — An option contract is not per se invalid as 
a wagering transaction." 



Mackey v. Raiisch, 60 Hun 583, 15 
N. Y. Supp. 4. 

But in Watte v. Wickersham, 27 
Neb. 4S7, 43 N. W. 259, in support of 
a contention that certain sales of 
grain were gambling deals, evidence 
that the person selling did not own 
or have possession of any grain, and 
particularly of the grain sold at the 
. time he ordered the plaintiff brokers 
to sell, was \held admissible in con- 
nection with proof that the plain- 
tiffs knew the fact. 

In Donovan v. Daiber, 124 Mich. 
49, 82 N. W. 848, a statute (Comp. L. 
Mich. 1897, § 11,373) prohibiting the 
pretended buying or selling of stocks 
or produce on margins when the 
seller does not have the property on 
hand to deliver or when the pur- 
chaser does not intend actually to re- 
ceive the property, was held not to 
invalidate contracts for future de- 
livery, though the seller did not have 
the property, where it was the un- 
derstanding of both parties that an 
actual delivery could be enforced. 

21. Sawyer v. Taggart, 77 Ky. 
727; Conner v. Robertson, 37 La. 
Ann. 814. 

" The law does not require that the 
stock [purchased] should be in ex- 
istence, and that the customer should 
acquire such control by the purchase 
as to be able to deliver the title to it, 
if called for, when he sells." Win- 
ward V. Lincoln, 23 R. I. 476, 51 Atl. 
106. 

2Z. North V. Phillips, 89 Pa. St. 
250; Williams v. Tiedemann, 6 Mo. 
App. 269. 

But see Dickson v Thomas, 97 Pa. 
St. 278, where the testimony of a 
broker concerning an option contract 
was held to show it to be merely a 
wager. An option to purchase with- 
in a certain time is not illegal as a 
gaming transaction, and the case is 
not altered if, instead of paying for 
an option to buy, the person pays 
for an option to sell. Story v. Salo- 
mon, 71 N. Y. 420. 
A contract providing that in con- 



sideration of a certain sum, the mak- 
ers bind themselves to deliver a cer- 
tain amount of petroleum should the 
opposite party call on them to do so 
at any time within six months, and 
if the oil is called for, the call be- 
comes a contract, the opposite party 
agreeing to receive and pay for the 
commodity, is not on its face a gam- 
bling contract, but as it is evident 
that such an agreement can be read- 
ily prostituted to the worst kind of 
gambling ventures, its character may 
be weighed by the jury in connection 
with other facts in considering 
whether the bargain was a mere 
scheme to gamble. Kirkpatrick v. 
Bonsall, 72 Pa. St. 155. 

Right to Insist on Actual Delivery. 
Where it is agreed by the parties 
that the contract shall be actually 
performed if either party requires it, 
it is not a wagering contract, though 
one or both of the parties intend 
when the time for performance ar- 
rives to substitute therefor a settle- 
ment by the payment of differences, 
such an intention being immaterial 
except so far as it is made a part of 
the contract. Harvey v. Merrill, 
ISO Mass. I, 22 N. E. 49, IS Am. St. 
Rep. IS9. S L. R. A. 200. See also 
Winward v. Lincoln, 23 R. I. 476, 51 
Atl. 106 ;_ and Ward v. Bosburgh, 31 
Fed. 12, in which the court said : " It 
has been of late repeatedly decided 
that if the parties intend in fact to 
buy or sell property to be delivered 
at a future time agreed upon by 
them, it is not a gambling transac- 
tion, although they exercise the op- 
tion of settling the difference in price 
rather than make delivery of the 
property." 

But see contra, Melchert v. Ameri- 
can Union Tel. Co., 11 Fed. 193; and 
Kirkpatrick v. Adams, 20 Fed. 287, 
in which latter case the court said : 
" It is not sufificient that the parties 
reserve to themselves an option of 
converting the contracts into a real 
transaction of buying and selling for 
actual delivery, if the original intent 

Vol. VI 



174 



GAMING. 



' Option as to Time of Delivery. — So a mere option within certain 
limits as to the time of delivery does not invalidate the contract.''^ 

(4.) Effect of Rectuiring Margin. — Deals on margin are not neces- 
sarily wagering transactions.^* And the fact that brokers assume 
no risk on deals made for a client is evidence of the legality.^^ 



was to make a contract which con- 
templated in fact no delivery, but a 
mere adjustment of differences in 
price. It would be none the less a 
gambling transaction if such was the 
original purpose, because of the op- 
tion. . . . The existence of the 
option in the contract is merely one 
element^ of fact to which you may 
look, with all the others, in arriving 
at the real bona fide intent of the 
parties." 

23. United States. — yitXchttt v. 
American Union Tel. Co., ii Fed. 
193; Ward v. Vosburgh, 31 Fed. 12. 

Illinois. — Pixley v. Boynton, 79 
111. 351; Wolcott V. Heath, 78 111. 
433- 

Iowa. — Gregory v. Wattowa, 58 
Iowa 711, 12 N. W. 726. 

Missouri. — Crawford v. Spencer, 
92 Mo. 498, 4 S. W. 713, I Am. St. 
Rep. 47S; Williams v. Tiedemann, 6 
Mo. App. 269. 

An option by which a seller secures 
the right to deliver a commodity 
within a certain time, and to receive 
therefor a certain price, though con- 
taining an element of hazard, is not 
necessarily inconsistent with the fact 
that the seller owned the commodity 
when making the contract or had an 
existing contract to receive it; and 
hence is not void as a wager. Bige- 
low V. Benedict, 70 N. Y. 202. So 
the existence of an option as to the 
time of delivery does not bring the 
contract within the Illinois statute 
prohibiting option contracts. Logan 
V. Musick, 81 III. 415. 

24. United States. — Edwards v. 
Hoeffinghoff, 38 Fed. 635. 

Connecticut. — Hatch v. Douglas, 
48 Conn. 116, 40 Am. Rep. 154. 

Indiana. — Whitesides v. Hunt, 97 
Ind. 191. 

Massachusetts. — Marks v. Metro- 
politan Stock Exchange, 181 Mass. 
251, 63 N. E. 410. 

Pennsylvania. — Wagner v. Hilde- 
brand, 187 Pa. St. 136, 41 Atl. 34; 
Hopkins v. O'Kane, 169 Pa. St. 478, 

Vol. VI 



32 Atl. 421 ; Peters v. Grim, 149 Pa. 
St. 163, 24 Atl. 192. 

"The fact that after the stocks 
have been bought by the broker he 
is to actually receive them from the 
seller, and to pay for them for the 
most part out of his own pocket, or 
with funds raised on his personal re- 
sponsibility and the pledge of the 
stocks, and then carry them for his 
customer so long as his customer 
keeps him indemnified from loss by 
keeping the margin agreed upon 
good, and that in so carrying the 
stocks the relation between the cus- 
tomer and the broker is a contractual 
one, does not make the transaction 
a wagering transaction." Rice v. 
Winslow, 180 Mass. 500, 62 N. E. 
1057- 

But the fact that orders for wager- 
ing stock transactions are marked 
" Protect in full," by which is meant 
that the stock was not to be sold out, 
and that the margin would be kept 
good, does not validate the transac- 
tion on the theoretic possibility that 
under such an order margins might 
be furnished until the stock had lost 
all its value, and the then worthless 
certificate turned over; this being 
very far from establishing an intent 
to make an actual purchase. 
Thompson v. Brady, 182 Mass. 321, 
6s N. E. 419. 

25. In Hatch v. Douglas, 48 
Conn. 116, 40 Am. Rep. 154, the 
court referred to the fact that the 
brokers did not assume any risk, as 
indicative of the legality of transac- 
tions in stocks made by them for a 
client. 

In Brown v. Speyers, 20 Gratt. 
(Va.) 296, the court regarded the 
circumstance that a broker could sus- 
tain no loss nor realize any profit 
from speculative transactions, be- 
yond his commissions, as conclusive 
against their invalidity as wagers, 
saying it had yet to see a case in 
which it had been held that a con- 
tract was a wager, by the terms of 



GAMINC. 



175 



(5.) Nature of Commodity Dealt In. — The nature of the commodity 
dealt in is not, apparently, suggestive of illegality.^' 

(6.) Place Where Transaction Occurs. — And it would seem that the 
fact that the transaction occurs on a stock exchange or board of 
trade is not evidence of its illegality, at least beyond suggesting the 
propriety of its close scrutiny.*^ 

But the importance of a certain city as a grain market has been 
regarded as a circumstance to be considered in determining 
whether brokers there were aware of their client's intention to 
engage in wagering transactions in grain.^' 

Rules of Exchange or Board of Trade. — The" weight of authority 
seems to favor the view that the rules of an exchange or board of 
trade on which transactions are conducted are not admissible^" to 



which the loss and profit were all 
on one side. 

But in Flagg v. Baldwin, 38 N. J. 
Ep. 219, the fact that a broker specu- 
lating for his client on margins had 
retained, or attempted to retain, per- 
fect indemnity against loss on his 
part, was said not to affect the il- 
legal character of the transactions as 
wagering contracts. 

26. The only difference between 
stocks and other commodities is that 
as stocks are more commonly made 
the vehicle of gambling speculation 
than some other things, courts are 
disposed to look more closely into 
stock transactions to ascertain their 
character. Hopkins v. O'Kane, 169 
Pa. St. 478, 32 Atl. 421. 

An option for the sale of gold does 
not warrant the inference that it is 
a wagering contract on account of 
the nature of the commodity dealt 
in, notwithstanding contracts for the 
purchase and sale of gold are a con- 
venient cover for gambling transac- 
tions, in view of the frequent fluctua- 
tions in the value of gold, the op- 
portunities for combinations affect- 
ing the market, and the ability to 
ascertain the market value on any 
day or hour. Bigelow v. Benedict, 
70 N. Y. 202. 

27. Sawyer v. Taggart, "^y Ky. 
727. 

Contra. — Rogers v. Marriott, 59 
Neb. 759, 82 N. W. 21, in which the 
court remarked that it is a matter of 
common knowledge that many mil- 
lions of bushels of wheat are annu- 



ally, in form, bought and sold on 
the Chicago board of trade, which 
are not in existence, never change 
hands, and are never intended to, 
and that as the transactions repre- 
senting bona fide sales are but a 
small part of the sum total, the most 
natural and probable inference would 
be that any particular transaction 
occurring there 'would fall within the 
category of speculative ventures. 

Judicial Notice — Courts are 
bound to take notice that stock and 
grain gambling is carried on at the 
exchanges in the commercial cen- 
ters of the country; and in view of 
this contracts for future delivery will 
be very carefully scrutinized. Mohr 
V. Miesen, 47 Minn. 228, 49 N. W. 
862. 

Transactions Between Other Par- 
ties. — Evidence as to transactions 
on a board of trade between parties 
other than those before the court 
is inadmissible to characterize the 
transaction engaged in on the board 
by the parties to the suit. Edwards 
V. Hoeffinghoff, 38 Fed. 635. 

28. Williar v. Irwin, 11 Biss. 57, 
30 Fed. Cas. No. 17,761; Roundtree 
V. Smith, 108 U. S. 269. 

29. Waite v. Frank, 14 S. D. 626, 
86 N. W. 64s; Whitesides v. Hunt, 
97 Ind. 191 ; Pardridge v. Cutler, 168 
111. S04, 48 N. E. 125; Mackey v. 
Rausch, 60 Hun 583, 15 N. Y. 
Supp. 4. 

In Bartlett v. Collins, 109 Wis. 
477, 85 N. W. 703, the court held 
that where a client authorizes his 

Vol. VI 



176 



GAMING. 



characterize them, and when admitted, the significance attached to 
them has varied greatly.^" 

E. Circumstances and Conduct of the Parties. — a. Impor- 
tance in General. — More than the provisions of the contract itself 
or the declarations of the parties, their circumstances and conduct 
furnish the most cogent and reliable evidence of their true intent.^^ 



brokers to enter into transactions for 
him, under the auspices of a board 
of trade, he impliedly submits him- 
self to the lawful rules of the or- 
ganization, which are therefore ad- 
missible in an action between them, 
as bearing on the illegality of the 
transactions entered into. 

Parties Ignorant of the Rules. 
See Davy v. Bangs, 174 Mass. 238, 
54 N. E. 536. 

Failure to Offer Rules Referred to 
in Contract — But in Lowry v. 
Dillman, 59 Wis. 197, 18 N. W. 4, 
the court enumerated among the sus- 
picious circumstances tending to dis- 
credit a grain broker's testimony 
that he made an actual purchase for 
his client, the fact that though the 
written contract provided that it 
was subject to the rules of a cham- 
ber of commerce, these rules were 
not introduced in evidence. 

30. In Crawford v. Spencer, 92 
Mo. 498, 4 S. W. 713, I Am. St. Rep. 
745, the fact that contracts made by 
grain brokers for a client were not 
written, and under the rules of the 
exchange under which they operated 
the purchaser had the right to cill 
for the commodity bought, was not 
regarded as establishing the legiti- 
mate character of the transactions. 

In Sawyer v. Taggart, jy Ky. 727, 
a rule of the New York cotton ex- 
change providing that either party to 
a contract might close out on notice, 
the party receiving the notice having 
the option either to make settlement 
by paying or receiving the difference, 
or to accept a satisfactory person in 
the room of the party giving the no- 
tice, and also a rule relating to mar- 
gins, and one governing settlements 
on default in delivery or receipt of 
goods sold, were considered, and it 
was said that they seemed to provide 
for real and not fictitious trade, that 
they provided against unreal trans- 
actions, and that so large a portion 

Vol. VI 



of the real business in great cities is 
done on 'change as to wholly forbid 
the conclusion that the contracts 
made there are unlawful. 

In Dows V. Glaspel, 4 N. D. 251, 
60 N. W. 60, the court, in referring 
to a rule of a board of trade provid- 
ing that in cases of sales of produce 
the parties selling should deliver the 
property unless the purchaser should 
accept or consent to pay the defend- 
ant in cash but in all cases the 
buyer should have the right to de- 
mand the property, as confirming its 
views that transactions on the board 
of trade were known by the com- 
mission merchant making them to be 
wagering deals, said : " In this very 
rule the purchaser is given the option 
to accept or pay the difference in 
price when the seller so requests him 
to do. In other words, the rule pro- 
vides that the parties may agree to 
do what every layman knows they 
can agree to do without any such 
rule. Why mention this right to 
agree to settle by paying differences 
when it is a right which exists inde- 
pendently of any rule? The reason 
is obvious, when the almost uni- 
versal practice is considered. When 
brokers, by their rules, inform their 
speculating customers that no de- 
livery is necessary if the parties 
agree to dispense with it, and this is 
followed by the almost uniform prac- 
tice of settling by paying differences, 
we are constrained to believe that no 
delivery was intended from the very 
outset of any of these transactions, 
and that the brokers were well aware 
of it." 

31. In Melchert v. American 
Union Tel. Co., 11 Fed. 193, in 
speaking of the legality of transac- 
tions in grain futures, the court said : 
" We must look at the actions of 
interested or accused persons, rather 
than their mere words, to ascertain 
their real intention. We must con- 
sider what they have done, rather 



GAMING. 



177 



And a statute making certain conduct prima facie evidence of the 
illegal nature of the transaction in futures, is constitutional.^^ 

Even the mora! estimate which a party put upon the transaction 
he was about to engage in has been held significant. ^° 

b. Course of Dealing Between Parties. — At least in those cir- 
cumstances in which the question of the legitimate character of a 
transaction arises between the broker and his client, the field of 
inquiry into conduct includes the whole course of dealing between 
the parties.^* 

c. Delivery. — (1.) In the Course of Dealing. — Thus the fact that 
numerous deals in commodities for future delivery were uniforrnly 
closed out without delivery is significant evidence of the intention 



than what they have said, when 
called to account for their actions. 
We can best learn what interpreta- 
tion the parties themselves have put 
upon their own contract by consider- 
ing what they have done under and 
in pursuance of it, with a view to its 
settlement or fulfillment." 

32. Crandell v. White, 164 Mass. 
54, 41 N. E. 204. 

33. In Wheeler v. McDermid, 36 
111. App. 179, the court, remarking 
on the circumstances that the defend- 
ant, who purchased grain through 
the plaintiff broker^ was a clergyman, 
and doubtful about the propriety of 
engaging in speculative deals, said : 
" The very fact that the conscience 
of this honest clergyman pricked him 
as he stood in the charmed circle of 
the ' corn pit ' and watched the con- 
flict between the 'bulls and bears,' 
and looked with longing eyes upon 
the golden calf he was about to 
worship is a circumstance not without 
significance as showing what the in- 
tent of appellant [the defendant] 
was." 

34. Williar v. Irwin, 11 Biss. 57, 
30 Fed. Cas. No. 17,761 ; Kenyon v. 
Luther, 50 Hun 602, 4 N. Y. Supp. 
498; Carroll v. Holmes, 24 111. App. 
4S3; Edwards v. Hoeffinghoff, 38 
Fed. 63s; Waite v. Frank, 14 S. D. 
626, 86 N. W. 64s. 

In Crandell v. White, 164 Mass. 
54, 41 N. E. 204, which was an ac- 
tion by a principal against his agents 
to recover money paid out on specu- 
lative deals in futures, evidence was 
admitted concerning transactions 
which took place during the five days 
preceding that on which those in suit 

12 



began, the court saying: "It is a 
general rule that separate and dis- 
tinct acts, unconnected with those in 
suit, are inadmissible for the purpose 
of raising an inference that the party 
did the particular things which he is 
charged with doing. But we think in 
this case that the transactions ob- 
jected to were of such a nature and 
were so connected with those in suit, 
and so near to them in time, that they 
might fairly be regarded as having 
some tendency to show what the de- 
fendant had reasonable cause to be- 
lieve that no intention existed actu- 
ally to perform the contracts \yhich 
form the basis of the present suit." 

In an action on a note, defended on 
the ground that it was based on spec- 
ulations of a gambling nature on a 
board of trade, evidence as to other 
similar transactions between the par- 
ties for three months after the note 
was given, as well as evidence of 
transactions prior thereto, is admissi- 
ble to show the intention of the par- 
ties. Gardner v. Meeker, 169 111. 40, 
48 N. E. 307. 

But in Dwight v. Badgley, 60 Hun 
144, 14 N. Y. Supp. 498, which was 
an action by brokers to recover dif- 
ferences from a client, the court held 
that evidence as to whether grain Lad 
been actually delivered in previous 
transactions was inadmissible to char- 
acterize those in suit as wagering con- 
tracts, saying : " Even if the parties 
had been guilty of entering into ille- 
gal contracts prior to the transactions 
upon which this action is based, as 
the plaintiff is entitled to the strictest 
proof in this case, we think that proof 
of former transactions alleged to be 
illegal, not embraced within the time 

Vol. VI 



178 



GAMING. 



of the parties to gamble. ^^ And is also evidence that brokers or 
commission merchants were aware of the illegal intent of their cus- 
tomer.^' 

But instances of actual delivery in the course of a series of deals 
will rob the failure to deliver, in the majority of instances, of its 
evidentiary force.'' 

(2.) In the Particular Transaction. — The fact that a particular con- 
tract for future delivery is closed out before maturity does not, how- 
ever, prove its invalidity.^' But while not conclusive, it is admissi- 



specified in the bill of particulars, is 
not competent." 

So in Benson v. Morgan, 26 111. 
App. 22, the court refused to notice 
evidence of a transaction between the 
maker of a note and his brokers prior 
to the execution of the instrument, as 
bearing on the question whether it 
was given for a gambling considera- 
tion arising out of speculations in 
grain ; saying that it did not consider 
the evidence relevant. 

35. Colderwood v. McCrea, 11 111. 
App. S43; Carroll v. Holmes, 24 111. 
453; Beveridge v. Hewitt, 8 111. App. 
467; Curtis V. Wright, 40 111. App. 
491 ; Fareira v. Gabell, 89 Pa. St. 89 ; 
Miles V. Andrews, 40 111. 155; Craw- 
ford V. Spencer, 92 Mo. 498, 4 S. W. 
713, I Am. St. Rep. 745. 

Contra. — Sawyer v. Taggart, 77 
Ky. 727, in which the fact that in the 
whole course of dealing between 
brokers and their clients, covering 
about two years and aggregating sev- 
eral hundred thousand dollars, no 
goods were actually received by 
either, was denied significance as in- 
dicating gambling transactions, the 
court saying that all the purchases 
were had with an intention to resell, 
and that resales were actually made 
in all instances. See also Ward v. 
Bosburg, 31 Fed. 12, and Williar v. 
Irwin, II Biss. (U. S.) 57. 30 Fed. 
Cas. No. 17,761, in which latter case 
the custom of commission merchants 
to reciprocally surrender or cancel 
their contracts and adjust differences 
in price between themselves was said 
to be founded in commercial con- 
venience and not to be in contraven- 
tion of the law. 

36. Dows V. Glaspel, 4 N. D. 251, 
60 N. W. 60, in which, in speaking 
of the proof of the knowledge of 
commission merchants concerning 

Vol. VI 



their client's illegal intent, the court 
said : " From the very beginning the 
defendant pursued the course of clos- 
ing out these purchases long before' 
the day of delivery had arrived; in 
some cases ordering sold within a 
few days after the purchase all or a 
portion of the wheat purchased^ for 
May delivery. What did this indi- 
cate to the mind of the plaintiffs, if 
it did not tend to show them that 
defendant was merely gambling in 
options? . . . His [the client's] 
indifference to the matter of delivery, 
all through these transactions, was 
certainly suggestive to plaintiffs, who 
were familiar with such indifference, 
and the reasons for it, they having 
witnessed it in a multitude of similar 
transactions." And see to the same 
effect, Mohr v. Miesen, 47 Minn. 228, 
49 N. W. 862. 

37. Ward' v. Vosburg, 31 Fed. 12. 
In Pratt v. B'oody, 55 N. J. Eq. 17s, 

35 Atl. 1 1 13, it appeared that a client 
purchased in one month from a 
broker stocks amounting to over 
$20O,00Oi and that the actual deliver- 
ies to the client amounted to $47,000. 
During the next ten months the pur- 
chases amounted to $1,500,000, with 
deliveries only to the amount of $556. 
During the succeeding year the pur- 
chases amounted to over $650,000, 
with actual deliveries amounting to 
$57,337, and the court held' that the 
small proportion of deliveries was 
insufficient to_ justify the conclusion 
that both parties intended a mere set- 
tling of differences, without actual 
delivery, saying that the importance 
of the deliveries actually made in de- 
ciding as to the validity of the whole 
account was very great. 

38. Ward v. Bosburgh, 31 Fed. 
12; Kirkpatrick v. Adams, 20 Fed. 
287; Conner v. Robertson, 37 La. 



GAMING. 



179 



ble,"" and has been regarded as not devoid of weight in indicating 
the intent of the parties.*" 

On the other hand the fact of actual delivery, under a contract 



Ann. 814; Sawyer v. Taggart, 77 
Ky. 727 ; Williams v. Tiedemann, 6 
Mo. App. 269; Kent v. Miltenberger, 
13 Mo. App. 503; Edwards v. Hoef- 
finghofif, 38 Fed. 635; Fareira v. Ga- 
bell, 89 Pa. St. 89. 

Where in a contract for future de- 
livery the actual transfer of the goods 
is contemplated, the vendee may, be- 
fore the time for delivery has arrived, 
agree to sell or transfer his right to 
the goods, or, under the contract, to 
some one else who, should he retain 
the same, would be entitled to receive 
possession at the time agreed; and 
such transfer would not affect the 
validity of the transaction Gregory 
V. Wendell, 39 Mich. 337. 

But in. Rogers v. Marriott, 59 Neb. 
7S9, 82 N. W. 21, which was an ac- 
tion by commission merchants to re- 
cover advances from a client, the 
court said it was not amiss to note 
that both parties were contemplating 
selling the "trades," as these trans- 
actions were termed, as soon as the 
market would permit of a profit be- 
ing realized, and that there was not 
in any of their communications the 
remotest suggestion or inference of 
an actual delivery at any time, or of 
any intention to transfer wheat to the 
client. 

39. Curtis v. Wright, 40 111. App. 
491 ; Mohr v. Miesen, 47 Minn. 228, 
49 N. W. 862. 

In Edwards v. HoefRnghoff, 38 
Fed. 63s, the court said that the jury 
had a right to look to the circum- 
stance of the absence of deliveries, 
in connection with other circum- 
stances, to determine whether or not 
the purchases and sales were actual. 

40. Lyon V. Culbertson, 83 111. 33. 
In Melchert v. American Union 

Tel. Co., II Fed. 193, the court, after 
holding that it was no objection to a 
bona fide contract for future delivery 
that the parties. afterward settled it 
by payment of differences, added 
that, notwithstanding their subse- 
quent conduct might, as evidence, 
cast " strong reflected light " upon 
their intent in making the contract. 



and said: "How can we judge of 
their intentions except by considering 
what they actually did in adjusting 
their contracts? Is it not just to con- 
clude, in the absence of proof to the 
contrary, that parties to a contract 
adjusted it according to their under- 
standing of their own intents in mak- 
ing it?" 

In Dows V. Glaspel, 4 N. D. 251, 
60 N. W. 60, the circumstance that a 
purchase of grain by commission 
merchants for a client for future de- 
livery was closed out by selling a like 
amount, was regarded by the court_ as 
cogent evidence that the commission 
merchants knew their client intended 
to gamble. The court said: "How 
could the plaintiffs [the commission 
merchants] expect that the defendant 
would regard a bona fide purchase by 
him closed out, and himself released 
from all further liability on the con- 
tract by ordering a new contract to 
be made with another person — a con- 
tract of sale — thus increasing, rather 
than extinguishing, his liability, if the 
two transactions were bona fide 
sales? The natural mode of wiping 
out an obligation is to reach the 
party who holds it, and agree with 
him as to the terms on which he will 
release the other party who desires 
to be discharged. Yet the plaintiffs 
knew that the defendant was willing 
to pursue a widely different course 
and close out his purchase at a profit 
by obligating himself to sell more 
wheat to another without securing a 
release from the contract of purchase 
which he wiped out." 

Stat. i8go, ch. 437, §4, making the 
fact that settlements had been made 
prima facie evidence of the wagering 
character of contracts for future de- 
livery embraces, if it is not confined 
to, settlements of the transactions 
concerned; and the fact that a trans- 
action of that sort is not completed in 
fact is prima facie evidence of its 
illegal character. Thompson v. 
Brady, 182 Mass. 321, 65 N. E. 419. 
And see Marks v. Metropolitan Stock 
Exchange, 181 Mass. 251, 63 N. E. 
410. 

Vol. VI 



180 



GAMING. 



for future delivery, is not conclusive evidence of the intention of the 
purchaser to receive the property when the order for its purchase 
was given.*^ 

(3.) Preparations for Receipt or Delivery of Commodity. — Lack of 
preparation by a party to a contract for future delivery, for the 
delivery or receipt of the commodity dealt in, has been regarded as a 
circumstance tending to show the wagering character of the transac- 
tions, and to charge the party's broker with knowledge of his illegal 
intent.*^ 

(4.) Delivery by Broker to Client. — The fact that a broker who has 
purchased stocks and commodities for his client does not deliver 
them to him does not indicate illegality, and is irrelevant to that 
issue when it arises between them.*^ So the client's intent as to 
delivery is quite immaterial.** 



41. Miles V. Andrews, 40 111. App. 
ISS- 

The fact that a commission mer- 
chant, who made a contract for his 
client without intending a delivery, 
and afterward, when the client's de- 
meanor began to inspire mistrust, 
bought the grain, to make a show of 
fulfilling the contract, would not 
validate it. Edwards v. HoefBnghofF, 
38 Fed. 63s. 

42. Melchert v. American Union 
Tel. Co., II Fed. 193; Crawford v. 
Spencer, 92 Mo. 498, 4 S. W. 713, I 
Am. St. Rep. 745. 

In Watte v. Wickersham, 27 Neb. 
4S7, 43 N. W. 259, in support of the 
contention that certain transactions 
in grain were gambling deals, evi- 
dence that the purchasers were not 
the owners of elevators, or other 
means of receiving or storing grain, 
was held admissible in connection 
with proof that the fact was known 
to the plaintiff brokers. 

43. Young V. Glendenning, 194 Pa. 
St. SSO, 45 Atl. 364; Post V. Leland, 
184 Mass. 601, 69 N. E. 361; Win- 
ward v. Lincoln, 23 R. I. 476, 51 Atl. 
106. And see Davy v. Bangs, 174 
Mass. 238, 54 N. E. 536. 

The prima facie case under Stat. 
1890, ch. 437, § 4, making the fact of 
settlement prima facie evidence that 
the transaction was a wagering con- 
tract, is not made out by showing 
that the broker purchased stocks for 
his client, and retained them until 
resold, instead of delivering them to 
the client, and that on the resale a 
settlement was made between them, 

Vol. VI 



there having been hona Ade trans- 
fers of stocks between the broker and 
third persons with whom he dealt. 
Rice V. Winslow, 180 Mass. 500, 62 
N. E. 1057. 

But in Hill v. Johnson, 38 Mo. 
App. 383, the fact that no cotton was 
ever delivered or tendered to a client 
by commission merchants employed 
to purchase for him, was said to be 
" certainly a material circumstance" 
bearing on the validity of the trans- 
actions as gambling deals. 

And in Walters v. Comer, 79 Ga. 
796, 5 S. E. 292, the fact that brokers 
who had bought cotton for their 
client did not deliver it to him, was 
apparently regarded as a circum- 
stance tending to show the gambling 
nature of the transaction. 

44. Where a broker purchases 
stock for a client it is entirely im- 
material to the character of the trans- 
action as a gambling deal, whether 
the client intends to have the broker 
hold the securities for him until they 
shall actually be sold, and then to 
settle with the broker, or whether he 
intends ultimately to pay the balance 
of the purchase money and receive 
the securities. Rice v. Winslow, 180 
Mass. 500, 6z N. E. 1057. 

In Winward v. Lincoln, 23 R. I. 
476, SI Atl. 106, it was held that 
where a broker actually purchased 
stock on his client's account, the fact 
that the client did net intend to re- 
ceive it from the broker is immate- 
rial to the legality of the transac- 
tion, the court saying : " If the de- 
fendants [the clients] had ostensibly 
bought stock of the plaintiff [the 



GAMING. 



181 



(5.) Validity of Broker's Transaction with Third Person. — On the 
Other hand, the fact that a broker making contracts for future deHv- 
ery for a cHent actually purchases the stocks and commodities, or 
intends an actual delivery thereof to the third persons concerned, is 
also immaterial when the issue of the legality of the transaction 
arises between the broker and the client ;*' but the failure of evidence 
to affirmatively disclose that the broker made an actual purchase 
indicates a wagering contract,*" as does also the client's indifference 
to the pecuniary responsibility of the persons with whom the broker 
is supposed to deal." 



broker] and sold stock to hinr, then 
their intention to deliver certificates 
would have been of importance. But 
when they directed him to buy for 
their account, the question is, did 
they intend that he should actually 
buy and receive the certificates, and 
did they intend that he should de- 
liver certificates when they ordered 
him to sell?" 

45. Flagg V. Baldwin, 38 N. J. 
Eq. 219; Pardridge v. Cutler, 168 111. 
S04, 48 N. E. 125. 

In Rogers v. Marriott, 59 Neb. 759, 
82 N. W. 21, the court held tliat the 
fact that commission merchants made 
actual purchases and sales of com- 
rnodities for a client was not conclu- 
sive of the legality of the transactions 
as between them and the client, re- 
marking that there was no evidence 
as to the parties* from whom the 
nominal purchases were made, or that 
any third party appeared, in any 
order, to enter into the transaction. 

In an action to recover from brok- 
ers money lost in an alleged gambling 
transaction on a board of trade, the 
nature of the; contract that the brok- 
ers may have made on the board of 
trade or elsewhere, with some third 
party, is immaterial or a mere cir- 
cumstance of corroboration. Ken- 
nedy V. Stout, 26 111. App. 133. 

In Griswold v. Gregg, 24 111. App. 
384, it was held that the fact that 
brokers dealing for a client on a 
board of trade intended in making 
such deals an actual performance by 
delivery, was not the criterion of the 
validity of the transactions as be- 
tween the broker and the client, but 
if, as between them, it was intended 
that the broker should only deal in 
options, the transactions were illegal. 

In Harvey v. Merrill, 150 Mass. 



I, 22 N. E. 49, IS Am. St. Rep. 159, 
5 L. R. A. 200, the court held that 
the fact that brokers bound them- 
selves to actual deliveries on a cli- 
ent's account would not prevent the 
transactions, as between them and 
the client, being void as gambling 
deals, they being treated as having 
bound themselves on their own ac- 
count merely. 

But in Post V. Leland, 184 Mass. 
601, 69 N. E. 361, which was an 
action to recover money paid out on 
speculative deals in stocks, the fact 
that the defendant broker purchased 
the stock at plaintiff's request and 
held it subject to his control was 
held to be an element to be consid- 
ered on the question whether the 
broker had reasonable cause to be- 
lieve that plaintiff was carrying on 
a wagering contract. 

46. Peck V. Doran, 57 Hun 343, 10 
N. Y. Supp. 401; First Nat. Bank 
of Lyons v. Oskaloosa Pack. Co., 66 
Iowa 41, 23 N. W. 255. 

Where a commission merchant 
testifies that he never had a ware- 
house receipt for grain claimed to 
have been purchased on the order of 
a client, that he did not know in 
what elevator the alleged grain was, 
and that he settled the alleged loss by 
" ringing up " in the board of trade, 
his evidence fails to show a bona 
fide purchase for actual delivery. 
Sprague v. Warren, 26 Neb. 326, 41 
N. W. 1 1 13, 3 L. R. A. 679. 

47. " The purchaser in an hon- 
est business sale naturally wishes to 
know something of the pecuniary re- 
sponsibility and of the character of 
the man who has agreed to deliver 
property to him at a certain time 
for a specified price. If the vendor 
will not perform his contract, and 

Vol. VI 



182 



GAMING. 



d. Pecuniary Responsibility of Purchaser. — Evidence of the 
financial inability of one purchasing for future delivery to pay for 
the goods is admissible to show that 'he was gambling,*' and is a 
strong circumstance in demonstration of that fact;*' and a broker's 



cannot be made to pay damages for 
breach of it, the contract is of no 
value to the purchaser." Dows v. 
Glaspel, 4 N. D. 251, 60 N. W. 60. 

48. Watte v. Wickersham, 27 
Neb. 457, 43 N. W. 259; Kirkpatrick 
V. Bonsall, 72 Pa. St. 155. 

The means of a purchaser of grain 
for future delivery may be consid- 
ered in determining the wagering 
character of the contract, and if they 
are inadequate to carry the contract 
into effect, it is a circumstance 
which, though not conclusive, may 
be viewed in determining the pur- 
chaser's intention. And the pur- 
chaser's own evidence as to his lack 
of means is a4piissible. Myers v. 
Tobias (Pa.), 16 Atl. 641. 

In Stewart v. Schall, 65 Md. 289, 
4 Atl. 399, 57 Am. Rep. 327, evi- 
dence that defendant, sued by his 
brokers for a balance of account 
which he asserted arose out of 
gambling transactions, was worth 
only thirty-five hundred dollars, 
while the transactions aggregated 
eight hundred thousand dollars, was 
a lawyer by occupation and resided 
next door to plaintiffs, who knew 
him well, was held competent to go 
to the jury. 

49. United States. — WilliaT v. 
Irwin, II Biss. 57, 30 Fed. Cas. No. 
*7.76i. 

Illinois. — Jamieson v. Wallace, 
167 111. 388, 47 N. E. 762; Colder- 
wood V. McCrea, 11 111. App. 543; 
Carroll v. Holmes, 24 111. App. 453; 
Beveridge v. Hewitt, 8 111. App. 467, 

Kentucky. — Beadles v. M'Elrath, 
8 Ky. L. Rep. 848, 3 S. W. 152. 

Minnesota. — Mohr v. Miesen, 47 
Minn. 228, 49 N. W. 862. 

New Jersey. — Flagg v. Baldwin, 
38 N. J. Eq. 219. 

Pennsylvania. — Kirkpatrick v. 
Bonsall, 72 Pa. St. 155. 

South Dakota. — Waite v. Frank, 
14 S. D. 626, 86 N. W. 645. And see 
Rogers v. Marriott, 59 Neb. 759, 82 
N. W. 21; Sprague v. Warren, 26 

yoi. n 



Neb. 326, 4t N. W. 1I13, 3 L- R. A. 
679; North V. Phillips, 89 Pa. St. 
250; Ruchizky v. De Haven, 97 Pa. 
St. 202. 

In Wheeler v. McDermid, 36 111. 
App. 179, the fact that a country 
clergyman bought and sold within 
three months hundreds of thousands 
of bushels of corn, that on a single 
day he sold four hundred thousand 
bushels and made a single purchase 
for a like amount, and that not a 
bushel of corn was ever seen, re- 
ceived, delivered, tendered or de- 
manded by anybody, was regarded as 
evidence of the wagering character 
of the transactions, the court saying: 
" Was this country ' parson a mer- 
chant prince, that he could " corner ' 
the corn of Illinois, or a Joseph, that 
he could buy and crib such vast 
quantities of corn without money and 
without credit? To believe that 
such a thing was possible is to tax 
the credulity to the utmost limit, 
and to substitute for reason and 
common sense mere fairy tales, and 
gullibility that would put Baron 
Munchausen himself to shame." But 
see Stewart v. Schall, 65 Md. 289, 4 
Atl. 399, 57 Am. Rep. 327; Edwards 
V. Hoeffinghoff, 38 Fed. 635. 

In Winward v. Lincoln, 23 R. I. 
476, SI Atl. 106, the court said: 
" The defendants urged, and some 
of the cases which they cited took 
the view, that the pecuniary inability 
of the defendants to pay the full 
price charged for the stocks bought 
ought to have great weight in in- 
clining the court to believe that the 
intention was not to buy, but to fix a 
starting point for a wager. We do 
not find any force in this argument, 
particularly when the purchase is 
made through his broker and the 
purchaser avails himself of the brok- 
er's credit and facilities for borrow- 
ing on the stocks themselves. It 
only indicates at the most that the 
customer is buying for speculation 
rather than for permanent invest- 
ment," 



GAMING. 



183 



knowledge of such inability on the part of his client is a circumstance 
to be considered in determining his knowledge of the client's illegal 
intent.^" 

e. Residence. — So also a party's residence may be relevant evi- 
dence as to his intent to gamble in futures. °^ 

f. Occupation. — And his occupation, and that he was not a dealer 
in the commodity involved in the transaction, is also admissible.'^ 

g. Broker's Failure to Demand Purchase-money. — Among the 
features of conduct indicating wagering contracts conducted by a 
broker, the fact that he never calls upon his client for purchase- 
money, but only for margins, will sustain the inference that there 
was no intention actually to receive the property ,°^ and also indi- 
cates the broker's knowledge of the client's intent.'"* 



50. Williar v. Irwin, ii Biss. (U. 
S.) 57. 30 Fed. Cas. No. 17,761; 
Dows V. Glaspel, 4 N. D. 251, 60 
N. W. 60. 

In Waite v. Frank, 14 S. D. 626, 
86 N. W. 64s, the circumstances that 
a broker and his client resided in 
the same town, and that the broker 
was fully acquainted with the client's 
financial condition and knew that he 
could not make payment for the 
amount of commodities which he or- 
dered purchased, and that he was 
not a shipper of such commodities 
nor interested in any business re- 
quiring their use, were held to sus- 
tain a finding that the broker had no 
intention of making deliveries of the 
commodities purchased, but did in- 
tend a settlement of differences. 
First Nat. Bank of Lyons v. Oska- 
loosa Pack. Co., 66 Iowa 41, 23 N. 
W. 25s. 

To tcharge grain brokers with 
knowledge that a client, ordering 
purchase and sales to be made for 
future delivery, intended to gamble, 
the fact that at the time the brokers 
made contracts for the client he was 
behind with his margins and was be- 
ing pressed by them for money to 
make his margins good, should be 
considered by the jury. Mohr v. 
Miesen, 47 Minn. 228, 49 N. W. 862. 

51. Mohr z'. Miesen, 47 Minn. 
228, 49 N. W. 862. 

In Rumsey v. Berry, 65 Me. 570, it 
was held by practically an evenly di- 
vided court that the circumstance 
that a client of Chicago grain brokers 
lived in Bangor and had no wheat of 
his own, though making it appear 



" singular and even suspicious " that 
he should undertake to sell and de- 
liver ten thousand bushels of wheat 
in Chicago, was an immaterial cir- 
cumstance so far as the validity of 
the contract, or the broker's knowl- 
edge of the client's intent, was con- 
cerned; the dissenting judges re- 
garding this circumstance, with 
proof that the client furnished the 
brokers with a margin which he 
failed to keep good, as sufficient evi- 
dence to go to the jury on the ques- 
tion of the intent of the parties to 
gamble. 

52. Mohr v. Miesen, 47 Minn. 
228, 49 N. W. 862; Williar v. Irwin, 
II Biss. (U. S.) 57, 30 Fed. Cas. 
No. 17,761. 

In Dows V. Glaspel, 4 N. D. 251, 
60 N. W. 60, in speaking of the 
proof on the issue of commission 
merchants' knowledge of their cli- 
ent's intention to gamble in grain 
transactions, the court said: "The 
defendant was a lawyer, as plaintiff 
well knew. Why was he buying 
thousands of bushels of wheat for 
future delivery, and then closing out 
the transaction in a short time ? " 
So, conversely, it may be shown that 
the client was producing the com- 
modity sold. Forsyth Mfg. Co. v. 
Castlen, 112 Ga. 199, 37 S. E. 485. 

53. Jamieson v. Wallace, 167 111. 
388, 47 N. E. 762. And see Wagner 
V. Hildebrand, 187 Pa. St. 136, 41 
Atl. 34; Phelps V. Holderness, 56 
Ark. 300, 19 S. W. 921 ; Wheeler v. 
McDermid, 36 111. App. 179. 

54. Dows V. Glaspel, 4 N. D. 251, 

Vol. VI 



184 



GAMING. 



h. Broker's Statements and Accounts. — A broker's statements 
and accounts have been held evidence to show the legaHty of a trans- 
action or to cast suspicion upon it.^^ 

i. Correspondence. ■ — Correspondence between a broker and his 
client, couched in the language of illicit speculation, is evidence of 
gambling.^" 

j. Method and Appliances of Broker's Business. — And the 
method and appliances of a broker's business may be indicative of 
the illegal character of transactions had with him.^' 



60 N. W. 60; Melchert v. American 
Union Tel. Co., 11 Fed. 193. 

As bearing on grain broker's 
knowledge that the client ordering 
purchases and sales to be made for 
future delivery intended to gamble, 
the fact that immediately after clos- 
ing the deals the broker treated the 
transaction as at an end, and instead 
of charging the client with the pur- 
chase of grain sent him statements 
charging or crediting him, as the 
case might be, with the differences 
between the purchase and sale price, 
should be considered by the jury. 
Mohr V. Miesen, 47 Minn. 228, 49 
N. W. 862. 

55. Lowry v. Dillman, 59 Wis. 
197, 18 N. W. 4. 

In Winward v. Lincoln, 23 R. I. 
476, 51 Atl. 106, the circumstance 
that a broker's client was credited 
on the former's books with the divi- 
dends on stocks purchased for him, 
was regarded as evidence of the 
actuality of the purchases, the court 
saying that it seemed quite improb- 
able that this would have been done 
had no purchases in fact been made, 
and in the same case the court also 
said : " Another circumstance shown 
by the account seems to us remark- 
able, if it represented fictitious trans- 
actions. The final sale was on De- 
cember 21 St, entered on Monday, the 
23rd. There were ninety shares of 
St. Paul sold — fifty at 62, and forty 
at 61%. If the contract had been to 
close out marginal stock at market 
quotations, the closing quoted prices 
for the day would have fixed the 
market price for the whole." 

56. In Wheeler v. McDermid, 36 
111. App. 179, letters by a grain 
broker to his client, saying: "You 
insisted on trading in such large 
amounts that we were obliged to 

Vpl, yj 



urge some closing of it to prevent 
our making a loss." "We trusted 
you, or rather I trusted you, be- 
cause your trades would have been 
closed out when the margins ex- 
pired had it not been for me," and 
" You know, of course, you can sell 
at any time and draw your profits 
and margins as soon as sold," were 
said to be not apt for describing a 
real transaction, but exactly the re- 
verse. 

In Dows V. Glaspel, 4 N. D. 251, 
60 N. W. 60, on the issue of com- 
mission merchants' knowledge of 
their client's intention to gamble in 
grain transactions, the court re- 
ferred to correspondence in which 
the client distinguished between his 
" actual wheat account " and his 
"option account," and in which the 
commission merchants advised the 
client to close out wheat bought for 
future delivery and buy it back 
cheaper, as furnishing strong evi- 
dence of such knowledge. 

57. Crawford v. Spencer, 92 Mo. 
498, 4 S. W. 713, I Am. St. Rep. 745. 

In Ballou v. Willey, 180 Mass. 
512, 62 N. E. 1064, the fact that the 
defendant maintained an " ex- 
change " on a shopping street for 
the purpose of enabling women to 
watch the stock market and specu- 
late thereon, and that there was tele- 
phonic communication between liv- 
ing-rooms in the hotel, where there 
was a "ticker," and defendant's of- 
fice, were referred to as circum- 
stances tending to show that de- 
fendant had reasonable cause to be- 
lieve that plaintiff did not intend to 
carry out her contract, the court say- 
ing that they might be "considered 
fairly, if unexplained, as trade tools 
or appliances, justifying . . . 
such inferences as are drawn in an- 



GAMING. 



185 



k. General Character of Broker's Business. — But evidence of the 
illegal nature of transactions between a broker and other customers 
is inadmissible to characterize those had between him and a particu- 
lar client.** 

2. Recovery of Money Wagered. — A. Actions by Winner. 
a. Burden of Proof. — It is incumbent on a party suing to recover 
winnings on a gambling transaction to prove facts taking the case 
out of the general rule that courts will not aid parties to gambling 
contracts.^" On the other hand, where the defense that the obliga- 
tion sued on and fair on its face was given for a gambling debt is 
sought to be established, the proof on the part of the defendant must 
be clear and strong ;'" and evidence from which it may be imagined 
or suspected merely that the obligation originated in gambling 
transactions is insufRcient.*^ 

'It has been held, however, that an indorsee, suing on a non- 
negotiable certificate of deposit averred by the defendant to have 
been originally transferred in settlement of a gaming debt, must 
negative the fact of the gambling transaction in order to have any 
standing in court.'^ 

b. Evidence Relevant to Defense of Wagering Transaction. 
Where an action on a note is defended on the ground that it was 
given for a gambling consideration, evidence that the payee had the 



other class of cases from the use of 
beer pumps, or the possession of 
liquor glasses containing heeltaps." 
58. In Edwards v. Hoeffinghoff, 
38 Fed. 635, the court permitted the 
books of a commission merchant, 
exhibiting transactions between him 
and third persons, to be examined by 
the jury to aid them in determining 
whether there was anything excep- 
tional in selling wheat for cash, and 
whether the absence - of entries 
showing such transactions tended to 
show that the commission merchant 
was not conducting a legitimate 
business. See also Gregory v. Wen- 
dell, 40 Mich. 432. 

And in Staninger v. Tabor, 103 
111. App. 330, which was an action 
to recover money lost in speculating 
in produce, evidence of defendants' 
deals with other customers than 
plaintiff was held admissible to show 
that defendants were running a 
"bucket shop," and that no grain or 
provisions were ever received or de- 
livered. 

59. Thus in an action by a client 
against a broker to recover profits 
niad« on a wagering contract for the 
future delivery of produce, it is in- 



cumbent on the plaintiff to show 
affirmatively that the money was paid 
to the broker by some third person ; 
and the fact that the defendant held 
himself out as a broker, and may 
have ostensibly contracted as such, 
is insufficient tO' prove that in the 
particular transaction in question he 
had a principal who paid him monev 
for the plaintiff. Floyd v. Petter- 
son, 72 Tex. 202, 10 S. W. 526. 

60. Pixley v. Boynton, 79 111. 351 ; 
Johnson v. Godden, 33 Ark. 600. 

But in McCormick v. Nichols, 19 
111. App. 334, it was held that an in- 
struction that the defense of a gam- 
bling consideration pleaded in an ac- 
tion of assumpsit must be " clearly 
proven by a preponderance of the 
evidence " was properly refused, the 
court saying " A criminal offense was 
not necessarily, nor in fact, imputed 
to the plaintiffs, but we hold that as 
against them it was sufficient to prove 
a gambling contract ... by the 
measure of evidence generally re- 
quired in civil actions." 

61. West V. Marquart, 78 111. 
App. 61. 

62. Savings Bank of Kansas v. 
National Bank of Commerce, 38 
Fed. 800. 



Vol. VI 



186 



GAMING. 



general character of a gambler is inadmissible.^' But evidence that 
he was in truth and fact a gambler is properly admitted.'* 

In an action on a note in the handwriting of a professional 
gambler, and executed by the maker while drunk, evidence that 
whenever he was in that condition he had a propensity to gamble is 
not admissible for the defense."^ 

B. Actions by Loser. — a. Presumptions and Burden of Proof. 
In an action to recover money lost in gambling, the defendants will 
be presumed to have known that they were receiving money which 
the owner could recover if he chose.'* In such an action, the bur- 
den of proof is on the plaintiff to establish his case by a preponder- 
ance of the testimony." 

Matters Material to Be Shown. — It is sufficient for plaintiff to show 
the aggregate amount of his losses or their excess over his winnings 
between specified dates, without proving the amount and date of 
each particular loss, or the particular agent to whom each sum was 
paid.®* It is not material in whose name the money lost was paid 
or deposited.'* 

Where suit is brought to recover money paid on a note given for 
a loss at gaming, the burden is upon the plaintiff to show the fact of 
payment, and the amount paidJ" 



63. Chambers v. Simpson, 3 Litt. 
(Ky.) 290. But in Fowler v. Chap- 
man, I W. & W. Civ. Cas. Ct. App. 
(Tex.), §963, evidence of the payee's 
reputation as a gambler was held 
admissible to prove that the trans- 
feree of a check had notice, when he 
obtained it, of its illegality. 

64. Chambers v. Simpson, 3 Litt. 
(Ky.) 290. 

65. Thompson v. Bowie, 4 Wall. 
(U. S.) 463. In this case the court 
said: "All evidence must have rel- 
evancy to the question in issue, and 
tend to prove it. If not a link in 
the chain of proof, it is not properly 
receivable. Could the habit of B. 
to gamble, when drunk, legally tend 
to prove that he did gamble on the 
day the notes were executed? . . . 
That B. gambled at other times, 
when in liquor, was surely no legal 
proof that because he was in liquor 
on the first day of January, 1857, he 
gambled with S. It is very rare that 
in civil suits the character of the 
party is admissible in evidence, and 
it is never permitted, unless the na- 
ture of the action involves or directly 
affects the general character of the 
party. B. was not charged with 
fraud, nor with any eiction invplving 

Vol. VI 



moral turpitude. He was simply en- 
deavoring to show that his own ne- 
gotiable paper was given for money 
lost at play; and to allow him as 
tending to prove this to give evidence 
of his habit to gamble when drunk, 
would overturn all the rules estab- 
lished for the investigation of truth." 

66. Parker v. Otis, 130 Cal. 322, 
62 Pac. 571, 927. 

67. Perry v. Gross, 25 Neb. 826, 
41 N. W. 799. 

68. Lear v. McMillen, 17 Ohio St. 
464. 

But where a statute authorizes the 
recovery of money lost at gaming by 
a person who " shall, at any time or 
sitting," lose a sum amounting in 
whole to $10, the plaintiff must prove 
a loss of $10 at some one time or 
fail in his case. Ranney v. Flinn, 60 
111. App. 104. 

69. Harnden v. Melby, go Wis. %, 
62 N. W. 53S. 

70. Buckley v. Saxe, 10 Mich. 
328, in which it was also held that 
the mere production of the note by 
the plaintiff would not be evidence 
either of payment or the amount 
paid, since plaintiff's possession of 
the instrument is as consistent with 



GAMING. 



187 



Money Wagered on Horse-Uaces. — In an action to recover money 
lost on a horse-rac€, it is immaterial whether the race was properly 
conducted, who was the winner, or who promoted the contest-'^ 

b. Competency and Relevancy of Evidence. — Checks, drawn by 
the loser, to obtain, as he testifies, money afterward lost at gaming, 
are admissible in his action to recover it, as tending to corroborate 
him to the extent of showing that at that time he had money 
with which to gamble.'^ 

Evidence in defense of an action to recover money lost on a 
wager, that part of that staked was counterfeit, is admissible, 
though the defendant does not produce the counterfeit notes.''' 

In an action against a stakeholder for money paid over on a 
wager after notice not to do so, one of the plaintiffs is a proper 
witness to prove such notice, though the wager was made by his 
co-plaintiflE, he being an undisclosed principal^* 

II. CRIMINAL RESPONSIBILITY. 

1. General Rules. — A. Circumstantial Evidence. — In crim- 
inal prosecutions for violations of the laws against gambling, a 
conviction may be had on circumstantial evidence alone.'"' 



the presumption that it was surren- 
dered to him because void, as that 
it was given up upon payment. 

71. Perry v. Gross, 25 Neb. 826, 
41 N., W. 799. 

Where a statute authorizing an ac- 
tion by the loser pf money at gaming 
excepts money or property lost on 
any " turf race," the plaintiff, in such 
action, having shown that he lost his 
horse in a horse-race, must negative 
the possibility that it was a "turf 
race." Nelson v. Waters, 18 Ark. 



Kizer v. Walden, 96 111. App. 



570. 
72. 

593. 

73. App V. Coryell, 3 Pen. & W. 
(Pa.) 494. But the court said that 
the defendant's refusal to produce 
notes was a strong circumstance to 
rebut the evidence that they were 
counterfeit. 

74. Turner v. Thompson, 21 Ky. 
L. Rep. 1414, ss S. W. 210. 

75. Rice V. State, 10 Tex. 545; 
Com. V. Warren, 161 Mass. 281, 37 
N. E. 172; Padgett v. State, 68 Ind. 
46. In a prosecution for keeping a 
gambling-house, evidence from which 
the jury may infer the fact that de- 
fendant was a keeper is sufficient, 
since from the nature of the thing 



positive proof on the part of the state 
can neither be expected nor re- 
quired. State V. Worith, R. M. 
Charlt. (Ga.) 5. 

In Roberts v. State, 25 Ind. App. 
366, 58 N. E. 203, which was a pros- 
ecution for visiting a gambling- 
house, certain circumstantial evidence 
was held to warrant the inference 
that the room where defendant was 
found was a gambling-room, not- 
withstanding the direct testimony of 
the persons found there that no gam- 
bling was being carried on, the court 
saying : " If .it was necessary to es- 
tablish the fact by direct and positive 
evidence, the state has wholly failed. 
But such is not the law. It often oc- 
curs in prosecutions for the violation 
of criminal statutes, that it is impos- 
sible to establish the defendant's 
guilt by direct and positive evidence, 
and, if the state did not have resort 
to other means of proof, the guilty 
would go unpunished. . . . Cir- 
cumstantial- evidence is one of the 
means of establishing the fact in dis- 
pute." See also Need v. State, 25 
Ind. App. 603, s8 N. E. 734. 

On a prosecution for keeping a 
gambling-house, evidence that de- 
fendant was seen in certain rooms 
dealing cards at faro, that the room.-, 

Vol. VI 



188 



GAMING. 



B. Expert and Opinion Evidence. — Though a witness who 
saw a game may testify in general terms what it was, expert evi- 
dence that certain acts constitute a gambling game is not admis- 
sible f" and testimony that the witness supposed defendant was the 



were kept and used as common 
gambling-rooms, that defendant had 
charge of them, and that whenever 
any questions arose about the games 
played there disputes were referred 
to him for settlement, is sufficient to 
warrant an inference that the gam- 
bling there carried on was for money 
or other valuable things, and will 
support a conviction, though explicit 
testimony to that effect was not 
given. Robbins v. People, 95 111. 175. 

iln a prosecution for renting a 
house to be used for gaming, the 
illegal purposes for which the lease 
was made need not be shown by di- 
rect evidence. Rodifer v. State, 74 
Ind. 21. At least, where there is a 
statute providing that it shall be suf- 
ficient evidence of the unlawful pur- 
pose, if gaming is actually carried 
on in the building and the owner or 
lessor knows or has reason to be- 
lieve that such is the fact and does 
not prevent it. Voght v. State, 124 
Ind. 358, 24 N. E. 680. 

76. People v. Rose, 85 Cal. 378, 24 
Pac. 817; People v. Gosset, 93 Cal. 
641, 29 Pac. 246; People v. Carroll, 
80 Cal. 153, 22 Pac. 129. In this last 
case, the court said : " We do not 
concur in the view, however, that 
one witness can describe the game, 
and another can be allowed to testify 
that, from the description, the game 
was a banking game, or any other. 
We think a person who knows the 
game may testify in general terms 
what the game he witnessed was. 
If not familiar with the game, he 
may describe it, and the court should 
instruct the jury as to what consti- 
tutes the game charged to have been 
played or conducted, leaving the 
jury to determine whether the game 
played was the one charged or not. 
To leave the question open to be 
proved or disproved in every case by 
experts would lead to great uncer- 
tainty in the administration of jus- 
tice." But in this case it was held 
not a ground for reversing a convic- 
tion of gambling, that a witness had 

Vol. VI 



been permitted to define a " banking 
game," the definition being substan- 
tially correct, and such as the court 
should have given in its instructions. 
In People v. Sam Lung, 70 Cal. 
515, II Pac. 673, the court said: 
" The testimony of the witnesses 
Carrow and Nesbit was not expert 
testimony in the proper sense of such 
term. One of them was called, who 
testified in effect that, he saw the de- 
fendant conducting a certain game 
for money or its equivalent, and de- 
scribed it before the jury; the other 
witness was called, who had illus- 
trated to him the game which was 
shown before the jury. He said: 
' That is the game of tan.' This did 
not take away from the jury the de- 
termination of the material thing at 
issue — that is, whether or not the de- 
fendant had carried on or conducted 
such a game for money as that illus- 
trated by one witness, and identified 
as being a certain kind of a game by 
another witness. A given individ- 
ual may have witnessed the playing 
of some ordinary game of cards for 
money but twice or thrice in his life, 
and heard the players denominate it 
by its proper name, and yet he may 
be able readily (when he has such 
a game as he formerly observed il- 
lustrated before him) to declare that 
such game is the game he formerly 
saw played; and in such recollection 
or identification no special skill or 
science is a necessary ingredient. 
And such evidence is entirely proper, 
and may sometimes be all that can 
be had in a given case upon a special 
point. The evidence given was com- 
petent and pertinent to the issue; of 
its force the jury alone were the 
judges." 

But in Com. v. Adams, 160 Mass. 
310, 35 N. E. 851, which was a pros- 
ecution for being present in a com- 
mon gaming-house when gambling 
implements were found there, the 
court said: "The witness O. was 
properly permitted to testify as an 
expert, It is not to be assumed that 



GAMING. 



189 



banker in a gambling game from the position he occupied at the 
table has been excluded as opinion evidence.''' 

C. Proof of Value;. — It will be presumed that things bet at 
a gambling game were of some value/' and courts will take judicial 
notice that money used in gambling has value/* so that fact need not 
be proved.'" So a jury may infer that tokens used in play at a 
gaming table represented money or something of value.'^ Still the 
fact that such tokens represented different denominations of money 
may be proved, the fact being material and relevant.'^ 

D. Evidence of Other Offenses — Evidence of other offenses 
or of convictions thereof is generally inadmissible,'^ but where such 



the jury were acquainted with the 
mode of playing an unlawful game, 
and the presiding justice might al- 
low the witness to testify to his spe- 
cial knowledge, derived from playing 
the game more than one thousand 
times during a period of ten years, 
although the last occasion was more 
than a year before the trial, and there 
had since been changes and altera- 
tions in the game of which the wit- 
ness knew only by hearsay. Even if 
he testified on the strength of infor- 
mation which he had not personally 
verified, such testimony might be ad- 
missible." The testimony of the 
witness, or the issue on which it 
was offered, is not disclosed in the 
opinion. See also Hall v. State, 6 
Baxt. (Tenn.) 522. 

So in a prosecution for selling 
" lottery policies," under a statute 
containing no definitions of the 
terms, and the papers themselves not 
being before the court, it has been 
held competent to show by one who 
has familiarized himself with such 
documents, precisely what is known 
among those who use them, as a 
" lottery policy." People v. Emer- 
son, 25 N. y. St. 466, 6 N. Y. Supp. 
274. 

77. People v. Ah Own, 85 Cal. 
580, 24 Pac. 780. 

78. Simms v. State, 60 Ga. 145. 
Grant v. State, 89 Ga. 393, 15 



79. 

S. E. 

80. 

81. 



Mallory v. State, 62 Ga. 164. 

In order to convict for bet- 
ting at faro, it is not necessary to 
prove that defendant wagered some 
particular piece of coin, it being suf- 
ficient to show that he bet small 
pieces of silver money, the denomi- 



nation or legal character of which 
the witness did not know. State v. 
Douglass, I Mo. 527; Stevens v. 
State, 3 Ark. 66; but see contra, 
State V. Brooks, 94 Mo. App. 57, 67 
S. W. 942. 

82. And the state may prove gen- 
erally, in chief, that poker-chips, 
such as defendant had, commonly 
represented money in gambling, leav- 
ing the source and extent of the wit- 
ness' knowledge to be tested upon 
cross-examination. Wilson v. State, 
113 Ala. 104, 21 So. 487. 

83. Thus in a prosecution for 
gambling it is error to ask defendant 
on cross-examination whether he 
ever before played cards for money. 
State V. Trott, 36 Mo. App. 29. In 
this case the court said : " The 
question thus put to the witness by 
the state's attorney was not only not 
pertinent to the witness' direct exam- 
ination, or to the issues, but it was 
inadmissible as evidence against him 
on any theory, and it thrust into the 
minds of the jurors an irrelevant 
matter which was highly prejudicial 
to the accused." 

So in a prosecution for keeping 
and exhibiting a gaming-table, evi- 
dence that defendant had often been 
seen gambling, that he and his partner 
kept a gambling-house, and that de- 
fendant had frequently played poker, 
is irrelevant and inadmissible. Ah 
Kee V. State (Tex. Grim.), 34 S. 
W. 269. 

And in a prosecution for playing 
cards in a public place, evidence that 
defendant had been previously con- 
victed of gambling is not competent. 
Goldstein v. State (Tex. Grim.), 35 
S. W. 289. 

Vol. VI 



190 GAMING. 

evidence illustrates, explains or corroborates the previous proof it 
is admissible.*^ 

2. Evidence in Particular Cases. — A. Prosecutions i^or Gam- 
bling. — a. Presumptions, Burden of Proof and Matters to be 
Proved. — (l.) in General. — In conformity no doubt to the usual 
presumption of innocence, it has been held in a criminal prosecution 
for dealing in options, that telegrams from the defendant to the 
firm with which he was charged to have dealt unlawfully, but 
which were within the lines of his legitimate business, would be 
presumed to relate to lawful business matters.*^ 

And yet it has also been held in a prosecution for betting at a 
gaming table that if it were material to make out the offense, the 
keeper of the table would be presumed to have known of and con- 
sented to the gambling.*' 

The nature of the game is the important element, and its name 
is immaterial.*^ It is sufficient to show that defendant, with others, 
played at cards for money, without explaining the character of the 
game, or which of the players lost or won.** 

Thoug'h in a prosecution for betting money on an alleged gaming 
table, the character of the table must be shown, proof of a single 
instance of unlawful playing, even by the defendant himself, is 
sufficient for that purpose.** 

(2.) necessity of Showiner Wager. — In a prosecution for gambling, 
the state must show that defendant bet money or some other thing 
of value.*" And this must be proved beyond a reasonable doubt."^ 

84. Thus in a prosecution for 90. Thompson v. State, gg Ala. 
keeping a gaming-house, evidence of 173, 13 So. 753. 

other acts than the one relied on as But in a prosecution for betting at 
constituting the offense is admissible a pool-table it seems that the money 
for the purpose stated in the text. or thing bet must have been in ex- 
Toll V. State, 40 Fla. 566, 23 So. 942. cess of the charge for the use of 

And in a prosecution for selling the table, and the mere statement of 

lottery tickets, evidence that defend- a witness that defendant bet at a 

ant, for a period of time covering game is insufficient to show this. 

the particular offense charged, had Bone v. State, 63 Ala. 185. 

been engaged in the lottery business, 91. Russ v. State (Ala.), 35 So. 

is relevant. People v. Noelke, 94 107. 

N. Y. 137. In Moss v. State, 17 Ark. 327, the 

So where the defendant has affirmative testimony of one witness 
pleaded guilty to violating an ordi- to an act of betting was held suf- 
nance, that fact may be shown on the ficient as against that of another wit- 
trial of an indictment for an offense ness that he was present and saw no 
consistmg of the same acts. Bibb bet made, the court saying that tes- 
V. State, 83 Ala. 84, 3 So. 711. timony of the latter witness was of 

85. State v. Gritzner, 134 Mo. a negative character, which did not 
512, 36 S. W. 39. counterpoise that of the witness for 

86. Ramey v. State, 14 Tex. 409. the state, but that the jury had a 

87. Smith V. State, 17 Tex. 191. P^''^^'=' ^'^ht to discredit the state- 
00 A ij Oi i ,,- /-I »„/: ments of one and found their ver- 

88. Arnold v. State, 117 Ga. 706, jict upon those of the other. 

45 b. h.. 59. „ ^ In Tatum v. State, 33 Fla. 31 r, 14 

89. Ramey v. State, 14 Tex. 409. So. 586, a conviction of gambling 
Vol. VI 



GAMING. 



i9i 



So it must be shown that defendant himself did the betting."" It 
i.= also necessary to show that other persons were present besides 
defendant who played and bet on the game."'' 

It seems that it is unnecessary to prove the actual payment over 
to defendant of money won by him at the gaming for which he 
is prosecuted."* 

b. Competency and Relevancy of Evidence. — The articles used 
in gambling are admissible to aid in illustrating the kind of game, 
and also as part of the res gestae.^^ 

Where one witness has testified to the commission of the 
ofifense by the defendant, the evidence of another that he saw 
defendant at the place where the gambling occurred is admissible 
in corroboration, though the latter witness did not see defendant 
play.»» 

On a prosecution for betting on an election parol evidence is 
admissible to show that one of the persons on whom the wager was 
placed was a candidate."^ 

c. Testimony of Accomplice. — The general rule that a conviction 
of a criminal offense cannot be had on the uncorroborated testimony 
of an accomplice obtains in prosecutions for gaming,'* but the 
views of the court as to what constitutes an accomplice vary 
widely."* 



was sustained on the evidence of a 
witness who testified that he saw 
some money on the ground where' 
defendant and others were playing 
cards, but did not know whether they 
were betting or not. But see Oder 
V. State, 26 Fla. 520, 7 So. 856. 

92. Jackson v. State, 117 Ala. 155, 
23 So. 47. 

Evidence that defendant was play- 
ing poker when a pool was up war- 
rants the conclusion that he put up 
his money, though there is no direct 
proof to that effect. Cohen v. State, 
17 Tex. 142. 

The fact that defendant has not 
paid for the chips with which he 
gambles at poker is immaterial. 
Robinson v. State, 77 Ga. loi. 

For an instance of evidence held 
sufficient to warrant the inference by 
the jury that defendant bet money 
on a game of "craps," see Thomp- 
son V. State, 99 Ala. 173, 13 So. 753. 

93. Thompson v. State, 99 Ala. 
173. 13 So. 7S3. 

94. BranAum v. State, 7 Ind. 503. 

95. People v. Sam Lung, 70 Cal. 
SIS, II Pac. 673. In this case the 
game in question was " tan," and the 



articles used in carrying it on were 
styled the " layout." 

96. Washington v. State (Tex. 
Crim.), so S. W. 34i- 

97. Brand v. Com., 23 Ky. L. Rep. 
416, 63 S. W. 31. 

98. Bird v. State, 36 Ala. 279. 
But in Grant v. State, 89 Ga. 393, 

IS S. E. 488, which was a prosecu- 
tion for gambling, the court says 
that th^ uncorroborated testimony of 
an accomplice is sufficient to warrant 
a conviction of a misdemeanor. 

In Texas it is provided by statute 
(Penal Code, Art. 367) that a con- 
viction for gaming may be had on 
the unsupported evidence of an ac- 
complice or participant, and this stat- 
ute has been sustained as constitu- 
tional. Wright V. State, 23 Tex. 
App. 313, S S. W. 117. And see ar- 
ticle " Accomplices," Vol. I. 

99. _ Thus it has been held that a 
participant in a game of cards is an 
accomplice of his adversary. David- 
son V. State, 33 Ala. 350. 

But it has also been held that one 
who bets at a game of pool with 
others, the players betting with and 
against each other, is not an accom- 

Vol. VI 



192 



GAMING. 



B. Prosecutions por Gaming at Particui^ar Place. — a. Biir- 
den of Proof and Matters to be Proved. — (1.) Fact of Bet. — In a 
prosecution for playing cards in a public house, it has been held 
unnecessary for the state to show that anything was bet on the 
game, the fact that no wager was made being a matter of defense 
which the defendant must affirmatively establish.^ 

(2.) Character of Place. — In a prosecution for playing cards in a 
pubHc place the state must show the place to have been such as the 
general public had access to for business, pleasure, religious worship 
or other public purpose.^ 



plice of the others. Stone v. State, 
3 Tex. App. 675. In this case the 
court said : " There is not that one- 
ness of intent and oneness of of- 
fense between them to make them 
principals. No one of them is aiding 
or assisting another by acts or en- 
couraging by words in the commis- 
sion of the offense. Each acts in- 
dependently for himself against the 
others, and without concert medi- 
ately or immediately with the other 
betters. . . Each one, as he 
takes part in the game and bets 
money on it, is guilty of a separate 
offense." And in Branscum v. 
State, 7 Ind. 593, a conviction of 
gambling seems to have been sus- 
tained on the uncorroborated testi- 
mony of the defendant's adversary in 
the game, the question of corrobora- 
tion not having been raised. 

It has been held that one who 
plays without participating in the 
betting is not an accomplice. Bass v. 
State, 37 Ala. 469, and, contra, that 
a dealer in a game of stud-poker is 
an accomplice with those who bet 
at the game, though he does not bet 
himself and receives no compensa- 
tion or share of the profits. State 
V. Light, 17 Or. 358, 21 Pac. 132. 
But it seems that one who partici- 
pates in the betting, sharing the 
gains and losses of a player and ad- 
vancing money to him to be used 
in wagers on the game, is an accom- 
plice of the player, though he does 
not play himself. English v. State, 
3S Ala. 4:28. 

Merely assisting a player who 
does not understand the game, by 
instructing him from time to time 
how to play, occasionally taking a 
card from his hand and throwing it 
on the table for him, and in one in- 

Vol. VI 



stance, during the player's momen- 
tary absence, playing one of his 
cards for him, is insufficient to con- 
stitute an accomplice. Smith v. 
State, 37 Ala. 472. 

In Day v. State, 27 Tex. App. 143, 
II S. W. 36, it was held that a wit- 
ness who had engaged in playing 
" craps " during the night on which 
defendant had also played, was not 
an accomplice to an extent that 
would exclude his testimony in de- 
fendant's behalf, under a statute 
making persons indicted as accom- 
plices incompetent witnesses for the 
principal defendant. 

One who purchases a. lottery ticket 
for the purpose of detecting and pun- 
ishing the crime of selling the same 
is not an accomplice of the seller, 
since he lacks the criminal intent. 
People V. Noeike, 94 N. Y. 137. 
And see also. People v. Emerson, 
S3 Hun 437, 6 N. Y. Supp. 274, 
where such a purchaser was held not 
an accomplice of the seller because 
the statute did not make the pur- 
chase of a lottery ticket a criminal 
act. 

1. Wilcox V. State, 26 Tex. 146. 

2. But a house to which all who 
wish can go night or day and in- 
dulge in gaming is a public place, 
though it is also otherwise used and 
entrance can be obtained only by 
permission and after surveillance. 
Smith V. State, 52 Ala. 384. The 
playing must be shown to have taken 
place at the time when the house 
was accessible to the public, and 
proof that it occurred at night when 
the house was closed for its regular 
business is insufficient. Turbeville 
V. State, 37 Tex. Crim. 145, 38 S. 
W. loio. But a mere temporary 
closing for the purposes of the game 



GAMING. 



193 



Propinquity to Public Place. — In Alabama, in a prosecution for 
playing cards in a public place, the same being an upper room in 
a house occupied below for business purposes, it has been held that 
the house is prima facie an entirety, a presumption which is not 
overthrown by evidence of mere non-user, or by use zs a storeroom 
for waste material.^ But in Texas this idea of entirety, which for- 
merly prevailed, is now overthrown; and some business connection 
must be shown between the portion of the building used for busi- 
ness purposes and that in which the gaming occurs.* Nor will 
it be presumed that the proprietor of the business establishment 
had control over rooms in the building not connected with his own." 
Proof, however, that the room in which the playing occurred was 
in any manner connected with or used for the purposes of the 
business established is sufficient.* 

In a prosecution for playing cards in a public place, proof of 
playing within view of a public place sufiSciently makes out the 
state's case.^ 

b. Competency and Relevancy of Evidence. — In a prosecution 
for playing cards at a gambling-house, evidence that gamblers were 



will not defeat a conviction. Gom- 
precht V. State, 36 Tex. Crim. 434, 
37 S. W. 734- 

Where the prosecution is for 
playing cards at a store, the state 
need not prove that the proprietor 
sold his goods to all persons in gen- 
eral, the presumption being that 
merchants sell to all who choose to 
become their customers. Redditt v. 
State, 17 Tex. 610. 

In a prosecution for playing cards 
at a gambling-house, it must be 
shown that gaming was carried on 
there as a business and the house 
devoted to that purpose. Anderson 
V. State (Tex. App.), 12 S. W. 868. 
Card-playing on but one occasion 
when no one is present but those con- 
cerned in the game will not show the 
place to be one where people resort. 
Wheelock v. State, 15 Tex. 260. 

3. Cochran v. State, 30 Ala. 542. 

4. In O'Brien v. State, 10 Tex. 
App. 544, the court said : " If de- 
fendant used the room in connection 
with his beer saloon, or the business 
carried on in the saloon; if he had 
sent drinks into the room to the 
players, thus using it in connection 
with and in aid of his business, the 
allegation that it was a beer saloon 
would be sustained. The learned 
judge must have fallen into the 
opinion of the Supreme Court in 

13 



Cole V. State, 9 Tex. 42; Pierce v. 
State, 12 Tex. 210; Redditt v. State, 
17 Tex. 610. In these cases it was 
held that a house for retailing spir- 
ituous liquors included the whole 
house, from cellar to garret, regard- 
less of approaches. These cases have 
been overruled, and now the room in 
which the game is played must be 
shown to have the inhibited charac- 
ter. It is not necessary that it is in 
the main business room; if it be 
auxiliary to or used in connection 
with the business of the principal 
room, this will suffice. Holtzclaw 
V. State, 26 Tex. 682; Horan v. 
State, 24 Tex. i6i." 

5. Holtzclaw V. State, 26 Tex. 
682. And see Robinson v. State 

(Tex. App.), 19 S. W. 894; Steb- 
bins V. State, 22 Tex. App. 32, 2 S. 
W. 617. 

6. Watson v. State, 13 Tex. App. 
160. 

But in a prosecution for playing 
cards at a house where spirituous 
liquors are retailed, evidence that 
liquors were served from the saloon 
to the players in the room where the 
gaming occurs establishes a suf- 
ficient connection. Stebbins v. State, 
22 Tex. App. 32, 2 S. W. 617. 

7. White V. State, 39 Tex. Crim. 
269, 4S S. W. 702. 

But proof of playing in a hollow 

Vol. VI 



194 GAMING. 

ill the habit of resorting to the house is admissible as tending to 
show its character.* 

So evidence that lights were seen at different times in a house 
is admissible to prove that people commonly resorted there," and 
evidence that whisky was sold at a certain place is admissible to 
show public patronage thereof.^" 

In a prosecution for gaming at a place other than a private 
residence, evidence of the particular place where the ofifense 
occurred may be introduced.^^ Evidence of a group of persons 
playing cards where and when the offense was charged to have 
been committed is admissible in corroboration, though defendant 
was not recognized by the witness.^^ 

C. Prosecution for Being a Common Gambi,er. — Compe- 
tency AND Relevancy of Evidence. — On a prosecution for being 
a common gambler, evidence of the defendant's reputation is im- 
proper," but evidence of a single act of gaming by the defendant 
is admissible." 

D. Prosecutions for Keeping or Permitting Gaming-house 
OR Device. — a. Burden of Proof and Matters to be Proved. 
(1.) In General. — The general irule that in a criminal case guilt must 
be established beyond a reasonable doubt has been extended to an 
action to recover from a railroad company a penalty for suffering 
gaming on its cars — the action being, in effect, a criminal prose- 
cution.^' In a prosecution for keeping a gambling-room, the names 
of the persons who gamble at the place are immaterial, ^° and like- 
wise, in a prosecution for exhibiting a gaming-table, it is imma- 

more than a hundred yards from a said : " It is the general course of 

public place, and not in view there- conduct in pursuing the business or 

from, nor from which the public place practice of unlawful gaming which 

may be seen, and where no one has constitutes a common gambler. A 

played before, is insufficient. Smith ^an's character is, no doubt, formed 

V. State, 23 Ala. 39. ]i,y ^^^ results from his habits and 

8. Anderson v. State (Tex. practices; and we may infer, by 
App.), 12 S. W. 868, in which it was, proving his character, what his hab- 
however, held that evidence that one its and practices have been. But we 
of the players who played with de- j^ n^j know any principle of law 
fendant was a professional gambler ^j,;^,^ sanctions the introduction of 
was immaterial and irrelevant, bee .. , ..i-i^, ,>. r 
also Washington v. State (Tex. evidence to estabhsh the character of 
Pn'm 1 cn <? v^T lA-r *"e accused with a view to convict 
Crim.; so b. W. 341. him of offending against the law 

9. Moore v. State, 35 Tex. Cnm. upon such evidence alone." 

74-31 S^ W 649. 14. A single act may be attended 

10. White V. State, 39 Tex. Cnm. ^ith such circumstances as will jus- 
269, 45 S. W. 702. tify a conviction. Com. v. Hopkins, 

11. Washington v. State (Tex. 2 Dana (Ky.) 418. 

Crim.), 50 S. W. 341- 15. Louisville & N. R. Co. v. 

12. Franklin v. State, 91 Ala. 23, Com., 23 Ky. L. Rep. 1900 66 S W 
8 So. 678. 505. 

13. Com. V. Hopkins, 2 Dana 16. Winemiller v. State, 11 Ind. 
(Ky.) 418. In this case the court 516. 

Vol. VI 



GAMING. 



195 



terial to whom the token was sold which entitled a player to 
participate in the game.^'' 

(2.) Character of House or Device. — To convict of keeping a com- 
mon gaming-house, the state must prove two essential things : first, 
that the house was a gaming-house; second, that it was kept by 
defendant.^' 

It seems that proof of a single instance of gambling is insufficient 
to fix the character of the house.^* While it is held in one state 
that if the house was kept with the intent that gambling should 
be carried on there, it is sufficient to establish the offense, whether 
gambling was actually carried on or not."" Certainly, it is not 
necessary to show that the house was open to the public generally.-^ 

It is not necessary to show that defendant carried on gaming at 
the place as a business for profit, or that gambling was the only 
business for which the place was used, or that it was constantly 
kept for that purpose, or that the gaming was visible from the 
exterior, or that defendant occupied the whole house."" Nor need 
it be shown that the mechanism of the defendant's business consti- 
tuted a gambling device."' 

In a prosecution for exhibiting a gaming-table, the nature of 
the game played must be shown sufficiently to establish its incrim- 
inating character."* 



17. Dalton v. State (Tex. 
Crim.), 74 S. W. 25. 

18. State V. Mosby, 53 Mo. App. 
S7I- 

19. White V. State, 115 Ga. 570, 
41 S. E. 986; Bell V. State, 92 Ga. 
49, 18 S. E. 186. 

Thus proof of occasional games of 
poker privately played with acquaint- 
ances for money is insufficient. 
State V. Mosby, 53 Mo. App. 571. 

But in State v. Cooster, 10 Iowa 
453, in commenting on an instruction 
that a single act of gambling was 
sufficient to show that defendant 
kept a gambling-house, the court 
said that while some of the old au- 
thorities seemed to sustain the con- 
tention that this was erroneous, it 
did not think that a fair construc- 
tion of the statute punishing a per- 
son "who kept a place resorted to 
for the purpose of gambling" re- 
quired that the place kept must be 
first frequented by numbers before 
the crime was complete. So evidence 
of a single act of gaming is admissi- 
ble, and is sufficient to sustain a 
conviction if the jury chooses to so 
regard it. Armstrong v. State, 4 
Blackf. (Ind.) 247. A single act, 



with attending circumstances and 
surrounding indications, may be suf- 
ficient evidence to show that the 
house was really a gaming-house. 
Bell V. State, 92 Ga. 49, 18 S. E. 186. 

20. State V. Miller, S Blackf. 
(Ind.) 502; McAlpin v. State, 3 Ind. 
567. 

21. State V. Mosby, 53 Mo. App. 
571 ; Com. V. Blankinship, 165 Mass. 
40, 42 N. E. 115. In this latter case, 
the fact that an unincorporated club of 
one hundred and fifty members occu- 
pied rooms commonly used for gam- 
bling by them and such" others as 
they invited, was held to establish 
a common gaming-house, though it 
was not open to the public generally. 

22. State v. Mosby, 53 Mo. App. 
571. 

23. State v. Grimes, 74 Minn. 
2S7, 77 N. W. 4. 

24. Jackson v. State (Tex. 
Crim.), 25 S. W. 773, and see Ra- 
mey v. State (Tex. App.), 18 S. 
W. 417. 

Proof that defendant owned the 
table, exhibited the game, and took 
the bets, and that the players bet 
against him, is sufficient to show 
that the game was played as a table 

Vol. VI 



196 



GAMING. 



(3.) Scienter. — The state must prove that the defendant had 
knowledge that gambhng was taking place on his premises.^" But 
where defendant is in possession of the premises, the fact that 
gaming occurs there raises a presumption of knowledge.^'^ Supply- 
ing instrumentalities for gaming is, of course, sufficient evidence 
of knowledge.^^ Defendant's presence while gambling is going on 
in his premises, even though he is inattentive, will also, show 
knowledge.^* 

(4) Permission. — In a prosecution for permitting gambling in 
one's house, proof of express permission, while the best evidence, 
is not essential, proof of facts from which permission may be 
fairly inferred being sufficient.''® 



or banking game. Mohan v. State, 
42 Tex. Crim. 410, 60 S. W. 552. 

But the principle of one against 
the many need not be shown to per- 
meate the game played. Dalton v. 
State (Tex. Crim.), 74 S. W. 25. 

In a prosecution for keeping a 
faro-table for the purpose of betting 
thereat, proof that the things bet 
were of value is not essential. Simms 
V. State, 60 Ga. 145. 

Judicial Notice In a prosecu- 
tion for setting up and keeping a 
contrivance in general use for gam- 
ing purposes, proof must show that 
the contrivance was ordinarily used 
for gambling, and the court will not 
take judicial notice that a keno-table 
is such a contrivance. Com. v. Mon- 
arch, 6 Bush (Ky.) 298. 

25. Harris v. State, S Tex. 11. 
Mere proof that gambling occurs 

on the defendant's premises is a cir- 
cumstance tending to show the sci- 
enter. State V. Cooster, 10 Iowa 453. 
But standing alone it is not sufficient 
evidence thereof. Padgett v. State, 
68 Ind. 46; State v. Currier, 23 Me. 
43; State V. Cooster, supra, in which 
latter case an instruction that the 
law would presume defendant's per- 
mission from the fact that gambling 
occurred on the premises, was held 
improper. 

See post, " E. — Prosecution for 
Renting Houses for Gambling Pur- 
poses, a. — Burden of Proof and 
Matters to be Proved." 

26. McGafifey v. State, 4 Tex. 
156; Robinson v. State, 24 Tex. 152, 
and see Ward v. People, 23 111. App. 
Sio. 

But the mere fact of ownership 

Vol. VI 



without possession would not raise 
such presumption. The presump- 
tion is commensurate with the size 
of the house and the defendant's ex- 
clusive occupancy. Harris v. State, 
S Tex. II. The burden is of course 
on the defendant to rebut the pre- 
sumption. McGaffey v. State, 4 'Tex. 
156; Robinson v. State, 24 Tex. 152. 

27. State v. Cooster, 10 Iowa 453, 
and see. Mohan v. State, 42 Tex. 
Crim. 410, 60 S. W. 552. 

But where such instrumentalities 
may also be innocently -used, and de- 
fendant has expressly forbidden 
their improper use, there must be 
further evidence of the scienter. 
Wells V. State, 22 Tex. App. 18, 2 
S. W. 609; Smith V. State, 28 Tex. 
App. 102, 12 S. W. 412. 

28. Hamilton v. State, 75 Ind. 586. 

29. Harris v. State, S Tex. 11, in 
which it was also held that proof 
that defendant witnessed the occur- 
rence and did not immediately stop 
it or prevent its recurrence showed 
permission. 

So, evidence that persons came to- 
gether and gambled at defendant's 
house has been held to warrant an 
inference of permission. Stoltz v. 
People, 5 III. 168. And see also Ward 
V. People, 23 111. App. 510, in which 
it was held that proof that after as- 
sembling at defendant's house the 
persons so meeting there engaged in 
gambling with his consent would be 
strong evidence that he permitted 
them to meet for that purpose, but 
that such proof of playing was not 
indispensable to establish his guilt of 
the offense of permitting persons to 
come together to gamble. 



GAMING. 



197 



(5.) Participation. — In a prosecution for keeping and exhibiting 
a gaming-table, the state must show that defendant actually partici- 
pated in the exhibition, or was interested therein.^" 

Proof that defendant dealt the cards as keeper of a faro-table 
is prima facie evidence that he was keeper of the house.'^ 

Evidence that defendant conducted the business of a gambling- 
room and took out a " chip " when certain cards were played, 
the take-out going to pay for drinks, etc., warrants the inference 
that he received compensation, though it does not directly appear 
that he received the balance of the take-out after the expenses were 
paid.'^ So the fact that persons came together and gambled at 
defendant's saloon warrants an inference that he benefited thereby.^^ 

In a prosecution for permitting gaming in a house under defend- 
ant's control, evidence that the house was under the control of 
defendant's tenant will not sustain a conviction.'* 

(6.) Permitting Minor to Play at Billiard-Table. — On the trial of the 
keeper of a billiard-table for permitting a minor to play thereat 
without his parents' consent, the burden of proving the absence of 
such consent is upon the state.'" 

(7.) Keeping Pool-Koom. — On a prosecution for keeping a pool- 
room where bets were registered on horse-races, evidence that the 
defendant was the mere agent of the person making the bet, to 
place it on a certain horse, for a commission, does not show the 
offense.'' Where defendant, by the part he takes in registering 



30. Jackson v. State (Tex. 
Crim.), 25 S. W. 773. 

But he need not be shown to be 
the owner or have an interest where 
the proof shows that he exhibited the 
table. Lettz v. State (Tex. Crim.), 
21 S. W. 371; Rice V. State, 3 Kan. 
13s. 

On the other hand, proof that the 
business was in the immediate con- 
trol of an agent will not defeat a con- 
viction where the defendant was the 
actual owner; and this is true not- 
withstanding that the fact that de- 
fendant is the person whose estab- 
lishment o.r business the gambling 
room is must be shown beyond a 
reasonable doubt. Wooten v. State, 
24 Fla. 335, 5 So. 39. 

But actual participation must be 
shown, and proof of defendant's mere 
presence is insufficient. Blum v. 
State (Tex. Crim.), 47 S. W. 1002; 
Erwin V. State, 25 Tex. App. 330, 8 
S. W. 276. 

Slight participation, -however, such 
as returning the dice to the dealer, 
has been held to be enough. Smith 
V. State (Tex. Crim.), 33 S. W. 871. 



31. United States v. Miller, 4 
Cranch C. C. 104, 26 Fed. Cas. No. 
15,773- 

32. Harper v. Com., 93 Ky. 290, 
19 S. W. 7Z7- 

33. Stoltz V. People, 5 111. 168. 

34. Kimborough v. State, 25 Tex. 
App. 3Q7, 8 S. W. 476. 

But where defendant retains con- 
trol in spite of the renting, the rule is 
otherwise. Hodges v. State, 44 Tex. 
Crim. 444, 72 S. W. 179. 

35. Conyers v. State, 60 Ga. 103, 
IS Am. Rep. 686. 

But the state, having made a prima 
facie case, it is incumbent on the de- 
fendant to show that he believed in 
good faith and with good reason that 
the minor was of full age. Taylor 
v. State, 107 Ind. 483, 8 N. E. 450, 
in which it was also held that mere 
inquiries of him and his reply that 
he was an adult would not overthrow 
a conviction. 

36. People v. Wynn, 58 Hun 609, 
12 N. Y. Supp. 379. 

But the agency must be bona Ude. 
People V. Fisher, 62 Hun 622, 17 N. 
Y. Supp. 162. 

Vol. VI 



198 



GAMING. 



bets, practically admits that there are horses of the names shown 
on the blackboard, the fact that the witness had never seen the 
horses is immaterial.^'' And where it appears that a witness selected 
a number and bet his money without anything being said as to the 
defendant's undertaking, the inference from the form of the trans- 
action is that it was selling a pool and not making an ordinary bilat- 
eral wager.*' 

b. Statutory Rules as to Prima Facie Evidence. — A statute pro- 
viding that if any gambling apparatus shall be found in any house 
it shall be prima facie evidence that the house is kept for gambling 
purposes is not unconstitutional.*' 

c. Competency and Relevancy of Evidence. — (1.) In General. 
In a prosecution for keeping a gaming-table, evidence that defend- 
ant was a professional gambler is not admissible.*" 

(2.) Character of House. —In a prosecution for keeping a gaming- 
house, evidence of defendant's reputation as a gambler is admissible 
to establish the character of the place." 

Evidence of what was done at the place, the kind of games played, 
and the character of the betting transacted is admissible for the 
same purpose, though defendant is not shown to have been present."'' 

And evidence of the reputation of those who frequent the place as 
being gamblers is relevant.** 



37. Com. V. Clancy, iS4 Mass. 
128, 27 N. E. 1001. 

38. Com. V. Watson, 154 Mass. 
13s, 27 N. E. 1003. 

39. Wooten v. State, 24 Fla. 335, 
5 So. 39. In this case it was also 
held that such a statute did not de- 
prive a defendant of due process of 
law. 

Nor does it infringe the presump- 
tion of innocence accorded to all ac- 
cused persons. Houston v. State, 24 
Fla. 356, S So. 48. 

Such a statute does not render the 
discovery of gambling apparatus 
prima facie evidence of actual gam- 
bling. Richardson v. State, 41 Fla. 
303, 2S So. 880. 

40. Lettz V. State (Tex. Crim.), 
21 S. W. 371. 

41. State V. Mosby, S3 Mo. App. 

571- 

42. Bindemagle v. State, 6a N. J. 
L. 307, 37 Atl. 619, in which such ev- 
idence was also held admissible as 
part of the res gestae. See also, as 
to the admissibility of evidence of 
the res gestae. State v. Wilson, g 
Wash. 16, 36 Pac. 967, and Bibb v. 
State, 83 Ala. 84, 3 So. 711, in which 

Vol VI 



latter case it was held, on the trial 
of an indictment for keeping a gam- 
ing table, to be competent to show by 
a witness that he had heard on sev- 
eral occasions " the rattle of chips," 
such as are commonly used in play- 
ing poker, going on in the room oc- 
cupied by the accused; and on one 
occasion had heard, accompanying 
such sounds, words indicative of a 
proposal to bet money. 

Evidence of gaming in the house 
previous to the offense charged is 
likewise admissible to show its char- 
acter. Chase v. People, 2 Colo. 509; 
State V. Agudo, S La. Ann. 185. 

But evidence for the defense of 
other uses to which the room and ap- 
paratus were put, such as that the 
room was defendant's private bed- 
room, and that the table found .there 
was ordinarily used by him to eat 
his meals on, is properly excluded 
as irrelevant. Bibb v. State, 83 Ala. 
84, 3 So. 711. 

43. State v. Mosby, S3 Mo. App. 
571. In this case the court said: 
" Now, proof showing the reputation 
of those who frequented a house, or 
who habitually resorted to it, is a 
very persuasive portion of evidence. 



GAMING. 



199 



(3.) Scienter and Participation. ^ — Evidence that gambling was 
carried on in the house previous to the offense charged is admissible 
to show defendant's guilty knowledge and intent.** And where it 
appears that defendant was cognizant of the gaming and frequently 
took part therein, evidence that he had established a rule forbidding 
gambling is properly excluded.*^ Evidence that defendant's saloon 
was connected by call bells with the rooms in which the offense 
occurred is admissible to show his connection with the gaming.*" A 
deed to him is admissible to show his ownership of the premises.*'' 

A servant charged with participating in keeping his master's 
gambling-house may put in evidence representations made to him by 
his master, respecting the nature of the business, to show his inno- 
cent intent.** 

(4.) Opinion Evidence. — As a general rule, the mere opinions of 
witnesses as to whether gambling took place in the house are not 
admissible.*" 

(5.) Permitting Minor in Pool-Room. — In a prosecution for permit- 
ting a minor to stay in defendant's pool-room, evidence that 
defendant ordered him from the room after the offense had been 
committed, or after defendant was prosecuted, would be inad- 
missible."" 

E. Prosbctjtion for Renting House for Gambung Purposes. 
a. Burden of Proof and Matters to he Proved. — In a prosecution 



tending to establish the character of 
a house, especially when it is sup- 
plemented with evidence of actual 
gaming in the house." 

So in a prosecution for keeping a 
bucket-shop, evidence of the intent 
of those who frequent the place not 
to receive or deliver the commodities 
dealt in is admissible. Soby v. 
State, 31 111. App. 242. 

44. State v. Agudo, 5 La. Ann. 
185. 

45. Humphreys v. State, 34 Tex. 
Crim. 434, 30 S. W. 1066. 

46. Com. V. Edds, 14 Gray 
(Mass.) 406. 

47. But evidence of impeaching 
the deed is also admissible on the 
part of the defense. Biles v. State, 
2S Tex. App. 441, 8 S. W. 650. 

48. State v. Ackerman, 62 N. J. 
L. 4S6, 41 Atl. 697. 

49. Thus in a prosecution for per- 
mitting gambling in defendant's 
house, the opinion of witnesses that 
wagers of cigars and other things 
sold by defendant did not constitute 
betting is properly excluded. Hum- 



phreys V. State, 34 Tex. Crim. 434, 
30 8. W. 1066. 

So in a prosecution for keeping a 
gambling-house, a question asked a 
witness whether he knew of defend- 
ant's having kept a gaming-table or 
room is improper as calling for a con- 
clusion. Wheeler v. State, 42 Md. 

563- 

But on the trial of a steamboat 
captain for suffering cards to be 
played on his boat, a witness was 
permitted to testify that he saw or 
participated in the game, without 
giving a particular description of it, 
the court saying that the accuracy of 
his knowledge was subject to the 
test of cross-examination. Johnson 
V. State, 74 Ala. 537. 

So in a prosecution for keeping a 
pool-room, a witness was allowed to 
testify that certain names appearing 
in a combination bet on were, so far 
as he knew, those of baseball clubs. 
Com. V. Watson, 154 Mass. 135, 27 
N. E. 1003. 

50. Alexander v. State (Tex. 
Crim.), 67 S. W. 319- 

Vol. VI 



200 



GAMING. 



for renting a house to be used for gaming, the state must show that 
the defendant let the property with that object in view.''^ 

Proof that defendant had full opportunity to know the illicit 
occupation of his tenants places the burden on him to show that 
he was actually ignorant thereof.''^ 

b. Statutory Rule as to Sufficiency of Evidence. — A statute pro- 
viding that it shall be sufiEcient evidence that any building is rented 
for the purpose of gaming, if gaming is actually carried on there, 
and the owner or lessor knows or has good reason to believe such 
to be the fact, and takes no means of preventing it, is not unconsti- 
tutional as an invasion of the right of the jury to determine the 
facts in a criminal case.^' 

c. Relevancy of Evidence. — Evidence of the reputation of the 
tenant,"* or of the house,°° or that it had previously been used for 
gambling purposes,'"' is relevant to show the scienter. 



51. Rodifer v. State, 74 Ind 21, 
in which it was held that mere evi- 
dence that gambling was carried on 
in the premises after the lease would 
not sustain a conviction. A point 
also ruled in Harris v. State, S Tex. 
II. This latter case also holds that 
evidence that defendant knew the 
character of his tenants raises the in- 
ference that he knew in what way it 
was intended to use the house. 

In Gaby v. Hankins, 86 111. App. 
529, whi-ch was a civil action against 
the owner of a building where gam- 
bling was carried on, to recover 
money lost thereat, the fact that de- 
fendant had discovered a poker-table 
and other paraphernalia of gaming 
on making a visit to the place was 
said to have been sufficient to put 
him on inquiry as to what was taking 
place there. 

52. Rivers v. State, 118 Ga. 42, 44 
S. E. 859. 

Ordinarily, however, the defendant 
is not required to prove his want of 
knowledge of his tenant's intent. 
Harris v. State, S Tex. 11, 



53. Morgan v. State, 117 Ind. 569, 
19 N. E. 154. See also Voght v. 
State, 124 Ind. 358, 24 N. E. 680. 

54. Rivers v. State, 118 Ga. 42, 
44 S. E. 859. In this case the court 
said that the tenant's reputation was 
a circumstance having more or less 
weight according as it was more or 
less notorious, and the fact that he 
had been presented before the grand 
jury for keeping a gaming-house 
was admissible to show reputation. 

Voght V. State, 124 Ind. 358, 24 N. 
E. 680. In this case not only evi- 
dence of the tenant's reputation but 
that he had been indicted on and 
pleaded guilty to the charge of keep- 
ing a gambling-room, while keeping 
the room in question, was held com- 
petent as tending to ra^se an infer- 
ence than the owner, who was an 
active man residing in the com- 
munity, knew the facts. 

55. Voght V. State, 124 Ind. 338, 
24 N. E. 680. 

56. Rivers v. State, 118 Ga. 42, 44 
S. E. 859. 



GAMING CONTRACTS See Gaming. 



GARNISHMENT.— See Attachment. 

Vol. VI 



GIFTS. 

By G. p. Cook. 

I. GIFTS INTER VIVOS, 204 

I. In General, 204 

A. Degree of Proof Required, 204 

a. General Rule, 204 

b. Mere Declarations of Intention, 205 

c. Declarations Accompanied by Possession in Donee. 

205 
'd. Admissions of Donor, 206 
e. Gift Not Asserted Until After Death of Donor, 206 

B. Burden of Proof, 207 

C. Essential Elements of Proof, 207 

a. The Donor's Intent, 207 

(i.) Mode of Proof in General, 207 
(2.) Evidence Bearing Upon Intent, 207 
(A.) Reasons and Motives, 207 
(B.) Declarations of Intention, 207 
(C.) Donee Not Told of Gift, 208 

b. Delivery, 208 

(i.) Mode of Proof in General, 208 

(A.) Acts and Conduct of Donor, 208 
(2.) Delivery Inferred from Circumstances, 209 

c. Acceptance, 210 

(i.) When Presumed, 210 

(A.) When Beneficial to Donee, 210 
(B.). When Unaccompanied by any Condi- 
tion, 210 
(C.) When Donee is a Minor, 210 
(D.) When Donee is Nan Compos, 211 

(2.) Acts of Acceptance, 211 

D. Admissibility of Evidence in General, 211 

a. Declarations of Donor, 211 
(i.) When Admissible, 211 

Vol. VI 



202 GIFTS. 

(A.) When Part of Res Gestae, 211 
(B.) When Against His Interest, 212 
(C.) Subsequent Admissions, 212 
(2.) When Inadmissible, 213 

(A.) When Subsequent to Gift, 213 
(a.) General Rule, 213 

b. Declarations of Donee, 214 

(i.) When Admissible, 214 

(A.) Made in Presence of Donor, 214 

c. Declarations of Party in Possession, 214 

(i.) When Admissible, 214 

(A.) To Explain Nature of Possession) 214 

d. Other Evidence Bearing Upon the Issue- 215 

(i.) Ability of Donor, 215 
(2.) Acts of Ownership, 215 
(3.) Discrediting Acts, 216 
(4.) Evidence of Other Gifts, 216 
2. Particular Classes of Gifts, 217 

A. With Reference to Nature of the Transaction, 217 

B. With Reference to the Parties, 219 

a. Confidential Relations in General, 219 

(i.) General Rule, 219 
(2.) Burden of Proof, 220 

(3.) Property Conveyed to Dependent Person, 
221 

b. Gifts From Husband to Wife, 221 

(i.) Degree of Proof Required, 221 
(2.) Property Conveyed to Wife, 222 
(3.) Security in Name of Wife, 224 

c. Gifts From Wife to Husband, 224 

(i.) Degree of Proof Required, 224 

(2.) Gj/^ Inferred From Circumstances, 224 

(A.) Use of Wife's Property by Husband, 

225 
(B.) Distinction Betiveen Principal and In- 
terest, 226 
Vol. VI 



GIFTS. 203 

(3.) Question of Intention in Bach Case, 226 

d. Gifts From Parent to Child, 226 

(1.) Degree of Proof Required, 226 

(2.) Every Presumption in Favor of the Gift, 227 

(3.) Property Delivered to Child, 227 

(4.) Security in Child's Name, 230 

(5.) Presumption of Gift Rebutted, 230 

(6.) Parol Gift of Land, 230 

e. Gifts From Child to Parent, 231 

(i.) Presumption of Parental Influence, 231 
(2.) Burden of Proof, 232 

f. Other Confidential Relations, 233 

11. GIFTS CATJSA MORTIS, 234 

1. Weight and Sufficiency of Bvidence in General, 234 

A. Generally Regarded With Suspicion, 234 

B. Modified Doctrine, 235 

C. Uncorroborated Testimony of Donee, 236 

D. Mere Intention Insufficient, 236 

2. Burden of Proof, 236 

3. Essential Elements of Proof, 2^7 

A. In General, 237 

a. Apprehension of Death, 237 

b. Death From Impending Peril, 238 

c. Delivery, 239 

(i.) Requisites as Compared With Gifts Inter 

Vivos, 239 
(2.) Previous Intent as Corroborating Evidence, 

239 
(3.) Where Subject of Gift is Chose in Action, 

239 
(4.) Possession by Donee, 240 
(5.) Declarations Insufficient, 240 
(6.) Reap pro priation by Donor, 240 
(7.) Question of Fact in Each Case, 240 

d. Acceptance, 241 

Vol. VI 



204 GIFTS. 

(i.) When Presumed, 241 

4. Admissibility of Evidence, 241 

A. Prior Declarations of Intention, 241 

B. Declarations of Donee, 241 

C. Previous Intention of Donor, 241 

D. Conduct of Donee, 241 

E. State of Peeling, 242 

5. Confidential Relations, 242 

A. In General, 242 

B. Mere Personal Friendship, 242 

CBOSS-BEFEBEHCES : 
Delivery; Descent and Distribution; 
Husband and Wife. 

I. GIFTS INTER VIVOS. 

1. In General. — A. Degree of Prooe Required. — a. General 
Rule. — As a general rule gifts inter vivos are watched with caution 
by the courts, and clear and convincing evidence is required to prove 
them.^ But in the absence of suspicious circumstances the gift will 
be presumed to be valid. ^ It has been held that there is no pre- 
sumption in favor of a gift." 

1. Canada. — McConnell v. Mc- was the uncorroborated deposition of 

Connell, 15 Ch. 20. the donee, although there was no di- 

IlUnois. — Boudreau v. Boudreau, rect evidence to contradict the dep- 

45 111. 480; Barnum v. Reed, 136 111. osition. 

388, 26 N. E. 572. In Canada, by virtue of a statute, 

Nevada. — Simpson v. Harris, 21 if the gift is not asserted until the 

Nev. 353, 31 Pac. 1009. death of the donor, it will not be 

New York. — Scoville v. Post, 3 sustained upon the uncorroborated 

Edw. Ch. 203; Jones v. Perkins, 29 testimony of the donee. Watson v. 

App. Div. 37, 51 N. Y. Supp. 380; Bradshaw, 6 A. R. 666. 

Gilkinson v. Third Ave. R. Co., 47 In the case of Gilkinson v. Third 

App. Div. 472, 63 N. Y. Supp. 792. Ave. R. Co., 47 App. Div. 472, 63 N. 

Ohio. — Flanders v. Blandy, 45 Y. Supp. 792, it was held that the 

Ohio St. 108, 12 N. E. 321. uncorroborated testimony of the 

Pennsylvania. — Osthaus v. McAn- donee's aunt was sufficient to estab- 

drew, 8 Atl. 436. lish a gift. 

It has been held that a gift inter Compare Richardson v. Colbum, 

vivos will not be sustained upon the 77 Minn. 412, 80 N. W. 356. 

uncorroborated testimony of the *• Hackney v. Vrooman, 62 Barb, 

donee. Grant v. Grant, 34 Beav. (N- Y.) 650; Yeakel v. McAtee, 156 

(Eng.) 623. Pa. St. 600, 27 Atl. 277. 

In Preese v. Odd Fellows Sav. 3. While v. Warren 120 Cal 322 

Bank, 136 Cal. 662, 69 Pac. 493, the 49 Pac. 129, 52 Pac. 723 ; Denigan v 

trial court refused to sustain the gift Hibernia Loan & Sav. Soc, 127 Cal. 

when the only evidence supporting it 137, 59 Pac. 389. 

Vol. VI 



GIFTS. 



205 



The quantum of proof necessary to establish a gift, however, 
depends largely upon the peculiar circumstances of each particular 
case.* 

b. Mere Declarations of Intention. — A mere promise or decla- 
ration of intention is not usually sufficient to establish a valid gift.° 

c. Declarations Accompanied by Possession in Donee. — But 
where there is evidence of a declared intention to give, accompanied 
by possession in the donee, it is sufficient to raise a presumption" that 



4. Lewis V. Merritt, 42 Hun (N. 
Y.) 161. 

" The rule to be extricated from 
the great weight of all the authori- 
ties, and the one suggested by sound 
reason, it seems to us, as to the quan- 
tum of proof requisite to support a 
gift inter vivos, is that which, applied 
to each case, and the situation and re- 
lation of the parties, satisfies the 
court that the donor, understandingly, 
and without improper influence, in- 
tended to give the property to the 
donee, and did give it to hirri, or a 
bailee for him, in the unconditional 
and immediate control and possession 
of it." Hesse v. Hemberger (Tenn.), 

39 S. W. 1063. 

5. United States. — Backer v. 
Meyer, 43 Fed. 702. 

Alabama. — Stallings v. Finch, 25 
Ala. 518. 

California. — Giselman v. Starr, 
106 Cal. 651, 40 Pac. 8. 

Connecticut. — Minor v. Rogers, 

40 Conn. 512. 

Illinois. — Meyers v. Malcom, 20 
111. 621 ; Barnum v. Reed, 136 III. 
388, 26 N. E. 572; May v. May, 36 
111. App. 77. 

Kentucky. — Callender v. Calen- 
der, 24 Ky. h. Rep. 114s, 70 S. W. 
844; Rodemer v. Rettig, 24 Ky. L. 
Rep. 1474, 71 S. W. 869. 

Maine. — Bath Sav. Inst. v. Ha- 
thorn, 88 Me. 122, 33 Atl. 836, 51 
Am. St. Rep. 382, 32 L. R. A. 377. 

Maryland. — Pennington v. Git- 
tings, 2 Gill & J. 209; Whalen v. 
MilhoUand, 89 Md. 199, 43 Atl. 45, 44 
L. R. A. 208. 

Massachusetts. — Gerrish v. Insti- 
tution for Savings, 128 Mass. 159, 
35 Am. Rep. 365. 

Michigan. — Buncombe v. Rich- 
ards, 46 Mich. 166, 9 N. W. 149; 



Casserly v. Casserly, 123 Mich. 44, 
81 N. W. 930. 

Mississippi — Wheatley v. Abbott, 
32 Mich. 343. 

New York. — Geary v. Page, 9 
Bosw. 290; Young v. Young, 80 N. 
Y. 422; Adler v. Davis, 31 Misc. 120, 
63 N. Y. Supp. 87s; Tyrrel v. Emi- 
grant Industrial Sav. Bank, 77 App. 
Div. 131, 79 N. Y. Supp. 49. 

Ohio. — Larimore v. Wells, 29 
Ohio St. 13; Flanders v. Blandy, 45 
Ohio St. 108, 12 N. E. 321. 

Pennsylvania. — Crawford's Ap- 
peal, 61 Pa. St. 52. 

Texas. — Doyle v. First Nat. 
Bank (Tex. Civ. App.), 50 S. W. 480. 

Vermont. — Frost v. Frost, 33 Vt. 
639; Pope V. Savings Bank, 56 Vt. 
284, 48 Am. Rep. 781. 

Virginia. — Yancey v. Field, 85 Va. 
756, 8 S. E. 721. 

G. Illinois. — Breier v. Weier, 33 
III. App. 386; Morey v. Wiley, 100 
111. App. 75. 

Iowa. — Wescott v. Wescott, 75 
Iowa 628, 35 N. W. 649. 

Kentucky. — Jones v. Jones, 102 
Ky. 450, 43 S. W. 412; ScoUard v. 
Scollard, 22 Ky. L. Rep. 33, 56 S. W. 
648. 

Maryland. — Gardner v. Merritt, 
32 Md. 78. 

. New Hampshire. — Liscomb v. 
Manchester & L. R. Co., 70 N. H. 
312, 48 Atl. 284. 

New York. — Hackney v. Vroo- 
man, 62 Barb. 650; Rix v. Hunt, 16 
App. Div. 540, 44 N. Y. Supp. 988. 

South Carolina. — McCluney v. 
Lockhart, i Bail. 117. 

Tennessee. — Mason v. Willhite, 61 
S. W. 298. 

On the question whether the de- 
livery of a promissory note by a 
mother, since deceased, to her son, 
was a gift inter vivos or mortis 

Vol. VI 



206 



GIFTS. 



the gift was actually made. Mere possession by the donee, how- 
ever, is, in itself, insufficient.' 

d. Admissions of Donor. — It has been held that the admissions 
of the donor to the effect that he had made the gift are not con- 
clusive in themselves, but are to be weighed by the jury with the 
other evidence.* 

e. Gift Not Asserted Until After Death of Donor. — Where the 
gift is not asserted until after the death of the donor it is regarded 
as an additional reason for requiring the transaction to be proved by 
clear and convincing evidence.' 



causa — held, that though there was 
no evidence to show that it was a gift 
mortis causa, yet the possession of the 
note with his mother's indorsement 
on it was sufficient to support a com- 
mon gift and to corroborate the 
donee's testimony concerning it. 
Phelps V. Hopkinson, 6i 111. App. 
400. 

The fact that the alleged donee had 
possession of certain notes up to the 
time of the donor's death, and that 
this was with the knowledge and ap- 
proval of the donor, is sufficient to 
raise a presumption in favor of the 
validity of the gift. Rix v. Hunt, 
16 App. Div. 54°, 44 N. Y. Supp. 988. 

7. Possession of Bonee Insufficient. 
Thus where a husband purchased a 
piano, under an agreement that title 
was to remain in the vendors until 
paid for, and that he was not to part 
with possession without their written 
consent, it was held that a gift to his 
wife, so as to subject the instrument 
to levy upon execution by her cred- 
itors, was not to be presumed from 
the fact that he afterward abandoned 
his home, leaving the instrument in 
her possession. Dawson v. Lindsay, 
III Mich. 200, 69 N. W. 495. 

Where two sisters were the own- 
ers of a mortgage as the heirs of 
their mother, and one of them, who 
had possession of the mortgage, de- 
livered it to the other, saying at the 
time that she gave it to her, but no 
notice of this transaction was given to 
the mortgagee, and he subsequently 
paid interest to both the sisters in the 
same manner that he had been doing 
previously, and also paid a part of 
the principal to both of them — held, 
that the evidence did not establish a 
gift inter vivos, since the word 
" give " was probably not used in its 
technical sense and the transfer of 

Vol. VI 



possession lost a great deal of sig- 
nificance inasmuch as the sisters 
were already joint owners, either of 
them being entitled to possession. 
Thompson v. West, 56 N. J. Eq. 660, 
40 Atl. 197. 

In an action of replevin to re- 
cover a slave, the proof was that 
when plaintiff's son J. was about 
leaving home, plaintiff told him he 
would let him have one of three 
negro boys, that he might take 
choice, and J. selected the boy in 
controversy, and that plaintiff then 
remarked to him that he would let 
him have the boy he selected " as 
a loan," to be delivered when called 
for, and J. assented to this and left 
with the boy; that plaintiff had 
given slaves to several of his chil- 
dren in the same way. Held, to be 
clearly a loan and not a gift. Smith 
V. Jones, 8 Ark. 109. 

8. Rooney v. Minor, 56 Vt. 527. 
(See this case commented upon in 
Gross V. Smith, 132 N. C. 604, 44 
S. E. III.) 

But in an action by a daughter 
against the executor of her father 
to recover certain money which she 
alleged was due to her as a gift, 
held, that the deliberate admissions 
of the father made to third persons 
relating to facts and not to mere 
intentions to give were sufficient to 
establish the gift. Sourwine v. 
Claypool, 138 Pa. St. 126, 20 Atl. 
840. 

9- Fitzpatrick v. Graham, 122 
Fed. 401 ; Denigan v. Hibernia Loan 
& Sav. Soc, 127 Cal. 137, S9 Pac. 
389; DePuy V. Stevens, 37 App. Div. 
289, ss N. Y. Supp. 810; In re Mun- 
son, 25 Misc. 586, 56 N. Y. Supp. 
151; In re Taber, 30 Misc. 172, 63 
N. Y. Supp. 728; Robinson v. Car- 



GIFTS. 



207 



B. BuRDfiN oif Proof. — It is obvious from the foregoing that 
the burden of proof usually rests upon the donee, or those claiming 
under him, to establish every element of a valid gift.^" 

C. Essential Elements of Proof. — a. The Donor's Intent. 
(1.) Mode of Proof in General. — As a general rule the intent of the 
donor to make the gift is to be gathered from all the surrounding 
circumstances." 

(2.) Evidence Bearing Upon Intent. — (A.) Reasons and Motives. 
As bearing upon the proof of intent, evidence showing the reasons 
and motives of the donor is usually competent and relevant.^^ 

(B.) Declarations of Intention. — On the question of intent the 
declarations of the donor, made prior to the gift, showing an intent 
to make it, are admissible in favor of the donee ;^' and it has been 



penter, 77 App. Div. 520, 79 N. Y. 
Supp. 283; Bray v. O'Rourke, 89 
App. Div. 400, 8s N. Y. Supp. 907. 

" He who attempts to establish 
title to property through a gift inter 
vivos, as against the estate of a de- 
cedent, takes upon himself a heavy 
burden, which he must support by 
evidence of great probative force, 
which clearly establishes every ele- 
ment of a valid gift — that the de- 
cedent intended to divest himself of 
the title in favor of the donee, and 
accompanied his intent by a delivery 
of the subject-matter of the gift." 
In re O'Connell, 33 App. Div. 483, 
S3 N. Y. Supp. 748. 

10. Burden of Proof. 

England. — Cooke v. Lamotte, 15 
Beav. 234. 

Canada. — Murray v. Murray, 8 
Ch. 293. 

United States. — Wright v. Bragg, 
106 Fed. 2S. 

Alabama. — Wheeler v. Glasgow, 
97 Ala. 700, II So. 7s8. 

Ai'kansas. — Norton v. McNutt, 
SS Ark. S9, 17 S. W. 362. 

Georgia. — Porter v. Allen, S4 Ga. 
623. 

Maine. — Hansan v. Millett, 55 
Me. 184. 

New York. — Doty v. Willson, 47 
N. Y. s8o. 

When a person attempts to take 
a benefit under a voluntary settle- 
ment or deed of gift, he has the 
burden of proving that there was a 
distinct intent upon the part of donor 
to make the deed irrevocable. 
Coults V. Acworth, L. R. 8 Eq. SS8. 



11. Dille V. Webb, 61 Ind. 85; 
Porter v. Gardner, 39 N. Y. St. 671, 
IS N. Y. Supp. 398. 

In an action of replevin for a 
piano stool and cover which plain- 
tiff claimed as a gift from her in- 
fant brother, who had been emanci- 
pated by his father, it was held that 
" the general circumstances of the 
family at the time of the pretended 
purchase and gift were proper to be 
shown to sustain and corroborate 
and make probable the transaction 
as testified to by the plaintiff and 
her brother, and therefore were not 
irrelevant." Wambold v. Vick, so 
Wis. 456, 7 N. W. 438. 

12. Gilham v. French, 6 Colo. 196. 
Thus the testimony of the donee's 

wife that she had rendered services 
to the donor's wife during her last 
illness is competent for this purpose. 
Hurlburt v. Hurlburt, 18 N. Y. St. 
407, 2 N. Y. Supp. 317. 

And where it is sought to estab- 
lish a gift of a deposit in a savings 
bank, the fact that the alleged donor 
had on deposit in his own name all 
that he was allowed to have under 
the statute is of material importance 
as showing a reason for depositing 
in the name of another. Cogswell 
V. Newburyport Inst, for Savings, 
16s Mass. 524, 43 N. E. 296. 

13. United States. — Miller v. 
Clark, 40 Fed. 15. 

Georgia. — Sanderlin v. Sander- 
lin, 24 Ga. 83. 

Iowa. — Sherman v. Sherman, 75 
Iowa 136, 39 N. W. 232. 

Vol. VI 



208 



GIFTS. 



held that such declarations are admissible whether made before 
or after the transaction.^* 

Such declarations, however, are weaker in proportion as they 
recede from the time of delivery.^^ 

(C.) Donee Not Toi,d of Gift. — It has been held that the fact that 
the alleged donor never communicated to the donee the fact that he 
had made the gift is relevant evidence on the question of intent.^" 

b. Delivery. — (1.) Mode of Proof in General (A.) Acts and Con- 
duct OF DoNOE. — As a general rule, the fact of delivery may be 
arrived at from the acts, conduct and declarations of the alleged 
donor." It has been held, however, that the declarations of the 



Neiv York. — Hunter v. Hunter, 
19 Barb. 631. 

Ohio. — Larimore v. Wells, 29 
Ohio St. 13. 

See contra, Barnum v. Reed, 136 
111. 388, 26 N. E. 572- 

" The declarations of the donor 
made prior to the gift are admissible 
in evidence if made during the time 
the gift was under consideration and 
discussion by the donor, and were in 
reference to and contemplation of it, 
and explanatory of the donor's inten- 
tion." Gillespie v. Burleson, 28 Ala. 

SSI- 

In an action against certain ad- 
ministrators to recover two promis- 
sory notes which plaintiff claimed 
as a gift from defendant's intestate, 
the court instructed the jury that the 
mere declarations of the decedent of 
her purpose to give plaintiff her 
property or any portion of it would 
- not vest him with any right or in- 
terest in the notes unless they be- 
lieved from the evidence that de- 
cedent delivered the notes to plain- 
tiff with the purpose and intent of 
giving them to him. Held, that this 
instruction was improper and that 
these declarations of deceased should 
have been allowed to go to the jury 
without any expression of opinion 
by the court as to the weight to be 
given to them. Jones v. Jones, 102 
Ky. 450, 43 S. W. 412. 

A deed of gift which was invalid 
to pass title for want of proper exe- 
cution has been admitted in evi- 
dence as a declaration of the donor's 
intent. Sewal! v. Glidden, i Ala. 
52; Myers v. Peek, 2 Ala. 648. 

Although a mere recital in a deed 
referring to a previous conveyance 

Vol. VI 



has been held inadmissible for this 
purpose. Stephens v. Murray, 132 
Mo. 468, 34 S. W. S6. 

14. Prior and Subsequent Decla- 
rations — Ruiz V. Dow, 113 Gal. 490, 
4S Pac. 867. In this case a husband 
made out a deed to his wife of all 
his property, both real and personal, 
and completed the transaction by a 
valid delivery to the wife, with the 
understanding that the deed was not 
to be recorded until after his death. 
Subsequent to the delivery of the 
deed he collected some money on a 
promissory note and deposited it in 
the bank in his own name. On the 
question as to whether the deed 
transferred the money, so collected, to 
the wife as a gift inter vivos — held, 
that it was purely a question of the 
intent of the donor, to prove which 
his own declarations made both be- 
fore and after the transaction were 
admissible. 

15. Powell V. Olds, 9 Ala. 861. 

16. Ide V. Pierce, 134 Mass. 260. 

17. "All courts hold that deliv- 
ery is necessary to the validity of the 
gift, but the fact of delivery may 
be found by the jury from the ac- 
tions, conduct and declarations of the 
alleged donor, just as any other ma- 
terial fact may be found in the same 
way from the acts, conduct and dec- 
larations of a party to Ije affected 
thereby." Gross v. Smith, 132 N. C. 
604, 44 S. E. III. 

" In the case of a gift inter vivos, 
the evidence should be sufficient to 
render a finding of the fact of de- 
livery reasonable, and should dis- 
close the circumstances under which 
the delivery occurred; that it may 
appear that the gift was absolute, not 



GIFTS. 



209 



donor are insufficient, of themselves, to prove an actual delivery," 
but other authorities have disputed this doctrine." 

Where the intent of the donor is proved by a writing under his 
own hand, the courts will presume a delivery in support of the 
gift on slight evidence.^" 

(2.) Delivery Inferred from Circumstances. — Where the parties stand 
in close personal relation, such as members of the same family, it 
often becomes unnecessary to prove an actual manual delivery, the 
law presuming one in such cases from the attendant circumstances.^^ 



conditional; that it was complete, 
not made in the donor's last sickness 
or on his deathbed and in view of 
death." Bean v. Bean, 71 N. H. 538, 
S3 Atl. 907. 

And though proof of delivery is 
necessary, still, where the property 
has passed into the possession of 
the donee, an actual manual tradition 
at the time of making the gift may 
be dispensed with. Wing v. Mer- 
chant, 57 Me. 383. 

18. Declarations to Trove Deliv- 
ery — United States. — Chambers v. 
McCreery, 106 Fed. 364. 

Alabama. — Brys^nt v. Ingraham, 
16 Ala. 116. 

Georgia. — Anderson v. Baker, i 
Ga. S9S. 

New Jersey. — Smith v.. Burnet, 

34 N. J. Eq. 219; Smith v. Burnet, 

35 N. J. Eq. 314- 

New York. — Johnson v. Spies, S 
Hun 468. 

North Carolina. — Adams v. 
Hayes, 24 N. C. 361 ; Medlock v. 
Powell, 96 N. C. 499, 2 S. E. 149. 

Pennsylvania. — Schiehl's Estate, 
179 Pa. St. 308, 36 Atl. 181. 

The indorsement on a promissory 
note to a third party for the benefit 
of another is strong evidence of an 
intention, but not, in itself, sufficient 
evidence of delivery. Yokem v. 
Hicks, 93 III. App. 667. 

Where the subjects of the alleged 
gift, a note and mortgage, were 
placed in the hands of an agent who 
placed them in an envelope upon 
which he made an indorsement show- 
ing the nature of the transaction, 
held, the donor and the agent being 
dead, that this envelope with the in- 
dorsement thereon was inadmissible 
in evidence to show a delivery. 
Wright V. Bragg, 106 Fed. 25. 

The fact that a father when buy- 

14 



ing a piano stated that it was for his 
daughter is not sufficient to make 
out a valid gift to her, when there 
was no actual or constructive de- 
livery to her at the time of the 
purchase or afterward. Cambre- 
leng V. Graham, 60 N. Y. St. 855, 29 
N. Y. Supp. 419. 

19. See Blake v. Jones, i Bail. 
Eq. (S. C.) 141, 21 Am. Dec. 530; 
Gross V. Smith, 132 N. C. 604, 44 S. 
E. Ill; Lord V. New York Life Ins. 
Co., 95 Tex. 216, 66 S. W. 290, 56 L. 
R. A. 596; Yancey v. Stone, 7 Rich. 
Eq. (S. C.) 16; Grangiac v. Arden, 
10 Johns. (N. Y.) 293. 

20. Brinckerhoff v. Lawrence, 2 
Sandf. Ch. (N. Y.) 400; Matson v. 
Abbey, 53 N. Y. St. 794, 24 N. Y. 
Supp. 284; Pennington v. Lawson, 23 
Ky. L. Rep. 1340, 65 S. W. 120. 

21. England. — Grant v. Grant, 
34 Beav. 623. 

Canada. — Queen v. Carter, 13 C. 
P. 611; Viet V. Viet, 34 Q. B. 104. 

Alabama. — Sewall v. Glidden, i 
Ala. 52. 

Arkansas. — Danley v. Rector, 10 
Ark. 211 ; Dodd v. McCraw, 8 Ark. 
83; Prater v. Frazier, 11 Ark. 249. 

Georgia. — Moore v. Cline, 115 Ga. 
405, 41 S. E. 614; Poullain v. Poul- 
lain, 79 Ga. 11, 4 S. E. 81. 

Indiana. — Tenbrook v. Brown, 17 
Ind. 410. 

Kansas. — Schwindt v. Schwindt. 
61 Kan. 377, 59 Pac. 647. 

Kentucky. — Meriwether v. Mor- 
rison, 78 Ky. 572. 

Maine. — Wing v. Merchant, 57 
Me. 383. 

Maryland. — Isaac v. Williams, 3 
Gill 278; Hitch V. Davis, 3 Md. Ch. 
266. 

Michigan. — Harris 1/. Hopkins, 43 
Mich. 272, 5 N. W. 318, 38 Am. Rep. 
180. 

Vol. VI 



210 



GIPTS. 



c. Acceptance. — (l.) When Presumed. — (A.) When Beneficial ifo 
Donee. — Where the gift is for the advantage of the donee he will 
be presumed to have accepted it until the contrary appears.^^ 

(B.) When Unaccompanied by Any Condition. — When the gift is 
unaccompanied by any condition to be performed by the donee his 
acceptance will be presumed.^^ 

(C.) When Donee is a Minor. — So when the donee is a minor the 



New York. — Crouse v. Judson, 41 
Misc. 338, 84 N. Y. Supp. 7SS ; Scott 
V. Siraes, 10 Bosw. 314. 

Pennsylvania. — Crawford's Ap- 
peal, 61 Pa. St. 52. 

South Carolina. — McLure v. Lan- 
caster, 24 S. C. 273, s8 Am. Rep. 259 ; 
Bennett v. Cook, 28 S. C. 353, 6 S. 
E. 28; Reid V. Colcock, i Nott & 
McC. 592. 

Tennessee. — Davis v. Garrett, 91 
Tenn. 147, 18 S. W. 113. 

Texas. — Hillebrant v. Brewer, 6 
Tex. 45. 

D., while a minor, was engaged 
by his father in carrying the mail, 
in consideration of which he gave 
to D. a negro slave. D. lived with 
his father on the farm, and subse- 
quent to this transaction the father 
exercised the same control over the 
slave that he had before. Held, that 
since D. was a minor this transaction 
could be treated as a gift, and that, 
where an infant child resides with 
his father and continues a member 
of his family, the possession will be 
presumed to be in the infant, al- 
though the father exercises control 
over the slave and appropriates his 
labor. Danley v. Rector, 10 Ark. 
211. 

Where the donee had lived in the 
donor's family for a number of years, 
it was held that a complete gift 
inter vivos to her of a promissory 
note was shown when he gave her 
the note and told her so, and, as evi- 
dence of the gift, indorsed it to her, 
although she allowed him to retain 
possession of the note as her agent. 
Royston v. McCulley (Tenn.), 59 S. 

W. 725. 

" It requires less positive and un- 
equivocal testimony to establish the 
delivery of a gift from a father to 
his children than it does between 
persons who are not related, and in 
cases where there is no suggestion 

Vol. VI 



of fraud or undue influence very 
slight evidence will suffice." Love v. 
Francis, 63 Mich. 181, 29 N. W. 843, 
6 Am. St. Rep. 290. 

22. California. — De Levillain v. 
Evans, 39 Cal. 120. 

Indiana. — Goelz v. People's Sav. 
Bank, 31 Ind. App. 67, 67 N. E. 232; 
Pruitt V. Pruitt, 91 Ind. 595; Rin- 
ker V. Rinker, 20 Ind. 185. 

Kentucky. — Denunzio v. Scholtz, 
25 Ky. L. Rep. 1294, 77 S. W. 715. 

Michigan. — Dunlap v. Dunlap, 94 
Mich. II, S3 N. W. 788; Holmes v. 
McDonald, 119 Mich. 563, 78 N. W. 
647, 75 Am. St. Rep. 439. 

New York. — Adler v. Davis, 31 
Misc. 120, 63 N. Y. Supp. 87s. 

Season for Rule " The rule 

that requires acceptance to complete 
a gift rests largely upon the very 
reasonable ground that the donee 
may not desire to have the prop- 
erty intended as a gift, for the rea- 
son that there may be burdens grow- 
ing out of its ownership which he 
does not desire to assume, and the 
law will not enforce a gift again.st 
his will. But the rule prevails that, 
where the gift is entirely beneficial 
to the donee, his acceptance of it 
will ordinarily be presumed, unless 
the contrary appears." Goelz v. 
People's Sav. Bank, 31 Ind. App. 67, 
67 N. E. 232. See also Armitage 
V. Widoe, 36 Mich. 124. 

Every Gift Supposed to Be Bene- 
ficial — Goss V. Singleton, 2 Head 
(Tenn.) 67. 

It has been held that an acceptance 
might be inferred from the fact that 
the donor informed the donee of the 
gift, with the express or implied as- 
sent of the donee. Scott v. Berk- 
shire Co. Sav. Bank, 140 Mass. 157, 
2 N. E. 925. 

23. Blanchard v. Sheldon, 43 Vt. 
512. 



GIPTS. 



211 



law will imply an acceptance, even though the infant be ignorant 
of the gift.2* 

(D.) When Donee is Non Compos. — And where the donee is a per- 
son of unsound mind the law will presume an acceptance. ^^ 

(2.) Acts of Acceptance. — Any acts of the donee displaying an in- 
intent to receive the gift or to take advantage of it are admissible 
in evidence for the purpose of proving an acceptance.^® 

D. Admissibii<ity of Evidence in General. ^ a. Declarations 

of Donor. — (l.) When Admissible (A.) When Part of Res Gestae. 

As a general rule the declarations of the donor are always admissible 
when they are properly a part of the res gestae.^'' 



24. Pruitt V. Pruitt, 91 Ind. 595; 
De Levillain v. Evans, 39 Cal. 120. 

25. Malone v. Lebus, 20 Ky. L. 
Rep. 1 146, 77 S. W. 180. 

26. Thus where the gift is deliv- 
ered to a third person for the use 
of the donee, his subsequent demand 
for possession of the written evi- 
dence of the gift from such third 
person is evidence of his acceptance. 
Hunter v. Hunter, 19 Barb. (N. Y.) 
631. 

On the question as to whether the 
donee in a deed of gift of real es- 
tate intended to accept the gift and 
comply with its conditions, held, that 
evidence showing that the donee 
bought land contiguous to the prop- 
erty described in the deed, and which 
would be needed to make the use of 
the latter more beneficial, was com- 
petent and relevant as showing the 
donee's attitude towards the trans- 
action. Pierce v. Brown University, 
21 R. I. 392, 43 Atl. 878. 

27. United States. — King v. 
Smith, no Fed. 95, 54 L. R. A. 708; 
Miller v. Clark, 40 Fed. 15. 

Alabama. — Olds v. Powell, 7 Ala. 
|6S2; Powell v. Olds, 9 Ala. 861; 
Caldwell v. Pickens, 39 Ala. 314; 
Gillespie v. Burleson, 28 Ala. 551 ; 
Gunn V. Barrow, 17 Ala. 743; Bragg 
V. Massie, 38 Ala. 89, 79 Am. Dec. 
82; Hale V. Stone, 14 Ala. 803; Jen- 
nings V. Blocker, 25 Ala. 415. 

California. — Ruiz v. Dow, 113 
Cal. 490, 45 Pac. 867. 

Connecticut. — Meriden Sav. Bank 
V. Wellington, 64 Conn. 553, 30 Atl. 
774- 

Georgia. — Burney v. Ball, 24 Ga. 
505; Sanderlin v. Sanderlin, 24 Ga. 



583; Evans V. Lipscomb, 31 Ga. 71. 
Illinois, — Weaver v. Weaver, 73 
111. App. 301; Martin v. Martin, 174 
III. 371, 51 N. E. 691. 

Indiana. — Woolery v. Wollery, 29 
Ind. 249, 9S Am. Dec. 630; Durham 
V. Shannon, 116 Ind. 403, 19 N. E. 
190, 9 Am. St. Rep. 860; Durling v. 
Johnson, 32 Ind. 155. 

Iowa. — Sherman v. Sherman, 75 
Iowa 136, 39 N. W. 232. 

Kentucky. — Smith v. Montgom- 
ery, s Mon. 502. 

Maryland. — Bowie v. Bowie, i 
Md. 87; Graves v. Spedden, 46 Md. 
527; Parks V. Parks, 19 Md. 323; 
Cecil V. Cecil, 20 Md. 153. 

Massachusetts. — Gerrish v. Insti- 
tute for Savings, 128 Mass. 159, 35 
Am. Rep. 365; Scott v. Berkshire 
Co. Sav. Bank, 140 Mass. 157, 2 N. 
E. 925; Whitwell V. Winslow, 132 
Mass. 307. 

Mississippi. — Carradine v. Col- 
lins, 7 Smed. & M. 428. 

New Jersey. — Skillman v. Wie- 
gand, 54 N. J. Eq. 198, 33 Atl. 929. 

New York. — Grangiac v. Ardeii, 
10 Johns. 293; Hunter v. Hunter, 19 
Barb. 631; Smith v. Maine, 25 Barb. 
33; Hurlburt v. Hurlburt, 18 N. Y. 
St. 407, 2 N. Y. Supp. 317; Devlin v. 
Farmer, 30 N. Y. St. 541, 9 N. Y. 
Supp. 530; Hill V. Froehlich, 38 N. 
Y. St. 24, 14 N. Y. Supp. 610. 

North Carolina. — Collier v. Poe, 
16 N. C. 55; Moore v. Gwyn, 26 N. 
C. 27s; Cowan V. Tucker, 30 N. C. 
426. 

Pennsylvania. — Swab v. Mille, 9 

Atl. 667; Jacques v. Fourthman, 137 

Pa. St 428, 20 Atl. 802; Stewart's 

Estate, 137 Pa. St. 175, 20 Atl. 554. 

South Carolina. — Banks v. Hat- 

Vol. VI 



212 



GIFTS. 



(B.) Whun Against His Interest. — They are also admissible when 
made against his interest.^' 

(C.) Subsequent Admissions. — And the declarations of the donor 
made subsequent to the gift, and admitting that it was made, are 
admissible on behalf of the donee and those claiming under him.^° 



ton, I Nott & McC. 211 ; Brashears v. 
Blassingame, i Nott & McC. 223; 
Davis V. Davis, I Nott & McC. 224; 
Snowden v. Logan, Rice Eq. 174; 
Watson V. Kennedy, 3 Strob. Eq. i ; 
Blake v. Jones, i Bail. Eq. 141, 21 
Am. Dec. 530. 

Texas. — Higgins v. Johnson, 20 
Tex. 389; Smith v. Strahan, 25 Tex. 
103. 

Wisconsin. — Wainbold v. Vick, 
SO Wis. 4S6. 

In Lark v. Cunningham, 7 Rich. 
L. (S. C.) 376, the plaintiff claimed 
title to a slave as a parol gift from 
his father-in-law. Held, that the de- 
fendant might put in evidence, as 
part of the res gestae, a receipt, 
signed by the wife of plaintiff, show- 
ing that at the time the slave was de- 
livered to her it was considered a 
loan to be returned when called for; 
even though such receipt was not 
given in the presence of the husband 
and was not known to him. 

Where a father gave a slave to his 
daughter upon her marriage, but 
afterward obtained possession of the 
property and mortgaged it to a third 
party, held, that a recital in his will, 
made at the time of the gift and ac- 
knowledging it, was admissible in 
evidence as part of the res gestae. 
Jennings v. Blocker, 25 Ala. 415. 

28. Rule Stated. — " In almost 
all the cases in which gifts have been 
the subject of litigation, the declara- 
tions of the donor have been received 
in evidence, without objection, or 
any question that they were not com- 
petent. If the donor were living, 
and suing for the property, it is quite 
clear that his declarations in refer- 
ence to a gift to the donee would be 
admissible on the most elementary 
principles of the law of evidence. 
When the contest, as to the gift, is 
between the donee and the represent- 
atives of the donor, the declarations 
of the donor are undoubtedly ad- 
missible, being against his interest 

Vol. VI 



when made; and the admissions of 
the testator or intestate, as a uni- 
versal rule, are admissible against 
the representatives." Hackney v. 
Vrooman, 62 Barb. (N. Y.) 650. 

29. Subsequent Admissions. 
England. — Ivat v. Finch, i Taunt. 
141. 

Georgia. — Poullam v. Poullam, 76 
Ga. 420, 79 Ga. 11, 4 S. E. 81. 

Indiana. — Dean v. Wilkerson, 126 
Ind. 338, 26 N. E. 55- 

Ma ssach.u setts. — Fellows v. 
Smith, 130 Mass. 378. 

Missouri. — Gunn v. Thruston, 130 
Mo. 339, 32 S. W. 654. 

North Carolina. — Gross v. Smith, 
132 N. C. 604, 44 S. E. III. 

Soiith Carolina. — Richards v. 
Munro, 30 S. C. 284, 9 S. E. 108. 

Upon a trial involving the ques- 
tion of a parol gift of land the sub- 
sequent declarations of the donor 
tending to show a motive for the 
gift are admissible in favor of the 
donee; but they would not be ad- 
missible for the purpose of fastening 
a parol trust upon a deed previously 
made to the donor. Rives v. Lamar, 
94 Ga. 186, 21 S. E. 294. 

In an action brought against the 
administrator of plaintiff's father for 
the value of board and lodging fur- 
nished the deceased by the plaintiff, 
the defendant set up as a counter- 
claim certain promissory notes which 
the deceased held against the plain- 
tiff, but which plaintiff claimed had 
been given up to him. Held, that it 
was competent to put in evidence 
declarations of the deceased made 
to third persons to the effect that he 
had made the gift. Pritchard v. 
Pritchard, 69 Wis. 373, 34 N. W. 
506. 

In an action brought by a hus- 
band against his wife's administrator, 
to recover money which he alleged 
had been given to him by her, held, 
that it was proper to receive in evi- 
dence her declarations made during 



GIFTS. 



213 



(2.) When Inadmissible (A.) When Subsequent to GifT. — (a.) Gen- 
eral Rule. — As a general rule the declarations of the donor, made 
after the consummation of the gift, are not competent to qualify it 
or to afifect the title conferred.''*' 



her last sickness to the effect that she 
had given her personal property to 
her husband, and also a letter written 
by her to him, saying that he could 
have the money after a certain date. 
Dean v. Dean, 43 Vt. 337. 

" When money is delivered, as in 
this case, from father to son, and no 
writing is made, and no evidence of 
debt taken, and under circumstances 
rendering it uncertain as to whether 
it was intended as a loan or gift, and 
not inconsistent with either, then a 
distinct declaration to the donee, 
made afterward, that it was intended 
as a gift, may have the effect, not of 
changing it, but of determining 
which it was." Doty v. Willson, 47 
N. Y. 580. 

If the donee introduce subsequent 
declarations of the donor, his oppo- 
nent may introduce other declara- 
tions of the donor denying the gift. 
Stallings V. Finch, 25 Ala. 518; Han- 
sell V. Bryan, 19 Ga. 167; Sims v. 
Saunders, Harp. L. (S. C.) 374; Mc- 
Kane v. Bonner, i Bail. (S. C.) 113; 
Stone V. Stroud, 6 Rich. L. (S. C.) 
306; Bennett v. Cook, 28 S. C. 353, 
6 S. E. 28. 

See this doctrine disputed in 
Woodruff V. Cook, 25 Barb. (N. Y.) 
505, and compare Doty v. Willson, 
47 N. Y. 580; Young V. Young, 80 
N. Y. 422. 

In an action brought by a wife 
against her husband's aduiinistrator 
for the recovery of a slave which 
plaintiff claimed as a gift from her 
husband, the only evidence of the 
gift was the declarations of the hus- 
band. Held, that it was error to ex- 
clude from evidence on behalf of the 
defendant a will executed by the 
husband subsequent to the gift, in 
which he bequeathed the slave, to- 
gether with other property, to his 
wife for life only with remainder to 
her children. Barziza v. Graves, 25 
Tex. 322. 

And the declarations of the donor 
made prior to the gift and in his own 
favor are sometimes admissible 



against the donee to rebut previous 
declarations put in evidence by the 
donee. Sherman v. Sherman, 75 
Iowa 136, 39 N. W. 232. ' 

30. When Subseq.uent to Gift. 
General Eule. — Gillespie v. Burle- 
son, 28 Ala. 551; Cowan v. Tucker, 
30 N. C. 426; Hicks V. Forrest, 41 
N. C. 528; Lam v. Brock (Va.), 23 
S. E. 224. 

It has been held that the subse- 
quent declarations of the donor im- 
peaching or denying the gift are in- 
competent and irrelevant ; that " the 
donor's subsequent denials of the 
gift no more disprove the gift than 
the disavowal of his hand and seal 
would have been disproof of his 
bond, nor is the evidence a whit 
more competent in the one case than 
in the other. The denial is not 
an operative act in itself. It lays no 
other foundation for disbelieving the 
witness who proves the act of giving 
than the mere veracity of the declar- 
ant. It is the mere statement of a 
fact, without the sanction of an 
oath." Snowden v. Logan, Rice's 
Eq. (S. C.) 191. See also Newman 
V. Wilbourne, i Hill Eq. (S. C.) g; 
Hunter v. Parsons, 2 Bail. (S. C.) 
59; compare Sims v. Saunders, Har- 
per 374- 

Gift of Judgment to Wife. 
Reese v. Reese, 157 Pa. St. 200, 27 
Atl. 703. 

Some authorities hold that the sub- 
sequent declarations of the donor are 
inadmissible against the donee un- 
less they explain other declarations 
already put in evidence by the donee. 
Blagg V. Hunter, 15 Ark. 246; How- 
ell V. Howell, 59 Ga. 145. 

When too Remote to Be Part of 
Res Gestae — -Georgia. — Carter 7;. 
Buchannon, 3 Ga. 513. 

Indiana. — ■ Thistlewaite v. Thistle- 
waite, 132 Ind, 355, 31 N. E. 946; 
Hamlyn v. Nesbit, 37 Ind. 284 ; Har- 
ness V. Harness, 49 Ind. 384. 

New Jersey. — Lister v. Lister, 35 
N. J. Eq. 49- 

Vol. VI 



214 



GIFTS. 



h. Declarations of Donee. — (1.) When Admissible. — (A.) Made in 
Presence oe Donor. — The declarations of the donee asserting title 
to the property in dispute, made in the presence of the donor, and 
acquiesced in by him, are admissible on behalf of the donee and 
those claiming under him."^ 

The declarations and acts of the donee, while in possession of 
the gift, against his interest and acknowledging title in the 3onor 
are admissible on behalf of the donor and those claiming under him.'^ 

c. Declarations of Party in Possession. — (l.) When Admissible. 
(A.) To Explain Nature oe Possession. — The declarations of the 



Vermont. — Ross v. White, 60 Vt. 
558, IS Atl. 184. 

In an action to recover possession 
of a tract of land, it appeared that 
defendant was an adopted son of 
the person through whom plaintiffs 
claimed title, while plaintiffs were 
nieces and nephews. Defendant 
claimed title by parol gift and 
sought to put in evidence a conver- 
sation between his natural father and 
plaintiff's uncle, the alleged donor, in 
which the latter agreed to adopt the 
defendant and make a parol gift to 
him of the property in dispute. 
Held, that this conversation, occur- 
ring nearly twenty-five years before 
the alleged gift was made, was too 
remote to be a part of the res gestae, 
and was inadmissible as evidence. 
Ward V. Edge, 100 Ky. 757, 39 S. W. 
440. 

Subsequent to Gift and in his Own 
Pavor — Gunn v. Barrow, 17 Ala. 
743; High V. Stainback, I Stew. 
(Ala.) 24; Kimball v. Leland, no 
Mass. 325; Scott V. Berkshire Co. 
Sav. Bank, 140 Mass. 157, 2 N. E. 
92s; Duff V. Leary, 146 Mass. 533, 
16 N. E. 417; Woodruff V. Cook, 25 
Barb. (N. Y.) 505. Compare Sander- 
lin V. Sanderlin, 24 Ga. 583. 

On the question whether a parent 
had given certain negro slaves to her 
child upon the marriage of the latter, 
held, that since the parent on the 
morning before the marriage had 
made certain admissions acknowledg- 
ing the gift, any after declarations of 
hers tending to defeat the gift were 
inadmissible. Eelbank v. Burt, 3 N. 
C. 330. 

While Donee is in Possession. 
Gillespie v. Burleson, 28 Ala. 551 ; 
Porter v. Allen, 34 Ga- 623; Baxter 

Vol. VI 



V. Knowles, 12 Allen (Mass.) 114; 
Fellows V. Smith, 130 Mass. 378. 

After DDnor Has Parted With Pos- 
session Walden v. Purvis, 73 Cal. 

S18, IS Pac. 91. 

Where DOnor Has Regained Pos- 
session. — Cornett V. Fain, 33 Ga. 
219. 

When not Made in Presence of 
Donee. — Prater v. Frazier, 11 Ark. 
249; Dixon V. Labry, 16 Ky. L. Rep. 
S22, 29 S. W. 21 ; Mulliken v. Greer, 
S Mo. 489; Griffin v. Stadler, 3S 
Tex. 69s ; Whittaker v. Marsh, 62 N. 
H. 477; Cowan v. Tucker, 30 N. C. 
426; Rumbley v. Stainton, 24 Ala. 
712; Miller v. Hartle, 53 Pa. St. 108; 
Ray V. Loper, 65 Mo. 470. 

To Defeat Deed of Gift Julian 

V. Reynolds, 8 Ala. 680; Strong v. 
Brewer, 17 Ala. 706; Gregory v. 
Walker, 38 Ala. 26; Hatch v. 
Straight, 3 Conn. 31 ; Blalock v. Mi- 
land, 87 Ga. 573, 13 S. E. SSi ; 
Grooms v. Rust, 27 Tex. 231. 

31. Thomas v. Degraffenreid, 17 
Ala. 602. 

Declarations of Wife in Presence 
of Husband. — In an action brought 
by the administrator of a husband 
against the vendee of his wife to re- 
cover certain slaves which the de- 
fendant claimed had been a gift to 
the wife as her separate estate from 
her father, held, first, that any dec- 
larations of the husband admitting 
the separate estate in his wife, and 
second, any declarations of the wife 
while she was in possession of the 
slaves asserting her own title thereto, 
made in the presence of the husband 
and acquiesced in by him, were ad- 
missible against his administrator. 
Gillespie v. Burleson, 28 Ala. 551. 

32. Parr v. Gibbons, 23 Miss. 92 



GIFTS. 



215 



party in possession of the gift, when properly a part of the res 
gestae, are usually admissible to explain the nature of his pos- 
session.^^ 

d. Other Evidence Bearing Upon the Issue. — (1.) Ability of Donor. 
Evidence showing the financial standing of the donor and his ability 
to make the gift is relevant as corroborating the other evidence 
of the gift.=* 

(2.) Acts of Ownership. — Any acts of ownership exercised over 
the subject of the gift, either by the donor or the donee, and acqui- 
esced in by the other party, are competent as evidence either to sup- 
port or defeat the gift.^® 



33. Degraffenreid v. Thomas, 14 
Ala. 681 ; Nelson v. Iverson, 17 Ala. 
216 ; Nelson v. Iverson, 19 Ala. 95 ! 
Vincent v. State, 74 Ala. 274; Bach- 
man V. Killinger, 55 Pa. St. 414. 

In an action of replevin brought by 
a aaughter against her mother, who 
was administratrix to her father's 
estate, to recover a piano claimed as 
a gift from her father, it appeared 
that an inventory of the estate had 
been filed nearly five years previous 
in v.hich the piano was not included 
among the goods of the decedent. 
The defendant was sued, not as ad- 
ministratrix, but personally. Held, 
that the declarations of the defendant 
made at the time the piano was re- 
plevied, to the effect that it belonged 
to her daughter and not to the de- 
ceased, were admissible against her ; 
that since she was sued personally 
they were not the declarations of a 
trustee offered to divest the title of 
the cestui que trust. Swab' v. Mil- 
ler (Pa.), 9 Atl. 667. 

Personal property belonging to the 
wife was sold by her husband. In 
an action by her to recover the prop- 
erty, in which the defense was that 
it had been given by her to her hus- 
band — held, that his declarations 
made before the sale, that he was not 
the owner, was important proof to 
negative the idea of a gift. Although 
if the property had formerly belonged 
to the husband, his declarations 
would have been inadmissible to vest 
title in the wife as against creditors. 
Musser v. Gardner, 66 Pa. St. 242. 

When the declarations are not 
merely explanatory of possession, but 
are offered to disprove a title derived 
from the declarant, they are inadmis- 



sible as evidence in favor of the 
party making them. Walker v. Blas- 
singame, 17 Ala. 810. 

But before such declarations can 
be put in evidence the main fact, the 
possession, must be proved. Thomas 
V. Degraffenreid, 17 Ala. 602. 

34. Thus, in an action to recover 
a sum of money claimed by the de- 
fendant as a gift from plaintiff's in- 
testate to his wife, the decedent's 
daughter — held, that evidence show- 
ing the financial standing of the de- 
cedent and his ability to give the 
amount claimed was relevant to cor- 
roborate the other evidence of the 
gift. Blaisdell v. Davis, 72 Vt. 295, 
48 Atl. 14. 

Family Connections In an ac- 
tion brought for money alleged to 
have been loaned by plaintiff's tes- 
tator to the defendant, to whom he 
was engaged to be married, but 
which the defendant claimed as a gift 
— held, that evidence was admissi- 
ble showing that the testator had no 
child, wife or parents to provide for 
as bearing upon the probability of 
the gift to the defendant. Also his 
v/jll, executed shortly after the al- 
leged gift, was competent evidence 
to show his family relationship. 
Russell V. Langford, 135 Cal. 356, 67 
Pac. 331. 

35. Acts of Ownership In an 

action to recover possession of cer- 
tain bonds which plaintiff claimed as 
a gift from her deceased aunt — held. 
that it was competent for the de- 
fendant, the aunt's executor, to show 
that, at the time of her death, the 
bonds were deposited in bank in her 
own name, as tending to refute any 

Vol. VI 



216 



GIFTS. 



(3.) Discrediting Acts. — Evidence showing any acts of the claim- 
ant which are inconsistent with the theory of a gift, or which cast 
suspicion upon his conduct, is relevant and material.^' 

(4.) Evidence of Other Gifts. ■ — In contests involving gifts to chil- 
dren, evidence showing gifts or advancements to other children of 
the same parent is relevant as bearing upon the probability of the 
parent having made the gift in question.^' 



inference of a gift. Patterson v. Du- 
shane, 137 Pa. St. 23, 20 Atl. 538. 

In an action by the heirs of a de- 
ceased wife to recover certain money 
which the husband claimed as a gift 
from her — held, that it was compe- 
tent to show that he afterward loaned 
the money and took a note therefor, 
payable to himself, with her knowl- 
edge and without any objection on 
her part. Whitaker v. Marsh, 62 N. 
H. 477. 

On the question as to whether a 
piano had been given to a wife by 
her husband — held, that the manner 
in which the piano was treated by the 
husband and wife, and their acts re- 
specting it, were relevant, and con- 
sequently it was not error to admit 
evidence showing that the piano had 
been insured in the wife's name. 
Fletcher v. Wakefield, 75 Vt. 257, 54 

Atl. I0I2. 

" The fact that a promissory note 
was found in the possession of the 
payee at the time of his death is ev- 
idence that he had not made a present 
of it to the maker." Oelke v. Theis 
(Neb.), 97 N._W. 588. 

Evidence of improvements made by 
the donee under a parol gift of land, 
after the comfnencement of the con- 
troversy involving the gift, is in- 
admissible. Aurand v. Wilt, 9 Pa. 
St. 54- 

36. Discrediting Acts Where a 

person claimed certain property by 
virtue of a will and also by deed of 
gift, the fact that she did not pro- 
duce the deed until after the will 
had been declared invalid was held 
strong evidence to contradict the -va- 
lidity of the gift, but not suificient 
to work as an estoppel. Bishop v. 
Hendrick, 42 N. Y. St. 296, 17 N. 
Y. Supp. 241. 

Where a son in settling up his 
father's estate first credits the es- 
tate with a judgment standing in 

Vol. VI 



the testator's name, and afterward 
claims the judgment by^ an assign- 
ment to himself as a gift, the fact 
that he first recognized the judg- 
ment as belonging to the estate, and 
that the assignment is without con- 
sideration, is evidence from which 
it might be inferred that the assign- 
ment was not intended to operate as 
a gift. Stewart's Estate, 137 Pa. St. 
17s, 20 Atl. SS4. 

The fact that a deed of gift was 
executed at the instigation of one of 
the donees is of material importance 
as bearing upon the question of fraud. 
Sears v. Shafer, i Barb, (N. Y.) 
408. 

Threats — In an action for certain 
bonds and bank stock which plaintiflf 
claimed as a gift from defendant's in- 
testate, it appeared that plaintiflf had 
possession of the property after the 
death of the donor, but had given 
them up to the administrator. Held, 
that plaintiflf's evidence showing that 
she had been threatened by the ad- 
ministrator with imprisonment, if 
she did not give them up, was com- 
petent and relevant evidence as 
tending to explain her surrender of 
possession. Pryor v. Morgan, 170 
Pa. St. 568, 33 Atl. 98. 

37. " In order to show the mo- 
tive which prompted the intestate in 
giving plaintiffs the amounts with 
which the attempt is made to charge 
them, all the circumstances should be 
considered. These would include the 
value of the estate, the value of the 
donations, and what has been done 
by way of gifts or advancements to 
the other heirs. The law ascribes 
to the parent the intention to deal 
equally with all his children in the 
distribution of his estate, and evi- 
dence that he had made absolute gifts 
to other children would tend to prove 
that the same motive prompted him 
in giving to these plaintiffs. Evidence 



GIFTS. 



217 



2. Particular Classes of Gifts. — A. With Reference to NaturB 
OF Transaction. — Where money is deposited in a savings bank 
in the name of a person other than the depositor, some authorities 
hold that the mere form of the deposit raises a presumption of a 
gift.'* But the weight of authority and better reasoning is to the 



that he had made advancements to 
other children would tend to for- 
tify the presumption that these gifts 
were intended as advancements. We 
think it was competent, therefore, for 
plaintiffs to prove that deceased had, 
in his lifetime, made absolute gifts to 
his other children, and to show their 
value. The evidence would tend to 
prove the intention of the intestate 
in making the gifts in question, and 
would be admissible for that pur- 
pose, without pleading the facts." 
Gunn V. Thruston, 130 Mo. 339, 32 
S. W. 6S4- See also Lam v. Brock 
(Va.), 23 S. E. 224. 

Contra — In an action by a father- 
in-law against his son-in-law to re- 
cover a slave which defendant 
claimed as a gift — held, that evidence 
showing that plaintifif had not given 
his other sons-in-law any property 
upon their marriage, and his declara- 
tions to the effect that he did not in- 
tend to make any donations to his 
' future sons-in-law, were irrelevant 
and improperly admitted. Olds v. 
Powell, 7 Ala. 652. See also Porter 
V. Allen, 54 Ga. 623. 

38. Connecticut. — Minor v. Rog- 
ers, 40 Conn. 512; Kerrigan v. Rau- 
tigan, 43 Conn. 17. 

Maryland. — Gardner v. Merritt, 
32 Md. 78. 

Nezv Hampshire. — Blasdel v. 
Locke, 52 N. H. 238; Kimball v. 
Norton, 59 N. H. i. 

New York. — Hannon v. Sheehan, 
SI N. Y. St. 902, 22 N. Y. Supp. 
935; Millspaugh v. Putnam, 16 Abb. 
Pr. 380; Witzel v. Chapin, 3 Bradf. 
386; Orr V. McGregor, 43 Hun 528; 
Martin v. Funk, 75 N. Y. 134. 

Rhode Island. — Ray z>. Simmons, 
II R. I. 266, 23 Am. Rep. 447. 

Vermont. — Howard v. Savings 
Bank, 40 Vt. 597; Pope z'. Savings 
Bank, 56 Vt. 284, 48 Am. Rep. 781- 

D. deposited in a savings bank a 
certain sum of money in her own 
name as trustee for W., a minor. 



She afterward drew out the whole 
sum and signed a receipt in the 
bank-book in her own name without 
the word trustee, and delivered the 
book up to the bank. She had al- 
ways retained the book in her pos- 
session. A few days after making 
the deposit she informed W.'s father 
of it and afterward alluded to it in 
conversations with his parents. W. 
knew nothing of the deposit until 
after D.'s death. Held, in a suit 
against her executor, that the e\i- 
dence established" a complete and 
executed gift at the time of the de- 
posit, that was irrevocable by the 
donor. Minor v. Rogers, 40 Conn. 
512. ' 

Presumption May Be Rebutted. 
Bath Sav. Inst. v. Hathorn, 88 Me. 
122, 33 Atl. 836, 51 Am. St. Rep. 382, 
32 L. R. A. 377; Parret v. Craig, 56 
N. J. Eq. 280, 38 Atl. 305. Compare 
McDermott's Appeal, 106 Pa. St. 358, 
SI Am. Rep. 526. 

"While we think that the deposit 
of one's own money in a savings 
bank to the credit of another, with- 
out any qualification expressed at the 
time, is of itself prima facie evidence 
of a gift to the latter of the fund 
deposited, an intent to the contrary 
may be shown, and the retention by 
the depositor of the deposit-book 
(like the one in question) is some 
evidence of intent not to perfect the 
gift at the time of making the de- 
posit. In this fact, and in withhold- 
ing knowledge from the person to 
whom the credit is so given, may in- 
dicate a purpose as of the time the 
deposit is made not to surrender 
dominion over the fund to the latter." 
Orr V. McGregor, 43 Hun (N. Y.) 
528. 

" Where it clearly appears that such 
deposit is made merely for the con- 
venience of the parent in drawing 
money, and not with the intention to 
make a gift to the child in case of 
its surviving the parent, a subsequent 
change of intention and determina- 
tion to make a gift to the child must 

Vol. VI 



218 



GIFTS. 



effect that a gift will not be presumed merely from the form of the 
deposit, without corroborating circumstances.^' 

The authorities differ as to the necessity of showing a transfer of 
possession of the deposit-book, but where the gift is otherwise com- 
pletely executed, it is immaterial that the deposit-book remains in the 
possession of the donor." 



be proven by clear and satisfactory 
evidence. The mere permitting the 
account to remain in joint names, 
and loose declarations indicating a 
gift, are not sufficient." Skillman v. 
Wiegand, 54 N. J. Eq. 198, 33 Atl. 
929. 

Question of Fact in Each Case. 
Ide V. Pierce, 134 Mass. 260; Bart- 
lett V. Remington, 59 N. H. 364; 
Marcy v. Amazeen, 61 N. H. 131. 

" It is a matter wholly between the 
depositor and the bank. If, by the 
delivery of the book, or a sufficient 
declaration of trust, or other act be- 
tween the depositor and the claimant, 
the latter should acquire a right, the 
form of deposit would estop the de- 
positor, as against the bank, from de- 
nying that right." Sherman v. New 
Bedford Sav. Bank, 138 Mass. 581. 

39. England. — Green v. Carlill, 4 
Ch, Div. 882. 

United States. — Stone v. Bishop, 
4 Cliff. 593, 23 Fed. Cas. No. 13,482. 

California. — Denigan v. Hibernia 
Loan and Sav. Bank, 127 Cal. 137, 59 
Pac. 389. 

Connecticut. — Burton v. Savings 
Bank, 52 Conn. 398. 

Maine. — Bath Sav. Inst. v. Hat- 
horn, 88 Me. 122, 33 Atl. 836, SI Am. 
St. Rep. 382, 32 L. R. A. 277; Fair- 
field Sav. Bank v. Small, 90 Me. 546, 
38 Atl. 551 ; Getchell v. Biddeford 
Sav. Bank, 94 Me. 452, A7 Atl. 895, 
80 Am. St. Rep. 408. 

Maryland. — Pennington v. Git- 
tings, 2 Gill & J. 209 ; Whalen v. Mil- 
holland, 89 Md. 199, 43 Atl. 45, 44 L. 
R. A. 208. 

Massachusetts. — Alger v. North 
End Sav. Bank, 146 Mass. 418, 15 
N. E. 916, 4 Am. St. Rep. 331 ; Adams 
V. Brackett, 5 Mete. 280; Ide v. 
Pierce, 134 Mass. 260; Sherman v. 
Savings Bank, 138 Mass. 581. 

New York. — Beaver v. Beaver, 117 
N. Y. 421, 22 N. E. 940, IS Am. St. 
Rep. S3 1, 6 L. R. A. 403; Geary v. 
Page, 9 Bosw. 290. 

"It may be justly saiql that a 4?" 

Vol, VI; 



posit in a savings bank by one per- 
son of his own money to the credit of 
another, is consistent with an intent 
on the part of the depositor to give 
the money to the other. But it does 
not, we think, of itself, without more, 
authorize an affirmative finding that 
the deposit was made with that in- 
tent, when the deposit was to a new 
account, unaccompanied by any dec- 
laration of intention, and the de- 
positor received at the time a pass- 
book, the possession and presentation 
of which, by the rules of the bank, 
known to the depositor, is made the 
evidence of the right to draw the de- 
posit. We cannot close our eyes to 
the well-known practice of persons 
depositing in savings banks money to 
the credit of real or fictitious persons, 
with no intention of divesting them- 
selves of ownership. It is attribu- 
table to various reasons ; reasons con- 
nected with taxation; rules of the 
iDank limiting the amount which any 
one individual may keep on deposit; 
the desire to obtain high rates of in- 
terest where there is a discrimination 
based on the amount of deposits, and 
the desire, on the part of many per- 
sons, to veil or conceal from others 
knowledge of their pecuniary condi- 
tion. In most cases where a deposit 
of this character is made as a gift, 
there are contemporaneous facts or 
subsequent declarations by which the 
intention can be established, independ- 
ently of the form of the deposit. 
We are inclined to think that to in- 
fer a gift from the form of the de- 
posit alone would, in the great ma- 
jority of cases, and especially where 
the deposit was of any considerable 
amount, impute an intention which 
never existed and defeat the real 
purpose of the depositor." Beaver v. 
Beaver, 117 N. Y. 421, 22 N. E. 940, 
IS Am. St. Rep. 531, 6 L. R. A. 403. 

40. Possession of Deposit-Book. 
Rule Stated. — " There is some 
confusion in the authorities re 
spectin^ the disposition of a 



GIFTS. 



219 



As Between Husband and Wife. — As between husband and wife it 
has been held that a deposit by the husband in the name of himself 
and his wife raises no presumption of a gift to the wife.*"^ 

B. With Reference to the Parties. — a. Confidential Rela- 
tions in General. — (1.) General RvUe. — As a general rule, where 
it is shown that a relation of special trust and confidence exists 
between the parties, a gift to the party in the ascendency is prima 
facie void.*^ 



bank-book, showing a deposit in 
the name of the donee, as af- 
fecting the rights of the parties, 
and there is no reasonable hypothesis 
upon which they can be reconciled. 
The weight of the authorities, how- 
ever, and better reason support the 
proposition that, where a completely 
executed gift of the money deposited 
is shown, it is immaterial that the 
deposit-book has not been delivered 
to the donee, but remains in the pos- 
session of the donor." Goelz v. Peo- 
ple's Sav. Bank, 31 Ind. App. 67, 67 
N. E. 232. 

On the other hand, the mere pos- 
session of a check-book and bank- 
book by the alleged donee is insuffi- 
cient in itself to raise a presumption 
of a gift. Dinlay v. McCullagh, 72 
N. Y. St 416, 36 N. Y. Supp. 1007. 

41. As Between ^usband and 
Wife. _ Marshal v. Cruttwell, L. R. 
20 Eq. 328; Brown's Estate, 113 Iowa 
351, 85 N. W. 617; Getchell v. Bidde- 
ford Sav. Bank, 94 Me. 452, 47 Atl. 
8gs, 80 Am. St. Rep. 408; In re Ward 
SI How. Pr. (N. Y.) 316; Greeno v. 
Greeno, 23 Hun (N. Y.) 478; Slee 
V. Kings Co. Sav. Inst., 78 App. Div. 
S34. 79 N. Y. Supp. 630. See contra, 
Payne v. Marshall, 18 O. R. (Can.) 
488. Compare Brown v. Brown, 174 
Mass. 197, 54 N. E. 532, 75 Am. St. 
Rep. 292. 

42. Confidential Relation. — Gen- 
eral Rule. — £;;g/and. — Griffiths v. 
Robins, 3 Madd. 191 ; Hunter v. At- 
kins, 3 Myl. & K. 113; Consett v. 
Bell, I Y. & C. Ch. 569; Gibson v. 
Russell, 2 Y. & C. Ch. 104; Huguenin 
V. Baseley, 14 Ves. Jr. 273. 

Canada. — Mason v. Seney, 11 Ch. 
447- 

California. — White v. Warren, 120 
Cal. 322, 49 Pac. 129, 52 Pac. 723. 

Iowa. — Samson v. Samson, 67 
Iowa 253, 25 N. W. 233. 

Maryland. — Todd v. Grove, Z3 



Md. 188; Brooke v. Berry, 2 Gill 83; 
Griffith V. Diffenderffer, 50 Md. 466. 

Missouri. -^ Hall v. Knappenber- 
ger, 97 Mo. 509, iiS. W. 239, 10 Am. 
St. Rep. 337; Garvin v. Williams, 44 
Mo. 465, ICO Am. Dec. 314; Hamilton 
V. Armstrong, 20 S. W. 1054; Mc- 
Clure V. Lewis, 72 Mo. 314; Reed v. 
Carroll, 82 Mo. App. 102. 

New York. — Sears v. Shafer, i 
Barb. 408; Decker v. Waterman, 67 
Barb. 460; Ross v. Ross, 6 Hun 80. 

Tennessee. — Graves v. White, 4 
Baxt. 38. 

But where the relation of principal 
and agent exists between donor and 
donee, the fact that the donor was in 
a declining state of health at the time 
the gift, was made does not necessa- 
rily raise a presumption of fraud and 
undue influence. Ralston v. Turpin, 
129 U. S. 663. 

Sisters. — The fact that the donor 
and donee were sisters, that the busi- 
ness relation of principal and agent 
did not exist between them, and that 
whatever was done for the donee by 
the donor was through sisterly af- 
fection, does not show such a confi- 
dential relation as to raise a presump- 
tion of undue influence. Funston v. 
Twining, 202 Pa. St. 88, 51 Atl. 736. 

Half-Sisters. _ The fact that the 
donee is the half-sister of the donor 
does not show such a confidential re- 
lation as to raise a presumption of 
undue influence. Richardson v. 
Smart, 152 Mo. 623, 54 S. W. 542, 75 
Am. St. Rep. 488. 

The English Courts have adopted 
even a more stringent rule in the 
case of confidential relations, requir- 
ing it to be shown that the donor 
had free and independent advice in 
making the gift. 

England. — Rhodes v. Bate, L. R. 
I Ch. App. 252; Liles V. Terry 
(189s), 2 Q. B. 679; Barron v. Wil- 
lis, 3 Ch. 121 ; Kempson v. Ashbee, 

Vol. VI 



220 



GIFTS. 



The presumption of undue influence may be rebutted by showing 
that the donor, after the confidential relation has ceased, has elected 
to ratify the gift.*^ 

(2.) Burden of Proof. — The burden of proof is upon the donee to 
show that the transaction is free from any fraud or undue influ- 
ence.** 



L. R. 10 Ch. App. is; Walsh v. Stud- 
dart, 6 Ir. Eq. Rep. i6l. 

Canada. — Mason v. Seney, li Ch. 
447; Fraser v. Rodney, ii Ch. 426; 
J. c, 12 Ch. 154; Dawson v. Dawson, 
12 Ch. 278. 

The English rule is not applied 
with the same force to a mere trifling 
gift as it is where the donor gives 
up his whole property or subjects 
himself to a liability involving it. 
Rhodes v. Bate, L,. R. i Ch. App. 252. 
See also Cray v. Mansfield, i Ves. 
379- 

43. Subsequent Uatification. 
Mitchell V. Homfray, L. J. 8 Q. B. 
460. See also Ralston v. Turpin, 120 
U. S. 663. 

44. Confidential Eelation Bur- 
den of Proof. — England. — Hunter 
V. Atkins, 3 Myl. & K. 113; Billage 
V. Southee, 9 Hare 534; Toker v. 
Toker, 31 Beav. 629; Morley v. 
Loughnan, i Ch. 736; Dent v. Ben- 
nett, 4 Myl. & Cr. 269. 

Canada. — Masan v. Sehey, 1 1 Ch. 
447; Dawson v. Dawson, 12 Ch. 278; 
Kersten v. Tane, 22 Ch. S47. 

United States. — Ralston v. Tur- 
pin, 129 U. S. 663. 

Maryland. — Todd v. Grove, 33 
Md. 188; Griffith v. Diffenderffer, 50 
Md. 466. 

Missouri. — Hall v. Knappenber- 
ger, 97 Mo. 509, II S. W. 239, 10 
Am. St. Rep. 337; Gay v. Gillilan, 92 
Mo. 250, s S. W. 7, I Am. St. Rep. 
712; Hamilton v. Armstrong, 20 S. 
W. 1054. 

New Jersey. — Parker v. Parker, 45 
N. J. Eq. 224, 16 Atl. 537; Haydock 
V. Haydock, 34 N. J. Eq. 570, 38 Am. 
Rep. 385. 

New York. — Adee v. Hallett, 73 
N. Y. St. 754, 38 N. Y. Supp. 273; 
Cowee V. Cornell, 75 N. Y. 91, 
31 Am. Rep. 428; Case v. Case, 
17 N. Y. St. 313, I N. Y. 
Supp. 714; Decker v. Water- 
man, 67 Barb. 460; Barnard v. Gautz, 
140 N. Y. 249, 35 N. E. 430; In re 

Vol. VI 



Taber, 30 Misc. 172, 63 N. Y. Supp. 
728. 

Pennsylvania. — Hasel v. Beilstein, 
179 Pa. St. 560, 36 Atl. 336- 

Tennessee. — Graves v. White, 4 
Baxt. 38. 

Wisconsin. — Doyle v. Welch, 100 
Wis. 24, 15 N. W. 400. 

Parties on Unequal Terms. — /» 
re Rogers, 10 App. Div. 593, 42 N. 
Y. Supp. 133. ^ , . , , . ^. 

"Where a confidential relationship 
exists, and one party is exposed to 
the arts and designs of the other, 
and a voluntary settlement or deed 
of gift is made, the policy of the law 
requires the party claiming the bene- 
fit of such a deed or settlement to 
show affirmatively that it proceeded 
from the donor's own free will, and 
was fully understood by him, and 
carried into effect by the intervention 
of some disinterested third person. 
If all this appears, the gift will be 
supported." Siemon v. Wilson, 3 
Edw. Ch. (N. Y.) 36. See also 
Chalker v. Chalker, 5 Redf. (N. Y.) 
480. 

" When the Gift is Dispropor- 
tionate to the Means of the Giver, 
and the giver is a person of weak 
mind, of an easy temper and yielding 
disposition, liable to be imposed upon, 
the court will look upon such a gift 
with a very jealous eye, and will very 
strictly examine the conduct and be- 
havior of the person in whose favor 
it is made. If it can discover that 
any arts or stratagems, or any undue 
means, have been used by him to pro- 
cure such gift; if it see the least 
speck of imposition at the bottom, or 
that the donor is in such a situation 
with respect to the donee as may 
naturally give him an undue influence 
over him; if there be the least scin- 
tilla of fraud, a court of equity will 
interpose." Sears v. Shafer, i Barb. 
(N. Y.) 408. 

The question of undue influence 
in such cases is for the jury. Wood 



GIFTS. 



221 



(3.) Property Conveyed to Dependent Person. — Where property is 
conveyed to a person toward whom the vendor is under moral or 
legal obligation for maintenance or support, the presumption is that 
the transaction was a gift or advancement.*^ 

b. Gifts From Husband to Wife. — (1.) Degree of Proof Required. 
The authorities are almost universal in holding that a gift from hus- 
band to wife will be sustained only upon the clearest and most con- 
vincing evidence.*" 



bury i: Woodbury, 141 Mass. 329, S 
N. E. 27s, 55 Am. Rep. 479; Osthous 
V. McAndrew (Pa.), 8 Atl. 436. 

45. Illinois. — Lux v. Hoff, 47 111. 
425 ; Capek v. Kropik, 129 111. 509, 21 
N. E. 836. 

Iowa. — Cotton v. Wood, 25 Iowa 
43- 

Massachusetts. — Whitten v. Whit- 
ten, 3 Cush. 191. 

Missouri. — Darrier v. Darrier, 58 
Mo. 222. 

New York. — Welton v. Divine, 20 
Barb. 9. 

Exception to Bale as to Resulting 
Trust. — " In ordinary actions, as we 
have said, in order to prima facie 
establish a resulting trust, all that is 
necessary is to establish the fact that 
the party seeking to enforce the trust 
paid the purchase money. The law 
then raises the presumption of the 
trust. It is different, however, where 
the purchaser, and he who seeks to 
establish a resulting trust, takes the 
conveyance in the name of a wife or 
child, or some other person for whom 
he is under some natural or moral or 
legal obligation to provide. When 
this appears, the presumption of a re- 
sulting trust is rebutted, and the law 
will presume, until the contrary is 
shown, that a gift or advancement 
was intended." Doll v. Gifford, 13 
Colo. App. 67, 56 Pac. 676. 

Rule Does not Apply as Between 
Brothers. — Atwell v. Watkins, 13 
Tex. Civ. App. 668, 36 S. W. 103. 

The mere possession by a son of 
a promissory note, made by himself 
and payable to his father, is not suf- 
ficient to raise a presumption that it 
had been given back to the son after 
being delivered to the father. Grey 
V. Grey, 47 N. Y. 552. 

This presumption may be rebutted 
by evidence showing a different in- 
tention. Creed v. Lancaster Bank, i 
Ohio St. I. 



" The mere circumstance that the 
name of a child or a wife is inserted 
on the occasion of a purchase of 
stock is not sufficient to rebut a re- 
sulting trust in favor of the pur- 
chaser if the surrounding circum- 
stances lead to the conclusion that a 
trust was intended. Although a pur- 
chase in the name of a wife, or a 
child, if altogether unexplained, will 
be deemed a gift, yet you may take 
surrounding circumstances into con- 
sideration, so as to say that it is a 
trust, not a gift. So in the case of a 
stranger, you may take surrounding 
circumstances into consideration, so 
as to say that a purchase in his name 
is a gift, not a trust." Marshal v. 
Cruttwell, L. R. 20 Eq. 328. 

46. Degree of Proof Required. 
England. — Mews v. Mews, 15 Beav. 
529; Walter v. Hodge, i Wils. Ch. 
445; s. c, 2 Swans. 92; Rich v. 
Cockell, 9 Ves. Jr. 369. 

Canada. — O'Doherty v. Bank, 32 
C. P. 285 ; McEdwards v. Ross, 6 Ch. 
373. 

Connecticut. — Jennings v. Davis, 
31 Conn. 134. 

Maine. — Lane v. Lane, 76 Me. 
521; Trowbridge v. Holden, 58 Me. 
117. 

Maryland. — George v. Spencer, 2 
Md. Ch. 353. 

Missouri. — Walker v. Walker, 25 
Mo. 367. 

New Jersey. — Dielts v. Stevenson, 
17 N. J. Eq. 407- 

New York. — Neufville v. Thom- 
son, 3 Edw. Ch. 92. 

North Carolina. — Paschall v. Hall, 
S8 N. C. 108. 

Pennsylvania. — Herr's Appeal, 5 
Watts & S. 494. 

West Virginia. — Martin v. Smith, 
25 W. Va. 579. 

Opportunity for Praud. — " The de- 
fendant contends that the savings 
were received by her as a gift from 

Vol. VI 



222 



GIFTS. 



In Equity, a gift from husband to wife need not be evidenced by 
any formal deed of trust or of gift, but may be made and evidenced 
by acts and declarations.*'' 

(2.) Property Conveyed to Wife. — Where a husband conveys prop- 
erty to his wife or furnishes the consideration for property which is 
conveyed to her by a third party, it raises a presumption of a gift to 
the wife." 



her husband. The burden is upon 
her to establish the fact by clear and 
incontrovertible evidence. The mari- 
tal relation often affords temptation 
and opportunity for fraud in such 
matters. A strong jnstinctive pas- 
sion for property often leads a hus- 
band or wife into schemes for the 
absorption and conversion of the 
other's possessions. And equity is 
watchful to defeat all such wrongful 
appropriations. It requires that the 
donor's intention to divest himself or 
herself of the property, and the exe- 
cution of that intention by an act of 
delivery, shall be clearly proved by 
the donee." Lane v. Lane, 76 Me. 

Especially When Rights of Cred- 
itors Involved. _ Little v. Willetts, 
37 How. Pr. (N. Y.) 481; Myers v. 
King, 42 Md. 6$ ; In re Sweeting, 172 
Pa. St. 161, 33 Atl. S43. 

47. Grant v. Grant, 34 Beav. 
(Eng.) 623; Lockwood v. Cullin, 4 
Rob. (N. Y.) 129. 

Mere Possession by the Wife of 
Money belonging to the husband is no 
evidence that it is a gift to her as her 
separate estate. Parvin v. Capewell, 
4S Pa. St. 89; Resch v. Senn, 28 Wis. 
286. 

A parol gift from husband to wife 
of the family furniture must be 
proved by an actual or constructive 
delivery, and mere possession by the 
wife for the usual family purposes is 
insufficient. Tyrrell v. York, 32 N. 
Y. St. 368, 10 N. Y. Supp. 611; Stan- 
ton V. Kirsch, 6 Wis. 338. 

48. Property Conveyed to Wife. 
England. — Kingdome v. Bridges, 2 
Vern. 67; Slanning v. Style, 3 P. 
Wms. 336. 

Alabama. — Tillis v. Dean, 118 Ala. 
64s, 23 So. 804. 

Arkansas. — Ward v. Ward, 36 
Ark. s86; Kline v. Ragland, 47 Ark. 
Ill, 14 S. W. 474. 

California. — Read v. Rahm, 65 
Cal. 343, 4 Pac. III. 

Vol. VI 



District of Columbia. — Cohen v. 
Cohen, i App. D. C. 240. 

Illinois. — Johnston v. Johnston, 
138 111. 38s, 27 N. E. 930; Pool V. 
Phillips, 167 111. 432, 47 N. E. 758. 

Iowa. — Cotton v. Wood, 25 Iowa 
43; Sunderland v. Sunderland, 19 
Iowa 325. 

Maine. — Stevens v. Stevens, 7° 
Me. 92; Spring v. Hight, 22 Me. 408; 
Lane v. Lane, 80 Me. 570, 16 Atl. 

323- 

Massachusetts. — Jaquith v. Bap- 
tist Convention, 172 Mass. 439, 52 N. 
E. 544; Whitten v. Whitten, 3 Cush. 
191; Cormerais v. Wesselhoeft, 114 
Mass. 550; Edgerly v. Edgerly, 112 
Mass. 175. 

Mississippi. — Warren v. Brown, 
25 Miss. 66; Fatheree v. Fletcher, 31 
Miss. 265. 

Missouri. — Richardson v Lowry, 
67 Mo. 411; Darrier v. Darrier, 58 
Mo. 222; Alexander v. Worrance, 17 
Mo. 228. 

Nebraska. — Kobarg v. Greeder, 51 
Neb. 36s, 70 N. W. 921; First Nat. 
Bank v. Havlik, 51 Neb. 668, 71 N. 
W. 291 ; Lavigne v. Tobin, 52 Neb. 
686, 72 N. W. 1040; Veeder v. Mc- 
Kinley-Lansing Loan & Trust Co., 61 
Neb. 892, 86 N. W. 982; Doan v. Dun- 
ham, 64 Neb. 13s, 89 N. W. 640; 
Solomon V. Solomon, 92 N. W. 124. 

Nezv lersey. — Whitley v. Ogle, 47 
N. J. Eq. 67, 20 Atl. 284; Leslie v. 
Leslie, S3 N. J. Eq. 275, 31 Atl. 170; 
Selover v. Selover, 62 N. J. Eq. 761, 
48 Atl. 522; Lister v. Lister, 35 N. 
J. Eq. 49 ; Duvale v. Duvale, 54 N. J. 
Eq. 581, 35 Atl. 750; Moran v. Ne- 
ville, s6 N. J. Eq. 326, 38 Atl. 857; 
Linker v. Linker, 32 N. J. Eq. 174; 
Read v. Huff, 40 N. J. Eq. 229. 

New York. — Guthrie v. Gardner, 
19 Wend. 414; Welton v. Divine, 20 
Barb. 9. 

North Carolina. — Arrington v. 
Arrington, 114 N. C. 1 16, 19 S. E. 
278. 

0»-^go». — Parker v. Newitt, 18 



GIFTS. 



223 



Property Purchased with Community Funds and title taken in name of 
the wife is presumed to continue community property-*® This pre- 
sumption may be rebutted by parol evidence.^" But the rebutting 
evidence must be clear and convincing.'^ 



Or. 274, 23 Pac. 246; Taylor v. Miles, 
19 Or. 550, 25 Pac. 143. 

Pennsylvania. — Earnest's Appeal, 
106 Pa. St. 310. 

South Dakota. — Bern v. Bern, 4 
S. D. 138, 55 N. W. 1 102. 

Texas. — Higgins v. Johnson, 20 
Tex. 389; Smith v. Strahan, 16 Tex. 
314; Dunham v. Chatham, 21 Tex. 
231; Smith V. Boquet, 27 Tex. 507. 

Vermont. — Walston v. Smith, 70 
Vt. 19, 39 Atl. 252. 

Virginia. — Irvine v. Greever, 32 
Gratt. 411. 

" If the evidence shows the con- 
sideration was the separate property 
of the husband, then it will be pre- 
sumed that in taking the deed in the 
wife's name the husband intended to 
make a gift of the property to the 
wife. If the evidence shows the 
property was purchased with the 
separate estate of the wife, and the 
deed is taken in her name, the prop- 
erty remains her separate property. 
These rules are applicable to a case 
arising between husband and wife, or 
their heirs, legatees, or representa- 
tives.'' Caffey v. Cooksey, 19 Tex. 
Civ. App. 145, 47 S. W. 65. 

Expenditures on Wife's Estate. 
" The same reasons which support 
the presumption that by purchasing 
property, and taking title thereto in 
the name of his wife, a husband in- 
tends to make a settlement, apply 
with equal force to expenditures made 
by him in the improvement of her 
separate estate, and particularly is 
this so when the property upon which 
the expenditures are made has pre- 
viously been conveyed by the hus- 
band to the wife by way of a settle- 
ment upon her." Selover v. Selover, 
62 N. J. Eq. 761, 48 Atl. 522. 

_49. California. — Higgins v. Hig- 
gins, 46 Cal. 260; Peck V. Brumma- 
gim, 31 Cal. 440, 89 Am. Dec. 195; 
Woods V. Whitney, 42 Cal. 358. 

Texas. — • Dunham v. Chatham, 21 
Tex. 231 ; Story v. Marshall, 24 Tex. 
305; Smith V. Strahan, 25 Tex. 103; 
Smith V. Boquet, 27 Tex. 507 ; Caffey 
V. Cooksey, 19 Tex. Civ. App. 145, 47 
S. W. 65; Schwartzman v. Cabell 



(Tex. Civ. App.), 49 S. W. 113; 
Johnson v. Burford, 39 Tex. 242. 

50. Bem v. Bern, 4 S. D. 138, 55 
N. W. 1 102; Darrier v. Darrier, 58 
Mo. 222; Read v. Huff, 40 N. J. Eq. 
229; Persons v. Persons, 25 N. J. Eq. 
250; Walston V. Smith, 70 Vt. 19, 39 
Atl. 252; Corey v. Morrill, 71 Vt. 51, 
42 Atl. 976. 

In an action brought by a wife to 
establish title to certain land as a 
gift from her husband, it appeared 
that the land had been purchased by 
the husband and the deed made out 
to the wife. Immediately afterward, 
to protect the husband in case _ of 
her death, she made a will devising 
the land to him. He afterward sold 
this property and bought other land 
in his own name and dealt with it as 
his own for several years. Held, 
that these facts rebutted any pre- 
sumption of a gift to the wife. 
Moore v. Moore, 165 Pa. St. 464, 30 
Atl. 932. 

The presumption which arises in 
favor of a gift when a husband pur- 
chases property and has it conveyed 
to his wife may be rebutted by show- 
ing that he took possession of the 
property and occupied it with her 
as a homestead ; that it was assessed 
in his name and he paid the taxes on 
it, and that these acts were done 
with his wife's knowledge and con- 
sent. Pool V. Phillips, 167 111. 432, 
47 N. E. 758. 

The declarations of the husband, 
at the time the transactions were 
effected, to the effect that the prop- 
erty was his and that the trans- 
fers were made to his wife for 
the purpose of enabling her to trans- 
act business for him, together with 
her admissions from time to time 
that the land and other property be- 
longed to him and that she was hold- 
ing it for him and his children, af- 
ford a better explanation of the true 
condition and status of the property 
rights than any legal inferences that 
might be drawn from the form of the 
conveyance. Parrish v. Parrish, 33 
Or. 486, 54 Pac. 352. 

51. District of Columbia. — Cohen 
V. Cohen, i App. D. C. 240. 

Vol. VI 



224 



GIFTS. 



(3.) Security in Name of Wife. — The same presumption arises 
where a husband takes a security in the name of his wife, even 
though he retains possession of the security.^^ 

c. Gifts From Wife to Husband. — (l.) Degree of Proof Required. 
As a general rule gifts from wife to husband are regarded with sus- 
picion, and clear and convincing evidence is required to prove them."^ 

(2.) Gift Inferred from Circumstances. — In many cases, a gift from 
a wife to her husband may be inferred from the attendant circum- 
stances without showing an actual manual delivery of the gift."* 



Iowa. — Sunderland v. Sunderland, 
ig Iowa 325. 

Nebraska. — Kobarg v. Greeder, 51 
Neb. 365, 70 N. W. 921 ; Veeder v. 
McKinley-Lansing Loaij & Trust Co., 
61 Neb. 892, 86 N. W. 982 ; Doane v. 
Dunham, 64 Neb. 135, 89 N. W. 640. 

New Jersey. — Lister v. Lister, 35 
N. J. Eq. 49; Read v. Huff, 40 N. J. 
Eq. 229. 

Pennsylvania. — Earnest's Appeal, 
106 Pa. St. 310. 

South Dakota. — Bern v. Bern, 4 S. 
D. 138, S5 N. W. 1 102. 

52. Scott V. Simes, 10 Bosw. (N. 
Y.) 314. In an action upon a prom- 
issory note, the defense set up was 
that the note was given for prop- 
erty, purchased from plaintiff's hus- 
band and that the note was made out 
to the plaintiff at the husband's re- 
quest, and that plaintiff was not the 
real owner of the note. Held, that 
the fact that the note was made out 
to the wife was prima facie evidence 
of a gift from her husband. Richard- 
son V. Lowry, 67 Mo. 411. 

53. England. — Rich v. Cockell, 9 
Ves. Jr. 369; McLean v. Lougland, 
5 Ves. Jr. 72. 

Canada. — Elliott v. Bussell, ,19 O. 
R. 413. 

Alabama. — Smyley v. Reese, 53 
Ala. 89, 25 Am. Rep. 598. 

Georgia. — Brooks v. Fowler, 82 
Ga. 329, 9 S. E. 1089. 

Indiana. — Parrett v. Palmer, 8 
Ind. App. 3S6, 35 N. E. 713, 52 Am. 
St. Rep. 479. 

Kentucky. — Long v. Beard, 20 
Ky. L. Rep. 1536, 48 S. W. 158; Scar- 
borough V. Watkins, 9 B. Mon. 547. 

Michigan. — Wales v. Newbould, 
9 Mich. 4S; Penniman v. Perce, 9 
Mich. 509; White v. Zane, 10 Mich. 

333- 

New Jersey. — Black v. Black, 30 
N. J. Eq. 215. 

Vol. VI 



Ohio. — Hardy v. Van Harlingen, 
7 Ohio St. 208. 

" There can be no doubt that a 
wife may make a valid gift to her 
husband of her personal property, but 
courts of equity examine every such 
transaction with great caution, and 
with apprehension of some undue in- 
fluence ; but, unless such influence is 
evinced, the gift will be upheld." 
Long V. Beard, 20 Ky. L. Rep. 1036, 
48 S. W. 158. 

Burden of Proof is on Husband. 
California. — White v. Warren, 120 
Cal. 322, 49 Pac. 129, 52 Pac. 723. 

Illinois. — Patten v. Patten, 75 111. 
446. 

Kentucky. — Broaddus v. Broad- 
dus, 16 Ky. L. Rep. 330, 27 S. W. 989. 

Michigan. — Wales v. Newbould, 
9 Mich, 45. 

Nebraska. — Hovorka v. Havlik, 
93 N. W. 990. 

New Jersey. — Black v. Black, 30 
N. J. Eq. 215. 

New York. — Boyd v. De La Mon- 
tagnie, 73 N. Y. 498; Lamb v. Lamb, 
18 App. Div. 250, 46 N. Y. Supp. 219, 

West Virginia. — Berry v. Wied- 
man, 40 W. Va. 36, 20 S. E. 817, 52 
Am. St. Rep. 866. 

Contra. — Long v. Beard, 20 Ky. 
L. Rep. 1036, 48 S. W. 158; Scar- 
borough V. Watkins, 9 B. Mon. 
(Ky.) 547; Hardy v. Van Harlingen, 
7 Ohio St. 208. 

In Georgia, a deed of gift from 
wife to husband is friina facie valid, 
but it will be declared void upon the 
slightest evidence of fraud or undue 
influence upon the part of the hus- 
band. Hadden v. Larned, 87 Ga. 634, 
T3 S. E. 806. 

54. England. — Caton v. Rideout, 
I Mac. & G. 599; Beresford v. Ar- 
magh, 13 Sim. 643. 



GIFTS. 



271 



(A.) Use of Wife's Property by Husband. — Thus the use by the 
husband of the wife's money or property with her knowledge or 
consent has been held sufficient to raise a presumption of a gift to 
the husband.^^ And where the rights of the husband's creditors 
become involved, it requires very clear and convincing evidence to 
rebut this presumption."" But it has been held that the mere pos- 
session by the husband of the wife's chattels is not sufficient to raise 
a presumption of a gift to him.^^ And if the separate property of 



Illinois. — Reed v. Reed, 135 11!. 
482, 25 N. E. lOQS, II L. R. A. 513. 

Indiana. — Hileman v. Hileman, 85 
Ind. I. 

New lersey. — Black v. Black, 30 
N. J. Eq. 215; Hanford v. Bockee, 
20 N. J. Eq. loi. 

Where a husband was indebted to 
his wife and confessed judgment to 
a brother of hers for her use, the 
fact that the judgment was after- 
ward entered on the record as sat- 
isfied with the assent of the wife is 
prima facie evidence of a gift by her 
to her husband. Kerr's Appeal, 104 
Pa. St. 282. 

55. Kentucky. — Orr v. Orr, 10 
Ky. L. Rep. 7SS> 10 S. W. 640. 

Maryland. — Kuhn v. Stansfield, 
28 Md. 210; Tyson v. Tyson, 54 Aid. 

35- 

Pennsylvania. — McGlinsey's Ap- 
peal, 14 Serg. & R. 64; Towers v. 
Hagner, 3 Whart. 48; Naglee v. In- 
gersoll, 7 Pa. St. 204; Johnston v. 
Johnston, 31 Pa. St. 450; Graybill 
V. Moyer, 45 Pa. St. 530; Hinney v. 
Phillips, so Pa. St. 382. 

West Virginia. — McGinnis v. Cur- 
ry, 13 W. Va. 29. 

Compare Vinden v. Eraser, 28 Gr. 
Ch. (Can.) 502. 

" The husband having been per- 
mitted by the wife to occupy her 
land, and receive and dispose of the 
products, the law will not, in the 
absence of proof of an express agree- 
ment that she should share in the 
products, or that he should account 
to her, imply such a contract, but 
will rather regard her as having 
made a gift of the use of the land to 
the husband, while such occupation 
continued." Van Sickle v. Van 
Sickle, 8 How. Pr. (N. Y.) 265. 

" Where a husband receives funds 
belonging to his wife, and with her 
knowledge and consent invests it in 

15 



real estate in his own name, the law 
raises a prima facie presumption of 
a gift." Crumrine v. Crumrine, 50 
W. Va. 226, 40 S. E. 341, 88 Am. 
St. Rep. 8S9- 

Presumption Rebutted Where it 

is shown that the husband, while 
using the wife's property, acted as 
her agent or attorney in fact, this will 
rebut any presumption of a gift. Ma- 
hon's Estate, 202 Pa. St. 201, 51 Atl. 
745. So where the husband for a 
number of years acknowledges his 
indebtedness and promises to pay in- 
terest. Latimer v. Glenn, 65 Ky. 535. 

56. Newlin v. McAfee, 64 Ala. 
357; Ladd v. Smith, 107 Ala. 506, 
18 So. 195. 

Burden on Wife " Money or 

property delivered by a wife to her 
husband is presumed, in a contest be- 
tween her and the creditors of her 
insolvent husband, to have been a 
gift, and the burden is upon her to 
show the contrary." Horner v. Huff- 
man, 52 W. Va. 40, 43 S. E. 132. 

Private Understanding " When 

the facts and circumstances tend to 
show that a gift was intended, and 
that the husband used and dealt with 
the property as his own, the mere 
parol testimony of the husband and 
wife of a private understanding be- 
tween themselves that the transaction 
was by them considered or intended 
as a loan to the husband by the 
wife, and not a gift, will not, as 
against the creditors of an insolvent 
husband, rebut the presumption of a 
gift." Horner v. Huffman, 52 W. 
Va. 40, 43 S. E. 132. 

57. Bachman v. Killinger, 55 Pa. 
St. 414; Bergey's Appeal, 60 Pa. St. 
408; Johnston v. Johnston, 31 Pa. St. 
450 ; Hamill's Appeal, 88 Pa. St. 363 ; 
Wormley's Estate, 137 Pa. St. loi, 
20 Atl. 621 ; Dresser v. Zabriskie (N. 
J.), 39 Atl. 1066. 

Vol. VI 



226 



GIFTS. 



the wife be mortgaged and the mortgage be taken in the names of 
both husband and wife, the mere form of the security will not raise 
a presumption that the wife intended to give any portion of her 
property to her husband.^* 

(B.) Distinction Between Principal and Interest. — In regard to 
the use by the husband of the wife's separate estate, a distinction is 
drawn between the principal and the interest or profits, and where 
the husband receives the principal of the wife's separate estate it 
will not generally raise a presumption of a gift, but where he 
receives the interest or profits and spends them with her knowledge 
or consent, a gift will be presumed.^' This doctrine has been dis- 
puted by some authorities.*" 

(3.) auestion of Intention in Each Case. — In all such cases, whether 
the transaction is a gift or a loan is largely a question of intention 
to be determined from the facts and circumstances.®^ 

d. Gifts From Parent to Child- — (l.) Degree of Proof Required. 
It requires less®' evidence to establish prima facie a gift from parent 



58. Form of Security. — Trimble 
V. Reis, 37 Pa. St. 448; McGovern 
V. Knox, 21 Ohio St. 547- 

59. England. — Powell v. Han- 
key, 2 P. Wms. 82; Pawlet v. Dela- 
val, 2 Ves. 663; Smith v. Camelford, 
2 Ves. Jr. 698; Milnes v. Busk, 2 
Ves. Jr. 500; Digby v. Howard, 4 
Sim. 588. 

Illinois. — Jackson v. Kraft, 186 
111. 623, 58 N. E. 298. 

Indiana. — Nicodemus v. Simons, 
121 Ind. 564, 23 N. E. 521; Parrett 
V. Palmer, 8 Ind. App. 356, 35 N. 
E. 713, 52 Am. St. Rep. 479; Bristor 
V. Bristor, 93 Ind. 281 ; Bristor v. 
Bristor, loi Ind. 47; Armacost v. 
Lindley, 116 Ind. 295, 19 N. E. 138; 
Haymond v. Bledsoe, 11 Ind. App. 
202, 38 N. E. 53°, 54 Am. St. Rep. 

502. 

Iowa. — Logan v. Hall, 19 Iowa 
491. 

Michigan. — Wales v. Newbould, 
9 Mich. 4S; White v. Zane, 10 Mich. 
333; Campbell v. Campbell, 21 Mich. 
438. 

Minnesota. — McNally v. Weld, 30 
Minn. 209, 14 N. W. 895; Chad- 
boiirn V. Williams, 45 Minn. 294, 47 
N. W. 812; Schmidt's Estate, 56 
Minn. 256, 57 N. W. 453. 

New Jersey. — Black v. Black, 30 
N. J. Eq. 215 ; Jones v. Davenport, 
44 N. J. Eq. 33, 13 Atl. 652; Horner 

Vol. VI 



V. Webster, 33 N. J. L. 406; Adoue 
v. Spencer, 62 N. J. Eq. 782, 49 Atl. 
10, 90 Am. St. Rep. 484, reversing 46 
Atl. 543- 

Pennsylvania. — Hauer's Estate, 
140 Pa. St. 420, 21 Atl. 445, 23 Am. 
St. Rep. 245. 

Rhode Island. — Steadman v. Wil- 
bur, 7 R. I. 481. 

South Carolina. — McLure v. Lan- 
caster, 24 S. C. 273, 58 Am. Rep. 
259; Charkes v. Coker, 2 S. C. 122; 
Reeder v. Flinn, 6 S. C. 216. 

Tennessee. — Lishey v. Lishey, 2 
Tenn. Ch. 5. 

Wisconsin. — Lyon v. Railway Co., 
42 Wis. 548. 

60. Vreeland v. Vreeland, 16 N. 
J- Eq. 525. 

61. Fritz v. Fernandez (Fla.), 34 
So. 31s; McNally v. Weld, 30 Minn. 
209, 14 N. W. 895; Coburn v. Storer, 
67 N. H. 86, 36 Atl. 607. 

68. Kentucky. — Brown z;. Brown, 
4 B. Mon. S3S. 

New Jersey. — Betts v. Francis, 
30 N. J. L. 152. 

North Carolina. — Wessell v. Rath- 
john, 89 N. C. 377. 

Pennsylvania. — YisktX v. McAtee, 
156 Pa. St. 600, 27 Atl. 277. 

Rhode Island. — Thurber v. 
Sprague, 17 R. I. 634, 24 Atl. 48. 

South Carolina. — Davis v. Davis, 
I Nott & McC. 224. 



GIFTS. 



227 



to child than would be required between strangers, or than would 
be necessary to prove one from child to parent."' 

(2.) Every Presumption in Favor of the Gift. — Generally every pre- 
sumption is in favor of the gift."* But where the rights of third 
parties are involved, the transaction should be proved with reasona- 
ble certainty."^ 

(3.) Property Delivered to Child. — When a parent delivers property 



Texas. — Saufley v. Jackson, i6 
Tex. 579. 

63. Wycott V. Hartman, 14 Ch. 
(Can.) 219. 

64. Canada. — Armstrong v. Arm- 
strong, 14 Ch. 528. 

United States. — Meyer v. Jacobs, 
123 Fed. 900. 

Illinois. — Oliphant v. Liversidge, 
142 III. 160, 30 N. E. 334- 

Indiana. — Teegarden v. Lewis, 
14s Ind. 98, 44 N. E. 9. 

Kansas. — Schwindt v. Schwindt, 
61 Kan. 377, 59 Pac. 647. 

Maryland. — Bauer v. Bauer, 82 
Md. 241, 33 Atl. 643. 

Minnesota. — Prescott v. Johnson, 
97 N. W. 891. 

Pennsylvania. — Campbell v. 
Brown, 183 Pa. St. 112, 38 Atl. 516. 

Texas. — Saufley v. Jackson, 16 
Tex. 579; Millican v. Millican, 24 
Tex. 426. 

But age and feebleness of the pa- 
rent may raise a presumption against 
the gift. 

Canada. — Donaldson v. Donald- 
son, 12 Ch. 431 ; Beeman v. Knapp, 
13 Ch. 398; McConnell v. McConnell, 
IS Ch. 20. 

Indiana. — Teegarden v. Lewis, 35 
N.. E. 24; J-. c, 14s Ind. 98, 40 N. E. 
1047, overruled in 44 N. E. 9. 

Maryland. — Bauer v. Bauer, 83 
Md. 241, 33 Atl. 643; Highberger v. 
Stiffler, 21 Md. 338. 

Nebraska. — Gibson v. Hammang, 
63 Neb. 349> 88 N. W. 500. 

New Jersey. — Collins v. Collins, 
IS Atl. 849. 

New yor*. — Chalker v. Chalker, 
5 Redf. 480; Stubing v. Stubing, 27 
N. Y. St. 43, 7 N. Y. Supp. 500. In 
re Rogers, 10 App. Div. 593, 42 N. Y. 
Supp. 133. 

Pennsylvania. — Stewart's Estate, 
137 Pa. St. 175, 20 Atl. 554 

Texas. — Ellis v. Matthews, 19 
Tex. 390, 70 Am. Dec. 353- 



Wisconsin. — Doyle v. Welch, 100 
Wis. 24, 75 N. W. 400. 

Where a child claimed title to cer- 
tain property through a deed of gift 
from his father which had since been 
destroyed, and it was shown that if 
the deed had been made as alleged 
it would have deprived the parent of 
nearly all his property, both real and 
personal, leaving scarcely anything 
for the support of his wife or any 
children that he might have after- 
ward, it was held that such a claim 
would only be supported upon the 
clearest and most convincing evi- 
dence. Parker v. Hinson, 36 N. C. 
381. 

There Must be Other Suspicions 
Circnjnstances besides the mere age 
of the parent to raise any presump- 
tion of undue influence. Chalker v. 
Chalker, 5 Redf. (N. Y.) 480; Ten- 
brook V. Brown, 17 Ind. 410; Slay- 
back V. Witt, 151 Ind. 376, 50 N. E. 
389; Moore v. Moore, 67 Mo. 192. 

" In case of a gift or voluntary 
conveyance from parent to child, no 
presumption of fraud or undue in- 
iiuence arises, as between the parties 
thereto, from the mere fact of the 
relation. But where a conveyance 
from a parent to one of several chil- 
dren by way of gift prima facie is not 
a just or reasonable disposition of the 
parent's property, and the age and 
physical condition of the parent, the 
proportion of the property conveyed 
to the whole estate, and the circum- 
stances surrounding the gift suggest 
fraud and undue influence, the trans- 
action should be closely scrutinized, 
and the burden is upon the donee to 
overcome the presumption of fact 
arising from such circumstances." 
Gibson V. Hammang, 63 Neb. 349, 
88 N. W. 500. 

66. Berthlett v. Polsom, 21 Tex. 
430. 

Vol. VI 



228 



GIFTS. 



to his child, allowing him to retain possession and control of it, a 
presumption of a gift or advancement arises.^" 

Whether the transaction is a gift or an advancement is wholly a 
question of intention on the part of the parent, and when there is no 
direct evidence of this intent it is to be gathered from the surround- 
ing circumstances."' 

But it has been repeatedly held that a voluntary transfer of prop- 
erty from parent to child will be presumed to be an advancement and 
not a gift."* But money spent by a parent for his child's education 
will be presumed to be a gift and not an advancement."^ 

The intent of a parent in making a voluntary conveyance to his 
child may be shown by parol evidence.'" The presumption of gift 



66. Alabama. — Merri wether v. 
Eames, 17 Ala. 330; Pharis v. Leach- 
man, 20 Ala. 662. 

California. — Spitler v. Kaeding, 
133 Cal. 500, 6s Pac. 1040. 

Georgia. — Daniel v. Frost, 62 Ga. 
697. 

Kentucky. — Smith v. Montgom- 
ery, s Men. 502. 

Mississippi. — Falconer v. Hol- 
land, s Smed. & M. 689. 

Nebraska. — Johnson v. Ghost, 11 
Neb. 414, 8 N. W. 391. 

Ohio. — Crumbaugh v. Kugler, 2 
Ohio St. 374. 

Texas. — Cannon v. Cannon, 66 
Tex. 682, 3 S. W. 36; Higgins v. 
Johnson, 20 Tex. 389; Smith v. Stra- 
han, 16 Tex. 314. 

Virginia. — Fitzhugh v. Anderson, 
2 Hen. & M. 289, 3 Am. Dec. 625; 
Scott V. Scott, 83 Va. 251, 2 S. E. 
431 

But the mere possession by a son, 
temporarily, of a slave belonging to 
his father, is insufficient to raise a 
presumption of a gift from the 
father. Slaughter v. Tutt, 12 Leigh 
(Va.) 147. 

Eule does Not Apply to Step-Chil- 
dren. _ Willis V. Snelling, 6 Rich. 
L. (S. C.) 280. 

67. Bradsher v. Cannady, 76 N. 
C. 445; Riddle's Estate, 19 Pa. St. 
431; King's Estate, 6 Whart. (Pa.) 
370. 

68. Indiana. — Woolery v. Wool- 
ery, 29 Ind. 249, 95 Am. Dec. 630; 
Stanley v. Brannon, 6 Blackf. 193; 
Hodgson V. Macy, 8 Ind. 121 ; Dill- 
man V. Cox, 23 Ind. 440; Dille v. 
Webb, 61 Ind. 85. 

MarylaTid. — Graves v. Spedden, 

Vol. VI 



46 Md. 527; Stewart v. Pattison, 8 
Gill 46; Clark v. Willson, 27 Md. 

693. 

Missouri. — Gunn v. Thruston, 130 
Mo. 339, 32 S. W. 654; Ray v. Loper, 
65 Mo. 470. 

Tennessee. — Dudley v. Bosworth, 
10 Humph. 9. 

69. Pusey V. Desbouvrie, 3 P. 
Wms. (Eng.) 318; Mitchell v. 
Mitchell, 8 Ala. 414; Meadows r. 
Meadows, 33 N. C. 148. 

Fresiunption Rebutted Riddle's 

Estate, 19 Pa. St. 431. 

Subsequent Declarations. 
" The presumption that a parent in- 
tended the expenses of a child's ed- 
ucation to be an absolute gift will 
not be repelled by any declaration 
afterward of a wish that they shall 
be deemed an advancement, unless 
contained in a will legally executed." 
Bradsher v. Cannady, 76 N. C. 44s, 
citing Mitchell v. Mitchell, 8 Ala. 
414. 

70. Indiana. — Woolery v. Wool- 
ery, 29 Ind. 249, 95 Am. Dec. 630; 
Hodgson V. Macy, 8 Ind. I2i ; Shaw 
V. Kent, II Ind. 80; Dillman v. Cox, 
23 Ind. 440; Dille v. Webb, 61 Ind. 
85. 

Maryland. — Graves v. Spedden, 
46 Md. 527; Parks v. Parks, 19 Md. 
323; Cecil V. Cecil, 20 Md. 153; 
Clark V. Willson, 27 Md. 693. 

Missouri. — Gunn v, Thurston, 130 
Mo. 339, 32 S. W. 654. 

New York. — Proseus v. Mcln- 
tyre, 5 Barb. 424; Jackson v. Mats- 
dorf, II Johns. 92. 

Tennessee. — Dudley v. Bosworth, 
10 Humph. 9. 

T^.ra.s. — Higgins v. Johnson, 20 



GIFTS. 



229 



or advancement is very much strengthened if the transaction occurred 
at or about the time of the child's marriage," or upon his arriving at 
ageJ" The presumption may also be strengthened by showing that, 
on like occasions, the parent had given property to his other chil- 
dren.'^ The same rule as to the presumption of a gift prevails 
where the parent furnishes the consideration for property conveyed 
to the child." 



Tex. 389; Smith v. Strahan, 16 Tex. 
314- 

71. Alabama. — Hill j'. Duke, 6 
Ala. 259; Cole v. Varner, 31 Ala. 
244; Olds V. Powell, 7 Ala. 652; 
Caldwell V. Pickens, 39 Ala. 514; 
Gunn V. Barrow, 17 Ala. 743. 

Arkansas. — GuUett v. Lamberton, 
6 Ark. 109; Henry v. Harbison, 23 
Ark. 25. 

Georgia. — Carter v. Buchanan, 9 
Ga. 539; Gill v. Strozier, 32 Ga. 688; 
Cornett v. Fain, 33 Ga. 219. 

Massachusetts. — Nichols v. Ed- 
wards, 16 Pick. 62. 

Mississippi. — Falconer v. Hol- 
land, 5 Smed. & M. 689; Woods v. 
Sturdevant, 38 Miss. 68; Fatheree v. 
Fletcher, 31 Miss. 265; Whitfield v. 
Whitfield, 40 Miss. 352. 

Missouri. — Mulliken v. Greer, 5 
Mo. 489; Martin v. Martin, 13 Mo. 
37; Jones V. Briscoe, 24 Mo. 498. 

New Jersey. — Betts v. Francis, 30 
N. J. L. IS2. 

North Carolina. — Mitchell v. 
Cheeves, 3 N. C. 126; Farrel v. 
Perry, 2 N. C. 2; Carter v. Rut- 
land, 2 N. C. 97; Parker v. Phillips, 
2 N. C. 452. 

(But in North Carolina, in 1806, 
a statute was passed requiring a 
transfer of slaves to be evidenced by 
writing. For interpretation of this 
statute in connection with gifts, see 
Barrow v. Pender, 7 N. C. 483; 
Lynch v. Ashe, 8 N. C. 338; Hicks 
zr. Forrest, 41 N. C. 528.) 

South Carolina. — Teague v. Grif- 
fin, 2 Nott & McC. 93; Johnston v. 
Dilliard, I Bay 232; Edings v. 
Whaley, i Rich. Eq. 301 ; McCluney 
z: Lockhart, 4 McCord 251 ; Wat- 
son V. Kennedy, 3 Strob. Eq. I. 

Tennessee. — Stewart v. Cheat- 
ham, 3 Yerg. 60; Wade v. Green, 3 
Humph. 547. 

Texas. — Owen v. Tankersley, 12 
Tex. 405. 



In Virginia, to establish a parol 
gift from a parent to his child upon 
marriage, the evidence must be clear 
and convincing. Collins v. Lofftus, 

10 Leigh (Va.) 5, 34 Am. Dec. 719, 
citing Brown v. Handley, 7 Leigh 
119, and Mahon v. Johnston, 7 Leigh 

317- 

72. Hollowell v. Skinner, 26 N. 
C. 165, 40 Am. Dec. 431. 

73. Smith v. Montgomery, 5 
Mon. (Ky.) 502. 

74. England. — Dyer v. Dyer, 2 
Cox Ch. 92; Whitehouse v. Ed- 
wards, 37 Ch. Div. 683; Christy v. 
Courtenay, 13 Beav. 96. 

Colorado. — Doll v. Gifford, 13 
Colo. App. 67, 56 Pac. 676. 

New Jersey. — Hallenback v. Rog- 
ers, 57 N. J. Eq. 199. 40 Atl. 576, 
atHrmed 43 Atl. 1098; Peer v. Peer, 

11 N. J. Eq. 432. 

New York. — Partridge v. Havens, 
10 Paige 618; Adee v. Hallett, 73 N. 
Y. St. 7S4, 38 N. Y. Supp. 273. 
(But see Gibbons v. Campbell, 148 
N. Y. 410, 42 N. E. IOSS-) 

Ohio. — Creed v. Bank, i Ohio St. 
I ; Tremper v. Barton, 18 Ohio 418 ; 
Vanzant v. Davies, 6 Ohio St. 52. 

Pennsylvania. — Kern v. Howell, 
180 Pa. St. 315, 36 Atl. 872, 57 Am. 
St. Rep. 641. 

Tennessee. — Dudley v. Bosworth, 
10 Humph. 9, 51 Am. Dec. 690. 

Texas. — Shepherd v. White, 10 
Tex. 72. 

"Where one party pays the pur- 
chase-money, and the legal title is 
conveyed to another, the usual pre- 
sumption is that the grantee holds 
in trust for the party paying the 
purchase-money; but this may be re- 
butted by proof that the latter in- 
tended the grantee to take bene- 
ficially. Where the parties are pa- 
rent and child, the presumption is 
that the payment of the purchase- 
money was a gift, and this presump- 

Vol. VI 



230 



GIFTS. 



(4.) Security in Child's Name. — A presumption of a gift arises 
where the parent takes a security in the child's name, even though 
the parent retains possession of the security.'^ 

(5.) Presumption of Gift Hebutted. — In all such cases where the 
parent delivers property to his child, the presumption of a gift which 
arises is not conclusive, but may be rebutted by other evidenceJ' 

Evidence showing that it is the general plan of a parent to loan 
and not to give property to his children may be sufficient to rebut the 
presumption of a gift." The subsequent admissions of the child 
may be sufficient for this purpose-'* So the declarations of the 
parent made at the time and acquiesced in by the child may be such 
as to rebut the presumption of a gift.''* The presumption may also 
be rebutted by showing that the parent has regained possession of 
the property and continued in the undisputed ownership of it for 
some time.*" 

(G.) Parol Gift of land. — Parol gifts of land, from parent to child, 
seem to form an exception to the general rule and will not be s'us- 
tained except upon the clearest and most convincing evidence.'^ 



tion must be overcome by proof in 
order to establish a resulting trust." 
Hallenbeck v. Rogers, 57 N. J. Eq. 
199, 40 Atl. 576. 

Bule Denied as Against a Mother. 
Where a mother purchased property 
with money belonging to her sepa- 
rate estate and had the title made 
out to one of her sons — held not 
to be a gift, but a resulting trust in 
favor of the mother. Pinney v. Fel- 
lows, IS Vt. 525. 

75. Spitler v. Kaeding, 133 Cal. 
Soo, 6s Pac. 1040; Mallett v. Page, 
8 Ind. 364. 

76. Kentucky. — Smith v. Mont- 
gomery, 5 Mon. 502; Reed v. Litsy, 
17 Ky. L. Rep. II2S, 33 S. W. 827. 

Missouri. — Beale v. Dale, 25 Mo. 
301. 

New Jersey. — Betts v. Francis, 
30 N. J. L. 152; Peer v. Peer, 11 N. 
J. Eq. 432. 

Ohio. — Creed V: Bank, i Ohio 
St. I. 

Pennsylvania. — Roland v. Schrack, 
29 Pa. St. 125. 

South Carolina. — Steedman v. 
McNeill, I Hill L. 194; Watson v. 
Kennedy, 3 Strob. Eq. I. 

Texas. — Higgins v. Johnson, 20 
Tex. 389; Smith v. Strahan, 16 Tex. 
314- 

Taking Security. — Flower v. 
Marten, 2 Myl. & C. (Eng.) 459. 

Vol. VI 



77. Lockett v. Mims, 27 Ga. 207; 
Rich V Mobley, 33 Ga. 8s. 

But evidence as to the habits of 
business of a man is not admissible 
to prove, from his conduct, whether 
the sending of property home with 
his daughter upon her marriage was 
a gift or a loan. Parker v. Cham- 
bers, 24 Ga. S18. See also Gilman 
V. Riopelle, 18 Mich. 145, as to the 
admissibility of evidence showing a 
custom among old settlers of giving 
land to the eldest son. 

78. Rich V. Mobley, 33 Ga. 85. 

79. Thus in North Carolina, be- 
fore 1806, if a father sent home prop- 
erty with his daughter upon mar- 
riage it was presumed to be a gift, 
but this presumption could be re- 
butted by the declarations of the pa- 
rent made to the daughter at the 
time that it was intended as a loan 
and not a gift, even though these 
declarations were not made in the 
presence of and were not known to 
the daughter's husband. Collier v. 
Poe, 16 N. C. SS. 

80. Watson v. Kennedy, 3 Strob. 
Eq. (S. C.) I. 

81. Georgia. — Beall v. Clark, 71 
Ga. 818; Poullain v. Poullain, 76 Ga. 
420. 

Illinois. — Schoonmaker v. Plum- 
mer, 139 111. 612, 29 N. E. 11 14. 
Iowa. — Huston v. Markley, 49 



GIFTS. 



231 



Some authorities even go to the extent of holding that in such cases 
the gift must be proved by evidence that is direct, positive, express 
and unambiguous.*^ ' 

e. Gifts From Child to Parent. — (l.) Presumption of Parental 
Inffuence. — As a general rule, in cases of gifts from child to parent, 



Iowa 162; Williamson v. Williamson, 
4 Iowa 279; Holland v. Hensley, 4 
Iowa 222; Truman v. Truman, 79 
Iowa 506, 44 N. W. 721. 

Kentucky. — Alley v. Hastie, 15 
Ky. L. Rep. 690, 25 S. W. 274. 

Maryland. — Hardesty v. Richard- 
son, 44 Md. 617, 22 Am. Rep. 57; 
Loney v. Loney, 86 Md. 652, 38 Atl. 
1071 ; Polk V. Clark, 92 Md. 372, 48 
Atl. 67. 

Michigan. — Jones v. Tyler, 6 
Mich. 364; Gifford v. Gifford, 100 
Mich. 258; 58 N. W. 1000; Moross 
V. Moross, 131 Mich. 339, 91 N. W. 
631. 

Missouri. — Anderson v. Scott, 94 
Mo. 637, 8 S. W. 23s; O'Bryan v. 
Allen, 108 Mo. 227, 18 S. W. 892, 32 
Am. St. Rep. 595. 

New York. — Ogsbury v. Ogsbury, 
IIS N. Y. 290, 22 N. E. 219; In re 
Munson, 25 Misc. 586, 56 N. Y. Supp. 

151- 

Pennsylvania. — Hugus v. Walker, 
12 Pa. St. 173; Miller v. Hartle, S3 
Pa. St. 108. 

South Carolina. — Edings v. Wha- 
ley, I Rich. Eq. 301 (see Caldwell v. 
Williams, Bail. Eq. I7S) ; DeVeaux 
V. DeVeaux, i Strob. Eq. 283. 

Texas. — Wootters v. Hale, 83 
Tex. 563, 19 S. W. 134; Murphy v. 
Stell, 43 Tex. 123; Willis v. Mat- 
thews, 46 Tex. 478; Woodridge v. 
Hancock, 70 Tex. 18; 6 S. W. 818; 
Zallmanzig v. Zallmanzig (Tex. Civ. 
App.), 24 S. W. 944. 

Virginia. — Lightner v. Lightner, 
23 S. E. 301. 

Wisconsin. — Hawkes v. Slight, 1 10 
Wis. I2S, 85 N. W. 721 ; Kelley v. 
Crawford, 112 Wis. 368, 88 N. W. 
296. 

Improvements Made by the Son. 
" Where a son goes into possession of 
his father's land, and makes improve- 
ments, a jury is not to infer from 
that, in the absence of other evidence, 
that the father gave him the land. 
Neither are loose declarations of the 



father to his neighbors, in casual 
conversations, calling it his son's 
property, without any explanation 
how it came to be his, sufficient evi- 
dence of a gift." Hugus V. Walker, 
12 Pa. St. 173. See also Cox v. 
Cox, 26 Pa. St. 37S, 67 Am. Dec. 
432; Brown v. Brown, 38 S. C. 173, 
17 S. E. 452. 

In Georgia, by virtue of a statute, 
it is held that the exclusive posses- 
sion by a child of land belonging to 
the father, without payment of rent 
for the space of seven years, will 
create a conclusive presumption of a 
gift to the child, unless there is evi- 
dence of a loan or claim of dominion 
by the tather acknowledged by the 
child, or a disclaimer of any title on 
the part of the child. But if the 
father die before the lapse of the 
seven years, the rule will not apply. 
McKee v. McKee, 48 Ga. 332. See 
also Hughes v. Hughes, 72 Ga. 173; 
Johnson v. Griffin, 80 Ga. S5i. 7 S. 
E. 94; Burch V. Burch, 96 Ga. 133, 
22 S. E. 718. 

This presumption may arise in fa- 
vor of a child whose possession be- 
gan during minority, if at or before 
the time he received possession he 
had been manumitted by his parent. 
Holt V. Anderson, 98 Ga. 220, 25 
S. E. 496. But the rule does not 
apply as to illegitimate children. 
Floyd V. Floyd, 97 Ga. 124, 24 S. 
E. 451- 

82. Iowa. — Wilson v. Wilson, gg 
Iowa 688, 68 N. W. 910- 

Montana. — Story v. Black, S 
Mont. 26, I Pac. i, 51 Am. Rep. 27. 

Pennsylvania. — Sower v. Weaver, 
78 Pa. St. 443; Erie & W. V. R. Co. 
V. Knowles, 117 Pa. St 77, 11 Atl. 
250; Poorman v. Kilgore, 26 Pa. St. 
36s; Shellhammer v, Ashbaugh, 83 
Pa. St. 24. 

West Virginia. — Harrison v. Har- 
rison, 36 W. Va. 556, 15 S. E. 87. 

Such a transaction will be sus- 
tained in equity if it is established by 

Vol. VI 



232 



GIFTS. 



the presumption is that the child is under the influence and control 
of the parent.^^ 

(2.) Burden of Proof. — The burden of proof is generally upon the 
parent to overcome the presumption of parental influence.** 



the evidence with reasonable cer- 
tainty. Neale v. Neales, 9 Wall. (U. 
S.) I. See also Wylie v. Charlton, 
43 Neb. 840, 62 N. VV. 220. 

Collateral Attack In an action 

against a town for damages for wi- 
dening a street through plaintiff's 
land, the plaintiff claimed title to the 
land through a parol gift from his 
father. Held, that for this purpose 
all he was required to show was a 
prima facie title, and this he did by 
showing possession taken and main- 
tained for fifteen years, a house 
erected and improvements made, 
death of the father and quit-claim 
deed from the other heirs. Royer 
V. Ephrata, 171 Pa. St. 429, 33 Atl. 
361, distinguishing Erie & W. V. R. 
Co. V. Knowles, 117 Pa. St. 77, 11 
Atl. 250. 

83. Turner v. Collins, L. R. 7 Ch. 
App. 329; Archer v. Hudson, 7 Beav. 
(Eng.) ssi; Oliphant v. Liversidge, 
142 111. 160, 30 N. E. 334; Bauer v. 
Bauer, 82 Md. 241, 33 Atl. 643 ; Whit- 
ridge V. Whitridge, 76 Md. 54, 24 
Atl. 64s. 

" A child may makfe a gift to a 
parent, and such a gift is good if it 
is not tainted by parental influence. 
A child is presumed to be under the 
exercise of parental influence as long 
as the dominion of the parent lasts. 
Whilst that dominion lasts, it lies on 
the parent maintaining the gift to 
disprove the exercise of parental in- 
fluence, by showing that the child 
had independent advice, or in some 
other way. When the parental influ- 
ence is disproved, or that influence 
has ceased, a gift from a child 
stands on the same footing as any 
other gift; and the question to be 
determined is, whether there was a 
deliberate, unbiased intention on the 
part of the child to give to the pa- 
rent." Wright V. Vanderplank, 8 De- 
G. M. & G. (Eng.) 146. 

It has been held that undue influ- 
ence of parent over the child will 
not be presumed. Jenkins v. Pye, 12 

Vol. VI 



Pet. (U. S.) 253. See also Murray 
V. Hihon, 8 App. D. C. 281. 

" In the case of a child's gift of 
its property to a parent, the circum- 
stances attending the transaction 
should be vigilantly and carefully 
scrutinized by the court, in order to 
ascertain whether there has been un- 
due influence in procuring it; but it 
cannot be deemed prima facie void; 
the presumption is in favor of its va- 
lidity; and, in order to set it aside, 
the court must be satisfied that it 
was not the voluntary act of the 
donor. The same rule as to the bur- 
den of proof applies with equal, if 
not greater, force to the case of a 
gift from a parent to a child, even 
if the effect of the gift is to confer 
upon a child with whom the parent 
makes his home and is in peculiarly 
close relations, a larger share of the 
parent's estate than will be received 
by other children or grandchildren." 
Towson V. Moore, 173 U. S. 24. 

Where Gift is Reasonable Pro- 
vision for Parent it will not be de- 
feated by any presumption of undue 
influence on the part of the parent. 
White V. Ross, 160 111. 56, 43 N. E. 
336. 

84. England. — Hoghton v. Hogh- 
ton, IS Beav. 278; Heron v. Heron, 
2 Atk. 162; Turner v. Collins, L. R. 
7 Ch. App. 329; Savery v. King, 5 
H. L. C. 627. 

Illinois. — White v. Ross, 160 111. 
56, 43 N. E. 336. 

Maryland. — Whitridge v. Whit- 
ridge, 76 Md. 54, 24 Atl. 64s. 

Pennsylvania. — Miskey's Appeal, 
107 Pa. St. 611. 

"The legal right of a person who 
has attained his age of twenty-one 
to execute deeds and deal with his 
property is indisputable. But where 
a son, recently after attaining his 
majority, makes over property to Iiis 
father without consideration, or for 
an inadequate consideration, a court 
of equity expects that the father shall 
be able to justify what has been 



GIFTS. 



233 



f. Other ConMential Relations. — Where it is shown that the 
donor and the donee are of the same family, and the donee in a 
position of authority, there is a presumption that the gift was 
obtained by fraud or undue influence. ^° 

As between near relatives, where the interests of creditors are not 
involved, the rule as to the sufficiency of evidence to establish a gift 
is not so strict. '° 

A gift from client to attorney,^'' from patient to physician,** or 



done; to show, at all events, that 
the son was really a free agent, that 
he had adequate independent advice, 
that he was not taking an imprudent 
step under parental influence, and 
that he perfectly understood the na- 
ture and extent of the sacrifice he 
was making, and that he was desir- 
ous of making it." Savery v. King, 
5 H. L. Cas. (Eng.) 627. 

85. Maryland. — Snyder v. Jones, 
38 Md. 542. 

Michigan. — Duncombe v. Rich- 
ards, 46 Mich. 166, 9 N. W. 149. 

Missouri. — Hamilton v. Arm- 
strong, 20 S. W. 1054. 

Pennsylvania. — Worrall's Appeal, 
no Pa. St. 349, I Atl. 380, 76s; Scott 
V. Reed, 153 Pa. St. 14, 2$ Atl. 604. 

Wisconsin. — Davis v. Dean, 66 
Wis. 100, 26 N. W. 737. 

This Presumption May be Rebut- 
ted — Eakle V. Reynolds, 54 Md. 
305; Madeira's Appeal (Pa.), S Atl. 
257. 

86. Fowler v. Lockwood, 3 Redf. 
(N. Y.) 46s; Hadden v. Larned, 87 
Ga. 634, 13 S. E. 806. 

" A voluntary gift thus made by a 
capable donor in pursuance of a 
long-cherished purpose, to a favorite 
nephew whom he had raised from 
childhood and with whom he had 
lived on the most intimate and af- 
fectionate terms, negatives the sus- 
picion of fraud and undue influence; 
and a court ought not to set aside a 
deed made under such circumstances, 
except upon proof of the strongest 
and most conclusive character." 
Eakle v. Reynolds, 54 Md. 305. 

87. England. — Gibson v. Jeyes, 6 
Ves. Jr. 267; Wood v. Downes, 18 
Ves. Jr. 120; Morgan v. Minett, L. 
R. 6 Ch. Div. 638; Liles v. Terry 
(189s), 2 Q. B. 679; Barron v. Wil- 
lis, 2 Ch. 121; Walsh V. Studdart, 
6 Ir. Eq. 161. 



New York. — Decker v. Water- 
man, 67 Barb. 460; Nesbit v. Lock- 
man, 34 N. Y. 167. 

Contra When Made After Suit is 

Closed Up Oldham v. Hand, 2 

Ves. (Eng.) 259. 

Burden of Proof TTpon Attorney. 
Walsh V. Studdart, 6 Ir. Eq. 161; 
Whipple V. Barton, 63 N. H. 613, 
3 Atl. 922; Decker v. Waterman, 67 
Barb. (N. Y.) 460; Nesbit v. Lock- 
man, 34 N. Y. 167; Snook V. Sulli- 
van, S3 App. Div. 602, 66 N. Y. Supp. 
24, atHrmed 167 N. Y. 536, 60 N. E. 
1 120. 

" Where a solicitor purchases or 
obtains a benefit from a client, a 
court of equity expects him to be 
able to show that he has taken no' 
advantage of his professional posi- 
tion; that the client was so dealing 
with him as to be free from the in- 
fluence which a solicitor must nec- 
essarily possess, and that the solic- 
itor has done as much to protect his 
client's interest as he would have 
done in the case of the client deal- 
ing with a stranger. This duty ex- 
ists on the part of the solicitor in 
all cases where he is dealing with 
any client, but of course, where the 
client is a very young man who has 
only just attained his majority, and 
who is so far unemancipated as to be 
still living under his father's roof as 
part of his family, the duty is, if not 
stronger, at all events more obvious." 
Savery v. King, S H. L. C. 27. 

88. Gibson v. Russell, 2 Y. & C. 
Ch. (Eng.) 104; Woodbury v. 
Woodbury, 141 Mass. 329, 5 N. E. 
27s, SS Am. Rep. 479. See contra, 
Audenreid's Appeal, 89 Pa. St. 114, 
33 Am. Rep. 731- 

When Upheld. _ Pratt v. Barker, 
I Sim. (Eng.) I. 

Vol. VI 



234 



GIFTS. 



to the donee's spiritual adviser,*" or from a nun to her convent,"" 
or from a ward to his guardian, is prima facie void."^ A gift to a 
personal attendant requires clear proof,"^ but it has been held that 
no presumption of undue influence arises from the fact that the donee 
was the donor's mistress."'' 

II. GIFTS CAUSA MORTIS. 

1. Weight and Sufficiency of Evidence in General. — A. Gener- 
ally Regarded With Suspicion. — Gifts causa mortis will not be 
sustained except upon clear and convincing evidence."* 



89. Huguenin v. Basely, 14 Ves. 
Jr. (Eng.) 273; Lyon v. Home, L. 
R. 6 Eq. (Eng.) 655; Morley v. 
Loughman, i Ch. (Eng.) 736; In re 
Corson, 137 Pa. St. 160, 20 Atl. 588. 

ITnited States Supreme Court. 
Jackson v. Ashton, 11 Pet. (U. S.) 
229. In this case, the court uses the 
following language : " Does the pro- 
fession of a clergyman subject him 
to suspicion which does not attach 
to other men? Is he presumed to 
be dishonest? It would, indeed, ex- 
hibit a most singular spectacle if this 
court, by its decision, should fix this 
stain on the character of a class of 
men who are generally respected for 
the purity of their hves and their 
active agency in the cause of virtue. 
They are influential, it is true; but 
their influence depends upon the 
faithfulness and zeal with which 
their sacred duties are performed. 
Acquainted as we are with the im- 
perfections of our nature, we cannot 
expect to find any class of men ex- 
empt from human infirmities. But 
why should the ministers of the Gos- 
pel, who as a class are more exem- 
plary in their lives than any other, 
be unable to make a contract with 
those who know them best and love 
them most ? " 

90. England. — Whyte v. Meade, 
2 Ir. Eq. 420; McCarthy v. McCar- 
thy, 9 Ir. Eq. 620; but see In re Met- 
calfe, 2 De G. J. & S. 122, where a 
deed of gift by a nun to her con- 
vent was held valid. 

91. Hylton v. Hylton, 2 Ves. 
(Eng.) S47; Hatch v. Hatch, 9 Ves. 
Jr. (Eng.) 292; Ferguson v. Low- 
ery, 54 Ala. 510; Berkmeyer v. Kil- 
lerman, 32 Ohio St. 239; Waller v. 
Armistead, 2 Leigh (Va.) 11. 

Vol, VI 



92. Osthaus v. McAndrew (Pa.), 
8 Atl. 436; Hesse v. Hemberger 
(Tenn.), 39 S. W. 1063. 

93. Eule Stated: "A relation 
par amour carries no presumption of 
the exertion of an undue influence by 
the mistress. It does call for sus- 
picious scrutiny of the conduct of 
the parties, in ascertaining whether 
the challenged act of the man was 
induced to be done by an undue in- 
terference with his free action." 
Schwalber v. Ehman, 62 N. J. Eq. 
314, 49 Atl. 1085. 

94. England. — Walter v. Hodge, 
I Wils. Ch. 445, 2 Swans. 92; Cos- 
nahan v. Grice, 13 Moore P. C. 215; 
McGonnell v. Murray, 3 Ir. Eq. 460; 
Dunne v. Boyd, 8 Ir. Eq. 609. 

California. — Knight v. Tripp, 121 
Cal. 674, 54 Pac. 267. 

Indiana. — Caylor v. Caylor, 22 
Ind. App. 666, 52 N. E. 465. 

Kentucky. — Albro v. Albro, 23 
Ky. L. Rep. isss, 65 S. W. 592. 

Maine. — Hatch v. Atkinson, 56 
Me. 324; Goulding v. Horbury, 85 
Me. 227, 27 Atl. 127, 3S Am. St. 
Rep. 357. 

Maryland. — Hebb v. Hebb, S 
Gill 506. 

Massachusetts. — Rockwood v. 
Wiggin, 16 Gray 402. 

New Jersey. — Buecker v. Carr, 60 
N. J. Eq. 300, 47 Atl. 34. 

New York. — Devlin v. Greenwich 
Sav. Bank, 125 N. Y. 756, 26 N. E. 
744, reversing De^•Iin v. Farmer, 30 
N. Y. St. 541, 9 N. Y. Supp. 530; 
Ridden v. Thrall, 125 N. Y. 572, 26 
N. E. 627, 21 Am. St. Rep. 758, 11 
L. R. A. 684; Grynies z>. Hone, 49 
N. Y. 17, 10 Am. Rep. 313; Lehr v. 



GIFTS. 



235 



B. MoDiSifiD Doctrine. ■ — Some of the later authorities, however, 
hold that there is no presumption of law either for or against such 
gifts, and that it is sufficient if they are established by a preponder- 
ance of the evidence as in other civil cases."' 



Jones, 74 App. Div. S4. 77 N. Y. 
Supp. 213; In re Swade, 65 App. 
Div. 592, 72 N. Y. Supp. 1030; Pod- 
more V. Dime Sav. Bank, 29 Misc. 
393, 60 N. Y. Supp. 533; Plasterstein 
V. Hoes, 37 App. Div. 421, 56 N. Y. 
Supp. 103; Tilford v. Bank for Sav- 
ings, 31 App. Div. 565, 52 N. Y. 
Supp. 142. 

North Carolina. — Shirley v. 
Whitehead, 36 N. C. 130. 

OWo. — Gano v. Fisk, 43 Ohio St. 
462, 3 N. E. 532, 54 Am. Rep. 819. 

Pennsylvania. — In re Wise, 182 
Pa. St. 168, 2,7 Atl. 936. 

Rhode Island. — Citizens Sav. 
Bank v. Mitchell, 18 R. I. 739, 30 
Atl. 626. 

Virginia. — Smith v. Smith, 92 Va. 
6g6, 24 S. E. 280. 

West Virginia. — Seabright v. Sea- 
bright, 28 W. Va. 412. 

Opportunity for Fraud " Cases 

of this kind demand the strictest 
scrutiny. So many opportunities and 
such strong temptations present 
themselves to unscrupulous persons 
to attend these deathbed donations, 
that there is always danger of having 
an entirely fabricated case set up. 
"And, without any imputation of 
fraudulent contrivances, it is so easy 
to mistake the meaning of persons 
languishing in a mortal illness, and, 
by a slight change of words, to con- 
vert their expressions of intended 
benefit into an actual gift of prop- 
erty, that no case of this description 
ought to prevail unless it is sup- 
ported by evidence of the clearest 
and most unequivocal character." 
Cosnahan v. Grice, 15 Moore P. C. 
(Eng.) 215. 

Contravene law of Wills " Gifts 

causa mortis are not regarded in the 
law with favor, since they are in 
contravention of the general rules 
prescribed for the testamentary dis- 
position of property, and therefore 
should, in all cases, be established 
by clear and convincing proof of the 



requisites of such a gift." Knight v. 
Tripp, 121 Cal. 674, 54 Pac. 267. 

As Compared With Gifts Inter 
Vivos. __ It has been held that no 
other or different proof is required to 
establish a gift causa mortis than is 
necessary to prove one inter vivos. 
Bedell v. Carll, 33 N. Y. 581. 

On the other hand, it has been held 
that the burden of proof rests much 
more heavily upon the donee in the 
case of a gift causa mortis than when 
the gift is inter vivos. Seabright v. 
Seabright, 28 W. Va. 412. See also 
In re Murray, 9 A. R. (Can.) 369. 

95. It has been held that while 
there was no presumption of law or 
fact against a gift, there was no pre- 
sumption of law or fact in favor of 
one ; and that he who claimed title to 
property through the gift must es- 
tablish it by evidence which is " clear 
and convincing, strong and satisfac- 
tory." Parian v. Wiegel, 76 Hun 
462, -31 Abb. N. C. 159, 28 N. Y. 
Supp. 95. 

But in a later case in the same 
state the court used the following 
language : " There is no presumption 
of law either in favor of or against 
such a gift. By reason of the fact 
that there is some opportunity for 
fraud in cases of this kind, great care 
should be exercised by the courts to 
see that no wrong is done or fraud 
perpetrated. The necessity for care, 
however, does not change genaral 
rules applicable to civil cases; and 
when the gift is a natural one, and 
the evidence is reasonable and prob- 
able, and the several steps to estab- 
lish the gift causa mortis are es- 
tablished by a fair preponderance of 
evidence, the donee is entitled to the 
decision or verdict." Reynolds v. 
Reynolds, 20 Misc. 254, 45 N. Y. 
Supp. 338. 

In Trenholm v. Morgan, 28 S. C. 
268, 5 S. E. 721, the court said: 
" Although we cannot say that courts 
lean against gifts causa mortis, yet 
the evidence to establish them should 

Vol. VI 



236 



GIFTS. 



C. UNCOEROBORATgD TESTIMONY 01^ DoNEfi. — It has been inti- 
mated in one or two cases that it would establish a very dangerous 
precedent to allow such gifts to be maintained upon the uncorrobo- 
rated testimony of the donee."" 

D. Mere Intention InsueFicient. — The mere intent to give 
is not a gift, and where the evidence shows such an intent without 
an actual gift consummated by delivery and acceptance, it will result 
in a failure of proof."' But testimony that an intention to give 
existed for a long time before the act of giving serves to corroborate 
the other evidence of the gift."' 

2. Burden of Proof. — The burden of proof generally rests upon 
the donee or those claiming under him to establish every element of 
a valid gift causa mortis.'^ 



be clear and unequivocal, and will 
be closely scrutinized." 

Preponderance Sufficient It has 

been held error to charge that a gift 
causa mortis must be proved " be- 
yond suspicion." Lewis v. Merritt, 
113 N. Y. 386, 21 N. E. 141, revers- 
ing 42 Hun 161. See also Gibbs v. 
Carnahan, 4 Misc. 564, 25 N. Y. 
Supp. 786, affirmed in jy Hun 607, 
28 N. Y. Supp. 113s, where it was 
held proper to refuse to charge the 
jury that a gift causa mortis must 
be established " beyond a reasonable 
doubt " or " by the clearest evidence " 
or "by clear and satisfactory evi- 
dence ;" that the same rule was to 
apply as in all other civil cases, and 
that it was suificient if the gift were 
established by a preponderance of 
evidence. 

Question of Fact in Each Case. 
Castle V. Persons, 117 Fed. 835; 
Crue V. Caldwell, 52 N. J. L. 215, 19 
Atl. 188. 

For evidence held sufficient to es- 
tablish gift causa mortis, see Calla- 
nan v. Clement, 18 Misc. 621, 42 N. 
Y. Supp. 514; affirmed in 162 N. Y. 
618, S7 N. E. 105; Podmore v. South 
Brooklyn Sav. Inst., 48 App. Div. 
218, 62 N. Y. Supp. g6i. 

For evidence held insufficient, see 
Daniel v. Smith, 64 Cal. 346, 30 Pac. 
575 ; Farmer v. Devlin, 32 N. Y. St. 
168, 10 N. Y. Supp. 425 ; affirmed in 
124- N. Y. 646, 27 N. E. 412; Pod- 
more ?'. Dime Sav. Bank, 29 Misc. 
393, 60 N. Y. Supp. 533; Plasterstein 
V. Hoes, 37 App. Div. 421, 56 N, Y. 
Supp. 103; Alsop V. Southold Sav. 

Vol. VI 



Bank, 66 Hun 300, 21 N. Y. Supp. 
632; Wetmore v. Brooks, 44 N. Y. 
St. 327, 18 N. Y. Supp. 852. 

In Emery v. Clough, 63 N. H. 552, 
4 Atl. 796, it was held that the fol- 
lowing memorandum was sufficient 
evidence to establish a valid gift 
causa mortis: " Give to Hannah K. 
Clough, on condition that if I regain 
my health it is to be returned to me 
in good faith, otherwise the gift is 
absolute. William Emery." 

96. Kenney v. Public Adminis- 
trator, 2 Bradf. (N. Y.) 319. 

It has been held that there is no 
absolute rule that a gift of this kind 
may not be established by the evi- 
dence of the claimant alone; but 
that there is no class of questions in 
which it is more important that cor- 
roborating testimony should be in- 
sisted on. McDonnell v. Murray, 3 
Ir. Eq. 460. 

97. Partridge v. Kearns, 32 App. 
Div. 483, 53 N. Y. Supp. 154; Del- 
motte V. Taylor, i Redf. (N. Y.) 
417; Wilcox V. Matteson, 53 Wis. 
23, 9 N. W. 814, 40 Am. Rep. 754; 
Gano V. Fisk, 43 Ohio St. 462, 3 N. 
E. 532, 54 Am. Rep. 819. 

98. Goulding v. Horbury, 85 Me. 
227, 27 Atl. 127, 35 Am. St. Rep. 357. 

99. Illinois. — Barnum v. Reed, 
136 111. 388, 26 N. E. 572. 

Maine. — Doh v. Lincoln, 31 Me. 
422. 

Michigan. — People's Sav. Bank v. 
Look, 95 Mich. 7, 54 N. W. 629. 

New Jersey. — Snyder v. Harris, 
61 N. J. Eq. 480, 48 Atl. 329. 



GIFTS. 



237 



3. Essential Elements of Proof. — A. In GfiNERAL. — There are 
four essential elements to be proved in order to establish a gift causa 
mortis. It must be shown that the gift was made under an appre- 
hension of impending death, that the donor died of a present peril 
existing at the time of the gift, that there was a delivery of the thing 
given and an acceptance by the donee-^ 

a. Apprehension of Death. — It is necessary in all cases to prove 
that the gift was made under an apprehension of impending death 
and with the idea of reclaiming it upon recovery.^ But it is not 
necessary, however, that this apprehension of death be evidenced by 
any express declaration of the donor; it may be inferred from the 
surrounding circumstances.'' Thus when the transaction takes place 



New York. — Lehr v. Jones, 74 
App. Div. 54, 77 N. Y. Supp. 213; 
Flood V. Cain, 78 Hun 378, 29 N. Y. 
Supp. 156; Kirk V. McCusker, 3 
Misc. 277, 22 N. Y. Supp. 780; Conk- 
lin V. Conklin, 20 Hun 278. 

South Carolina. — Trenholm v. 
Morgan, 28 S. C. 268, 5 S. E. 721. 

M'^est Virginia. — Dickeschied v. 
Bank, 28 W. Va. 340; Seabright v. 
Seabright, 28 W. Va. 412. 

Not to Disprove Traud The fact 

that the burden of proof rests upon 
the claimant does not require him to 
prove in the first instance that there 
was no fraud practiced upon the de- 
ceased. Vandor v. Roach, 73 Cal. 
614, IS Pac. 354; Frantz v. Porter, 
132 Cal. 49, 64 Pac. 92. 

Not to Show Donor's Sanity. 
Vandor v. Roach, 73 Cal. 614, 15 
Pac. 354. 

Habits of Donor. — Evidence that 
the deceased donor was addicted to 
the excessive use of liquor is not 
sufficient in itself to establish mental 
incompetency to make the gift, but 
does impose upon the court the duty 
of a very careful scrutiny of the 
proof required to establish it, and is 
relevant upon the question of intent 
and understanding in determining the 
purpose of the deceased and in the 
weight to be attached to the testi- 
mony as a whole. Tilford v. Bank 
for Savings, 31 App. Div. 565, 52 N. 
Y. Supp. 142. 

1. Essential Elements of Proof. 
Royston V. McCulley (Tenn.), 59 S. 
W. 725. 

2. England. — Edwards v. Jones, 
7 Sim. 325. 



Maine. — Dresser v. Dresser, 46 
Me. 48. 

New Jersey. — Snyder v. Harris, 
61 N. J. Eq. 480, 48 Atl. 329. 

New York. — Kirk v. McCusker, 3 
Misc. 277, 22 N. Y. Supp. 780; Bick 
V. Reese, 21 N. Y. St. 404, 3 N. Y. 
Supp. 757; Van Vleet v. McCarn, 18 
N. Y. St. 73, 2 N. Y. Supp. 67s. 

North Carolina. — Kiff v. Weaver, 
94 N. C. 274, 55 Am. Rep. 601. 

Pennsylvania. — Gourley v. Linsen- 
bigler, 51 Pa. St. 345; Rhodes v. 
Childs, 64 Pa. St. 18. 

South Carolina. — Gilmore v. 
Whitesides, Dud. Eq. 14. 

Texas. — Thompson v. Thompson, 
12 Tex. 327. 

Time of Donation Material It 

has been held that for the purpose 
of establishing a case of donatio 
mortis causa it is absolutely neces- 
sary to show at what time it was 
that the donation itself took place. 
Edwards v. Jones, 7 Sim. (Eng.) 
325. 

Expectation of Death Essential. 
Evidence showing a vague and gen- 
eral impression that death may occur 
from those casualties which attend all 
human affairs is not sufficient to 
sustain a gift causa mortis. It must 
be shown that the donor was in a 
condition to fear approaching death 
from a proximate and impending 
peril or from illness preceding ex- 
pected dissolution. Irish v. Nutting, 
47 Barb. (N. Y.) 370. 

3. Blazo V. Cochrane, 71 N. H. 
585, 53 Atl. 1026; Williams v. Guile, 
117 N. Y. 343, 22 N. E. 1071, 6 L. R. 
A. 366 ; Grymes v. Hone, 49 N. Y. 17, 

Vol. VI 



238 



GIFTS. 



during the last sickness of the donor, it will usually be presumed to 
have been made in contemplation of death.* And when the gift, 
under these circumstances, consists of the whole or a great portion 
of the donor's personal estate, it has been held to raise even a 
stronger presumption in favor of a gift causa mortis as distinguished 
from one inter vivos.'' 'This presumption, however, that the gift was 
made in contemplation of death, is not conclusive, but may be 
rebutted by other evidence.® 

b. Death From Impending Peril. — As a general rule it must be 
shown that the donor died from the very cause from which he appre- 
hended death.'' But it has been held sufficient to show death from 



10 Am. Rep. 313; Rhodes v. Childs, 
64 Pa. St. 18; Nicholas v. Adams, 2 
Whart (Pa.) 17; Seabright v. Sea- 
bright, 28 W. Va. 412. 

4. In re Swade, 65 App. Div. 592, 
72 N. Y. Supp. 1030; Bliss V. Fos- 
dick, 86 Hun 162, 33 N. Y. Supp. 317, 
affirmed in 151 N. Y. 625, 45 N. E. 
1 131; Merchant v. Merchant, 2 
Bradf. (N. Y.) 432; Irish v. Nuttmg, 
47 Barb. (N. Y.) 370; Delmotte v. 
Taylor, I Redf. (N. Y.) 417; Sea- 
bright V. Seabright, 28 W. Va. 412; 
Henschel v. Maurer, 69 Wis. 576, 34 
N. W. 926, 2 Am. St. Rep. 757 ; Gard- 
ner V. Parker, 3 Madd'. Ch. (Eng.) 
185. Cited in Williams v. Guile, 117 
N. Y. 343, 22 N. E. 1071, 6 L. R. A. 
366. 

Gift Before Surgical Operation. 
So, where the donor was an invalid 
of rather advanced age and about to 
undergo a surgical operation it was 
held that the circumstances precluded 
the transaction from being considered 
as a gift inter vivos; that in such 
a case it must be assumed that the 
donor had at least a hope of recovery, 
and of getting well and safely out of 
the surgical operation, and that it 
would require very clear evidence to 
authorize a conclusion that she in- 
tended to make the gift absolute and 
not conditional upon death. Knight 
V. Tripp, 121 Cal. 674, 54 Pac. 267. 

5. Seabright v. Seabright, 28 W. 
Va. 412. 

6. Blazo V. Cochrane, 71 N. H. 
S8S, S3 Atl. 1026. 

Evidenced by Writing. — Where 
the transaction, alleged to be 
a gift causa mortis, is evidenced by 
tin instrument in writing, purporting 

Vol. VI 



to be a regular assignment, exactly 
the same as where the purpose is ab- 
solutely and at once to pass the whole 
interest in the subject-matter, this is 
a strong circumstance against the 
presumption of the transaction being 
intended to operate as a gift causa 
mortis. Edwards v. Jones, i Myl. 
& Or. (Eng.) 226. Compare Wes- 
terlo V. De Witt, 36 N. Y. 340, 93 
Am. Dec. 517. But another court 
said : " Instead, therefore, of con- 
sidering such absolute indorsement 
and assignment of the bond or 
note to the donee as conclusive 
evidence that it was a gift inter 
vivos and not causa mortis, it 
seems to me to be in itself no evi- 
dence whatever, and that it only 
shows that it is a gift in presenti, 
which may be a gift inter vivos or 
causa mortis. Both of such gifts are 
always gifts in presenti." Seabright 
V. Seabright, 28 W. Va. 412, criticis- 
ing Edwards v. Jones, i Myl. & Cr. 
(Eng.) 226. 

Gift or Will. — It has been held 
that where the transaction alleged to 
be a gift causa mortis is coupled with 
a condition that the donee shall pay 
the funeral expenses, this circum- 
stance affords a strong argument for 
the jury that a mere nuncupative will 
was made of which the donee was to 
be the executor. Hills v. Hills, 8 M. 
& W. (Eng.) 401. 

7. Royston v. McCulley (Tena), 
59 S. W. 725. See also cases cited 
under note 2, supra. 

"The rule of law, in such cases of 
gifts made in prospect of death, de- 
mands for their validity that the 
proof shall show the existence of a 
bodily disorder, or of an illness 



GIPTS. 



239 



a peril existing at the time the gift was made, though not the one 
from which the donor supposed that he was going to die.* 

C. Delivery. _ (1.) Requisites as Compared With Gifts Inter Vivos. 
As a general rule the requisites to prove delivery are practically the 
same in both classes of gifts,® and it is necessary to show an absolute 
parting with possession by the donor .^° 

(2.) Previous Intent As Corroborating Evidence. — Where the evidence 
shows that the intent to give was obvious and clear, the delivery may 
be supported upon less stringent evidence.^^ 

(3.) Where Subject of Gift is Chose in Action. — It has been held 
where the subject of the gift is a chose in action, and has been trans- 
ferred by a mere manual delivery, without any written assignment, 
that the absence of the written assignment affords a presumption 
against the gift.^" 



which imperils the donor's life, and 
which eventually terminates it. But 
that he should be confined to his bed, 
or his room, or that he should die 
within a certain limited time, are not 
essential circumstances to support 
such a gift." Williams v. Guile, 117 
N. Y. 343, 22 N. E. 1071, 6 L. R. A. 
366. 

8. " It must appear that the gift 
was made by the donor during an 
illness or impending peril of such a 
nature as to cause him to apprehend 
death therefrom ; and while it is not a 
legal requisite that he should die of 
the disease or peril from which he 
apprehends death, he must not re- 
cover from it, and his death must re- 
sult from a disease or peril existing 
or impending at the time the gift was 
made." Blazo v. Cochrane, 71 N. 
H. S8S, S3 Atl. 1026. See also Rid- 
den V. Thrall, 125 N. Y. 572, 26 N. E. 
627, 21 Am. St. Rep. 758, 11 L. R. A. 
684. 

9. Basket v. Hassell, 107 U. S. 
602; Yancey v. Field, 85 Va. 756, 8 
S. E. 721 ; Ewing V. Ewing, 2 Leigh 
(Va.) 337- 

It has been held that less stringent 
proof would be required to prove de- 
livery in the case of a gift inter 
vivos than one causa mortis. Sea- 
bright V. Seabright, 28 W. Va. 412. 

May be Inferred. — It is not neces- 
sary that the delivery be proved by 
eye-witnesses who actually saw it 
done, but it may be inferred from the 
surrounding facts and circumstances. 
Hitch V. Davis, 3 Md. Ch. 265. 



In New Hampshire, it has been 
provided by statute that a gift causa 
mortis cannot be enforced unless the 
actual delivery of the property to the 
donee shall be proved by two indif- 
ferent witnesses. Blazo v. Coch- 
rane, 71 N. H. 585, S3 Atl. 1026. See 
Pub. Stat. N. H. (1091), ch. 186, 
§18. 

10. Dole V. Lincoln, 31 Me. 422. 

11. Previous Intent as Corrobora- 
ting Evidence. — " Where the intent 
to bestow is obvious and clear, and 
the language and deportment of the 
donor indicate a belief upon his part 
that he has done all that is necessary 
to accomplish his purpose, they come 
to the aid of the act of delivery, if 
slight and ambiguous, but not to dis- 
pense with it as an essential element 
of a valid gift." Waite v. Grubbe, 
43 Or. 406, 73 Pac. 206. 

12. Varick v. Hitt (N. J.), SS Atl. 
139. 

Where the subject of the gift is a 
chose in action, such as a bond mort- 
gage, or promissory note not in- 
dorsed, it may be transferred by de- 
livery only; but in such case, more 
and different evidence is required, in 
enforcing the claim, than where a 
specific chattel has been delivered, or 
an indorsement or a formal written 
transfer of the security has been 
made. Westerlo v. DeWitt, 36 N. Y. 
.340, 93 Am. Dec. 517. Reported be- 
low in 35 Barb. (N. Y.) 215. 

Contra. — It has been held that 
where the subject of the gift con- 
sists of a bond and mortgage, the 

Vol. VI 



240 



GIFTS. 



(4.) Possession ty Donee. — As a g-eneral rule the mere possession of 
the subject of the gift by the donee is not sufficient evidence of dehv- 
cry,^^ especially where a close personal relation existed between the 
donor and donee-^* It has been held, however, that the custody of 
the thing given, though not decisive upon the issue of delivery, 
usually throws light upon its solution. ^° 

(5.) Declarations Insufficient. — Delivery cannot usually be proved 
by the mere declarations of the donor, uncorroborated by other evi- 
dence.^" 

(8.) Re-Appropriation by Donor. — Where the donor, subsequent to 
the alleged gift, takes the property into his own possession again, it 
shows either an ineffectual delivery or a revocation, and in either 
case is fatal to the validity of the gift.^' 

(7.) Question of Tact in Each Case. — The question of delivery must 
usually be decided according to the peculiar facts and circumstances 
of each particular case.^^ 



mere possession by the donee is 
prima facie evidence of ownership in 
him; and that in such case the rule 
that the gift must be established by 
clear and unmistakable proof does 
not apply, but that the preponderance 
of the evidence is sufficient. Kiflf v. 
Weaver, 94 N. C. 274, 55 Am. Rep. 
601. 

13. Hawkins v. Blewitt, 2 Esp. 
663, s Rev. Rep. 761 ; Dickeschied v. 
Bank, 28 W. Va. 340; Seabright v. 
Seabright, 28 W. Va. 412; Buecker v. 
Carr, 60 N. J. Eq. 300, 47 Atl. 34; 
Podmore v. Dime Sav. Bank, 29 
Misc. 393, 60 N. Y. Supp. 533. 

Delivery, Not Possession, Essential. 
" It is not the possession of the donee, 
but the delivery to him by the donor, 
which is material in a donatio mortis 
causa. The delivery stands in place 
of nuncupation, and must accompany 
and form a part of the gift. An 
after-acquired possession of the donee 
is nothing; and a previous and con- 
tinuing possession, though by the 
authority of the donor, is no better." 
Miller v. Jeffress, 4 Gratt. (Va.) 472. 

It has been held that to establish 
a gift causa mortis by parol evidence 
alone, the mere fact that the subject 
of the gift has passed into the pos- 
session of the donee, even by the act 
of the donor himself, is not sufficient ; 
but the circumstances must be such 
as are consistent with the presump- 
tion that he parted with all dominion 

Vol. VI 



over it, subject only to its revoca- 
tion upon the happening of any of 
those events which make such a gift 
revocable and distinguish it from one 
inter vivos. Delmotte v. Taylor, i 
Redf. (N. Y.) 417. 

14. Conklin v. Conklin, 20 Hun 
(N. Y.) 278. 

15. Tomlinson v. Ellison, 104 Mo. 
los, 16 S. W. 201. 

16. Rockwood v. Wiggin, 16 Gray 
(Mass.) 402. 

17. Kirk v. McCuster, 3 Misc. 277, 
22 N. Y. Supp. 780. 

18. Claytor v. Pierson (W. Va.), 
46 S. E. 935- 

See the case of Ellis v. Secor, 31 
Mich. 18s, 18 Am. Rep. 178, for facts 
held sufficient to constitute a deliv- 
ery. Also Waite v. Grubbe, 43 Or. 
406, 73, Pac. 206. 

Question for Jury. — AH questions 
regarding the fact of delivery, as well 
as of the capacity in which the per- 
son who receives the property holds 
it, are for determination by the jury, 
just as other questions of fact in 
actions of law. Dunn v. German- 
American Bank, 109 Mo. 90, 18 S. W. 
II39- 

" While every case must be 
brought within the general rule that, 
to constitute a valid gift causa mor- 
tis, there must be a delivery of the 
property or the thing given to the 
donee, or to a third person for his 



GIFTS. 



341 



d. Acceptance. — (l.) When Presumed. — When the gift is unac- 
companied by any burden and is wholly beneficial to the donee, his 
acceptance will usually be presumed.^" 

4. Admissibility of Evidence. — A. Prior DecIvArations of 
Intention. — The prior declarations of the donor, showing an 
intention to make the gift, are usually admissible in favor of the 
donee.'"' 

B. Declarations oe Donee. — The declarations of the donee, in 
his own favor, made in the donor's presence, are admissible, both as 
part of the res gestae and to rebut his subsequent declarations against 
his interest.^^ 

C. Previous Intention oE Donor. — Where the intent with 
which the donor made the delivery is doubtful, evidence showing a 
previously fixed state of mind, on his part, inconsistent with the gift, 
is relevant and admissible.^^ 

D. Conduct oe DoneE- — The conduct of the donee is always a 
material circumstance in the proof, especially where he has been 
guilty of concealment and falsity in such a way as to lend suspicion 
to the transaction.^' 



use and benefit, yet, as the circum- 
stances under which such gifts are 
made must of necessity be varied and 
infinite, the courts must determine 
each case upon its own peculiar facts 
and circumstances." Caylor v. Cay- 
lor, 22 Ind. App. 666, 52 N. E. 465. 
Where the subject of a gift was a 
trunk and its contents, and the evi- 
dence showed that the donor had di- 
rected a third person to put some 
dresses into the trunk, and then to 
lock it and put the key back where 
it was found, and the key remained 
there until after the death of the 
donor, it was held not sufficient to 
show such an absolute delivery 
as is necessary to establish a gift 
causa mortis. Coleman v. Parker, 
114 Mass. 30. 

19. Leyson v. Davis, 17 Mont. 220, 
42 Pac. 775, 31 L. R. A. 429; Blazo 
V. Cochrane, 71 N. H. 585, 53 Atl. 
1026. In re Swade, 65 App. Div. 592, 
72 N. Y. Supp. 1030; Darland v. 
Taylor, 52 Iowa 503, 3 N. W. 510, 
33 Am. Rep. 285. 

20. Leyson v. Davis, 17 Mont. 220, 
42 Pac. 775, 31 L. R. A. 429; Ridden 
V. Thrall, 125 N. Y. 572, 26 N. E. 
627, 21 Am. St. Rep. 758, 11 L. R. 
A. 684. In re Swade, 65 App. Div. 
592, 72 N. Y. Supp. 1030; Smith v. 

16 



Maine, 25 Barb. (N. Y.) 33; Parker 
V. Marston, 27 Me. 196. 

Where the Circumstances Sur- 
rounding the Transaction are Am- 
biguous, the prior declarations of the 
donor, showing an intention to make 
the gift, are properly admitted upon 
the trial against his personal repre- 
sentative. Smith V. Maine, 25 Barb. 
(N. Y.) 33. 

21. Declarations of Donee. 
Thomas v. Lewis, 89 Va. i, 15 S. E. 
389, ^^ Am. St. Rep. 848, 18 L. R. 
A. 170. 

22. Where there is any ground for 
doubt as to the intent with which the 
delivery was made, or whether pos- 
session was obtained by the donee as 
a voluntary gift or in some other 
mode, evidence tending to show a 
continuous and apparently fixed 
state of mind and purpose incon- 
sistent with such alleged gift, exist- 
ing previously thereto, is relevant 
and competent as affecting the in- 
ferences to be drawn from the sur- 
rounding facts and circumstances. 
Whitney v. Wheeler, 116 Mass. 490. 

23. The conduct of the donee is 
a material circumstance in the proof; 
and when he has been guilty of con- 
cealment and falsity at a period when 
the validity of the gift, if the trans- 

Vol. VI 



212 



GIFTS. 



E. State op Feeling. — Evidence showing the state of feehng 
existing between the donor and donee is generally admissible to 
show a mative either for ot against the gift.^* 

5. Confidential Relations. — A. In General. — Where a confi- 
dential relation is shown to exist between the parties, the general 
rule applies as in cases of gifts inter vivos, and the transaction is 
prima facie void.^° 

B. Mere Personal Friendship. — But where the relation exist- 
ing between the parties is one of mere personal friendship, there can 
be no presumption of any fraud or undue influence.^^ 



action was fair and honest, might 
have been evidenced by competent 
witnesses, this circumstance in itself 
will cast suspicion upon the validity 
of the gift. Kenney v. Public Ad- 
ministrator, 2 Bradf. (N. Y.) 319. 

24. Smith v. Maine, 25 Barb. (N. 
Y.) 33. 

Where a Harried Woman Made a 
Gift causa mortis to a person other 
than her husband, evidence of her 
husband's ill-treatment of her is ad- 
missible to show a motive for the 
gift. Comner v. Root, 11 Colo. 183, 
17 Pac. 733. 

25. Walsh V. Studdart, 4 D. & W. 
159; Thompson v. Heffernan, 4 D. 
& W. 28s; Varick v. Hitt (N. J.), 
SS Atl. 139. 

" When a clergyman attends upon 
a person in his last moments, and sets 
up a gift from the dying man to 
himself, the evidence of the transac- 
tion ought to be perfectly free from 
all suspicion, and such as to leave 
no reasonable doubt in the mind of 

Vol. VI 



the court as to its truth. A death- 
bed is not the fit place, nor the 
proper time, at which a clergyman of 
any persuasion should look to his 
own personal interest, or seek to ob- 
tain the property of the dying man. 
On such an occasion, if a man has 
a testamentary intention, and time al- 
lows, proper advice should be ob- 
tained, some professional person 
should be sent for, and disinterested 
witnesses called in ; all due solemni- 
ties should attend the disposition of 
the property. Advantage ought never 
to be taken of a man's last moments 
in order to obtain dispositions of 
his property in favor of persons not 
connected with him by ties of blood; 
and I shall always require strong 
evidence, more especially in the case 
of a clergyman, before I support a 
gift made in extremis." Thompson 
V. Heffernan, 4 D. & W. 285. 

26. Frantz v. Porter, 132 Cal. 49, 
64 Pac. 92. 



GRAND JURY. 

By Ci^rEncB MeiIvY. 

I. WITNESSES, 245 

1. Attendance, 245 

A. Subpoena, 245 

B. Recognizance, 245 

C. Presence and Demeanor of Witness, i4«> 

D. Persons Amenable to Process, 245 

2. Oath, 245 

A. Necessity, 245 

B. Manner and Form, 245 

C. Authority to Administer, 247 

3. Examination, 247 

A. Mode, 247 

a. Discretion, 247 

b. Public Examination, 247 

c. Absence of Judge, 247 

d. Interpreter, 248 

B. Persons Present and Participating, 248 

a. Bailiff, 248 

b. Prosecuting Attorney, 248 

c. Attorney, 248 

d. Witnesses, 249 

e. Stenographer, 249 

f. Presence of Accused, 249 

II. EVIDENCE, 249 

I. Scope of Inquiry, 249 

A. Evidence for the Defense, 249 

B. Inquisitorial Power, 250 

a. Definition, 250 

b. Existence, 252 

c. Indictment on Testimony in Other Investigation, 

252 

Vol. VI 



744 GRAND JURY. 

2. Competency and Relevancy, 252 

A. Duty to Receive Competent Evidence, 252 

B. Effect of Incompetent Evidence, 253 

C. Presumptions, 254 

D. Confessions, 254 

E. Documentary Evidence, 254 

a. Direction of Court, 254 

b. Depositions, 254 

3. Self -Criminating Evidence, 254 

A. Involuntary Statement, 254 

B. Voluntary Statement, 256 

C. Constitutional Protection, 256 

D. Statutory Protection From Subsequent Prosecution, 256 

4. Sufficiency, 257 

A. Knowledge of Grand Jury, 257 

B. Review of Sufficiency of Evidence, 257 

C. Degree of Proof, 259 

a. /m General, 259 

b. Indictment on Indictment, 259 

c. Re-Examination of Witnesses After Indictment 

Quashed, 259 

D. Presumptions, 259 

E. Practice, 260 

5. Record and Inspection Thereof, 260 

A. Preservation of Minutes, 260 

B. Inspection, 260 

6. C/j^ m Subsequent Proceedings, 261 

A. Secrecy in General, 261 

B. C/je oj Original Evidence, 262 

C. For Purposes of Impeachment, 263 

D. To Refresh Witness^ Recollection, 264 

CROSS-KEPERENCES: 
Attendance of Witnesses; 
Contempt ; 
Witnesses. 
Vol. VI 



GRAND JURY. 



245 



I. WITNESSES. 

1. Attendance, — A. Subpoena. — A subpoena is the proper 
process with which to bring a witness before the grand jury.^ 

B. Recognizance. — The Circuit Court has power to require 
witnesses subpoenaed to testify before the grand jury to enter into 
a recognizance to appear before that body, whether at the present 
or a future term of court. ^ 

C. Presence and Demeanor of Witness. — A witness before 
the grand jury has no right to leave its presence, after being sworn 
and placed under examination, without its permission.^ The grand 
jury cannot enforce the obligation of a witness to answer a ques- 
tion, but must refer the matter of his refusal to the court.* 

D. Persons Amenable to Process. — The grand jury cannot 
summon witnesses from other states.^ 

2. Oath, — A. Necessity. — Witnesses must be sworn before 
testifying.* 

B. Manner AND Form. — Witnesses before the grand jury should 
be sworn in such manner that if their testimony is false they may 



1. The testimony of a witness 
may support an indictment although 
he was not subpoenaed. State v. 
Parrish, 8 Humph. (Tenn.) 8o. As 
to right of private person to volun- 
tarily give information to grand jury, 
see infra " II. Evidence, i. Scope 
of Inquiry, B. Inquisitorial Power." 

Baldwin v. State, 126 Ind. 24, 25 
N. E. 820. The decision involves the 
construction of numerous statutes as 
to the power of the grand jury to 
subpoena witnesses to discover the 
commission of offenses. 

See infra " II. Evidence, i. Scope 
of Inquiry, B. Inquisitorial Power." 

The Subpoena Should Require At- 
tendance Before the Court, not be- 
fore the grand jury; if the latter, it 
is void. State v. Butler, 8 Yerg. 
(Tenn.) 83. 

State's Attorney May Have Sub- 
poenas Issued in Vacation, — O'Hair 
V. People, 32 111. App. 277. 

2. Gwynn v. State, 64 Miss. 324. 

3. People V. Kelly, 12 Abb. Pr. 
(N. Y.) ISO. 

4. In Heard v. Pierce, 9 Cush. 
(Mass.) 338, 54 Am. Dec. 757, the 
action was for assault and battery, 
and was brought by an officer in at- 
tendance on the grand jury against 
a recalcitrant witness, the question of 
the jury's power to place the witness 



in the officer's custody being raised. 
In passing on it the court said : " In 
truth, without the power to take re- 
fractory witnesses, or witnesses who 
honestly interpose unfounded objec- 
tion to giving evidence, before the 
court for its direction and aid, the 
grand jury would be wholly unable 
to perform the duties imposed upon 
them by law, . . . and power to 
detain such a witness and take him 
to the court is manifestly essential 
to enable the jury to exercise the 
powers expressly given them, and to 
perform the duties imposed upon 
them by law." 

Bx parte Hendrickson, 6 Utah 3, 
21 Pac. 396. See article " Con- 
tempt," Vol. III. 

5. Beal v. State, IS Ind. 378. 

6. Testimony of unsworn wit- 
ness if material is fatal to the in- 
dictment. United States v. Cool- 
idge, 2 Gall. 364, 25 Fed. das. No. 
14,858; State V. Roberts, 19 N. C. 
S40. 

Where One Without Authority 
Administered the Oath to a witness 
before the grand jury it was held that 
the indictment found on such testi- 
mony would be quashed, the witness' 
statement having been given without 
the requisite sanction. Joyner v. 
State, 78 Ala. 448. 

In Rex V. Dickinson, Russ. & R. 

Vol. VI 



246 



GRAND JURY. 



be indicted for perjury/ But the manner of swearing witnesses 
cannot be inquired into.* 

General Oath. — An oath of a witness to give evidence touching 
criminal charges to be laid before the grand jury, without reference 
to any particular person accused, is unobjectionable." 

Swearing in Open Court. -^ A witness for the grand jury^" should 



(C. C.) 401, the fact that a defend- 
ant was indicted on the testimony of 
witnesses not sworn was made the 
occasion for recommending him for 
a pardon. 

In State v. Easton, 113 Iowa 516, 
8s N. W. 79S, the fact that a witness 
was not sworn as required by statute 
was held not ground for setting 
aside the indictment, it not being 
among those specified in the code. 

Testimony of Child In State v. 

Doherty, 2 Overt. (Tenn.) 80, it was 
held that the testimony of a child 
under fourteen years of age who had 
no sense of the obligation of an oath, 
and was therefore incompetent to 
take one, could not be heard by the 
grand jury without that sanction. 
But in People v. Sexton, 42 Misc. 
312, 86 N. Y. Supp. 517, it was held, 
construing Code Crim. Proc, §§ 255, 
392, to be discretionary with the 
grand jury to receive the testimony 
of children under twelve years of 
age without being sworn. 

In King v. State, S How. (Miss.) 
730, it was held that it need not 
appear from the record that wit- 
nesses examined before the grand 
jury were sworn. See also State v. 
Barnes, 52 N. C. 20; State v. Har- 
wood, 60 N. C. 226. 

Where the foreman of the grand 
jury has omitted to mark the wit- 
nesses before that body as having 
been sworn, the state may show by 
proof that they were sworn, notwith- 
standing a statute providing that the 
foreman shall so mark the witnesses. 
State V. Hines, 84 N. C. 810. 

Where the witnesses for the grand 
jury are in fact sworn by the clerk 
of the court as required by statute, 
the fact that they did not deliver to 
the foreman a certificate showing that 
fact, or that no such certificate was 
fver made by the court, as the stat- 

Vol. VX 



ute required, would not invalidate the 
indictment. Duke v. State, 20 Ohio 
St. 225. 

7. State V. Passet, 16 Conn. 457. 

For an instance of an oath suf- 
ficient to sustain such an indictment, 
see State v. Green, 24 Ark. 591. 

8. Turner v. State, 57 Ga. 107; 
Simms V. State, 60 Ga. 145; Reg. v. 
Russell, I Car. & M. 247. 

But in United States v. Reed, 2 
Blatchf. 43S, 27 Fed. Cas. No. 16,134, 
it was held that the manner of 
swearing witnesses for the grand 
jury, when they were sworn in open 
court, might be inquired into. 

In Reg. V. Russell, i Car. & M. 247, 
it was said that even if the inquiry 
were open, an improper mode of 
swearing a witness would not vitiate 
an indictment. This is because grand 
jurors may indict on their own 
knowledge. 

9. In United States v. Reed, 2 
Blatchf. 43S, 27 Fed. Cas. No. 16,134, 
it was held that an indictment 
against R. on the testimony of wit- 
nesses sworn to give evidence touch- 
ing charges against S. and others 
was not objectionable as based on 
testimony given without the sanction 
of an oath. Contra — Construing 
statute, Ashburton v. State, 15 Ga. 
246. And see infra — " II. Evi- 
dence, I. Scope of Inquiry, B. In- 
quisitorial Power." 

10. Gilman v. State, i Humph. 
(Tenn.) 59; State v. Kilcrease, 6 
S. C. 444. 

But the temporary absence of the 
judge is immaterial. Jetton v. 
State, Meigs (Tenn.) 192. 

Where a statute gives a foreman 
of the grand jury power to admin- 
ister oaths, witnesses need not be 
sworn by or before the court. Bird 
V. State, 50 Ga. 585. 



GRAND JURY. 



247 



be sworn in open court. But the rule has been altered by statute 
in some states.^^ 

C. Authority to Administer. — In the absence of statute, the 
foreman of the grand jury has no authority to swear witnesses on 
indictments for felony.^^ 

3. Examination. — A. Mode. — a. Discretion. — The mode of ex- 
amining witnesses is discretionary with the grand jury, and cannot 
be reviewed by the court.^^ 

b. Public Examination. — The court has no right to require the 
grand jury to have the witnesses before it examined publicly.^* 

c. Absence of Judge. — An indictment is not vitiated by the fact 
that some of the witnesses were examined by the grand jury while 
the judge was absent from the county holding another term of 
court.^^ 



Failure to swear witnesses in open 
court is not a ground for a motion 
in arrest of judgment, but of plea in 
abatement. Gilman v. State, i Humph. 
(Tenn.) 59. 

11. In State v. Fasset, 16 Conn. 
457, the swearing of witnesses in the 
grand jury room by a magistrate, 
who was himself a grand juror, was 
sustained, the court saying : " The 
practice in England and in the 
courts of the United States certainly 
is that the witnesses should be sworn 
iti open court; growing probably out 
of the fact that formerly grand ju- 
ries met with the court, and the pro- 
ceedings seem to have been carried 
on under the eye of the court. . . . 
By the laws of this state, a provision 
was early made that every town 
should choose two or more . . . 
grand jurors. . . They were to 
meet quarterly, or oftener, to inquire 
into breaches of the law; to call wit- 
nesses before them for examination; 
and if such persons, after being duly 
summoned by a warrant from an as- 
sistant or justice of the peace, re- 
fused to be examined on oath, such 
magistrate might commit them to 
gaol; ... In 1784 the statute 
was altered so far that the superior 
and county courts might order a 
grand jury from those chosen by the 
towns, or other sufficient freeholders. 
Under these circumstances, it was 
very natural that the grand jurors 
of the respective towns, when eight- 
een of them met together, at the call 
of the court, should pursue the same 



course as to the witnesses as when 
they met in their respective towns; 
and that they should suppose that the 
justice of the peace might as well 
summon and swear the witnesses as 
\vliere a smaller number of grand 
jurors had convened. ... So far 
as we are informed, no witness has 
ever been sworn in our courts and 
sent to the grand jury for examina- 
tion. A practice so ancient and so 
uniform, growing up under the eyes 
of the court, is certainly strong evi- 
dence of what is the law." 

See also the statutes of the several 
states. 

12. Ayrs v. State, S Cold. (Tenn.) 
26. 

But under Tex. Crim. Code, arts. 
2949-2955, an indictment cannot be at- 
tacked on this ground. ^Morrison v. 
State, 41 Tex. 516. 

In State v. Allen, 83 N. C. 680, 
a statute empowering the foreman of 
the grand jury to swear the witnesses 
whose names were indorsed on the 
bill was held not to abrogate the 
practice of swearing witnesses for 
the grand jury in open court. See 
also State v. White, 88 N. C. 6g8. 

13. United States v. Reed, 2 
Blatchf. 435, 27 Fed. Cas. No. 16,134. 

For a discussion of the right of 
the grand jury to continue to ex- 
amine witnesses after the indictment 
has been returned, see Coppenhaver 
z: State, 160 Ind. 540, 67 N. E. 453. 

14. State V. Branch, 68 N. C. 186, 
12 Am. Rep. 633. 

15. Com. V. Bannon, 97 Mass^ 
214. 

Vol. V-I 



248 



GRAND JURY. 



d. Interpreter. — Where the statute allows the presence of an 
interpreter before the grand jury, the prosecuting witness may 
properly act as such.^** 

B. Persons Present and Participating. — a. Bailiff. — The 
mere presence of the bailiff of the court who is in attendance on 
the grand jury during their examination of witnesses will not 
vitiate an indictment/'' 

b. Prosecuting Attorney. — The prosecuting attorney has the 
right to be present before the grand jury and aid in examining 
witnesses, but cannot make suggestions as to the weight and credi- 
bility of the testimony.^^ 

c. Attorney. — The fact that an attorney, not an official, was pres- 
ent before the grand jury and examined witnesses, but left before 
the deliberation upon the accusation, would not invalidate an indict- 
ment." 



16. People V. Ramirez, 56 Cal. 
533- 

Witness Must Not Advise Grand 
Jury as to making a presentment. In 
re Gardiner, 31 Misc. 364, 64 N. Y. 
Supp. 760. 

It is error for an attorney for the 
prosecution to procure himself to be 
summoned as a witness before the 
grand jury, and to address that body 
urging the finding of an indictment. 
Welch V. State, 68 Miss. 341, 8 So. 
673- 

17. State V. Kimball, 29 Iowa 267. 

18. In re District Attorney of 
United States, 7 Fed. Cas. No. 3925; 
Charge to Grand Jury, 2 Sawy. 667, 
30 Fed. Cas. No. 18,225; Stattuck v. 
State, II Ind. 473; State v. Adam, 
40 La. Ann. 745, 5 So. 30; State v. 
Baker, 33 W. Va. 319, 10 S. E. 639. 

So a regular assistant of the dis- 
trict attorney may examine witnesses. 
United States v. Kilpatrick, 16 Fed. 
76s ; Franklin v. Com., 105 Ky. 2-!7, 
48 S. W. 986. 

Special counsel appointed by the 
court may examine witnesses before 
the grand jury. Raymond v. Peo- 
ple, 2 Colo. App. 329, 30 Pac. 504; 
State V. Kovolosky, 92 Iowa 498, 61 
N. W. 223; State V. Tyler, 122 Iowa 
I2S, 97 N. W. 983. 

Notwithstanding a statute limiting 
the persons allowed to be present be- 
fore the grand jury to the prosecut- 
ing attorney and witnesses, the fact 
that an attorney acting for the prose- 

Vol. VI 



cuting attorney, though not his dep- 
uty, examined witnesses, would not 
warrant quashing an indictment. 
Bennett v. State, 62 Ark. 516, 36 S. 
W. Q47. Contra — People v. Scan- 
nell, 36 Misc. 40, 72 N. Y. Supp. 449. 

In State v. District Court of Mon- 
tana, 21 Mont. 25, SS Pac. 916, a 
statute giving the attorney-general 
supervisory power over county attor- 
neys and empowering him when re- 
quired by the public service to assist 
the county attorney in the discharge 
of his duties, together with a statute 
requiring the county attorney to at- 
tend before the grand jury, was held 
to give the attorney-general the right 
to examine witnesses before that 
body, though another statute pro- 
vided that an indictment must be set 
aside where any one but members 
of the grand jury, witnesses, the 
county attorney and the judge were 
present during the jury's session. 

For an instance of the quashing of 
an indictment on account of the 
participation in the examination of 
witnesses of an examiner of the de- 
partment of justice, see United States 
V. Kilpatrick, 16 Fed. 765. 

19. Wilson V. State, 41 Tex. 
Crim. IIS, SI S. W. 916. 

Contra. — Durr v. State, S3 Miss. 
425, where the proper remedy was 
held to be a plea in abatement, and 
whether a motion to quash would 
lie was said to be doubtful. 

For an instance of a refusal to 
quash an indictment because the 



GKAXD JURY. 



249 



d. Witnesses. — The presence of an expert witness while other 
witnesses are being examined before the grand jury and his pro- 
pounding questions to them vitiates an indictment; and the court 
will not inquire whether the accused was prejudiced thereby.^" 

e. Stenographer. — The fact that a stenographer wasv present 
during the taking of testimony would not vitiate an indictment, 
where he left before the grand jury began the discussion of the 
propriety of finding a bill.^^ 

f. Presence of Accused. — The accused has no right to be present 
during the examination of witnesses before the grand jury.^^ 

n. EVIDENCE. 

1. Scope of Inquiry. — A. Evidence for the Defense. — One 
against whom a charge is being investigated by the grand jury has 
no right to introduce witnesses in his own behalf.^' But where the 



clerk of the grand jury, who was a 
practicing attorney, asked witnesses 
certain questions at the foreman's re- 
quest, see State v. Miller, 95 Iowa 
368, 64 N. W, 288. 

For an instance of the quashing of 
an indictment on account of the par- 
ticipation of an attorney for creditors 
of a bank, in the grand jury's inves- 
tigation of a charge of embezzlement 
by the bank's officers, the attorney 
having been originally called as a 
witness, see United States v. Far- 
rington, s Fed. 343. 

20. United States v. Edgerton, 80 
Fed. 374. But see Lawrence v. Com., 
86 Va. 573, 10 S. E. 840. 

21. Sims V. State (Tex. Crim.), 
45 S. W. 70s; United States v. Sim- 
mons, 46 Fed. 65. 

This is true, at least, where no 
prejudice to the defendant is shown. 
State V. Bates, 148 Ind. 610, 48 N. E. 
2; State V. Brewster, 70 Vt. 341, 40 
Atl. 1037, 42 L. R. A. 444. But see 
contra, State v. Bowman, 90 Me. 363, 
38 Atl. 331, 60 Am. Rep. 266. 

22. Billingslea v. State, 85 Ala. 
323, s So. 137; United States v. 
Terry, 39 Fed. 355; People v. Gol- 
denson, 76 Cal. 328, 19 Pac. 161. 
Contra — State v. Fasset, 16 Conn. 
437. The grand jury should permit 
the accused to put any proper ques- 
tions he may desire to the witness. 
Lung's Case, i Conn. 428. 

Whether the accused shall go be- 



fore the grand jury and interrogate 
witnesses is discretionary with the 
court. State v. Hamlin, 47 Conn. 95, 
36 Am. Rep. 54. 

The declaration of the bill of 
rights that in criminal prosecutions 
the accused shall have the right to 
be confronted with the witnesses 
against him does not entitle, as a 
matter of right, a person accused of 
crime before the grand iury to be 
present during their investigation. 
State V. Wolcott, 21 Conn. 271. 

As to the right of an accused per- 
son to introduce evidence, see infra, 
" IL Evidence, I. Scope of Inquiry, 
A. Evidence for the Defense." 

Right to Confront Witnesses does' 
not apply to proceedings before grand 
jury. State v. Smith, 74 Iowa 580, 
38 N. W. 42; People v. Stuart, 4 Cal. 
218. 

23. Respublica v. Shaffer, i U. S. 
236; United States v. Palmer, 2 
Cranch C. C. 11, 27 Fed. Cas. No. 
15,989; Charge to Grand Jury, Taney 
615, 30 Fed. Cas. No. 18,257; 
United States v. Terry, 39 Fed. 
355 ; People v. Goldenson, 76 Cal. 
328, 19 Pac. 161; Lung's Case, i 
Conn, 428. 

This is on the ground that to per- 
mit the accused to introduce evidence 
would amount to a usurpation by the 
grand jury of the functions of the 
trial court and petit jury, and would 
give to the grand jury's investigation 
the effect of former jeopardy, and to 

Vol. VI 



250 



GRAND JURY. 



grand jury has reason to believe that there is evidence within its 
reach which will qualify or explain away the charge under investi- 
gation, it should order it to be produced.^* 

B. Inquisitorial Power. — a. Definition. — The inquisitorial 
power of the grand jury is the authority to' secure and examine 
witnesses with a view to the discovery of the commission of offenses, 
though no specific accusation has been presented to it for investi- 
gation.^^ 



an indictment, when found, an undue 
weight with the petit jury. Respub- 
lica V. Shaffer, i U. S. 236. 

The refusal of the district attorney 
to summon witnesses at the request 
of the grand jury in behalf of an ac- 
cused person does no vitiate an in- 
dictment. United States i/. Terry, 
39 Fed. 3SS. 

Evidence on behalf of one charged 
with crime before the grand jury 
cannot be received by that body, 
though the district attorney promised 
the accused that he might introduce 
it. United States v. Blodgett, 35 G. 
A. 336, 30 Fed. Cas. No. 18,312. See, 
however, United States v. White, 2 
Wash. C. C. 29, 28 Fed. Cas. No. 
16,685. 

In Reg. V. Rhodes (1899), i Q. B. 
77, a statute providing that every per- 
son charged with an offense should 
be a competent witness for the de- 
fense at every stage of the proceed- 
ings was held not to confer on one 
eharged with crime before a grand 
jury the right to appear and be 
sworn in his own behalf, the court 
saying: "A grand jury have nothing 
whatever to do with the defense. 
Their functions are well known. 
They sit in private. They have to 
hear the evidence, or at any rate 
part of the evidence, for the prose- 
cution, and to say whether in their 
opinion a prima facie case against 
the prisoner has been made out. It 
would be difficult to believe that the 
legislature intended by this section 
to enable the grand jury to hear evi- 
dence for the defense. Such a thing 
would be no less than an anomaly." 

The Insanity of the Accused is not 
a subject which the grand jury can 
investigate. United States v. Law- 
rence, 4 Cranch C. C. Si4> 26 Fed. 
Cas. No. 15,576, An<l in Reg. v- 

Vol. VI 



Hodges, 8 Car. & P. 195, it was 
held that the grand jury could not 
refuse to indict for murder on the 
ground of the defendant's insanity, 
though that fact clearly appeared 
from the evidence for the prosecu- 
tion. 

24. Charge to Grand Jury, 2 
Sawy. 667, 30 Fed. Cas. No. 
18,255; United States v. Kilpatrick, 
16 Fed. 765. In re Grand Jury, 62 
Fed. 84a. 

25. The inquisitorial power of 
grand juries was unknown at com- 
iTion law. State v. Lee, 87 Tenn. 
114, 9 S. W. 425; Harrison v. State, 
4 Cold. (Tenn.) 195; Glenn v. State, 
I Swan (Tenn.) 19; Warner v. 
State, 81 Tenn. 52. And see Com. 
V. Green, 126 Pa. St. 531, 17 Atl. 
878, 12 Am. St. Rep. 894. 

" That the powers of the body 
[the grand jury] are inquisitorial to 
a certain extent is undeniable; yet 
they have to be exercised within 
well-defined limits. Anything they 
can find out by their own inquiry 
and observation is legitimate and 
praiseworthy, but they have no au- 
thority to force private persons or 
the officers of other courts to dis- 
close to them who may have violated 
the public laws, and the names of 
persons by whom such infractions 
can be established; in short, to make 
every man a spy upon the conduct of 
his neighbors and associates, and 
compel him to violate the confidence 
implied^ in holding social intercourse 
with his fellows by forcing him to 
become a public informer. Such an 
exercise of power would be in dero- 
gation of general principles essential 
to the enjoyment of rights regarded 
as sacred and paramount in the inter- 
course between man and man; and 
these right? have been carefully 



GRAND JURY, 



251 



guarded, not only by the spirit of 
our law, but by its express enact- 
ments. . . . It is the right of any 
citizen or any individual of lawful 
age to come forward and prosecute 
for offenses against the state, or when 
he does not wish to become the 
prosecutor, he may give information 
of the fact to the grand jury, or any 
member of the body, and in either 
case it will become their duty to in- 
vestigate the matter thus communi- 
cated to them, or made known to 
one of them, whose obligation it 
would be to lay his information be- 
fore that body. This, however, dif- 
fers widely from forcing a person 
to reveal his knowledge to the in- 
quest. This latter process is in the 
nature of an unlawful search, against 
which citizens are protected by con- 
stitutional provisions. . . . We do 
not intend to intimate that the state's 
prosecuting officer may not, if he sees 
proper to do so, make search for evi- 
dence and secure its forthcoming by 
serving subpoenas upon witnesses in 
anticipation of the impaneling and 
qualification of the grand jury be- 
fore whom the matter is to be in- 
vestigated ; he is certainly not bound 
to do so, but he violates no official 
duty in thus acting, provided he is 
careful to state in the subpoena the 
names of the parties and the offense 
to be investigated." In re Lester, 
yy Ga. 143. 

In Lewis v. Board of Com'rs, 74 
N. C. 194, it was said that there was 
no authority of law to summon and 
send witnesses before the grand jury 
upon mere matters of inquiry, " a 
power which, if allowed, is capable 
of the grossest and most oppressive 
abuse, coupled with great tempta- 
tions to abuse it." And again : " The 
law denounces such inquisitorial 
power, which may be carried to the 
extent of penetrating every house- 
hold, and exposing the domestic 
privacy of every family." 

Grand juries " cannot make inquisi- 
tions into the general conduct and 
private business of their fellow-citi- 
zens, and hunt up offenses by send- 
ing for witnesses to investigate vague 
accusations founded upon suspicious 
and indefinite rumors. The repose 
of society, as well as the nature of 



our free institutions, forbids such a 
dangerous mode of inquisition. A 
prosecuting officer has no right to 
send witnesses to the grand jury 
room merely to be interrogated 
whether there has been any viola- 
tion of law within their knowledge." 
United States v. Kilpatrick, 16 Fed. 

Where an, offense with respect to 
which inquisitorial power has not 
been specially conferred by ' statute 
is under investigation, the inquiry 
must be confined to the grand jurors 
themselves, and in such case they can 
make a lawful presentment only upon 
knowledge or information possessed 
within themselves. State v. Lee, 87 
Tenn. 114, 9 S. W. 425. 

A presentment not on the knowl- 
edge of any of the grand jury, but 
upon information detailed to it by 
others, should be abated. State v. 
McManus, 4 Humph. (Tenn.) 258. 

In Ward v. State, 2 Mo. 120, 22 
Am. Dec. 449, it appeared that the 
grand jury had subpoenaed a witness - 
to appear and testify generally, with- 
out saying in what particular matter 
or cause 'he was to testify. It was 
objected that the grand jury had no 
right to interrogate a witness in this 
general way, but that an indictment 
should have been drawn up charging 
some particular persons with crimes, 
and then the witness be required to 
give testimony as to the matter of the 
indictment. The court said that if 
it should ever happen that a grand 
jury should determine to summon 
every person in the county with a 
view to experiment if, perchance, 
they might find out some offense, it 
would be the duty of the court to 
withhold its process and stop such a 
course, as this would be an abuse of 
power. But in ordinary cases when 
the jury had cause to believe that 
some offense had been committed, 
such procedure as that pursued was 
proper. If the jury were not to be 
trusted with the power to send for 
witnes.ses until some malignant prose- 
cutor or some injured persons should 
cause an indictment to be sent up to 
them, this would strip them of their 
greatest utility. And in United 
States V. Kimball, 117 Fed. 156, the 
exercise of inquisitorial power by 

Vol. VI 



253 



GRAND JURY. 



b. Existence. — Statutes conferring it must be strictly construed.^" 
And an individual has no right to communicate private information 
to the grand jury for the purpose of obtaining a presentment." 

c. Indictment on Testimony in Other Investigation. — The grand 
jury may base the indictment of a witness before it on testimony 
given while another offense was under investigation.^' 

2. Competency and Relevancy. — A. Duty to Receive Compe- 
tent Evidence. — The evidence before the grand jury must be 
competent legal evidence, such as is proper before a petit jury.^' 
But subject to the qualification of its legitimate character, the grand 
jury should receive all evidence presented tending to throw light 



the grand jury seems to have been 
countenanced. 

26. Glenn v. State, i Swan 
(Tenn.) ig; Harrison v. State, 4 
Cold. (Tenn.) 195. 

Under a statute conferring inquisi- 
torial power, the fact that the pre- 
sentment was not -made upon the 
knowledge of the jurors themselves, 
but upon information communicated 
by others, would not vitiate it. Gar- 
ret V. State, g Yerg. (Tenn.) 389. 

Under such a statute it is no ob- 
jection to an indictment that it was 
prepared after the witnesses" were ex- 
amined instead of before. State v. 
Parrish, 8 Hump. (Tenn.) 80. 

A statute giving the grand jury 
power to send for witnesses when- 
ever they suspect the commission of 
certain offenses does not confer upon 
the attorney-general authority to or- 
der subpoenas upon his own motion 
for witnesses to appear before that 
body. Warner v. State, 81 Tenn. 52. 

For instances of statutes confer- 
ring inquisitorial power, see State v. 
Lee, 87 Tenn. 114, 9 S. W. 425; State 
V. Estes, 3 Lea (Tenn.) 168; State 
V. Smith, Meigs (Tenn.) 99; State 
V. Adams, 2 Lea (Tenn.) 647; Stale 
V. Barnes, 5 Lea (Tenn.) 398; Glenn 
V. State, I Swan (Tenn.) 19. 

27. United States v. Kilpatrick, 16 
Fed. 765; Charge to Grand Jury, 2 
Sawy. 667, 30 Fed. Cas. No. 18,255. 
And see Com. v. Green, 126 Pa. St. 
531, 17 Atl. 878, 12 Am. St. Rep. 894. 
But in State v. Stewart, 45 La. 
Ann. 1 164, 14 So. 143, it was held 
that the fact that the leading witness 
for the state went without summons 
or request before the grand jury and 

Vol. VI 



gave his version of the case against 
the defendant, and instituted the 
prosecution, did not vitiate an indict- 
ment, the court saying : " The witness 
had the undoubted right to go before 
the grand jury voluntarily and dis- 
close his knowledge of the case. As 
a good citizen it was his duty to do 
so. No one can be excused for with- 
holding knowledge of a crime from 
the public until he is summoned to 
give his testimony of its commis- 
sion." 

28. People v. Craven-Fair, 137 

§al. 222, 69 Pac. 1041 ; State v. 
eebe, 12 Minn. 241 ; People v. 
Northey, 77 Cal. 618, 19 Pac. 865, 20 
Pac. 129. But see Com. v. Green, 
126 Pa. St. S3I, 17 Atl. 878, 12 Am. 
St. Rep. 894; Com. v. McComb, 157 
Pa. St. 611, 27 Atl. 794. 

29. United States v. Reed, 2 
Blatchf. 435, 27 Fed. Cas. No. 16,134. 
So hearsay evidence is inadmissible. 
United States v. Kilpatrick, 16 Fed. 
76s, and likewise mere reports and 
suspicions. In re Grand Jury, 62 
Fed. 840. Charge to Grand Jury, 2 
Sawy. 67, 30 Fed. Cas. No. 18,255. 

In Territory v. Pendry, 9 Mont. 
67, 22 Pac._ 760, a statute directing 
the grand jury to receive none but 
legal evidence was held directory 
merely. 

Notwithstanding a statute provid- 
ing that the grand jury can receive 
none but legal evidence, the fact 
that the justice reads to it certain 
affidavits and instructs that if the 
things therein sworn to be proven 
the jury should indict, does not 
vitiate the indictment. People v 
Glen, 173 N. Y. 395, 66 N. E. 112. 
Such conduct under a statute requir- 



GRAND JURY. 



253 



on the matter under consideration, whether it tends to show the 
guilt or the innocence of tke accused.^" 

B. Effect of Incompetent Evidence. — The grand jury's 
reception of incompetent evidence will not vitiate an indictment.^^ 



ing the court or justice to give the 
grand jury such information as he 
may deem proper concerning charges 
returned to court or Hkely to come 
before them is discretionary with 
him. People v. Glen, 64 App. Div. 
167, 71 N. Y. Supp. 893. 

Where there is doubt as to the ad- 
missibility of evidence, the grand 
jury should submit the question to 
the court for its instructions and 
directions. United States v. Kil- 
patrick, 16 Fed. 765. 

A witness summoned to produce 
books before the grand jury, portions 
of which he deems immaterial, should 
produce the books, and on being re- 
quested to exhibit any one of them 
should then raise the question of ma- 
teriality and have it determined by 
the court. In re Archer (Mich.), 96 
N. W. 442. 

30. In re Grand Jury, 62 Fed. 
840; Charge to Grand Jury, 2 Sawy. 
667, 30 Fed. Cas. No. 18,255. 

31. State V. Fasset, 16 Conn. 457. 
See also People v. Willis, 23 Misc. 
568, 52 N. Y. Supp. 808; United 
States V. Smith, 3 Wheel. Crim. Cas. 
100, 27 Fed. Cas. No. 16,342. Contra, 
In re Gardiner, 31 Misc. 364, 64 N. 
Y. Supp. 760. 

It is not a proper plea to an indict- 
ment that the grand jury received in- 
competent or irrelevant evidence, and 
for a ruling on the sufficiency of a 
motion to quash an indictment on 
account of the grand jury's reception 
of incompetent evidence. See Hope 
V. People, 83 N. Y. 418, 38 Am. Rep. 
460. 

Nor can the question whether im- 
proper evidence was received by the 
grand jury be inquired into on habeas 
corpus brought to obtain the release 
of a person indicted. Harkraer v. 
Wadley, 172 U. S. 148. 

Because Subject Not Open to In- 
quiry. — United States V. Cobban, 
127 Fed. 713; State v. Boyd, 2 Hill 
(S. C.) 287, 27 Am. Dec. 376. 

So an indictment will not be set 



aside because the accused's wife im- 
properly gave evidence against him 
before the grand jury. Dockery v. 
State, 35 Tex. Crim. 487, 34 S. W. 
281; State V. Tucker, 20 Iowa 508; 
Buchanan v. State (Tex. Crim.), 52 
S. W. 769; Chapman v. State (Tex. 
Crim.), 49 S. W. 587. At least it is 
too late to raise the objection after 
conviction. State v. Houston, 50 
Iowa 512. 

So receiving the testimony of an 
accomplice will not vitiate an indict- 
ment. State V. Wolcott, 21 Conn. 
271. 

Where a statute prescribes the 
grounds of a motion to quash or set 
aside an indictment and omits as 
one of them the competency of the 
evidence before the grand jury, the 
effect is to remove that question from 
the field of inquiry. 

United States v. Brown, 13 Int. 
Rev. Rec. 126, i Sawy. 531, 24 Fed. 
Cas. No. 14,671 ; United States v. 
Cutler, 5 Utah 608, 19 Pac. 145 ; Peo- 
ple V. Montgomery, 36 Misc. 326, 73 
N. Y. Supp. 535; Com. v. Minor, 89 
Ky. 555, 13 S. W. 5; Territory v. 
Pendry, 9 Mont. 67, 22 Pac. 760. 
This last holding was made despite 
a statute directing the jury to re- 
ceive none but legal evidence. 

For a full discussion of the prac- 
tice in New York, see iiifra, "4. 
Sufficiency, B. Review of Sufficiency 
of Evidence," note 51. 

But in United States v. Reed, 2 
Blatchf. 435, 27 Fed. Cas. No. 16,134, 
it was said that the competency of 
the evidence before the grand jury, 
whether oral or written, and the 
manner of the authentication of the 
latter species of evidence, might be 
inquired into. Provided, there is suf- 
ficient legal evidence to warrant in- 
dictment. 

People V. Sexton, 42 Misc. 312, 86 
N. Y. Supp. 517; People v. Winant, 
24 Misc. 361, 53 N, Y. Supp. 69s; 
Hammond v. State, 74 Miss. 214, 21 
So. 149; State V. Shreve, 137 Mo. i, 
38 S. W. 548; Bloomer v. State, 3 

Vol. VI 



254 



GRAND JURY. 



C. Presumptions. — It is to be presumed that only proper evi- 
dence will be laid before the grand jury.^^ It will not be presumed 
that the grand jury allowed itself to be influenced in finding an 
indictment by matters not properly before it.^^ 

D. Confessions. — Evidence of confessions ought n^ver to be 
admitted before the grand jury, except under the direction of the 
court, or unless the prosecuting officer is present and carefully 
makes the necessary preliminary inquiries.^* 

E. Documentary Evidence. — a. Direction of Court. — Docu- 
mentary evidence ought not to be submitted to the grand jury 
except under the direction of the court.^° 

b. Depositions. — The grand jury may base an indictment on 
depositions taken before an examining magistrate.^* 

3. Self -Criminating Evidence. — A. Invoi^untary Statement. 
The grand jury's action in compelling a witness before it to give 
self-criminating evidence will render his subsequent indictment 
void.'' 



Sneed (Tenn.) 66; State v. Coates, 
130 N. C. 701, 41 S. E. 706. 

But the jury must not have been 
influenced by the improper evidence. 
People V. Hayes, 28 Misc. 93, 59 N. 
Y. Supp. 761 ; People v. Molineux, 
27 Misc. 60, 58 N. Y. Supp. 155. 

It is presumed that such sufficient 
legal evidence existed. People v. 
Lauder, 82 Mich. 109, 46 N. W. 956. 

See also infra, " 4. Sufficiency, B. 
Review of sufficiency of Evidence." 
And note 45. 

Incompetent Evidence Will Viti- 
ate if v/ithout it evidence is insuffi- 
cient. People V. Metropolitan Trac- 
tion Co., 12 N. Y. Crim. 405, 50 N. 
Y. Supp. 1117; People v. Mohneux, 
27 Misc. 60, 58 N. Y. Supp. 155. 

So, where the wife's testimony was 
vitally material to her husband's in- 
dictment. People V. Moore, 65 How. 
Pr. (N. Y.) 177; People v. Briggs, 
60 How. Pr. (N. Y.) 17. 

32. Motion to charge Grand Jury, 
9 Pick. (Mass.) 495. 

33. People v. Hayes, 28 Misc. 93, 
59 N. Y. Supp. 761 ; State v. Schieler, 
4 Idaho 120, 37 Pac. 272. 

34. United States v. Kilpatrick, 16 
Fed. 765. See article " Confes- 
sions." 

35. United States v. Kilpatrick, 
16 Fed. 765. 

The fact that a witness has re- 
ferred to a paper which on that ac- 

Vol. VI 



count is wanted by the grand jury 
is sufficient warrant for its submis- 
sion to them. United States v. Burr, 
Coombs Tr. of Aaron Burr i, 25 Fed. 
Cas. No. 14,693. 

36. People v. Stuart, 4 Cal. 218. 
In ..State v. Schieler, 4 Idaho 120, 37 
Pac. 272, the use of depositions be- 
fore the grand jury was held not a 
ground of reversal, where oral evi- 
dence was also introduced, and the 
defendants, with one exception, also 
testified in person. 

That witnesses on whose testimony 
an indictment was found were not 
examined viva voce, but their writ- 
ten statements were accepted by the 
grand jury, cannot be made the sub- 
ject of inquiry by the court. State 
V. Boyd, 2 Hill (S. C.) 288, 27 Am. 
Dec. 376. 

The grand jury cannot take the 
depositions of witnesses in other 
States. Beal v. State, 15 Ind. 378. 

37. State v. Gardner, 88 Minn. 130, 
92 N. W. 529; State V. Proiseth, 16 
Minn. 296; contra, as to the offense 
gaming, Wheately v. State, 114 Ga. 
17s. 39 S. E. 877 (this holding seems 
to be in view of constitutional and 
statutory provisions not referred to) ; 
and see Pointer v. State, 89 Ind. 235. 

The admission of self-criminating 
evidence will vitiate an indictment, 
though it does not appear that the 
defendant was prejudiced thereby. 



GRAND JURY. 



255 



But the fact that in the investigation of another charge a person 
may have been required to give evidence material to an offense for 
which he is afterward indicted is no cause for setting the indictment 
aside, unless it appears from the indorsement of his name thereon 
as a witness that it was found in whole or in part on his evidence. ^^ 

Where the names of other witnesses are also indorsed on an 
indictment it will not be presumed that defendants, whose names 
are on the indictment, gave material or any evidence before the 
grand jury; and hence the indictment is not objectionable as based 
on self-criminating evidence.^' 



United States v. Edgerton, 80 Fed. 
374; Boone v. People, 148 111. 440, 
36 N. E. 99. 

And the same is true where he at- 
tends without counsel. People v. 
Haines, 6 N. Y. Crim. 100, i N. Y. 
Supp. 55. But see People v. Lauder, 
82 Mich. 132, 46 N. W. 956. 

In United States v. Kimball, 117 
Fed. 156, it was held that a witness 
who attended with counsel and testi- 
fied without compulsion, and another 
who welcomed the opportunity for 
explanation, and a third who after 
being warned answered or not as he 
chose, were not coerced into giving 
self-criminating evidence in violation 
of their constitutional privilege. 

Knowledge of Charge and Warn- 
ing — Where a person appears be- 
fore the grand jury in response to a 
subpoena, and is examined touching 
things material to an offense for 
which he is afterward indicted, 
without being informed that the 
grand jury is considering a charge 
against him, the indictment will be 
quashed. United States v. Edgerton, 
80 Fed. 374. Contra. — People v. 
Lauder, 82 Mich. 109, 46 N. W. 956. 

In United States v. Kimball, 117 
Fed. 156, it was held that witnesses 
who had been actors in a bank fail- 
ure under investigation by the grand 
jury could not complain of a viola- 
tion of their constitutional privilege 
on the ground that they did not know 
their conduct was being inquired into. 

Where a defendant under arrest 
and in jail for an offense was 
brought before the grand jury and 
examined with relation thereto, with- 
out being informed of his right not 
to give incriminating evidence or the 
effect his answers might have, or 



whether they might be used against 
him, the indictment was held void. 
State V. Clifford, 86 Iowa 550, 53 N. 
W. 299, 41 Am. St. Rep. 518. But 
merely compelling a person charged 
with crime to appear before the grand 
jury will not vitiate an indictment 
where he is properly warned before 
testifying that he need not incrimi- 
nate himself. State v. Trauger 
(Iowa), 77 N. W. 336; State v. 
Donelon, 45 La. Ann. 744, 12 So. 
922. Contra. — People v. Singer, 18 
Abb. N. C. (N. Y.) 96. In Indiana 
it is held that the grand jury is under 
no obligation to inform a witness be- 
fore it that he is not obliged to in- 
criminate himself. State v. Comer, 
157 Ind. 611, 62 N. E. 4S2. 

In State v. Burlingham, 15 Me. 104, 
a motion to quash because of the re- 
ception of self-incriminating evidence 
by the grand jury was held too late 
after arraignment and plea. 

In Texas the grand jury's reception 
of self-incriminating evidence can- 
not be made a ground of a motion 
to quash the indictment. Mencheca 
V. State (Tex. Crim.), 28 S. W. 203. 
This is under a statute not includ- 
ing that ground among those author- 
izing the motion. Spearman v. State, 
34 Tex. Crim. 279, 30 S. W. 229. 

It is proper to examine each of two 
co-defendants against the other be- 
fore the grand jury, for the purpose 
of obtaining an indictment against 
both. State v. Frizell, iii N. C. 722, 
16 S. E. 409 (in effect overruling 
State V. Krider, 78 N. C. 481, which 
is said to have been decided under 
a statute since altered). 

38. State v. Hawks, 56 Minn. 129, 
57 N. W. 455- 

39. United States v. Brown, 13 

Vol. VI 



256 



GRAND JURY. 



The fact that the grand jury received as evidence against a 
pharmacist, charged with violating the prohibitory liquor law, the 
monthly reports which the law requires him to file with the auditor, 
does not vitiate his indictment as compelling him to testify against 
himself.** 

B. Voluntary StatumbnT. — The voluntary testimony before 
the grand jury of a person accused of crime does not vitiate a sub- 
sequent indictment against him.*^ 

C. Constitutional Protection. — The constitutional privilege 
of a person not to be compelled to criminate himself extends to an 
investigation by the grand jury.*^ 

D. Statutory Protection From Subsequent Prosecution. 
Where a statute frees the witness from prosecution for any matter 
he may disclose, he may be compelled to testify notwithstanding his 
constitutional privilege.*^ Such a statute applies to proceedings 
before the grand jury.** 



Int. Rev. Rec. 126, i Sawy. 531, 24 
Fed. Cas. No. 14,671. 

40. State V. Smith, 74 Iowa 580, 
38 N. W. 492. 

41. United States v. Brown, 13 
Int. Rev. Rec. 126, I Sawy. S31, 24 
Fed. Cas. No. 14,671 ; State v. Comer, 
IS7 Ind. 611, 62 N. E. 452. And see 
United States v. Kimball, 117 Fed. 
IS8. 

Where the witness has been 
warned, his voluntary statement will 
support an indictment against him. 
Eastling V. State, 69 Ark. 189, 62 S. 
W. 584; People V. Sebring, 14 Misc. 
31, 35 N. Y. Supp. 237. 

42. Counselman v. Hitchcock, 142 
U. S. 547 j Ex parte Wilson, 39 Tex. 
Crim. 630, 47 S. W. 996; People v. 
Haines, 6 N. Y. Crim. 100, i N. Y. 
Supp. ss; Boone v. People, 148 111. 
44.0, 36 N. E. 99; Cullen v. Com., 24 
Gratt. (Va.) 624 (where the privi- 
lege was accorded to a witness ex- 
amined as to another's offense). 
And see State v. Froiseth, 16 Minn. 
296; State V. Gardner, 88 Minn. 130, 
92 N. W. 529. 

But in People v. Kelly, 12 Abb. Pr. 
(N. Y.) 150, a constitutional provi- 
sion that no person shall be com- 
pelled in any criminal case to be a 
witness against himself was held not 
to protect a witness before the grand 
jury from being compelled to give 
sclf-criminaling -evidence, the investi- 
gation being directed against other 
parties. See also United States v. 

Vol. VI 



Brown, 13 Int. Rev. Rec. 126, I Sawy. 
531, 24 Fed. Cas. No. 14,671. 

The fact that two members of the 
grand jury were present in court and 
heard a witness pleading his consti- 
tutional privilege against giving in- 
criminating evidence would not viti- 
ate an indictment afterward found 
against him, it not appearing that 
they were thereby influenced to vote 
for the bill. People v. Northey, 77 
Cal. 618, 19 Pac. 68s, 20 Pac. 129. 

43. Hirsch v. State, 8 Heisk. 
(Tenn.) 8g; People v. Kelly, 24 N. 
Y. 74. Contra. — Warner v. State, 81 
Tenn. 52. 

The common law rule that a wit- 
ness cannot be compelled to incrimi- 
nate himself does not apply to an 
examination before the grand jury 
where a statute prevents the use of 
the witness' testimony against him- 
self. People V. Kelly, 12 Abb. Pr. 
(N. Y.) ISO. 

44. Elliott V. State (Tex. App.), 
19 S. W. 249. 

A statute providing that a witness 
shall not be criminally prosecuted for 
any offense about which he may 
testify does not preclude the indict- 
ment of a witness testifying before 
the grand jury for an offense of a 
similar character to that concerning 
which he testifies. Owens v. State, 
2 Head (Tenn.) 4SS. 

Nor does it preclude his indict- 
ment for a different offense volun- 
tarily disclosed by him when testify- 



GRAND JURY. 



257 



4. SuiEcieney. — A. Knowledge of Grand Jury. — The grand 
jury may find an indictment on its own knowledge.*' So the fact 
that stime of the grand jurors had personal knowledge relative to 
the crime does not vitiate an indictment.*" And a grand juror may 
testify as a witness before that body.*'' 

B. Review of Sufficiency of Evidence. — The sufficiency of 
the evidence to warrant an indictment cannot be inquired into ;*' 



ing before the grand jury as to a 
charge against another. People v. 
Reggel, 8 Utah 2i, 28 Pac. 955. 

In United States v. Kimball, 117 
Fed. 156, where the affairs of an in- 
solvent bank were under investiga- 
tion by the grand jury, no specific 
charge having been made against any 
one, and certain persons connected 
with the institution being called on 
to testify, it was held that evidence 
given by them might be made the 
basis of their subsequent indictment 
without a violation of Rev. Stat., 
§ 860, declaring that his evidence can- 
not be used against a witnes.s in a 
subsequent prosecution. 

45. State v. Skinner, 34 Kan. 256, 
8 Pac. 420; State v. Schmidt, 34 
Kan. 399, 8 Pac. 867; State v. Terry, 
30 Mo. 368; Reg. V. Russell, Car. & 
M. (Eng.) 247. 

But under a statute providing that 
if a grand juror knows or has rea- 
son to believe that a crime has been 
committed he must declare it to 
his fellow-jurors, who must there- 
upon investigate it, the grand jury 
have no right to make a presentment 
of facts within their own knowledge 
and without making an investigation. 
In re Gardiner, 31 Misc. 364, 64 N. 
Y. Supp. 760, and see State v. Grady, 
12 Mo. App. 361. 

So, under a statute providing that 
no person shall be arrested on a 
presentment, before the attorney for 
the state shall prepare a bill which 
shall be found by the grand jury. 
State V. Cain, 8 N. C. 352. 

The absence of a prosecutor does 
not raise a presumption that a pre- 
sentment was found upon the knowl- 
edge of the grand jurors in the face 
of a plea averring the contrary. 
State V. Lee, 87 Tenn. 114, 9 S. W. 
425- 

4y, People V. Brcen, 130 Cal. 72, 
61 Pac. 408. 

17 



The fact that a grand juror, before 
the meeting of that body, made a 
personal investigation into the guilt 
of the accused and secreted himself 
in a room with an officer for the pur- 
pose of listening to declarations and 
admissions made by the accused con- 
cerning the crime, and heard such 
declarations and admissions, which, 
with statements of officers to the ef- 
fect that the accused was guilty, led 
the juror to the opinion which he 
entertained at the time of the in- 
vestigation by the grand jury, would 
not invalidate the indictment. Cora. 
V. Woodward, IS7 Mass. 516, 32 N. 
E. 939, 34 Am. St. Rep. 302. 

47. Com. V. Hayden, 163 Mass. 
453, 40 N. E. 846, 47 Am. St. Reo. 
468, 28 L. R. A. 318; State V. Mii- 
lain, 3 Nev. 409. But in Reg. v. 
Cunard, 2 New Brun. 500, it was 
held that the fact that a grand juror 
was the prosecutor vitiates an in- 
dictment. In State v. Cannon, 90 
N. C. 711, the fact that the foreman 
of the grand jury was also the prose- 
cuting witness was held unavailable 
by way of motion in arrest of judg- 
ment. 

48. United States. — United 
States V. Reed, 2 Blatchf, 435, 27 Fed. 
Cas. No. 16,134; United States v. 
Cobban, 127 Fed. 713. 

Alabama. — Hall v. State, 134 Ala. 
90, 32 So. 750; Jones v. State, 81 
Ala. 79, I So. 32; Bryant v. State, 79 
Ala. 282; Washington v. State, 63 
Ala. 189. 

Indiana. — Stewart v. State, 24 
Ind. 142; Pointer v. State, 89 Ind. 
255; State V. Comer, 157 Ind. 611, 
62 N. E. 452. 

lotva. — State v. Fowler, 52 Iowa 
103, 2 N. W. 983; State V. Smith, 
74 Iowa 580, 38 N. W. 492. 

Louisiana. — State v. Lewis, 38 
La. Ann. 680; State v. Chandler, 45 
La. Ann. 49, 12 So. 315. 

Vol. VI 



258 



GRAND JURY 



at least where the grand jury had some evidence before it.^' 
But where there was no legal evidence whatever before the grand 
jury to sustain an indictment it will be quashed. °'' 

Effect of Statute Specifying Grounds of Motion to ftuash. — A statute 
prescribing the grounds on which arv indictment may be attacked 
by motion and not enumerating the insufficiency of the testimony 
upon which the grand jury acted, in effect prohibits an inquiry by 
the court in regard thereto."'^ 



Texas. — Clark v. State (Tex. 
Crim.), 43 S. W. 522; Cotton v. 
State, 43 Tex. 169. 

Virginia. — Wadley v. Com., 98 
Va. 803, 35 S. E. 452. 

The fact that the minutes of the 
evidence taken before the grand jury 
do not show sufficient to justify the 
finding of an indictment is not a 
ground for quashing it. State v. 
Morris, 36 Iowa 272. 

49. Agee v. State, 117 Ala. 169, 
23 So. 486; State V. Logan, i Nev. 
427; Sparrenberger v. State, S3 Ala. 
481, 25 Am. Rep. 643. And see 
supra, "2. Competency and Rele- 
vancy, B. Effect of Incompetent 
Evidence." 

50. Sparrenberger v. State, 53 
Ala. 481, 25 Am. Rep. 643; People 
V Clark, 8 N. Y. Crim. 169, 179, 14 
N. Y. Supp. 642; State v. Grady, 84 
Mo. 220, affirming 12 Mo. App. 361 ; 
State V. Logan, I Nev. 427; State v. 
Lanier, 90 N. C. 714; State v. Rob- 
erts, 19 N. C. S40. Contra. — Kings- 
bury V. State, 37 Tex. Crim. 259, 39 
S. W. 365 ; State v. Dayton, 23 N. J. 
L. 49, 53 Am. Dec. 270. 

Under statutes requiring the grand 
jury to receive none but legal evi- 
dence, and forbidding it to indict 
without evidence warranting a con- 
viction, its presentment cannot be 
sustained where there is no evidence 
whatever to justify it. In re Gardi- 
ner, 31 Misc. 364, 64 N. Y. Supp. 760. 

Where a former conviction is re- 
lied on by the prosecution to increase 
the defendant's sentence, and the 
grand jury finds an indictment alleg- 
ing such former conviction without 
any testimony before them showing 
the defendant's identity with the for- 
mer convict, the indictment will be 
quashed. People v. Price, 6 N. Y. 
Crim. 141, 2 N. Y. Supp. 414. But 

Vol. VI 



where a defendant was indicted for 
five different offenses, he was not 
allowed to show upon the trial that 
the grand jury had evidence of but 
one offense. People v. Hulbut, 4 
Denio (N. Y.) 133, 47 Am. Dec. 244. 

The rule in the federal courts is 
thus stated in United States v. Far- 
rington, s Fed. 343: "While it is 
not the province of the court to sit 
in review of the grand jury, as upon 
the review of a trial when error is 
alleged, yet in extreme cases 
where the court can see that 
the jury's finding is based upon ut- 
terly insufficient evidence or such 
palpably incompetent evidence as to 
indicate prejudice, it should interfere 
and qua.sh the indictment." 

The court will not inquire whether 
there was any evidence before the 
grand jury as to a fact material to 
the charge. United States v. Reed, 
2 Blatchf. 435, 27 Fed. Cas. No. 

16,134- 

In State v. Savage, 89 Ala. i, 7 
So. 7, 183, 7 L. R. A. 426, the court 
said that it admitted of grave doubt 
whether the rule as to quashing an 
indictment on the ground that it was 
found without legal evidence should 
be extended to a report of the grand 
jury which was made the basis of 
an impeachment proceeding against a 
judicial officer. 

51. United States v. Brown, i 
Sawy. 531, 13 Int. Rev. Rec. 126, 24 
Fed. Cas. No. 14,671. So, under 
statutes summarizing the pleadings 
on _ the part of the defendant and 
omitting a plea or exception on ac- 
count of the insufficient proof before 
the grand jury. Morrison v. State, 
41 Tex. 516. 

The Rule in New York Prior to 

1897, the New York Code of Crimi- 
nal Procedure, § 313, specified the 



GRAND JURY. 



259 



C. Degree of Proof. — a. In General. — The grand jury ought 
not find an indictment unless the evidence before it, unexplained 
and uncontradicted, would warrant a conviction."^ 

b. Indictment on Indictment. — The grand jury cannot base an 
indictment merely on a previous one for the same offense, which 
has been quashed.^' 

c. Re-examination of Witnesses After Indictment Quashed. 
The grand jury may find an indictment without re-examining the 
witnesses where they have already testified before it when a prior 
but defective indictment was found."* 

D. Presumptions. — It is presumed that an indictment is based 
upon legal and sufficient evidence,"" and that an indictment has been 



cases in which an indictment should 
be set aside on motion, among which 
the insufficiency or incompetency of 
the evidence was not included. Not- 
withstanding this, it was held that an 
indictment not supported by any evi- 
dence would be quashed. People v. 
Metropolitan Traction Co., 12 N. Y. 
Crim. 405, so N. Y. Supp. 11 17; Peo- 
ple V. Clark, 8 N. Y. Crim. 169, 179, 
14 N. Y. Supp. 642; People v. Ed- 
wards, 25 N. Y. Supp. 480; People 
V. Brickner, 8 N. Y. Crim. 217, 15 N. 
Y. Supp. 528. The reception of ma- 
terial illegal evidence was also held 
a ground for the motion. In 1897 
the code was amended by adding, 
after the enumeration of grounds for 
the motion to set aside, " but in no 
other." Since this amendment the 
decisions have been in conflict, it 
being held in People v. Rutherford, 
47 App. Div. 209, 62 N. Y. Supp. 224, 
that an indictment could no longer 
be attacked for insufficiency or in- 
competency of the testimony, while 
in People v. Thomas, 32 Misc. 170, 
66 N. Y. Supp. 191, the court was held 
to have authority under § 671, pro- 
viding that it might dismiss an ac- 
tion after indictment to set aside an 
indictment found only on illegal evi- 
dence, notwithstanding § 313. But in 
People V. Montgomery, 36 Misc. 326, 
73 N. Y. Supp. 535, §671 was held 
not to confer any such authority. 
For a discussion of the right of the 
court under the amended statute, see 
People V. Glen, 64 App. Div. 167, 71 
N. Y. Supp. 893. 

52. People v. Clark, 8 N. Y. Crim. 
169, 179, 14 N. Y. Supp. 642; People 
V. Baker, 10 How. Pr. (N. Y.) 567; 



People V. Hyler, 2 Park. Crim. (N. 
Y.) 570; United States v. Kilpatrick, 
16 Fed. 765; In re Grand Jury, 62 
Fed. 840; Charge of Grand Jury, 
Taney 615, 30 Fed. Cas. No. 18,257; 
Charge to Grand Jury, 2 Sawy. 667, 
30 Fed. Cas. No. 18,255. This is pro- 
vided by statute in New York (Code 
Crim. Proc, § 258). See People v. 
Edwards, 25 N. Y. Supp. 480. 

53. Sparrenberger v. State, 53 
Ala. 481, 25 Am. Rep. 643; State v. 
Grady, 12 Mo. App. 361. 

Contra. — Terry v. State, 15 Tex. 
App. 66. As to the necessity of re- 
examining witnesses where same 
grand jury reindicts, see infra note 
54- 

54. State v. Clapper, S9 Iowa 279, 
13 N. W. 294; State v. Peterson, 61 
Minn. 73, 63 N. W. 171, 28 L. R. A. 
324; Com. V. Woods, 10 Gray 
(Mass.) 477; Whiting v. State, 48 
Ohio St. 220, 27 N. E. 96. See also 
Creek v. State, 24 Ind. 151. 

Contra. — State v. Ivey, 100 N. C. 
539, 5 S. E. 407- 

The fact that certain grand jurors 
who found the. original indictment 
were absent when a second indict- 
ment was found without a re-ex- 
amination of the witnesses, and that 
others were present who were absent 
on the former occasion, does not ren- 
der the second indictment invalid. 
Com. V. Cltine, 162 Mass. 206, 38 N. 
E. 435- And see Turk v. State, 7 
Ohio. (Pt. 2) 240. 

55. United States. — United 
States V. Reed, 2 Blatchf. 435, 27 
Fed. Cas. No. 16,134; United States 
V. Wilson, 6 McLean 604, 28 Fed. 
Cas. No. 16,737. 

Vol. VI 



260 



GRAND JURY 



presented only after all the testimony accessible to the grand jury 
has been heard by it.^" 

E. Practice. — A plea to an indictment is not the proper method 
of raising the question of the sufficiency of the evidence before 
the grand jury;"^ nor is a motion in arrest, but the proper remedy 
is a motion to quash.'* 

5. Record and Inspection Thereof. — A. Preservation op Min- 
utes. — Minutes of the evidence taken before the grand jury should 
be delivered to the district attorney and be kept by him among the 
governmental records.^" 

B. Inspection. — The right of a defendant to inspect the evidence 
before the grand jury has been denied in Illinois, Keintucky and 
Arkansas,"" but in New York it is held discretionary with the 
trial court."^ 



New York. — People v. Glen, 173 
N. Y. 395, 66 N. E. 112; People v. 
Martin, 87 App. Div. 487, 84 N. Y. 
Sitpp. 823. 

North Carolina. — State v. Lanier, 
9 N. C. 714; State V. Mclntire, 2 N. 
C. Law Repos. 287. 

Virginia. — Wadley v. Com., 98 Va. 
803, 3S S. E. 452. 

It is not sufficient to repel this pre- 
sumption that insufficient evidence 
was presented to the police magis- 
trate. People V. Martin, 87 App. 
Div. 487, 84 N. Y. Supp. 823. 

Where a statute requires an in- 
dictment for perjury to be based on 
the testimony of two witnesses it 
will be presumed that an indictment 
for that crime was found as the law 
directs rather than on the knowledge 
of the grand jurors themselves. 
Mackin v. People, 115 111. 312, 3 N. 
E. 222, 56 Am. Rep. 167. 

56. Terry v. State, 15 Tex» App. 
66. 

57. Hope V. People, 83 N. Y. 418, 
38 Am. Rep. 460; Sparrenberger v. 
State, S3 Ala. 481, 25 Am. Rep. 643. 

58. United States v. Kilpatrick, 16 
Fed. 76s 

Accused's affidavit, upon alleged in- 
formation and belief, that only in- 
competent testimony was given be- 
fore the grand jury, and that there 
was not sufficient evidence to war- 
rant his indictment, is insufficient to 
sustain a motion to set the indict- 
ment aside ; and is also insufficient 
to warrant the production, for the 
purposes of the motion, of the evi- 

Vol. VI 



dence taken before the grand jury. 
People V. Sebring, 14 Misc. 31, 35 N. 
Y. Supp. 237. 

It is not error to refuse to quash 
an indictment on the ground that it 
was found and returned without evi- 
dence, where defendant does not sus- 
tain his motion to quash by any evi- 
dence or offer thereof. O'Shields v. 
State, 92 Ga. 472, 17 S. E. 845. 

The report of a grand jury on 
which an information is filed for the 
impeachment of a judge cannot be 
attacked for the first time by motion 
to quash the information on the 
ground that the report was not 
based on legal and sufficient evi- 
dence. State V. Savage, 89 Ala. i, 
7 So. 7, 183, 7 L. R. A. 426. 

59. In re District Attorney of U. 
S., 7 Fed. Cas. No. 3925. 

Minutes are filed when deposited 
with the clerk along with the indict- 
ment, though the clerk does not in- 
dorse a certificate thereof on them. 
State V. Briggs, 68 Iowa 416, 27 N. 
W. 3S8. 

60. Cannon v. People, 141 III. 270, 
30 N. E. 1027; Franklin v. Com., 
los Ky. 237, 48 S. W. 986; Hofler v. 
State, 16 Ark. 534. 

61. The imposition of a condi- 
tion on such privilege, which, were 
the defendant's right absolute, would 
have been improper, is not error. 
People V. Diamond, 72 App. Div. 
281, 76 N. Y. Supp. 57. 

The refusal of the court to compel 
a public prosecutor to furnish pris- 
oner's counsel the evidence before 



GRAND JURY. 



261 



6. TJse in Subsequent Proceedings. — A. Secrecy in General. 
Grand jurors may testify as to the evidence admitted in their inves- 
tigations ;''^ and so may the witnesses before them.^' The prose- 
cuting attorney may testify as to evidence before the grand jury 



the grand jury is not subject to re- 
view upon writ of error. Eighmoy 
V. People, 76 N. Y. 546. 

The practice is to permit inspec- 
tion only where there has been no 
preliminary examination before the 
committing magistrate. People v. 
Proskey, 32 Misc. 367, 66 N. Y. Supp. 
736. And see People v. Naughton, 
38 How. Pr. (N. Y.) 430. 

Where defendant has not had a 
preliminary examination he should 
be permitted to inspect the grand 
jury's minutes though he shows no 
extraordinary cause or necessity 
therefor. People v. Molineux, 27 
Misc. 60, 57 N. Y. Supp. 936. 

Where the defendant had no pre- 
liminary examination in the magis- 
trate's court, and though tried be- 
fore the commissioner o"f police it 
did not appear that the charges or 
the witness were the same, he should 
be given leave to inspect the minutes 
of the grand jury which indicted him. 
People V. Foody, 38 Misc. 357, 77 N. 
Y. Supp. 943. 

62. State v. Benner, 64 Me. 267. 

State V. Wood, 53 N. H. 484, and 
see Com. v. Green, 126 Pa. St. 531, 17 
Atl. 878, 12 Am. St. Rep. 894; and 
Com. V. McComb, 157 Pa. St. 611, 
27 Atl. 794, 

Contra. — State v. Fasset, 16 Connl 
457; State V. Logan, i Nev. 427. 

" The oath of a grand juror that 
he will keep secret the state's coun- 
sel, his fellows', and his own, is in- 
tended to protect the grand jury 
from the interference of persons in- 
terested in its action in finding bills 
and to prevent the accu.s_ed from 
learning of the investigation of his 
offense. But when these things have 
been accomplished the entire purpose 
of secrecy is effected, so that if at a 
subsequent period it becomes neces- 
sary to the attainment of justice and 
the vindication of truth and right in 
a judicial tribunal that the testimony 
of a witness shall be inquired into 
it may be done." Jones v. Turpin, 



6 Heisk. (Tenn.) t8i. See also as 
to the effect of a grand juror's oath. 
State V. Broughton, 29 N. C. 96, 45 
Am. Dec. 507; Hinshaw v. State, 147 
Ind. 344, 47 N. E. 157- 

In Fotheringham v. Adams Ex- 
press Co., 34 Fed. 646, it was held, 
following the decision of the Missouri 
supreme court, that under the stat- 
utes of that state a grand juror could 
not testify in an action for malicious 
prosecution concerning the testimony 
given before the grand jury when 
the indictment upon which the action 
was based was found. In this case 
it was held also that the statutes of a 
state, construed by its courts to for- 
bid a grand juror from disclosing the 
evidence before the grand jury ex- 
cept in certain cases, would be con- 
formed to by the local United States 
District Court as not merely estab- 
lishing a rule of evidence, but as 
declaratory of the public policy of 
the state. 

But in Hunter V. Randall, 69 Me. 
183, the testimony of a witness be- 
fore the grand jury was held admis- 
sible in a subsequent action for ma- 
licious prosecution. 

A member of the grand jury which 
found an indictment is a competent 
witness on the trial to prove that a 
certain person was not a witness be- 
fore that body. Com. v. Hill, 
II Cush. (Mass.) 137. Or that he 
was. Rocco V. State, 37 Miss. 357. 
This last decision is under statute. 

A witness before the grand jury 
cannot object that the secrecy of the 
proceedings is violated by a mem- 
ber's testifying as to what he swore 
to. People V. Young, 31 Cal. 564; 
State V. Broughton, 29 N. C. 96, 45 
Am. Dec. 507; People v. Reggel, 8 
Utah 21, 28 Pac. 955. 

And see infra, " B. Use as Origi- 
nal Evidence," and " C. For Pur- 
poses of Impeachment." 

63. People v. Naughton, 38 How. 
Pr. (N. Y.) 430; Billingslea v. State, 
8s Ala. 323, S So. 137. 

Vol. VI 



262 



GRAND JURY. 



of which he has personal knowledge."* And the clerk of the grand 
jury is also a competent witness.'^ 

The fact that testimony before the grand jury is not written has 
been held a sufficient reason why it cannot be disclosed."" But 
where a statute provides for the appointment of a clerk or a stenog- 
rapher to preserve the evidence taken before the grand jury, the 
effect is to alter the rule, and it may be examined."'' 

B. Use as Original Evidence. — The admissions or confessions 
of a defendant made before the grand jury are admissible as original 
evidence against him."* And grand jurors are competent witnesses 
to prove that a witness before them committed perjury."® 



Contra. — State v. Fasset, i6 Conn. 
457- 

64. State v. Van Buskirk, 59 Ind. 
384. See also Hunter v. Randall, 69 
Me. 183. 

Contra. — People v. Thompson, 122 
Mich. 411, 81 N. W. 344. And he 
may testify that an indictment was 
returned without evidence. State v. 
Grady, 84 Mo. 220. 

65. State v. McPherson, 114 Iowa 
396, 87 N. W. 421. 

66. Territory v. Benoit, i Mart. 
(I,a.) 142. 

67. People v. Hyler, 2 Park. 
Crini. (N. Y.) 570; People v. Van 
Home, 8 Barb. (N. Y.) 158; In re 
Gardiner, 31 Misc. 364, 64 N. Y. 
Supp. 760. 

68. United States v. Porter, 2 
Cranch C. C. 60, 27 Fed. 
Cas. No. 16,072; United States 
V. Charles, 2 Cranch C. C. 
76, 25 Fed. Cas. No. 14,786; Wis- 
dom V. State, 42 Tex. Crim. 579, 61 
S. W. 926; State V. Moran, 15 Or. 
262, i4Pac. 419; Thomas t/. State, 35 
Tex. Crim. 178, 32 S. W. 771; State 
V. Broughton, 29 N. C. 96, 45 Am. 
Dec. 507. See also Paris v. State, 35 
Tex. Crim. 82, 31 S. W. 855. 

Defendant's admissions before the 
grand jury are admissible as original 
evidence notwithstanding the implied 
restrictions of a statute providing 
that grand jurors may be required to 
disclose the testimony of witnesses 
for purposes of impeachment or on a 
prosecution for perjury. Hinshaw 
V. State, 147 Ind. 344, 47 N. E. 157; 
United States v. Kirkwood, S Utah 
123, 13 Pac. 234. 

In Gutgesell v. State (Tex. Crim.), 

Vpl. VI 



43 S. W. 1016, various statutes bear- 
ing on the secrecy of the proceedings 
of the grand jury were construed, 
and it was held that testimony was 
inadmissible in a criminal prosecu- 
tion to show what defendant testified 
to when examined as a witness be- 
fore that body, he not being a wit- 
ness on the trial. 

The fact that the testimony of ac- 
cused before the grand jury was re- 
duced to writing will not exclude 
parol evidence on the trial of his tes- 
timony before that body. Grim- 
singer V. State, 44 Tex. Crim. i, 69 
S. W. 583; Hinshaw v. State, 147 
Ind. 334, 47 N. E. 157. 

In Higgins v. State, 157 Ind. 57, 
60 N. E. 685, a stenographer's evi- 
dence was admitted in a criminal 
trial to show what the defendant tes- 
tified to before the grand jury, al- 
though the stenographer admitted 
that he had no recollection of the de- 
fendant's evidence aside from his 
notes. 

In Thompson v. State, 19 Tex. 
App. 593, it was held that evidence 
of statements made before the grand 
jury by the defendant regarding in- 
ducements made to him to secure a 
confession was admissible only when 
in the judgment of the court it be- 
came material to the administration 
of justice that it should be allowed. 
In this case the court's refusal to per- 
mit grand jurors to testify to such 
statements was held proper. 

See article, " Confessions." 

69. Crocker v. State, Meigs 
(Tenn.) 127; State v. Logan, i Nev. 
427. 

But in Tindle v. Nichols,^ 20 Mo. 
326, it was held in an action for 



GRAND JURY. 



263 



In Civil Actions. — So, in a civil action the admissions of a party 
before the grand jury may be shown.'" While there can be but 
little doubt that in those instances in which evidence given before 
a grand jury constitutes in itself a cause of action, such action may 
be shown. The cases on the subject are not satisfactory." 

C. For Purposes of Impeachment. — A witness may be im- 
peached by showing that he made statements before the grand 
jury in conflict with his testimony at the trial.''' 



slander in charging plaintiff's wife 
with false testimony before a grand 
jury, that grand jurors could not be 
used as witnesses to show, in de- 
fendant's behalf, the truth of the al- 
leged slander. This holding was un- 
der statutes specifying the instances 
in which grand jurors might be re- 
quired to disclose testimony given be- 
fore them, and providing that they 
should not do so except when law- 
fully required. 

70. Burnham v. Hatfield, 5 
Blackf. (Ind.) 2i ; Kirk v. Garrett, 
84 Md. 383, 35 Atl. 1089. 

Contra. — Loveland v. Cooley, 59 
Minn. 259, 61 N. W. 138. 

In re Finney's Will, 27 Minn. 280, 
69 N. W. 791, 7 N. W. 144, on an is- 
sue as to the mental capacity of a 
testator, it was held that evidence 
of what he had testified to before the 
grand jury was properly excluded, 
the court saying that the only cases 
in which the testimony of a witness 
might be disclosed were those speci- 
fied in the statute. 

The testimony of a married 
woman, illegally elicited .before the 
grand jury on a charge against her 
husband, is not admissible against 
her on a question of property. Wil- 
son V. Hill, 13 N. J. Eq. 143. 

71. In Sands v. Robison, 12 
Smed. & M. (Miss.) 704, 51 Am. 
Dec. 132, the competency of grand 
jurors to testify to the utterance of 
slanderous words before them was 
held discretionary with the court, it 
being remarked that no oath of se- 
crecy was required of them. 

In Beam v. Link, 27 Mo. 261, which 
was an action for malicious prosecu- 
tion in which plaintiff alleged that 
the defendant appeared before the 
grand jury without probable cause, 
causing plaintiff to be indicted for 



perjury, it was held that no grand 
juror could be permitted to testify 
and disclose the name of any witness 
who appeared before that body. 

72. Indiana. — Burdick v. Hunt, 
43 Ind. 381. 

Iowa. — State v. McPherson, 114 
Iowa 492, 87 N. W. 421. 

Maine. — State v. Benner, 64 Me. 
267. 

Maryland. — Kirk v. Garrett, 84 
Md. 383, 35 Atl. 1089. 

Massachusetts. — Com. v. Mead, 
12 Gray 167, 71 Am. Dec. 741. 

Missouri. — State v. Ragsdale, 59 
Mo. App. 590. 

New Hampshire. — State v. Wood, 
S3 N. H. 484. 

Pennsylvania. — Gordon v. Com., 
92 Pa. St. 216, 37 Am. Rep. 672. 

Tennessee. — Jones v. Turper, 6 
Heisk. 18. 

Texas. — Scott v. State, 23 Tex. 
App. 521, 5 S. W. 142. 

Virginia. — Little's Case, 25 Gratt. 
921. 

And under a statute, Dean v. 
Com., 25 Ky. L. Rep. 1876, 78 S. W. 
1 1 12. 

Contra. — Imlay v. Rogers, 7 N. 
J- L- 347- 

In Ruby v. State, 9 Tex. App. 353, 
the proposition of the text was held 
to be the common law rule, but a 
statute prescribing the oath of grand 
jurors was held to change the rule 
and render the statements of wit- 
nesses before the grand jury inad- 
missible for purposes of impeach- 
ment. But the same statute was 
afterward construed in Clanton v. 
State, 13 Tex. App. 139, and a con- 
trary conclusion arrived at, Ruby v. 
State being expressly overruled. 

To render a witness' testimony be- 
fore the grand jury competent for 
purposes of impeachment, his truth- 
fulness on the particular matter must 

Vpl. VI 



264 



GRAND JURY. 



D. To Refresh Witness' Recollection. — The testimony of 
a witness before the grand jury, which has been reduced to writing 
and signed by liim, may be used to refresh his recollection on the 
trial/3 



have become an issue in the case. 
Spangler v. State, 41 Tex. Crim. 424, 
SS S. W. 326. And his contradictory 
statements before the grand jury 
must have related to the same matters 
as to which he is to be examined. 
Hines v. State, 37 Tex. Crim. 399, 
39 S. W. 935. 

A written statement of the wit- 
ness' testimony is admissible to im- 
peach him, although there is no law 
requiring testimony before the grand 
jury to be reduced to writing. Par- 
ker V. State (Tex. Crim.), 65 S. W. 
1066. 

Where an effort is made to im- 
peach a witness by proving that he 
made contradictory statements be- 
fore the grand jury, the practice is 
the same as that to be followed when 
it is sought to contradict him by 
statements made anywhere else. The 
witness must first be asked if he 
made the statement at the time and 
place, and if he does not admit doing 
so any person who heard the state- 
ment may be called to prove it. 
Looney v. People, 81 111. App. 370. 

Where a witness has been im- 
peached by showing contradictory 



statements made out of court, his 
testimony before the grand jury is 
admissible in corroboration of his 
evidence. Perkins v. State, 4 Ind. 
222. See also Way v. Butterworth, 
106 Mass. 75. 

73. Billingslee v. State, 85 Ala. 
323, 5 So. 137- 

But the witness cannot be asked 
to recur in his own mind to his testi- 
mony before the grand jury. Com. 
V. Phelps, II Gray (Mass.) 72. 

Howard's Annot, Stat., § 9502, pro- 
vides that grand jurors may be 
required to testify as to whether 
the testimony of a witness be- 
fore them was inconsistent with 
or different from his testimony 
in court, etc. In a prosecution 
for violating the local option 
law, unwilling witnesses, prejudiced 
against the prosecution, were asked 
by the prosecutor about their testi- 
mony before the grand jury. Held, 
that it was competent to call their 
attention to such previous testi- 
mony for the purpose of refreshing 
their memories and, if possible, elicit- 
ing the truth. People v. O'Neill, 107 
Mich. ss6, 6s N, W. 540. 



GRAND LARCENY. — See Larceny. 



GRANTS. — See Deeds. 



Vol. VI 



GUARANTY. 

By CIvArbnce MEily. 

I. MODE OF PROOF, 267 

1. In General, 267 

2. Guaranties Not Within the Statute of Frauds, 267 

3. Admissibility of Parol Evidence, 269 

A. In General, 269 

B. Matters Provable by Parol, 261) 

C. Limitations on the Introduction of Parol, 273 

4. Sufficiency of Memorandum Required by Statute of frauds, 

274 

A. In General, 274 

B. Memorandum Consisting of Detached Papers, 2^% 

C. Expression of Consideration, 276 

a. In General, 276 

b. Memorandum of "Promise," 279 

c. Expression by Implication, 279 

A Parol Proof of Consideration of Original ObUga- 
tion, 280 

e. Indorsed on Subjoined Guaranty, 281 

f. Recitals of Consideration, 284 

g. Statutory Presumption of Consideration, 285 

n. PRESUMPTIONS AND BURDEN OF PROOF, 285 

1. Blank Indorsement of Principal Obligation, 285 

A. Existence of Contract, 285 

B. Time of Execution, 286 

2. Execution and Delivery, 286 

3. Scope of Liability, 287 

4. Title of Guarantee, 287 

5. Prima Facie Case From Possession of Guaranteed Instru- 

ment, 287 

Vol. n 



266 GUARANTY. 

6. Consideration, 287 

A. Burden of Proof in General, 287 

B. Presumption Prom Pact of Writing, 288 

C. Effect of Recitals in Instrument, 288 

7. Conditions, 289 

8. Default, 289 

9. Notice of Default and Injury Prom Pailure to Give Notice, 

289 

10. Proceedings Against Principal, 291 

A. Guaranty of Collection, 291 

B. Guaranty of Payment, 292 

11. Discharge of Guarantor, 294 

in -DMPETENCY AND RELEVANCY OF EVIDENCE, 294 

1. Existence and Execution of Guaranty, 294 

2. Proof of Notice of Acceptance, 295 

3. Understanding of the Parties, 295 

4. Condition Not Disclosed to Guarantee, 296 
I,. Reliance on Guaranty, 296 

6. Declarations and Admissions of Parties, 296 

A. In General, 296 

B. Conclusiveness of Admissions in Guaranty, 297 

(1 Declarations of Principal Offered Against Guarantor, 
298 

7. Admissibility of Judgment Recovered Against Principal, 300 

8. Proof of Insolvency, 301 

9. Default and Notice, 301 

10. Proof of Damages, 301 

11. Discharge of Guarantor, 301 

GROSS-REFERENCES: 

Bills and Notes ; 
Principal and Surety,; 
Statute of Frauds. 
Vol. VI 



GUARANTY. 



267 



I. MODE OF PROOF. 

1. In General. — Contracts of guaranty differ from other ordi- 
nary simple contracts only in the nature of the evidence required to 
establish their validity. And in other respects the same rules of 
evidence apply to contracts of this character as apply to other ordi- 
nary contracts.^ The statute of frauds (29 Car. 2, ch. 3, § 4) 
provides that "no action shall be brought whereby to charge the 
defendant upon any special promise to answer for the debt, default, 
or miscarriage of another person, unless the agreement upon which 
such action shall be brought, or some memorandum or note thereof, 
shall be in writing and signed by the party to be charged therewith." 
This statute has been substantially copied into the statute law of the 
several states,'' and no parol evidence will be allowed as a substitute 
for the requirements of the statute.* The statute established a rule 
of evidence.* 

2. Guaranties Not Within the Statute of Frauds. — There is, how- 
ever, one important instance in which the statute of frauds is held not 
to apply to contracts of guaranty, which in such cases may be proved 
by parol. The rule may be thus stated : Where the holder of a contract 
of a third person transfers it to another upon a consideration moving 
to himself, his guaranty thereof, made simultaneously with the trans- 
fer and as a part of the transaction, is not within the statute of 
frauds, and need not be evidenced by a written memorandum.^ The 



1. Union Bank of Louisiana v. 
Coster, 3 N. Y. 203, 53 Am. Dec. 280. 

2. See the statutes of the several 
states. 

In Pennsylvania, the clause of the 
statute of frauds requiring a written 
memorandum to bind one to answer 
for the debt of another was not 
adopted until 1855, previous to which 
contracts of guaranty might be 
proved by parol. Jack v. Morrison, 
48 Pa. St. 113. But as a precaution 
against fraud, the courts required 
that such parol evidence should be 
clear and explicit, so that there 
might be no room for suspicion, mis- 
take, misapprehension, or any mis- 
representation in the transaction. 
Petriken v. Baldy, 7 Watts & S. 
(Pa.) 429. And every ambiguity in 
the evidence was weighed in favor 
of the defendant. Kellogg v. Stock- 
ton, 29 Pa. St. 60. 

The Iowa statute of frauds pro- 
viding that no evidence of any con- 
tract to answer for the debt, default 
or miscarriage of another person 
shall be competent, unless such stat- 
ute is in writing, means the same as 



the English statute which provides 
that no action shall be brought on 
such an agreement. Westheimer v. 
Peacock, 2 Iowa 527. 

3. Union Bank of Louisiana v. 
Coster, 3 N. Y. 203, 53 Am. Dec. 280. 

4. " It is too well established to 
justify referring to authorities that 
the statute of frauds relates only to 
the form of evidence." Sheehy v. 
Fulton, 38 Neb. 691, 57 N. W. 395, 
41 Am. St. Rep. 767. 

5. Georgia. — Mobile & G. R. Co. 
V. Jones, 57 Ga. 198. 

Indiana. — Beaty v. Grim, 18 Ind. 
131- . 

Michigan. — Thomas v. Dodge, 8 
Mich, so; Huntington v. Wellington, 
12 Mich. 10. 

Minnesota. — Wilson v. Hentges, 
29 Minn. 102, 12 N. W. 151 ; Nichols 
V. Allen, 22 Minn. 283. 

Missouri. — Barker v. Scudder, 56 
Mo. 272. 

New York. — Cardell v. McNiel, 
21 N. Y. 336; Johnson v. Gilbert, 4 
Hill 178; Bruce v. Burr, 67 N. Y. 
237- 

North Carolina. — Ashford v. Rob- 

Vol. VI 



res 



GUARANTY. 



reason of this rule, as commonly given, is that the guarantor is in 
eftect paying his own debt by the transfer of the contract, the guar- 
anty, therefore, being of an original and not a collateral character." 



inson, 30 N. C. 114; Rowland v. 
Rorke, 49 N. C. 337. 

Oregon. — Kiernan v. Kratz, 42 
Or. 474, 69 Pac. 1027. 

Pennsylvania. — Malone v. Keener, 
44 Pa. St. 107. 

Tennessee. — Hall v. Rodgers, 7 
Humph. 536. 

Vermont. — Fullam v. Adams, 37 
Vt. 391- 

Wisconsin. — Wyman v. Goodrich, 
26 Wis. 21 ; Eagle Mowing & Reap. 
Mach. Co. V. Shattuck, S3 Wis. 
4SS, 10 N. W. 6go, 40 Am. Rep. 780. 
Hence, the guaranty need not express 
a consideration. Brown v. Curtiss, 2 
N. Y. 225. And parol evidence may 
be resorted to to show a new and 
independent consideration, removing 
the guaranty from the operation of 
the statute. Tyler v. Stevens, 11 
Barb. (N. Y.) 485. And see Burt 
V. Horner, s Barb. (N. Y.) 501. 

But mere forbearance to the prin- 
cipal debtor is not sufficient to re- 
move the guaranty from the statute 
of frauds. Caston v. Moss, i Bail. 
(S. C.) 14. 

In Crenshaw v. Jackson, 6 Ga. 509, 
50' Am. Dec. 361, evidence that on 
transferring notes payable to bearer, 
the transferrer said that they were 
good and the maker, though a poor 
man, was perfectly good, and if he 
were not, he (the transferrer) was 
good, was admitte4 to prove a guar- 
anty of the notes. The court said 
that it was properly sent to the jury 
for what it was worth. 

In Hopkins v. Richardson, 9 Gratt. 
(Va.) 48s, it appeared that R. had 
assigned the bond of G. to K., guar- 
anteeing the same, to enable K. to 
purchase goods on the credit of the 
assignment and guaranty. K. pur- 
chased goods of H., who instituted 
action on the guaranty. Held, that 
the guaranty was not within the 
statute of frauds. 

But in Dows v. Swett, 120 Mass. 
322, it was held, in contravention of 
the rule stated in the text, that an 
oral guaranty of the notes of a third 

Vol. VI 



person transferred by a guarantor in 
settlement of his own outstanding 
due-bill was within the statute. But 

see Jones v. Palmer, I Doug. (Mich.) 

379, where the rule of the text was 

applied to such a case. 

6. Barker v^ Scudder, 56 Mo. 272 ; 
Cardell v. McNiel, 21 N. Y. 336; 
Johnson v. Gilbert, 4 Hill (N. Y.) 
178; Kiernan v. Kratz, 42 Or. 474, 
69 Pac. 1027; Leonard v. Vreden- 
burgh, 8 Johns. (N. Y.) 29, 5 Am. 
Dec. 317 (see post, note 28) ; Ashford 
V. Robinson, 30 N. C. 114; Wyman v. 
Goodrich, 26 Wis. 21. 

In Wilson v. Hentges, 29 Minn. 
102, 12 N. W. 151, the court said: 
" The reason assigned in some of the 
cases is that a promise is not within 
the statute where the leading or main 
object of the promisor is to subserve 
some purpose of his own and to bene- 
fit himself. This has been often, and 
we think very justly, criticised as 
being too indefinite and elastic to be 
adopted as a legal rule or test. Again, 
other authorities (following the clas- 
sification of Chancellor Kent in 
Leonard v. Vredenburgh, 8 Johns. 29) 
hold that such a guaranty is not 
within the statute, because founded 
on a new and original consideration 
moving from the guarantee to the 
guarantor, the idea being that ' any 
new and independent consideration 
of benefit to the promisor moving 
between the newly-contracting par- 
ties,' takes the case out of the stat- 
ute, Notwithstanding the eminent 
authority for this doctrine, yet, as 
thus broadly stated, it is now very 
generally criticised and disapproved, 
as not furnishing a correct criterion 
by which to determine whether or not 
a case comes within the statute. Some 
text-writers have suggested, as the 
reason why a guaranty made under 
such circumstances is not within the 
statute, that it is a mere extension 
of the terms of the warranty which 
the law implies upon the sale of any 
chattel or chose in action, and not a 
contract created ab origine for the 



GUARANTY. 



269 



3. Admissibility of Parol Evidence. — A. In General. — The 
contract of guaranty being usually written, the common rule exclud- 
ing parol evidence to vary or contradict a written instrument, or to 
expound it, except in cases of a latent ambiguity, applies,' rendered 
more strict in such phases of its application by the requirement of 
the statute of frauds.* 

B. Matters Provable by Parol. — In cases of uncertainty or 
ambiguity, the identity and amount of the obligation guaranteed," 



purpose specified in the statute of 
frauds. Another reason often as- 
signed is that such a guaranty is in 
substance a promise to pay the guar- 
antor's own debt, and therefore not 
within the statute, though the debt 
of a third person be incidentally 
guaranteed. This provision of the 
statute of frauds was never designed 
to enable men to evade their own 
obligations entered into solely for 
their own benefit, but it was designed 
to accomplish just what it says — viz., 
to prevent persons from being held 
liable for the debts or defaults of 
others upon mere verbal promises. 
The reason for such a provision was 
the temptation, through fraud and 
perjury, to impose a bad debt upon 
some other person of substance. 
Hence a general principle running 
through all the cases is that whenever 
a person's promise is in effect to pay 
his own debt, it is not within the 
statute, although in form and inci- 
dentally it guarantees the debt of 
another. Such a case is not within 
either the spirit or the mischief of 
the statute." 

7. Klein v. Kern, 94 Tenn. 34, 28 
S. W. 29s; Tyler v. Waddingham, 
58 Conn. 375, 20 Atl. 33s, 8 L., R. 
A. 657; Monroe v. Matthews, 48 Me. 
S5S ; Smith v. Montgomery, 2 Wils. 
Civ. Cas. Ct. App. (Tex.) §427; 
Union Bank of Louisiana v. Coster, 
3 N. Y. 203, 53 Am. Dec. 280 ; Hutch- 
inson V. Root, 2 App. Div. 584, 38 
N. Y. Supp. 16. 

8. Thus in Lazear v. Nat. Union 
Bank, 52 Md. 78, 36 Am. Rep. 358, 
the court said that the rule excluding 
parol evidence where there was an 
ambiguity in the language employed 
in the written memorandum, or un- 
certainty as to the subject-matter, 
should be more readily enforced in 



these cases falling within the pur- 
view of the statute of frauds. 

" In cases not within the statute of 
frauds, the rule which excludes evi- 
dence to vary, etc., a written instru- 
ment, has been held with less strin- 
gency, especially with regard to the 
consideration." Brewster v. ' Silence, 
8 N. Y. 207. 

9. Lee V. Butler, 167 Mass. 426, 
46 N. E. 52, 57 Am. St. Rep. 466; 
Willis V. Ross, 77 Ind. 1, 40 Am. 
Rep. 279; Lynn Safe Deposit & Tr. 
Co. V. Andrews, 180 Mass. 527, 62 
N. E. 1061 ; Sanders v. Barlow, 21 
Fed. 836; McDonald v. Fernald, 68 
N. H. 171, 38 Atl. 729. 

In Haskell v. Tukesbury, 92^ Me. 
551, 43 Atl. 500, 69 Am. St. 'Rep. 
529, parol evidence was admitted to 
identify the subject-matter of a guar- 
anty which read : " Friend Geo. : 
Pop Dyer has been up to see me 
about a bill that he owes your con- 
cern. If they will give him time, I 
will see that the bill is paid." 

In Eckel V. Jones, 8 Pa. St. 501, 
parol evidence was admitted to show 
that a note drawn by A to the order 
of B and indorsed by him to C 
was the subject-matter of a written 
guaranty of a note by A "payable" 
to C. 

Where the principal is intrusted 
with a general contract of guaranty 
to use at his discretion, parol evi- 
dence is admissible to show that he 
delivered it to the guarantee as se- 
curity for particular debts. Commer- 
cial Bank of Albany v. Eddy, 7 Mete 
(Mass.) 181. 

In Uaryland a Stricter Eule 
seems to obtain. Thus, in Deutsch 
V. Bond, 46 Md. 164, parol evidence 
was held inadmissible to show that 
the subject-matter of a guaranty 
reading, "We, the undersigned, take 
pleasure In recommending S. to D. 

Vol. VI 



270 



GUARANTY. 



and whether it consists of a past or future indebtedness,"* may be 
shown by parol evidence of the situation of the parties and the cir- 
cumstances surrounding the transaction; so also, the parties," the 



We also severally agree to become 
responsible for $350 to said D. to 
be forthcoming in thirty days after 
the final delivery of the work," was a 
contract between S. and D. for the 
publication of a book; the purpose 
of the evidence being to show the 
consideration of the guaranty. So, 
in Frank v. Miller, 38 Md. 450, parol 
evidence was held inadmissible to 
show the subject-matter of a guar- 
anty reading, " If you will make it 
4 notes, 3, 6, 9, and 12, I will settle 
them; 2 notes due;" the court saying 
that the statute of frauds required the 
contract to be in writing, and it could 
not be partly in writing and partly in 
parol. 

Where the written guaranty itself 
defines its subject-matter by a recital, 
parol evidence of the subject-matter 
is inadmissible. Hall v. Rand, 8 
Conn. 560. 

10. Standley v. Miles, 36 Miss. 

434- 

Thus, parol evidence is admissible 
to show whether the term " advance " 
relates to past or future advances. 
Haigh V. Brooks, 10 Ad. & E. 309, 
37 E. C. L. 108; Goldshede v. Swan, 
I Ex. IS4- 

And to show whether the term 
■' account " relates to an existing or 
future obligation. Waldheim v. 
Miller (Wis.), 72 N. W. 869; Wal- 
rath V. Thompson, 4 Hill (N. Y.) 
200. 

In Hall V. Soule, 11 Mich. 494, 
parol evidence was held inadmissible 
to show that a letter reading, " And 
now I hardly know what to say to 
you. I think, on the whole, that you 
will have to rely on my pledge al- 
ready made, that as soon and fast 
as I can, I will see that five hundred 
dollars of the demand you hold 
against Harry is paid; beyond that, 
I do not think myself under obliga- 
tion," was, in fact, a memorandum of 
a guaranty of future advances. 

In an action on a guaranty of pay- 
ment for goods " delivered from 
time to time " to the principal, pro- 
viding that it should be a continuing 

Vol. VI 



guaranty, it is proper to reject evi- 
dence of an agreement between the 
principal and the guarantee, of which 
the guarantor was ignorant, that the 
guaranty should stand for past in- 
debtedness. Pritchett v. Wilson, 39 
Pa. St. 421. 

11. Identity of Guarantor. — ^In 
Small V. Elliott, 12 S. D. 570, 82 N. 
W. 92, 76 Am. St. Rep. 630, parol 
evidence was admitted to show that 
the letters " Pt." following a signa- 
ture to guaranty were intended to 
show that the signer affixed his sig- 
nature in the capacity of a president 
of a bank. 

In Aaronson v. David Mayer 
Brew. Co., 26 Misc. 655, 56 
N. Y. Supp. 387, parol evi- 
dence seems to have been re- 
ceived to show that a written 
guaranty signed by the defendant 
corporation, but containing within the 
body of it the name of David Mayer 
as an individual, as guarantor, was 
in fact the contract of the corpora- 
tion. 

But in First Nat. Bank of Sturgis 
V. Bennett, 33 Mich. 520, parol evi- 
dence was held inadmissible to show 
that a contract of guaranty signed by 
the president of a bank, but on its 
face importing only his individual ob- 
ligation, was, in fact, the contract 
of the bank, such proof being a vio- 
lation of the statute of frauds. 

Identity of Principal. — In Has- 
kell V. Tukesbury, 92 Me. 551, 43 Atl. 
500, 69 Am. St. Rep. 529, parol evi- 
dence was admitted to identify the 
principal debtor, referred to in the 
written memorandum of guaranty as 
" Pop Dyer." See also Eichhold v. 
Tiffany, 21 Misc. 627, 48 N. Y. Supp. 
70. 

Identity of Guarantee Notwith- 
standing the statute of frauds, the 
surrounding circumstances may be 
looked to to ascertain who are the 
guarantees. McDonald v. Fernald, 
68 N. H. 171, 38 Atl. 729; Thomas 
V. Dodge, 8 Mich. 50; Watson v. 
McLaren, 19 Wend. (N. Y.) 557; 
Haskell v. Tukesbury, 92 Me. 551, 



GUARANTY. 



271 



time of execution^^ and the consideration.^^ But parol evidence 
cannot be resorted to, to incorporate conditions or limitations affect- 



43 Atl. 500, 69 Am. St. Rep. 529. 
Contra. — Hoffman v. LaRue, 3 N. J. 
L- 259. 

In Jones v. Dow, 142 Mass. 130, 
7 N. E. 839, the action was upon a 
guaranty indorsed on a note by the 
directors of a corporation under 
whose authority the treasurer of the 
company had executed the note pay- 
able to his own order, the purpose 
being to raise funds for the com- 
pany. It was objected that the guar- 
anty was insufficient under the statute 
of frauds, because it did not contain 
the name of the plaintiff. The court 
held that the guaranty was made to 
the first holder for value, which, in 
this instance, was the plaintiff, and 
that the memorandum was sufficient, 
saying : " It is true that in order to 
satisfy the statute of frauds it is 
necessary that the memorandum 
should show who are the parties to 
the contract, but it is sufficient if this 
appears by description instead of by 
name; and if the promisor or prom- 
isee is described instead of named, 
parol evidence is admissible to apply 
the description and identify the per- 
son who is meant by it." It also held 
that evidence of the circumstances 
under which the plaintiff took the 
note was competent to identify him 
as the first holder for value and the 
promisee in the guaranty. 

In Michigan State Bank v. Peck, 
28 Vt. 200, 65 Am. Dec. 234, parol 
evidence was admitted to show that 
a guaranty addressed to "T., Presi- 
dent," was in fact intended for the 
bank of which T. was president, as 
guarantee. 

In Wadsworth v. Allen, 8 Gratt. 
(Va.) 174, 56 Am. Dec. 137, parol 
evidence was admitted to show that 
a guaranty addressed to W. & W. 
was really intended for W., W. & 
Co., W. & W. being partners in that 
firm and not engaged in business on 
their own account. See also Drum- 
mond V. Prestman, 12 Wheat. (U. 
S.) S16. 

In Hedges v. Bowen, 83 111. 161, 
parol proof was admitted to show 
that a guaranty of the liabilities of an 
insurance company, not running to 
any person in particular, was in- 



tended merely to secure another 
company which assumed the business 
of the first, and was not intended to 
secure a policy-holder. In this case 
the court said that the instrument 
was manifestly intended to indemnify 
somebody, but it failed to state whom, 
and in such case it was, perhaps, ad- 
missible to resort to extrinsic evi- 
dence, even parol, to learn who the 
persons were who were to be indem- 
nified; and that if the paper was to 
have any effect whatever it must be 
by the force of extrinsic evidence. 

But in Marston v. French, 43 N. Y. 
St. 538, 17 N. Y. Supp. 509, a mem- 
orandum which failed to disclose the 
guarantee, but left it in doubt 
whether it was the obligation of the 
party of the first part or of the party 
of the second part to certain con- 
tracts, which were secured, was held 
sufficient evidence of a guaranty. 

Burden of Proof, see post, "II. 
Presumptions and Burden of Proof. 
4. Title of Guarantee," and note S3- 

12. The date of a written memo- 
randum of guaranty, where omitted 
or incorrectly given, may be proved 
by parol without contravening the 
statute of frauds. Hewes v. Taylor, 
70 Pa. St. 387; Wilson Sewing Ma- 
chine Co. V. Schnell, 20 Minn. 40; 
Draper v. Snow, 20 N. Y. 331, 75 
Am. Dec. 408; Ordeman v. Lawson, 
49 Md. 135. 

Presumption as to time of execu- 
tion of indorsed guaranty, see post, 
notes 48 and 49. 

13. Jones v. Dow, 142 Mass. 130, 
7 N. E. 839. 

In Southard v. Bryant, 26 Neb. 253, 
41 N. W. 1009, parol evidence was ad- 
mitted to show that a written promise 
" to release and defend B. on a cer- 
tain mortgage held by S. against said 
B.'s team of horses in case of said S. 
to ever collect said mortgage," was 
made as a part of an executory agree- 
ment of separation between B. and 
his wife and in consideration of B.'s 
ceasing to molest her, which he had 
refused to do, the court saying : " In 
an action between the original parties 
to an agreement, the consideration 
may be inquired into." 

Vol. VI 



27i' 



GUARANTY. 



ing the guarantor's liability, and which do not appear in the written 
memorandum." Whether oral evidence is receivable to fix the 



In Taylor v. Wightman, 51 Iowa 
411, the court held that parol evi- 
dence was admissible to show the 
consideration for a written guaranty 
other than the nominal consideration 
of one dollar mentioned therein. 

Parol evidence is admissible to 
show the actual consideration for a 
written guaranty,' not within the 
statute of frauds, though the guar- 
anty recites, " for value received ;" 
such evidence not varying the writ- 
ten contract. Jones v. Palmer, i 
Doug. (Mich.) 379. 

In Burt V. Horner, 5 Barb. (N. Y.) 
501, the court said, concerning a writ- 
ten guaranty, not within the statute 
of frauds, that it could be supported 
by parol evidence of a consideration 
consistent with the written agreement, 
though the writing itself disclosed no 
consideration. 

In Tyler v. Stevens, 11 Barb. (N. 
Y.) 485, the court said that parol 
evidence was admissible to show a 
new and distinct consideration for the 
guaranty of an existing indebtedness 
whereby the contract was removed 
from the statute of frauds, following, 
in this instance, the case of Leonard 
V. Vredenburgh, 8 Johns. (N. Y.) 
29, 5 Am. Dec. 317, though it added 
that if the question was an open one, 
it would hesitate before submitting to 
the doctrine which it regarded as a 
violation of the rule excluding parol 
evidence to vary an unambiguous 
written contract. 

For a discussion of the effect of 
the statute of frauds on parol proof 
of the consideration, see post, "4. 
Sufficiency of Memorandum Required 
by Statute of Frauds. C. Expres- 
sion of Consideration," and notes 26- 
42. 

14. Hakes v. Hotchkiss, 23 Vt. 
231 ; Neil v. Board of Trustees, 31 
Ohio St. 15; Jones v. Albee, 70 111. 
34; Watson V. Hurt, 6 Gratt. (Va.) 
633; Squier v. Evans, 127 Mo. 514, 
30 S. W. 143. 

Parol evidence that it was a con- 
dition of a written guaranty that the 
guarantee was to bring suit on the 

Vol. VI 



obligation secured is inadmissible. 
Nixon V. Long, 33 N. C. 428. 

In McKee v. Needles (Iowa), gS 
N. W. 618, parol evidence was held 
inadmissible to show that the guar- 
anty of a board bill, to be paid on 
the publication of a special edition of 
the guarantor's newspaper, was in- 
tended to be satisfied out of the prin- 
cipal's share of the proceeds of such 
edition. 

In Jones v. Hoyt, 25 Conn. 374, 
parol evidence was held inadmissible 
to show that a guaranty of freight 
indorsed on a bill of lading was. in- 
tended to prevent a sale of the ship- 
ment for the transportation charges. 
The court said that the bill of lading 
in providing that the freight should 
be payable before delivery clearly 
implied that payment was a condition 
upon which the goods were to be de- 
livered; and that the evidence offered 
was an attempt to vary this provision 
by parol, in violation of the rule ex- 
cluding parol evidence when offered 
to vary a written contract. 

In Allen v. Rundle, 50 Conn. 9, 
47 Am. Rep. 599, parol evidence of 
an agreement contemporaneous with 
a written guaranty of the collecti- 
bility of a note, by which the 
guarantors were to become principal 
debtors and the maker of the note be 
relieved from liability, was held in- 
admissible as varying the terms of 
the guaranty, even though it was 
offered, not to affect the construc- 
tion of the guaranty, but merely to ex- 
cuse the guarantee's want of dili- 
gence in pursuing the maker of the 
note. 

But in Clark v. Merriam, 25 Conn. 
576, parol evidence was received to 
show that the blank indorsement of 
'a note payable in one day from date, 
importing prima facie a guaranty of 
collectibility when due, was really in- 
tended to guarantee collectibility for 
a reasonable time. And in Swisher 
V. Deering, 204 111. 203, 68 N. E. 
517, a letter of the guarantor's ex- 
pressing his readiness to pay the 
debt was admitted in aid of the in- 
terpretation of a waiver in the 
guaranty of notice of its acceptance, 



GUARANTY. 



273 



character of the guaranty as a limited or continuing one depends 
on whether or not its provisions are ambiguous in that particular/* 

C. lylMITATlONS ON THE INTRODUCTION 0'^ PaROL. But this Tule 

cannot, of course, be pressed to the extent of admitting parol evi- 
dence to transform into a guaranty a writing which on its face does 
not import such an obligation." 



15. Arkansas. — West-Winfree 
Tobacco Co. v. Waller, 66 Ark. 445, 
SI S. W. 320. 

Connecticut. — Indiana Bicycle Co. 
V. Tuttle, 74 Conn. 489, Si Atl. 538; 
Hotchkiss V. Barnes, 34 Conn. 27^ 91 
Am. Dec. 713 ; Hall v. Rand, 8 Conn. 
S6o. 

Massachusetts. — Boston & Sand- 
wich Glass Co. V. Moore, 119 Mass. 
43S- 

New York. — McShane Co. v. 
Padian, 142 N. Y. 207, 36 N. E. 880; 
White's Bank v. Myles, 73 N. Y. 335, 
29 Am. Rep. IS7. 

Texas. — Gardner v. Watson, 76 
Tex. 25, 13 S. W. 39- 

In Hamill v. Woods, 94 Iowa 246, 
62 N. W. 735, it was held that a 
guarantor to be personally responsible 
for goods advanced to the principal, 
" and I will see the same is paid as 
if it was my own debt," might be 
shown by parol evidence not to have 
been a continuing guaranty, the court 
saying : " It is a generally recognized 
rule that, when the language of a 
guaranty is not so clear as to indicate 
its meaning conclusively, parol evi- 
dence is admissible to show the cir- 
cumstances under which it was exe- 
cuted, that it may be construed in the 
light of all material facts, to the end 
that the intent of the parties to it 
may prevail." 

In Schneider-Davis Co. v. Hart, 
23 Tex. Civ. App. 529, 57 S. W. 903, 
parol evidence was held inadmissible 
to show that a guaranty for " a line 
of credit " was not intended by the 
parties to be a continuing one, the 
court saying, however, that evidence 
to explain the meaning of that ex- 
pression might be received. 

From expressions in a few cases it 
might be inferred that parol evidence 
to show whether a guaranty was lim- 
ited or continuing might be received 
without much reference to the exist- 
ence of an ambiguity in a written 
memorandum. Thus, in Crist v. 

18 



Burlingame, 62 Barb. (N. Y.) 351, 
the court said : " There is another 
rule, partly of evidence and partly 
of construction, which applies to this 
class of contracts as well as to others, 
and that is, that in order to arrive 
at the intention of the parties, the cir- 
cumstances under which, and the 
purposes for which, the contract was 
made may be proved and must be 
kept in view in its construction." 
The question at issue in this case was 
whether a guaranty was a continuing 
one. 

So in Schwartz v. Hyman, 107 N. 
Y. 562, 14 N. E. 447, the court said 
that the construction of a guaranty 
claimed to be a continuing one must 
always be largely influenced by the 
precise language used, viewed in the 
light of the circumstances attending 
its execution. 

And in Michigan State Bank v. 
Peck, 28 Vt. 200, 65 Am. Dec. 234, 
the subsequent conduct of the parties 
was admitted to show that a guaranty 
was a continuing one, though the 
court said that the terms of the 
guaranty would naturally incline it 
to regard it as a single guaranty for 
a particular sum. 

16. Eckman v. Brash, 20 Fla. 763 ; 
Eaton V. Mayo, 1 18 Mass. 141 ; Clarke 
V. Russel, 3 Dall. (U. S.) 415. 

In O'Harra v. Hall,_ 4 Dall. 
(U. S.) 340, parol evidence to 
show that a written assignment, 
general in its terms, was in- 
tended as a guaranty, was excluded, 
the objection being that it varied the 
written instrument. But see contra, 
Overton v. Tracey, 14 Serg. & R. 
(Pa.) 311. 

To determine whether a transac- 
tion is a parol guaranty or an original 
promise, the language is to be con- 
strued in the light of the acts of the 
parties and the surrounding circum- 
stances. Cowdin V. Gottgetren, 55 N. 
Y. 650. 

So in Wichita University v. 
Schweiter, 50 Kan. 672, 32 Pac. 352, 

Vol. VI 



274 



GUARANTY. 



Blank Indorsement of Principal Obligation. — The weight of authority 
is, however, that a blank indorsement of the principal obligation may 
sufficiently evidence a contract of guaranty within the statute of 
frauds, and be shown by parol to constitute such a contract.^' 

4. Suflaciency of Memorandum Required by Statute of Frauds. 
A. In General. — Closely connected with the question of the 
admissibility of parol evidence is that of the sufficiency of the writ- 
ten evidence which the statute of frauds demands; for where this 
may be supplemented by parol its sufficiency is assured.- 

While the memorandum must be in writing, a telegraphic dispatch 



where certain persons had signed an 
instrument reciting that whereas 
divers individuals had undertaken to 
subscribe a certain sum to a building 
fund for a college, they, the under- 
signed, bound themselves that the 
full sum should be paid at the time 
and in the manner mentioned, it was 
held that it was competent for the 
signers, when sued on the writing, to 
show by parol that the instrument 
was a guaranty of the subscriptions 
mentioned therein. 

Parol Evidence to Show That the 
letters " 0. K." indorsed on a princi- 
pal obligation, and followed by a sig- 
nature, were intended to constitute a 
guaranty, has been held inadmissible 
in Salomon v. McRae, g Colo. App. 
23, 47 Pac. 409. To the same effect, 
Moore v. Eisaman, 201 Pa. St. 190, 50 
Atl. 982, in which parol evidence that 
such letters were understood by the 
parties to constitute a contract of 
guaranty was likewise rejected as 
violating the statute of frauds, 
though in this case the court said 
that it had been shown that such 
was their significance in trade circles 
that evidence would have sustained 
the guaranty. Contra. — Penn To- 
bacco Co. V. Leman, 109 Ga. 428, 34 
S. E. 679. 

17. Connecticut. — Beckwith v. 
Angel, 6 Conn. 315. 

Illinois. — Underwood v. Hossack, 
38 111. 208; Featherstone v. Hendrick, 
59 111. App. 497- 

Kansas. — Fuller v. Scott, 8 Kan. 
25. 

Massachusetts. — Tenney v. Prince, 
4 Pick. 38s, 16 Am. Dec. 347; Ulen 
V. Kittredge, 7 Mass. 233. 

Minnesota. — Peterson v. Russell, 
62 Minn. 220, 64 N. W. SSS, 54 Am. 
St. Rep. 634, 29 L. R. A. 612. 

Vol. VI 



Virginia. — Hopkins v. Richard- 
son, 9 Gratt. 485. 

Contra. — Schafer v. Farmers & 
Mechanics Bank, 59 Pa. St. 144, 98 
Am. Dec. 323; Jack v. Morrison, 48 
Pa. St. 113; Wilson v. Martin, 74 
Pa. St. IS9; Plauer v. Patterson, 84 
Pa. St. 274; Temple v. Baker, 125 
Pa. St. 634, 17 Atl. 516, II Am. Sf. 
Rep. 926, 3 L. R. A. 709. 

In Perkins v. Catlin, 11 Conn. 213, 
29 Am. Dec. 282, parol evidence was 
held admissible to show that a blank 
indorsement on a note was intended 
to evidence a contract of guaranty, 
as against the objection that it 
amounted to receiving such evidence 
to vary a written contract. The fur- 
ther objection that the reception of 
such evidence infringed the statute 
of frauds requiring a contract of 
guaranty to be in writing was like- 
wise held untenable, the court saying 
that the contention had no founda- 
tion in principle and was not sup- 
ported by any precedent which it 
could find; that the indorsement 
being in writing and in blank, was of 
itself an authority to write over it 
the agreement it was designed to ex- 
press, and that it constituted in it- 
self a memorandum of the contract 
signed by the party to be charged. 
It also said that if the objection 
should be sustained the statute would 
be an insuperable bar in every case of 
blank indorsement, to the proof of a 
limited contract. See also on this 
latter point. Castle v. Candee, 16 
Conn. 223. 

But in Pennsylvania, evidence to 
show_ that an indorsement on a 
promissory note was a guaranty 
thereof must itself be sufficient to 
constitute a memorandum under the 
statute of frauds, in which case it 
may be admitted. Eilbert v. Fink- 



GUARANTY. 



275 



IS sufficient.^* The memorandum must contain the promise;^" but 
it need not be made contemporaneously with the guaranty since the 
writing is only required to make valid proof of the contract;^" nor 
need it be delivered to the guarantee.^^ 

B. Memorandum Consisting op Detached Papers. — It is the 
established rule that the memorandum need not consist of a single 
paper, but that the statute is satisfied by several papers having refer- 
ence to each other, showing they were parts of the same transaction.^'' 
And parol evidence is not, in general, admissible to establish this 
connection,^" though the rule excluding it is not absolute.^* 



beiner, 68 Pa. St. 243, 8 Am. Rep. 
176. 

In Hodgkins v. Bond, i N. H. 284, 
however, the blank indorsement on 
a note by a stranger thereto after its 
delivery was held insufficient as a 
memorandum of guaranty under the 
statute of frauds, and it was also 
held that the matter was not helped 
by the writing of a memorandum 
above such signature by the holder 
of the note, the court saying : " When 
an agent has been authorized to write 
over the signature of the principal 
a contract already made, it is not 
enough to prove the signature of the 
principal and the authority of the 
agent to write a contract over it. 
This does not make the writing evi- 
dence of the contract, unless the con- 
tract is to be presumed to be anything 
the agent pleases to write. It would 
still be necessary to show that the 
agent had pursued his authority; and 
this could be done only by showing 
what the contract was, and compar- 
ing it with the writing. And when 
it was proved that the writing con- 
tained the real contact, this would 
not make the writing itself evidence 
of the contract. The proof of the 
contract would still rest altogether 
upon the evidence introduced to 
show that the writing was true." 

So also Culbertson v. Smith, 52 
Md. 628, 36 Am. Rep. 384. 

In Minnesota it is held that while 
a blank indorsement on a note by a 
stranger thereto is not a sufficient 
memorandum of a guaranty under 
the statute of frauds, yet, when the 
holder of the note writes above the 
signature a contract of guaranty, it 
thereupon becomes an adequate 
memorandum. Moor v. Folsom, 14 
Minn. 340; Peterson v. Russell, 62 
Minn. 220, 64 N. W. 555. Blank in- 



dorsement as expressing considera- 
tion, see post, "4. Sufficieny of 
Memorandum Required by Statute of 
Frauds. C. Expression of Con- 
sideration, e. Indorsed or Sub- 
joined Guaranty," and notes 36-38. 

18. Smith V. Easton, 54 Md. 138, 
39 Am. Rep. 355. 

19. Marston v. French, 43 N. Y. 
St. 538, 17 N. Y. Supp. 509. 

20. Ward v. Hasbrouck, 44 App. 
Div. 32, 60 N. Y. Supp. 391. 

21. Ward v. Hasbrouck, 44 App. 
Div. 32, 60 N. Y. Supp. 391. 

22. Alabama. — Strouse f. Elting, 
no Ala. 132, 20 So. 123. 

Massachusetts. — Lee v. Butler, 167 
Mass. 426, 46 N. E. 52, 57 Am. St. 
Rep. 466. 

Minnesota. — Highland v. Dresser, 

35 Minn. 345, 29 N. W. 55. 

New Hampshire. — Simons 7). 
Steele, 36 N. H. 73. 

New York Barney v. Forbes, 

118 N. Y. 580, 23 N. E. 890; Marston 
V. French, 43 N. Y. St. 538, 17 N. Y. 
Supp. 503; Hanford v. Rogers, 11 
Barb. 18; Ward v. Hasbrouck, 44 
App. Div. 32, 60 N. Y. Supp. 391. 

South Carolina. — Lecat v. Table, 
3 McCord 158. As to resorting to 
principal obligation to ascertain con- 
sideration of guaranty, see post notes 

36 to 38, inclusive. 

23. Deutsch v. Bond, 46 Md. 164; 
Ordeman v. Lawson, 49 Md. 13s; 
Frank v. Miller, 38 Md. 450; Eck- 
man v. Brash, 20 Fla. 763. 

When the relation between the 
papers is apparent by intrinsic refer- 
ence, parol evidence is receivable to 
identify the paper referred to. Mars- 
ton V. French, 43 N. Y. St. 538, 17 
N. Y. Supp. 509. 

24. In Strouse v. Elting, no Ala. 
132, 20 S. W. 123, the court said: 

Vol. VI 



276 



GUARANTY. 



In analogy to this rule, it has been also held that written evidence 
is not admissible to add to or interpret a guaranty, unless made a 
part thereof by intrinsic reference.^^ 

C. Expression of Consideration. — a. In General. — Among 
the features of the contract, the necessity of the incorporation of 
which in the memorandum has been determined, the chief and most 
vexatious is the consideration. 

It was early held in England that in view of the statute's 
requiring a note or memorandum of the " agreement " the con- 
sideration must appear;^" and this has become the settled law 



" The general rule is that it is not 

competent to connect several papers 
by parol, but the several instruments 
must be connected by references con- 
tained in the papers themselves. The 
rule is not absolute." It was ac- 
cordingly held in this case that parol 
evidence might be received to con- 
nect correspondence between the 
parties with the memorandum of 
guaranty, so as to exhibit the con- 
sideration for the latter. 

In Lee v. Butler, 167 Mass. 426, 46 
N. E. 52, 57 Am. St. Rep. 466, the 
court said that it was well settled 
that parol evidence might be intro- 
duced to show the connection of dif- 
ferent writings, constituting a memo- 
randum, with one another. 

In Union Bank of Louisiana v. 
Coster, 3 N. Y. 203, 53 Am. Dec. 
280, parol evidence was said to be 
admissible to connect a written con- 
tract of guaranty with the principal 
contract, also in writing. 

In Barney v. Forbes, 118 N. Y. 580, 
23 N. E. 8go, parol evidence was held 
admissible to show that two letters, 
one from a principal debtor to his 
creditor promising to make payments 
out of his salary received from a cer- 
tain firm, and the other a letter from 
a member of the firm guaranteeing 
such payments, were inclosed in one 
envelope and sent by the writers to 
the creditor; the purpose being to 
gather from the two instruments the 
consideration for the guaranty. 

25. In Bell v. Bruen, i How. (U. 
S.) 169, it was said that under the 
statute of frauds a letter of guaranty 
could not be added to by written evi- 
dence, if not signed by the guarantor, 
unless the written evidence was by 
a reference in the letter adopted as 
part of it. It was held, however, 
that a guaranty reading " Our mutual 

Vol. VI 



friend, T., has informed me that he 
has a credit given by you in his 
favor with A.," sufficiently referred to 
letters of the friend to the guarantee, 
and to A., to permit of their being 
.read in evidence. 

In Looney v. Le Geirse, 2 Wils. 
Civ. Cas., Ct. of App., (Tex.) §531, 
the court held parol evidence admis- 
sible to connect sheets of paper con- 
secutively numbered, inclosed in a 
single envelope, and mailed to the 
alleged guarantee, so as to show that 
the fifth paper containing a guaranty 
in these words, " I will be responsi- 
ble for the amount bought by my 
brother,'' had actual reference to an 
order for goods contained in the 
other papers, the court saying: 
" When an ambiguity arises which 
the contract itself does not explain, 
parol evidence is admissible to aid in 
its construction ; " arid that in the 
case at bar the guaranty by its terms 
would cover any purchase made of 
the guarantee by the principal at any 
time and to any amount, and that 
the subject-matter could only be as- 
certained by the evidence in question. 

Where a letter of guaranty begins 
by saying that the guarantor has be- 
fore him a letter addressed to the 
principal by the prospective guaran- 
tee, whatever letter or letters were 
so addressed on the subject and 
shown to the guarantor are compe- 
tent in evidence as tending to prove 
the contract between the parties; 
and even if they were not shown to 
the guarantor, but their contents 
communicated to him, that would be 
sufficient. Nelson Mfg. Co. v. 
Shreve, 94 Mo. App. 518, 68 S. W. 
376. 

26. In the leading and famous 
case of Wain v. Warlters, S East 
(Eng.) ID, the syllabus reads: "No 



GUARANTY. 



277 



of certain of the states by judicial adoption of the construction 
given the English statute,-' and in others by express statutory 



person can, by the statute of frauds, 
be charged upon any promise to pay 
the debt of another, unless the 
agreement upon which the action is 
brought, or some note or memoran- 
dum thereof, be in writing; by which 
word agreement must be understood 
the consideration for the promise as 
well as the promise itself. And 
therefore, where one promised in 
writing to pay the debt of a third 
person, without stating on what con- 
sideration, it was holden that parol 
evidence of the consideration was in- 
admissible by the statute of frauds; 
and consequently such promise ap- 
pearing to be without consideration 
upon the face of the written engage- 
ment, it was nudum pactum and gave 
no cause of action." 

" By the 4th section of the statute 
of frauds, an agreement to pay the 
debt of another must, in order to give 
a cause of action, be in writing, and 
must contain the consideration for 
the promise, as well as the promise 
itself, and parol evidence of the con- 
sideration is inadmissible." Saunders 
V. Wakefield, 4 B. & A. S9S, 6 E. C. 
Iv. 531. 

27. Maryland. — Sloan v. Wilson, 
4 Harr. & J. 322, 7 Am. Dec. 672; 
Elliott V. Giese, 7 Har. & J. 457; 
Culbertson v. Smith, 52 Md. 628, 36 
Am. Rep. 384; Nabb v. Koontz, 17 
Md. 283 ; Ordeman v. Lawson, 49 
Md. 135; Deutsch v. Bond, 46 Md. 
164; Hutton V. Padgett, 26 Md. 228. 
Nezv Jersey. — Buckley v. Beards- 
lee, S N. J. L. 57°, 8 Am. Dec. 620; 
Ashcroft V. Clark, 5 N. J. L. 577. 

In Georgia the English doctrine 
was early followed in the case of 
Henderson v. Johnson, 6 Ga. 390. 
But in Hargroves v. Cooke, 15 Ga. 
321, the propriety of the former de- 
cision was doubted, though it was 
held that the consideration must not 
be left to mere conjecture from the 
instrument. The matter was finally 
settled by statute (Pamphlet Acts, 
185T-2, §243), providing that the 
consideration need not be expressed 
in writing. See Sorrell v. Jackson, 
30 Ga. 901; Black v. McBain, 32 Ga. 
128. 



In New York the English rule 
was also followed, though in its more 
liberal aspect. In the leading case of 
Leonard v. Vredenburgh, 8 Johns. 
(N. Y.) 29, S Am. Dec. 317, Chief 
Justice Kent said : " There are, then, 
three distinct classes of cases on this 
subject, which require to be discrimi- 
nated : (i.) Cases in which the 
guaranty or promise is collateral to 
the principal contract, but is made at 
the same time, and becomes an es- 
sential ground of the credit given to 
the principal or direct debtor. Here, 
as we have already seen, is not, nor 
need be, any other consideration than 
that moving between the creditor and 
original debtor. (2.) Cases in which 
the collateral undertaking is subse- 
quent to the creation of the debt and 
was not tlie inducement to it, though 
the subsisting liability is the ground 
of the promise, without any distinct 
and unconnected inducement. Here 
must be some further consideration 
shown, having an immediate respect 
to such liability, for the consideration 
for the original debt will not attach 
to this subsequent promise. The 
cases of Fish v. Hutchinson (2 Wils. 
94), of Chater v. Beckett (7 Term 
Rep. 201), and of Wain v. Warlters 
(S East 10), are samples of this class 
of cases. (3.) A third class of cases, 
and to which I have already alluded, 
is when the promise to pay the debt 
of another arises out of some new 
and original consideration of benefit 
or harm moving between the 
newly contracting parties. The 
first_ two classes of cases are 
within the statute of frauds, 
but the last is not. The case before 
us belongs to the first class; and if 
there was no consideration other than 
the original transaction, the plaintiff 
ought to have been permitted to show 
the fact, if necessary, by parol proof; 
and the decision in Wain v. Warlters 
did not stand in the way." 

In 1830 a provision was incorpo- 
rated in the New York statute re- 
quiring the consideration to be ex- 
pressed, and this remained until 1863, 
when, in re-enacting the statute, it 
was omitted. But, notwithstanding 
this omission, it is settled that the 

Vol. VI 



278 



GUARANTY. 



enactment.^* But the holding gave rise to dissatisfactioii,^'' and the 
more general and better rule is that in the absence of express 
statutory requirement, parol evidence of the consideration of the 
guaranty, not repugnant to the terms of the memorandum, may be 
received; and hence the consideration need not be disclosed in the 
writing in order to satisfy the statute of frauds.^" 



English rule is still in force, and the 
memorandum must disclose the con- 
sideration, either expressly or by 
implication. Union Nat. Bank tj. 
Leary, 77 App. Div. 332, 79 N. Y. 
Supp. 217; Castle V. Beardsley, 10 
Hun (N. Y.) 343; Marston v. 
French, 43 N. Y. St. 538, 17 N. Y. 
Supp. 509; Brumm v. Gilbert, 27 
Misc. 421, 59 N. Y. Supp. 237. 
Contra. — Speyers v. Lambert, ;}7 
How. Pr. (N. Y.) 315. 

28. Such statutory provision exists 
in Alabama, California, Minnesota, 
Montana, Nevada and Wisconsin, and 
existed in New York between 1830 
and 1863. Under this provision 
parol evidence of the consideration 
has been rigorously excluded. Brew- 
ster V. Silence, 8 N. Y. 207; Rigby 
V. Norwood, 34 Ala. 129; Taylor v. 
Pratt, 3 Wis. 674. 

In White v. White, 107 Ala. 417, 
18 So. 3, it was said that where the 
statute requires not only that guaran- 
ties shall be in writing, but that the 
writing shall express the considera- 
tion, the failure to express a valuable 
consideration is as fatal to the bind- 
ing force of the contract as would be 
the failure to reduce it to writing. 

But in O'Bannon v. Chumasero, 3 
Mont. 419, parol evidence of the 
situation of the parties seems to have 
been considered in determining 
whether a memorandum of a guar- 
anty sufficiently expressed the con- 
sideration as required by the Mon- 
tana statute of frauds. 

29. The law has rtow been 
changed in England, by the third sec- 
tion of the Mercantile Law Amend- 
ment Act, 1856 (19 & 20 Vict. c. 97), 
providing that " no special promise to 
be made by any person after the 
passing of this act, to answer for the 
debt, default or miscarriage of an- 
other person, being in writing, and 
signeo by the party to be charged 
therewith, or some other person by 
him thereunto lawfully authorized, 

Vol. VI 



shall be deemed invalid to support 
an action, suit or other proceeding 
to charge the person by whom such 
promise shall have been made, by 
reason only that the consideration 
fqr such promise does not appear in 
writing or by necessary inference 
from a written document." See 
Houghton V. Ely, 26 Wis. 181, 7 Am. 
Rep. 52. 

30. United States. — Dunlap v. 
Hopkins, 95 Fed. 231. 

Connecticut. — Sage v. Wilcox, 6 
Conn. 81. 

Maine. — Levy v. Merrill, 4 Me. 
180; King V. Upton, 4 Me. 387, 16 
Am. Dec. 266; Gilligan v. Boardman, 
29 Me. 79. 

Massachusetts. — Lent v. Padel- 
ford, 10 Mass. 230, 6 Am. Dec. 119; 
Packard v. Richardson, 17 Mass. 122, 
9 Am. Dec. 123. 

New Hampshire Brown v. 

Fowler, 70 N. H. 634, 47 Atl. 412. 

North Carolina. — Ashford v. Rob- 
inson, 30 N. C. 114; Nichols V. Bell, 
46 N. C. 32; Green v. Thornton, 49 
N. C. 230. 

Ohio. — Reed v. Evans, 17 Ohio, 
128. 

Pennsylvania. — Shively v. Black, 
45 Pa. St. 345; Moore v. Eisaman. 
201 Pa. St. 190, 50 Atl. 982. 

South Carolina. — Fyler z'. Giv- 
ens, 3 Hill L. 48. 

Tennessee. — Gilman v. Kibler, 5 
Humph. 19. 

Vermont. — Smith v. Ide, 3 Vt. 
290; Roberts v. Griswold, 35 Vt. 496, 
84 Am. Dec. 641. 

In Gregory v. Gleed, 33 Vt. 405, 
the court said that the rule excluding 
parol evidence of the consideration 
of a guaranty, founded on the statute 
of frauds, was independent of the 
common law rule of evidence that 
parol testimony was not admissible 
to supply the defects of, or add to, a 
written contract. 

By the Indiana statute of frauds 
(l G. & H., §2, p. 351), the con- 



GUARANTY. 



279 



b. Memorandum of "Promise." — Where the statute uses the 
word " promise " in connection with or as a substitute for the word 
" agreement," it is held that the consideration may be omitted.^^ 

c. Expression by Implication. — The consideration need not 
appear in express language, but it is sufficient if it may be collected 
by necessary or reasonable implication from the writing, without the 
aid of parol.^^ Where a guaranty expressly refers to a previous 
agreement between the principal and a guarantee, executory in its 
character and embracing prospective dealings between the parties, it 



sideration for the promise or agree- 
ment to answer for the debt, etc., of 
another, need not be set forth in the 
written evidence thereof, but may be 
proved. Hiatt v. Hiatt, 28 Ind. S3- 

By the civil law as it exists in 
Louisiana, a guaranty is good without 
proof of a consideration, and hence 
the written memorandum thereof 
need not contain the consideration. 
Ringgold V. Newkirk, 3 Ark. g6. 

Performance of the consideration 
for a written guaranty may be proved 
by parol, though the statute requires 
the consideration to be in writing; 
since the parol evidence is used 
to show not what the consideration 
is, but that it has been performed. 
Union Bank of Louisiana v. Coster, 
3 N. Y. 203, S3 Am. Dec. 280. 

31. Taylor v. Ross, 3 Yerg. 
(Tenn.) 330; Britton v. Angier, ^ 
N. H. 420; McDonald v. Fernald, 68 
N. H. 171, 38 Atl. 729; Wren v. 
Pearce, 4 Smed. & M. (Miss.) 91; 
Colgin V. Henley, 6 Leigh (Va.) 8s; 
Sanders v. Barlow, 21 Fed. 836. And 
see Patmor v. Haggard, 78 111. 607. 

32. England. — James v. Wil- 
liams, I Bing. (N. C.) 476, 27 E. C. 
L. 280; Hawes v. Armstrong, i Bins- 
(N. C.) 761, 27 E. C. L. S65. 

Maryland. — Hutton v. Padgett, 26 
Md. 228; Ordeman v. Lawson, 49 
Md. 135; Deutsch v. Bond, 46 Md. 
164; Roberts v. Woven Wire Mat- 
tress Co., 46 Md. 374. 

Minnesota. — Straight v. Wight, 60 
Minn. 515, 63 N. W. 105. 

New Hampshire. — Simons v. 
Steele, 36 N. H. 73. 

New Jersey. — Laing v. Lee, 20 N. 
J- h. 337- 

New York.-— Union Bank of 
Louisiana v. Coster, 3 N. Y. 203, 53 
Am. Dec. 280; Douglass v. Hpwland, 
24 Wend. 35. 



Contra. — Bennett v. Pratt, 4 
Denio (N. Y.) 275. 

In Wilson Sewing Mach. Co. v. 
Schnell, 20 Minn. 40, the court said 
it would be sufficient if the memoran- 
dum was so framed that any person 
of ordinary capacity must infer from 
it that such and no other was the 
consideration; but that a mere con- 
jecture, no matter how plausible, 
would be insufficient to satisfy the 
statute, the law requiring a well- 
grounded inference to be necessarily 
collected from the terms of the 
memorandum. 

In Laing v. Lee, 20 N. J. L. 337, 
a recital that the principal debtor 
had transferred his stock of goods to 
the person sought to be charged 
as guarantor, which the latter 
intended to sell at the least 
possible expense, intending to make 
the most of it for the creditors, fol- 
lowed by a statement that the credit- 
ors might consider him as security, 
was held to sufficiently disclose a con- 
sideration in the transfer of the stock 
of goods to the guarantor. 

A written guaranty to pay an exe- 
cution if the execution plaintiff would 
delay service to a certain date and the 
defendant then failed to pay, suf- 
ficiently expresses the consideration 
thereof. Lent v. Padelford, 10 Mass. 
230, 6 Am. Dec. iig. See also Union 
Nat. Bank v. Leary, 77 App. Div. 332, 
79 N. Y. Supp. 217. 

A guaranty indorsed on a note~"as- 
suring the payment thereof, "The 
one-half within six months and the 
other half within twelve months," 
sufficiently expresses a consideration 
of forbearance toward the principal 
debtor to satisfy the statute of frauds. 
Neelson v. Sanborne, 2 N. H. 413, g 
Am. Dec. 108. 

In Oldershaw v. King, 2 H. & N. 
(Eng.) 399, a guaranty reciting as 

Vol. VI 



280 



GUARANTY. 



imports on its face a sufficient consideration f^ but an already exist- 
ing indebtedness or obligation of the principal is insufficient.^* 

d. Parol Proof of Consideration of Original Obligation. — Where 
it is sought to show the consideration of the original obligation as 



a consideration the creditor's forbear- 
ance to press for immediate payment 
was held not to express a considera- 
tion, the stipulation being too in- 
definite. 

In Packer v. Wilson, 15 Wend. 
(N. Y.) 343, it was held under 2 
Rev. Stat. 13s, § 2, subd. 2, requiring 
the memorandum of a contract of 
guaranty to express the consideration, 
that a guaranty indorsed on a promis- 
sory note after it had become over- 
due, by which the payment thereof 
was guaranteed in six months, but 
which expressed no further con- 
sideration, was insufficient, the court 
saying that while under the former 
statute, which was the same as the 
English statute, it was permissible 
to infer a consideration, yet under 
the present act the argument that 
forbearance could be inferred from 
the guaranty as a consideration there- 
for so as to satisfy the statute, could 
not prevail. 

33. Roberts v. Woven Wire Mat- 
tress Co., 46 Md. 374, and see 
Straight v. Wight, 60 Minn. 515, 63 
N. W. 105. 

In Stadt V. Lill, 9 East (Eng.) 348, 
it was held that a written guaranty 
to pay for goods which the vendor 
delivers to the principal, suf- 
ficiently expresses a consideration 
in the stipulation for such de- 
livery. To the same effect. Dun- 
ning V. Roberts, 33 Barb. (N. 
YJ 463; Hoad V. Grace^ 7 H. & N. 
(Eng.) 494; Church v. Brown, 21 
N. Y. 315; Eastman v. Bennett, 6 
Wis. 232; Waldheim v. Miller, 97 
Wis. 300, 72 N. W. 869; Coxe v. 
Milbrath, no Wis. 499, 86 N. W. 
174. 

In Marquand v. Hipper, 12 Wend. 
(N. Y.) 520, an undertaking to 
guarantee and become security for 
any amount in silver which B. might 
from time to time during two years 
put into the hands of C. for the pur- 
pose of manufacture, was held to suf- 
ficiently express the consideration 
therefor as required by the statute of 
frauds. 

Vol. VI 



A guaranty reading : " I hold my- 
self to P. for drafts he has accepted 
or may hereafter accept for L.," suf- 
ficiently expresses a consideration, 
the plain meaning of the draft 
being that in consideration of the 
plaintiff's acceptances for L., the 
defendant will be responsible for 
their payments. Hutton v. Padgett, 
26 Md. 228. 

But in Hutson v. Field, 6 Wis. 407, 
a guaranty incorporated in a lease 
and reading, " I, H., agree to become 
surety for the prompt payment of 
the lease," the lease being signed by 
H., who was not, however, otherwise 
a party to the transaction, was held 
not to express a consideration as re- 
quired by the Wisconsin statute of 
frauds. 

34. Elliott V. Giese, 7 Har. & J. 

(Md.) 457; James v. Williams, i 

Bing. (N. C.) 476, 27 E. C. L. 280; 

Walrath v. Thompson, 4 Hill (N. 

Y. ) 200. 

In Brumm v. Gilbert, 27 Misc. 421, 
59 N. Y. Supp. 237, it was held that 
a written promise to guarantee an 
existing debt of another which did 
not disclose a consideration was in- 
sufficient under the statute of frauds 
requiring that every promise to an- 
swer for the debt of another shall 
be in writing, etc., the court saying 
that from the earliest times, with 
but few exceptions, the courts of 
New York, following the English de- 
cision of Wain v. Warlters, S East 
10, have held that the written memo- 
randum must contain the whole con- 
tract, including a recital of a con- 
sideration, which could not be shown 
by extrinsic evidence. 

A guaranty reciting that whereas 
certain parties "have made and en- 
tered into various contracts," dis- 
closes only a past consideration and 
is, therefore, insufficient under the 
statute of frauds. Marston v. French, 
43 N. Y. St. 538, 17 N. Y, Supp. 509. 

In Oldershaw r. King, 2 H. & N. 
(Eng.) 399, a recital of possible fu- 
ture advances and a guaranty of the 
balaxice of account, including past and 



GUARANTY. 



281 



sustaining also a contemporaneous guarant}-, this may be done by 
parol.''' 

e. Indorsed on Subjoined Guaranty. — A memorandum indorsed 
on the contract guaranteed at the time of the execution of the 
latter, need not separately express a consideration in order to satisfy 
the statute of frauds;'" and this is true even where the statute 
requires the consideration to be expressed in writing.'^ But the 



future indebtedness, was held insuffi- 
cient. 

35. Leonard v. Vredenburgh, 8 
Johns. (N. Y.) 29, 5 Am. Dec. 317; 
Bailey v. Freeman, 11 Johns. (N. Y.; 
221, 6 Am. Dec. 371 ; D'Wolf v. Ra- 
baud, I Pet. (U. S.) 476; Wren v. 
Pearce, 4 Smed. & M. (Miss.) 91. 
But see contra, Brewster v. Silence, 
8 N. Y. 207. 

36. Illinois. — Underwood v. Hos- 
sack, 38 111. 208. 

Maryland. — Nabb v. Koontz, 17 
Md. 283 ; Ordeman v. Lawson, 49 
Md. 135. 

Mississippi. — Wren v. Pearce, 4 
Smed. & M. 91. 

New Hampshire. — Simons v. 
Steele, 36 N. H. 73- 

New York. — Leonard v. Vreden- 
burgh, 8 Johns. 29, s Am. Dec. 317; 
Bailey v. Freeman, 11 Johns. 221, 6 
Am. Dec. 371 ; Marsh v. Chamberlain, 
2 Lans. 287. 

The consideration of a guaranty in- 
dorsed on a note at the time of its 
execution will be presumed to be the 
same as that of the note. Parkhurst 
V. Vail, 73 111. 343. 

Parol evidence is admissible to 
show that an indorsed guaranty was 
concurrent with the making of the 
original obligation and a part of the 
same transaction, the purpose being to 
show the consideration for the guar- 
anty. Leonard v. Vredenburg, 8 
Johns. (N. Y.) 29, 5 Am. Dec. 317. 

But in Deutsch v. Bond, 46 Md. 
164, parol evidence was held inadmis- 
sible to connect a written guaranty 
with a written contract between the 
principal and the guarantee, for the 
purpose of showing a consideration 
for the guaranty. 

Sufficiency of indorsement as con- 
stituting memorandum in general, see 
ante, "3. Admissibility of Pa- 
rol Evidence. — Blank Indorsement of 
Principal Obligation," and note 17. 



37. Moses v. National Bank 01 
Lawrence Co., 149 U. S. 298 ; Evoy v. 
Tewksbury, S Cal. 285 ; Riggs v. Wal- 
do, 2 Cal. 485, s& Am. Dec. 356 ; and 
see Ford v. Hendricks, 34 Cal. 673. 
Contra. — Van Doren v. Tjader, i 
Nev. 380, 90 Am. Dec. 498. 

In Hazeltine v. Larco, 7 Cal. 32, 
and Otis v. Haseltine, 27 Cal. 81, the 
court noted the fact that the indorsed 
guaranty referred in terms to the 
principal contract. 

But in Taylor v. Pratt, 3 Wis. 674, 
evidence for plaintiff, in an action on 
a guaranty indorsed on' a promissory 
note but not separately expressing a 
consideration, of the actual consider- 
ation therefor, and that the guaranty 
was given at the same time with the 
making of a note, and that the prin- 
cipal credit was given to the guaran- 
tors, was held properly rejected, the 
court in effect thus repudiating the 
doctrine that the consideration of the 
principal obligation on which a con- 
temporaneous guaranty is indorsed 
can be extended to the latter so as to 
satisfy the requirement of the statute 
of frauds that the consideration shall 
be expressed in the written memo- 
randum. This case was severely 
criticised by Chief Justice Dixon in 
Houghton V. Ely, 26 Wis. 181, 7 
Am. Rep. 52, in which the case of 
Sears v. Loy, 19 Wis. 96, was said 
to be directly in conflict therewith 
and to have overruled it. But in 
Parry v. Spikes, 49 Wis. 384, 35 Am. 
Rep. 782, the doctrine of Taylor v. 
Pratt was expressly adhered to, the 
criticism in Houghton v. Ely being 
said to be that of the chief justice 
alone, in which the majority of the 
court did not concur. In this last 
case the rule obtaining in Wisconsin 
was thlis stated, in conformity to the 
previous statement made in Taylor v. 
Pratt : " A written guaranty, upon a 
negotiable promissory note, though 

Vol. VI 



282 



GUARANTY. 



indorsement of the guaranty must be contemporaneous with the 



referring to the note, and though 
made at the same time with the note, 
and constituting a ground of the 
credit given to the maker, is void 
within the statute of frauds because it 
does not express the consideration 
for the guaranty." 

The Rule in New York During 

.the period from 1830 to 1863, when 
the New York statute of frauds re- 
quired the written memorandum of 
a guaranty to express the considera- 
tion, the decisions in that state as 
to the application of this requirement 
to an indorsed guaranty contempo- 
raneous with the principal obligation, 
are in hopeless confusion. Two 
leading cases diametrically opposed 
to each other, that of Union Bank 
of Louisiana v. Coster, 3 N. Y. 203, 
53 Am. Dec. 280, and Brewster v. 
Silence, 8 N. Y. 207, may be noted. 
In the first of these the consideration 
of a guaranty subjoined to a letter 
of credit was held sufficiently in- 
ferable to satisfy the statute of 
frauds, the two contracts being read 
together to the effect that in con- 
sideration of the guarantee's pur- 
chase of drafts drawn on the princi- 
pal, the acceptance of such drafts was 
guaranteed. A decision of similar 
import was reached in Hanford v. 
Rogers, 11 Barb. (N. Y.) 18, in 
which a guaranty indorsed on a bond 
was construed with an assignment 
thereof, so as to show a considera- 
tion for the guaranty. In Church v. 
Brown, 21 N. Y. 315, a guaranty of 
the payment of goods indorsed on 
a contract for their purchase was 
construed therewith, in order to dis- 
close the consideration. In this case 
the court distinguished between the 
case of Union Bank v. Coster, supra, 
and that of Brewster v. Silence, 
supra, saying that under the former 
decision a guaranty indorsed on the 
original obligation may be construed 
therewith where the original obliga- 
tion is contracted on the credit of the 
guaranty and the consideration is a 
future one; while under the latter 
case, the two contracts cannot be 
read together, where the considera- 
tion for the principal obligation is an 
executed one, such as an existing in- 
debtedness; since, in such Qase, even 

Vol. VI 



if they were construed together, the 
consideration disclosed would not be 
an adequate one for the guaranty. 
" In the one case, the guaranty was 
of an existing debt; in the other, of 
a debt to be contracted on the credit 
of the guaranty. One had a past 
consideration to support the promise, 
which was none at all; in the other, 
the promise was supported by an act 
to be done by the promisee at the 
implied request of the promisor. In 
the one there was no consideration 
moving between the promisor and the 
promisee; there was none, in fact, 
and none could be legally implied. 
. . . In the other, the act to be 
done by the promisee, at the request 
of the promisor, and which was the 
consideration of the promise of the 
latter, was expressed in writing." 
The court held, however, that if this 
attempt at reconcilement was unsuc- 
cessful, the case of Brewster v. Si- 
lence must be considered overruled 
by that of Union Bank v. Coster. 
How this could be in view of the 
fact that the former is the later case 
is not clear. Prior to this line of 
decisions and as early as 1833, it had 
been held in Stymets v. Brooks, 10 
Wend. (N. Y.) 206, that a guaranty 
subjoined to a contract reciting the 
giving of a deed to the principal, 
showed the consideration, it being 
inferable that without the guaranty 
the deed would not have been made. 
In Manrow v. Durham, 3 Hill (N. 
Y.) 584, a guarantee of payment in- 
dorsed on a note was regarded in 
legal effect as itself a promissory 
note, and as such, importing a con- 
sideration. But, in Hunt v. Brown, 
5 Hill (N. Y.) 14s, this rule was 
held not to apply to a guaranty of 
collection so indorsed. And in Hall 
V. Parmer, 5 Denio (N. Y.) 484, 
and Tyler v. Stevens, 11 Barb. (N. 
Y.) 485. the idea that an indorsed 
guaranty was itself a promissory 
note was repudiated. Following the 
authority of Manrow v. Durham, 
suj^ra, it was held in Curtis v. Brown, 
2 Barb. (N. Y.) 51, that it was the 
settled law of New York that 
a guaranty of payment indorsed 
on a promissory note, but hav- 
ing no Qonnection with the mak- 



GUARANTY. 



283 



execution of the instrument guaranteed, and a part of the sam^ 
transaction ; and one subsequently indorsed and not in itself express 
ing a consideration is not sufficient.'* 



ing thereof, might be sustained 
by proof of its actual con- 
sideration and need not express a 
consideration. The conflicting cases 
of Manrow v. Durham, and Hall v. 
Parmer, supra, were both aflfirmed by 
the court of appeals in the same year, 
by a badly-divided court. Three 
years after Union Bank of Louisiana 
V. Coster, supra, was decided, the 
same court rendered the decision in 
Brewster v. Silence, supra, by which 
it was held that a guaranty of pay- 
ment indorsed on a note contempo- 
raneously with its execution must 
itself express its consideration. The 
court referred to the case of Leonard* 
V. Vredenburgh, 8 Johns. (N. Y.) 
828, S Am. Dec. 317, saying it was 
a fundamental error in that case to 
hold that in the case of a guaranty 
contemporaneous with the original 
transaction, parol proof might be re- 
ceived to show that it had no other 
consideration than that supporting 
the principal obligation. It also 
added : " But I know of no case 
where the statute of frauds requires 
the consideration to be expressed in 
a written agreement that, in an ac- 
tion at law founded upon it, the 
omission to state the consideration 
in the writing can be supplied by 
parol proof. When the case of Leon- 
ard V. Vredenburgh was decided, the 
statute did not require the considera- 
tion to be expressed in the writing. 
The remark of the chief justice that 
the omission to state the considera- 
tion in the writing might be sup- 
plied by parol proof conflicted with 
no statute. . . . Indeed, under 
the former statute, it was enough if 
the court could make out the con- 
sideration by inference. . . . But 
since the Revised Statutes, something 
more than mere argument or infer- 
ence has been deemed necessary to 
make out a consideration." Previous 
to this it had been held in Hall v. 
Farmer, supra, that a guaranty con- 
temporaneously indorsed on a note 
given for a pre-existing indebtedness 
and payable instanter, must separately 
express a consideration. Following 
Brewster v. Silence, it was held in 



Glen Cove Mut. Ins. Co. v. Har- 
rold, 20 Barb. (N. Y.) 298, that a 
contemporaneous guaranty indorsed 
on a note must express a considera- 
tion, the court saying that prior to 
Brewster v. Silence it had held the 
opinion that if the principal contract 
and guaranty were both on the same 
piece of paper and written at the 
same time, they should be considered 
as one transaction and the signature 
of the guarantor be deemed a sub- 
scription by him, not only to the 
guaranty, but also to the acknowledg- 
ment of a consideration in effect ex- 
pressed by the .principal contract; but 
that all previous decisions had been 
overruled by that case. Brewster i: 
Silence was also followed in Gould 
V. Moring, 28 Barb. (N. Y.) 444; 
and in Draper v. Snow, 20 N. Y. 
33i> 75 Am. Dec. 408, the same doc- 
trine was again reiterated by the 
court of appeals, which a little later 
was to repudiate it in Church v. 
Brown, supra. The matter was 
finally settled by the alteration of the 
statute in 1863, omitting the require- 
ment that the consideration be ex- 
pressed in writing, since which the 
doctrine of the text has obtained in 
New York. Marsh v. Chamberlain, 
2 Lans. (N. Y.) 287. 

The rule stated in the text has 
been extended to apply to a guaranty 
on a separate paper, but referring 
to the guaranteed obligation, which 
under such circumstances need 
not express a consideration, even 
though the. statute so requires. 
Jones V. Post, 6 Cal. 102; Wilson 
Sewing Machine Co. v. Schnell, 20 
Minn. 40; Highland v Dresser, 33 
Minn. 345, 29 N. W. SS; Union Bank 
of Louisiana v. Coster, 3 N. Y. 203, 
53 Am. Dec. 280. 

38. Moses v. National Bank of 
Lawrence Co., 149 U. S. 298; Rigby 
V. Norwood, 34 Ala. 129; Crooks v. 
Tully, 50 Cal. 254; Nichols v. Allen, 
23 Minn. 542. 

A guaranty written on a promis- 
sory note in these words, " I hereby 
guarantee that the above note is not 
outlawed, according to the laws of the 

Vol. VI 



284 



GUARANTY. 



f. Recitals of Consideration. — The words " for value received " 
are a sufficient recital of consideration in a written guaranty to 
satisfy the statute of frauds,"" as is alsO' the recital of a consideration 
of one dollar paid to the guarantor." 



state. Isaac Hampton," is invalid, no 
consideration being expressed in it. 
Clark V. Hampton, i Hun (N. Y.) 
612. 

In Manrow v. Durham, 3 Hill (N. 
Y.) 584, the court said that where a 
note and indorsed guaranty were con- 
temporaneous the note might be re- 
sorted to to sustain the consideration 
of the guaranty. " The note contains 
aliment to support the guaranty." 
But when the guaranty was made at 
a different time, it must be sustained 
by showing an independent consider- 
ation. 

But in Curtis v. Brown, 2 Barb. 
(N. Y.) SI, the court said that it 
must be taken as the settled law of 
New York that where a guaranty of 
payment was indorsed on a promis- 
sory note as a distinct and independ- 
ent agreement having no connection 
with the making of the note, the val- 
idity of the guaranty might be sus- 
tained by proof of its actual consid- 
eration, and it need not express a con- 
sideration. This case was professedly 
decided on the authority of Manrow 
V. Durham, supra. 

In Howland v. Aitch, 38 Cal. 133, 
the court said that the test as to 
whether the guaranty indorsed on the 
original contract rested upon the con- 
sideration of that contract, was not 
whether the indorsement was made 
contemporaneously with the execution 
of the original contract, but whether 
they constituted in fact a single trans- 
action; and in this case an indorse- 
ment guaranteeing a note, but made 
three days after the delivery of the in- 
strument, was held sufficient under 
the statute of frauds', though not re- 
citing a consideration, it having been 
made pursuant to an oral understand- 
ing prior to the execution of the note. 

In those states where the statute 
does not require the consideration to 
be expressed in a written memoran- 
dum, it seems that parol evidence of 
a new consideration for a subse- 
quently indorsed guaranty will be re- 
ceived, the burden of adducing which 

Vol. VI 



will be on the guarantee. Dreyer v. 
Kadish, 70 111. App. 76; Parkhurst v. 
Vail, 73 111. 343. 

In McCoskey v. Deming, 3 Blackf. 
(Ind.) 14s, it was held that a guar- 
anty indorsed on a promissory note 
after its delivery was admissible in 
evidence in an action against the 
guarantors, though it did not recite 
a consideration. 

Where it appears that the guaranty 
was indorsed on a lease after its de- 
livery and the occupation by the ten- 
ant under it, parol evidence should 
be received to show that there was no 
'new consideration for the obligation. 
Lewin V. Barry, 15 Colo. App. 461, 
63 Pac. 121. 

Presumption as to time of indorse- 
ment, see post, " II. Presumptions 
and Burden of Proof. — i. Blank. 
Indorsement of Principal Obliga- 
tions. — B. Time of Execution," and 
notes 48 and 49. 

39. United States. — Moses v. Na- 
tional Bank of Lawrence Co., 149 U. 
S. 298. 

Colorado. — Jain v. Giffin, 3 Colo. 
App'. 90, 32 Pac. 80. 

Maryland. — Emerson v. Aultman, 
69 Md. 125, 14 Atl. 671. 

Minnesota. — Osborne v. Baker, 34 
Minn. 307, 25 N. W. 606, 57 Am. Rep. 
55- 

New Fo»-fe. — Watson v. McLaren, 
19 Wend. SS7; Douglass v. Howland, 
24 Wend. 35; Miller v. Cook, 23 N. 
Y. 495 ; Mosher v. Hotchkiss, 3 Keyes, 
161 ; Howard v. Holbrook, 9 Bosw. 
237; Connecticut Mut. Life Ins. Co. 
V. Railway Co., 41 Barb. 9 ; Cooper v. 
Dedrick, 22 Barb. 516. 

Wisconsin. — Day v. Elmore, 4 
Wis. 190; Dahlman v. Hammel, 45 
Wis. 466. And see Brewster v. Si- 
lence, 8 N. Y. 207. 

40. Recitals in guaranty as making 
prima facie case of consideration, see 
post, " II. Presumptions and Bur- 
den of Proof. — 6. Consideration. — 
C. Effect of Recitals in Instrument," 
and note 57. Moses v. National Bank 



GUARANTY. 



285 



And a seal attached to the memorandum of guaranty expresses a 
consideration as the statute of frauds requires.*^ 

g. Statutory Presumption of Consideration. — The statutory pre- 
sumption of consideration arising from the fact that a contract is in 
writing does not apply to a written guaranty so as to take it out of 
the statute of frauds where it fails to express the consideration.*^ 

II. PRESUMPTIONS AND BURDEN OF PROOF. 

1. Blank Indorsement of Principal Obligation. — A. Existence 
OF Contract. — Where the blank indorsement of a stranger to the 
instrument appears on a note in the hands of the payee, the presump- 
tion obtains in certain states that he is a guarantor.*^ But the pre- 
sumption is not conclusive and parol evidence is admissible** to show 



< / Lawrence Co., 149 U. S. 298; 
Ciiilds V. Barnum, 11 Barb. (N. Y.) 
14. 

41. Rosenbaum v. Gunter, 2 E. D. 
Smith (N. Y.) 415; Douglass v. 
Howland, 24 Wend. (N. Y.) 35. As 
to effect of seal on burden of prov- 
ing consideration, see post, " II. Pre- 
sumptions and Burden of Proof. 6. 
Consideration. C. Effect of Recitals 
in Instrument," and note 58. 

42. Rigby v. Norwood, 34 Al.i, 
129. But see Thompson v. Hall, 16 
Ala. 204; Boiling v. Munchus, 65 
Ala. SSS. As to effect of statutory 
presumption on burden of proving 
consideration in general, see post, 
" II. Presumptions and Burden of 
Proof. 6. Consideration. B. Pre- 
sumption from Writing," and note 
S6. 

43. Illinois. — Klein v. Currier, 14 
III. 237; Camden v. McKoy, 4 111. 
437, 38 Am. Dec. 91 ; Cushman v. 
Dement, 4 III. 4Q7; Carroll v. Weld, 
13 111. 682, 56 Am. Dec. 481; Web- 
ster V. Cobb, 17 III. 459; Donovan 
V. Griswold, 37 111. App. 616; Glick- 
auf V. Kaufmann, 73 111. 378; Boyn- 
ton V. Pierce, 79 111. 145. 

Kansas. — Firman v. Blood, 2 
Kan. 491 ; Fuller v. Scott, 8 Kan. 25 ; 
Withers v. Berry, 25 Kan. 373. 

Nevada. — • Van Doren v. Tjader, 
I Nev. 380, 90 Am. Dec. 498. 

Ohio. — Greenough v. Smead, 3 
Ohio St. 416. 

In Bogue v. Melick, 25 111. 80, it 
was held that where the payee of a 
note is also one of the makers, the 
rule that a blank indorsement by a 



stranger will be presumed to be a 
guaranty will not apply, but such 
indorser will be regarded as a sec- 
ond indorser, since before the note 
can have validity the payee must first 
indorse it. But in Griffiths v. Her- 
zog, 100 111. App. 380, it was held 
that a name indorsed on a note 
drawn by the maker to his own 
order and indorsed by him, appear- 
ing there when the maker presented 
the note for discount, was presump- 
tively that of a guarantor. 

Sufficiency of blank indorsement 
as memorandum under statute of 
frauds, see ante, " I. Mode of Proof. 

3. Extent of Admissibility of Parol 
Evidence. D. Blank Indorsement 
of Princ