Sands v. Codwise , 4 Johns. 536 ( 1808 )

The reasons for the decree were thus given by

The Chancellor.

The right of the complainants generally to sustain this bill was questioned, on the ground that they had not made out a lien on the property of the bankrupt; and they referred their right to a period anterior to 1797, before which they allege their debts accrued.

In a former stage of this cause before me, the complainants’ bill was demurred to, by some of the defendants, because some of the complainants, claiming to he creditors, had not proved or offered to prove their debts before the commissioners of bankruptcy; and this cause of demurrer was sustained because no privity was made out between the assignee and a creditor at large, who had no particular claim on the fund, that he might, or might not, resort to it but that until he did, it could not appear that he had an interest in its increase or application.

The same objection, at a subsequent hearing, was repeated, as to others of the complainants ; but it was admitted in argument, and there was some evidence to that effect, that the complainants, without distinguishing which, and the amount of their different interests, were entitled to about 12,000 dollars under the commission.

The bill is of a somewhat peculiar complexion ; for if the complainants have a right- to maintain it, that right exists in them, both collectively and individually, though they profess to exert it for the benefit of all who shall ultimately appear entitled as creditors to share the general fund. How that fund was to be finally disposed of was made a subject for my consideration. It is sufficient for all equitable purposes, that some have entitled themselves as creditors ; and that the competency of the others to become parties, has been tacitly admitted by the defendants, by their submitting to answer. And so far as respects the creditors proving themselves such under the commission, they may be well likened, as has been done in a recent case,^* in the English court of chancery, to creditors on execution j for the commission is in the nature of an execution, as to all the creditors y and an effectual lien is created by the commission for their-benefit.

It was objected that the bill, in its present form, could not be maintained, because the complainants could not be admitted to substitute themselves for the assignees. This objection did not appear to be much relied on ; and I thought it could not admit of a doubt, that if they were interested in this fund, entrusted to the management of the assignee, and the latter neglected or refused to do the duties legally imposed on him, the creditors might pursue their interests, by filing a. bill, at the peril of costs.

Another objection, as to the mode of proving the bankruptcy and the circumstances constituting it, was taken by all the defendants, who have not admitted the bankruptcy.

The 56th section of the bankrupt law provided, that in all cases where the assignees should prosecute any debtor of the bankrupt, for any debt, duty or demand, the commission, or a certified copy thereof, and the assignment of the commissioners of the bankrupt’s estate should be considered as conclusive evidence of the issuing of the commission, and of the person named therein, being a trader and bankrupt, at the time mentioned therein.

A certified copy of the commission of bankruptcy, and of the assignment of the bankrupt’s estate, were given in evidence in the cause. a

Two difficulties were stated; the one relating to the complainants ; the other to the defendants.

It was urged that this section merely related to the assignee ; but the assignee represents the interest of the creditors collectively, and whether the assignee sues himself, or, in consequence of his laches or fault, devolves the execution of some of his functions on his creditors, . it ought not to vary the rule of evidence. The interest pursued is the same. The persons prosecuting for it are the same, under a different description. Their relation to the defendants is precisely the same, as to the objects pursued; and it appeared to me to be clearly within the reason of the statute, which was to prevent the debtors of the bankrupt from sheltering themselves under the subtilty of forms, to defeat a recovery.

A case was cited from Douglas,^* and another from the supreme court of this state ;^† but I did not consider them as having any analogy to the present.

The other part of the objection respected the defendants.

Debts originate in express compact, or by the act and operation of law. Thus, at common law an action may as well be maintained on an implied, as an express contract. A tort may be waived, and resort be had to the assumpsit.

The words are debt, duty or demand. A debt may be created by the unjust appropriation of the chattel of another. The word demand is the most comprehensive in its import that technical language affords, as to debts or duties ; and for the purpose of promoting substantial justice, there can be no insurmountable restraint to extend it so far as to embrace real, estate, and to consider an inequitable appropriation of it, as creating an equitable demand, equivalent to a debt by implication of law. The word debtor seems to have been intended as a correlative to the words debt, duty or demand j and hence, I was of opinion that it might well be maintained, that if the defendants had fraudulently possessed them,selves of the property of the bankrupt, they ought to be held debtors, by fraud, which no refinements or legal subtilties ought to screen from the justice of the court j and whose powers ape always exerted to defeat it. The general objections to maintaining the bill, appeared to me not sustained.

As to the merits, the case presented a complicated machinery, the precise relations of the different parts? of which it was not easy to discover, op unfold, though its effects were too obvious to be mistaken.

A man reputed to be of large property, possessed of an ample real and personal estate, involved in debt beyond his ability to pay, deliberately professes an intent to favour his friendly creditors, at the expense of other? whom he deems unfriendly ; distributes by conveyances, to which the different members of his family are subscribing witnesses, a large proportion of his property among his children, and others, none of whom are creditors, and some of whom were confessedly incompetent to pay, unless enabled so to do, by the production of the subjects conveyed. These, however, instead of selling, leave him in the enjoyment of some of it, in the perception of the rents of other parts, continuing to exercise acts of ownership at different periods, indicating air absolute and unrestrained control, and leaving the debts of both clashes of creditors unsatisfied.

This is the general aspect of the transaction. Its particular details require a more minute investigation.

The most material question between the parties does hot arise between contending creditors as to preference. It is between creditors, and those who are alleged to hold by fraud.

Previous to the statute of bankruptcy, no law existed imposing it as a duty upon an insolvent to make an equal distribution of his estate among his creditors, unless on a process instituted at his own instance. The field of competition was therefore left open for the most vigilant and active, to secure preferences in the payment of bona fide debts, and if fairly acquired, they could not unless affected by the usual badges of fraud, be defeated.

The obligation of the debtor sacredly to devote the whole of his property to the payment of his debts, was, however} from that circumstance, not the less imperative. The bankrupt law made no difference in this respect, but by enforcing the equality of satisfaction, in. cases of bankruptcy, and furnishing in some cases, more determined tests- of frauds practised in evasion of its provisions.

Thus it has been held, that the English statutes against fraud were merely in affirmance of the common law, and that without their aid, the suppression of the frauds, thereby intended to be restrained, might have been effected.

The first conveyance, in order of time, is that of the 30th of November, 1796, from Comfort hands to his daughter Sarah Maria Sands, for a house and lot in Greenwich-street. She having died subsequent to the bankruptcy, the defendant, Comfort Sands, held the property, as her heir.

The bill fixes the time of Comfort Sands’s insolvency to a period prior to 1797 ; and his answer limits it to the latter end of that year.

The deed bears date the 22d day of November, 1796, but it was made a question between the parties when it was delivered. This was an essential ingredient in the case, and both parties on the argument concurred in the suggesting that it was a proper point for an issue. I therefore directed an issue, in conformity to the wishes of the parties.

The next transaction relates to the judgment and execution of H. and S. Johnson. [Here his honour stated the facts.]

These answers made out a case, from the parties’ own showing, which rendered a recurrence to the depositions generally unnecessary; but that of John Swartwout, a principal actor in this transaction, throws a great degree of light on the subject, and explains some points which the answers had not fully disclosed. He states that he made the purchase, at the request of the defendant, Comfort Sands; that the inducement held out to him was his indemnification against the responsibilities he had incurred for the defendant, Comfort Sands ; and that H. and S. Johnson,- the plaintiffs in this suit, on which the execution issued, would furnish the means of paying for it ; that in the months of February and March, 1801, the defendant, Comfort Sands, applied to the witness, and requested him to convey those houses and-. Jota to the defendants, Robert Sands or Lewis Sands; that he hesitated, respecting it, as it might involve him in responsibilities with the commissioners of bankruptcy ; that Comfort Sands afterwards told him, that upon making such conveyance to his son Lewis Sands, he would give his note for the amount of the purchase-money, which note he would dispose of to some of his creditors, in satisfaction of his debts, and make a fair statement of it to the commissioners; that the said Comfort Sands had a considerable time before reimbursed, him for the responsibilities he had incurred for him ; that he made the conveyance to the defendant, Lewis Sands, and took his note payable to hearer, for the consideration money, and then redelivered the said note to Comfort Sands.

The sale by the sheriff to John Swartwout, was clearly in trust for the defendant, Comfort Sands ; for from his answer it is to be collected that the sale was not intended to devest him of his property in the houses and lots, but that it was merely colourable ; for though H. and S. Johnson had the debt alleged to be due to them, in the first instance, secured by judgment, they agreed to take their own notes ; and the note of Comfort Sands for 2,500 dollars, which they had indorsed j and for which sum they must either have continued as indorsors, or have received it, on the credit of the maker only, in payment.

Besides, it could not have conduced to their effectual indemnity against the responsibilities they had incurred, unless the property had sold so much under value, as those responsibilities amounted to, or unless the fund to pay for it was to be furnished by the defendant, Comfort. Sands.

These were strong indications of views inconsistent with the professed objects of the purchase, and of pro meditated evasion, which forcibly corroborated the evidence of John Swartwout.

That deposition disclosed, that not a cent was paid on the first purchase to the sheriff; that the notes applied to its payment were provided by the defendant, Comfort Sands, with the approbation of H. and S. Johnson; that the whole transaction was suggested and arranged, by the defendant, Comfort Sands, so as to be in perfect subserviency to his views; that though the responsibilities for indemnifying Id. and S. Johnson, which induced the sale, were satisfied, the property was held by John Sxvartxvout, until the defendant, Lexvis Sands, acquired a conveyance ; and that when that conveyance was made, no money was paid.

All these circumstances left no doubt, in my mind, that the defendant was the cestuy que trust; and that until the conveyance was made, John Sxvartxvout held as his trustee. It followed, that the estate passed by the assignment of the bankrupt’s estate, as the bankruptcy related to the 21st of March, 1801, and the conveyance to the defendant, Lexvis Sands, was not made till the 27th of April, in that year.

When the explanations contained in the depositions of John Sxvartxvout were taken into consideration, and compared with the answers of the defendants, no doubt could remain, but that this was a contrivance of the defendant to evade the provisions of the bankrupt law 3 that it originated in fraud, which accumulated in every subsequent step in the progress of these transactions.

The furniture and some other articles of personal property of the defendant, Comfort Sands, were sold by virtue of the same execution ; and Nathaniel Prime, his son-in-law, became the purchaser for 1,371 dols. and 38 cents 3 for which sum the defendant, Comfort hands, says thqt Nathaniel Prime gave his note,, and which he supposed he paid. Prime, in his answer, admits that he purchased the furniture and two slaves, for which he either paid or gave his note, which he afterwards paid ; and he denies that ■either Comfort Sands, or any other person on his account, furnished the money to pay for them, then, or at any time since. They both concur in stating that Comfort Sands has ever since possessed the furniture, some part of which Comfort Sands says was carried over with him to Long Island, during his confinement, and the remainder was left with him at his house in Pine-street, and when he returned, he used it, and continued so to do, as a personal accommodation to him from Nathaniel Prime, who says, that it is his property, and that he merely lent it to Comfort Sands, from motives of friendship. .

The only question arising on this subject was, whether leaving the furniture in the possession of Comfort Sands was not within the purview of the bankrupt law ?

The 27th section of the bankrupt law^* enacts, “ that if any person shall become bankrupt, and at such time, by consent of the owner, have in his or her possession and disposition any goods, whereof he or she shall be reputed owner, and take upon him or herself the sale, alteration or disposition thereof, as owner, the commissioners shall have power to assign the same, for the benefit of the creditors, as fully as any other part of the estate of the said bankrupt.”

The statute of 21 Jac. I. c. 19. s. 11. contained a similar provision ; • and the exposition it has received in England, may be of use in the construction of our bankrupt law. As to all the intents in which the 27th section of the latter, is material; in the present question, it is a transcript of the former.

In the case of Mace and Cadle,^† Lord Mansfield, in delivering the opinion of the court, lays it down, as deduced from the noted case of Twine,^‡ that if a man sonveyed his own goods to another, and kept the possession, such possession would have been void, as fraudulent, even before the statute of frauds. He adds, that it does not extend to the case of factors or goldsmiths, who have thé possession of other men’s goods, merely as trustees ; but the goods must be such as the party suffers the trader to sell as his own.

This opinion rather narrows the doctrine in Twine’s case, as it required the exertion of the power to sell to constitute the possession fraudulent.

The case of Lingham v. Biggs,^* is, in many leading points, analogous to the present. There the goods, consisting of furniture, were taken in execution ; valued by the sheriff ; a bill of sale made according to the valuation, to the plaintiff’s brother, in trust, for the plaintiff; articles of agreement entered into with the original owner, by which she stipulated to pay yearly 271. for four years, and covenanted not to remove them without the plaintiff’s consent. After the four years, the original owner became a bankrupt, and the goods were seized under the commission. The doctrine on this subject was fully examined. The distinction attempted to be taken between merchandise and furniture, was held not to be supported ; and that by the fair construction of the statute, the reputed ownership was the true test for determining the case; for from that reputed ownership the false credit arises ; and from that the mischief intended to be guarded against; the other terms of the section being incidental to reputed ownership. This appears to me a sound construction. The several cases cited in the argument were considered in that case; and I thought the doctrine attempted to be deduced from them, as applicable to this case, explained and distinguished with great legal discernment; and on the reasoning of that case, I was of opinion, that the furniture and other articles in possession of Comfort Sands, at the time of his bankruptcy, passed by the assignment.

It was urged, that the public sale, in this case, was favourable to its validity ; but whether a bankrupt sells directly, or employs circuitous means to effect the same object, cannot otherwise vary its complexion, than by furnishing additional motives for suspicion, from the extraordinary precautions resorted to. The judgment and execution appear to have been throughout, under the control of the defendant, Comfort Sands, and solely used to promote his views, and subserve his convenience ; and hence, even independent of the positive provisions of the bankrupt law, as to him, this might well be considered as part of the same system of conduct; for from the intrinsic circumstances of the transaction, as described, in the concurrent answers and depositions of John Sxvartwout, it seems almost incredible, that while the real estate was thus disposed of, the furniture which both the defendants, Comfort Sands and Nathaniel Prime, agree in representing as having been purchased for the personal accommodation of Comfort Sands, should have been paid for by Nathaniel Prime, without some secret understanding, that it would be reimbursed on disclosing the object of the sale. Either this was the case, or the defendant, Comfort Sands, in violation of every honest feeling, extorted money from a person disposed to serve him from friendly motives, under a colourable pressure, contrived by his own devices, and to answer his fraudulent purposes, and applied the money thus obtained to his own use ; but in whatever point of light it may be placed it cannot support the sale.

The Brooklyn property was conveyed in July, 1798 ; of consequence, prior to the passing of the bankrupt law. [Here his honour recapitulated the pleadings and evidence relative to the disposition of this estate.]

The defendants, Comfort and Henry Sands, concur in stating, that Henry Sands had not the means of paying for this estate, unless from the produce of the sales. By Robert Lenox he is described as a member of his father’s , , , family, not worth much ; and by Joshua Sands, as either a student at law, oran attorney recently admitted, having no property of any considerable value.

The relation between the parties ; the inability of the . son to pay ; the useless precaution of preceding the conveyance, intended to be consummated in a few days, by a contract; the anticipation of a year’s interest in the calculation of the value ; the satisfying the money to be paid by the terms of the contract, out of the rent of the land conveyed, combined with the pretences under which the conveyance was made, which the defendant, Comfort Sands, alleged was to raise a fund which might with greater facility be applied to the payment of his debts ; and to enable the defendant, Henry Sands, by laying out the property into lots and selling them, to obtain some compensation for his trouble in settling the mortgage, and the mode of management after the conveyance mac|e, are calculated not only to excite, but to make the most forcible impressions to confirm suspicion. When all these circumstances were reviewed in detail and analyzed, each of them seemed to acquire additional force from the dissection.

The relation of father and son, generally, involves an intimate union of views and interests. These may be discordant, and not unfrequently are so ; but in this instance, it is evident, that there was the most perfect coincidence in these particulars. One of the professed objects of the sale was to call into action, the activity and discernment of the son, by parceling out and selling the estate, and to give him a reward commensurate to his exertions by those means; and yet as soon as the operation of selling commences, the father is admitted to be better qualified to make proper dispositions, as being better acquainted with the relative value of the different parts. The son had no funds to pay the sum payable beyond the amount of the mortgage, and in this respect the matter is so arranged as entirely to exempt him from paying any part of it 3 for the principal sum due on the mortgage is stated to be 50,000 dollars ; and a year’s interest was due on the mortgage on the first day of the same month of July, in which the contract and convey»anee were made. Another year’s interest was anticipated ; and the remaining 4,000 dollars was received out of the produce of the estate thus professed to be sold, upon the settlement of the accounts with Joshua Sands.

The contract was another singular trait in this transaction. It is dated on the 5th of July, four days before it was intended the conveyance should be made. This, in the situation of the parties, was worse than useless» Every circumstance disclosed, showed that a perfect confidence existed between them. Comfort Sands had m> thing to acquire ; and it was, by his own account, principally intended as a benevolence to Henry Sands. No reciprocal but adverse interests, which it is generally the purpose of contracts of this kind to reconcile and ■ secure : no precise rights or duties, as equivalent to each other, to adjust: no difficulty in settling the terms can even be presumed 5 and the time allotted for its consummation so short, as to leave little at hazard, from the common contingencies of life.

This over caution is one of the settled indicii of fraud. It evinces a diffidence in the rectitude of the transaction, and excites a correspondent solicitude to provide defences for its protection.

After the conveyance was executed, another series ox acts was presented, further developing the intent of the parties. [Here his honour stated the acts and, transactions relative to the Brooklyn estate.]

I forbear to enumerate such other instances as are susceptible of some explanation on the part of the defendants, reconcilable to their pretences; but those -already intimated, show a general interference in the management of the property, and repeated and unequivocal acts of ownership.

These taken in connection with the reasons alleged for conveying the property, left no doubt, in my mind, that the whole of this business respecting the Brooklyn estate, was a tricky and not a bona fide conveyance.

I have not adverted to the value of the property. It is sufficient that it is of a value worth the pursuit of the creditors ;'and the contingent rise of value, if they have been unjustly deprived of it, is as much a positive loss to them, as if the value had remained stationary, and it had originally been so much undervalued.

It, however, appears-, by the answers of Comfort and Henry Sands, that it was of greater value at the time of the conveyance, than the money professed to have been intended to be paid for it; and. Joshua Sands, who, from his interest in and connection with the property, was, perhaps, the most competent to make a correct estimate, valued it at 75,000 dollars at the time of the conveyance. Other witnesses differ ; but none value it at less than 60,000 dollars ; which, whatever rule of calculation is adopted, will exceed the amount of the purchase-money considerably. For the 3,000 dollars were clearly an anticipation of a year’s interest; and the 4,000 dollars, by the terms of the contract to he paid in cash, was so paid as not to require a cent to be advanced j and though several unforeseen circumstances might have contributed to enhance its value more rapidly than was calculated upon, it was, from the whole evidence exhibited in the cause, in a state, of gradual increase, so as to yield & moral certainty to the purchaser, of a handsome profit iti a short period.

On a view of the whole subject, I was of opinion, that this conveyance, as against the creditors, must be deemed fraudulent and void. There were, however, circumstances disclosed, which rendered it convenient to consider it as a link in the chain of derivative title from Comfort Sands. The complainants were not disposed to question the partition, which, for aught that appears, was fairly and equally made. Sales were made to bona fide purchasers ; and the purchase-money paid into the bank of New-York, in exoneration of the estate, generally; and those payments, the complainants conceded, were not to be disturbed; and others who might claim under it, and who were not parties to this suit, could not and ought not to be deprived of the rights they supposed themselves entitled to, without having an opportunity of defending them.

I, therefore, thought the better mode would be to direct a sale of the property not so disposed of, and to decree that Comfort and Henry Sands should join with the master in the conveyance ; but it would have been less embarrassed in the detailed manner of selling calculated to make it most productive, if the title had been vested in the master, and by him transferred to the purchasers.

All the other transactions, relating to the estate of Comfort Sands, and between the same parties, must of course have received some taint from the fraud existing in this particular instance.

The intent expressed by Comfort Sands applied to all. The general circumstances of the parties continued the same throughout. Their answers as to the bona fides of the sale were falsified. The pretence of payment from the funds of Henry Sands was not maintained, in any part.

The estate of Comfort Sands, at Schaticoke, was the next object presented for consideration. [Here his honour stated the facts relative to this estate.]

If the conveyance in 1799, to Elias Nixen, was for a bona fide debt, I have already given my reasons for supposing it valid. The defendant, Elias Nixen, in his answer, shows an existing debt due to him from Comfort Sands ^ and that the conveyance by Henry Sands to him was made in satisfaction thereof. This answer is not impeached or disproved; it was before the passing of the bankrupt law ; and of consequense there was no legal restraint on a fair preference.

Though Peter Kemble, the surviving partner of Gouverneur & Kemble, was made a party to the bill, neither the bill charged, nor the answer disclosed any circumstance respecting the satisfaction of their debt, by the conveyance from Henry Sands to them. It was therefore, as to him, not within the purview of the bill.

Jesse Oakley is not a party; but the exchange of the notes mentioned by the defendant, Henry Sands, for the' bond by him executed to Comfort Sands, was expressly done to enable the latter to satisfy some of his creditors, in preference to others equally entitled, and in contemplation of bankruptcy, and therefore in evasion of the provisions of the bankrupt law.

This, therefore, was considered as void, as between Comfort and Henry Sands ; and as Henry Sands was to be held as trustee for Comfort Sands, in the disposition of this property, he was required to account for the one-fifth of the purchase-money received on his contract for the 801 acres; and I was of opinion that he should be decreed to convey the lands undisposed of towards the satisfaction of the creditors mentioned in his answer. As the extent, situation, and amount of these could not be satisfactorily collected from the answer, it was referred to a master to ascertain those circumstances.

The deposition of George Tibbits went to show the exercise of acts of ownership of Comfort Sands, as to the Schaticoke property, after the conveyance to Henry; but on the ground I have taken, in my view of the subject, it could not have much influence on the question.

The Minisink property was charged to have been conveyed by Comfort Sands to Henry Sands, for the consideration of 1,000 dollars. [Here his honour stated the facts relative to this estate.]

As far as those lands were destined to the satisfaction of existing debts, and were so applied, there could be no pretence for disturbing the title thus acquired. But the circumstances developed rendered it a proper subject to be referred to a master, to ascertain what proportion of those lands had been so applied, and when ; at what time the final settlement respecting them was made between the defendants Comfort Sands and Henry Sands, and whether the notes given to Clayton, and mentioned in the answer of Henry Sands, were satisfied, and how, and when. A report on these subjects was requisite to ascertain what proportion of the Schaticoke estate was to be considered as proper to be disposed of to the uses for which the complainants contend.

As to the lands in Washington, the bill stated that they were, in November, 1800, conveyed by the defendant, Comfort Sands, to his son, Lewis Sands, also a defendant, for 9,000 dollars.

The persons named in the answers as having received conveyances for parcels of the Washington property, were essential parties, but they have not been made parties; as to the surplus, which appears to exceed 390 acres, the complainants were entitled to an account of it.

Another branch of the complainants’ claim extended to the demand of Comfort Sands against the United States. [Here his honour stated the facts relative to this claim.]

No depositions were taken as to this point. It was therefore to be determined on the bill and answers.

As far as related to this debt, I was of opinion that the bill could only be sustained on the ground that the defendant, Isaac Kibbe, had not urged the prosecution of the claim on the United States with due diligence; for if the defendant, Nathaniel Prime, had done every thing incumbent on him to obtain a liquidation of the demand ; or if the defendant, Isaac Kibbe, had not grossly neglected his duty as assignee, the latter must of course, as the legal organ, constituted under the laws of the United States to manage the interests of the creditors, retain the power of managing it in his discretion, for the benefit of those creditors generally; for the right of the complainants to prosecute must originate in some palpable neglect or positive refusal of the assignee to perform a duty apparently in advancement of the trust, as to the precise subject in which the creditors collectively seek to establish their rights ; which they must always do at the peril of costs.

It was not pretended that the court of chancery could change the assignee. All that could be expected was, to enable the parties in interest to enforce the rights which the assignee was disinclined, either from negli-, gent or sinister motives, to give effect to.

The demand, in this instance, was not admitted by the government of the United States to be a claim on its justice. It is not a debt. Several other persons were originally interested in it, and the persons who claim under the assignment have added to the number interested in procuring the allowance of the claim. None of these persons, for aught that appeared, were dissatisfied. The fund had not been realized. Blended as the original interests of Comfort Sands were with those of others, it was difficult so to separate them as to attribute' fault to the assignee; and I could not discover that spedes of neglect which would constitute a proper ground for my interference. Besides, the time elapsed between the period when Comfort Sands was declared a baiikrupt, and the month of August, in the same year, the time the application was made to the assignee to prosecute the claim, afforded no opportunity to apply to congress on the occasion, as it was well known that congress wasnot in session between those days.

I was satisfied, from these views of the subject, that the bill, as to this point, could not be sustained.

The French debt, assigned to Joseph Sands, was in a somewhat similar situation; but the persons for whose benefit the assignment was intended were not parties, and therefore no effective decree could be pronounced.

Next, as to the notes delivered to John Havens. [Here his honour stated the allegations and facts relative to them.}

The circumstances stated as to him, as to the gist of the bill, are, that he offered to prove his debt before the commissioners ; that Comfort Sands, Nathaniel Prime, or some other of the friends of the former, pending the examination before the commissioners, found means satisfactorily to secure him, and procure him to assign the debt in question to Nathaniel Prime, and that he after-wards offered to prove the debt.

I know of no legal restraint on the assignment of the debts of a bankrupt, not interfering with the general and equal distribution of his effects among his creditors. Like all other chases in action they are transferable, so as to entitle the assignee to the dividends of the original creditors. The circumstances stated afforded probable cause for suspecting improper practice on the subject; and as far as the bill operated as a bill of discovery, it was calculated to draw the necessary discoveries from the defendant. But though all the facts are admitted, they formed no ground for a decree against the defendant, Havens; for the charge against him as deduced from the facts is that he assigned his debt, and of consequence the dividends to accrue therefrom, to Nathaniel Prime.

The answer of Lewis Sands was silent as to the whole of this transaction ; the making the notes for the consideration money for the Washington lots to Comfort Sands excepted.

There was no evidence to this point, and the whole rested upon the bill and answers, which did not make out a case for relief.

The complainants alleged,, that the whole amount of the consideration money for the Washington property sold to Lewis Sands, was 9,000 dollars ; that Lewis Sands gave notes to the amount of 19,000 dollars. The inference attempted to be drawn was, that he has received more than he has disclosed. There was, however, no circumstance to be collected from the pleadings which would warrant that inference. The collusion charged was denied. The consideration for the notes was not deduced from the property of Comfort Sands. For aught that appears, they may have been made by Lewis Sands for another, or without any consideration; but unless they were made w fraud of the creditors, there was no room to question them.

Whether these notes of Lewis Sands existed or not, was totally immaterial to the creditors of Comfort Sands. As they are stated to have been made after the bankruptcy of Comfort Sands, his indorsements are of course void; and the only ground upon which it was contended they ought to be cancelled was their supposed connection with the property of Comfort Sands. This, however, has not been made out beyond the Washington estate ; and on that they cannot operate as a lien. Besides, the strict duty of the assignee, as to these debts, was rather that of resistance than prosecution; and no .part of the interest confided to him could be withdrawn from the discretionary control with which he is legally invested, unless either laches or fault was made out against him; or unless the laches should be of a nature to enable the court to impute to him neglect generally, as to the whole concern. But he has not been required to do any act to repel the claim.

The notes in the hands of the defendant, Blagge, are in the same situation. They are the notes of Lewis Sands; and the complainants could not allege that the giving those notes was prejudicial to their interests, unless it appears that they detracted from the common fund. This, however, is not the case; for it does not appear when they were made payable. If payable heretofore, it did not appear that any measures had been taken to fix Comfort Sands as the indorsor. If payable after the bankruptcy, as the notes never were delivered to the persons who were intended to be thereby benefited, and Blagge’s interference cannot be resolved into an agency for them, they must, after the bankruptcy intervened, be legally inoperative; for the consummation of the contract being suspended, and an event occurring destructive of the indorsor’s power to bind himself, so as to affect the interest of his creditors, the capacity of clothing it with the legal essentials of consummation, were as effectually, to all legal purposes, lost, as in case of death. In either alternative, it would be useless to decree their delivery.

As to the houses and lots in James-street, conveyed to the defendant, Robert Sands, and by him to John Jackson; both Comfort and Robert Sands concurred in stating them to have been fairly conveyed, before the bankruptcy of Comfort Sands, in consideration of 3,200 dollars, to John Jackson, who was not a party, but was examined as a witness, and whose testimony corroborated those answers. But a decisive point, is,, it was. essential to make him a party to the suit, to bind his interest, and he has not been made a party.

Pendleton and T. A. Emmet, for the appellants.

The several conveyances from Comfort Sands, which are stated in the case, being for a valuable consideration, are good and valid, as between the parties. If they are void in regard to third persons, it must be either under the bankrupt law of the United States,^* or the statute of this state for the prevention of frauds.^†

This is a controversy between creditors and purchasers 5 not between some creditors and other creditors,. who have obtained an undue preference on the eve of, and in contemplation of bankruptcy. The 10th section of the bankrupt law provides, “ that in case of a bona fide purchase made from or under the bankrupt, for a valuable consideration, before the issuing of the commission, by any person having no knowledge, information or notice of any act of bankruptcy committed, such purchase shall not be invalidated or impeached.” This just and equitable provision is not to be found in the English statutes of bankruptcy. Again, by one of the English statutes,^* all voluntary conveyances by the bankrupt are void as against the assignees; but the law of the United States^† declares them void only if made “ with intent to defraud creditors.” If the conveyances of Comfort Sands to his children were for a good consideration, and without any intent to defraud his creditors, they must be valid.^‡ Any person, without notice of an act of bankruptcy, and before issuing the commission, may become a purchaser ; for it would be not only unjust, but extremely inconvenient in a commercial country, if conveyances made bona fide, and without notice, could be overreached and avoided, by any secret act of bankruptcy.

If the complainants succeeded in establishing their right to a portion of the common fund, which the assignee had either despaired of, or neglected, it seemed reasonable that it should be converted into money under their management, as parties materially interested in making it as productive to the creditors generally, as possible ; and as to that point the assignee ought to have it in his power to execute the trust reposed in him by the bankrupt law, by giving to the fund thus recovered the destination prescribed by that law.

I thought, however, that for this purpose, it was not necessary to appoint a receiver; a master being competent to discharge the duty required, in order to give the decree effect.

There were many other questions necessary to be determined in the cause, before a final decree could be made. On all the other matters pursued by the bill, I was of opinion it ought to be dismissed; but whether with or without costs, and how far the dismissal ought to extend, or how modified, it was not then necessary to determine. These were, therefore, reserved for further directions.

Any man may convey his own goods to another for money, at any time before execution, though he may fear executions for debts, provided there be no secret trust between him and the vendee.^§

A debtor may bona fide prefer one creditor to another.^¶

The house and lot in Pine-street were sold for a valuable consideration, and before any act of bankruptcy. The execution was on a bona fide and valid judgment. The conveyance of the 27th April, 1801, to Lewis Sands, was for notes, which were, afterwards, paid away to creditors of Comfort Sands. The price was adequate. It was a sale at public auction, where there was a competition of bidders. Mere inadequacy of price is not, of itself, evidence of fraud; but is a circumstance of suspicion to be confirmed by other proofs.^* The acts of ownership, when explained by the answers, are too trifling- to furnish evidence of any secret trust for Comfort Sands.

It is admitted, that if the conveyances were after an act bankruptcy, or notice of it, they were void. An act bankruptcy cannot exist, by implication. The debtor must do some one of the acts enumerated in the . . statute; as lying m prison two months without giving’ bail; and the act of bankruptcy is not complete, until that time is expired. In England it is different, and has relation back to the day of arrest. The commissioners state that Comfort Sands began trading on the 21st March. But their declaration is not conclusive; the act does not intend that any such judicial power should be exercised by them. The production of the commission and assignment is evidence merely, that the party was a bankrupt when the commission issued. If the time was doubtful, there ought to have been an issue to ascertain the fact. But if the act was committed on the 21st March ; yet if Lewis Sands had no notice of it, the conveyance to him would be valid.

The Brooklyn estate was conveyed to Henry Sands, prior to any act of bankruptcy ; and the only question is, whether the conveyance was made with a view to defraud creditors. Where a bill calls upon a defendant to answer as to certain facts, it makes the answer evidence as to such facts. If the answer is to be taken as fact, then there was no fraud. The acts of Comfort Sands, said to be evidence of ownership, were done by him as agent for his son. He could act from a mere parol authority.^† The answers expressly deny any fraud, and they are confirmed by the proofs in the cause.

But supposing that the conveyances were not valid; yet the decree is erroneous in not directing the money paid by the grantees to be refunded; and the conveyanees to stand as security, .until the money was repaid. A court of equity does not undertake to inflict a punishment; it merely affords compensation, or prevents fraud from producing any injury. Where a deed is valid between the parties, and fraudulent only as against creditors, the money paid by the purchaser is to be refunded.^* The conveyances are set aside, on payment of the purchase-money and interest. The right of the creditors to set aside the conveyance, is in the nature of an equity of redemption, and the property is considered as a mortgage for the money paid.

Again, the decree directs Comfort Sands to account for the rents and profits of the Brooklyn estate from 1798, to the time of the bankruptcy. This is clearly erroneous and unjust. He can never be called to account for acts done prior to his bankruptcy. If he could be made accountable for one year, he might be for his whole previous life.

Again, Henry Sands is required to account for the rents and profits from the 4th Aprils 1800. It is true the bankrupt law was passed on that day ; but that is no reason for making him accountable prior to any act of bankruptcy. He is also made accountable for the value of the lots sold, taken at the time of the decree, though sold several years before, when they were of much less value; and no allowance is made for taxes, or sums paid to Comfort Sands, prior to his bankruptcy.^†

As to the Greenwich lots, conveyed to his daughters, it appears, that Comfort Sands was in 1796 and 1797, a man of large property. Where a man is not so much in debt as to render it probable, that his voluntary settlements and provisions are made with a view to defraud creditors, they will be valid.^‡ The debtor should appear to be absolutely insolvent at the time, to render such settlements for children, which are regarded with favour, void.^*

Again, the chancellor has thought proper to take the property out of the hands of the assignees of the bankrupt, and place it in the hands of a master. If the creditors were dissatisfied, they might appoint new assignees. To put the property into the hands of a master, creates useless expense, is a violation of the bankrupt law, and an infringement of the rights of a majority of the creditors.

Riggs and Hoffman, contra.

The respondents appear' as creditors suing for themselves, and for those creditors who will contribute to the expense. The other creditors are not to be considered as those who have, by their vigilance, obtained a satisfaction for their debts; but as combined with Comfort Sands in his attempt to defraud the respondents. This is not the case of a grantor applying to have conveyances set aside, in which the maxim is to be applied, that the party claiming equity must first do equity. The only grounds on which the bankruptcy of Comfort Sands can have any influence on the questions raised in the cause are,

1. That his assignee became a necessary party:

2. That if the conveyance of any of the property conveyed, independent of the bankrupt law, should be valid,, the respondents, as standing in the place of the assignee, may have the benefit of the bankrupt laws;

3. As to bringing the money into court, and the distribution of the fund.

The cases which have been cited, if examined, will be found not to contain the doctrine to support which they were adduced, or are wholly inapplicable. An attentive examination of them will show, that Lewis Sands and Henry Sands can be entitled to no indemnity for their advances or responsibilities.

We contend that the conveyances by Comfort Sands are fraudulent and void, at common law, independent of any statute of bankruptcy. We shall first exhibit the conduct of Comfort Sands from the beginning of these transactions, which are throughout marked with that want of candour and honesty, as to leave no doubt of the fraud. [Here the counsel went into a minute examination of the facts.]

Conveyances of property with a fraudulent intent either pass no estate, or are void against the persons intended to be defrauded.^* This is either by common law, or the statute of 13 Eliz. c. 5.^† A gratuitous conveyance is always void, as against creditors.^‡ The relationship between the grantor and grantee is a strong circumstance of suspicion ; and the possession of the grantor, and acts of ownership by him inconsistent with the pretended sale, are evidence of. fraud.^§

Again, in cases of alleged fraud, the answer of the party is not to be relied on as to any advances; but positive proof of the payment of the money is required. The mere responsibility is not sufficient.^¶

Whoever comes into possession of an estate conveyed by fraud, must account for the rents and profits, when the conveyance is set aside.^** The case of Stackpole v. Davoren^†† is a very strong authority on this point.

As to the disposition of the fund, the court of chancery having jurisdiction of the cause, ought also to have the disposition of the property. It will not jeopardize it, by putting it in the hands of the assignee. It is more consistent with the dignity of the court, that it should be placed in the hands of a master, before whom all the creditors should exhibit their claims, that they may be contested or verified. In equity, all the creditors are equal, and no preference is to be given to judgment creditors, or. such as have legal liens. The proper mode is to declare that the creditors should prove their, debts before the master, and that they should be paid pro rata. A receiver may be appointed to receive the rents and profits, until the final end of the suit.^*

Yates, J.

In stating this case, for the purpose of giving an opinion, I shall confine myself to such facts as are immediately connected with the subjects, mentioned in the petition of appeal as exceptionable in the decree of his honour the chancellor, beyond which it is understood this court, according to an established rule, will not proceed in their adjudication, unless it be to extend and modify the decree, in favour of the respondents, according to such equitable rules as, in furtherance of justice, may be adjudged necessary; and I shall have a due regard to such acts of the parties generally, as tend to explain or establish important facts, connected with the subjects which are immediately before the court for adjudication.

[Here his honour stated the facts.]

The first question will be as to the validity of the conveyances.

1. With regard to the deed for the houses and lots in Pine and Cedar-streets.-

It is contended that a valid consideration was paid for this property, and that the proceeds have been properly disposed of; that the sale being public and by virtue of several executions of contending creditors, is sufcient to test the adequacy of the price.

No doubt can be entertained, that from the commencement of this transaction, Comfort Sands has been actuated by motives to continue this property under his control, particularly while Mr. Swartwout was connected with it., What he intended should be the ultimate disposition of it, remains to be inquired into. Whenever a person, in the embarrassed situation in which Comfort Sands appears to ¡have been at this time, voluntarily executes a bond and warrant to enter judgment in favour of particular creditors, it must, from the nature of the transaction, create suspicion; and his conduct immediately becomes a proper subject for the most scrupulous investigation.

It is true, as has been remarked, that there are creditors who, in honour, and perhaps in conscience, ought to be preferred; and I shall not undertake to say, that II. and S. Johnson, together with John Swartwout, were not of this description. Had, therefore, this property been sold for its real value, to a bona jide purchaser, and the avails appropriated to discharge the debts and responsibilities assumed by those persons for -Comfort Sands, it might perhaps be justified ; but as they were satisfied by him in a different manner, this property virtually continued in his hands, and under his control; for it is admitted that Swartwout must be deemed the trustee of Comfort Sands, having at his instance and request purchased from the sheriff. Notwithstanding his situation as trustee, Swartwout, on being requested by Comfort Sands to convey to his son Lewis, hesitates to do it. The reluctance evinced by him shows his impression of the impropriety of the proposed conveyance. He hesitated certainly, not from a desire to retain the property, and convert it to his own use. It must have been from the suspicious aspect of the conduct of C. Sands, with which he, in this particular, was fully acquainted from the commencement. On being informed, however, that he would take a note for 11,000 dollars from Lewis Sands, and pass the same to his creditors, Swartwout, on the 27th April, 1801, conveyed this property to Lewis Sands, subject to a lien of 2,500 dollars, amounting in the whole, to 13,500 dollars. This is the period it passed out of the hands of Comfort Sands, if the conveyance executed by John Swartwout is to be considered valid; and as this, in fact, is a sale made by the father to the son at a time when his circumstances were much embarrassed, it must undergo a strict examination; for, independent of other circumstances, as observed by Roberts, on Fraudulent Conveyances, (p. 452.) “ the very proximity of blood raises rather the idea of confederacy than affection.”

It cannot reasonably be supposed, that Lewis Sands was not in possession of sufficient information respecting the circumstances of his father, to be convinced that he was at this time about becoming a bankrupt, and had already committed the act of bankruptcy upon which the commission was to be issued; and that a purchase made by him must be intended either for his immediate benefit, or for the ultimate advantage of his father. This is by no means an unwarrantable presumption, particularly when aided by the extraordinary situation of this property, that John Swartwout was the grantor, and his father the actual vendor, and exclusive manager of the business, both before and at the time of the sale, and who took his note in the first instance payable to-bearer.

As to the amount of the consideration alleged to be paid for this property, I am not surprised that the true value could not be obtained at the sheriff’s sale. On such occasions there will always exist a reluctance on the part of the purchaser of an estate owned by a person so extensively involved as Comfort Sands must have been at the time of the sale. This inadequacy of price appears evident by the testimony of Swartwout, the purchaser, in the first instance. He states the value at 16,000 dollars, making a difference of upwards of 2,000 dollars between the amount alleged to be paid by Lewis Sands, and his valuation. When the peculiar situation of the witness is considered, we cannot but place reliance on his judgment, He asserts that his interference was for his own indemnity, and consequently the value of this property must have been a subject of interest and inquiry to him. Besides, the other witnesses do not testify to the aggregate amount, but to the annual value. This is not a just rule. Many estates in this country sell for an amount, the lawful interest of which far exceeds the annual income. As this might, perhaps, be considered a mere matter of opinion, and that too much reliance ought not to be placed on it, I shall regal'd it only of importance when connected with the possession and acts of ownership. These are proved by his residing for some time in one of the houses, and by the testimony of Isaac Pierson and John Gibson, to whom, as owner, he let the house in Cedar-street, gave receipts in his own name for the rent, and ordered repairs to be made. Add to this, the extraordinary application of the pretended consideration-notes to creditors, without their apparent consent or acquiescence.

From all these acts, the conduct of the parties appears to be so strongly marked with collusion, to the injury of the creditors of Comfort Sands, that I have no hesitation in saying, that the deed from John Swartwout to Lewis Sands, for the house's and lots in Pine and Cedar-street, is void.

The principles upon which this deed is adjudged void, cannot admit of a reimbursement, or an indemnification to Lewis Sands, against the consequences of his own fraudulent acts. There can be no doubt of his knowledge of the whole business, and an understanding that he ,was to participate in the expected advantages to be secured by this iniquity. Not a cent has ever been paid by himself; and the notes in the hands of John Blagge, we have reason to believe, remain under the control of his father. No equitable claim can consequently exist for reimbursement or indemnity, especially in favour of a person deemed a party to the transaction» I am, therefore, of opinion, that the decree in this respect is correct, being grounded on the fraudulent intentions of both Comfort and Lewis Sands ; and governed by principles different from those on which most of the cases adduced by the appellants, were decided, where deeds were avoided, or set aside on particular terms or conditions, founded on hard or unconscientious bargains.

It appears that the debt due to the bank of New-York of 56,000 dollars, without the addition of interest to accrue, was the true consideration to be paid for the Brooklyn property, and to which amount I shall confine my observations on the question respecting the adequacy of price.

This estate was held in common with Joshua Sands, the brother of Comfort Sands, who must be well acquainted with its value, and who considered it as worth, at the time of the sale, 75,000 dollars. A collector of taxes at Brooklyn states the value to be from 60,000 to 100.000 dollars. The average value, according to his estimation, would be 80,000 dollars.

I believe there is not one witness who puts it at less than 70.000 dollars ; so that on the most moderate valuation there existed a difference of 14,000 dollars, and by the testimony of Joshua Sands 19,000 dollars. This is a strong circumstance to presume the sale fraudulent.

The acts of ownership exercised over this property appear from the testimony of several witnesses. The allegation that those were the acts of an agent for Henry Sands, does not prevent the effect produced by the evidence on the validity of the whole transaction. No acts of ownership can be more striking than the receiving of rent, the payment of taxes, and, in some measure, managing and directing the sales and disposition of the property. Although it will not be questioned that an agent may be appointed by parol; yet it is somewhat extraordinary there did not exist some written authority^ particularly between parties who, at the time of the sale of this very property, evinced the greatest care and caution, by entering into written articles, when the deeds were to be executed a few days thereafter. No particular accounts as to this agency have ever been exhibited between them ; and on other occasions different and extensive payments are alleged to have been made on an adjustment of accounts; but no books were produced. These are evidently mere pretences to cover improper designs. I cannot doubt, therefore, but that the sale of this property was fraudulent, and the deed consequently void.

It does not appear that any money has been paid, except out of the sales of this property, nor that Henry Sands can have a claim for reimbursement and indemnity, for the reasons already assigned, in considering the same subject, respecting the Pine and Cedar-street property. No doubt of a combination between Comfort Sands and Henry Sands can possibly exist. There evidently appears to be a deliberate system adopted by Comfort Sands, to put a large, if not the greatest, portion of his property into the hands of his children, for the avowed purpose of effecting an odious discrimination between his creditors, not disconnected with improper views and intentions to benefit himself, and wholly to defeat some of the creditors.

I shall next proceed to inquire into the account ordered of the rents and profits of this estate.

The decree in the court of chancery does not interfere with the purchasers from Henry Sands. Those persons are, perhaps, properly left in the undisturbed enjoyment of the rights obtained under that conveyance; but an account of the rents and profits of all the real estate conveyed by Comfort Sands to Henry Sands from the 9th day of July, 1798, is directed.

The peculiar province of a court of equity is to detect and pursue fraudulent alienations, and arrest the property, particularly while in the hands of any of the parties to the transaction. This interference, however, must be grounded on an existing right in the party claiming redress, and can only take effect from the period when that right accrued in relation to the property. The title to such parts as are found in their hands must be considered as continuing in Comfort Sands, until the act of bankruptcy committed by him. I cannot, therefore, discover in what manner either Comfort Sands or Henry Sands can possibly be liable for the rents and profits of this estate, before that period.

It cannot be contended, that Comfort Sands had no right, before that time, to expend the avails or annual income, at his discretion, without responsibility to any one.

On a review, therefore, of the whole transaction between him and Henry Sands, and a recurrence to the reasons stated for the avoidance of the deed from him, the property being considered under his control and management, the demand on Henry Sands for the rents and profits previous to the acts of bankruptcy, ought not to be made. The decree ought, therefore, to be so modified, that no accounts of the rents and profits be required from either of them, until that event.

It is, undoubtedly, the duty of this court, in making up their opinion, to notice every incident connected with the cause, and, consequently, that part of the decree ordering those parties who are out of the jurisdiction of the court, to join in a conveyance with the master, ought to be so modified as to enable the court to enforce the decree, and secure an effectual remedy to the parties.

Upon the whole, my opinion is, that the decree of his honour the chancellor be affirmed, except as to the time when the accounts of the rents and profits in relation to the Brooklyn estate ought to commence.

Van Ness, J.

not having heard the argument of the cause, gave no opinion.

Spencer, J.

was for affirming the decree below, except as to the person who was to receive and distribute' the fund. He observed, that whenever an assignee declines to act, the creditor's have a right to institute a suit for the benefit of all the creditors.- By the law of the United States, the property of the bankrupt is vested in his assignees. The conveyances being adjudged fraudulent and void, the property remained in Comfort Sands, and by the bankrupt law became vested in his assignees. The conveyances were void at commtin law;' but the court of chancery had a concurrent jurisdiction,it being a case of fraud-5 and the application to that-court was merely for the purpose of avoiding the conveyances. It does not follow, that because the court of chancery had this cognisance of the cause,, it is to take the property out of the hands of the assignee, and place it in the hands of a master. Having disincumbered the estate of the conveyances, the property remained as if those deeds had never existed ; and being vested, by the law of the United States, in the assignees, no court can devest it.

Kent, Ch. J.

The first and principal question in this cause arises upon two deeds of conveyance of the estate of Comfort Sands; the one from him to his son Henry for the Brooklyn estate, and the other from John Swartwout to Lewis Sands, for the houses and lots in Pine and Cedar-streets, in the city of New-York.

Comfort Sands stopped payment and became insolvent; in the year 1797. He had been very extensively engaged in trade, and at the time of his failure, he was possessed-of a large real and personal estate, and owed debts to a great amount.

Instead of calling Ms creditors together, and exhibiting to them a full and fair account of his debts and estate, according to the usual course with- unfortunate merchants, he refused or neglected to exhibit any statement of his affairs, or to give them any satisfaction on the subject. He declared that he would prefer those creditors who did not sue him; and, just before the commission of bankruptcy had issued, he went so far as to declare in writing, that his hostile creditors» would suffer for their conduct, and not get five per cent, for then-demands.

. With such a temper of mind, under his misfortunes, it was very natural that the general disposition of his estate to his children- should destroy the confidence, and awaken the apprehensions of his creditors.»

In June, 1798, he conveyed his Schaticoke estate; in July, 1798, his Brooklyn estate ; and in September, 1799, Ms Minisink estate, to his son Henry. In November, 1798, his household furniture was seized under an execution issued in favour of two friendly creditors,- and sold to Nathaniel Prime, - his son-in-law, who left the Same to continue in his possession and enjoyment. In April, 1801, his houses in Pine and Cedar-streets were, by arrangement with Swartwout, his trustee, conveyed to his son Lewis, and in June following he conveyed to the same son his lots in-the city of Washington.

These sons, at the time of their respective purchases, were not men of reputed property, or by any means competent to pay for such- great estates. His son Henry, in 1798, had just quitted his clerkship in an attorney’s office, and was not in much business, and possessed little pecuniary credit. His son. Lewis was also a member of his family in 1801, and of no reputed responsibility. These were the' two sons to whom Mr. Sands thought proper to convey real estate worth, according to his own valuation, nearly 100,000 dollars : and he declared before the commissioners of bankrupt, that -these sales were made to prevent the operation of judgments, and to save his property from being sacrificed.

The general aspect of the business must at once excite in the mind a well-grounded distrust of the probity of the transactions; and when -we connect with it this confession of the party, the conclusion must press very strongly upon us that these sales were'not fair and honest, but were fraudulently intended to secure a very considerable share of the property, for the future benefit of himself and his children. A sale made, with the intent avowed by C. Sands, comes almost within the very words of the statute of 13 Eliz. which we have adopted, (Laws of N. Y. vol. 1. p. 75.) which declares, that every conveyance of lands made with the purpose or intent, to delay, hinder, or defraud creditors of their lawful actions and demands, shall be utterly void.

I shall first look more particularly into the circumstances attending the sale of the Brooklyn estate.

Comfort Sands, on .the 5th day of July, 1798, entered into a formal written agreement with his son Henry', to convey to him the Brooklyn estate for 60,000 dollars ; and this agreement was carried into effect, in four days thereafter, by the deed of the 9th of July. Such a studied formality in the negotiation, such a preliminary precaution without any apparent use or necessity, and that too between a father and a boy, just then emerged from school, and, as we may very well infer from the facts, still much dependent upon his father, and when the sale was avowedly intended by the father as a benefit to the son, is, to say the least of it, very extraordinary. It was out of the usual and natural course, as between such parties, and it therefore betrays contrivance, in order to give colour to the transaction. The estate was estimated at 60,000 dollars, which was the nominal con? sideration in the deed. To make up this sum, the mortgage to the bank of New-York, amounting, in principal and interest, to 53,000 dollars, was taken into the estimate, and another year’s interest to the bank, to the amount of 3,000 dollars, was anticipated. The residue of the purchase-money, after deducting the mortgage Upon the premises, with this anticipated interest, was 4.000 dollars, and that sum was to be paid to Comfort Sands ; and he was authorised by Henry to receive it, and he afterwards did receive it, out of the rents and profits. The estate was thus sold for 3,000 dollars less than the reputed value in the deed ; for the rents and profits for the year ensuing the sale, were a complete set-off against the interest which was to grow due in that year upon the mortgage. The consideration sum, as agreed upon by the parties at the time of the sale, is thus reduced to 57.000 dollars ; and yet the parties contrived, without any justifiable or even plausible pretext, to give the consideration in the deed an artificial and nominal rise to 60.000 dollars.

But the reputed value in the deed was not the real value of the estate. It was the minimum, or least sum' at which any person had ever computed its value. The value, in July, 1798, according to the weight of testimony, was, at least, 75,000 dollars, This was the positive testimony of Joshua Sands, who was perfectly acquainted with the property, and very competent to determine its value; and this was even below the average price, according to the opinion of the collector of taxes at Brooklyn. We may then very fairly consider, that the price of the Brooklyn estate, as estimated in the sale from C. Sands to his son, was at least 18,000 dollars below the real value. Here was then a great inadequacy of price.

But as the 4,000 dollars, coming to Comfort Sands Upon this sale, were paid out of the rents and profits, the son never paid a cent out of his own pocket, nor is it probable that the father ever looked to him as. personally responsible. The sale has every appearance of a settled design to save the residuum of the estate, after the discharge of the mortgage to the bank, from the grasp of the creditors, and to reserve it either for the use of the ’ father, or, as he himself expresses it, for the benefit his son.

These very striking circumstances attending the execution and consideration of the deed, were followed by acts of Comfort Sands, with the knowledge and privity .of the son, which confirm the inference that the sale was intended as a mere cover to protect the estate, and defraud ■the creditors. He continued in the exercise of acts of ownership, by selling and leasing lots, and holding himself out to the world as the real owner. For the evidence of this fact, I need only refer generally to the testimony of the witnesses, and especially to the deed from C. Sands to Annett, in March, 1802, the agreement to sell lots to Shelzel in the same year, and the lease from C. Sands to Britten, in April, 1804 ; and none of the lots specified in these sales were included in the reconveyance from the son. C. Sands also continued his former attentions, and bestowed all his care upon the property. His son Henry did little or nothing. He made few (if any) contracts, and he took upon himself neither trouble nor responsibility.

I am aware of the allegation that C. Sands acted all this while as the agent of his son; but this allegation, although easily made, is not supported by proof. We have no evidence of any regular appointment or instructions from the son, or of any regular account kept and rendered by the father of his receipts and expenditures, as agent. The attempt to screen these constant, essential and conclusive acts of ownership, under the authority of an agent, is a shallow artifice, destitute even of the merit of plausibility.

The next subject of examination is the deed from Swartwout to Lewis Sands.

The Pine and Cedar-streets lots were sold at a sheriff’s sale, in 1798, upon the judgment in favour of H. and S. and John Swartwout purchased them for about 11,000 dollars. He became the purchaser,- at the request of C. Sands ; he says, that he was also induced to make the purchase for his own eventual indemnity, as a surety. C. Sands told Swartwout, at the time of making the request, that it would be the means of preventing a sacrifice of the property, and that the plaintiffs in the execution would enable him to pay the purchase-money to the sheriff. This was accordingly done by C. Sands, who put into his hands certain notes of the plaintiffs, which the sheriff received as payment. The sale to Swartwout was therefore made ip consequence of an amicable arrangement between all parties ; and it was manifestly a mere cover of the property for the benefit of C. Sands. Swartwout continued the nominal, and C. Sands the real owner, until April, 1801, when Swartwout, being exonerated from his responsibilities» did, at the request of Comfort Sands, convey the houses and lots to his son Lewis Sands, and took a note from Lewis, payable to bearer for the consideration sum, and delivered the same over to the father. If then we view this act in its true and genuine light, here was a sale of these lots by Comfort Sands to his son Lewis; and the question is, whether that sale was not a palpable fraud attempted to be committed upon the creditors.

The contrivance by which this property had, for the three preceding years, been covered under the name of Swartwout, prepares the mind to anticipate fraud in the sale to the son.

It was stated, in the argument, that this deed was fraudulent and void under the late bankrupt law, and I incline strongly to this opinion. C. Sands had been in gaol upwards of 60 days, when the deed was executed; and, from the testimony of John Jackson, he was engaged in actual trade in the month of March, preceding the date of the deed. The commencement of his trading does not appear. Jackson proves only acts done, as a trader, in March. But from his former general character and business, as a merchant, and from those acts in March, may we not fairly presume,- that in February preceding he was equally a trader ? If so, C. Sands had clearly committed an act of bankruptcy, within the express words of the bankrupt law, at the time of the sale to Lewis; and can it be possible that Lewis Sands was a bona fide purchaser, without notice of that act of bankruptcy? He was then a member of his father’s family; and could he have been ignorant that his father had been in King’s county gaol, since January of that year; and could his father have carried on trade without his knowledge ? The thing- is to me incredible.

But admitting that the acts of bankruptcy mentioned by John Jackson, were the only solitary instances in which Comfort Sands assumed the character of a merchant while in gaol, another and a more serious question then arises, with what motive could C. Sands have engaged in the petty business of shipping 50 barrels of flour to Europe ? Was it really for the sake of mercantile profit, and of renewing his connections and operations abroad ? He was at that time completely insolvent, at war with his creditors, lost as to credit, and actually in prison. Was it not then rather for the purpose of becoming a trader, merely to bring himself within the purview of the bankrupt law, to which he soon after resorted ? My mind is overcome by the irresistible pressure of circumstances which carry it to this conclusion;. and those circumstances outweigh his assertion to the contrary. The question then is, was not this- sale to Lewis Sands made under a contemplation of bankruptcy, and with the privity of the son as to that intention ? The deed, in either alternative which I have mentioned, was void, as made in fraudem legis, and to defeat the equality and equity of the bankrupt law.

The validity of the deed does not, however, rest on the ground of constructive fraud,- by being made against the policy of the statute. The deed was fraudulent- in fact, by being made under the influence of corrupt motives, to cheat creditors, and it was, therefore, void at common law, and as against the statute of Elizabeth, which we have re-enacted, and which is only in affirmance of the principles of the common law.

The sale to Lewis Sands was for 11,000 dollars, and subject to a mortgage to Jones & Haring for 2,312 dollars. The property, near three years before, was, in the opinion of Swartwout, worth 16,000 dollars. The price was therefore inadequate, though not grossly so. What became of the large note for 11,000 dollars, does not appear, except from the answers of Comfort and Lewis Sands; and as the facts in those answers were put in issue, they ought to have been supported by proof. But assuming they, account of the disposition of the note for 11,000 dollars- to be correct, it then appears that the note was soon after exchanged, by arrangement between Lewis and his father, for several small notes, and most of them were deposited with John Blagge, an agent of C. Sands, where they remained (for any thing that appears to the contrary) unknown to the creditors, and where they remain still. Blagge says, that he was not the agent of the1 creditors for whose use these notes were alleged to have been lodged, nor was he acquainted with but one of them. It is exceedingly probable that C. Sands never gave any information to the creditors concerned, of the deposit of those notes, because no application was made by the creditors to Blagge for the possession of them. The notes of Lewis Sands, which were not deposited with Blagge but indorsed by Comfort Sands, and delivered over to the creditors, Gracie and Heyer, were attended with these singular circumstances. They fell due after the discharge of Comfort Sands under the bankrupt law, and yet he interferes in the first instance voluntarily, between the creditors and Lewis Sands, and assumes to pay them himself. Can there be more convincing testimony that the notes were considered by Comfort Sands as his proper debt, and that his son’s name upon the paper was regarded by him as a matter of form ? The history of these notes is alone sufficient to satisfy me of the fraudulent collusion between Comfort Sands and his son Lewis, and that the notes were never considered by either of the parties, as being given fora valuable consideration. Comfort Sands, at the time of this pretended sale, was in King’s county gaol, and upon his discharge in July, he returned and occupied, as his own, the estate in question. He resided in the house in Pine-street, and he continued to let the house in Cedar-street, first to Pierson, and afterwards to Gibson ; and he held himself out to those tenants, as the real owner. He speaks of acting all the time as agent for Lewis Sands, and of having settled with him; and he rests contented with this naked allegation, without the exhibition of a single document or voucher which might have afforded colour for his inference, or apology for his pretension. But we have a right to require some definite and specific evidence of his having acted and accounted, as the authorised agent of his son. His acts and his declarations were in the character of owner, not of agent; and the law will not allow him to assume in succession the one character or the other, as best suits his convenience. Such an ever-varying attitude is destructive to all simplicity and sincerity in dealing. Quo teneam vultus mutantem Protea nodo?

I forbear to dwell longer on this subject. The general-character of the transactions before us, the conclusions' which I have been obliged to draw, and the contrast between those conclusions and the answers of the parties to the deed, naturally give birth to painful reflections. I will therefore only observe, that for the reasons which have been suggested, I hold the two deeds to be grossly fraudulent, and absolutely void ; and this brings- me to consider the next question in' this case, which was, whether the deeds ought not to stand as security to reimburse the sons for their advances, and to indemnify them against their outstanding paper.

The denial of this prayer appears to me to result necessarily from a decision against the validity of the deeds. On the ground of absolute frauds the deeds were void to all intents and purposes. It is the same thing as if no such deeds had ever been executed. A fraudulent conveyance is no conveyance, as against the interest intended to be defrauded. This is the plain language and intelligent sense of the rule of the common; law. (Roberts on Fraudulent Conveyances, 591. 596, 597. Hob. 72. Humberton v. Hengil. Dyer, 194. 294. 296. pl. 8. 3 Co. 78. b.) It is impossible that those deeds can be permitted to stand as a security, if they are to be adjudged void ab initio. If they have no lawful existence, it would be inconsistent and absurd to recognise them for- any lawful purpose. I presume there is no instance to be met with of any reimbursement or indemnity afforded by a court of chancery to a particeps criminis, in a case of positive fraud. In Smith v. Loader, (Prec. in Chan. 80.) the party advancing money to an agent under a combination with him to cheat the principal, lost his whole security from the principal for the money actually advanced to his agent. It is fit and proper that & his result should take place, as a contrary course might afford countenance to fraud by giving it a partial effect. It would not become a court of equity to take a single step to save harmless a party detected in a fraudulent combination to cheat. No right can be deduced from an act founded in actual fraud. Nemo ex proprio dolo consequitur actionem. The cases in which a deed is set aside on terms are not at all analogous to the one before us. They are usually those in which one of the parties comes in for help against a hard or unconscientious bargain, or when a contract is fraudulent by construction of law only, as being against the policy or provisions of some particular statute. When one of the parties to a bargain asks to be relieved, the rule very properly applies, that he who demands equity under his own contract, must give equity. (1 Ch. Ca. 97.) But the rule has no manner of application to the present case.

The refusal to aid the purchasers here by means of ,the deeds, will not only be proceeding upon plain and sound principles, but we can do it without any actual loss to the party; for what is there to refund to these sons ? Henry Sands made no payments, except out of the proceeds of the Brooklyn estate; and as far as the sales of lots in that estate were made bona fide, and the monies paid in discharge of the mortgage to the bank, the decree does not disturb them. It only directs a sale of the property not so disposed of. Nor is there evidence that Lewis Sands ever paid a cent upon the notes, which he gave to his father upon the purchase of the lots in New-York ; and he runs but very little hazard upon the outstanding notes. Most of them remain still under the control of his father, in the hands of Blagge; and he has his defence, if his father should attempt to enforce them at law; and as to the two notes which were delivered into the hands of the creditors, the payment of them was expressly assumed by Comfort Sands? and the creditors were taught to look only to him.

Having thus examined the principal questions in the cause, I shall proceed briefly to consider some minor .points which have been submitted.

The decree touching an account of the rents and profits is complained of; and I am of opinion, that upon this point it ought to receive some modification.

Lewis Sands is to account only for the rents and profits which he received subsequent to his deed; and so far the decree is undoubtedly correct. But in respect to the Brooklyn estate, .the decree ought to be so modified as to make Henry Sands account only for the rents and profits received since the act of bankruptcy of his father,' and that Comfort Sands be required to account only fop the rents and profits subsequent to that event. The right of the complainants to call him to account cannot be extended beyond the time of his bankruptcy, because their title as creditors to an account accrued then, and not before. Chancery never decrees an account of rents and profits, but from the time that the right of the complainant accrued. (Ridgw. Rep. 180. 182, 183. 187.) In other respects the decree as to this estate is correct.

The only remaining point appealed from is respecting the disposition of the fund arising under the decree. The city lots are directed to be sold by a master, and Lewis Sands is directed to join with him in the conveyances to be made ; and out of the proceeds the master is first to satisfy the mortgage of Jones and Haring, and then bring the surplus money into court, to be distributed among the creditors, as should thereafter be directed. In like manner, the Brooklyn estate is ordered to be sold by a master; and Comfort and Henry Sands, and all other proper parties, are to join in the conveyances, and the monies arising from the sales are to be also brought into court, to be distributed. The petition of appeal complains, that by this decree the management of this estate is taken out of the hands of the assignee. The original assignee, Kibbe, was a party to this suit j and in his answer he admits, •that upon the application of the complainants, he had refused to prosecute the suit. This being the case, there can be no doubt that the creditors had a right to seek justice for themselves ; for it was ruled in the court of chancery, so long ago as the year 1740, in the case of Franklyn and Fern, (2 Eq. Ca. Abr. 103.) that if the assignees refuse to bring a bill for the benefit of the bankrupt’s estate, any creditor has a right to bring such bill. Kibbe, the assignee, in his answer, insists, however, that if the deeds should be set aside, the proceeds of these estates should be paid to him, to be distributed according to law. The contest then here is, who is to distribute the effects of the estate so recovered by the decree j .and in this respect the petition of appeal has proceeded without any real foundation for complaint. The chancellor has made no decree, as to the distribution. He does by the decree expressly reserve that point to be determined when the money shall be brought into court; and there is no reason to presume that he does not mean to place the monies in the hands of the assignee for distribution. Having' gone so far without the aid of the assignee, and against his will, I think the court of chancery was bound to render the remedy to the creditor effectual, by commanding possession of the fund. This power follows incidentally from the acknowledged jurisdiction which the court has in the first instance to sustain the bill. If the decree was to contain nothing more than the judgment of the court that the deeds were fraudulent and void, it would be a suit without relief; for execution is the fruit and end of the law. The assignee does not ask for the privilege of selling the estates, at his own time and pleasure. He only claims the proceeds for the purpose of distribution. I see no objection to the decree in directing a sale of the estates. It is the consummation of the remedy sought for. A sale by the master is a judicial sale, and binds all the parties to the suit who have right or claim. It would accordingly bind the assignee; and though it has been suggested that there has been a change of the assignee, and this fact was admitted in the proceedings which took place in this cause the last winter;^* yet from those proceedings it appears that this change did not take place until subsequent to the decree; and the new assignee is equally bound by that decree with his predecessor, for he stands precisely in his place, and is subject to all his obligations.

I have now finished the consideration of all the points in the decree upon which the appeal was brought; and I think it is a rule of practice from which we ought not to depart, that when the petition of appeal recites specifically the parts of the decree of which it complains, and from which the appeal is made, the appellant is to be confined to those parts of the decree. I have not, therefore, examined the question made respecting the feigned issue; for that issue was no part of the decree appealed from ; and it was very properly omitted, as the chancellor observed, in stating his reasons to this court, that both parties .suggested the propriety of that issue.

The result of my opinion accordingly is, that, except as to the rents and profits of the Brooklyn estate, the decree, as appealed from, was in all other respects correct, and ought to be affirmed. But some modifications of the decree of affirmance, if any are to be made by this court, have been suggested by the respondent’s counsel. As Henry Sands is out of the jurisdiction of the court, he ought not to be required to make any conveyance of the Brooklyn estate. This modification, I think, is necessary. The assignee may also, perhaps, be required to join in the conveyances, before the pro-deeds are paid over to him, though I do not believe that act requisite to perfect the title; and all costs and charges attending the suit in this court and in the court below, and for which the respondents might otherwise be responsible, ought to be previously deducted before they are paid over.

There were also some additions to the decree prayed for. One was respecting the balance, if any, of the demand of Sands against the United States, and assigned to Prime, and which would remain due after the claims under that assignment were satisfied; and also respecting the balance, if any, due from H. and S. Johnson to Sands. These balances ought undoubtedly to be ascertained, brought into court, and distributed in like manner as the other funds; and I see no reason why decrees to this effect ought not to be made, when the final decree comes to be completed in the court of chancery. The decree before us does not touch these questions; but the chancellor, in giving his opinion, seemed to intimate, that, as to these objects, the bill ought to be dismissed ; and it becomes therefore proper, that an expression of the opinion of this court should be made, that these objects ought to be embraced in the final decree.

The rest of the court were also of opinion, that the decree below ought to be affirmed, except as to the part which directs the sale of the estates by the master; and it was thereupon ordered, adjudged, and decreed, as follows, to wit:

That the conveyance made by the sheriff of the city and county of New-York, to John Swartwout, mentioned in the pleadings in this cause, for the house and lots of ground, situate adjoining Pine and Cedar-streets, in the city of New-York ; and also the deed in the said pleadings mentioned, for the said houses and lots of ground, from the said John Swartwout, to the appellant, Lewis Sands, having been made with intent to delay and defraud the respondents and others, the creditors of the appellant, Comfort Sands, are void, as against the said creditors: And it is further declared and decreed, that the said houses and lots of ground, adjoining Pine and Cedar-streets aforesaid, belonged to the appellant, Comfort Sands, at the time he became a bankrupt, as in the pleadings and proofs mentioned, and passed to, and became vested in the assignee of his estate and effects, as such bankrupt, subject to the mortgage thereon mentioned in the pleadings in this cause to the defendants, Samuel Jones and John Haring, in the same manner as though the said conveyances had not been made : And it is further ordered, decreed, and adjudged, that the said appellants, Comfort Sands, and Lewis Sands, respectively, account before one of the masters in chancery, for the rents and profits of the said houses and lots of ground, adjoining Pine and Cedar-streets, from the twenty-second day of June, 1801, which they the said Comfort Sands and Lewis Sands, have respectively received, or without wilful default might have received 5 and that in taking such accounts, allowances for taxes,repairs and improvements, permanently useful, be made to the said Comfort Sands and Lewis Sands; and the balance of the said accounts for the said rents and profits, when received, shall be placed in the hands of the assignee or assignees of the estate and effects of the said Comfort Sands, as such bankrupt: And this court doth further order, adjudge, and decree, that the deed of conveyance, made by the said Comfort Sands to the appellant, Henry Sands, (bearing date on or about the ninth day of July, in the year 1798,) mentioned in the pleadings, of the lands, tenements, hereditaments and real estate, situate at Brooklyn, in King’s county, in the pleadings also mentioned; and also the deed, which appears by the proofs in the cause, for part of the said lands, tenements and hereditaments dated on or about the fifteenth day of September, in the year of our Lord, 1801, from the said Henry Sands, to the said Comfort Sands, having been made with intent to delay and defraud the respondents, and others, the creditors of the appellant, Comfort Sands, are void as against the said creditors ; And it is further declared and decreed, that the said lands, tenements, .hereditaments and real estate, situate at Brooklyn aforesaid, and which, on a partition thereof, between the said Henry Sands, as grantee of the said Comfort Sands, and Joshua, Sands, as mentioned in the pleadings and proofs in this cause, were assigned, .or fell to the share of the said Henry Sands, belonged to the said Comfort Sands, at the time he became a bankrupt as aforesaid ; and passed to, and became vested in, the assignee of his estate and .effects, as such bankrupt, subject to the mortgage thereon, mentioned in the pleadings in this cause, to the president, directors and company of the bank of New-York.

And it is further ordered, adjudged and decreed, that the appellants, Comfort Sands and Henry Sands, respectively account, before one of the masters in chancery, for the rents and profits of the said last-mentioned lands, tenements, hereditaments and real estate, situate at Brooklyn, from the twenty-second day of June, in the year of our Lord, 1801, which they the said Comfort Sands and Henry Sands, have respectively received, or without wilful default might have received; and that in taking such accounts, allowances be made to the .said Comfort Sands and Henry Sands, for taxes, repairs and improvements, permanently useful, and the balance of the accounts for the said last-mentioned rents and profits, when received, shall be placed in the hands of the assignee or assignees of the estate and effects of the said Comfort Sands, as such bankrupt :

And it is further ordered, adjudged and decreed, that out of the said estates, situate adjoining Pine and Cedar-streets, in the city of New-York, and at Brooklyn, or out of the proceeds of the sales thereof, or any part thereof, which has or may be brought into the court of chancery, by virtue of any decree or order thereof, or out. of the said rents and profits, the respondents, in the first place, be reimbursed and satisfied all costs, charges and expenses, in and about the prosecution of the said suit, in the court of chancery, and the proceedings in this court, the amount whereof is to be ascertained by the court of chancery, which court is to give proper directions herein ;

And it is further ordered, adjudged and decreed, that the said decree of the court of chancery, so far as the-same is not hereby modified and altered, be, and the same is, hereby affirmed: And that the said decree so far as the same directs any conveyance to, or sale by, a master in chancery, of the said estates, or either of them, be, and the same is hereby reversed ; and that the record and proceedings brought here with this decree, be remitted to the court of chancery, to be executed according to law.

Judgment of affirmance.

* Ex parte Stokes, 7 Vevey, jun, 408.

* Doug. 203.

† 1 Caines, 593.

* L. U. S. v. 5. p. 63.

† Cowp. 234.

‡ 3 Co. Reb. 81.

* 1 Bos. & Pull. 32.

* 2 Johns. Rep. 487.