Hall v. Arnold

By the Court, Marvin J, It is well settled that a bona fide purchaser for a valuable consideration is to be protected, though the vendor made the sale for the purpose of delaying, hindering or defrauding his creditors.- If the purchaser had no knowledge or notice of the object and intention of his vendor to defraud, he cannot be affected by such intention. So if one purchase in good faith, without notice, from a fraudulent vendor, he acquires a good title as against the creditors of the original vendor. The remarks of Chancellor Kent in Hildreth v. Sands, (2 John. Ch. 42,) to the effect that a deed, fraudulent on the part of the grantor, might be avoided though the grantee was a bona fide purchaser and ignorant of the fraud, was not sustained in the same case in the court of errors, (14 John. 498.) When the possession does not accompany the sale, assignment or mortgage of the goods, the person claiming under such sale or assignment must make it appear that the sale or assignment was made in good faith, and without any intent to defraud the creditors of the vendor, or subsequent purchasers. (2 R. S. 136, § 5.) It is the purchaser, assignee or mortgagee, that is to make it appear that the sale was made in good faith. In the present ease the mortgagee was not called upon by the defendant to account for the property being left in the possession of the mortgagor, but the defendant puts the whole case upon the proposition that if the mortgagor designed to delay, hinder or defraud his other creditors, then the mortgagee, who was also a creditor, could not hold the property. He does not even ask that the jury should pass upon the question whether the oxen were not left with the debtor upon some secret trust for the benefit of the debtor, &c. &c. but he narrows the question to the one stated, viz. the design of the debtor. A debtor in failing circumstances has the right to prefer one creditor to another; and if he tabes his property and pays one of his creditors with it, designing at the time, and knowing that the effect of such payment to the particular creditor will be to prevent some other creditor or creditors from taking his property upon their executions, this will not affect the title of the creditor to whom he has delivered the property. [601] [Allegany General Term, September 6, 1853. Marvin, Bowen and Mullett, Justices.] Indeed the only question presented in this case is whether a bona fide vendee or mortgagee is to be protected, when the vendor or mortgagor designed and intended by the mortgage to prevent some other creditor from taking the property. And this proposition has been too often decided to be called in question. A new trial should be denied, with costs.