Sec 376

A conspiracy to defraud being indictable at common law, all agreements to effect such a conspiracy are invalid.2 This rule is applicable to conspiracies to cheat by a mock auction;3 to conspiracies to raise public funds by false rumors;4 to conspiracies to issue bills in name of fictitious or illegal banks;5 to conspiracies to obtain goods on false pretences or tricks;6 to conspiracies to make a person drunk and then obtain his money;7 to conspiracies to make money by false personation;8 to conspiracies to manufacture a spurious drug;9 to conspiracies to obtain money by coercion;10 to contracts by a company to pay unearned dividends.11 The party whom such conspiracies are designed to injure may, at his election, avoid any contract induced by such conspiracy.12 Under the same head are to be included all contracts whose object is to defraud creditors of their just rights.1 And no resulting trust will be permitted to arise from a settlement in fraud of creditors.2

Agreements to defraud voidable.

1 Smith v. White, L. R. 1 Eq. 626; Leake, 2d ed. 764; Riley v. Jordan, 122 Mass. 231.

2 See Wh. Cr. L. 8th ed. sec 3347 et seq.; Steinhurg v. Bowman, 103 Mass. 325; Moore v. Wood, 100 111. 451; Martin v. Bolton, 75 Ind. 295; Har-wood v. Knepper, 50 Mo. 456.

3 R. v. Lewis, 11 Oox, C. C. 404. 4 R. v. De Berenger, 3 M. & S. 67.

5 R. v. Hevey, 2 East, P. C. 858; Twitchell v. Com., 9 Penn. St. 211; Wh. Cr. L. 8th ed. sec 1357.

6 McKewan v. Sanderson, L. R. 15 Eq. 229; R. v. Aspinall, L. R. 1 Q. B. D. 735; R. v. Heymann, L. R. 8 Q. B. 102; Harrington v. Dock Co., L. R. 3 Q. B. D. 549; R. v. Kenrick, 5 Q. B. 49; Jackson v. Ludeling, 21 Wall. 616; State v. Bartlett, 30 Me. 132; Com. v. Warren, 6 Mass. 72: Fuller v. Dame, 18 Pick. 472; Rice v. Wood,.

113 Mass. 133; Bliss v. Matteson, 45 N. Y. 22; Com. v. McKisson, 8 S. & R. 420; State v. Buchanan, 5 Har. & J. 317; Bloomer v. State, 48 Md. 521; Byrd v. Hughes, 84 111. 174; People v. Richards, 1 Mich. 216; Powell v. In-man, 8 Jones, N. C. 436; Heineman v. Newman, 55 Ga. 262; Fenton v. Ham, 35 Mo. 409. That fraudulent cooperation on part of vendee is essential, see Beurmann v. Van Buren, 44 Mich. 496.

7 State v. Younger, 1 Dev. 357.

8 R. v. Robinson, 1 Leach, 44.

9 Com. v. Judd, 2 Mass. 329.

10 State v. Shooter, 8 Rich. 72.

11 Lockhart v. Van Alstyne, 14 Am. Law Reg. 180; Culver v. Reno Real Est., 91 Penn. St. 367.

12 Jackson v. Duchaire, 3 T. R. 551; Willis v. Baldwin, 2 Doug. 450; Begbie v. Phosp. Co., L. R. 1 Q. B. D. 679.

1 See cases cited to sec 379 et seq.; and further, to the effect that all conveyances in fraud of creditors are void, Huse v. Preston, 51 Vt. 245; Blant v. Gabler, 77 N. Y. 461; Southard p. Benner, 72 N. Y. 424; Miller v. Sauer-bier, 30 N. J. Eq. 71; Budd v. Atkinson, 30 N. J. Eq. 530; Bunn v. Ahl, 29 Penn. St. 387; Blystone v. Bly-stone, 51 Penn. St. 373; Brocken-brough v. Brockenbrough, 31 Grat. 580; McQuade v. Rosecrans, 36 Oh. St. 442; Appleton Bk. v. Bertschey, 52 Wis. 438; Crapster v. Williams, 21 Kan. 109; Annis v, Bonar, 86 111. 128; Tobey v. Robinson, 99 111. 222; Harrison v. Bailey, 14 S. C. 334; Marshall v. Croom, 60 Ala. 121; Horn v. Wiatt, 60 Ala. 297; Sattler v. Marino, 30 La. An. Pt. I. 355; Fisher v. Lewis, 69 Mo. 629. In Blennerhasset v. Sherman, Sup. Ct. U. S. 1882, it is said by Woods, J.: "It is not to be disputed that, except as forbidden by the bankrupt law, a debtor has the right to prefer one creditor over another, and that the vigilant creditor is entitled to the advantage secured by his watchfulness and attention to his own interests. Neither can it be denied that the mere failure to record a mortgage is not a ground for setting it aside for the benefit of subsequent creditors who have acquired no specific lien on the property described in the mortgage.

"But where a mortgagee, knowing that his mortgagor is insolvent, for the purpose of giving him a fictitious credit, actively conceals the mortgage which covers the mortgagor's entire estate and withholds it from the record, and while so concealing it represents the mortgagor as having a large estate and unlimited credit, and by these means others are induced to give credit to the mortgagor, who fails and is unable to pay the debts thus contracted, the mortgage will be declared fraudulent and void at common law, whether the motive of the mortgagee be gain to himself or advantage to his mortgagor.

"It is not enough in order to support a settlement against creditors that it be made for a valuable consideration. It must be also bonafide. If it be made with intent to hinder, delay, or defraud creditors, it is void as against them, although there may be in the strictest sense a valuable or even an adequate consideration. (Twyne's case, 3 Co. Rep. 81; Holmes v. Penney, 3 Kay & J. 99; Gragg v. Martin, 12 Allen, 498; Brady v. Briscoe, 2 J. J. Marsh. 212; Bozman v. Draughn, 3 Stew. 243; Farmers' Bank v. Douglass, 11 Sme. & Mar. 469; Bunn v. Ahl, 29 Penn. St. 387; Root v. Reynolds, 32 Vt. 139; Kempner v. Churchill, 8 Wall. 362; Kerr on Fraud and Mistake, 200.

"As long ago as the case of Hunger-ford v. Earle, 2 Vern. 261, it was held that 'a deed not at first fraudulent may afterwards become so by being concealed or not pursued, by which means creditors are drawn in to lend their money.' This doctrine has been repeatedly reaffirmed. (Chancellor Kent in Hildreth v. Sands, 2 Johns. Ch. 35; Scrivenor v. Scrivenor, 7 B. Mon. 374; Bank of the United States v. Housman, 6 Paige, 526)." 26 Alb. L. J. 116.

2 Perry on Trusts, 131; 1 Lead. Cas. in Eq. 320; Murphy v. Hubert, 16 Penn. St. 56; infra, sec 377; see Lynch's App., 97 Penn. St. 349.