A contract or transfer intended to defraud creditors can neither be rescinded nor enforced by legal proceedings on behalf of the fraudulent debtor.58 This is clear on principle at least where there is an actual and not merely a constructive intent to defraud. Therefore if a fraudulent grantor sues for the price he should not be allowed to recover, whether the parties intended a permanent transaction or the fictitious appearance of one. It is so held in some States.59 But in many States such an action is allowed if the contract is on its face unobjectionable, and the plaintiff's case can be made out without exposing the fraud.60 Where the buyer or grantee under a which was engaged in selling land in Canada. The defendants were the proprietors of a weekly newspaper in which they held themselves out as giving honest advice to intending purchasers of Canadian land. The plaintiff agreed with the defendants, who owed him 14901., that if they paid him 7501. by certain instalments and observed the terms of the agreement in all respects he would accept the payment in full satisfaction of their debt. One of the terms was that the defendants should not publish in any periodical published by them any comment upon the plaintiff's land company, its directors, business or land, or upon any company with which the defendants had notice that the land company was connected or concerned. Upon a subsequent breach of this term by the defendants, the plaintiff brought this action under the agreement to recover the balance of the whole 1490l. It was held, affirming the decision of Atkin, J., that the agreement was unenforceable, being vitiated by the term in question upon two grounds, namely, (1) that the term was in restraint of trade and was wider than was reasonably necessary for the protection of the plaintiff, and (2) that the term was void as being against public policy, inasmuch as it was not consistent with the proper conduct of the newspaper in the public interest.
58 Dent v. Ferguson, 132 U. S. 50, 33 L. Ed. 242, 10 S. Ct. Rep. 13; Scher-merhorn v. De Chambrun, 64 Fed. 105, 12 C. C. A. 81; Baird v. Howison, 154 Ala. 359, 45 So. 668; Hollis v. Morris, 2 Harr. (Del.) 128, and see cases cited infra, n. 63.
59 Church v. Muir, 33 N. J. L. 318; Nellifl v. Clark, 4 Hill, 424, 20 Wend. 24; Briggs v. Merrill, 58 Barb. 389; Bradford v. Beyer, .17 Ohio St. 388. See also Norris v. Norris, 9 Dana, 317, 35 Am. Dec. 138; Demeritt v. Miles, 22 N. H. 523; Powell v. Inman, 7 Jones L. 28; Harvin v. Weeks, 11 Rich. L. 601.
60 Giddens v. Boiling, 93 Ala. 92, 9 So. 427 (but see Glover v. Walker, 107 Ala. 540, 18 So. 251); Landwirth v. Shaphran, 47 La. Ann. 336,16 So. 839; Butler v. Moore, 73 Me. 151, 40 Am. Rep. 348; Maxfield v. Jones, 76 Me. 135, 137; Dyer v. Homer, 22 Pick. 253; Harvey v. Varney, 98 Mass. 118; Sellings v. Turner, 153 Mass. 534, 27 N. E. 671; Gary v. Jacobson, 55 Miss. 204, 30 Am. Rep. 514; Telford v. Adams, 6 Watts, 429; Carpenter v. McClure, 39 Vt. 9, 91 Am. Dec. 370. See also Sauter v. Leveridge, 103 Mo. 615, 15 S. W. 981.
61 See infra, Sec. 1754.
62 See Harvey v. Varney, 08 Mass. 118.
63 Bush v. Rogan, 65 Ga. 320, 38 Am. Rep. 785; Bibb v. Baker's Adm'r, 17 B. Mon. 292; Peterson v. Brown, 17 Nev. 172, 45 Am. Rep. 437; Jackson v. Garnsey, 16 Johns. 189; York v. Merritt, 80 N. C. 285; Boyle v. Rankin, 22 Fa. St. 168; Croft v. Jennings, 173 Pa. St. 216, 220, 33 Atl. 1026; Broughton v. Broughton, 4 Rich. L. 491; Hoeser v. Kraeka, 29 Tex. 450; Starke's Ex. v. Littlepage, 4 Rand. 368. See also Moore v. Cline, 115 Ga.
405, 408, 41 S. E. 614; Russell v. Cole, 167 Mass. 6, 9, 44 N. E. 1057, 57 Am. St. Rep. 432. Contra, Kirkpatrick v. Clark, 132 HI. 342, 24 N. E. 71, 8 L. R. A. 511, 22 Am. St. Rep. 531.
Courts will not aid a fraudulent grantor to recover his property from a grantee to whom the title was entrusted. Kirby v. Reynes, 138 Ala. 194, 35 So. 118; Castellor v. Brown, 119 Ga. 461, 46 S. E. 632; Jayne v. Jayne, 148 Ky. 613, 147 S. W. 41; Redmond v. Hayes, 116 Minn. 403, 133 N. W. 1016.
Under a deed or contract of composition with creditors, it is assumed in the absence of express statement to the contrary, that all creditors are to fare alike. Consequently a secret agreement to give one creditor an advantage not shared by others is in fraud of them and is ground for avoiding the composition itself by the others, and not only defeating the agreement with the greedy creditor to give him an advantage,64 but also (it has been held in England) depriving him of any right under the composition. The release therein binds him though he is unable to enforce any executory promise for his own advantage.64a If, however, excessive payment is actually made to a creditor, it cannot be recovered from him, unless in subsequent bankruptcy proceedings the elements of a voidable preference can be established.64b