This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
It may be here briefly noted that a different rule obtains if the contract under which have arisen rights which are sought to be assigned has been so far performed as to pass property rights. Thus if property is obtained by fraud in the inducement, and such contract is so far performed as to pass a title which is at least voidable, a bona fide purchaser for value from such fraudulent vendee can hold such property as against the original vendor.1 The term "bona fide" purchaser is used to include a trustee without notice for bona fide creditors.2 So land transferred by vendee to his father in payment of an actual debt cannot be charged with the amount due from the vendee to co-vendee by reason of false representations as to the price of the land.3 If the property is transferred to one not a bona fide purchaser, as to one with notice of the fraud,4 or one who aids in such fraud,5 or one who does not pay value therefor, as a devisee,6 or a judgment creditor,7 or an officer who levies on the property, sells it and has the proceeds in his hands,8 such person is liable to the defrauded vendor to the extent of the property in his hands. One who is aware of facts which are enough to put him on inquiry whereby he would have discovered the true state of affairs is not a bona fide purchaser of property.9 as where he knows that the mortgagor is old and infirm, that the mortgage covers his entire property and that the mortgagee is insolvent.10 If conveyed to one who has notice of the fraud he is liable even if he has sold the property as agent of the vendee and transmitted the proceeds to vendee.11
1 Moore v. Reeek, 163 I11. 17; 44 N. E. 868; Bunn v. Schnellbacher, 163 I11. 328; 45 N. E. 227; Burton v. Perry. 146 111. 71; 34 N. E. 60; Moore v. Moore. 112 Ind. 149; 2 Am. St. Rep. 170; 13 N. E. 673; Bank v. Bank. 159 N. Y. 456; 54 X. E. 66; Schwartz v. McCloskey, 156 Pa. St. 258; 27 Atl. 300; Dettra v. Kestner, 147 Pa. 566; 23 Atl. 889; Oberdorfer v. Meyer, 88 Va. 384; 13 S. E. 756.
2 Oberdorfer v. Meyer, 88 Va. 384; 13 S. E. 750.
3 Bunn v. Schnellbacher, 163 I11. 328; 45 N. E. 227.
4 Lewis v. Mortgage Co.. 94 Ga. 572: 21 S. E. 224: Lillibridge v. Walsh, 97 Mich. 459; 56 X. W. 854; De Arnaud v. Peet. 49 X. J. Eq.
346; 25 Atl. 964; Hofecker v. Pfeil, 193 Pa. St. 288; 44 Atl. 421; Stone v. Oil Co., 188 Pa. St. 602; 41 Atl. 748, 1119; Stone v. Oil Co., 188 Pa. St. 614; 41 Atl. 748; 41 Atl. 1119; Knox v. Earbee (Tex. Civ. App.), 35 S. W. 186. Even if the statutory notice necessary to give notice to bona fide purchasers is not filed. Lillibridge v. Walsh, 97 Mich. 459; 56 N. W. 854.
5 Horter v. Herndon, 12 Tex. Civ. App. 637; 35 S. W. 80.
6 Rhino v. Emery, 72 Fed. 382.
7 Hofecker v. Pfeil, 193 Pa. St. 288; 44 Atl. 421.
8 Converse v. Sickles. 146 N. Y. 200; 48 Am. St. Rep. 790; 40 N. E. 777.