trolling factor in determining the buyer's intent. The fact of insolvency and the buyer's failure to disclose it is some evidence of his intent not to pay, still such intent cannot be presumed or inferred from the fact that he was insolvent, when it appears that he carried on his business in a very slipshod manner, and testified that he was not aware of the fact that he was insolvent; and it has been held that the mere fact that a buyer subsequently executed chattel mortgages upon goods purchased, thereby giving certain creditors preference, or that he made an assignment for the benefit of creditors, will not warrant the inference of a design to obtain the goods without payment.5

4

595. Admissibility of Evidence to Prove Intent.-Quite a wide latitude is given to the admission of evidence to prove the fraudulent intent on the part of the buyer not to pay for the goods, and acts and declarations showing such a fraudulent purpose, if connected in point of time, are admissible as throwing light on his general object, though they do not relate to the property or transaction in question. Thus on the question whether a purchase was fraudulently made in anticipation of insolvency, evidence tending to show that the buyer fraudulently purchased other and similar goods about the same time may be admitted, having the tendency to show the fraudulent intent in the case under consideration.8 But such other transactions must be so near to the one in question in point of time and so like it in other relations that the same fraudulent motive may reasonably be imputed to all, and this evidence is admissible only to prove the quo animo.

derson, 31 Ohio St. 162, 27 Am. Rep. 501; German Nat. Bank v. Princeton State Bank, 128 Wis. 60, 107 N. W. 454, 8 Ann. Cas. 502, 6 L.R.A. (N.S.)

556.

Notes: 14 L.R.A. 265; 44 L.R.A. .(N.S.) 21; 8 Ann. Cas. 506.

2. Gillespie v. J. C. Piles, 178 Fed. 886, 102 C. C. A. 120, 44 L.R.A. (N.S.) 1; Belding Bros., etc., Co. v. Frankland, 8 Lea (Tenn.) 67, 41 Am. Rep. 630.

Note: 44 L.R.A. (N.S.) 21; 8 Ann. Cas. 506.

3. Dalton v. Thurston, 15 R. I. 418, 7 Atl. 112, 2 A. S. R. 905. See also Gavin v. Armistead, 57 Ark. 574, 22 S. W. 431, 38 A. S. R. 262. Notes: 80 Am. Dec. 268; 8 Ann. Cas. 506.

4. Dalton v. Thurston, 18 R. I. 418, 7 Atl. 112, 2 A. S. R. 905.

5. Thompson v. Peck, 115 Ind. 512,

18 N. E. 16. 1 L.R.A. 201.

6. Mackinley v. McGregor, 3 Whart. (Pa.) 369, 31 Am. Dec. 522.

Note: 44 L.R.A. (N.S.) 21 et seq.

7. Thompson v. Rose, 16 Conn. 71, 41 Am. Dec. 121; Jacobs v. Shorey, 48 N. H. 100, 97 Am. Dec. 586; Cary v. Hotailing, 1 Hill (N. Y.) 311, 37 Am. Dec. 323; Mackinley v. McGregor, 3 Whart. (Pa.) 369, 31 Am. Dec. 522; Miller v. White, 46 W. Va. 67, 33 S. E. 332, 76 A. S. R. 791.

Note: 37 Am. Dec. 328.

8. Rowley v. Bigelow, 12 Pick. (Mass.) 307, 23 Am. Dec. 607: Jordan v. Osgood, 109 Mass. 457, 12 Am. Rep. 731; Jacobs v. Shorey, 48 N. H. 100, 97 Am. Dec. 586; Hall v. Naylor, 18 N. Y. 588, 75 Am. Dec. 269.

Notes: 75 Am. Dec. 272; 44 L.R.A. (N.S.) 22.

9. Hall v. Naylor, 18 N. Y. 588, 75 Am. Dec. 269.

Proof of false representations to one firm to induce a sale by it affords no ground for the inference that like representations were made to induce another sale effected nearly contemporaneously.10 While the fraudulent intent must have existed when the property was bought, it may be established by proof of subsequent acts throwing light on the transaction.11 It may also be shown that the buyer purchased a quantity of goods inordinately large in proportion to his apparent means of payment or the credit given.12 It may also be shown that soon after the purchase, the buyer made resales at inadequate prices before expiration of the credit given; 18 and the fact that the buyer made secret and fraudulent transfers to his creditors generally or to favored creditors may be considered as bearing on his probable intent in the purchase in question.14 Evidence is not admissible that the buyer made false statements as to his pecuniary circumstances, with a different object from that of inducing a sale of goods, as, for instance, to induce a creditor to forbear pressing for payment of a demand not yet due.15

596. Against Whom Seller's Right of Rescission Enforceable Generally. The fact that the subject matter of a sale induced by the fraud of the buyer has passed into the hands of a third person or that a third person has acquired a lien thereon from or under such buyer. does not preclude the seller from rescinding the sale and recovering the property if such third person is not entitled to protection as a bona fide purchaser for value.16 Where the seller of cloth for a billiard table is induced by the buyer's fraudulent representation of his ownership of a table to sell the cloth and tack it upon the table, the cloth being removable without injury to the table, he may rescind the sale and retake the cloth as against the owner of the table, as in such a case the cloth does not by accession become a part of and the property of the owner of the table.17 Any unreasonable delay on the part of the seller in the rescission of the sale will deprive him of the right to do so as against third persons claiming under the fraudulent buyer, for the reason that even as against the buyer the seller must properly exercise his right of rescission after discovery of the fraud.18

10. Note: 37 Am. Dec. 328.

15. Hall v. Naylor, 18 N. Y. 588,

11. Bidault v. Wales, 19 Mo. 36, 75 Am. Dec. 269. 59 Am. Dec. 327.

Note: 18 A. S. R. 365.

12. Jacobs v. Shorey, 48 N. H. 100, 97 Am. Dec. 586.

13. Bidault v. Wales, 19 Mo. 36, 59 Am. Dec. 327; Jacobs v. Shorey, 48 N. H. 100, 97 Am. Dec. 586.

14. Bidault v. Wales, 19 Mo. 36, 59 Am. Dec. 327; Jacobs v. Shorey, 48 N. H. 100, 97 Am. Dec. 586.

Note: 44 L.R.A. (N.S.) 23.

16. See cases cited in the paragraphs immediately following.

17. Perkins v. Bailey, 99 Mass. 61, 96 Am. Dec. 689. And see ACCESSION, vol. 1, p. 116 et seq.

18. Hoffman v. Noble, 6 Metc. (Mass.) 68, 39 Am. Dec. 711; Barnard v. Campbell, 58 N. Y. 73, 17 Am. Rep. 208. See infra, par. 610, as to the effect of laches or delay in exercising the right of rescission.

A donee is obviously not a purchaser for value and is not entitled to protection. 19

597. Purchasers with Notice of Fraud.-The seller may avoid the sale as against third persons claiming under the fraudulent buyer with notice of the fraud.20 And this is true if notice of the fraud is acquired by a subsequent purchaser after his contract of purchase was made, but before payment of the price. So if a purchaser has sufficient notice of facts to put him on reasonable inquiry and fails to make inquiry, he will not be deemed a bona fide purchaser, but will be deemed to have taken with notice. This is in pursuance of the general rule that if in any purchase there be circumstances which, in the exercise of common reason and prudence, ought to put a man upon particular inquiry, he will be presumed to have made that inquiry and will be charged with notice of every fact which that inquiry would give him. Thus where the goods are placed by the fraudulent buyer in the hands of an auctioneer for sale, who makes advances on them, the latter is not entitled to protection as a bona fide purchaser if, at the time the goods were delivered to him, he had knowledge of circumstances calculated to put a man of ordinary prudence on inquiry as to whether the party who intrusted the goods to him was perpetrating a fraud in selling them by auction, and he failed to make the inquiry into the character of the transaction.

19. Baker v. Lever, 67 N. Y. 304, 182; Arnold v. Hageman, 45 N. J. Eq. 23 Am. Rep. 117. 186, 17 Atl. 93, 14 A. S. R. 712.

V.

Notes: 25 Am. Dec. 613; 10 A. S. R. 381; 13 A. S. R. 257; 14 A. S. R. 725; 36 L.R.A. 161; 44 L.R.A. (N.S.) 2.

1. Arnold v. Hagerman, 45 N. J. Eq. 186, 17 Atl. 93, 14 A. S. R. 712. 2. Morrow Shoe Mfg. Co. v. New England Shoe Co., 57 Fed. 685, 6 C. C. A. 508, 24 L.R.A. 417; Higgins v. Lodge, 68 Md. 229, 11 Atl. 846, 6 A. S. R. 437; Lincoln v. Quynn, 68 Md. 299, 11 Atl. 848, 6 A. S. R. 446; Durell v. Haley, 1 Paige Ch. (N. Y.) 492, 19 Am. Dec. 444; Barnard v. Campbell, 58 N. Y. 73, 17 Am. Rep. 208.

20. Browning v. De Ford, 178 U. S. 196, 20 S. Ct. 876, 44 U. S. (L. ed.) 1033; Morrow Shoe Mfg. Co. v. New England Shoe Co., 57 Fed. 685, 18 U. S. App. 256, 6 C. C. A. 508, 24 L.R.A. 417; Pelham Chattahoochee Grocery Co., 146 Ala. 216, 41 So. 12, 119 A. S. R. 19, 8 L.R.A.(N.S.) 448; Benesch V. Waggner, 12 Colo. 534, 21 Pac. 706, 13 A. S. R. 254; Harris v. Alcock, 10 Gill & J. (Md.) 226, 32 Am. Dec. 158; Manning v. Albee, 14 Allen (Mass.) 7, 92 Am. Dec. 736; Hoffman v. Noble, 6 Metc. (Mass.) 68, 39 Am. Dec. 711; Rowley v. Bigelow, 12 Pick. (Mass.) 307, 23 Am. Dec. 607; Hiller v. Ellis, 72 Miss. 701, 18 So. 95, 41 L.R.A. 707; Johnson-Brinkman Commission Co. v. Missouri Pac. R. Co., 126 Mo. 344, 28 S. W. 870, 47 A. S. R. 675, 26 L.R.A. 840; Farley v. Lincoln, 51 N. H. 577, 12 Am. Rep. 417.

Notes: 25 Am. Dec. 613; 2 L.R.A.

155.

See NOTICE, vol. 20, p. 346 et seq. 3. Higgins v. Lodge, 68 Md. 229, 11 Atl. 846, 6 A. S. R. 437. See also Morrow Shoe Mfg. Co. v. New England Shoe Co., 57 Fed. 685, 18 U. S. App. 256, 6 C. C. A. 508, 24 L.R.A.

Ordinarily it seems that whether the circumstances are such as should have put the subsequent purchaser on inquiry is one for the determination of the jury. Where the person claiming under the buyer, after the seller has established the fraud of the buyer, has himself proven that he is a purchaser for value, it has been held in some cases that the burden is then upon the seller to show that such person had notice of the fraud when he purchased or before he paid the purchase money or parted with the consideration or had knowledge of facts putting him on inquiry which if diligently prosecuted would have brought him to a knowledge of the buyer's fraud.5 Other cases, however, in announcing the broad rule that the burden is upon the purchaser from the fraudulent buyer to show that he was a bona fide purchaser for value seem to include the element of want of notice of the buyer's fraud and some authorities expressly so hold."

598. Assignee for Benefit of Creditors; Trustee in Bankruptcy; Receiver. The assignee for the benefit of creditors of the fraudulent buyer succeeds only to the rights and interest of the buyer and is not entitled to hold the goods as against the defrauded seller; and an action of replevin may be maintained against the assignee though he took without notice of the fraud, and it has been held that the fraudulent buyer and his assignee may be jointly sued in replevin." The assignee in bankruptcy of the fraudulent buyer acquires no greater rights than the buyer and cannot retain the goods as against the defrauded seller. 10 Where the defrauded seller rescinds the sale

4. Higgins v. Lodge, 68 Md. 229, 11 Atl. 846, 6 A. S. R. 437.

5. Morrow Shoe Mfg. Co. v. New England Shoe Co., 57 Fed. 685, 18 U. S. App. 256, 6 C. C. A. 508, 24 L.R.A. 417; Pelham v. Chattahoochee Grocery Co., 146 Ala. 216, 41 So. 12, 119 A. S. R. 19, 8 L.R.A. (N.S.) 448. Note: 8 L.R.A. (N.S.) 449.

6. Ditton v. Purcell, 21 N. D. 648, 132 N. W. 347, 36 L.R.A. (N.S.) 149. Note: 8 L.R.A. (N.S.) 448.

N. Y. 552, 40 N. E. 206, 27 L.R.A. 757; Converse v. Sickles, 146 N. Y. 200, 40 N. E. 777, 48 A. S. R. 790; Knowles v. Lord, 4 Whart. (Pa.) 500, 34 Am. Dec. 525; Belding Bros., etc., Co. v. Frankland, 8 Lea (Tenn.) 67, 41 Am. Rep. 630; Woonsocket Rubber Co. v. Loewenberg, 17 Wash. 29, 48 Pac. 785, 61 A. S. R. 902.

Notes: 25 Am. Dec. 614; 37 Am. Dec. 327; 19 A. S. R. 743; 2 L.R.A. 154; 17 L.R.A.(N.S.) 1032; 44 L.R.A. (N.S.) 4.

8. Farley v. Lincoln, 51 N. H. 577, 12 Am. Rep. 182.

9. Nichols v. Michael, 23 N. Y. 264, 80 Am. Dec. 259.

Note: 80 Am. Dec. 269.

7. Lowry v. Hitch, 33 Ky. L. 573, 110 S. W. 833, 17 L.R.A. (N.S.) 1032; Atlas Shoe Co. v. Bechard, 102 Me. 197, 66 Atl. 390, 10 L.R.A. (N.S.) 245; Mooney v. Davis, 75 Mich. 188, 42 N. W.-802, 13 A. S. R. 425; Hiller v. Ellis, 72 Miss. 701, 18 So. 95, 41 10. Montgomery v. Bucyrus Mach. L.R.A. 707; Farley v. Lincoln, 51 N. Works, 92 U. S. 257, 23 U. S. (L. H. 577, 12 Am. Rep. 182; Sleeper v. ed.) 656; Donaldson v. Farwell, 93 Davis, 64 N. H. 59, 6 Atl. 201, 10 U. S. 631, 23 U. S. (L. ed.) 993; A. S. R. 377; Nichols v. Michael, 23 Gillespie v. J. C. Piles, 178 Fed. 886, N. Y. 264, 80 Am. Dec. 259; American 102_C. C. A. 120, 44 L.R.A. (N.S.) Sugar Refining Co. v. Fancher, 145 1; Lowry v. Hitch, 33 Ky. L. Rep.

and receives back the goods, though with the consent of the buyer, this is not an unlawful preference by the fraudulent buyer, within the meaning of the Federal Bankruptcy Statute, though it would have been an unlawful preference if the goods were received back in payment or part payment of the price,11 and the same has been held true where the defrauded seller received from the fraudulent buyer the proceeds of goods resold by the buyer. 12 Also, as the goods do not become in any sense a part of the assets of the fraudulent buyer's estate, neither the trustee nor his attorney has any legal or equitable claim for compensation out of the proceeds thereof, the goods having been sold as perishable by order of the bankruptcy court, for services rendered to bring them into or retain them in the estate of the bankrupt, because their services were not beneficial, but were deleterious to the defrauded seller.18 If goods are sold to an insolvent corporation in reliance on false representations as to its financial condition, the seller, if he promptly rescinds the sale, may recover the goods or their proceeds in the hands of the receiver of the corporation.14

599. Attachment and Execution Creditors.-It is the well recognized general rule that neither an attachment creditor nor an execution creditor acquires any greater right in the property attached or levied on than his debtor possessed; his levy is subject to all outstanding rights and equities of third persons.15 It is accordingly held that where a sale of chattels is induced by the fraud of the buyer, the seller may rescind therefor and recover the chattels as against a creditor of the buyer who levies an attachment before the discovery of the fraud. by the seller and the rescission of the contract,16 and the same right is given the defrauded seller as against a judgment creditor of the buyer levying his execution on the property.17 It has been held that

573, 110 S. W. 833, 17 L.R.A. (N.S.) 1032; Hodgson v. Barrett, 33 Ohio St. 63, 31 Am. Rep. 527.

Note: 17 L.R.A.(N.S.) 1032. 11. Montgomery v. Bucyrus Mach. Works, 92 Ū. S. 257, 23 U. S. (L. ed.) 656; Silvey v. Tift, 123 Ga. 804, 51 S. E. 748, 1 L.R.A.(N.S.) 386.

12. Montgomery v. Bucyrus Mach. Works, 92 U. S. 257, 23 U. S. (L. ed.) 656.

13. Gillespie v. J. C. Piles, 178 Fed. 886, 102 C. C. A. 120, 44 L.R.A. (N. S.) 1.

14. Seeley v. Seeley-Howe-Le Van Co., 130 Ia. 626, 105 N. W. 380, 114 A. S. R. 452.

16. Thompson v. Rose, 16 Conn. 71, 41 Am. Dec. 121; Atwood v. Dearborn, 1 Allen (Mass.) 483, 79 Am. Dec. 755; Buffington v. Gerrish, 15 Mass. 156, 8 Am. Dec. 97; Newell v. Randall, 32 Minn. 171, 19 N. W. 972, 50 Am. Rep. 562; Bidault v. Wales, 20 Mo. 546, 64 Am. Dec. 205; Farley v. Lincoln, 51 N. H. 577, 12 Am. Rep. 182; Sleeper v. Davis, 64 N. H. 59, 6 Atl. 201, 10 A. S. R. 377; Woonsocket Rubber Co. v. Loewenberg, 17 Wash. 29, 48 Pac. 785, 61 A. S. R. 902.

Notes: 25 Am. Dec. 614; 61 A. S. R. 907.

17. Bidault v. Wales, 20 Mo. 546, 64 Am. Dec. 205; Farley v. Lincoln, 51 N. H. 577, 12 Am. Rep. 182; Durell v. Haley, 1 Paige (N. Y.) 492,