Page:Federal Reporter, 1st Series, Volume 9.djvu/113

 98 FEDERAL REPORTER. �land to the extent of the large expenditures and improvements sub- Sequently put upon it by the debtor. �The whble transaction, upon the facts stated in the bill, would be regarded as but one continuous scheme to defraud, and subsequent creditors would be equally entitled to relief. Sedgwiek \. Place, 6 Ben. 184; S. C. 12 Blatohf. 163; Kehr v. Smith, 10 B. E. 49; Shand y.Hanley, 71 N. Y. 319 ; Dewey v. Meyer, 70 N. Y. 76 ; Underwood v. Sutcliffe, 77 N. Y. 58; Burdick v. GUI, 7 Fed. Eep. 668. �The averments in the bill of aotual intent to defraud creditors as the animus of all these transactions are not, as counsel for defend- ants claim, avenuents of a mere conclusion of law, to be disregarded on demurrer, except as necessarily to be inferred from the other facts alleged. They are averments of an af&rmative and essential fact. Upon this fact alone depends all the distinction between cases of aetual and of constructive fraud which runs through all this branch of the law. Such an averment of aetual fraudulent intent is to be passed upon as a fact ; it may be directly testified to as a fact, (Clarke v. Eailroad Co, 14 N. Y. 570,) and the demurrer must be held to admit it as a fact when pleaded, as in this case, as the motive of transactions which deprived creditors of a very considerable part, if not all, of their means of payment. �Averments of the insolvency of the debtor at every stage of such an alleged scheme to defraud are not necessary to be made or proved. The bOl avers that the debtor began largely in debt and ended in insolvency. This is sufficient to cast upon the defendant the burden of proving any fact which may exist to justify, as against creditors, the gift and expenditure of over $150,000 upon bis wife's property. Pratt V. Curtis, 6 B. E. 139, 144. Certainly the magnitude of these gifts affords no presumption that they were reasonable in amount or without hazard to creditors, and they must have contributed to, if they did not wholly cause, the debtor's ultimate insolvency. These large gifts and expenditures, through the methods stated in the com- plaint, are not necessarily incompatible with the debtor's large indebtedness, or even with his pecuniary embarrassment, as alleged in the bill; nor is the prior record of the deed to his wife any sufS- cient answer to the debtor's subsequent representations, ooupled with his occupation and building upon the premises, that he was the owner thereof, upon the strength of which representations creditors trusted him and were defrauded. He might, notwithstanding the prior recorded deed to his wife, have been legal owner, by a subsequent ��� �