been extinguished by the will. While the father was alive, he was a creditor of William in respect of the moneys loaned to him, and undoubtedly he had the right to enforce the collaterals, and thereby satisfy or reduce William's debt; but the situation was changed at his death. Then the will came into effect, and, the debt itself being discharged thereby, the purposes of the security ended by inevitable consequence. These collaterals had all the while remained in John's hands, and were obtained from him by one of the administrators, to turn over to William, whose receipt states that they were "received of E. C. Means (from John Means)." These collaterals the administrators claimed as property which they held in pledge for the debt which they asserted in favor of the estate against William. William had lost all his property, and was in very straitened circumstances. Since his downfall, he has been broken in spirit and wavering in his purposes. He seems at times to have been impressed that the administrators had a moral, if not a legal, claim upon him that he should yield up his legacy to the estate, and this claim was pressed and insisted upon by the administrators. That they had no such legal claim upon him we have already determined. His brother and sisters all being in affluent circumstances, and his own family in needy circumstances, that he should have voluntarily given up the whole of this large sum, with no mistake in regard to what his legal rights were, it is difficult to believe. It amounted simply to a gift to the administrators for the benefit of the other legatees, whose only claim rested on the bounty of the testator. Courts of equity view such transactions with distrust, and, if the circumstances indicate that the trustee has dealt with the beneficiary unjustly, will not hesitate to set them aside. The absence of any adequate consideration in itself raises a presumption of unfairness, which the trustee is bound to repel. Equity will relieve the legatee in such transactions, where he has, under a misapprehension of his legal rights, surrendered to the trustee valuable interests without any adequate consideration, especially where the situation is such that no harm will come to the interests of others. Such would be the case where the claim relates to a fund which has not yet passed beyond control. These propositions are amply sustained by authority. 1 Story, Eq. Jur. §§ 307, 308; 2 Pom. Eq. Jur. §§ 948, 951, 955, 956, 958, 1088; Taylor v. Taylor, 8 How. 183; Comstock v. Herron, 6 U. S. App. 629, 5 C. C. A. 266, and 55 Fed. 803, and the cases there cited; Mills v. Drewitt, 20 Beav. 632; In re Ashwell's Will, Johns. Eng. Ch. 122; Snow v. Booth, 2 Kay & J. 132; Oil Co. v. Hawkins, 20 C. C. A. 468, 74 Fed. 395. "It is not," says Mr. Justice Story, ubi supra, "upon the feelings which a delicate and honorable man must experience, nor upon any notion of discretion, to permit a voluntary gift or other act of a man, whereby he strips himself of his property, that courts of equity have deemed themselves at liberty to interpose in cases of this sort." They "will not, therefore, arrest or set aside an act or contract merely because a man of more honor would not have entered into it. There must be some relations between the parties which compel the one to

make a full discovery to the other or to abstain from all selfish projects. But when such a relation does exist, courts of equity, acting upon this superinduced ground, in aid of general morals, will not suffer one party, standing in a situation of which he can avail himself against the other, to derive advantage from that circumstance, for it is founded in a breach of confidence." It makes no difference that the other legatees would ultimately obtain the benefit of the wrong. However innocent of it they may be, it would come tainted to their hands. Even gifts between persons who stand in no confidential relation to each other are watched with jealousy. 2 White & T. Lead. Cas. Eq. 582; Cooke v. Lamotte, 15 Beav. 234. Where the transfer is of a large sum, and constitutes the whole of the property of the party making it, himself having obligations to those in need, to one standing in no need, it raises an almost insurmountable presumption that there has either been some untoward influence or gross misconception on the part of the party making it of his rights and obligations. It is possible that the administrators were actuated by a purpose to get William's share out of the way of creditors, thinking the other legatees were more justly entitled to it; but they do not charge themselves with any such purpose, and we shall not impute it to them. We are, therefore, of the opinion that the transactions which took place between the administrators and William Means, among them that of taking the receipt of October 16, 1890, ought not to be allowed to bar the enforcement of the payment of the legacy.

In view of the conclusions which we have reached in respect to the title of William Means to the legacy in question, it is not necessary for us to decide whether, as against the administrators, there is any sufficient proof of the existence of the agreement between William Means and the members of his family which is said to have been made in February, 1890. The trust deed executed by him on December 26, 1891, conveyed his interest to the present complainants as trustees. As between William Means and the complainants in the Greene county court of common pleas, there having been due service of the process upon him, the decree therein rendered, and the trust deed, were effective in transferring the title, and estop him from denying that it was in fact transferred. It is no concern of the administrators whether they are required to pay the legacy to the legatee, or to his assignee; nor can they require that the rights of William Means' creditors should be litigated in this suit. They are not parties, and that subject could only be considered in independent litigation. Akin to that matter is the question presented in regard to the complainants' trust being in part for the benefit of the grantor in the deed. Whether, as to creditors, that part of the trust would be obnoxious to their attack, we do not, for the reasons above stated, think it is necessary or proper to decide.

The result is that the decree of the court below must be reversed, and the cause remanded, with directions to enter a decree for the complainants setting aside the receipt of October 16, 1890, and directing an account to be taken for the purpose of ascertain

ing the amount due in respect of the legacy of William Means, and that thereupon the complainants are entitled to recover the same. The complainants will recover costs in this court and in the court below, to be paid by the administrators from the funds of the estate.

HAZZARD v. FITZHUGH et al.1

(Circuit Court of Appeals, Fifth Circuit. December 8, 1896.)

No. 490.

MORTGAGE OF HOMESTEAD-COLORABLE CONVEYANCE-FORECLOSURE-ACTION FOR PosSESSION-BILL TO ENJOIN-INNOCENT PURCHASER.

A husband and wife, colorably and for the purpose of borrowing money thereon, conveyed, by deed absolute, their homestead to a third person, for a recited consideration, part in cash and part in a purchase-money note; at the same time making affidavit that the sale was bona fide. No cash passed; but the note, by previous arrangement, was taken by a mortgage company, which paid the amount to be loaned directly to the husband, the grantee of the land giving it a deed of trust to secure the same. The note, guarantied by the mortgage company, was sold by it to defendant, an innocent purchaser for value, without notice, who, after maturity of the note, caused the property to be sold under the trust deed, and bought it in for less than the sum due. Defendant then brought an action at law to recover possession of the land from the husband and wife, who had remained in possession, whereupon they filed this bill in equity to enjoin the prosecution of such action. Heid, that the injunction must be denied, the case being ruled by the equitable principles that between equal equities the law will prevail, and that the equity of a person misled is superior to that of the person misleading.

Appeal from the Circuit Court of the United States for the Northern District of Texas.

This was a suit in equity by Mrs. A. E. Fitzhugh and her husband, L. H. Fitzhugh, against Mrs. Fisher Hazzard, to enjoin the latter from prosecuting an action of ejectment; complainants claiming to be the equitable owners of the land in controversy, as their homestead. The title sued upon in the ejectment suit by the defendant herein was a title acquired by purchase upon the foreclosure of the trust deed mentioned in the opinion of the circuit court, which is set out below. The defendant filed an answer under oath, and also a cross bill, praying affirmative relief. The circuit court entered a decree dismissing the cross bill, canceling the alleged lien of the defendant and all her muniments of title, and perpetually enjoining her from setting up any claim to the premises, or further prosecuting her action of ejectment.

The circuit court (McCormick, Circuit Judge) delivered an opinion, which is here set out in full:

All of the chief actors in the transaction out of which this suit grew are persons of high respectability and superior intelligence. They have all testified by deposition in this case, and I find no substantial conflict in their testimony. I have examined fully and carefully all of the evidence, and find that the complainants, L. H. Fitzhugh and A. E. Fitzhugh, were married in December, 1851, and from that time have lived together as husband and wife. In 1886 they acquired the land in controversy, and from that year have continued to occupy and

1 Rehearing denied January 26, 1897.

use it as their residence homestead, having and claiming no other homestead. In the latter part of November, 1888, L. H. Fitzhugh applied to Bryan T. Barry, then the manager of the Security Mortgage & Trust Company, for a loan of money to be secured on the land in controversy. The form of security offered was a deed by the complainants to S. H. Milliken and a note by Milliken, purporting to be for the unpaid purchase money in the sum of six thousand five hundred dollars, with the vendors' lien on the land. Barry knew that the premises were Fitzhugh's homestead; that Milliken was their son-in-law; and when, after some conference and inquiry, he had satisfied himself that the dealings with Milliken were simulated, he declined to take the note. A few days after this, negotiation began with H. M. Taylor, and he and L. H. Fitzhugh saw Barry in reference to getting from the company about $4,500, which Fitzhugh desired to raise on the land, the security to take the customary shape of a deed from the husband and wife to H. M. Taylor, reciting a cash consideration in part and a purchase-money note for the balance, to become due in five years. The abstract of title was submitted to Judge T. S. Miller, the company's legal adviser, but no Intimation was given him touching the recent offer and rejection of the Milliken deed and note on the same property. The attorney's report on the title being satisfactory, Barry agreed to give $4,500 for the note. The deed from L. H. Fitzhugh and his wife, A. E. Fitzhugh, to H. M. Taylor, the joint affidavit of all three, the purchase-money note, and the deed of trust executed by H. M. Taylor, were all prepared in the office of the company, under Barry's dictation, on printed forms kept in stock in readiness, and furnished by the company for such transactions. The deed recited a cash consideration in the sum of $9,000 in hand paid to the grantors by the maker of the note, and the further consideration of $5,200, for which latter sum the lithographed note with coupons was given, payable to the order of the Security Mortgage & Trust Company; and the deed of trust was made to J. T. Dargan, trustee, and to his successors in this trust, to secure the payment of the principal note and interest coupons as each matured. These papers all bear date 10th December, 1888, and appear to have been executed and delivered on that day. The joint affidavit of the three parties is as follows:

"The State of Texas, County of Dallas-ss.: We, L. H. Fitzhugh and wife and H. M. Taylor, do solemnly swear that on the 10 day of December, 1888, the said L. H. Fitzhugh and wife sold to said H. M. Taylor a certain parcel of land, to wit, 32 acres of the John Grigsby survey, in East Dallas, Dallas county, Texas, described in the deed thereto, and in part payment for which a balance of $5,200 will be due on the 1st day of December, 1893, with interest at the rate of seven per cent. from December 10, 1888; that said balance is a subsisting vendor's lien against said land conveyed in said deed, recorded in Book, page —, Records of Deeds of Dallas County, to which said deed and the record thereof reference is hereby made for a more complete description of said land; that the vendor's lien is specially retained in said deed to secure the payment of said balance; that all payments made on said balance have been credited; that there are no pending suits or unsatisfied judgments in the supreme court, or any circuit or district court of the United States, or in the supreme court, court of appeals, or any district, county, or justice of the peace's court of this state, or in any other court whatsoever, which in any manner affect the title to said land; that there are no executions against us in the hands of any United States marshal, or of any sheriff or constable, and that none of said officers have levied on, or advertised for sale, or made a deed to, said land, or any part thereof, since the said L. H. Fitzhugh and the said H. M. Taylor acquired title to it; that we are neither principal nor surety upon any bond which is or may become a lien upon said land; that there are no mechanics' liens, or liens for labor or materials, upon the buildings situated upon said land; that there are no unrecorded deeds, trust deeds, or mortgages to or upon said premises; that the said deed to said land was made in good faith, and not for the purpose of defeating or avoiding any homestead law of this state; that the title is perfect in the said H. M. Taylor, subject to said lien; that the said vendors were of legal age when said deed was executed; that there are no liens of any kind against said land prior to said vendor's lien; improved city property; that there is on said premises one house, of the value of $4,500.00; 1 barn, of the value of $500.00; other outhouses, of the value of $200.00; and fencing, of the value of $200.00; that the present value of the premises, without the perishable improvements, is $9,000.00; that the present

value of the perishable improvements, including fencing, is $5,200.00; that the total value of the above-described premises is $14,200.00; that Taylor owns other real estate and property as follows, about $1,500.00, clear of all lien; that my indebtedness is, besides said note, $1,600.00; that the above representations are made for the purpose of effecting a sale of the vendor's lien as above described; and that they are true.

H. M. Taylor. "L. H. Fitzhugh. "A. E. Fitzhugh.

"Sworn to and subscribed before me, this 10 day of December, A. D. 1888, and I hereby certify that affiants were by me made acquainted with the contents of this instrument before swearing.

"[Seal.]

"Postoffice of Maker, Dallas, Tex.

M. L. Robertson, Notary Public, Dallas Co."

Bearing the same date is a letter addressed to the Security Mortgage & Trust Company, in these words:

"Gentlemen: I was present and acted as attorney in making the sale of 31⁄2 acres to H. M. Taylor, from L. H. Fitzhugh and wife, A. E. Fitzhugh, and believe the same to be a bona fide transaction, and an absolute sale, without any condition of defeasance. Lafayette Fitzhugh, Attorney."

There is also another affidavit, as follows:

"The State of Texas, County of Dallas. Before me, the undersigned authority. on this day personally appeared L. H. Fitzhugh and A. E. Fitzhugh, husband and wife, who, after having been by me duly sworn on oath, says: That they in good faith have sold and conveyed a certain tract of land as follows: 31⁄2 acres adjoining the city of East Dallas, in Dallas county, out of the John Grigsby survey. beginning at a stake in the S. W. boundary of Gano avenue, 861 feet S., 45 deg. east, from the center of Ross avenue; thence N., 45 deg. W., 360 feet, along the line of Gano avenue to San Jacinto street; thence S., 45 deg. W., 408 feet, to the N. E. line of Fitzhugh avenue, on the E. boundary line of Duncan & Words addition; thence S., 45 deg. E., 360 feet, to a point on Fitzhugh avenue; thence N., 45 deg. E., 408 feet, to the place of beginning,-being 31⁄2 acres out of 4acre tract conveyed to L. H. Fitzhugh by Jno. T. Gano, 31st Aug., 1886, and recorded in Book 92, page 330, Records of Deeds, Dallas County. That the intention and purpose in making said conveyance was to make an absolute sale of said property. That at the time of the execution of said conveyance there was no expressed or tacit understanding between us and said Taylor that said conveyance was made for the purpose of evading the homestead law, and was not made for the purpose of procuring a loan on said property, nor with any condition of defeasance whatever. Witness our hands, this 10th day of December A. D. 1888.

L. H. Fitzhugh. "A. E. Fitzhugh.

"Sworn to and subscribed before me, this 10th day of December, A. D. 1888. "[Seal.] M. L. Robertson, "Notary Public, Dallas County, Texas."

The writer of the letter is the son of complainants. The transaction, as between the complainants and H. M. Taylor, was wholly colorable. The recitation of the cash consideration was purely fictitious. No money passed or was to pass in the transaction, except the $4,500, which was passed the same day directly from Barry to L. H. Fitzhugh. The note and deed of trust were sold to Mrs. Hazzard for their full face value, without notice of the simulation; but, by subsequent dealings between her and the mortgage company, she now has no substantial interest in the controversy, and the Security Mortgage & Trust Company is now as much the real beneficial owner of the securities as if no transfer of them had been made.

I conclude that Barry had then present knowledge of facts sufficient to charge him and the company he represented with notice of the character of the transaction between Fitzhugh and Taylor; that the deed of trust was void, and the land is not bound. The respondent is entitled to have a judgment against L. H. Fitzhugh for the amount remaining unpaid on the note, assessing that amount without reference to the $3,000 which appears indorsed as amount bid at the sale inade by the substitute trustee, and all the costs in this suit; and the complain