The test of one's right in a mineral region is its appropriation and use, and not the place and character of its use: Davis v. Gale, 32 Cal. 26; 91 Am. Dec. 554, and note. A mere change in the use of water from one mining location to another does not forfeit the appropriator's prior right: Maeris v. Bicknell, 7 Cal. 261; 68 Am. Dec. 257, and note.

BRADTFELDT v. COOKE.

[27 OREGON, 194.]

CONTRACTS-ENFORCEMENT OF WHEN ILLEGAL.—A court will not, in an action between the parties to an illegal contract, lend its aid, either to annul it when executed, or to enforce it when executory.

FRAUDULENT CONVEYANCES - VALIDITY OF AS BETWEEN THE PARTIES.-A conveyance made to hinder, delay, or defraud the grantor's creditors is valid between the parties thereto when there is a consideration to support it.

FRAUDULENT CONVEYANCES-VALIDITY OF, AS TO CREDITORS.-There is a marked distinction between contracts which are void ab initio, and those which are void only as to third persons. A fraudulent conveyance is not void, but merely voidable at the suit of the creditor, and is, therefore, capable of ratification.

FRAUDULENT CONVEYANCES-ENFORCEMENT OF, BETWEEN THE PARTIES-CONSIDERATION.-If the owner of one piece of land, for the purpose of defrauding his creditors, conveys another piece, in which he has no interest, and takes from his grantee, at the same time and as part of the same transaction, a note, and a mortgage on the first piece of property to secure its payment, there is a consideration for the note and mortgage, and the contract is enforceable between the parties thereto.

VENDOR AND PURCHASER-RESCISSION OF SALE. — A grantee of land conveyed with warranty has a remedy upon the covenants of his deed for a failure of title, and, if a perfect title is tendered by the grantor before a decree is rendered, the contract will not be rescinded unless it appears to the court that the grantee has sustained some loss, injury, or damage, by reason of the delay in perfecting the title.

CONTRACTS.-IF TWO CONTRACTS ARE CONTEMPORANEOUSLY EXECUTED by the same parties, and relate to the same subject matter, they must be construed together as constituting but one agreement.

MORTGAGES-DELIVERY.-The delivery of an instrument is a question of fact, but this may be inferred from circumstances. The fact that a mortgage has been returned to the mortgagor, for safekeeping, after it has been delivered to the mortgagee, does not defeat its delivery.

NEGOTIABLE INSTRUMENTS-REASONABLE ATTORNEY FEE. If a note provides for a reasonable attorney fee, in case of suit, and there is an issue as to what is such a fee, the statutory attorney fee only will be allowed, unless some evidence is taken as to what constitutes a reasonable attorney fee.

Suit by Eliza Bradtfeldt to foreclose a mortgage alleged to have been executed by the defendant, Martha S. Cooke, to secure the payment of a promissory note for four thousand dollars. The complaint was in the usual form. It was shown by the

evidence that on November 7, 1891, the plaintiff being the owner in fee simple of lot 5, block 21, in Albina addition to Portland, Oregon, for the expressed consideration of four thousand dollars, executed to the defendant a deed containing a covenant of warranty against all encumbrances, except three mortgages given to secure the payment of demands aggregating two thousand three hundred dollars, which purported to convey lot 5, in block 51, in said addition. At the same time, the defendant executed to Eliza Bradfeldt a note for four thousand dollars, payable in one year, with interest, and a mortgage upon lot 5, in block 21, in said addition, which purported to secure the payment of the note. Mrs. Cooke, however, retained possession of the mortgage until August, 12, 1892, when it was procured from her by a ruse, and recorded. Henry Witt, who held one of the mortgages excepted in Eliza Bradtfeldt's covenant of warranty was, on January 18, 1892, paid the sum of one thousand and fifty dollars by Mrs. Cooke, and his mortgage was canceled of record. The execution of the note was admitted by the defendant, but she denied that there was any consideration received for it. She also admitted signing and acknowledging the mortgage, but denied that it was made to secure the payment of the note. The defendant, for a further defense, alleged that Eliza Bradtfeldt represented to her that she was having trouble with her divorced husband, F. H. Shroeder, who was threatening to sue her for wages that he claimed to be due him, and requested the defendant to take a deed to said property, so that, if Shroeder obtained a judgment against her, he could not sell the property upon execution; and that for this purpose and without any consideration there for, the plaintiff executed said deed. Mrs. Cooke further alleged that it was agreed that the defendant should retain possession of the mortgage, but that the plaintiff, by falsely representing that she wished to show it to her relatives, unlawfully obtained possession of it, and had it recorded. She further alleged that it was at plaintiff's request that she paid Henry Witt the sum of one thousand and fifty dollars, and had his mortgage satisfied of record. Mrs. Cooke tendered to the plaintiff a deed to said lot 5, in block 51, and prayed that she might be subrogated to Henry Witt's rights and interest in his mortgage, that the lien of Witt's mortgage might be restored and foreclosed, and that her note and mortgage to Eliza Bradtfeldt might be canceled. The new matter in the answer was demurred to, but the demurrer was overruled, and the plaintiff replied to it. The cause was referred to

a referee, and evidence was taken, from which the court found the additional facts that plaintiff claimed that she sold and conveyed to Mrs. Cooke lot 5, in block 21, and that the mortgage was executed back to secure a part of the purchase price, but that the proof did not show that the plaintiff ever conveyed lot 5, in block 21, to Mrs. Cooke, or that she ever obtained title to that lot; that there was no consideration for the note and mortgage executed by Mrs. Cooke; that, at the time of the execution of the deed, the plaintiff did not intend to sell, or Mrs. Cooke intend to purchase, the lot described in the mortgage, or the lot described in the deed; that there was no understanding or agreement between the parties that there should be a sale and purchase of either of the lots; that, on the contrary, it was understood and agreed between them that Mrs. Cooke should take a conveyance of lot 5, in block 21, and hold the title for the use and benefit of the plaintiff; that the plaintiff, up to the commencement of this suit, had continued in possession of the lot last named, and exercised acts of ownership respecting it; that the acts and things done by Mrs. Cooke concerning the property were at plaintiff's special instance and request; that the said defendant did not see the said lot at the time of said conveyance, or for many months afterward; that nothing appeared to show that Mrs. Cooke made any inquiry concerning the value of the lot, or that she had the title examined, or used or exercised any of the precautions usually exercised by purchasers; that the note was delivered to Eliza Bradtfeldt on November 7, 1891, but that Mrs. Cooke never delivered the mortgage to her; that the plaintiff, by false statements and representations made many months after the execution of the instruments, wrongfully obtained possession of the mortgage, without consideration, and had it recorded; that at the time Mrs. Cooke paid the Witt note and mortgage, she believed that the title to the property encumbered by that mortgage was vested in her; that it appeared from the evidence that the lot owned by Eliza Bradtfeldt was lot number 5, in block 21, in the original townsite of Albina; and that the description in the deed made by plaintiff to the defendant was erroneous. It was decreed that the note and mortgage executed by Mrs. Cooke be surrendered and the mortgage canceled; that Mrs. Cooke recover one thousand and fifty dollars paid upon the Witt mortgage, with interest, and stand in the relation of assignee of that mortgage, and hold a lien upon lot 5, in block 21, in said addition, to secure the payment of the principal and interest; that said lien be foreclosed, and the expense of the sale, and the debt, be paid from

the proceeds of the sale of the lot; and that Mrs. Cooke recover her costs and disbursements of the suit. The plaintiff appealed from this decree.

Watson, Beekman & Watson and George W. P. Joseph, for the appellant.

Edward N. Deady and William M. Davis, for the respondent.

198 MOORE, J. The plaintiff contends that the new matter alleged in the answer does not constitute a defense to the suit, and that the court erred in overruling the demurrer thereto; while the defendant insists that she may plead her participation in the scheme to hinder, delay, or defraud the plaintiff's creditors, and that, the note and mortgage being evidence of an executory contract, which, as she contends, is illegal, the court should not enforce it. The defendant's contention proceeds upon the theory that, she being in pari delicto, the maxim, Potior est conditio defendentis, applies to prevent a recovery in cases where the contract sought 199 to be enforced has not been executed. The rule is well settled that a court will not, in an action between the parties to an illegal contract, lend its aid, either to annul it when executed, or enforce it when executory: Willis v. Hoover, 9 Or. 418; Bernard v. Taylor, 23 Or. 416; 37 Am. St. Rep. 693. But while the decisions are quite uniform in affirming the foregoing rule, there is an irreconcilable conflict of judicial opinion in defining an illegal contract, and hence the important question to be considered is, whether a conveyance made to hinder, delay, or defraud the grantor's creditors is valid between the parties there to, when there is a consideration to support it. The statute of frauds, so far as it applies to the case at bar, declares that "every of any estate or interest in lands, made with the intent to hinder, delay, or defraud creditors, as against the persons so hindered, delayed, or defrauded, shall be void": Hill's Code, sec. 3059. While such conveyances are by the statute declared to be void as to the grantor's creditors, they are, nevertheless, by the great weight of authority, binding and valid between the parties: Harris v. Harris, 23 Gratt. 737; Hess v. Final, 32 Mich. 515; Clemens v. Clemens, 28 Wis. 637; 9 Am. Rep. 520; Knapp v. Lee, 3 Pick. 452; Dyer v. Homer, 22 Pick. 253; Harbaugh v. Butner, 148 Pa. St. 273; Still v. Buzzell, 60 Vt. 478; Bump on Fraudulent Conveyances, 2d ed. 436, 451; Wait on Fraudulent Conveyances, sec. 395. But in Nellis v. Clark, 20 Wend. 24, it is held that a contract void as to creditors is void between the parties to it, and, when such

conveyance

contract is executory, it will not be enforced by the courts. The force of this authority is much weakened by the dissenting opinion of Nelson, C. J., in which he clearly distinguishes the difference between an illegal contract, in the strict sense of the term, and one fraudulent as respects creditors; the former kind being altogether 200 void, and the latter void only as against the persons hindered, delayed, or defrauded. In the case of Harvey v. Varney, 98 Mass. 118, Foster, J., in commenting upon the question under discussion, said: "Nellis v. Clark, 20 Wend. 24, was decided in the supreme court of New York in 1838, by Mr. Justice Cowen and Mr. Justice Bronson, and sustains the position which the present defendants maintain. But a dissenting opinion was delivered by the third judge, Chief Justice Nelson, now of the supreme court of the United States, the reasoning and conclusions of which commend themselves to our judgment in preference to the opinion of the majority of that court." And Steele, J., in Carpenter v. McClure, 39 Vt. 9, 91 Am. Dec. 370, also said: "We are aware that in Nellis v. Clark, 20 Wend. 24, the court, citing the case from Maine, have made the distinction between executed and subsisting contracts under a statute very similar to ours, and have put their decision substantially upon the grounds which have been so well set forth in the exhaustive and learned argument of the defendant's counsel. With great respect for the able court, the majority of whom concurred in that decision, we are unable to arrive at the same conclusion. So far as we are informed, contracts fraudulent as to creditors have been uniformly treated by our courts as not becoming thereby void be tween the parties; and such is clearly the spirit of our reported cases: Gifford v. Ford, 5, Vt. 532; Conner v. Carpenter, 28 Vt. 240; Boutwell v. McClure, 30 Vt. 676." It would be useless to cite further authority upon this subject, for, as was said by Dixon, C. J., in Clemens v. Clemens, 28 Wis. 637, 9 Am. Rep. 520: “It will be found, on examination, that these questions have been and are the subject of the most direct and positive conflict of opinion and decision among the courts of the different states of this Union, and sometimes among the courts of the same state."

201 1. Amid such a conflict of authority, it should be the duty of a court, when a question is raised for the first time, to adopt that line of decisions which, in its judgment, presents the better reason; and, with this object in view, we have carefully examined the numerous cases cited by counsel for both the plaintiff and defendant in their exhaustive briefs. It is admitted that where it appears from the plaintiff's own case, or by proper plea

AM. ST. REP., VOL. L-45