Appellee having failed to comply with its covenants and agreements, and relying upon the penalty of $500 and the letter of the contract, as against appellant, he was justified in regarding the contract at an end. No court of equity could or would compel him to take one-tenth of the property he conveyed, in the same condition as when he conveyed, as a consideration for the whole. The rescission or cancellation of contracts or deeds, and specific performance, are not matters of absolute right, but are matters of sound discretion, in a court of equity, to be granted or refused according to its own ideas of what is reasonable and right. 1 Story, Eq. Jur. §§ 206, 692, 693; Mortlock v. Buller, 10 Ves. 293. In Torrance v. Bolton, L. R. 8 Ch. App. 118, it is laid down "that there is no general rule that actual fraud is necessary. Even in sales of land, if the contract or enforcement of it is, in the opinion of the court, unconscientious, equity will rescind it." Graham v. Johnson, L. R. 8 Eq. 36; Jones v. Bolles, 9 Wall. 364; Glastenbury v. McDonald, 44 Vt. 450; Wilson v. Getty, 57 Pa. St. 266; Martin v. Graves, 5 Allen, 601. The court will take jurisdiction, and decree deeds, leases, or contracts to be canceled "when enforcing instruments or agreements would be inequitable or unjust. Baker v. Monk, 4 De Gex, J. & S. 388; Wright v. Vanderplank, 8 De Gex, M. & G. 133; Hyer v. Little, 20 N. J. Eq. 443; Allore v. Jewell, 94 U. S. 506; Reid v. Burns, 13 Obio St. 49. But in this case it is unnecessary to rely upon the equitable power and jurisdiction of the court to cancel and set aside the contract as inequitable and unjust. A failure to perform on the part of appellee was so far a repudiation of the contract as to warrant appellant in regarding it as rescinded, and he had his election either to sue at law for the breach for damages,-treating the conveyance as valid,-or, as in this case, to bring suit to cancel the conveyance and recover his land. In 2 Pars. Cont. 679, it is stated: "Generally, where one fails to perform his part of the contract, or disables himself from performing it, the other party may treat the contract as rescinded." See Keys v. Harwood, 2 C. B. 905; Planche v. Colburn, 8 Bing. 14; Shaw v. Turnpike Co., 2 Pen. & W. 454; Goodrich v. Lafflin, 1 Pick. 57; Hill v. Green, 4 Pick. 114.

Before entering into the final contract, appellee offered $1,000 for the property,

which was declined. Upon the trial, officers and witnesses of appellee fixed the value of the property at from $6,000 to $10,000, and appellee had paid but $100. To allow appellee, after failure to perform its covenants to give the property value, to retain the property, by falling back upon the $500 penalty, thus keeping the property for $600, would be clearly unjust and inequitable. The district court erred in dismissing the suit, in effect holding appellant to specific performance. The decree will be reversed, and cause remanded.

WOOD v. LAKE.

(3 Colo. App. 284)

(Court of Appeals of Colorado. May 8, 1893.) CERTIORARI-Requisites of PETITION.

1. Under Gen. St. 1883, § 1995, a petition in certiorari in the county court to review a judgment of a justice must state that the judgment was not the result of negligence on plaintiff's part; that the judgment, in plaintiff's opinion, is erroneous, specifying the injustice; and that it was not in his power to take an appeal in the ordinary way, setting forth the circumstances.

2. The remedy so provided, being in the chapter regulating justices, is exclusive, and the general provisions of the Code relative to certiorari are not applicable.

Error to Garfield county court. Proceedings in certiorari by Roderick Lake against Seth H. Wood. From a judgment for plaintiff, defendant brings error. Reversed.

Seth H. Wood, for plaintiff in error. H. P. Bennet, Jr., and Robert A. Bennet, for defendant in error.

BISSELL, P. J. This is one of those extraordinary cases in which the judgment which was originally entered against Lake ought not to stand, and in which the judgment impeaching it, rendered upon proceedings under a writ of certiorari, cannot be sustained. The result looks like an apparent inequity, but under the record justice is not far from being accomplished. Emma Pruitt brought suit against Lake to recover $25 due her for work and labor done. Wood, a justice of the peace in Garfield county, after proper steps taken to that end, issued a writ of attachment in aid of the suit. It was effectuated by process of garnishment served on a corporation which admitted an indebtedness to Lake in a sum beyond the plaintiff's claim. After the action was started, Lake settled the case out of court, did not appear on the return day, and evidently sought to escape responsibility for the costs incurred by the proceedings. The justice subsequently entered a judgment against him for the accrued costs, and included therein a fee of five dollars for the plaintiff's attorney, which the counsel contended he had earned in the collection of the debt. The judg ment was for $24.10, and when the justice issued an execution on it Lake endeavored to escape liability by attacking the judgment. It would not be useful to recite the various grounds on which it is claimed the judgment is invalid. It need only be

stated that the defendant, Lake, did not appear, and prosecuted no appeal. He subsequently initiated the present proceedings against Seth Wood, the justice, because that magistrate was without jurisdiction to enter it. When the petition was filed in the county court, that tribunal issued a writ of certiorari, brought up the proceedings, adjudged them to be erroneous, taxed the costs against the justice, and entered judgment accordingly.

If the parties had proceeded regularly and in accordance with the statute, the finding would have been good, and the magistrate would have been remediless. The act concerning justices and constables provides that in certain cases and under certain circumstances the judgments which may be entered by a justice of the peace are reviewable under proceedings initiated by this writ. There is no trouble in holding that the justice's act, which gives this remedy, must be exclusive, and that a party is bound to bring himself within the scope and terms of this law respecting it if he seeks otherwise than by appeal to overturn a judgment which the justice may have entered. It is seriously contended in argument that the Code provisions respecting the writ of certiorari are likewise applicable, and if, under either it or the justice's act, the proceedings may be justified, the judgment appealed from must stand. This cannot be the law. In general, the provisions of the Code have no relation to proceedings before a justice, and wherever, as in the present case, the act regulating the jurisdiction of justices of the peace provides the remedies when a litigant's rights are not respected by the magistrate, these remedies must be taken to be exclusive. The chapter concerning certiorari in the Code is therefore entirely inapplicable, and the sufficiency of the present proceedings must be tested by the statute as interpreted by our supreme court. The act has been considered by that court on several different occasions. Their conclusions respecting its requirements are uniform, definite, and well settled. Tilton v. Association, 6 Colo. 288; Small v. Bischelberger, 7 Colo. 564, 4 Pac. Rep. 1195. Section 1995 of the General Statutes of 1883 requires the petition to contain, according to the decision last cited, three things, viz.: "First, that the judgment before the justice was not the result of negligence on his part; second, that the judgment, in his opinion, is erroneous and unjust, stating wherein such error and ir justice consist; and, third, that it was not in his power to take an appeal in the ordinary way, setting forth the particular circumstances which prevented him from so doing." This very lucid statement of the law by Judge Helm removes all difficulty from the determination of this case. The petition in no respect complied with the statutory requisites thus clearly and abundantly stated. There was no showing whatever that the judgment was not the result of negligence, nor any showing that it was not in the power of Lake, against whom the judgment was entered, to take an appeal, and review the judg. v.33P.no.2-6

ment in the ordinary way. Since a petition lacking these or equivalent statements, and containing nothing to bring the case within the statutory requirements, will not, under those decisions, support an application for the writ and a judgment thereon, the action of the court below cannot be sustained. For the error committed by the court in entering the judgment upon an insufficient petition the case must be reversed and remanded.

(3 Colo. App. 281)

DITTO et al. v. JACKSON. (Court of Appeals of Colorado. May 8, 1893.) MECHANICS' LIENS-PLEADING-DEMURRER.

The complaint of a subcontractor, to enforce a mechanic's lien, which fails to state that, at the time plaintiff furnished the mate rials to the contractor, no payments had been made by the owner to the contractor, is not subject to demurrer, when it contains averments implying that the owner is indebted to the contractor.

Appeal from district court, San Miguel county.

Action by William Jackson against G. M. Ditto and the Bank of Telluride to enforce a mechanic's lien. From a judgment for plaintiff, defendants appeal. Affirmed. W. H. Gabbert, for appellants. Hogg & Fitzgarrald, for appellee.

BISSELL, P. J. This judgment must be affirmed. It will be affirmed upon a much narrower basis than that outlined by the arguments of respective counsel. It is one of those controversies which are constantly springing from the attempted enlargement by the legislature of the preferential rights which the lien statutes give to contractors, and men who furnish material for the erection of buildings. In May, 1891, Ditto, one of the appellants, was the owner of certain premises in the town of Telluride, San Miguel county, and then entered into a contract with Frank Shewmaker to erect a building on the lot for an agreed sum of $800. In the further statement of his cause of action the plaintiff, Jackson, alleged that Shewmaker commenced the work, finished the building according to the contract, and prior to the 1st day of June completed the work, and in all respects fully complied with his contract. There are further allegations in regard to the lumber furnished by Jackson under a contract with Shewmaker, and the filing of a lien under the statute. It is apparently conceded by the appellants that the complaint is a sufficient statement of the cause of action, save in one particular, to wit, that the pleader failed to state directly that no payments had been made by Ditto to the contractor, Shewmaker, prior to the time that Jack. son, the appellee, furnished the materials for which he seeks to recover in this action. The complaint was demurred to on the ground that it did not state facts sufficient to constitute a cause of action, and from the judginent overruling the demurrer the owner of the premises appeals.

The lien law of 1883 was radically amended by the act of 1889, (Sess. Laws 1889, p. 247.) Section 7 of the act substan

Prior to the 1st of November, 1890, appellants, as partners under the firm name of Hunter & West, were doing a banking business at Greeley. About that date the business was closed, and they were suc ceeded by the Greeley National Bank. On the 25th of August, 1890, appellee deposited with the firm $225; on the 3d day of September made another deposit of $175; on the 30th day of September, another deposit of $125; on October 6th, another deposit of $175. For each of such deposits she received a certificate payable six months after date, with interest, at 6 per cent. per annum. The different certificates aggregated some $700. After November 3d, when succeeded by the Greeley National Bank, defendants were found to be in a failing condition and insolvent. Demand was made by appellee on December 26th for the payment of the respective certificates. They were not paid. On the same date this action was commenced in the county court in the county of Weld, by filing a complaint and suing out an attachment, alleging as grounds for attachment that the certificates of deposit were overdue and unpaid; that the defendants had fraudulently transferred and assigned, and were about to fraudulently transfer, convey, and assign, their property and effects so as to hinder or delay creditors. The attachment was levied upon certain chattels, and certain supposed debtors of the firm were served with process of garnishment. On the same date, December 26, 1890, after the attachment was levied, Hunter & West, and West individually, made general assignments of all their property for the benefit of their creditors. Special traverse denying each allegation contained in the affidavit for attachment was filed. An answer to the complaint, traversing each material allegation, was also filed. Upon the issues so formed, trial was had to a jury, resulting in a verdict for the defendants, with special findings that the certificates of deposit were none of them due, and that the defendants had not and were not about to fraudulently dispose of or transfer or assign any of their property. Judgment upon the verdict, dismissing the attachment. An appeal was taken to the district court, and trial had at the May term, 1891, resulting in a disagreement of the jury. At the November term, 1891, a trial was had to a jury, resulting in a verdict for the plaintiff, and a finding that the defendants, on the 26th of December, 1890, did fraudulently transfer their property, and were about to fraudulently transfer their property, with intent to hinder and delay their creditors. The court instructed the jury that the certificates of deposit sued on were not due when the action was commenced, and that question was withdrawn from their consideration. Motion for a new trial was denied; judgment entered upon the verdict for $730.31. An appeal was prosecuted to this court.

The supposed errors relied upon by counsel in argument are: The third, as follows: "The verdict, the order sustaining attachment, and the judgment of the court is unsupported by and against the

weight of the evidence." The sixth, being to an instruction of the court: "The court further instructs you that if you believe from the evidence that the acts, statements, and conduct of the defendants, or either of them, at and about the time the attachment in question was sued out, were such as fairly and reasonably showed an intention on their part to so dispose of their property as to intentionally hinder and delay and defraud their creditors, you should find for the plaintiff." The seventh assignment of error, also to an instruction of the court, as follows: "If you find from the evidence that George H. West, managing partner of Hunter & West, bankers, believed at the time the assignment was made that there was enough, or more than enough, property in said firm to pay all indebtedness, and if judicially managed there could be a surplus left, after paying all debts, and that one of the moving rea sons for the making of such assignment was the protection of such surplus, such facts, in connection with the assignment, are a badge of fraud, and indicative of an intent t convey property so as to delay, hinder, or defraud creditors." The ninth assignment, that the court erred in modifying an instruction asked by defendant's counsel, as follows: "The court instructs the jury that where, in consequence of action of one or more particular creditors, there is danger that the property, which but for such action would be sufficient to pay every debtor in full, will fall short of that result, and the object and intent of the debtor are to enable all his creditors to realize their entire demands, and prevent loss or injury to any one, he is in a condition to make a valid assignment for the benefit of all his creditors. Where the property of a debtor is of a doubtful character, and may or may not, according to circumstances, be sufficient to discharge his debts in full, and his primary object and influencing motive is to distribute it equitably and fairly, an assignment in such case, instead of violating the policy of the law for the rights of creditors, is in harmony with both. The possibility of a surplus resulting in such a case to the debtor himself would form no objection to such an arrangement;" to which the court added: "But a debtor is not allowed to make an assignment to prevent a sacrifice of his property when no one but himself is in danger of being a loser by its immediate appropriation.

H. N. Haynes, for appellants. A. C. Patton and James W. McCreery, for appellee.

REED, J., (after stating the facts.) Taking up the errors assigned in the same order as discussed by counsel, the third is the first to be considered, viz. that the verdict and judgment sustaining the attachment were against the weight of evidence, and unsupported by the evidence. Ordinarily the verdict of a jury will not be disturbed where the testimony is conflicting, and there is sufficient evidence to sustain the verdict. The only question to be determined was that of fraud. It has been frequently said by the courts that

*

fraud is a question of fact to be determined by the jury by all the circumstances of the case; but it would perhaps be safer to say that it is a mixed question of law and fact. "It is the judgment of law on facts and intents." Wait, Fraud. Conv. 22; Pettibone v. Stevens, 15 Conn. 26; Sturtevant v. Ballard, 9 Johns. 342; Otley v. Manning, 9 East, 64. "Fraud is always a question of fact. With reference to the intention of the grantor, * * every case depends upon its circumstances, and is to be carefully scrutinized, but the vital question is always the good faith of the transaction. There is no other test." Swayne, J., in Lloyd v. Fulton, 91 U. S. 485; Humes v. Scruggs, 94 U. S. 22. Creditors have an interest in the property of the debtor. It has been called an equitable interest; it is the fund to which they look for the payment of the debts, and the law makes it so. Any alienation of property for the purpose of hindering, delaying, or defeating creditors in subjecting the property to the payment of the debts is fraudulent. So long as a man retains the control and possession of his property, whether he is solvent or insolvent, he has the legal right to dispose of his property, and if he does so honestly, and honestly applies the proceeds in the discharge of his indebtedness, he has full right to do so. But any transfer to put the property beyond the reach of creditors, or to reserve henefits to himself, is fraudulent; hence the question, as before said, is the intention, and this must be determined from all the circumstances. In the management of the property, and the application of it by the parties preceding the assignment, we find no evidence whatever of misapplication or fraudulent disposition. It is not contended in argument that there was not a bona fide use of the assets in the payment of legitimate indebtedness, nor is there any evidence or claim that the debtors were to have any resulting benefits from any of the transactions. So long as a debtor retains control of his property, he can legally prefer one creditor to another. Even if insolvent, he can pay to one the entire indebtedness, to another nothing, and such discrimination is legal. A careful review of all the testimony fails to show that a dollar was misapplied. It only shows that some were paid, and others were not; that the debtors had exercised the legal right of election and discrimination. Consequently, the first clause of the paragraph upon which the attachment was based, viz. "that defendants had fraudulently conveyed, transferred, and assigned their property so as to hinder and delay creditors," absolutely unsustained by any evidence. The following is section 186, Mills' Ann. St.: "No assignment shall be invalid because of misappropriation of the property of the debtor by him, prior to the assignment, but the assignee may recover such property, if so misappropriated in fraud of this act. But nothing in this act contained shall invalidate any conveyance or mortgage of property, real or personal, by the debtor, before the assignment, made in good faith, for a valid and valuable consideration.

"

*

*

was

In attempted support of the second

clause of the affidavit for an attachment, viz. "are about to fraudulently transfer convey, and assign their property and effects so as to hinder or delay their creditors," the evidence was of an intention to make a general assignment for the benefit of all creditors, which was done the mornng after the suing out of the attachment in this case. A general assignment by a debtor of all his property for the benefit of all his creditors is not a fraudulent disposition of property furnishing ground for an attachment, when it is made honestly and bona fide. To vitiate it there must be fraudulent intention, followed by irregular and fraudulent disposition of the property, or a failure to convey all. In other words, there must be either a reservation of property, or such a disposition of it that the proceeds will inure in some way to the benefit of the assignor. If made fully and in good faith, it is not only a proper and legal application of assets, but an equitable one, preventing the sequestration and sacrifice of the estate by a few at the expense of the many, and, although it may operate to binder and delay creditors, it is no ground for attachment. The fundamental principles are that "the debtor must devote all his property absolutely to the payment of his debts; reserve no control for himself, (Riggs v. Murray, 2 Johns. Ch. 565;) "must provide for no benefit to himself other than what may result from the payment of his debts; impose no condition upon the right of the creditors to participate in the fund; authorize no delay upon the part of the trustee, Lutkins v. Aird, 6 Wall. 79; Bank v. Talcott, 19 N. Y. 148.) A very careful examination of all the evidence-and a very wide range was properly allowed-fails to show that any of the rules or controlling canons were violated, and that there was not a full, complete, and absolute transfer of all the property for the benefit of all creditors. We can find no evidence upon which the verdict could be based, and conclude that it must have been the result of bias or prejudice on the part of the jury, or that the jury was misled in regard to the law by the instructions of the court.

"

It is in evidence that on the day this action was commenced, and the day preceding the assignment, Mr. Hunter, managing partner of the firm, in conversation with the husband of appellee, said that if he could not get money they would have to go to the wall; "that he had considerable ditch stock, and he would dispose of it, and he would have from ten to twenty thousand dollars left, and I need not be alarmed about my money." Again: "He said he would have $15,000 or $20,000 left after he settled up his business." This was the only evidence in the case upon which any question of fraud was attempted to be predicated, and the only basis for the instructions of the court submitting the question of fraud to the jury. It is claimed that this expression of a hope, opinion, or expectation of having a balance left after full payment of debts was a badge of fraud, and the question was submitted to the jury by the instructions.