I have seen this case cited here and there, supposedly the genesis of the now familiar concept that a transfer of property with actual intent to delay, hinder or defraud creditors may be avoided. But yesterday I stumbled on Prof. Bob Lawless’s post on Credit Slips about this fascinating new law review article by Northwestern Law Professor Emily Kadens, entitled New Light on Twyne’s Case. The article is here. She writes, “Twyne’s Case today stands for the point that even transfers made for good consideration can be fraudulent if they were made with the intent to defraud other creditors. ”
The facts are surprisingly familiar. In 1600, the undersheriff of Hampshire, Brian Chamberlain, is instructed by a creditor to execute a writ and seize property of one John Pearce. When he gets to Pearce’s farm, he is told the sheep, the cattle, grains, “leases,” and everything else is owned by John Twyne, not John Pearce. Twyne was a cousin of Pearce and a man of some stature and wealth. There is a confrontation over the next two-three days (called a “riot” in the legal papers of the time) but when the dust settles, nothing is removed from the farm. It seems that months earlier, Twyne agreed in writing to pay certain of Pearce’s debts in exchange for a transfer of Pearce’s property to Twyne. Possession of the property remained with Pearce, apparently not unusual since it wasn’t that easy to move sheep, cattle and grain and the arrangement provided that if Pearce came up with the money, he would get his property back. The paperwork of course was confusing, contradictory in places, incomplete and the “deeds” may have been back-dated. But the court later agreed that “Twyne gave greater consideration than the total worth of Pearce’s property.”
The court later ruled that the transfers from Pearce to Twyne were fraudulent conveyances. It used “badges of fraud” to get to that ruling.
The badges of fraud are synonymous with Twyne’s Case in modern lawyers’ minds, and many assume that in this trial the Star Chamber took up the question of the “signs and marks of fraud” for the first time. A recent article uncovered the possible medieval Roman law origins of the badges of fraud, and it seems rather unlikely that suddenly in 1602 the judges of the Star Chamber, one of whose main responsibilities was punishing fraud, realized they needed a device to identify fraudulent acts. Indeed, Hawarde’s language suggests that the judges were quite comfortable already with such a tool: “By the Judges and the Lord Keeper: The deed has all the badges of fraude.”
All of the reports agreed on three marks of fraud: the grant was general, possession did not transfer, and the conveyance was made in secret.
There were additional badges of fraud. At some point after the conveyance, Twyne apparently sued Pearce on the debt. At some point, Pearce filed out some form of the day “assessing himself more in taxes on his goods than he had before the transfer.” Most importantly in my view is that the conveyance took place after Pearce was sued by one of his many creditors.
If you are interested at all in old English history and law, you will love this article.