The motion for a rehearing in this case was granted in order to give a more thorough examination to the question of the burden of proof. The plaintiffs in error, through their counsel, insist that it was incumbent upon the defendant in error, in order to establish the deed in trust under which he claims, to prove that the debts secured by it were valid and subsisting liabilities of the mortgagors at the time the instrument was executed. The plaintiffs in error were attaching creditors, and the defendant in error at the time of the seizure was in possession of the property attached. The instrument, if valid, gave him the right of possession. He filed a claimant's oath and bond, which were returned into court for a trial of the right of property under the statute. Article 4838 of the Revised Statutes reads as follows: "In all cases arising under this title, if the property was taken from the possession of the claimant, the burden of proof shall be upon the plaintiff;" that is, upon the plaintiff in the writ of attachment or execution, as the case may be. Rev. Stats., art. 4832. *Page 57
The plaintiffs alleged in their pleadings that the debts secured by the deed in trust were fictitious, but introduced no evidence tending to prove that fact. There was testimony as to the genuineness of one of the debts, and in the absence of proof that some other debt was fictitious, and that such creditor whose debt was proved knew of the fraud, it would seem that this was sufficient to sustain the mortgage, although it should be held that the burden was upon defendant to prove the debts. Haas v. Kraus, 86 Tex. 687. But we do not desire to rest the decision of this case upon that proposition.
It is broadly contended, on behalf of plaintiffs in error, that their plea attacking the mortgage for fraud, and alleging that the debts were fictitious, shifted the burden of proof, and made it incumbent upon the claimant to prove the validity of the debts in order to sustain the instrument. The proposition is not without authority to support it. The decisions bearing upon the question are numerous and conflicting. We are of opinion, however, that the doctrine can not be maintained upon sound principle. Fraud is never presumed in the absence of evidence. It is incumbent upon the party who asserts it to prove it.
In Jones v. Simpson, 116 United States, 610, the Supreme Court of the United States quote with approval the following utterances by the Supreme Court of Kansas: "A further objection is made to the direction given by the court, that 'fraud is never presumed, but must be established by evidence.' Of the correctness of this proposition there should be no question; but counsel seem to argue that the burden of proof was upon the plaintiff to show that he did not participate in the fraud now conceded to have been intended by the Howard Bros. Fraud is not so lightly imputed. While certain circumstances will give rise to an inference of fraud, yet the law never presumes it. It devolves on him who alleges fraud to show the same by satisfactory proof; and the burden rested upon the creditors of Howard Bros., who assailed the good faith of Penn in this transaction, to show, by either direct or circumstantial evidence, that the transaction was fraudulent as to Penn. As the trial court stated, 'The law presumes, in the absence of proof to the contrary, that the business transactions of every man are done in good faith and for an honest purpose; and any one who alleges that such acts are done in bad faith, or for a dishonest and fraudulent purpose, takes upon himself the business of showing the same.' "
In Giddings v. Steele, 28 Tex. 758, this court said: "The rule is believed to be almost without exception, that all contracts are presumed prima facie to be fair and not unlawful or fraudulent, and the person who may attack them as tainted with fraud has the burden of proof upon him of proving the existence of the fraud by positive or circumstantial evidence."
A debtor, though insolvent, has the right, under our law, to execute in good faith a mortgage to secure one or more of his creditors, and thereby to give a preference. Such an instrument, therefore, which *Page 58 does not by its terms disclose a fraudulent intent, is legal upon its face, and should, as we think, be held, in the absence of proof to the contrary, to confer the right which it purports to confer.
In Wait on Fraudulent Conveyances, section 271, the rule is thus stated: "With the possible exception of conveyances to a wife by a husband, the burden of proof, in cases where the instrument is valid upon its face, generally rests upon the creditor to show a fraudulent intent or absence of consideration."
Mr. Bump lays down the following rule: "As the presumption is always in favor of fairness, the statement of the payment of the consideration in an instrument is prima facie evidence of the fact. It is, however, the lowest species of prima facie evidence, inasmuch as the same motives which induce parties to make and execute a fraudulent conveyance would induce them to insert an acknowledgment of the payment and receipt of the consideration; and therefore, where there is any evidence of fraud, there must be other proof of the consideration." Bump on Fraud. Con., 3 ed., 594.
The learned author would seem to rest the doctrine in part at least upon the proposition that the recital in the deed is some evidence of the fact. We think, however, the presumption of fairness in the conveyance is the safer ground upon which to base it. The authorities which lay down the contrary rule — namely, that a mere allegation attacking a conveyance or mortgage for fraud is sufficient to cast upon the party claiming under the instrument the burden of proving the payment of the consideration or the existence of debts, as the case may be — place it upon two grounds: first, that the recitals in a deed are not evidence as to third parties; and second, that the fact of the consideration is one peculiarly within the knowledge of the parties to the instrument. Should it be conceded that the recitals are not evidence, it does not follow that the instrument is not presumptively fair. While it is true that a debtor may execute a mortgage upon his property nominally to secure a fictitious debt, yet when a mortgage has been executed, and there is nothing to show a want of good faith in the transaction, it is far more reasonable to presume that the debts are genuine, than that they are simulated. As to the second ground, it is true that the fact as to the consideration or the existence of the debts is best known to him who claims under the instrument, and may not be known to his adversary. We do not think, however, that in such a case this is sufficient to shift the burden of proof from him who makes the attack upon the conveyance to him who stands upon his defense. It is contrary to the essential principles of judicial procedure to permit a plaintiff to bring his adversary before a court, alleging that he has been guilty of fraud, and to demand, without evidence, that he exonerate himself from the charge. The fact that the grantee in a conveyance claimed to be fraudulent knows the true consideration, has an important effect in a proper case. When the party attacking the conveyance has proved a circumstance, though slight in itself, *Page 59 which tends to show that the recited consideration is false either in whole or in part, then, for the reason that the grantee, if the transaction be fair, has it in his power to show that the recital is true, his failure to make such proof is not only a strong circumstance against him, but should also in most cases have a controlling effect upon the issue. So if it be shown that a deed or mortgage has been executed with a fraudulent intent on the part of the maker of the instrument, without the knowledge of such intent on part of the grantee or mortgagee, then it is incumbent upon the latter to prove the payment of value in case of the deed, or an existing debt in case of a mortgage, in order to shield himself upon the ground of his want of notice.
In Rex v. Turner, 5 M. S., 206, Mr. Justice Bailey used the following language: "I have always understood it to be a general rule, that if a negative averment be made by one party, which is peculiarly within the knowledge of the other, the party within whose knowledge it lies, and who asserts the affirmative, is to prove it, and not he who avers the negative." In commenting upon these remarks, Baron Alderson said: "I doubt as a general rule whether those expressions are not too strong. They are right as to the weight of the evidence, but there should be some evidence to start it in order to cast the onus on the other side." Elkin v. Janson, 13 M. W., 655. So in another English case, the rule, it is said, "is not allowed to supply the want of necessary proof * * * against a defendant; * * * but when such proof has been given, it is a rule to be applied in considering the weight of the evidence against him, whether direct or presumptive, when it is unopposed, unrebutted, or not weakened by contrary evidence, which it would be in the defendant's power to produce, if the fact directly or presumptively proved were not true." Rex v. Burdett, 4 B. A., 95.
The utterances here quoted, in our opinion, lay down the reasonable and proper limitations upon the rule; and applying the rule so limited to the present case, we think that the plaintiff in error should have introduced some evidence of fraud "to start it," before the defendant could be called upon to prove the validity of the debts.
It would subserve no useful purpose to discuss in detail the many cases bearing on the main question. Most of the leading cases in support of the rule laid down by Mr. Bump, as well as those against it, are cited by that author in the foot note to his text, to which we have heretofore referred.
For the reasons given, we adhere to our former ruling, and affirm the judgment.
Affirmed.
Delivered March 4, 1895. *Page 60