## Facts

- Pierce owed Twyne £400 and owed another creditor (C) £200.
- While C’s debt action against Pierce was pending, Pierce executed a secret, general deed transferring all his goods and chattels (worth about £300) to Twyne, stated to be in satisfaction of Twyne’s debt.
- Pierce remained in possession and continued to treat the property as his own, including selling items and shearing and marking the sheep.
- After C obtained judgment and a writ of execution, the sheriff attempted to levy on the goods.
- Twyne’s agents resisted the levy and asserted title under the deed, claiming the transfer was supported by lawful consideration.
- The Attorney General filed an information in the Star Chamber alleging the conveyance was fraudulent under the statute against conveyances made to delay, hinder, or defraud creditors.

## Issues

1. Whether a secret, general transfer of all goods to a creditor, made while litigation was pending and leaving the debtor in possession, was void as a fraudulent conveyance against other creditors under 13 Eliz. c. 5.
2. Whether satisfaction of a preexisting debt (“good consideration”) prevented avoidance, or whether the transaction also had to be made in good faith.
3. What circumstances justify inferring fraudulent intent in applying the fraudulent conveyance statutes.

## Decision

- The court held the deed a fraudulent gift within 13 Eliz. c. 5 and void as against creditors such as C.
- The court ruled that good consideration (including satisfaction of a bona fide debt) does not remove a conveyance from the statute unless the conveyance is also made bona fide.
- The court treated several circumstances as indicia of fraud, including the deed’s generality, secrecy, execution during pending litigation, the debtor’s continued possession and use, a trust-like arrangement allowing the debtor to appear as owner, and suspicious self-justifying recitals in the instrument.
- The court stated that statutes aimed at suppressing fraud are to be construed liberally to accomplish their purpose.

## Legal Principles

- A conveyance made with intent to delay, hinder, or defraud creditors is void as to those creditors, even if the transferee is a creditor and the transfer is framed as satisfaction of an existing debt.
- “Good consideration” is insufficient if the surrounding circumstances show lack of good faith; bona fides is required to defeat a fraudulent conveyance claim.
- Retention of possession and continued dominion by the debtor after a purported transfer is a major indicator of fraud because it creates a false appearance of ownership to others.
- “Badges of fraud” may be inferred from objective circumstances, including general transfers of all assets, secrecy, timing in relation to creditor process, continued possession, trust-like control retained by the debtor, and unusual clauses inserted to assert honesty.
- Anti-fraud conveyance statutes are construed broadly to prevent evasions through formalisms.

## Conclusion

The Star Chamber invalidated a secret, all-assets transfer that left the debtor in possession, holding that payment of a genuine debt did not immunize the conveyance where the circumstances showed an intent to obstruct another creditor, and it articulated enduring “badges of fraud” used to infer fraudulent intent.


Twyne’s Case, (1601) 3 Co. Rep. 80b, 76 Eng. Rep. 809 (Star Chamber)