PARLANCE, District Judge
(after stating the facts as above). The main question in this matter is whether the charges of fraud made by the complainants have been proved by them. Fraud is not presumed, and the party who alleges fraud must prove it. It is true that frequently fraud cannot be proven by direct,» affirmative evidence, and that, in order to discover and expose it, resort must be had to circumstantial evidence. But, whether the evidence be direct or circumstantial, the effect of it must be to produce a reasonably clear and distinct conviction that fraud has been committed. Mere suspicions are not sufficient. While it is also true that in civil matters fraud need not be proven beyond a reasonable doubt, yet a charge of fraud should not be fastened on any one, even in a civil matter, unless the proof satisfies the mind. There are frauds [280]*280which are closely allied to criminality, and there are crimes of which fraud is an integral part. It is clear that it would be unjust to judicially declare a person to have perpetrated a fraud upon slight proof or bare presumption. With these principles before us, we have carefully examined and considered the evidence, and it has failed to produce upon our minds the effect which it had upon the learned trial judge. The charges of fraud, as we understand them to be set out in complainants’ pleadings, are, substantially, that one Dupree was insolvent, and intended to commit a fraud upon his creditors; that Evans, the intervener, knew of Dupree’s insolvency and fraudulent intention; and that, for the purpose of assisting Dupree to perpetrate the fraud, the intervener loaded him $2,500, which Dupree appropriated, and which he subsequently secured in class A of the deed of trust. We note that while complainants’ pleadings prefer, in effect, a charge of actual fraud, the brief of their counsel virtually concedes that there is no proof supporting such a charge, and limits itself, as we understand it, to an attempt to prove a constructive fraud; that is to say, the complainants now contend that the circumstances existing at the'time when Dupree applied to the intervener for the loan of $2,500 were such as to put the latter upon inquiry as to the financial condition and intention of Dupree. These circumstances, as stated in the brief for complainants, are substantially as follows: For several years prior to the loan of $2,500, and at the time the same was made, the intervener was Dupree’s attorney. At the time Dupree applied for the $2,500 loan, he already owed the intervener a note for $1,000 and interest, five months past due. The $2,500 loan, represented by a note' of Dupree payable in sixty days, was made two days before the deed of trust. When making the second loan, the intervener did not ask Dupree when he would pay the first note, nor did the intervener ask for security as to either loan, nor did he ask Dupree what his financial condition was. The deed of trust was executed on December 3, 1896. On May 28, 1896, Dupree had conveyed to one Birkhead, whom he after-wards made trustee, certain real estate, for $1 cash, and eight notes of $1,000 each. The deed was acknowledged before one J. T. Harrison, a notary public, whose name is signed as attesting witness to the intervener’s petition in this cause. About six days before the second loan was made, Dupree conveyed other real estate' to Birkhead for $100 cash, and ten notes of $1,000 each. About two weeks prior to the second loan, Dupree conveyed a storehouse to one Pickett, a kinsman of his, for $100 cash, and a note of $5,-000. The deed of trust was drawn up by the intervener, as counsel for Dupree; and complainants claim that it shows upon its face evidence of careful preparation, and that it was practically impossible for the intervener to have prepared it in the interval between the moment when it is said that Dupree first informed the intervener that he wished to execute a deed of trust, and the moment when the deed of trust was actually executed. When Dupree borrowed the $2,500, there were notes of his, aggregating a large amount, held for .collection by several of the banks of the city of [281]*281Waco, and these notes were to fall due in a few days; and the intervener was the attorney for one of these banks, which held Dupree’s notes for some $(1,000 or $7,000. Dupree told the intervener at the time the second loan was made that he (Dupree) owed ihe Provident National Bank some money, but he did not say how much. Dupree owed sundry accounts to his butcher, and for other household and office expenses, as also debts to local capitalists. The evidence introduced before the master on the hearing before him of ihe present intervention consisted only of the following: «to the part of the intervener, the two notes, of $1,000 and $2,500, respectively, were offered, as also the deed of trust, and the in-ten ener testified in his own behalf. The complainants offered ‘Dupree a.s their own witness, and one Kelly, a clerk in ope of the banks of Waco. It was admitted by the intervener that the comida inants could prove that the several banks in Waco held for collection, at the time the $2,500 loan was made, some $50,000 or $60,000 of Dupree’s commercial paper, which was to mature in a few days. We understand that the master, to whom the numerous interventions in the main cause were referred, announced at the outset of the hearings that any evidence heard by him during the hearings would be used by him in any one of the interventions, if applicable thereto. If does not appear that the parties either agreed or objected to this. In the briefs before us, reference is made to evidence which was not introduced at the hearing of the present intervention before the master, but which was introduced in other interventions in the cause. Jr would seem that,.when fraud is charged, the party having the onus upon him should distinctly offer the proof upon which he relies to establish the fraud, so that the party charged may know what the hb'ged inculpatory evidence is, and may have a fair opportunity to meet it. But, however this may he in ihe present matter, ever, upon consideration of all the evidence before us, we are unable to come to the conclusion that the complainants have proven fraud on the part of the intervener. The evidence directly offered on the hearing of the present intervention is brief. The intervener testified in his own behalf, positively and distinctly stating, among other tilings, that he acted in good faith, with the belief that Dupree was abundantly solvent, and without any knowledge of a fraudulent intention on Dupree’s part. The intervener testified that on a number of previous occasions he had loaned money to Dupree; that he would have refused to lend him the money, had be believed Mm to be embarrassed; that when Dupree came to him, and told Mm that he wanted to execute a deed of trust, he (the intervener) was as surprised as if vise of the most prosperous banks in Waco had applied to him for the purpose. The intervener further said that Dupree came to him with the lists of his creditors already prepared and classified, and ihe intervener handed them over to his stenographer. Dupree, called by the complainants as their witness, substantiated and .corroborated the intervener. Kelly, the only other witness for the complainants, tesla find (hat, while the hank in which he was employed hold for collection noil's of Dupree, he never informed the intervener of that fact; end. as already stated, it was admitted that other banks hold Dupree’s [282]*282notes for collection.
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PARLANCE, District Judge
(after stating the facts as above). The main question in this matter is whether the charges of fraud made by the complainants have been proved by them. Fraud is not presumed, and the party who alleges fraud must prove it. It is true that frequently fraud cannot be proven by direct,» affirmative evidence, and that, in order to discover and expose it, resort must be had to circumstantial evidence. But, whether the evidence be direct or circumstantial, the effect of it must be to produce a reasonably clear and distinct conviction that fraud has been committed. Mere suspicions are not sufficient. While it is also true that in civil matters fraud need not be proven beyond a reasonable doubt, yet a charge of fraud should not be fastened on any one, even in a civil matter, unless the proof satisfies the mind. There are frauds [280]*280which are closely allied to criminality, and there are crimes of which fraud is an integral part. It is clear that it would be unjust to judicially declare a person to have perpetrated a fraud upon slight proof or bare presumption. With these principles before us, we have carefully examined and considered the evidence, and it has failed to produce upon our minds the effect which it had upon the learned trial judge. The charges of fraud, as we understand them to be set out in complainants’ pleadings, are, substantially, that one Dupree was insolvent, and intended to commit a fraud upon his creditors; that Evans, the intervener, knew of Dupree’s insolvency and fraudulent intention; and that, for the purpose of assisting Dupree to perpetrate the fraud, the intervener loaded him $2,500, which Dupree appropriated, and which he subsequently secured in class A of the deed of trust. We note that while complainants’ pleadings prefer, in effect, a charge of actual fraud, the brief of their counsel virtually concedes that there is no proof supporting such a charge, and limits itself, as we understand it, to an attempt to prove a constructive fraud; that is to say, the complainants now contend that the circumstances existing at the'time when Dupree applied to the intervener for the loan of $2,500 were such as to put the latter upon inquiry as to the financial condition and intention of Dupree. These circumstances, as stated in the brief for complainants, are substantially as follows: For several years prior to the loan of $2,500, and at the time the same was made, the intervener was Dupree’s attorney. At the time Dupree applied for the $2,500 loan, he already owed the intervener a note for $1,000 and interest, five months past due. The $2,500 loan, represented by a note' of Dupree payable in sixty days, was made two days before the deed of trust. When making the second loan, the intervener did not ask Dupree when he would pay the first note, nor did the intervener ask for security as to either loan, nor did he ask Dupree what his financial condition was. The deed of trust was executed on December 3, 1896. On May 28, 1896, Dupree had conveyed to one Birkhead, whom he after-wards made trustee, certain real estate, for $1 cash, and eight notes of $1,000 each. The deed was acknowledged before one J. T. Harrison, a notary public, whose name is signed as attesting witness to the intervener’s petition in this cause. About six days before the second loan was made, Dupree conveyed other real estate' to Birkhead for $100 cash, and ten notes of $1,000 each. About two weeks prior to the second loan, Dupree conveyed a storehouse to one Pickett, a kinsman of his, for $100 cash, and a note of $5,-000. The deed of trust was drawn up by the intervener, as counsel for Dupree; and complainants claim that it shows upon its face evidence of careful preparation, and that it was practically impossible for the intervener to have prepared it in the interval between the moment when it is said that Dupree first informed the intervener that he wished to execute a deed of trust, and the moment when the deed of trust was actually executed. When Dupree borrowed the $2,500, there were notes of his, aggregating a large amount, held for .collection by several of the banks of the city of [281]*281Waco, and these notes were to fall due in a few days; and the intervener was the attorney for one of these banks, which held Dupree’s notes for some $(1,000 or $7,000. Dupree told the intervener at the time the second loan was made that he (Dupree) owed ihe Provident National Bank some money, but he did not say how much. Dupree owed sundry accounts to his butcher, and for other household and office expenses, as also debts to local capitalists. The evidence introduced before the master on the hearing before him of ihe present intervention consisted only of the following: «to the part of the intervener, the two notes, of $1,000 and $2,500, respectively, were offered, as also the deed of trust, and the in-ten ener testified in his own behalf. The complainants offered ‘Dupree a.s their own witness, and one Kelly, a clerk in ope of the banks of Waco. It was admitted by the intervener that the comida inants could prove that the several banks in Waco held for collection, at the time the $2,500 loan was made, some $50,000 or $60,000 of Dupree’s commercial paper, which was to mature in a few days. We understand that the master, to whom the numerous interventions in the main cause were referred, announced at the outset of the hearings that any evidence heard by him during the hearings would be used by him in any one of the interventions, if applicable thereto. If does not appear that the parties either agreed or objected to this. In the briefs before us, reference is made to evidence which was not introduced at the hearing of the present intervention before the master, but which was introduced in other interventions in the cause. Jr would seem that,.when fraud is charged, the party having the onus upon him should distinctly offer the proof upon which he relies to establish the fraud, so that the party charged may know what the hb'ged inculpatory evidence is, and may have a fair opportunity to meet it. But, however this may he in ihe present matter, ever, upon consideration of all the evidence before us, we are unable to come to the conclusion that the complainants have proven fraud on the part of the intervener. The evidence directly offered on the hearing of the present intervention is brief. The intervener testified in his own behalf, positively and distinctly stating, among other tilings, that he acted in good faith, with the belief that Dupree was abundantly solvent, and without any knowledge of a fraudulent intention on Dupree’s part. The intervener testified that on a number of previous occasions he had loaned money to Dupree; that he would have refused to lend him the money, had be believed Mm to be embarrassed; that when Dupree came to him, and told Mm that he wanted to execute a deed of trust, he (the intervener) was as surprised as if vise of the most prosperous banks in Waco had applied to him for the purpose. The intervener further said that Dupree came to him with the lists of his creditors already prepared and classified, and ihe intervener handed them over to his stenographer. Dupree, called by the complainants as their witness, substantiated and .corroborated the intervener. Kelly, the only other witness for the complainants, tesla find (hat, while the hank in which he was employed hold for collection noil's of Dupree, he never informed the intervener of that fact; end. as already stated, it was admitted that other banks hold Dupree’s [282]*282notes for collection. The other evidence relied on by the complainants was not directly offered at the hearing, and consisted of the proof, already referred to, that Dupree owed some household, office, and other local debts, and had made certain conveyances of property, one of which antedated the deed of trust by more than six months. The complainants, with the burden of proof upon them, have failed to show knowledge by the intervener of Dupree’s condition or intention. There is no proof that the intervener knew of the conveyances of property, or that notes of Dupree, to a large amount, were held by the banks. Even under the restricted charge made in the brief for complainants, there is no proof that the intervener knew of any circumstances which could fairly put him upon inquiry as to Dupree’s conditioner intentions. It is urged upon us by the complainants’ counsel that it is incredible that Evans, as Dupree’s attorney, did not know Dupree’s financial condition. This would appear to mean that although both the intervener and Dupree (the latter being complainants’ witness) swear that the intervener did not know of Dupree’s condition, and although their testimony contains no internal indication of untruth or incorrectness, and is consistent with the other evidence in the cause, yet we should wholly disbelieve it, virtually, on the ground that it is impossible that an attorney should not know the financial condition of his client. This apparently amounts to saying that there is an irrebuttable presumption in such a case. Of course, we cannot agree to such doctrine. The banks which held Dupree’s commercial paper for collection, and his other debtors, had no distrust of him. He was evidently doing a large and extensive business, and was considered a prosperous and abundantly solvent business man. But, after Dupree’s insolvency was discovered (to the surprise of all who had dealt with him), the complainants seem to have assumed and taken for granted that the intervener necessarily knew Dupree’s condition, merely because he was Dupree’s attorney. Under all the proof before us, we find in this matter nothing more tangible than a suspicion created merely by the relation between the parties. Complainants’ counsel concede in their brief that the intervener is a reputable attorney, in good standing, and. they do not charge him with giving false testimony. Yet, even under the restricted contention that the intervener was put upon inquiry, it is plain, in view of the intervener’s testimony, that we could not decree against him without finding his testimony false. It is conceded that the intervener paid the $2,500 to Dupree. If we are to deal with mere speculation or possibility, we think it would be extremely improbable, to say the least, that an ordinarily intelligent attorney, even if dishonest, would engage in a fraudulent conspiracy with a client, when the only result which the attorney could hope to attain would be the return to him, by means of perjury, and after hazardous litigation, of the money which he would disburse at the outset- of the conspiracy. The intervener had been Dupree’s attorney for years. Doubtless he had reason to believe that he would continue to be employed by Dupree. A bare suspicion that the intervener disbursed the $2,500 to obtain preference for the $1,000 previously borrowed, or to be employed as attorney in executing the [283]*283deed of (rust, and in the proceedings growing out of it, or to enable Dupree to obtain a settlement of his large aggregate indebtedness, of over $200,000, would be entirely unsupported by anything fairly deducibie from the evidence before us, and would he, in our opinion, utterly beyond any probability which, under the evidence, could properly be taken into account. A consideration of much weight is that the master, who heard and saw the witnesses, found unhesitatingly in favor of the intervener.
The deed of trust not having provided for attorney’s fees on the note, the master was correct in disallowing such fees.
The decree herein, in so far as it rejects the claim of the intervener, Evans, on the note for $2,5(10 and interest, is reversed, and the canse is remanded to the lower court, with instructions to grant a rehearing, to sustain the master’s report as to said claim, and to proceed in accordance with the views herein expressed.