The Fraudulent Transfers

Action on a promissory note and for fraudulent transfer of D's assets, allegedly rendering him insolvent. P's complaint seeks a money judgment for $10,000, the amount of the note, interest, and costs, and an order against D and E, setting aside a purported conveyance of Brownacre from D to E. D's answer admits the debt to P and the conveyance to E but denies that the conveyance was made with any fraudulent intent or effect. At trial, D offers two witnesses:

(1) W1, Jr., to testify that his father, W1, Sr., is dead, that W1, Sr.'s estate is not yet settled, and that just before W1, Sr., died he said that he owed D $5,000.

(2) W2, Jr., to testify that his father, W2, Sr., is dead, that W2, Sr.'s estate is not yet settled, and that just before W2, Sr., died he said that he had secretly conveyed Goldacre to D.

What ruling and why on these offers? What policy considerations support admissibility? What policy considerations militate against admitting such evidence? What types of statements are covered by the exception for statements against interest? Where would you draw the line? What other elements must exist to invoke the exception?