259 A.D. 347 | N.Y. App. Div. | 1940
In three causes of action set forth in the complaint the plaintiff seeks damages in the aggregate sum of $500,000. The first pertains to the claimed conversion of the capital stock of the Yonkers Colonial Corporation, engaged in operating a brewery and originally incorporated under the name Penar Corporation, hereinafter referred to as “ Yonkers.” The second charges that the defendant, by his acts and conduct, induced Yonkers to breach its agreement to pay to the plaintiff the sum of $109,264.25, the balance of a loan made to it by plaintiff’s intestate, and prevented the payment of such sum to her, which claim was subsequently established against Yonkers in bankruptcy. The third involves the
Plaintiff, in support of her first cause of action, alleges that her intestate, at the time of his death on the 24th day of October, 1935, was the actual owner of the capital stock of Yonkers, which was held in the name of his dummy and agent, one William M. Vogel, the consideration of $100,000 having been paid by plaintiff’s intestate. After the death of intestate, and on the 11th day of August, 1936, Vogel and the defendant entered into a contract under which the defendant agreed to purchase the Yonkers stock. Although consideration was recited in the contract, and in form paid to Vogel, the latter received only the sum of $3,000, which the defendant caused Yonkers to pay to him after the stock had been acquired by defendant. At the time the defendant knew that the stock belonged to the plaintiff, as administratrix. In the second cause of action it is alleged that there was owing from Yonkers to intestate the sum of $109,264.25, representing the balance of a loan made by intestate to Yonkers, which loan was carried on'the books of that corporation in the name of Vogel; that defendant, after acquiring control of Yonkers, declared himself to be the owner of the indebtedness and caused entries to be made canceling and discharging it of record; that Yonkers was adjudicated a bankrupt on the 11th day of October, 1938, as the result of a voluntary petition caused to be filed by the defendant. In that proceeding plaintiff’s claim for the amount of the loan was allowed, but moneys with which to pay it were not available. In the third cause of action it is alleged that defendant wrongfully obtained a satisfaction of the purchase-money bond and mortgage delivered by Yonkers to the Edward Ann Corporation, but which bond and mortgage belonged to the intestate, on which a balance of $132,000 remained unpaid.
The defendant, in his first defense, alleges that the intestate, during the years 1932 to 1934, inclusive, was engaged in the business of manufacturing and selling beer at the Yonkers brewery, situated at Edward and Ann streets in the city of Yonkers. This brewery was purchased by intestate in June of 1932 for the sum of $75,000, but title thereto was taken in the name of one Julian G. Straus, another of intestate’s dummies, The Edward Ann Corporation
The question presented is limited to the sufficiency of the first defense as a matter of law. Assuming the allegations therein contained to be true, it appears that intestate took title to the brewery, the shares of stock, the advances and the bond and mortgage in the name of dummies, from whom defendant acquired them, for the illegal and immoral purpose of inducing public authorities to issue permits which otherwise would not have been procured. It is well-settled law that parties to a fraudulent or illegal transaction who are in pari delicto may not invoke judicial aid to undo the consequences of their illegal acts. The law leaves them where it finds them. If such a contract be executory, it will refuse to enforce the contract; if executed, it will refuse to disturb the result. The general rule, firmly imbedded in the law of this State, is stated by Chancellor Walwoeth in Nellis v. Clark (4 Hill, 424, 426): “ Where both parties are equally offenders against the positive laws of the country, or the general principles of public policy, or the laws
The facts with which we are concerned differentiate this case from the authorities dealing with an incidental or collateral violation of a statute which is merely malum prohibitum and where recovery is not inconsistent with the purpose for which the statute Was enacted. (Rosasco Creameries, Inc., v. Cohen, 276 N. Y. 274; Wood v. Erie Railway Company, 72 id. 196; Ayew v. Hawes & Co., Inc., 250 App. Div. 596; Hall v. Corcoran, 107 Mass. 251.) Here the conveyances were made to dummies for the precise purpose of evading the law and in violation of good morals and public policy. (Bossom Dairy Co., Inc., v. Rockdale Creamery Corp., 171 Misc. 657; affd., 258 App. Div. 961.)
The defense on its face is sufficient and the burden of establishing it is on the defendant.
The order granting in part and denying in part plaintiff’s motion to strike out separate defenses set forth in the answer should be modified by striking out the first ordering paragraph and by inserting in the last ordering paragraph the word “ First ” between the words “ the ” and “ Second.” As so modified, the order, in so far as appealed from, should be affirmed, without costs.
The appeal from the order denying reargument should be dismissed.
Lazansky, P. J., Adel, Taylor and Close, JJ., concur.
Order granting in part and denying in part plaintiff’s motion to strike out separate defenses set forth in the answer modified by striking out the first ordering paragraph and by inserting in the last ordering paragraph the word “ First ” between the words “ the ” and “ Second.” As so modified, the order, in so far as appealed from, is affirmed, without costs.
Appeal from order denying reargument dismissed.