80 W. Va. 594 | W. Va. | 1917
This suit in equity by W. B. Haymond, as administrator of J. S. Hyer, deceased, was brought against his heirs and creditors for the purpose of ascertaining decedent’s debts, determining what interest, if any, defendant A. W. Corley had in certain lands described in the bill and of which said J. S. Hyer died seized, and for the purpose of selling decedent’s lands, or a sufficient quantity thereof to pay his debts. The bill avers that some of the lands had been partitioned among the heirs and that other lands had not been so partitioned. As to the latter, it avers they had been conveyed to said J. S. Hyer by apparently absolute deeds, but that the defendant A. W. Corley claimed an equitable interest therein, and plaintiff did not know whether or not his claim was just and desired the court to ascertain and determine that matter. J. S. Hyer died July 7th 1903, and the bill was filed at October rules, 1904. The following January, A. W. Corley filed his answer in the nature of a cross-bill, averring that he was an equal joint owner with said Hyer in a number of tracts of land, to which the latter held the legal title upon secret trust, exhibiting contracts in writing, signed by the latter, evidencing sale by him to Corley of such interest,- and also, in most instances, acknowledging payment in full of the consideration therefor, and agreeing to execute deeds to him for his interest when demanded. No deeds appear ever to have been executed. Some of the lands alleged to have been so held in trust were sold by Hyer, and he accounted to Corley for a part, if not all, of his share of the proceeds. The arrangement between them appears to have been in the nature of a partnership for the purpose of speculating in lands, in fact Corley so alleges in his cross-bill. Plaintiff and two of the Hyer heirs filed special replications and answers to the cross-bill, averring that a number of the tracts of land in which said Corley claimed an equitable interest were purchased by said Hyer in pursuance of a collusive and fraudulent arrangement between himself and said Corley, the latter acting as executor of W. L. J. Corley, deceased, whose estate the lands were, or as a commissioner of court, or in both capacities, in making sales thereof to said
Prom that decree Corley has appealed, assigning as error the refusal of the court to grant him any relief in respect to. his interest ill the tracts of land above mentioned, and denying him credit for the $1,060, paid to said J. S. Hyer in his lifetime.
The above-mentioned tracts of land were all carved out of' a tract of 3066 acres, formerly owned by W. L. J. Corley, P. B. Adams and H. A. Holt, who had sold the smaller tracts, in. the lifetime of W-. L. J. Corley, to Albert Pierson, William
By his cross-bill Corley seeks to establish his secret equity in the lands, against Hyer’s estate, and, by their answers thereto, his administrator and heirs at law defend by setting up an unlawful contract or arrangement between the intestate and said Corley whereby their respective interests had been acquired. Public policy forbids one, who is acting in a' representative or trust relation, from acting in the dual capacity of seller and purchaser. Neither a trustee, personal representative, nor a commissioner of court can lawfully buy, either directly or indirectly, at his own sale, or a sale procured at his instance of property entrusted to him. Bailey’s Admx. v. Robinson, 1 Grat. 4; and Howery v. Helms, 20 Grat. 1. “A fiduciary can not make a valid purchase of the trust property, though it be made at a public judicial sale under a decree made in an adverse proceeding.” Newcomb v. Brooks,
That' such sales are only voidable at the election of the party affected and not absolutely void, is no reply to plaintiff’s answer to Corley’s cross-bill. This is not a suit to set aside the sale, but a suit by Corley to compel performance of an unlawful contract, made between himself and Hyer in his lifetime. Hyer died before it had been fully performed and now Corley is asking the aid of a court of equity to complete its performance. He Says Hyer died holding the legal title upon a secret trust for both of them, and Hyer’s representative does not deny it, but replies that it was so held in pursuance of an unlawful arrangement, and says the parties should be left where they placed themselves. If Hyer had lived it is likely the arrangement would have been fully carried out, and perhaps nobody but themselves would have known it. It may also be true that no one interested was ae-
But it is insisted a party ought not to be allowed to plead his own fraud, nor ought his personal representative be permitted to do so in order to protect his estate. This is ordinarily true, but where both parties to the suit are equally guilty, and a denial of. the right to plead it would cause a greater wrong and injury to the public, the courts permit the fraud to be pleaded. This is done out of public consideration, and not for defendánt’s benefit. Lord Mansfield in Holman v. Johnson, 1 Cowp. 341, says: “The objection that a contract is immoral or illegal as between plaintiff and defendant, sounds at all times very ill in the mouth of the defendant. It is not for his sake, however, that the objection ip ever allowed, but it is founded in general principles of policy which the defendant has the advantage of, contrary to the real justice as between him and the plaintiff, by accident, if I may say so. This principle of public policy is this; ex dolo malo non oritur actio. No court will lend its aid to a man who founds his cause of action upon an- immoral or an illegal act. If, from the plaintiff’s own stating or otherwise, the cause of action appears to arise ex turpi causa, or the transgression of a positive law of this country, there the court says he has no right to be assisted. It is upon that ground the court goes; not for the sake of the defendant; but because they will not lend their aid to such a plaintiff. So if the plaintiff and defendant were to change sides, and the defendant Avas to bring his action against the plaintiff, the latter
This is the reason given for the rule in all the authorities. It is a rule adopted to better secure the public against dishonest transactions, and the beneficial results a defendant happens to get from its application follows from the court’s refusal to entertain a cause of action founded on an illegal transaction. It matters not whether the suit is brought to enforce some alleged right growing out of the iniquitous contract, or to relieve against some of its provisions, the position •of the defendant is the more advantageous, for whenever the illegality is made to appear, it matters not from which side the evidence comes, the disclosure is fatal to plaintiff’s case, and not even the most solemn agreement by the defendant to waive the objection could neutralize its effect. Says Justice Swayne in Coppell v. Hall, 7 Wall, at page 559, and quoted by Mr. Justice Peckham in McMullens v. Hoffman, 174 U. S. 658; "The principle extracted from all the cases is, that the law will not lend its support to a claim founded upon its violation."
A. W. Corley is here the plaintiff, seeking by his cross-pill to have certain provisions of the illegal contract enforced, and under the rule relief must be denied him, not because the court is of opinion he is more culpable than the other party to the illegal contract, but simply because the only method of enforcing the rule is to leave the parties where they placed themselves. McClintock v. Loisseau, 31 W. Va. 865; and Pomeroy’s Eq. Jur., sec. 401.
It is no advantage to Corley that the vice of the transaction does not appear from the averments of his cross-bill and the exhibits filed therewith. He may have presented a prima facie case entitling him to relief. But the appearance of the vice nullifies its effect. Looking beyond the mere formal sales made in writing by Ilyer to Corley, we discover the prior illegal contract between them, whereby the latter was an indirect purchaser with the former from the beginning. ’The subsequent writings served not only, to show Corley’s interest, but also to conceal the true character of the transactions, and were executed in furtherance of it. A new
A leading case in this State on the question here under-consideration is Horn v. Star Foundry Co., 23 W. Va. 522. Judge GREEN there reviews many of the earlier Virginia cases in point, and finds them to be in harmony with his own. view of the law. He approves the decisions in Starke’s Ex’or. v. Littlepage, 4 Rand. 368, and Harris v. Harris’ Ex’or., 23 Grat. 737, two cases cited and relied on by counsel for appellant. In both those cases the plaintiff was allowed to recover, which would seem to be exceptions to the rule. But, if we bear in mind that the purpose of the rule is to protect, society against- illegal contracts by refusing' relief to any party to such contract who asks it, we will readily perceive that the decisions in those cases were not exceptions to, but in harmony with the rule. To have refused relief to the plaintiff in either of those cases, would have been equivalent to granting relief to the defendant against his fraudulent contract, whereas a recovery by plaintiff had the effect to-•leave the parties in the position in which their unlawful contract had placed them. So that, those cases and others like them, are no exceptions to the rule. The difference is only apparent, not real. Says Judge J. W. Green in Starke’s Ex’or. v. Littlepage, 4 Rand., at page 372: “If it be neces
To grant.the prayer of Corley’s cross-bill in the present case would be to assist to carry out the original illegal contract, whereas, by denying him relief the court stamps its condemnation upon it and discourages the making of such contracts in the future. That either party to a fraudulent contract may allege and prove the fraud in defense of a suit brought upon it by the other, is well established. This is allowed even though the plaintiff has established a prima facie case entitling him to relief. “Courts of justice will allow the objection that the consideration of the contract was immoral or illegal to be made even by the guilty party to the contract; for the allowance is not made for the sake of the party who raises the objection, but is granted upon general principles of policy.” 2 Kent’s Commentaries, (14th ed.), 466. Broom’s Legal Maxims, (8th ed.) 577; Standard Lumber Co. v. Butler Ice Co., 146 Fed. 359, 7 L. R. A. (N. S.) 467, and cases in note; and Lanham v. Meadows, 72 W. Va. 610.
The maxim, in pari delicto potior est conditio defendentis results from the enforcement of the rule, and not from any purpose or design to assist the defendant. He simply happens to be in a more fortunate position, because he is the party sued and not the suitor.
The decree appealed from denied Corley credit for $1,060, for which he holds Hyer’s receipt. In that respect the court erred. As to that item the court misapplied the rule, and, in effect, granted relief pro tanto to Hyer’s estate. The receipt represented a closed transaction; it was for money paid to Hyer, or retained by him in pursuance of the fraudulent contract, and, to deny Corley credit therefor would be equivalent to allowing Hyer’s estate to recover back money which he had paid on the illegal contract. It would not be leaving his estate in the situation in which he had placed it, but would be changing it for the better. Denial of credit to Corley relieved Hyer’s estate from a part of the illegal con
In so far as the decree appealed from denies appellant credit for the $1,060, it will be reversed, and in all other respects it will be affirmed, with costs to appellant.
Affirmed in part. Reversed in part. Remanded.