42 Md. 513 | Md. | 1875
Lead Opinion
delivered the following opinion, which was concurred in by Judges Bowre and Brent:
A careful examination of the record in this case cannot fail for a moment to convince any one that, in the transfer and concealment of the property of Mali, in the name and apparent ownership of Roman, a gross fraud was perpetrated upon the creditors of the former. But, in the view of a majority of this Court, Mali was not less guilty in the
We are not unmindful of the fact, that there are exceptions to the general rule, that Courts of Justice will not actively interpose for the relief of a party who has been particeps criminis in an illegal or fraudulent transaction ; and that one of the exceptions is, where the party suing, although paticeps criminis, is not in pari delido with the adverse party. There may be different degrees of guilt as between the parties to the fraudulent or illegal transaction ; and if one party act under circumstances of oppres-. sion, imposition, undue influence, or at great disadvantage with the other party concerned, so that it appears that his guilt is subordinate to that of the defendant, the Court, in such case, will relieve. But we have examined the record in this case in vain to find any evidence whatever of those circumstances that should entitle Mali to the benefit of the exception to-the general rule. On the contrary, it is most fully and clearly shown that he was a man of intelligence, of large business habits and experience, and of considerable pretensions in the world, and by no means such a person as would be liable or likely to be inveigled, misled, or unduly influenced, by the fraudulent suggestions and advice of Roman. The whole transaction, from the beginning to the end, was the joint scheme of the two, the one co-operating with the other, and both being equally ■guilty, to withdraw and conceal Mali’s property from the pursuit of his creditors; and having accomplished that object, and gotten rid of his creditors hy a composition founded upon his fraud and deception, Mali now seeks to
Whether the relation of client and attorney, in its full and proper sense, existed between Mali and Roman at the time of the concoction of the fraud, admits of great doubt, whatever may have been their relation afterwards. Mali has sworn that no such relation did exist, and that Roman held no property in which he, Mali, was interested; and we think he should be forever estopped to deny the truth of his sworn testimony upon the subject. But oven conceding that the relation of client and attorney did exist, we think there is no well established rule of law that requires, under the facts disclosed in this case, that the Court should allow such effect to that relation as to form an exception to the general rule before stated. By so doing the attorneys would form a special class from which assignees would be sought in all cases where parties desired to cheat and defraud their creditors, by the assignment of their property. The general rule, by which all relief is withheld, might deter a party from conveying his property to an unprofessional person, but under the exception to that general rule, sought to be established in this case, if an unprincipled and fraudulent attorney could be found, the party could deal with him with impunity, being secure in the full protection of all the remedies administered by the Courts, for the restoration of the property after the fraudulent object had been accomplished.
The general rule to which wc have referred is most salutary and conservative, as a means of suppressing illegal and fraudulent contracts, and nothing should be done by the Courts to weaken its force and operation. The suppression of such illegal and fraudulent transactions is far more likely, in general, to be accomplished by leaving the
Whether, the confidential letter of Roman to his wife, exhibited in the record, contains such a declaration of trust in favor of Mali as may be enforced, we are not now called- upon to decide, and in regard to which we intimate no opinion whatever ; but the present bill will be dismissed without prejudice to any right that the appellee may have in that behalf.
Decree reversed, and hill dismissed.
Concurrence Opinion
filed the following concurring opinion : From the proof adduced in the cause, there would be no difficulty in the establishment of the trust asserted in the bill, if the complicity of the complainant in the fraud to elude his creditors, did not incapacitate him according.to the well settled rules of law, from maintaining his claims.
Resulting trusts are expressly excepted, by the 8th section of the Statute of Frauds from its operation.
It is quite obvious, that there is abundant evidence in this case, to show that the property in question, was mainly, if not entirely purchased by means and'moneys advanced to Eoman by Mali.
It is equally manifest that these parties, Eoman and Mali, were in fraudulent collusion to have the funds of the latter so invested in the property, as to evade the claims of his creditors.
Under such circumstances, that is, where two or more persons have been engaged in a fraudulent transaction to injure another, it is the established rule, that neither law nor equity will interfere to relieve either as against the other, from the consequences of their misconduct. Freeman vs. Sedwick, 6 Gill, 28.
This principle, in the administration of justice has its foundation in reasons of public policy.
The Courts have uniformly considered it the better and more effectual way to discourage fraud, not to interpose and adjudicate between the participants therein, except where their action may be necessary, to counteract the fraud.
The contract between such parties is enforced or avoided, as may best answer that purpose.
To allow the complainant to succeed through the Courts, in the recovery of the property in question, would not have the effect to counteract the fraud, but to render it successful. By permitting Eoman to hold it, it is true, he derives a benefit from the fraud, but that is through Mali’s agency, and the Court as between them, will not interfere for the reasons stated.
As to the effect of the fraud upon the interest of both delinquents in such cases, if the Courts had the power,
That Mali was very much under the guidance and direction of Roman, as the leading and master spirit in the fraudulent conspiracy, would seem to admit of no doubt; but that he was influenced by him to such extent, as to excuse and relieve him from the operation of the rule, is a proposition not to be defended, except at the sacrifice of the rule.
To relax the rule in cases where the relation of counsel ;and client existed, in favor of the latter, and make his .'case per se, an exception, would create a distinction without ‘adequate reason. Whilst this has been done in some instances, in derogation of the general rule, its policy or justice may be well doubted. The uniform recognition of such exception might lead to pernicious results.
If the inequality of capacity between counsel and client, were such as to render the latter excusable upon general ■ grounds applicable to all parties, there would be no reaIson to make the special exception.
There might be cases when the converse of the proposition would he true, where the counsel might be under the superior influence of his more sagacious client.
It is not always the case, that the counsel has more intelligence, or can exert more influence than the client.
Whilst an ignorant client, in the hands of more adroit counsel, might be entitled to some consideration ; if it happened that the client in another case was the equal, or superior of his counsel, his exemption from the effect of the rule, would be simply preposterous.
Unable to apprehend the propriety of deviating from the general rule, where the relation of counsel and client exist, upon any principle of public policy or sound reason, I can discover no ground for distinguishing this case.
Both parties here, according to the evidence are properly in delicto.
Where they are in pari delicto, the rule “potior est conditio defendentis,” strictly applies.
If they are participes criminis, although in different degrees, the rule on that account is not to be evaded ; for no man can be permitted to set up his own iniquity, or its result, although less criminal than his confederate, as a ground of action, any more than his confederate, can plead his, as a defence.
Where both parties are involved in the fraud, although the one, to some extent, under the influence of the other, and therefore, it may be, less guilty in the forum of absolute justice ; it is not the province of the Court, nor within their power, to exactly graduate their relative demerit or delictum ; and because one is not quite so bad as the other, to relieve him of his disability under the rule.
That would impair the practical virtue of the rule, by metaphysical refinements, and the Court could reach no satisfactory conclusion.
The duty of adjudicating between the comparative faults of contestants, is not imposed upon the Court; and it is not their province to determine mere moral questions.
Men are so differently constituted in their endowments and capacities, that there could hardly be a case where two or more parties were concerned in a fraud, but that one would be in some degree under the influence of another.
To measure their precise relative criminality by the moral standard, where there are slight shades of difference, would be a difficult and speculative undertaking, not necessary to the attainment of practical justice. Where the disparity between confederates in fraud, virtually
Were they both, grossly in fault, and is there any thing fairly entitling the one to sue the other, notwithstanding the rule applicable to confederates in crime, are the questions involved.
Applying that rule so firmly established, to the confederates in this fraud, considering all their relations and capacities, there would seem to be no other alternative, according to the facts in this case, but to leave the parties, where by their conduct they have placed themselves in relation to the property in question.
For the purpose of eluding his creditors, Mali having entrusted his funds to the keeping of Roman, and confided the management of the enterprise to him ; if he has been deceived by his accomplice ; upon what principle can he expect the Courts to come to his aid and rescue him, in the absence of proof that such was the influence exerted over him professionally, or otherwise by Roman, that he had not the power to resist it ?
This has not been attempted, but the evidence exhibits him, the surviving victim of his own fraudulent complicity, •asking to be relieved.
It is beyond the power of the Court governed by its established rules, to give him the relief sought by the bill. The decree of the Circuit Court must be reversed and the bill dismissedj without prejudice to any right he may be able to establish under the confidential letter of Roman to the respondent.'
Dissenting Opinion
filed the following dissenting opinion, in which Chief Judge Bartol and Judge Miller, concurred :
The hill in this case was filed against the appellant as devisee of the late J. Philip Roman, to compel her to convey to the appellee certain property on Locust Point, in the City of Baltimore, the legal title to which was held by Roman at the time of his death.
It substantially alleges that Roman acquired the title to the property in the capacity of agent and legal adviser of Mali, the complainant, that he paid for it with the money of Mali, and that from the time of its purchase until his death, in 1871, he held it as agent and trustee of Mali.
The appellant, in her answer, denies all the material allegations in the bill touching the purchase of the property by Roman, as agent or legal adviser of Mali, relies upon the lapse of time and the entire absence of any written evidence of the title of Mali to this valuable property, and says if it should be established that Roman acquired the title to the property in pursuance of an agreement between him and Mali, for the purpose of concealing it from the creditors of Mali, the latter has no right to invoke the aid of a Court of Equity to restore to him the property thus fraudulently conveyed.
The law in regard to presumptive or resulting trusts, as applicable to the case before us, is too well settled to admit of much contention. It is sufficient to say, that in all cases where the conveyance of the legal estate is taken in the name of one person, while the consideration money is paid or furnished by another, the parties being strangers to each other, a resulting or presumptive trust arises by virtue of the transaction, and the person named in the conveyance will be held to be a trustee for the party from whom the consideration proceeds. And inasmuch as the Statute of Frauds extends to creations or declarations of trusts by parties only, and does not affect, indeed expressly excepts, trusts arising by operation or constructions of law,
In some of the earlier cases, it is true, a distinction was taken in regard to the nature and character of the proof, before and after the death of the nominal purchaser, and it was held in some of these cases, that after the death of the nominal purchaser, parol evidence alone was not sufficient to establish a trust against the express declarations in the deed. These cases, however, have been overruled, and it may now be considered settled law, that whatever effect the death of the nominal purchaser may have upon the weight of the testimony, it does not affect its admissibility.
In Leach vs. Leach, 10 Vesey, 517, where the plaintiff after the death of her husband endeavored to establish a claim to a trust in an estate, on the ground that it had been purchased by her husband with trust money, Sir William Grant held, “that the question as to whether the purchase was made with trust money, depended upon the proof of the fact, and whatever doubts may have been formerly entertained on the subject, it was now settled, that money may be followed into the land in which it was invested ; and that a claim of this kind may be established by parol evidence. It may be proper to say however, that the proof in such cases ought to be of the most certain and satisfactory character.”
The first question then, to be determined, is whether the proof in this case, conclusively shows, that the property in question, was purchased by Roman for and on account of Mali, and paid for with Mali’s money?
It would extend this opinion to an unreasonable length, to examine in detail the testimony to be found in the five hundred pages of this record, and we shall therefore refer only to some of the prominent facts bearing upon this question.
In 1853, the Messrs. Ellicotts sold the Locust Point property now in dispute, to Otis P. Jewett for the sum of
In April, 1853, Mali, the complainant, purchased of Jewett a half interest in the property, in consideration of which he paid $7500, being one-half of the cash payment paid by Jewett, and agreed to pay one-half the purchase money due to the Ellicotts.
In the spring of 1854, Mali being about to leave for Europe, seems to have requested Roman to send him a power of attorney, authorizing Roman to act for him in reference to his interest in this Locust Point property, during his absence. Roman enclosed the power of attorney to be executed by Mali, and says:
“ It is very broad, and therefore, I wish you to write me, giving particular instructions with regard to the property, if sold, as to price, &c. Be assured, 1 will look entirely to your interest, yet I hope Mr. Jewett will buy you out. If he finds you intend to divide, I think he will at once come into terms.”
On the 3rd of June, the day on which Mali sailed, Roman told Jewett that Mali had placed all his business affairs in his. (Roman’s) hands, as his (Mali’s) counsel and trustee.
While Mali was in Europe, the Parker Yein Coal Company, of which he had been President, failed, -in consequence of which he returned home much sooner than he expected. On his return, he found himself threatened with suits by certain stockholders of the Company to recover damages on account of the over-issue of stock.
At that time Mali lived in the city of New York, and was worth from one to two hundred thousand dollars. Roman lived in Allegany County, in this State, and was a director in and attorney for the Parker Yein Coal Com
“ Converse with no one before you take legal advice.” “ Don’t he frightened, they can’t hurt a hair of your head, and as to confiscation, that is all humbug I regret exceedingly you did not tell me of the difficulty when you were in Cumberland. I think if you had done so, my advice and counsel would have relieved you of all difficulty ; don’t he alarmed, take legal advice and be careful about your declarations. Let me know when you return ; telegraph at once.”
This letter was dated July 11th, and on the 24th of the same month, we find Roman in New York making preliminary arrangements, hy which the Locust Point property ultimately came into his possession. Nothing was done in reference to this property during Mali’s absence in Europe, although it is evident from the correspondence and power of attorney referred to, that he expected to make a sale of it through Roman, as his agent. On the 25th of July, the day after Roman arrived at New York, Mali sells his one-half interest in the property to Jewett, for $50,000, and sells also to him certain stock in the Parker Vein Steamship Company, for $25,000. .To secure the payment of these several sums, amounting to $75,000, Jewett mortgaged the whole property to Mali. In making this sale, the proof shows that Roman acted as Mali’s attorney and agent. The $75,000 note and mortgage were at the same time assigned hy Mali to Roman. In the latter part of 1854, suits were brought against Mali, and also against Jewett to recover damages from them on account of the over-issue of the Parker Yein Coal Company’s stock. Roman was the counsel both of Mali and Jewett, and advised them that these claims were unfounded, and that the suits were only intended to levy black-mail.
On the 1st of January, 1855, the notes and mortgage to the Ellicotts for the unpaid purchase money became due, and the Jewetts having failed to pay the same, an ex parte petition was filed on the 15th of the month by Roman, as assignee of said notes and mortgage, for a sale of the property. Upon this petition a decree was passed and George H. Williams, Esqr., appointed trustee. No sale, however, was made under this decree.
The next step by Roman was to get from Clarence Jewett a conveyance of the interest held by him under the deed from his brother, Otis. For this purpose, Roman had several interviews with Clarence, in which he represented himself as acting as the agent of Mali, and with a view of protecting Mali’s interest in the property. He told Clarence Jewett that the deed from his brother Otis was made without consideration, and would not stand the test of the law, and that it would not be safe for Mali, under the circumstances, to advance any more money on account of the property. He then proposed that Clarence should convey to him whatever interest he Clarence might have under the deed from his brother Otis, the same to be held by Roman for Mali’s benefit. To this Clarence finally assented, with the understanding that the interests of his brother and himself should be protected. When the deeds were prepared, the name of J. Dixon Roman was inserted as grantee, J. Philip Roman saying, it was necessary that the conveyance should be made to a third party. These deeds were executed on the Ith of February, 1855, and on the 10th, Roman filed an original bill to foreclose, in which he refers to the former proceedings, and prays that the decree under them may be annulled for the following reasons.
2nd; That Mali held a mortgage from Jewett upon the property for $75,000, the condition of which was broken by Jewett’s failure to pay the Ellicott mortgage, and that Mali insists he has a right to proceed without delay under his mortgage.
3rd. That Otis P. Jewett had assigned his interest to Clarence, and that the latter had assigned the same to J. Dixon Roman. The bill then avers that by reason of Jewett’s mortgage to Mali, and the conveyance to J. Dixon Roman, the title to the property may be clouded, &c.
The bill of February 10th being filed, answers, admitting the averments of the bill and consenting to a decree as prayed, were filed at the same time by Jewett and wife, Mali and J. Dixon Roman ; and on the same day a decree for sale was passed, and Mr. Williams was again appointed trustee. On the 15th of March, 1855, the property was sold by the trustee for $46,000, subject to the same liens which were on it when Jewett purchased, in 1853, and J. Philip and J. Dixon Roman were returned as purchasers. On the day of the sale J. Philip Roman writes to Mali:
“ I bought the property to-day, in the name of J. Dixon Roman and J. Philip Roman, for $46,000 cash, subject to mortgages. No bi’d but mine.”
After years of protracted litigation, judgments were finally recovered against Mali in the suits for damages on account of the over-issue of the Parker Vein Coal Company’s stock, amounting in the aggregate to over one hundred and fifty thousand dollars. At the instance of the judgment creditors, Mali was examined under oath, for the purpose of making him disclose what property he had, and what disposition, if any, he had made of the same. In this Examination Mali denied that Roman was his counsel, and also denied having any interest in the property now in dis
We have thus endeavored to trace, as briefly as possible, how and by what manner Mali acquired an interest in the property — the disposition he made of the same, the relations of Roman with him, and the connection of the latter with the Locust Point property. In doing this we have seen that Mali, who prior to the institution of these suits, was a member of a large and prosperous mercantile firm in the city of'Rew York, and worth from one to two hundred thousand dollars, stripping himself of all his property, assigning at one time to Roman a mortgage of $75,000, and then at another, bonds of the value of thirty thousand dollars, until not a dollar’s worth of property could be found within the reach of the judgment creditors. On the other hand, Roman, who prior to this time was without any property, borrowing small sums of money to meet his daily necessities, suddenly becomes a man of fortune, with thousands of dollars at his command, buying property at a cash sale for $46,000, and, as the record shows, immediately thereafter expending as much more in its improvement. The inquiry then naturally suggests itself, are we dealing with truth or with fiction ? — were the assignments by Mali to Roman made for a valuable consideration ?— were the Romans, in fact, the purchasers of the Locust
■ The facts already referred to are sufficient at least, we think, to excite a suspicion in regard to the good faith of these transactions, but when viewed in connection with the proof we are now about to consider,, there can be no difficulty in answering each and all of the inquiries above suggested.
The Locust Point purchase amounted to $46,000, of ■which $16,574.42, was audited to the $75,000 note of 'Jewett to Mali, thus leaving but $29,425.58, to be paid •to the trustee. Now if we turn to pages 20, 21, of Ledger J. P. Roman, we find the following entries under the .head of “Locust Point estate: ”
1855. D. To cash paid through Geo. H. Williams, trustee, under auditor’s report.. $29,518 58
B. Five houses built by Clarke and Smith; see account B, filed, with my papers.. . 2,377 65
A. Cost of repairs to warehouse, new roof, stone foundation, &c...................... 2,795 64
C. Cost of coal wharf; see account C........ 20,402 48
E. Amount paid through A. C. Hall; see account A..................................... 1,263 22
F. Cash paid out by J. Philip Roman in 1855; see account F and vouchers..... 3,086 59
.1856. G. Amount paid out per account G filed with my papers..................... 10,931 20
1857. H. Cash paid out per account, and vouchers filed with my papers, marked H 20,853 45
1858. J. Paid out per account, and vouchers filed, marked J............................... 3,214 96
Thus making the sum of........................ $94,443 77
“1855-56-57-58, Cash at divers times, see accounts, $89,754.59. { $94,443.77.”
It thus appears tiiat every dollar paid by Roman on account of the property, and every dollar paid for its improvement amounting in the aggregate to $94,443TV¥, was charged by him to Mali. These entries by Roman, in his own Ledger, prove beyond all controversy, that the property in question was purchased by him, and improved as the agent of Mali. They are susceptible of no other construction. And as to the further question, whether he had at the time money in hand belonging to Mali, sufficient to pay the purchase money, is we think answered by other entries to be found in the same Ledger. The whole amount of purchase money, applicable to every charge against the property, except the $75,000 note and mortgage of Mali, was $29,425xVo, from which must be deducted James’ lien of $4,662XW, paid by Mali before the sale, thus leaving but $24,763xWto be paid to the trustee. How on page 27 of the Ledger, Mali is credited with $49,373 AV, to which must be added the further sum of $12,600, the pfoceeds arising from the sale of 35 steamship bonds, making $61,973 AV- Deduct from this sum, the debits charged against him on the same page, amounting to $35,577t¥«, and we have due to Mali in April, 1855, $26,395^.
If the case rested here, it must be admitted there is strong and pregnant proof, tending to show, not only that the property was purchased for Mali, but also that it was paid for with his money. But if to this proof we add the testimony of Spates, Otis P. and Clarence Jewett, the conclusion is irresistible. Of all persons, Spates certainly had the best opportunity of knowing the facts and circumstances connected with the purchase of the property. He
Otis P. Jewett testifies that prior to the sale of the property, Roman told witness that he wanted to secure the title of the property for Mali, and that after the sale, so late as the year 1867, in repeated conversations with Roman about the proj>erty, he always said he held it for Mali, and spoke of it as Mali’s property, and never intimated that either J. Dixon Roman or himself bad any interest in it.
It is unnecessary to extend this opinion by a review of other facts to be found in the record. It is sufficient to say, that upon the px-oof already referred to, upon the written admissions of Roman himself — upon the positive testimony of Spates and the two Jewetts, witnesses unim peached and uncontradicted, we are forced to the conclusion that the property was purchased by Roman as the agent and legal adviser of Mali, and paid for with Mali’s money.
In regard to J. Dixon Roman, it is only necessary to say, that the whole record shows that he never in fact had any interest in the property, and that he was returned as one of the purchasers, and his name inserted in the deed from Clarence Jewett, for the purpose of deceiving and misleading Mali’s creditors.
We come now to the question, conceding that the legal title of the property was conveyed to Roman in pursuance of an agreement with Mali for the pux-pose of defrauding Mali’s creditors, will a Court of Equity compel the appellant as devisee of Roman to re-convey the property thus fraudulexxtly acquired? As between man and man standing upon an equal footing, we should not hesitate to say ixo. In such a case the maxim “in pari delicto” would apply in its fullest force. But this maxim, wise and salutary as it may be, is not one of universal application, on the contrary, it is subject to certain exceptions as binding in authority as the rule itself. We take the law to be well settled, that although both parties are in delicto it does not always follow that they stand in pari delicto; for there may be, and often are, very different degrees in their guilt. “ One party may act under circumstances of oppres
Osborne vs. Williams, 18 Vesey, 379; Lord St. John vs. Lady St. John, 11 Vesey, 535; Smith vs. Bromley, Doug., 696; Browning vs. Morris, Cowper, 790; Morris vs. McCullock, 2 Eden, 191; 1 Fonblanque’s Equity, book 1, chap. 4, sec. 4, note y.
The question then resolves itself into this, does the testimony in the record before us, prove such an inequality of condition between Roman and Mali, and the exercise of .such an influence by the former over the latter, as to entitle the complainant to relief, although he may have been a party to the fraud relied on by the appellant ? Now if there is one fact established beyond all controversy, it is that befqre and at the time of the sale of the property in question, the relation of client and attorney existed between them. Further than this, the proof conclusively shows,, that in the long and protracted litigation growing ■ out of the suits against Mali to recover damages on account .of the over-issue of the Parker Yein Coal Company’s stock, in the sale by Mali to Jewett of his interest in the Locust Point property — in the cunningly devised chancery proceedings under' which the property was sold, in the examination of Mali under oath, and in the subsequent proceedings by. Iiicks the receiver, Roman was the master-spirit who planned, advised and counselled every step by which he thus acquired possession of Mali’s property, and prevented .the judgment creditors from reaping the fruits of their judgments.
■ Before Mali sailed for Europe and before the failure of •the Parker. Yein Coal Company, Roman encloses to him a power of attorney in the broadest terms, authorizing him
“ Don’t be frightened, they can’t hurt a hair of your head.”
Afterwards when Mali seeks his counsel and advice he tells him “to put all Ms property and the eases in his hands, follow Ms advice and he would see him through.” Other counsel it is true were employed in the New York cases, but they acted under the guidance and control of Roman.
To his confidential friend Spates he writes:
“Proceed very slowly with your negotiations, I do hate to give them any money, or to allow them to get any advantage of us, it will not do to give judgments now. Peel your way carefully.”
On the 18th of February, he writes again :
“I will go to the library here to-morrow and examine all the New York decisions. I hope you will get Yanderpool’s opinion, and if he suggests it, better get a written opinion from one of the tiptop lawyers.”
Then again February 20th :
“You had better break off negotiations for awhile.”
And on March 3rd:
“I think we will have to execute powers of attorney to confess judgment for about $25,000. If you talk with them, tell them we are afraid of other suits, and propose that, as it will secure all their influence against additional suits. Talk largely about O’Connor’s opinion that he can gain the suit.”
The relation of client and attorney is one of truth and confidence, and in regard to transactions between parties occupying this relation, Courts subject them to other and stricter tests than apply to the dealings between man and man standing upon am equal footing.
In Ford vs. Harrington, 16 N. Y., 285, where an attorney advised his client to convey to him an interest in pro
£< I think this is a case where, on account of the relations existing between the parties and the circumstances under which the contract was assigned, the Court was called upon to interfere and compel the attorney to restore what he had acquired under the assignment, on being repaid what he had disbursed, although the object of the assignment was to perpetrate a fraud. The parties, although in ‘delicto,’ did not stand ‘in pari delicto.’ In the transaction, Conway was the mere instrument in the hands of the defendant. If an attorney will so far forget, or wilfully disregard his duty to the Courts, whose license to practice he holds, to his clients, who, in consequencet of such license, are induced to seek and act upon his counsel, and to the public, as, for the purpose of gain or profit to himself, to induce by his advice the commission of fraud by those who thus confide in him, he at least should be compelled to restore to his victim the fruits of his iniquity.”
The subsequent cases of Freelove vs. Cole, 41 Barbour, 318, and Gvodenough vs. Spencer, 2 N. Y. Sup. Court Rept., 588, approve and sanction the doctrine thus laid down in Ford vs. Harrington.
It is not necessary in this case to rest the right of the complainant to relief solely upon the relation of client and attorney. There is proof to show that owing to his troubles, the mind of Mali had in a measure become impaired, and it is impossible to read this record without seeing that from the time he first sought the counsel of Román, the latter exercised the most unbounded influence over him.
To permit a lawyer who thus advises his client, harassed by suits for damages, that the claims are unfounded, and
The appellee’s counsel on the 11th October, 1875, made a motion for a re-argument of the foregoing case, assigning the following reasons in support thereof:
The question presented for decision was not whether the Court would give its aid to either of two parties who stand in pari delicto, it having been conceded in the former argument, that in such a case the Court will leave the parties as it finds them. But the real question to be determined is whether, when both parties are in delicto, one of them being however, in the eye of the law, more guilty than his adversary, the Court will not upon grounds of public policy, give relief to the less guilty.
In deciding upon the question of the relative degrees of guilt between parties to an illegal transaction, for the purpose of applying this principle of law, it is submitted that the Court does not consider the actual relative capacity of the parties, in order to determine which is the more in fault.
Relief in such cases is not granted because one party has availed himself of his personal superiority to oppress or defraud the other. When that state of facts is made to appear, the party oppressed or defrauded, is entitled to relief in his own right, grooving out of his situation.
But relief is granted on grounds of public policy, and is granted for the advantage of the public, and not of the
The public is concerned in the maintenance of certain relations between parties in the strictest purity and integrity,- irrespective of all considerations of their. relative personal power and capacity. When those relations are shown to exist, the law concludes one party to occupy a position of superiority to the other, which cannot be used to gain an advantage for him who is thus presumed to be the superior.
Among the relations which public policy requires to be thus guarded, is that of counsel or legal adviser-, and client, and when it appears that a lawyer has advised his client to do an unlawful act, by which the former has obtained possession of the property of the latter, the law presumes from the relation itself, without evidence as to which was in fact the more capax doli, and without weighing their actual personal capacity, that the parties do not stand in pari delicto, but that the lawyer is the more guilty of the two.
' This conclusion is drawn not in the interest of either party, but in the interest of the public, which requires the maintenance of the utmost integrity and good faith on the part of the legal adviser. In the language of Judge Story, “ There may be on the part of the Court itself, a necessity of supporting the public interests, or public policy, in many cases, however reprehensible the acts of the parties maybe.” (1 Eq. Jur., sec. 300.) ' -
This principle is recognized by three of the Judges who concur in reversing the decree below. They say: “ There may be different degrees of guilt as between the parties to the fraudulent or illegal transaction, and if one party act under circumstances of oppression, imposition, undue influ
The minority of the Court agree in this principle, and it is not questioned, except by one of the seven Judges who heard the case. But in applying the principle, the three Judges who united in the reversal are understood as deciding that, in order to ascertain the existence of that disparity in guilt on which relief will be granted to one of two guilty parties, we are to weigh their relative personal degrees of capacity, instead of inferring it from the relation in which they stand.
In other words, it is understood to be laid down, that if counsel and client engage in an illegal transaction, under the advice and direction of the former, the Court will enquire which of the two was actually the more capable of imposing upon the other, and to what extent the client was personally capable of resisting and preventing the fraud of his counsel, and if it appear that the client was the more capable, mentally or morally, or both, than his legal adviser, relief will be refused to the former against the latter.
It is submitted, that is not in accordance with the meaning or policy of the rule as stated by the majority of the Court. It would result from such a principle of decision, that a lawyer may retain whatever he can get by advising a client of equal or superior capacity to his own, but that he will be made to restore what he gets by the same means from a client of less capacity.
The principle of the rule of public policy as applied to the relation of counsel and client, would thus be made to depend, not upon the absolute inviolability of the fidelity and integrity of the relation of counsel, but upon the extent of the personal capacity of the client. Public policy has nothing to do with the degree of personal capacity that clients may possess. It is as much against
In the latter case, relief was given to a party to an illegal transaction, because his infirmity in guilt was conclusively presumed from the establishment of the relation between the parties (that of debtor and creditor,) and there was no inquiry into the question of their actual relative degrees of capacity to enable the Court to decide which was in fact the more guilty.
In Austin’s Adm’r vs. Winston, 1 Henning & Munford, 32, the Court of Appeals of Virginia, gave relief to one of two parties to just such a transaction as this between Roman and. Mali, upon the sole ground that it had been advised by a creditor, and that from the relation alone, the law presumed him to he more guilty than his debtor, who followed his advice. The Court say: “ It is said that Winston was probably indebted ; that his conduct was a great violation of morality, in respect to his creditors ; and that in point of morality, he was most culpable. That Winston violated the principles of morality, is already implied, in the admission that he had committed a fraud ; hut that fraud is palliated and excused by reason of the imbecility of his situation. But how does the case stand with respect to Austin ? * * * * t0 gay the least, he hatched and brought to maturity a free and voluntary fraud to the injury of Winston’s creditors ; to say the truth, he capped the climax of his iniquity, by committing a double- fraud towards his companion. So little regardful was he of the
The rule we contend for was applied in this instance because the parties to the fraud stood in the relation of debtor and creditor. In Osborne vs. Williams, 18 Vesey, 379, Sir William Ghaut, applied the rule to a case in which the parties stood in the relation of father and son, both having been concerned in a fraud upon the Post Office Laws.
See also Reynell vs. Sprye, 1 DeG. Man. & G., 585. In Ford vs. Harrington, 16 N. Y., 285, and in two decisions in the Supreme Court of New York, (41 Barbour, 318, and 2 N. Y. Sup. Ct. Reps., 508 and 511,) the rule for which we contend, was applied to the relation of counsel and client.
We submit that no authority can be found to sanction the contrary doctrine.
We also refer the Court to the numerous decisions of tribunals of the highest resort at home and in England, cited in our original brief on the same question. Without discussing further than has already been done at the trial, the abundant evidence to be found in the record, that Roman concocted and executed the fraud in this case, and that Mali was a passive instrument in his hands, we submit that the Court should allow a further argument upon the interesting and important subject above discussed, with a view to consider whether the opinion of the majority can be reconciled with the current of English and American decisions.
delivered the opinion of the Court.
In disposing of applications for re-argument, after the case has been acted on by the Court and the judgment has been entered, this Court has adopted the rule which obtains in the Supreme Court of the United States, as announced
In this case, very full and able arguments were heard at the bar, and elaborate briefs were filed by both sides; and it was not until after the most careful consideration and repeated conferences upon the subject, that the conclusions were announced at which the Court arrived, though concurred in but by a bare majority of the Judges who heard the case. This division of the Judges, upon a question of so much importance, was certainly unfortunate, and very much to be regretted ; but no Judge who concurred in the judgment rendered is dissatisfied with his opinion, and therefore further argument is not desired ; and, indeed, if further argument than that heard at the bar were desired, we have it, on the part of the appellee, in the elaborate piloted argument in support of the motion for re-hearing. This latter argument has been carefully examined and considered, but the Judges who concurred in the judgment that has been rendered, fail'to find in that argument anything that causes them to doubt of the correctness of their previous conclusions.
In order, however, to avoid all possible misapprehension upon the subject, we deem it proper to state, that the general rule governing transactions between client and attorney is in no manner designed to be questioned, or in
But this wise and salutary rule, instituted to promote honesty and fair dealing, and which the Courts are always ready to uphold and enforce upon all proper occasions, was
But what is this case? In brief it is this. In a particular crisis in Mali’s affairs, he desired to conceal and shield from the pursuit of his creditors his property, and to accomplish that object he combined with Roman, who was active in devising the fraudulent scheme whereby the property was effectually concealed and the creditors defrauded. The property was concealed under Roman’s ostensible and acknowledged ownership; and that ownership was held out and maintained by both Mali and Roman under all circumstances against Mali’s creditors, even to the extent of swearing, in the most positive and unequivocal manner, in a judicial proceeding, that Mali had no interest in the property whatever. Upon what terms or understanding this fraudulent combination between Mali and Roman was entered into, the record does not disclose ; but the scheme was most adroitly executed and maintained by the parties for nearly seventeen years, and until all the creditors designed to be cheated had been induced to surrender their claims, upon the supposition that Mali had no property, on payment of some nine or ten cents in the dollar. During all this long period, Mali not only acquiesced in, but maintained, against the most searching efforts of his creditors, Roman’s pretended ownership; and notwithstanding the many opportunities, and the strong honest incentives that should have induced him to withdraw
But it is said that Roman was Mali’s legal adviser, and that he devised and concocted the fraudulent scheme, and counselled Mali’s course in reference to it; and that, therefore, notwithstanding Mali’s fraudulent conduct, he ought to have the benefit of the rule governing transactions between client and attorney, and be relieved on principles of public policy. Whether Roman, in his character of attorney, was retained, at the commencement of the transaction, as the legal adviser of Mali, certainly admits of great doubt upon the proof before us. Mali himself has sworn positively that Roman was not his attorney. But if it be conceded that the relation of client and attorney did exist, then it is manifest that Mali had but one object in retaining Roman as his counsel, and that was to obtain the aid and assistance that the latter could render in evading and defrauding his, Mali’s, creditors; and though Roman was the more activo of the two in planning and executing the fraud, yet Mali was all the while approving and co-operating in it, and supported it throughout. Both were, therefore, in the contemplation of law, equally guilty; and the counsel for the appellee do not deny, ‘£ that the evidence shows that Roman and Mali were parties to a miserable fraud, conceived in sin, and matured on perjury.” It is also conceded by the counsel for the appellee that neither party lias shown any right in himself which a Court of justice ought to respect, and in this we entirely agree.
Such, then, being the case, it falls directly within the well established principle, that he who comes into equity must come with clean hands ; and if a party seeks to cancel or set aside an instrument, or be relieved of a transac
Motion for re-argument denied.
