Tyler v. Larimore

| Mo. Ct. App. | Nov 23, 1885

Lead Opinion

Philips, P. J.

I. The first question, lying at the threshold of this controversy, is, whether the contract sought to be enforced is not void in its inception. Contracts which contravene the provisions and policy of statute law, or are repugnant to principles of sound policy, or founded in fraud, are not enforceable, either at law or in equity. 2 Kent Com. 466. A contract of sale,, neither prohibited by any positive law, nor against good morals, may nevertheless be void as being contrary to principles of sound policy. Jones v. Randall, Camp. 39 ; Brye v. Lewis, Ry. & Mor. 386. Judge Story very succinctly and forcibly comprehends this principle in this statement: “Whenever the divine law, or the positive law, or the common law prohibits the doing of certain acts, or enjoins the discharge of certain duties, any agreement to do such acts, or not to discharge such duties, is against the dearest interests of society, and, therefore, is held void; for, otherwise, the law would be open to the-just reproach of winking at crimes and omissions, or tolerating in one form, what it affected to reprobate in another.” 1 Story Eq., sect. 296.

So contracts violative of the policy of an act of parliament, or looking to the withdrawal of assets of a bankrupt from the course of the bankrupt act, or for the evasion of other public laws and duties are illegal and void. 1 Add. Cont., sects. 259-260.

The manifest policy of our administration law is, that the estates of dead men shall be taken charge of, managed, controlled and disposed of by duly constituted administrators and executors, in the manner directed by the statute, and not otherwise. Such administrators are under the supervision and severest surveillance of the courts of probate.

The office of an administrator is essentially a trust. He receives and administers the entire assets of the estate, solely to protect the interests of the heirs and distributees, and the creditors of the estate. On the death of the intestate, the personal property goes directly to the administrator, and not to the heir.

All monies arising from the sales of real estate, made-pursuant to an order of the probate court, go to the administrator, to be distributed and accounted for as the court may order. All surplus monies arising from foreclosure sales under mortgages and deeds of trust, executed by the intestate, go to the administrator, to be inventoried and accounted for. And all creditors of the estate have two years after grant of letters of administration, and due notice thereof, in which to present their demands for allowance.

Now v hat do we find in the record before us % The two years have not expired for the allowance of claims against this estate. The intestate died seized of a large and valuable real estate. About 1,020 acres were covered with mortgages to secure debts amounting to about $9,000. There had been allowed against the estate about $9,344 of unsecured claims. In addition to which, so the contract in question recognizes, there were other outstanding claims for large sums against the estate, or at least which the parties to the contract anticipated would be presented for allowance within due time. When the administration had run only little over one year, and the mortgagees were about proceeding to foreclose, the heirs, the parties to this contract, including the administratrix herself — the trustee of both the estate and the creditors— meet and enter into compact, the evident object of which was to prevent the due course of administration, and to circumvent the claims of creditors.

If the sole purpose of the parties to this scheme were, as suggested by counsel, to prevent a sacrifice of the land, and protect the interest of the heirs, by making the mortgaged land pay off the mortgage debts and the probated claims, what was the need of the written compact ? Why was it deemed needful for the plaintiffs to take a written assignment of the interest of the other two heirs ? Could they not have bid as much for the land without as with the contract ? On its very face, to say nothing of its deeper meaning, the judicial eye must readily discover the prime motive.

In the first place we discover on the face of the contract, a declared purpose that one claim, already allowed by the court as a debt against the estate in favor of one Duncan, was not to be paid by the administratrix. It is next stipulated, that if the lands to be sold under the trust deeds brought $18,000, and the mortgaged debts and claims then allowed should be less than $18,000, then the plaintiffs, condescendingly, stipulated to pay the difference into the hands of the administratrix. Why contract to pay this money into her hands % The money arising on the foreclosure sale would legally be paid by the purchaser over to the trustee. It would then have become the plain duty of the administratrix to have demanded this surplus of the trustee, and it would have been the plain duty of the trustee; after satisfying the trust, to have handed the surplus over to the administratrix.

The truth strikes us at every corner of this instrument that the parties undertook to take the land and the estate out of the due course of law and justice, and administer it among themselves, so that any surplus fund might not be exposed to the dreaded Curtis claims.

If there could be any reasonable doubt as to the justness of the deduction made, it must disappear on reading the succeeding provision of this contract. If the land should bring more than $18,000, then the difference between that sum and the amount of said debts {%. e., the mortgage, debts and the claims already probated, barring the Duncan claim) “ shall not be paid to the administratrix, but shall belong to said parties of the second part (the plaintiffs), and shall be paid to them,”

Here then, we have a bold, solemn compact in writing between the heirs, including the administratrix, stipulating that two of the heirs shall have this land at $18,000, provided no obtrusive outsider should enter the competitive list; but if there should be such competition, the plaintiffs could run it up indefinitely, for the administratrix and the other heirs covenant that the administratrix will abandon her high office as trustee for the time, by not claiming any surplus over $18,000, so the heirs can lug it off out of the reach of distant creditors. And, as if infatuated to judicial and moral blindness with the conception of the scheme to administer this estate outside of the due course of law, so as to divert the assets, they became so bold as to add this closing climax: “It is mutually understood that none of the purchase money, as aforesaid, to be paid for said land at said sale, shall he appropriated to the payment of any claims, except the mortgage debts aforesaid and the debts now allowed against the estate of the said Henry Larimore.”

This being the declared object on the face of the contract, that some creditors were designed to be left out, the parol evidence introduced by defendant merely named the parties struck at, and supplemented the fraudulent, animus already apparent on the very face of the paper. Here, then, is a contract between an administratrix and the heirs to so manage a sale of the real estate — and according to plaintiffs’ contention it makes no difference whether the money arose from foreclosure outside of court, or under a sale made by the administratrix under an order of the probate court — that no surplus shall be applied except as they stipulate. No other claims are to be paid except such as they consent to. The' law governing the administration of dead men’s estates, the rights of creditors, the duties and statutory obligations of the administratrix, are all cast aside, with an abandon that is almost admirable for-its audacity; and then the plaintiffs —parties to this contract — come into court and ask that they be helped to reap the fruits of this vicious compact.

It is an unclean thing, and the courts will not touch it. The law leaves the parties to such contracts just as it found them. It will help neither, Allison v. Hess, 28 Iowa 389 ; Bartle v. Nutt, 4 Pet. 184" court="SCOTUS" date_filed="1830-03-17" href="https://app.midpage.ai/document/bartle-v-nutt-85698?utm_source=webapp" opinion_id="85698">4 Pet. 184; Irwin v. Wells, 1 Mo. 9 ; Hamilton v. Scull’s Adm’r, 25 Mo. 166-7.

II. Counsel for appellants seek to meet this ugly feature of the case by the suggestion that the contract is wholly executed by the one party, the defendant, when he and Jane Larimore executed the instrument, as they had then done all they contracted to do. “ This rule will not avail the plaintiffs in this instance. Their action is bottomed on the forbidden contract. They plead it in their petition, and put it in evidence at the trial. Without it they would not have one grain of sand on which to stand.

The test — says Chitty Cont. (11 Ed.) 972 — as to whether a demand connected with an illegal transaction be caj)able of being enforced is, whether the plaintiff requires to rely on such transaction in order to establish his case. If the plaintiff cannot open his case without introducing the immoral or corrupt contract, the court will not hear him. Duncan v. Scott, 11 Ser. & R. 164; Thomas v. Brady, 10 Barr. 170 Holt v. Green, 73 Pa. St. 198 ; Kitchen v. Greenabaum, 61 Mo. 110" court="Mo." date_filed="1875-10-15" href="https://app.midpage.ai/document/kitchen-v-greenabaum-8005120?utm_source=webapp" opinion_id="8005120">61 Mo. 110; Watson v. Harmon, 84 Mo.

III. It was perfectly competent to interpose the defence of the invalidity of this contract under the general issue. Greenway v. James, 34 Mo. 322; Glasscock v. Young, 79 Mo. 574" court="Mo." date_filed="1883-10-15" href="https://app.midpage.ai/document/young-v-glascock-8007619?utm_source=webapp" opinion_id="8007619">79 Mo. 574.

IV. It is next claimed by appellants that defendant cannot defend the judgment of the circuit court on the ground that the contract is illegal, as the defendant asked no instruction to that effect. This is an entire misconception of the rule of practice. The defendant recovered judgment; he is not appealing. In the action at law, under the code, if the party appealing would have the cause reviewed, he must have asked declarations of law of the lower court. If he did not do so, and there is any evidence to support the verdict, the appellate court will affirm the judgment. Kurlbaum v. Roepke, 27 Mo. 161" court="Mo." date_filed="1858-03-15" href="https://app.midpage.ai/document/kurlbaum-v-roepke-8000345?utm_source=webapp" opinion_id="8000345">27 Mo. 161 ; Altum v. Arnold, 27 Mo. 264" court="Mo." date_filed="1858-07-15" href="https://app.midpage.ai/document/johnson-v-mchenry-8000381?utm_source=webapp" opinion_id="8000381">27 Mo. 264; Easly v. Elliott, 43 Mo. 289" court="Mo." date_filed="1869-02-15" href="https://app.midpage.ai/document/easley-v-elliott-8002502?utm_source=webapp" opinion_id="8002502">43 Mo. 289 ; Cunningham v. Snow, 82 Mo. 587" court="Mo." date_filed="1884-10-15" href="https://app.midpage.ai/document/cunningham-v-snow-8007974?utm_source=webapp" opinion_id="8007974">82 Mo. 587; Harrington v. Minor, 80 Mo. 270" court="Mo." date_filed="1883-10-15" href="https://app.midpage.ai/document/harrington-v-minor-8007692?utm_source=webapp" opinion_id="8007692">80 Mo. 270.

All the instructions asked by appellants wholly ignored the issue tendered by the pleadings and the evidence as to the fraudulent character of the transaction. Instructions should be predicated of all the issues and evidence in the case. But it is wholly immaterial what the instructions are, the verdict is for the right party, and in such case the court will not reverse for any technical errors.

V. I am of the opinion that the merits of the case are with the defendant on the other branch of it on which the principal contest seems to have been made at the trial. The money sought to be recovered in this action did not come into defendant’s hands on account of the sale contemplated by the parties. It was the product of another and wholly different sale, conducted under the auspices of the probate court, made by the administratrix, and a year after the trustees’ sale had passed, and subserved its purpose.

But we prefer to place this affirmance on the higher ground of stamping our disapprobation on such contracts as this. The discouragement of such attempts we think important for the preservation of the integrity of administrations, and the prevention of fraud and injustice.

The judgment of the circuit court is, therefore, affirmed.

All concur.

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Rehearing

ON MOTION EOE BE-IIEABING-.

Philips, P. J.

I. It is claimed that the creditors alone could complain of the fraudulent contract in question ; and that in this respect our opinion is in conflict with that of the supreme court in Steadman v. Hayes, 80 Mo. 323. This is a misconception of the attitude of the case at bar. The Steadman case but asserts the familiar rule, that in an action to set aside a - deed for fraud instituted by a third party, the defendant cannot interpose the fraud as a defence, when such creditors are strangers to the record. It does not hold that where A has conveyed his land to B, solely to defraud his creditors, in an action by A to recover this land, B may not plead the fraudulent purpose of the transaction. In such case the courts will afford no relief, but will leave the parties to the fraud- precisely where their mutual wrong has placed them. Brown’s Adm’r v. Finley, 18 Mo. 375" court="Mo." date_filed="1853-07-15" href="https://app.midpage.ai/document/browns-administrator-v-finley-7999118?utm_source=webapp" opinion_id="7999118">18 Mo. 375. So in Hamilton v. Scull’s Adm’r (25 Mo. 165" court="Mo." date_filed="1857-03-15" href="https://app.midpage.ai/document/hamilton-v-sculls-administrator-8000089?utm_source=webapp" opinion_id="8000089">25 Mo. 165), it is held to be a good defence to an action on a promissory note that it was given in furtherance of an attempt to defraud defendant’s creditors.

. The action of the bar is founded on the fraudulent contract, and is an attempt by one of the parties thereto to enforce its provisions against the other party. The moment that fact appears the courts should close their doors against the complainant.

II. It is further suggested that this court overlooked the fact that the circuit court granted to plaintiff an instruction, to the effect that the contract in question is valid. The fact was not overlooked. It was not commented on in the opinion because of the well recognized rule that where the judgment of the trial court, on the whole record, is for the right party, and especially so where the court tries the case without the intervention of a jury, this court will not reverse the case because of some misconception of the law by the trial court. The plaintiffs were not entitled to the instruction accorded them. It does not lie in their mouths to assign for error on appeal that a verdict is inconsistent with a declaration of law wrongfully accorded at their instance. Crews v. K. C., St. Jo. & C. B. R. R. Co., Ante, P. 302.

Nor can we perceive the force of the objection, now interposed by this motion for are-hearing, that by the action of the court in so declaring the law respecting the validity of the contract, all questions of fraud were eliminated from the case, or that plaintiffs could thereby have been induced to forego the introduction of any evidence in its possession touching the integrity of the contract. This declaration of law, of course, was not made until all the evidence was in and both parties had rested. And as the vicious character of the contract appeared onthe’face of the contract itself, it was not competent for the trial court to bind this court by any construction it might give to its legal effect and character, so as to preclude us from affirming its judgment on the ground that on the whole record its judgment was for the right party. The defendant’s evidence tended to show that the contract was conceived in fraud. The plaintiffs did not controvert the fact; but relied upon their misconception of the law. By the record, as they left it, we determine their appeal.

III. It is also urged that we overlooked the facts that before the final trial in the circuit court the statute of limitation had run against any outstanding claims against the estate, and that all debts had been paid and the money distributed.

Waiving any discussion as to the legal effect of such fact on the contract, it is enough to say there is nothing in the record indicating that between the time of the execution of the contract and the expiration of the two years within which such claims might have been probated, the outstanding claims were not presented and allowed. As to the other facts assumed, the record wholly fails to show that all the debts had been paid or all the money had been distributed. The clear inference, on the contrary, from plaintiff’s evidence is, that the debts paid were those provided for in the contract; while the only money shown to have been distributed was that paid over to defendant. Nor is there anything in the record to preclude the inference that the money so received by defendant might not be called for by the administrator to respond to debts allowed against the estate.

IY. Counsel also call our attention to certain other proceedings had in one of the circuit courts on a controversy growing out of this contract between these same parties,, and the action of the circuit court thereon, and the fact that the issues therein are pending on appeal in the supreme court. These are wholly matters in pais, not appearing on this record. If they did so appear we possibly might feel embarrassed to differ from the nisi court, but certainly would not be concluded by any opinion it might entertain. And as to the supreme court, while we try to follow where it has led, we cannot do so by anticipation. We assume in advance that there will be no conflict between'its conclusion, arising on the same state of facts, and that reached by this court.

The motion for re-hearing, the other judges concurring, is overruled.