Case ID: la_17/html/0074-01.html
Source: Caselaw Access Project
Author: {"author": "Bullard, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Gravier’s Curator v. Carraby's Executor.
    An obligation or contract without a cause, or with a falso or unlawful one, can have no effect, and tho law will give no action to enforce it.
    No action can be maintained on a contract, tho consideration of which is wicked in itself or prohibited by law.
    A simulation is not necessarily a fraud. It is only when injury to third persons is intended that it becomes fraudulent. — 18 L, 126; 14 L. 51; 1 A. 70.
    So, an agreement or contract that property which had been conveyed to persons to secure them for advances and protect the transferror from the pursuits of his creditors, should be sold out by the former as theirs, and the price accounted for to the latter, over and above their ad varices, in preference to judgment creditors, cannot be enforced in a court of justice.
    Appeal from the court of probates for the parish and city of New Orleans.
    This is an action by the curator of the vacant estate of Jean Gravier, deceased, to recover from the executor of Antoine Oarraby, deceased, the sum of $55,000, the value of certain property, which he alleges was conveyed to the Carrabys by simulated sales.
    The plaintiff alleges that Jean Gravier died in October, 1834, at a very adr vanced age, in embarrassed circumstances, but having claims to a large [119] property. That he conducted his business loosely, from 1803 to the time of his death; being in constant dread of executions, he early commenced concealing his property from his creditors by passing simulated sales to various persons who advanced him money on usurious interest, who were to hold his property in trust for him, and at the same time to secure themselves for their advances. That the persons with whom he was in the habit of making these simulated contracts were Etienne, Pierre and Antoine Oarraby, of New Orleans, and the late Nicolas Eoehe; the two last named Carrabys being associated as partners in commercial business.
    The plaintiff further shows that a large square of ground bounded by Baronne, Phillippa, Gravier and Perdido streets, was, after several transfers, first from Jean Gravier in 1810 conveyed at his request to Pierre & Antoine Carraby, nominally for $1,000, but in fact they paid nothing but only held it in trust for said Gravier and to secure their advances to him. Several other squares and lots of ground all in the new Faubourg St. Mary, were in like manner conveyed; all of which transfers and sales by the said Gravier and others acting on his behalf, to the said P. <& A. Carraby, are alleged to be simulated, without a valuable consideration, and executed with the intention of securing the Carrabys for their occasional advances and for preventing said property from seizure; they always remaining the owner of the claims and the property. That in 1819, there was a settlement of accounts between the parties and an account current signed by them, in which Gravier became indebted for a balance of $5,130; and after this period he ceased to have any more dealings of consequence. In the following year he abandoned his affairs as hopeless and did not venture to let it be known that he was the owner of all of said property, which he had conveyed or transferred to the Carrabys; but on the contrary concealed it and denied his title to it, aware that it would be immediately seized by his creditors.
    He further shows that in 1826 Pierre Oarraby died, and his brother [120] Antoine succeeded by inheritance to all his deceased brother’s estate. That they have accounted for some of said property, but that they claimed the balance as their own, under the pretended pledge to them. That Antoine Carraby died in the kingdom of France, August 24th, 1832, and that P. Guesnon has been appointed his testamentary executor. That most of said property has been sold and that the estate of A. Carraby is liable for the value thereof. The plaintiff then enumerates the pieces of property for which said A. Carraby’s estate is liable, and prays judgment for the sum of $55,000, as the value thereof, and for $5,000 in damages.
    After judgment by default the executor came in and applied for a delay of six months to answer in, which was disallowed by the court.
    The defendant then pleaded a general denial; and if any sale or retransfer of the property was ever agreed to be made by the Oarrabys (which he expressly denies) he avers that Gravier failed to pay the price necessary to redeem said property.
    These pleadings formed the material issues on which the case was tried.
    The plaintiff propounded a string of interrogatories to the defendant with the view to procure all the information and acknowledgments concerning the books, papers and accounts of the Oarrabys, as would have authorized their production; but were answered that the defendant knew nothing of them and supposed they were in France. In an amended petition the books ahd papers were more definitively described and the defendant obtained a delay of six months to answer the new call made on him. In the mean time Lafon and other creditors of Gravier intervened, averred the succession was insolvent; that they had an interest with the plaintiff in the success of the case. The suit was instituted in February, 1835. On the 29th Januaiy, 1836, tho [121] defendant answered the plaintiff’s supplemental petition, and the petition of intervention by general denial. The trial commenced in April following, and in May the defendant opened his case and introduced a mass of papers in evidence, (it being understood that it was subject to all legal objections,) and the books and notes of Gravier were all deposited in court.
    The papers of the Oarrabys were received from France, and let in new light on the facts of the case. They disclosed a regular series of accounts current, signed by both parties, beginning in 1812, and continuing until 1817, generally made out at the end of each year, showing the advances made by the Oarrabys to Gravier, and the moneys received by them for or from him. At the foot of each of these accounts is an agreement in which Gravier promises to pay the balance due. by him in a year, with twelve per cent, interest per annum, and the Oarrabys declare that, as security for the payment of this balance, they have íl en nantissement” certain property, which is very fully described, with the date of the acts given, by which Gravier apparently sold the property to them. The latest of these sales were made in 1815. Then follows an ordinary account current of the 17th October, 1819, without any mention of interest or property pledged. The last of these documents is dated December 27th, 1823, in which Gravier acknowledges himself indebted in tho sum of $13,277, which he promises to pay in one year. The Oarrabys enumerate very minutely the property they have in pledge, and Gravier agrees that if the debt is not paid at maturity, the Oarrabys shall have the right to sell so much of the property as may be necessary to pay themselves at public auction, after thirty days’ (advertisement in two newspapers. These documents show that the amount of Gravier’s debt was swelled by compound and usurious interest from the sum of $5,730, the amount ascertained to be due in 1819, to the aggregate amount of $13,277, in 1823!
    [122] It appeared at the commencement of this suit that Jean Gravier’s succession was insolvent, but at the close of the investigation it was admitted it was solvent, and that there would be a large balance for the heirs.
    The judge of probates came to the conclusion that there was the sum of $22,920 due to Gravier’s succession from the Carrabys, after settling the various accounts between them; and gave judgment for this sum; ordering it to be paid out of the funds of Antoine Carraby’s succession, for the use and benefit of the succession of Gravier. The executor of Oarraby appealed.
    When the case came up to this court, the counsel for the defendant and appellant filed a peremptory exception, “ that the action against the defendant, as set forth in his petition, cannot be maintained, because the contracts on which it is said to be founded are illegal, immoral, and contrary to public policy,” and “ judgment should be entered against the plaintiff, with costs.”
    
      Eustis and Soulé, on the part of the defendant and appellant,
    maintained: 1. That the principal cause of action, as set forth in the plaintiff's petition, is immoral and illegal; and wherever any legal cause of action is disclosed, it is so coupled with the principal one as to be inseparable from it. No court of justice can lend its aid to enable a party to recover in such a transaction. See case of Armstrong v. Toler, 11 Wheaton, 258, 275, and cases cited.
    2. The case of Griffin v. Lopez, decided by this court, and reported in 5 Martin, 145, and relied on by the plaintiff’s counsel, does not cover this case. The simulation in that case was not alleged to have been for purposes which the law repudiates.
    
      L. Janin, for the plaintiff and appellee,
    insisted: 1. That when this suit was instituted, the estate of Gravier was insolvent. That the allegations were made in the petition, and the action brought under these circumstances, which fully justified them. The curator represented the estate as insolvent, and was acting in behalf of the creditors; this claim was expressly based [123] on its insolvency, and the right of the plaintiff,, as the representative of the creditors, to sue and set aside transactions entered into in fraud of their rights. Neither the plaintiff nor the intervening creditors then imagined they spoke in the name of Gravier or his heirs, or that the latter would have the least interest in the issue. The suit could not have been instituted on the ground of simple simulation; and the plaintiff could only recover in one of two cases, viz., if he could obtain from his adversaries a counter-letter, or if he proved fraud upon third, persons. His allegations had therefore to be framed so as to meet both contingencies; and in the character he there acted, they could not injure the estate, whether one or the other of the supposed cases should be discovered to be the true one.
    2. The facts of this case fully 'show that there was nothing illegal, immoral, or contrary to public policy, in Gravier’s dealings with the Carrabys, except the usury of the latter. The real nature of Gravier’s business with them is very easily understood. It is not shrouded in mystery, as would as suredly have been the case if fraud had been intended; it is on the contrary explained with great clearness, in the explicit and business-like accounts current with the Oarrabys, rendered to Gravier from time to time. They acted as Gravier’s agents on many occasions, and they stipulated twelve per cent, interest for advances, without any additional compensation for their trouble. They were less liberally rewarded than factors who attend to the business of planters. Instead of mortgages, they took for their security simulated sales of property, intended to have the same effect. A regular account current, followed by the description of the property held, “ en nantissement,” was made out at least once a year. From 1817 down, they had no new dealings with Gravier, and only renewed notes ho had given them for his debt, at short intervals, raising the interest to 18 per cent. In 1828, their last con-[124] tract with him stipulated that if their claim was not paid within a year, they should be authorized to sell property enough to pay themselves. The evidence does not show that Gravier had any intercourse with them after 1824. From 1825 to 1829, they sold all the property, without rendering any account. The plaintiff now calls for this account, besides which he complains of certain usurious charges.
    3. It is shown that previous to 1812, Gravier had similar dealings with E. Carraby and N. Roche; and his acts came under the eye of this court, when the object of his simulated sales was correctly interpreted. The court says that from the “ evidence introduced it may be inferred that Eoche was an agent of Gravier’s, making to his principal, advances of money, for the security of which the latter made conveyances of land, which were to be rescinded on his paying any balance which he might appear to owe, from time to time, on a settlement of accounts. See case of Ferrari’s Administratrix v. Lambeth & al. 11 La. Reports, 106.
    4. It also appears from the testimony that when Gravier’s intimacy with P. A. Carraby commenced, he ceased to have any business with Eoche or E. Carraby. He never made a simulated sale to any person but to those who lent him money; his only simulated sales after 1812 were made to P. & A. Carraby, and the last in 1815. During all this time Gravier was a rich man, though always pressed for money for want of management, and property to a very large amount was standing in his name. The property sold since the commencement of this suit, and which has rendered his estate solvent, was still in his name, and the large square of ground recently recovered from J. McDonough was not sold by the sheriff until 1830. This latter case is a striking illustration of the manner Gravier managed his affairs. In 1830, a great square of ground belonging to him was sold at sheriff’s sale, and bought by MoDonougli for only ninety dollar’s. Since Gravier’s death, in 1836, this [125] same property was recovered by the present plaintiff from McDonough, and resold by him for one hundred and twenty-eight thousand dollars! This rendered the estate perfectly solvent since the institution of this suit.
    5. As soon as the contracts and agreements between Gravier and the Carrabys were obtained and produed in evidence, it was clear the latter were Gravier’s bankers and agents. It then becomes an actio mandati directa; a settlement of accounts between principal and agent. Neither party would he permitted to prove any thing contrary to or beyond them and no attempt of the kind was made. Not a syllable in all the numerous writings in evidence, shows that either party intended to injure third persons. The simulated sales between the parties were proved, and the Carrabys were called on to account for all the property of Gravier’s which had thus been transferred, and held or sold by them. There is no fraud in this, and especially as relates to third persons or creditors. The matters set forth in the exception filed in this court are not shown to exist, and the grounds assumed in the defence cannot avail the defendant. This action is clearly maintainable on principles settled by a decision of this court. See the case of Griffin's executor v. Lopez, 5 Martin, 145.
   Bullard, J.

delivered the opinion of the court.

The plaintiff, curator of the estate of Jean Gravier, represents in his petition, that his intestate always conducted his business in a very careless manner, neglected his numerous engagements, and from the year 1803 to the time of his death suffered many judgments to be rendered against him, and much of his property to be seized and sold under execution. That being constantly in dread of executions and pressed for money, he early commenced a practice of concealing his property from his creditors by passing simulated sales of it, and making conveyances of his property to various persons who advanced him money on usurious interest and who were to hold the property in trust for him and to secure their advances. It is alleged that the persons with whom these simulated contracts were principally entered into, were the late [126] Meólas Boche, and Etienne, Pierre and Antoine Oarraby. The petition enumerates several pieces of property which it is alleged were conveyed to the Carrabys by sueh'simulated contracts without consideration, but intended to secure the said Carrabys’ occasional advances of money, and to prevent the seizure of said property. The said Gravier always remaining the real owner of said property. It is further alleged that the affairs of Gravier in that manner became utterly deranged, and that in 1824, judgments were rendered against him for large amounts, and that the property remaining in his name was seized and sold, but that the Carrabys protected the property thus nominally conveyed to them from seizure. That after that period Jean Gravier abandoned his affairs as hopeless and did not venture to let it be known that he was the owner of said property, but on the contrary concealed his other property and denied his title to it, lest it should be immediately seized by his judgment creditors. The plaintiff proceeds, to allege that the property thus conveyed was sold by the Carrabys, and the object of the present suit is to compel their legal representatives to account to the estate of Gravier for the value of the property thus alienated by them to the prejudice of Gravier.

The judgment of the court of probates having sanctioned to a certain extent these pretensions of the plaintiff, the defendant prosecutes the present appeal. His counsel has interposed in this court a peremptory exception founded upon the alleged illegal and immoral character of the agreements between the original parties and invokes the maxims of law, “ allegans turpitudinem suam non est audiendus; ” and “ ex turpi causa non oritur actio.”

The counsel for the. appellee contends in reference to this exception, that it ought not to prevail because the plaintiff being curator of the estate of Gravier represents the creditors rather than the heirs, and that although since [127] the institution, of this suit it has turned out that the estate is solvent, and that the amount reserved may benefit the heirs, yet the principle relied on is inapplicable to the present case.

The first part of this argument assumes as a principle that contracts admitted to be reprobated by law contrary to good morals and public order may be enforced for the benefit of creditors although not for the direct personal advantage of one of the parties. But the Code declares that an obligation without a cause or with a false or an unlawful one can have no effect. The taw gives no action to enforce them whoever may demand it, unless it be in cases of innocent holders of the evidence of such contracts in a commercial form. It is enough in the present case, in our opinion, that the legal representative of Gravier is plaintiff to let in the inquiry as to the turpitude of the transactions out of which this suit has grown.

By the Roman law the right to recover back what had been paid on an illicit contract depended upon the question which of the parties was dishonest or whether both were chargeable with the same turpitude. If the party who had received were alone dishonest, the sum paid could be recovered back even although the purpose for which it was given had been accomplished. “ Quod si turpis causa accepientis fuerit, etiam si ressecuta sit, repeti potest.” As in the case supposed by Julien of money paid to prevent the commission of sacrilege, robbery or murder. But where both parties are chargeable with the same turpitude the law gives no action. “ Ubi autem et dantis et aecepientis turpitudo versatur non posse repeti dicimus.” And the case supposed by Paul is that of a bribe given to the adversary’s attorney, which could not be recovered back. “ Ham turpiter accepta pecunia justius penes eum est qui deceptus sit, quam quidecepit.” In such cases the maxim is “in pari causa turpitudinis potior est causa possidentis.” Pothier’s Pandectes, vol. 5, book 12, title [128] 5. These principles apply in cases where the corrupt or reprobated contract has had its effect and the object of the action is to repair the injury complained of by one of the parties. It is hardly necessary to add that a, fortiori the law will not lend its aid to enforce the performance of such contracts in the first instance. The principle has been held to apply not only in relation to the original corrupt or reprobated contract but to any new engagements growing immediately out of it. The chief justice in delivering the opinion of the court of the United States in the case of Armstrong v. Toler, says, “no principle is better settled, than that no action can be maintained on a contract the consideration of which is either wicked in itself or prohibited bylaw. How far this principle is to effect subsequent or collateral contracts the direct and immediate consideration of which is not immoral or illegal, is a question of considerable intricacy, on which many controversies have arisen and many decisions have been made.” After reviewing several of those cases the chief justice says, “ one of the strongest cases in the books is Steers v. Laushley, 6 Term Rep. 61, where the broker had been concerned in stock jobbing transactions and had paid the losses, drew a bill of exchange for the amount on the defendant and after its acceptance indorsed it to a person who knew of the illegal transaction on which it was drawn, the court held that such indorsee could not recover on the bill.” 11 Wheaton, 258—274.

This court has in more than one case recognized these principles and especially in the case of Mulhollan v. Voorhies, 3 Martin, N. S. 48.

But the counsel for the appellant relies upon the case of Griffin v. Lopez, 5 La. Rep. 145, as sanctioning a different doctrine, and upon 2 Chardon, Traite du Dol et de la Fraude. In that case the original intent of the parties does not appear to have been dishonest or immoral. One of the parties it was alleged entered into a simulated contract with the other in order to protect a part of his property from unjust lawsuits and prosecutions by certain ene- [120] mies. It appears that there was also a counter letter executed: The object of the suit was to prevent the apparent vendee from disposing of the property as his own, after having obtained surreptitiously possession of the counter letter which alone showed the true character or rather the absence of any contract between the parties. A simulation is not necessarily a fraud. It is only when injury to third persons is intended that it becomes fraudulent; and the decision in the case of Griffin v. Lopez does not appear to militate against the principles above expressed; for, if the simulation was at first innocent and not intended to injure third persons, the subsequent suppression of the counter letter and conversion of the property to the sole use of the apparent vendee was in itself a fraud against which the apparent vendor was probably entitled to the protection of the law. We are not prepared to say that the principle recognized in that case is applicable to the present.

But we are referred to a French author who has treated ex professo the subject of fraud and simulation and the plaintiff’s counsel places great reliance upon him in support of his cause. The theory of this author is, that even in relation to the parties themse ves simulation is a ground of radical nullity, and that each one may attack it against the other who seeks to consummate the intended fraud or by a new fraud profit by the first. He lays down an axiom well worthy of attentive consideration as the source in our opinion of the errors of his system — to wit: “ that whatever may he the object or purpose of a fraudulent simulation it has that reprobated character only became it infringes a prohibitory disposition of the law. Now in this case it can have no effect.” He then quotes the two articles of the Code Napoleon, 1131 and 1133, corresponding to those of the Code of Louisiana, which declare that an obligation without cause or consideration or with a false or unlawful one can have no effect; and that the cause is unlawful when it is prohibited by law, when it is contrary to good morals and public order, he proceeds to say, [130] “ we have nowhere either in the Code or elsewhere any statute more absolute or less susceptible of exception; it is one of the fundamental principles of the-theory of contracts, and it is established for the sole interest of the contracting’ pan-ties, since in relation to third persons their condition is secured by art.. 1165 ; contracts have their effects only between the contracting parties and do not affect third persons.”

Again the author says, “ the contrary system is founded upon the axiom, “propriam turpitudinem allegans non est audiendus” — it will be instantly perceived that this axiom can he properly invoked only- by third persons,when the author of the fraud seeks to use it as an arm against them. Another-axiom not less moral may be opposed to it, “ nemini sua fraus patrocinad debet.” But it is not by axioms so general and which are not re-enacted by any text of our Code, that exceptions can be created to a rule so imperative as that set forth in the articles which we have first cited.

This position, that the maxim which denies an action in reference to immoral or prohibited contracts has relation only to third persons, cannot receive the sanction of this court. The whole of the 5th title of the 2d book of the Digest treats the matter as it relates to the parties towards each other, either as the right to enforce dishonest and immoral contracts or to recover back what has been already paid in execution of them. Nor can we concur with that author in the opinion, that this stern morality of the Roman law has not been retained in our modern legislation. On the contrary we think that when the Oode declares that contracts prohibited by law, or contrary to good morals or public order shall have no effect, it recognizes the same general principle, and although the fundamental precepts of the ancients “ honesté vivere, alterum non ldere, swum cwique tribuere” constituting the religion [131] of the law, have not been expressly venerated as formal texts, yet they lie at the foundation of our jurisprudence, and that courts of justice are not reduced to the humiliation of adjusting among dishonest men the results of their unholy speculations or of protecting one party against another while engaged in a common purpose, at war with the best interests of society and subversive of public order.

It remains to inquire whether these principles are applicable to the case now before the court, and what was the true character of the dealing and contracts between the original parties. It is not denied that the pretended sale of lots and other property by Gravier to the Oarrabys was for the double purpose of protecting the property against the pursuits of his creditors and of securing the reimbursement of certain loans of money and other advances with usurious interest; and that to a certain extent it was successful. That such contract was fraudulent and might have been successfully attacked as such by the creditors at the time, if they had had the proofs now before us, we cannot doubt. The Oarrabys were made to appear to the world as absolute owners and thus the judgment creditors of Gravier were frustrated in their pursuits. The ultimate agreement was that the property should he sold by the Oarrabys as theirs, and the price accounted for to Gravier over and above the amount of their advances, in preference to the judgment creditors. Would a court of justice have lent its aid to enforce such a contract? to carry out the fraudulent intentions of the parties ? Oould Gravier at that time have recovered damages from the Oarrabys for the non-performance of such a contract ? We think he could not. “ In pari causa turpitudinis potior est conditio possidentis.” This action is brought by his legal representative to recover from the estates of the Oarrabys the value of the property thus alienated together with damages.

We conclude that the exception ought to be sustained.

[132] It is therefore ordered, adjudged and decreed, that the judgment of the nourt of probates he avoided and reversed and 'that ours be for the defendant with costs in both courts.