Case ID: me_10/html/0071-01.html
Source: Caselaw Access Project
Author: {"author": "Mjsluen C.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Smith & al. vs. Hubbs Administrator of Hubbs.
    A. fm'nisljed goods to B. at the request of C. to hold and sell in the name, and as the agent of C. under a fraudulent arrangement between the three, to protect the goods from attachment at the suit of B’s creditors. Tn a suit brought by A. against C. to recover the price of the goods, it was keltl, that it was competent for C. to allege and prove the fraud, in defence of the action — and that B. was admissible as a witness for that purpose.
    Assumpsit, on account annexed to the writ for goods sold and delivered. They were delivered to one Silas M. Weymouth ; and the plaintiffs contended, and stated in the opening of the cause to the jury, that they were delivered to Weymouth on the credit of the defendant’s intestate, and his promise to pay for them. This was denied by the defendant.
    The plaintiff then called Oliver II. Dorrance as a witness, who testified, that on the 21st Sept. 1829, the intestate, who was a seafaring man, and Weymouth, came to his store and applied for goods to be delivered to Weymouth; — that he let Weymouth have a small assortment, say to the amount of three or four hundred dollars, and charged them to the intestate, who said he was going to supply Weymouth with goods to fill up a small store ; — that Weymouth made the selection of goods; —■ that one or the other of them said that Smith Brown, (the plaintiffs,) were to furnish the West India goods : —• that Weymouth soon after opened a store ; — that the witness supplied him with goods from time to time, and charged them to the intestate, Hubbs; —■ that he should not have credited Weymouth; — that he had settled with Weymouth, who had paid him in full.
    
      George E. Hacker, also called by the plaintiff,
    testified that he was clerk to Weymouth in his store, which was kept by him as agent, and it was so expressed on his sign; —■ that it was kept in Hubb’s name ; — that the invoice of goods purchased were in his name, and bills against purchasers were made out in Weymouth’s name as agent, and some of the notes were thus taken ; — that Hubbs, the intestate, once furnished money to the amount of $273, for which Hubbs asked, and Weymouth gave a receipt; — and at another time $110, by way of an order on a Mr. Lunt; — that Weymouth charged himself with what he took from the store.
    
      Weymouth, who testified in behalf of the defendant,
    stated that Brown, (one of the plaintiffs) informed him of a vacant store, and advised him to take it; — that he told Brown he was embarrassed by the failure of the Merrills; that Brown told him he had better begin again and try ; that there would be no difficulty; that the witness might get his father’s name ; that he, Brown should be willing to have the witness trade under him, as matter of form, but they had so much business of, their own they did not wish it. That Brown also named William Hubbs, the intestate, as one who might make such an arrangement ; — that some days after, the witness met Brown and Hubbs and had some conversation with them; that Brown told Hubbs he did not wish any one to lend his name for security of payment; observing that he was willing to look to the witness for payment; but wished, or advised the witness only to appear as agent, so as to prevent the old creditors of the witness from calling on him; that soon after all three went into Smith &/■ Brown’s store, and nearly the same conversation took place there; that Hubbs examined some of the articles purchased; that he took some notes for goods sold in the name of Hubbs; that he bought goods of several other merchants in Portland in his own name; that since the death of William 
      
      Hubbs lie had made several payments to Smith Sf Brown, amounting to about Si; 223.
    
      Moses Hall was called by the plaintiffs,
    and testified that he was one of the assessors for Portland, during the years 1831 and 1832 ; —■ that Weymouth told him the stock in the store belonged to William Hubbs; — that he did not know which was taxed for it, but whoever was, he, Weymouth, should pay the tax.
    The counsel for the plaintiffs objected to Weymouth as a witness, or rather to his competency to testify to the arrangement by him stated, with Smith &f Brown; —• contending that such an arrangement was a fraud and conspiracy to deceive and injure the creditors of Weymouth; that though such an arrangement, if proved by legal evidence, would defeat the plaintiffs’ action, still that Weymouth could not be admitted as competent to prove the fraud and conspiracy.
    The Chief Justice however overruled the objection, and the jury returned a verdict in favour of the defendant' — the case being reserved for the opinion of the whole Court upon the correctness of this ruling of the presiding Judge.
    There was also a motion filed by the plaintiffs’ counsel for a new trial, because the verdict was against evidence.
    Longfellow, for the plaintiffs,
    contended that Weymouth was incompetent to testify to the facts, for the proof of which he was called, because he would thereby be testifying to his own fraud. It would be against the policy of the law to permit it. Churchill v. Suter, 4 Mass. 156.
    
      Weymouth was not only incompetent,
    but the evidence itself was inadmissible. — Not competent for the defendant to set up the fraud of his intestate in the defence of this action. A third person might avail himself of it, and take the property, but a party to the fraud cannot. Roberts v. Roberts, 2 Barn. Aid. 367 ; Montefeori v. Montefeori, 1 Wm. Bl. IÍ, 363 ; Osborne v. Moss, 7 Johns. R. 161 ; Bac. Abr. tit. Fraud, p. 307.
    A contract, though fraudulent, is binding between the parties to it, and may be enforced, unless the plaintiff is obliged to disclose the fraud in seeking his remedy. A defendant cannot allege and prove his own turpitude in defence, and thereby discharge himself from an obligation otherwise legal.
    The verdict ought also to be set aside, because it is against the weight of evidence.
    Mr. Longfellow here went into a particular examination of the testimony, and endeavoured to maintain the position taken.
    
      Fessenden &f Deblois, for the defendant.
    The facts in the case do not show any attempt to defraud the creditors of Weymouth. The debts due to his then existing creditors had been incurred long before this transaction — they therefore, could not be deceived by it — those credits had not been given on the faith of these new goods. Nor could the new creditors be deceived — no false credit was given Weymouth — he did not pretend to the trading community, that he owned the store and goods, but the contrary.
    B.ut if the agreement between the plaintiffs and Hulls and Weymouth was fraudulent, then a demand arising out of such contract will not be enforced by a court of law. And it is not only competent for the defendant to avail himself of this defence, but he may show the fraud by Weymouth himself. In support of which, they cited, Jordan v. Lashlrook, 7 T. It. 601; Stark. Fio. 2, 87, in note; also pages 17, 18 ; Clark v. Shee.&f al. Cowper, 197; 2 Ld. Raym. 1008; Ward v. Mauns, 2 Atkins, 228; Bean v. Bean, 12 Mass. 20; Loker v. Haynes, 11 Mass. 498; Hill v. Pay son al. 8 Mass. 559; 1 Phillips Ev. 32, and cases there cited; Goodwin v. Hubbard, 15 Mass. 210 ; Wait v. Merrill, 4 Greenl. 102.
    Where both parties are equally guilty, the maxim of law is in pari delictu, potior est conditio defendentis.
    
    Where one has paid money to induce another to do an illegal act, the payer cannot recover it back. The cases cited by the counsel on the other side are of this kind. There is a marked distinction in this respect, between contracts executed and contracts executory. If the money be not paid in the case above supposed, the facts may be shown and payment resisted — but if paid it cannot be recovered back.
    As to the motion to set aside the verdict as against evidence, they contended, that if there was any evidence on the part of the defendant, which uncontradicted would authorise the jury to find a verdict for him, then it should not be disturbed. It should be an extreme case to authorise the Court to set aside a verdict as against the weight of evidence. The present, certainly not such an one. On the contrary, the weight of evidence, It was contended, was entirely in favour of the defendant.
   The opinion of the Court was at a subsequent term delivered by

Mjsluen C.

motion for a new trial, predicated on the report of the pro,siding Judge, has been placed, in the argument, by the counsel for the plaintiffs, on two grounds — viz. :

1. That by law it was not competent for the defendant to set up the defence which he was permitted to make : —•

2. That Weymouth, in support of the defence, was an inadmissible witness. The counsel contended that both objections were well founded, because the intestate and Weymouth were both parties to the fraudulent arrangement to which Weymouth testified. And the counsel for the defendant, on his part, contended that the arrangement abovementioned was not fraudulent and illegal. —■ The correctness of this position, we apprehend cannot be maintained on any sound principles; for the object in view of the parties was to secure and protect the property that was purchased of the plaintiffs, as well as of other persons, and placed in the store, from the old, that is, the then existing, creditors of Weymouth; under false appearances to deceive them, and thus to defraud them. Surely such a transaction cannot be sanctioned in a court of justice. The design of all three, according to the finding of the jury, was, in reality, that Weymouth was to be considered to all intents and purposes as the purchaser of the goods; and then they were to be placed by him, under the cover of the name of the intestate, and, to appearance, as his property. Such is the real nature of the transaction, as the jury must have found it: it thus assumes the essential character of a fraudulent sale by a debt- or, to conceal his property from his creditors ; in the formation and execution of which design all three of the parties were aiding and acting in concert. Nine times in ten, in similar cases, the object is to defraud existing, not future, creditors. Howe v. Ward, 4 Greenl. 195. The next inquiry is, whether the plaintiffs’ first ground of objection, above stated, is tenable. The argument is, that no man shall defend himself by alleging and proving his own turpitude. The counsel for the plaintiffs admits that where the fraud that poisons, or the illegality that destroys a contract is disclosed and proved by him who claims the benefit of it, there ■ the other party, attempted to be charged by such contract, may avail himself of such fraud or illegality to defeat it. But he contends that when a plaintiff has proved the contract on which he has declared, and which appears to be fair and legal, the defendant shall not be permitted, by way of defence, to prove that the contract was fraudulent and illegal between the plaintiff and himself, and thus avail himself of his own wrong and violation of law. Notwithstanding the emphalical manner in which the counsel contended for the above distinction, we arc not aware of its existence, except under a limitation which is not applicable to the case before the Court. That limitation we will- state. There is a marked and settled distinction between executory and executed contracts of & fraudulent or illegal character. Whatever the parties to an action have executed for fraudulent or illegal purposes, the law refuses to lend its aid to enable either party to disturb. Whatever the parties have fraudulently or illegally contracted to execute, the law refuses to compel the contractor to execute or pay damages for not executing; but in both cases leaves the parties where it finds them. The object of the law in the latter case is, as far as possible, to prevent the contemplated wrong ; and in the former, to punish the wrongdoer, by leaving him to the consequences of his own folly or misconduct. The case of Doe on dem. of Roberts v. Roberts, cited from 2 Barnw. & Ald. 367, differs from the case under consideration. It is a case of an executed contract. George Roberts made a deed to the plaintiff, of the premises in question, for which ejectment was brought against the grantor’s widow, and on cross examination of a witness to the deed, it appeared that jt was made on an illegal consideration. On a question reserved, the Court disallowed the defence, on the ground that a grantor could not impeach his own deed on account of his own fraud. To make this case more plain, suppose the grantor had brought an action against the grantee to recover the land back on the ground of fraud ; it is very clear he could not recover against his own conveyance, though it was a voluntary and fraudulent one ; for it was good between the parties and unaffected by the statute of Eliz. Yet if in the case reported the Court had sustained the defence, on the ground of fraud between the grantor and grantee, the title of the latter would have been defeated and the heir of the grantor would have held the land, in direct opposition to the principle above stated, as to executed contracts of a fraudulent or illegal character. The case from Wm. Bl. 363, Montefeori v. Montefeori, was of the same nature as Doe v. Roberts. The abstract of the case of Osborne v. Moss is in harmony with the case of Doe v. Roberts : it is in these words, “ where a person makes a fraudulent convey- “ anee of his goods to another, for the purpose of defrauding “ his creditors, and dies intestate, the conveyance though void against creditors, is good against the intestate : and an action “ may be maintained against the administrator for the goods.” This is the case of an executed' contract also. — With respect to the supposed distinction abovementioned, we have not found it stated in any of the numerous cases we have examined, which relate to contracts of an executory kind, and which were fraudulent or illegal. In many of them there is a statement of the facts on which the questions of law arose, without an intimation by which party the proof of them was introduced. In some cases of special contract, the fraud or illegality appeared on the face of it. In others, as cases for money had and received, the facts are necessarily disclosed in'the opening of the cause. In others, a fair contract and ground of action is displayed in the opening, and it must, from the nature of the case, have been the testimony on the part of the defendant that disclosed the fraud or illegality to the Court. In numerous other cases it appears distinctly that the evidence, destructive of the plaintiff’s right to recover, was introduced by the defendant, though he was a party to the fraud or illegality. The following cases support the last position. Cockshot v. Bennett, 2 T. R. 763 ; Lightfoot & al. v. Tenant, 1 Bos. Pul. 55. It was an action on bond, and the defendant pleaded the facts which disclosed the poison and defeated the action. Clugar v. Panaluna, 4 T.R. 466, — a smuggling transaction — proved by the defendant. Waymell v. Reed & al. 5 T. R. 599, a case of the same kind; and the smuggling arrangement between the parties proved in the same manner. Howard v. Hodges, 1 Bos. & Pul. 341, note; 1 Selw. N. P. 79; Bowry v. Bennel, 1 Camp. 348; Girardy v. Richardson, 1 Esp. Cas. 13; Bayley & al. v. Taber, 5 Mass. 286. In Holman v. Johnson, Cowp. 341, Lord Mansfield says, The objection that a contract is im- moral or illegal as between plaintiff and defendant, sounds at “ all times very ill in the mouth of the defendant. It is not for “ his sake, however, that the objection is ever allowed ; but it “ is founded on general principles of policy, which the defen- “ dant has the advantage of, contrary to the real justice, as be- “ tween him and the plaintiff, by accident, if I may so say. The principle of public policy is this, ex dolo et malo non ori- “ tur actio. No Court will ever lend its aid to a man who founds “ his cause of action upon an immoral or illegal act. If from “ the plaintiff’s own showing or otherwise, the cause of action appears to arise ex turpi causa, or the transgression of a pos- “ itive law of this country, the Court says he has no right to be “ assisted. Where both are equally in the wrong, potior est “ conditio defendentis.” Starkie, vol. 2, page 86, says, “ Where the illegal consideration is set forth upon the record, “ the objection may be taken either by demurrer, or in arrest of “ judgment. But where it does not appear on the record, the “ defendant may shew that the claim is in reality founded upon “ an illegal and noxious agreement.” In the case of the Inhabitants of Worcester v. Eaton, 11 Mass. 368, Parker C. J. in delivering the opinion of the Court, says, “ It appears to be the settled law in England, and we are satisfied it is also the “ law here, that where two persons agree in violating the laws “ of the land, the Court will not entertain the claim of either “ party against the other, for the fruits of such am unlawful bar- “ gain. If one holds the obligation or promise of the other, to “ pay him money, or do any other valuable act, on account of “ such illegal transaction, the party defendant may expose ike “ nature of the transaction to the Court” — and thus defeat the action.

We apprehend that the authorities we have collected and stated in this opinion, are sufficient to shew that there is no such legal distinction as the counsel for the plaintiffs has endeavoured to establish, as to the source from which the evidence of covin or illegality is to be derived, in actions on executory contracts. We may, however, add to the list, the familiar defence of usury in actions on contracts: in all such cases, the evidence of the usury is always introduced by the defendant to prove the illegality of the contract. The defence which destroys a gaming note is always sustained by proof adduced by the defendant, though he is guilty of a violation of law, and relieves himself from his obligation by such violation in concert with the plaintiff. For the reasons thus given, we are of opinion that it was competent for the defendant to set up the defence which he was permitted to make.

As to the second ground of objection, namely, the alleged incompetency of Weymouth to testify in support of the defence, there seems to be no room for hesitation. In Mill v. Pay son, 3 Mass. 559, it was decided that the grantee of a deed was a good witness to prove the deed without consideration and void against creditors. In Loker v. Haines, 11 Mass. 498, it was decided that the grantor in a deed, if not interested, was a good witness for a similar purpose. The same principle was decided in the above cited case of Inhabitants of Worcester v. Eaton. So also in Bean v. Bean, cited in the argument. It would seem to be a sound principle, that the same reasons and policy which render it proper and salutary to permit, a partner in the fraud or illegality in the contract, when sued upon it, to disclose and prove such fraud or illegality by way of defence to the action, render it proper for any other partner, except the plaintiff, to be a good witness in support of the defence. On the whole, we are all of opinion that the ruling of the Judge was correct, and that the motion for a new trial cannot be sustained for any reasons appearing on the report of the Judge.

The only remaining question is, whether the verdict ought to be set aside, as being against evidence, as stated in the motion on file. On this point, we need say no more than that the testimony was contradictory, and therefore, peculiarly proper for the exclusive consideration of the jury. We see no ground for disturbing the verdict on account of the conclusion to which they arrived.

Judgment on the verdict.