Case ID: nc_175/html/0038-01.html
Source: Caselaw Access Project
Author: {"author": "Hoke, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

MRS. LOUISE DICKS MARSHALL et al. v. R. P. DICKS et al., Administrators of M. C. DICKS, Deceased.
    (Filed 12 December, 1917.)
    1. Contracts, Illegal — Courts.
    Our courts will not enforce tbe obligations of an executory contract wbicb is illegal or contrary to public policy or against good morals, or lend tbeir aid to tbe acquisition or enjoyment of rights or claims wbicb grow out of or are necessarily dependent upon sucb contracts.
    2. Same — Fraud—In Pari Delicto.
    A conveyance of lands to defraud or avoid creditors is illegal; and where sucb is made tbe ground for recovery by an heir at law, contending that it was so made by bis mother to tbe defendant for her benefit during her life and then in trust for her heirs at law, be and tbe defendant are m pari deUoto, and the law will leave them in statu quo.
    
    3. Contracts, Illegal — Fraud—Pleadings—Allegations—Courts.
    Where tbe plaintiffs claim land as heirs at law of a deceased grantor who bad made, a conveyance of tbe same with intent to defraud bis creditors, and tbeir right to recover is made to depend upon the illegal transaction, it is not necessary that they allege fraud on tbe part of tbe defendant, tbe grantee in tbe deed, for tbe court to deny a recovery.
    Civil ACTION, tried before Cline, J., and a jury, at July Term, 1917, of RANDOLPH.
    Tbe action was instituted by plaintiff, two of tbe children, heirs at law and distributees of M. 0. Dicks, deceased, to enforce tbe payment of $5,600, being balance due on a note and mortgage executed by G. F. Hankins to Mrs. M. 0. Dicks (now deceased) and transferred by written assignment absolute in terms to defendant R. P. Dicks, a son of Mrs. Dicks, sucb transfer and assignment alleged by plaintiffs to have been in trust to collect tbe proceeds and pay to said M. 0. Dicks if living, and if collected after ber death to pay same to ber beirs at law, etc. H. M. "Worth, administrator of M. 0. Dicks, having failed to sue for or collect said amount, was made party defendant, tbe other defendant being tbe son, R. P. Dicks, and two daughters, also distributees and beirs at law of said M. 0. Dicks.
    At close of tbe plaintiff’s testimony, on motion, there was judgment of nonsuit, and plaintiff having duly excepted appealed.
    
      Walser & Walser and Brittain & Brittain for plaintiff.
    
    
      W. G. Hammer, R. Q. Kelly, and King & Kimball for defendant.
    
   Hoke, J.

Tbe evidence on tbe part of plaintiff tended to show that during ber lifetime, Mrs. M. 0. Dicks, now deceased, bolding a note and mortgage on which there was a balance due of $5,600, transferred same by written assignment absolute in terms to her son, defendant R. P. Dicks, and at tbe time of tbe transfer there was an agreement by parol that tbe assignee should bold and collect tbe note in trust for bis mother; that at sucb time tbe said M. 0. Dicks was involved in debt and tbe transfer was made by ber with tbe intent and purpose to avoid payment of ber debts. Said M. 0. Dicks thereafter died, and tbe present action is instituted by plaintiffs, two of ber children and beirs at law and dis-tributees, against R, P. Dicks to enforce an accounting of tbe proceeds alleged to bave been collected and now held under and by virtue of said assignment, tbe other children of deceased being made parties defendant, and also tbe administrator of M. G. Dicks, be having declined to join in said litigation.

Upon these facts, we concur in tbe view of bis Honor below that tbe plaintiff should be nonsuited.

It is tbe fixed principle with us and, so far as we are aware, of all courts administering tbe same system of laws, that when the parties are in pari delicto they will not enforce tbe obligations of an executory contract which is illegal or contrary to public policy or against good morals. Nor will they lend their aid to tbe acquisition or enjoyment of rights or claims which grow out of and are necessarily dependent upon sucb a contract. Fashion Co. v. Grant, 165 N. C., 453; Pfeifer v. Israel, 161 N. C., 409; Lloyd v. R. R., 151 N. C., 536; Edwards v. Goldsboro, 141 N. C., 60; Culp v. Love, 127 N. C., 457; King v. Winants, 71 N. C., 469; Blythe v. Lovinggood, 24 N. C., 20; Sharp v. Farmer, 20 N. C., 255; McMillan v. Hoffman, 174 U. S., 639-654; Battle v. Nutt, 29 U. S., (4 Pet.), 184; Armstrong v. Toler, 24 U. S., 258 (11 Wheat.); 1 Waites Act. & Def., 43.

In King’s case, supra, it is held as follows: “The law prohibits everything which is contra bonos mores, and, therefore, no contract which originates in an act contrary to the true principles of morality can be made the subject of complaint in courts of justice.” In Blythe v. Loving-good: “An executory contract, the consideration of which is contra bonos mores, or against the public policy or the laws of the State, or in fraud of the State, or of any third person, cannot be enforced in a court of justice.” And in Sharp v. Farmer: “No action can be sustained in affirmance and enforcement of an executory contract to do an immoral act, or one against the policy of the law, the due course of justice, or the prohibition of a penal statute.” And in Battle’s case (4 Peters), supra: “The law leaves the parties to such a contract as it found them. If either has sustained a loss by the bad faith of a particeps criminis, it is but a just infliction for premeditated and deeply practiced fraud. He must not expect that a judicial tribunal will degrade itself by an exertion of its powers to shift the loss frqm one to the other, or to equalize the benefits or burthens which may have resulted from the violation of every «principle of morals and of law.” And in Armstrong v. Toler (11 "Wheat.), supra: “Where a contract grows immediately out of and is connected with an illegal or an immoral act, the law will not lend its aid to enforce it. So if the contract be in part only connected with the illegal considerations and growing immediately out of it, though in fact a new contract, it is equally tested by it.”

The cases in this jurisdiction hold further that a. conveyance or contract made between the parties with the intent to delay, hinder and defraud one’s creditors comes directly within the principle. Pass v. Pass, 109 N. C., 484; York v. Merritt, 80 N. C., 285.

• It is urged in behalf of plaintiffs that the position is not open to defendants on the record, for the reason that there are no allegations of fraud in the pleadings, but this, too, must be resolved against the appellants. Where a litigant is making a fraud perpetrated on him the basis of his claim, or is seeking to set aside deeds or contracts on that ground, then the fraud charged must be averred and ordinarily the essential facts must be set forth with sufficient fullness and accuracy to indicate the fraud charged and to apprise the offending party of what he will be called on to answer (Mottu v. Davis, 151 N. C., 238) ; but the principle has no application to cases like the present, and, so far as examined, the Courts have uniformly held that wherever it appears, and with or without averment in the pleadings, that- a litigant is asking the aid •of the Court in the enforcement of rights growing out of an illegal or immoral transaction and dependent upon it, relief or recovery is denied. As said in some of the cases, it is not that the Courts favor the one or the other, but it declines to interfere and leaves the parties where they have placed themselves by the unlawful or iniquitous agreement.

In Cansler v. Penland, 125 N. C., 578, it was held in effect that, in .•such case, the law withdraws its support as soon as the illegality of a contract is discovered, and Paircloth, Q. J., delivering the opinion, quotes with approval from Coppel v. Hall, of Wallace, 74 U. S., 542, as follows : “The defense is allowed, not for the sake of the defendant but of the law itself. It will not enforce what it has forbidden and denounced. .. . . Whenever the illegality appears, whether the evidence comes from one side or the other,-the disclosure is fatal to the case. No consent of the defendant can neutralize its effect. A stipulation in the most solemn form to waive the objection would be tainted with the vice of the original contract, and void for the same reasons. Wherever the contamination reaches, it destroys. The principle to be extracted from all the cases is that the law will not lend its support to a claim founded on its violation.” And to like effect is Oscanyan v. Arms Co., 103 U. S., 261; Reid v. Johnson, 67 Pac., 381; Sheldon v. Pruessner, 35 Pac., 201; Cumberland Tel. & Tel. Co. v. City of Evansville, 127 Fed., 187-198; Richardson v. Buhl, 77 Mich., 632.

In Richardson1 s case, supra, it was held: “Courts of their own motion will take notice of illegal contracts which come before them for adjudication and will leave the parties where they have placed themselves.” And, in Sheldon v. Pruessner, supra: “The courts, in the due administration -of justice, will not enforce a contract in violation of law, or permit plaintiff to recover upon a transaction in violation of public policy, even if the invalidity of the contract or transaction be not specially pleaded.

In the present case the owner, having in her lifetime, by written assignment, absolute in terms, transferred the note and mortgage in •question to ■ defendant, the plaintiffs claiming as volunteers, can only recover by establishing the agreement as alleged and relied on that the assignee was to hold in trust for the owner, and that the facts showing that this transaction was for the purpose of hindering, delaying and -defrauding creditors of the owner. The law leaves the parties where they have placed themselves in reference to the property and, on the record, we must hold that recovery has been properly denied.

No error.