Case Name: LEADBETTER v. HAWLEY
Court: Oregon Supreme Court
Jurisdiction: Oregon
Decision Date: 1911-07-25
Citations: 59 Or. 422
Docket Number: 
Parties: LEADBETTER v. HAWLEY.
Judges: 
Reporter: Oregon Reports
Volume: 59
Pages: 422–429

Head Matter:
Argued July 19,
decided July 25;
rehearing denied September 5, 1911.
LEADBETTER v. HAWLEY.
[117 Pac. 289: 117 Pac. 505.]
Contracts — “Executed Contract" — "Executory Contract."
1. A contract is “executed” when all is done that Its terms require to be performed, but until full performance the contract is “executory.”
Contracts — Illegal Contracts — Disaffirmance.
2. Plaintiff, who was a stockholder and holder of bonds of a corporation, delivered the bonds to defendant, who claimed to be a stockholder, and the parties agreed that defendant should retain the ownership of his stock and vote it as directed by plaintiff.' Defendant was not a stockholder. Defendant never voted, nor was he directed how to vote the stock. Held, that plaintiff could sue for recovery of the bonds, and thereby disaffirm the contract, though it was contrary to public policy, since, the contract remaining executors', the law will aid in recovers' of the property delivered In part performance.
Contracts — Illegal Contracts — Right to Disaffirm.
3. One may disaffirm a contract, invalid as against public policy, and recover properts' parted with thereunder, provided only the contract still remains executory, whether he was equally with the other party at fault, or was drawn into it by fraud, though in the latter case he may be more entitled to relief.
Pleading — Allegations—Conclusions From Facts Alleged.
4. A complaint to recover property parted with under an Illegal contract need not in so many words confess the illegality of the contract and plaintiff’s fault, hut a party is entitled to the benefit of any legal conclusions that may be properly drawn from the facts stated in his pleading; so that, plaintiff having stated all the facts from his standpoint, including the guile pf defendant leading him into the situation from which he asks to be extricated, showing the contract is still executory, and it being discernible as .matter of law that the contract was against public policy, and hence void, he is entitled to this conclusion, and the further conclusion that he Is entitled to recover the property.
From Multnomah: John B. Cleland, Judge.
Statement by Mr. Justice Burnett.
This is an action by F. W. Leadbetter against W. P. Hawley. The substance of the complaint is, that about January 1, 1906, the plaintiff being a stockholder in the Crown-Columbia Pulp & Paper Company and the owner of $50,000 of its bonds delivered them to the defendant, who claimed to be also a stockholder in that company, on the agreement that the defendant should retain the ownership of his stock and vote the same as directed by the plaintiff, or would allow the plaintiff to vote it at all the stockholders’ meetings of the corporation for the protection of the interest and holding of plaintiff in the corporation, to all of which the defendant agreed, but that afterwards the plaintiff discovered that the defendant did not own any stock in the company, and by reason of his misrepresentations on this subject had deceived and defrauded the plaintiff. The complaint further alleges that the plaintiff has demanded the return of the bonds, but that the defendant refuses to return them, and now wrongfully and unlawfully withholds possession of the same from the plaintiff, within Multnomah County, State of Oregon, to the damage of the plaintiff in the sum of $9,000. The prayer is for the recovery of the possession of the property, or, in case recovery cannot be had, for the value of the same in the sum of $50,000, with the damages claimed.
The defendant denies the alleged fraud and the agreement narrated in the complaint, under which plaintiff claims the bonds were delivered; admits the delivery of the bonds, but claims they were a gift from the plaintiff to the defendant.
The reply traverses the new matter in the answer. At the close of all the testimony, on motion of the defendant, the court directed a verdict for him on the ground that the transaction set out in plaintiff’s complaint was an illegal contract, void as against public policy. From the consequent judgment, the plaintiff appeals.
Reversed.
For appellant there was a brief over the names of Messrs. Cake & Cake, with an oral argument by Mr. H. M. Cake.
For respondent there was a brief over the names of Messrs. Chamberlain, Thomas & Kraemer, and Messrs. Dolph, Mallory, Simon & Gearin, with oral arguments by Mr. Warren E. Thomas and Mr. John M. Gearin.

Opinion:
Mr. Justice Burnett
delivered the opinion of the court.
Stripped of its redundant verbiage, the complaint sets out a cause of action in replevin in the detinet to recover the bonds in question. Conceding, without deciding, that the contract drescribed in the complaint and the testimony in support thereof was contrary to public policy, the plaintiff's right to recover depends upon two conditions: First, the action must not be for the enforcement of the illegal agreement, but rather in disaffirmance of it; and, second, the contract must at the commencement of the action be yet in the executory stage. Whether we accept as a postulate the position of the plaintiff that he was induced by the fraud of the defendant to surrender possession of the bonds, or adopt the assumption of the defendant that the transaction detailed in the complaint is illegal to the extent that the court will not interfere with the existing situation created by the parties, this action proceeds in disaffirmance of the alleged contract. The plaintiff is in court, not in favor of his agreement, but in spite of it; not to enforce it, but to be relieved from it. If he were seeking to compel the defendant to vote his stock in a particular way, or to enjoin him from voting, or to recover damages for the result of his vote, it might be said that the object of the action was to enforce the contract. None of these things, however, appear. On the contrary, the plaintiff wishes to retrace his steps and to be restored to what is his own, irrespective of whatever contract was attempted by the parties, or either of them, whether legally or illegally. A contract becomes executed when all is done that its terms require to be performed. Until that situation is attained, the contract is executory.
The contract in question contemplated something to be done by the plaintiff, to wit: the delivery of the bonds. It also had in view something to be done by the defendant, viz., voting his stock as directed by plaintiff. As to the part to be performed by the defendant, the contract is clearly executory, for he makes no pretension that he ever voted or was directed how to vote in pursuance of the agreement. The defendant does not claim to have carried out his part of the agreement in the least. The principle underlying such affairs is that, until the illegal contract is executed, the law will aid in the recovery of the money paid or the property delivered in part performance of'.the illicit enterprise; but when it is fully accomplished the courts will be closed to both parties, and will leave them without remedy. This doctrine is illustrated in Willis v. Hoover, 9 Or. 418; Bernard v. Taylor, 23 Or. 416 (31 Pac. 968: 18 L. R. A. 859: 37 Am. St. Rep. 693). Other decisions of this court involving matters of this kind and refusing relief are where the plaintiffs sought to enforce the illegal contract, as in Pacific Livestock Company v. Gentry, 38 Or. 275 (61 Pac. 422: 65 Pac. 597), or where the unlawful agreement was fully executed, as in Ah Doon v. Smith, 25 Or. 89 (34 Pac. 1093).
There is testimony in the record upon which the plaintiff was entitled to go to the jury upon the question of fraud alleged in his complaint. On the defendant's theory of the contract being against public policy, the plaintiff had not yet passed the place of repentance, the agreement being yet executory; and, as he is proceeding in disaffirmance of the contract, he had a right to be heard before the jury and take its verdict.
The judgment is reversed. Reversed.