Court Opinion

ID: 5004814
Source: CourtListenerOpinion
Date Created: 2021-10-01 01:50:55.959631+00
Date Added: 2024-06-11T08:17:13.947369
License: Public Domain

On Motion for Rehearing.
We sustain appellees’ contention made in their motion for a rehearing to the effect that, appellants having paid the $500 and planted the fruit trees under the contract of purchase dated September 30, 1930, and not under the contract dated February 7, 1931, it was not necessary for appellees to make offer of restitution of these items before they could seek cancellation.
We, however, adhere to our holding, that the original purchase of the land was not an illegal contract. In the first place John Osterritter, while he was on the witness stand, admitted that he supposed, at the time of his purchase of the land, that his co-adventurers were making a commission on the deal. This being true, he had knowledge that his coadventurers had an interest in the deal which was antagonistic to his interest. This fact alone is sufficient to take the purchase of the land out of the category of illegal contracts. Because, for a contract of •this nature to be an illegal contract the fiduciary must have a private interest in the contract which is,undisclosed and unknown to his coadventurer or principal.
In the second place, the notes which are the subject-matter of this suit were not executed in the purchase of the land by the coad-venturers but in the deal when appellants sold their interest in the land to appellees. However, appellees’ contention is, that the original deal being illegal this subsequent deal is also illegal. We do not agree with this contention — there was no betrayal of trust in this deal. If appellees had been betrayed, it was in the first deal.
 The general rule is that where a contract is illegal and void it is unenforceable when executory and when executed no relief is awarded either party. Appellees are the ones that come into court seeking relief. If the contract be treated as strictly illegal, then no relief would, as a general rule, be awarded to either party. To illustrate this idea, if a controversy had arisen between Board and Forbes on the one hand, and appellants on the other hand, as to this deal, if same is to be considered as an illegal contract, the doors of the court would have been closed to them because each was equally guilty of the fraud. Appellants, in pretending to pay their part of the cash consideration, and Board and Forbes in pretending to receive same. But the situation is different with appellees, they were innocent of any false provisions in the contract or deeds and had no knowledge of same save and except they presumed that appellants were making a commission, thus the door of the court would not be closed to appellee's, but would be- open to them to come in and seek an injunction preventing appellants from placing these notes in the hands of innocent purchasers and to seek the cancellation of same. However, when appellees thus came into court they are treating the contract not as illegal but only as voidable, and can only ask for rescission by abiding by the rule of equity, which requires that he who seeks equity must do equity.
It follows that the transaction whereby ap-pellee John Osterritter bought out appellants’ interest in the land was a voidable and not a void transaction, and one which might properly and legally be compromised by the parties. John Osterritter, after discovering the fraud, having entered into a compromise agreement with appellants is bound thereby.
This case seems to be almost on all fours with the case of Garrison v. Bowman (Tex. Civ. App.) 183 S. W. 70. The court in that case held that the appellants, who retained the land after the discovery of the fraud, were not entitled to rescission but could only sue for damages. In the case at bar ap-pellees having retained the land and made no effort to cancel or rescind the original de¿l whereby Osterritter was deeded the land, could only sue appellants for damages. Having entered into a compromise as to those damages, appellees were bound by the compromise agreement.
Appellees’ motion for a rehearing is overruled.