Court Opinion

ID: 6992989
Source: CourtListenerOpinion
Date Created: 2022-07-24 03:28:17.608439+00
Date Added: 2024-06-11T16:09:40.381338
License: Public Domain

Waterman, J. The bill filed by appellant is for the enforcement of a contract alleged to have been made by him with appellees. The first question that arises is, whether the contract as stated is one which a court of equity will enforce. The rule that no one should be permitted to take advantage of his own wrong—JWullus cowmodum eapere potest de injuria sua propria—is familiar. We are therefore called upon to inquire what it really was that appellant alleges was agreed to be done, and what has been done in pursuance of such agreement. The allegation is made that he told appellees that he wished among other things to borrow money of them with which to pay his debts, and that they expressed a willingness to loan him money for such purpose; but it does not appear that any attempt to obtain money for such purpose was actually ever made. Practically, according to the bill, the advances and the application for advances were confined to the money necessary to buy in for the use of appellant his property when offered for sale. That the scheme was one well calculated to enable appellant to defraud his creditors, is apparent. Lots 4 and 5 were at the time he made this arrangement, worth §30,000, and lot 9 was then worth §2,000. Upon these the only incumbrance shown to have existed was for the sum of §10,620. In this property appellant had an equity of over §20,000, yet he arranges to have it sold, and it was sold to appellees, first on a judgment for §562, then two of the lots were sold for §12,800 on the mortgage. A secret trust, as appellant says, was created in his favor, he apparently having lost this valuable equity. Next, as a part of the arrangement, and lest some of his creditors might redeem from the judgment sale or seek to reach his secret equity, he filed a petition in bankruptcy. By this last proceeding appellant practically stayed the hands of his creditors, suspended the operation of the ordinary remedies they possessed, and compelled them to go into the bankrupt court in order to reach his property. By the adjudication of bankruptcy the valuable secret equity which he had in this property passed to his assignee, became a bankrupt asset to be sold, the proceeds thereof to be divided among his creditors. Appellant also, by the filing of his petition in bankruptcy, placed himself in a position where he might, by the payment of but a percentage upon the claims against him, obtain a discharge that would free him from all his indebtedness. In this proceeding, in which, under his solemn oath, he summoned his creditors into a court of his own choosing and compelled them there alone to look for the ascertainment and payment of their claims, he was bound to the exercise of the utmost good faith. It nowhere appears in the bill he has filed in this cause, that in the bankruptcy court he at any time disclosed the fact of his ownership of the valuable equity in this property, he now tells us that he then had. So far as appears, his creditors and his assignee were suffered to remain in ignorance of this, a fact which it was his moral and legal duty to at once make known. That he did not do so, and that his creditors were defrauded by his action and his silence, is apparent from- the fact that this valuable equity, amounting to over §20,000, was on the 26th day of March, 1877, sold by Robert E. Jenkins, his assignee, to Henry C. Durand, for his, appellant’s, use and benefit, for the sum of §315. And the arrangement for this proceeding under which his creditors were swindled out of this great sum, a court of equity is now'asked to lend its aid in carrying out. As to the lots alleged to have been worth the sum of §30,000, the work of secreting all evidence of appellant’s title and interest seems to have been complete February 27, 1877. As to the remaining lot, then worth §2,000, the right of creditors to redeem was finally cut off March 19, 1878. Appellant began, as he says, to collect rents and pay them over to appellees ; this continued until 1886 ; appellant keeping no account of how much he thus paid over, as he neither kept nor asked for an account of what appellees had paid for or kept on behalf of the premises. Twelve years thus passed away, when appellee saw fit to, as they told him, employ another real estate agent to look after the property; nearly four years after this he filed his bill. It is a fundamental principle that he who goes into a court of equity seeking relief, must do so with clean hands. The allegation in the bill that appellant had no intention of hindering or delajdng his creditors, is similar to that made in the case of Dunaway v. Robertson, 95 Ill. 419, concerning which the court say: “ This is but the statement of a collusion and does not control in the case.” The arrangement for an actual sale of appellant’s property under the circumstances described would be for a fraudulent purpose as regards creditors, notwithstanding any assertions to the contrary. Dunaway v. Robertson, supra. One of the most common occasions for the enforcement of the rule that he who comes into equity must do so with clean hands, arises in cases -where a debtor has in any manner transferred his property for the purpose of defrauding his creditors and afterward seeks as against the transferee to recover back the property. The door of a court of equity is always shut against such a claimant. Pomeroy’s Equity Jurisprudence, Sec. 401; Wheeler v. Sage, 1 Wall. 518 ; Bolt v. Rogers, 3 Paige, 156 ; Riedle v. Mulhausen, 20 Ill. App. 68; Ryan v. Ryan, 97 Ill. 38; Fitzgerald v. Forristall, 48 Ill. 228 ; Phelps et al. v. Curts et al., 80 Ill. 109 ; Nesbit v. Digby, 13 Ill. 387. It it true that according to the allegations of the bill, appellees were engaged with appellant in a fraudulent scheme, but in such case the rule is in pari delicto potior est conditio defendeniis. Miller v. Marckle, 21 Ill. 152. A secret trust in real estate resting upon an agreement to hinder or delay creditors, will not be enforced. Fast v. McPherson, 98 Ill. 468; Moore v. Wood, 100 Ill. 451. The agreement as stated was one which could not fail to hinder and delay creditors; the bankruptcy proceeding alone hindered and delayed them. Appellant did not make or state in his bill a cause entitling him to relief in a court of equity, and the bill was properly dismissed. Judgment affirmed.