Court Opinion

ID: 6232634
Source: CourtListenerOpinion
Date Created: 2022-02-17 20:25:25.439835+00
Date Added: 2024-06-11T08:57:55.693491
License: Public Domain

The opinion of the court was delivered, by
Thompson, J.
There is not much room for dispute about the legal principles governing in cases of confederated fraud, as between the parties to it. The supposed difficulty here lies in their applicability to the case in hand. “ There is a class of cases,” said my brother Woodward, in Miller’s Appeal, 6 Casey 478, “ where the parties to a fraudulent or even an illegal contract, have fully executed it themselves, in which courts of justice will not interfere to unravel their doings ; but, considering them in pari delicto, will leave them bound as they find them: 3 Barr 81; 12 Harris 62; 1 Jones 212; 3 Casey 90.” And he adds, what is an important test in cases like this, by saying, a “ contract, however, which remains to be executed, which stands in *375need of a decree of a court of justice to enable tbe parties to reap its fruits, and which is successfully impeached as covinous and fraudulent in fact, is easily distinguished from all such cases (executed contracts), and rests on a foundation of sand.”
Was .the judgment in this case an execution of the contract or transaction on which it was founded, so.as to put it out of the power of the defendant to retrace his steps by alleging the fraudulent purpose of it ? I certainly think it was. The pleadings in a suit are said in the elementary books to be the “ mutual altercations between the parties.” The next step is the trial, and this ascertains which party is right-in their altercations. Then follows the judgment, which is the conclusion of the law, and is said to bo the end of the law in regard to the controversy. All after that, in execution of the judgment, is ministerial, excepting where it may be judicial in aid of ministerial action. The judgment is to all intents and purposes conclusive on all matters pleaded or which might properly have been pleaded. So in judgments by confession the same principle exists. If one confess a judgment to another, with a full knowledge of its fraudulent purpose, and without being in any manner induced thereto, excepting as a confederate, he cannot in any sense be said to be - defrauded, for he knew what he was about and intended what he did. The judgment, therefore, as to him, being without fraud as between him and the party to whom it is confessed, cannot be impeached for fraud. 1 None which the law will reach was attempte'd to be shown.
The common law makes that which is fraudulent in fact, void ; but in all cases of confederated fraud, its maxim is in pari delicto, potior est conditio defendentis. Neither party will be aided or relieved against a contract executed by him. The statute of 13 Elizabeth has nothing to do with such" cases. It declares void all contracts intended to delay, hinder or defraud creditors, against the parties intended to be defrauded; but leaves it as between the parties as it was at common law; subject only to be affected, if not -within the maxim, by actual fraud upon one of the parties. If parties concoct a scheme to defraud others, and resort to a judgment to effect tiieir object, both having in view the same thing, there is no fraud between them, assuredly, of which either can complain or call on a court for relief. Courts will not move to change the condition of the parties any more readily in such case than they would to enforce an executory contract, which as a general rule they will not do. These are the principles of the authorities cited from 1 W. Bl. R. 364; 6 Watts 453; 5 Casey 219; to which many more might be added.
In this case the defendant was indulged with an issue to try the question of fraud in the judgment; fraud between themselves, for no others were party to the issue. The proof, however, fell short of this ; it showed that the judgment was confessed by the *376defendant to the plaintiff to defraud the defendant’s creditors, in which both participated; and this is just where the learned judge erred, for he held, and so charged, that if this was the purpose, of the judgment it was “ legally invalid for any purpose and, “ as it was not executed or collected, the law will not lend its aid for its enforcement.” It should have been remembered that the law will not lend its aid to relieve a party against the effect of his own fraud, any more than it will aid to enforce fraudulent contracts. It leaves both as it finds them. That the judgment was not collected was not the test that the contract out of which it sprung was executory. That was merged in the judgment and concluded by it, and needed not the aid of a court to reach its fruits. Process of execution, which is of course, was all that was needed.
'We think in this treatment of the case the learned judge lost sight of the great principle of the case, embraced in the maxim — ■ nemo allegans suum turpitudinem — in order to avoid his acts. The very reverse of this was held when the learned judge allowed the proof to be sufficient to relieve the defendant; which showed that he had confessed the judgment to defraud others without having been led into it by the fraud of the party to whom he confessed it. If he was cheated by his own machinery, he cheated himself, and must abide it; but this was not the effect given to his acts in the view the learned judge seems to have taken of them. The effect, unperceived of course by the learned judge, was to give the defendant a chance of escaping the consequences of his own fraud after having tried it, perhaps successfully, on his creditors. This is not our understanding of what should be the proper administration of the law in such cases, as is apparent from what has been already'said.
Our conclusion is that the court below erred in holding the judgment to be executory between the parties, and in charging, as we have already pointed out they did, and which is the substance of the second, third and fourth assignments of error. For these reasons the judgment in the issue must be reversed.
We have nothing to say in regard to the proposed set-off of this judgment; that is not before us. If the judgment is not otherwise impeached, it will depend on equitable principles whether it ■ will be a set-off against the defendant’s judgment or not. That will be determined at the proper time.
Judgment reversed, and venire de novo awarded.