Court Opinion

ID: 4894991
Source: CourtListenerOpinion
Date Created: 2021-09-02 23:55:58.578898+00
Date Added: 2024-06-11T08:12:40.768258
License: Public Domain

Stayton, Associate Justice.
The findings of fact by the judge who tried this cause show that the lost note sued upon was executed by B. B. Davis to Alfred N. Lewis, in consideration of property conveyed by the latter to the former with intent to defraud his creditors, and that this intent was known to all parties. They further show that Alfred N. Lewis, after the note was lost, but before its maturity, transferred his interest therein to Charles A. Lewis, who is not shown to have paid value therefor, and that he, after the maturity of the lost note, transferred it to the appellee.
The court below properly held that, under the existing facts, the note was subject to any defense which could have been urged against it in the hands of the person to whom it was originally made payable. The note was negotiable in form, but was not transferred by endorsement, as is necessary to pass the legal title to such paper. It was not in the possession of the party to whom it was made payable, nor is it shown that the person to whom it was assigned before maturity ever paid value for it.
It is well settled that, under such facts, it came into the ownership *501of the plaintiff subject to all defenses which the maker of it could urge against it, were it yet in the hands of Alfred H. Lewis, and that he stands charged with notice of the facts which attended its execution. Daniel on Neg. Insts., 741; Trust Co. v. National Bank, 101 U. S. 71; Allum v. Perry, 68 Me. 232; Bank v. Taylor, 100 Mass. 22; Foreman v. Beckwith, 73 Ind. 517; Beard v. Bedolph, 29 Wis. 142; Matteson v. Morris, 40 Mich. 55; Simpson v. Hall, 47 Conn. 417; Terry v. Allis, 16 Wis. 504; Boeka v. Nuella, 28 Mo. 180; Haskell v. Mitchell, 53 Me. 468; Hedges v. Sealy, 9 Barb. 214: Bissell v. Gowdy, 31 Conn. 49; Barlow v. Scott, 12 la. 65.
Such being the position of the plaintiffs, the court below held that those who represent the maker cannot now assert the illegality of the transaction. That as to them the note is to be deemed a valid instrument, and subject only to such defenses as could be urged against such an instrument in the hands of one holding only the equitable title thereto.
There are cases which hold that the maker of a note, given for the purchase money of property, which he knew the payee conveyed to him for the purpose of defrauding his creditors, cannot set up the fraudulent character of the transaction as a defense to the note. Amongst them are Carpenter v. McClure, 39 Vt. 9; Davis v. Mitchell, 34 Cal. 81; Dyer v. Horner, 39 Mass. 260; Sherk v. Endress, 3 W. & S. 255; Springer v. Drosch, 32 Ind. 486.
These decisions do not recognize any difference between contracts executed and executory, and are based on the language of the statutes declaratory of the illegality of conveyances made to defraud creditors, which, in most of the states, as here, only declare such contracts void as to creditors. Such statutory declaration does not, however, strip such a transaction of its fraudulent character, or give to it standing as a valid contract, which the courts will enforce.
“The proposition is universal that no action arises, in equity or at law, from an illegal contract; no suit can be maintained for its specific performance, or to recover the property agreed to be sold or delivered, or the money agreed to be paid, or damages for its violation. ” Pomeroy Eq., 940.
As between the parties to such a contract, who are in equal fault, no right exists which a court of justice will enforce.
“If the contract has been voluntarily executed and performed, a court of equity will not, in the absence of controlling motives of public policy to the contrary, grant its aid by decreeing a recovery back of the money paid or the property delivered, or a cancellation of the conveyance or transfer. As long as the contract is executory, *502it cannot be enforced in any kind of an action brought directly upon it. The illegality constitutes an absolute defense. ’ ’ Pomeroy Eq., 940.
And this is so for reasons of public policy, and not from regard for the interest of either party to such a contract. That the contract may have been executed by one party, furnishes no reason why the other should be compelled to execute his part of it yet remaining executory. McCausland v. Ralston, 12 Nev. 195; Briggs v. Merrill, 58 Barb. 399, Nellis v. Clark, 4 Hill 428; s. c. 20, Wend. 24; Norris v. Norris, 9 Dana 318 ; Harvin v. Weeks, 11 Rich. 601; Harwood v. Knapper, 50 Mo. 456; Ager v. Duncan, 50 Cal. 327; Hamilton v. Scull, 25 Mo. 165; Walton v. Lusten, 49 Miss. 576; McClenny v. Floyd, 10 Tex. 166.
Under the findings of fact, and the first conclusion of law reached by the court below, the judgment should have been for the defendants. The judgment will be reversed and here rendered—that the plaintiff take nothing, that the defendants go hence without day and recover of the plaintiff all costs incurred in this court and in the court below. It is so ordered.
Reversed and Rendered.
[Opinion delivered February 16, 1886.]
[Chief Justice Willie did not sit in this cause.]