Court Opinion

ID: 3571578
Source: CourtListenerOpinion
Date Created: 2016-07-05 23:24:37.098833+00
Date Added: 2024-06-11T07:40:57.871637
License: Public Domain

The object of the transfer of this property was to defraud the state of its revenues. The parties to the transaction were in pari delicto, and the heirs of Mrs. Delgado have no rights superior to those she had at the time of her death.
The State of New Mexico in an appreciation of its soldiers, enacted, "real and personal property of every soldier shall be exempt from taxation in the sum of two thousand dollars."
While the state is generous with its soldiers, it does not propose that its generosity shall be abused by such fraud as the court found to exist in this case, and to protect it therefrom enacted further: "Any person claiming or knowingly receiving said exemption with respect to property of which he is not the real owner, or any person claiming or knowingly receiving said exemption when not entitled thereto by any trick, fraud, evasion or subterfuge, or any person who is not entitled to the said exemption and who shall secure or attempt to secure the benefits of same by conveying his property to a person entitled to exemption under this act with intent to secure said exemption to such person not entitled thereto, and any person violating any provision of this act, shall be punished by a fine of not less than $500.00 nor more than $3,000.00 or imprisonment in the penitentiary not less than one year nor more than three years or by both such fine and imprisonment at the discretion of the court, and any or all property conveyed with intent to violate any of the provisions of this act shall escheat to the state upon proper proceedings therefor." Sec. 141-1408, N.M.Sts. 1929.
That such contracts are void is settled by innumerable decisions. In Third National Exchange Bank, etc., v. Smith,17 N.M. 166, 125 P. 632, regarding the validity of a deed of trust and notes securing it, given in violation of a federal penal statute, this court stated (page 635): *Page 591 
"* * * The defense interposed here is that the consideration of the contract out of which the notes and trust deed originated, and which they were given to secure, was based upon the violation of a penal statute of the United States. We think the authorities uniformly hold that an act done in violation of a statutory prohibition is void, and confers no right upon the wrongdoer. Reinhart had no right, under the law, to assert the right to the exclusive use and possession of government land, to which he had no claim or color of title, made or acquired in good faith, or asserted right thereto by or under claim made in good faith, with a view to entry thereof at the proper land office, etc., and in asserting such right he was acting in violation of law, and any conveyance or contract which he might make to any portion of the land to which he asserted such right to the exclusive use and possession, and into which his assertion of such right to the exclusive use and possession entered, and by which he attempted to confer such right upon another party, was utterly void. * * *
"We are aware that the rule above stated is subject to the qualification that when upon a survey of the statute and from its subject-matter, and the mischief sought to be prevented, it appears that the Legislature intended that the violation of the statutory prohibition should not render a contract void, effect must be given to that intention, but a survey of the statute in question fails to disclose any such intention."
Also, see, Waskey v. Hammer et al., 223 U.S. 85, 32 S.Ct. 187,56 L.Ed. 359; Niblack et al. v. Seaberg Hotel Co. et al., 42 N.M. 281,  76 P.2d 1156; Miller v. Ammon, 145 U.S. 421, 12 S.Ct. 884,36 L.Ed. 759.
The majority seem to hold that because the statute prescribes certain penalties, that, these exclude all others; in other words that such penalty is exclusive. I quote from the majority: "It is to be noted that the statute is penal in character and must therefore be strictly construed, and also that the statute contains no provisions that the forbidden conveyance shall be void between the parties."
The opposite is true. That is, unless it affirmatively appears from a survey of the statute, taking into consideration its terms, subject matter and the mischief sought to be prevented, the legislature intended that such contracts shouldnot be void, they are absolutely void. Miller v. Ammon, supra; Third National Exchange Bank v. Smith, supra; Niblack v. Seaberg Hotel Co., supra.
I conclude that the deed in question was void, as I find nothing in the statute to indicate that the legislature intends that contracts made in its violation should be valid.
It is true as the majority opinion holds, that ordinarily where parties to illegal contract are in pari delicto, the court will leave them where it finds them, whether the contract is executory or executed, refusing relief to both, and that this action of the court gives no validity to the transaction, *Page 592 
but deprives the parties of all right to either enforce the contract or be relieved from it. There is a well recognized exception to this rule; and that is, where such contracts are against the public policy of the state, or against public interests.
"Although the parties are in pari delicto, yet the court may interfere and grant relief at the suit of one of them where public policy requires its intervention, even though the result may be that a benefit will be derived by a plaintiff who is in equal guilt with the defendant. But here the guilt of the parties is not considered as equal to the higher right of the public, and the guilty party to whom the relief is granted is simply the instrument by which the public is served. But courts are and should be cautious in affording relief to a fraudulent debtor, or other violator of the law under this exception, and should not only where it is evident that some greater public good can be subserved by action than by inaction.'" 13 C.J. title "Contracts", Sec. 441.
Also, see, Gilchrist et al. v. Hatch, 183 Ind. 371,106 N.E. 694, Ann.Cas. 1917E, 1030, and note to Rideout v. Mars, Ann. Cas. 1913d 770; Buck v. Walker, 115 Minn. 239, 132 N.W. 205; 12 Am.Jur., title "Contracts", secs. 214 and 215.
The rights of the State are grossly violated by such unconscionable acts on the part of ex-soldiers and their relatives. To leave the parties where the court finds them would deprive the State of taxes due it for several past years, as well as future revenue. Consideration for the public welfare should be paramount; and in my opinion requires relief, notwithstanding, it may benefit the heirs of Mrs. Delgado, who otherwise would be entitled to no relief.
It is the public policy of this state, expressed in its constitution and statutes, that property subject to taxation shall bear its proportion of the burden of taxes which must be collected for the expense of government. As between the parties to this suit, the court is neutral. It is not interested in the transaction except to prevent a fraud against the state; otherwise it would leave the parties where they have placed themselves.
The opinion of the majority is an invitation to those who, in like situations, are willing to abuse a privilege granted to them by a generous state government, to defraud it of its revenue.
For years, the owners of this property have not been paying their just taxes on it, and cannot be compelled to do so while the legal title is in the defendant. This court should not say in such case that because the parties entered into a contract in violation of law and are in pari delicto, that the contract must stand. This is an invitation to others to go and do likewise. The mutual guilt of the parties to the deed should not be a bar to the granting of relief to the plaintiffs, the effect of which is to restore to the state its revenues (past and future), even though one of the parties *Page 593 
to the fraud (or her heirs) benefits thereby.
It is immaterial that the state may sue to escheat the property. This drastic remedy of forfeiture, with its attendant presumptions in favor of the holder of the title, may fail; or the law officers of the state may not institute proceedings. Notwithstanding public rumors have persisted for years that such practices are common, I have never heard of any suit being filed to escheat property under this statute.
The contract was void, and the parties were in pari delicto; but the interests of the state are involved and they are paramount. The very object of the contract was to rob the state. The defendant should not be rewarded for his perfidy by the court, and at the same time, reassure others guilty of the same conduct, or who may be inclined to follow this example, that the courts are helpless to prevent it.
The judgment of the district should be affirmed.