Court Opinion

ID: 9550865
Source: CourtListenerOpinion
Date Created: 2023-08-07 18:43:45.510406+00
Date Added: 2024-06-11T15:22:35.171139
License: Public Domain

ON PETITION FOR REHEARING
(No. 2446;
*47OPINION
Blume, Justice.
A petition for rehearing has been filed in the foregoing case by the defendant. The original opinion herein is found in 214 P. 2d 477.
In this case the plaintiff and her deceased husband conveyed property of the value of approximately $11,-000 to the defendant, brother of plaintiff’s deceased husband, without consideration and under an oral agreement to reconvey the property upon demand. Plaintiff sought to have the brother declared trustee and asked to have the property reconveyed and the title quieted in her. The court refused the plaintiff relief on account of the fact that it appeared that the conveyance was made in fraud of creditors. The court also dismissed defendant’s answers and cross-petitions — one of the latter being in the nature of ejectment. He did not appeal. In view of that fact the only question before us was whether or not, upon plaintiff’s appeal, she should be deified relief upon the ground stated by the trial court. We believed that the facts and circumstances in the case justified us in taking a step additional to that taken by the trial court and order recon-veyance of the property in question and to quiet title thereto in the plaintiff.
The petition for rehearing is based on the ground of newly discovered evidence, and, secondly, on the ground that our decision is contrary to law and the evidence. We shall consider these grounds in their order. There *48is attached to the petition, a certified record of the proceeding in the District Court of Sheridan County resulting in a judgment in favor of Dr. O. L. Veach against the plaintiff herein, and her deceased husband for the sum of $500 and costs rendered on April 20, 1937. Counsel for defendant say in their brief that they and the defendant did not know of the judgment until February 9,1950. No affidavit to that effect is attached. We may accept the statement of counsel so far as they are concerned, but it is evidently incorrect insofar as the defendant himself is concerned. The proceedings show that he intervened in the suit and claimed an automobile which was attached in the case. If he forgot the suit little blame can be attached to plaintiff if she, too, forgot it. Counsel’s assertion that she committed a fraud upon the trial court comes, under these circumstances, with little grace. Plaintiff states in an affidavit filed herein that she was told by her husband that the Veach claim was settled; that she honestly believed that it had been fully paid and satisfied; that the judgment has, in fact, now been fully paid and satisfied, the date of the payment not appearing. Nothing to the contrary has been shown.
Appellate courts will at times, at the original hearing of a case, in order that a proper order may be entered, take into consideration an incontestible fact not appearing in the record on appeal. Generally, however, additional proofs cannot be supplied in the appellate courts. 5 C. J. S. 243-245, Hess vs. Conway, 93 Kan. 246, 144 P. 205. Few courts will grant a rehearing on the ground of newly discovered evidence. The general rule is to the contrary. 4 C. J. S. 2034, 3 Am. Juris. 347, 350. In United States vs. Maxwell Land-Grant Co., 122 U. S. 365, 30 L. Ed. 1211, 7 Sup. Ct. 1271, the court says: “If this court should grant a rehearing it could only be had, according to the uniform course of the court during its whole existence, upon the record now before the court *49as it came from the Circuit Court for the District of Colorado.” The rule should, of course, be applied with greater strictness if it is not shown that diligence has been shown in connection with the newly discovered evidence. Harris vs. Beazley, 2 Ky. Op. 548, Hummel vs. Muller, 102 Cal. App. 474, 238 P. 87. No proper diligence, we think, has been shown in this case. The judgment above mentioned was a matter of public record; defendant, as already stated, knew of the suit; plaintiff on her cross-examination was asked at length as to the payment of the hospital bill; she also testified as to the debt owing Dr. Veach, and stated that he “must have been (paid) because he never asked me for any money any more.” A little inquiry, accordingly, would have led to the disclosure of the facts. We do not accordingly think that we are justified in this case to grant a rehearing on the ground here discussed, particularly since it appears that the judgment has in fact been paid.
We shall then proceed to consider the second alleged ground for rehearing. And we shall first consider the homestead right. We think that our holding in that connection was sound. Section 5-201, Wyo. Comp. St. 1945 relating to fraudulent conveyances excepts from the assets of a debtor property which is exempt from liability for his debts. Our holding is also sustained in addition to the cases originally cited by Freeman vs. Funk, 85 Kan. 473, 117 P. 1024, 46 L. R. A. N.S. 487, 496, Tanton vs. State Nat. Bank of El Paso, Tex. Civ. App., 43 S. W. 2d 957, 959, Schuerman vs. Schuerman, 7 Alberta 380, 3 Scott on Trusts, page 2198. In 1 Restatement of the Law on Trusts, page 200, it is stated: “if the owner of a piece of land transfers it to another who agrees to hold it in trust for the transferor, and the purpose of the transferor in making the transfer was to prevent a judgment creditor from levying execution upon the land, the transferor can compel the trans*50feree to reconvey the land if it was a homestead of the transferor’s upon which the creditor could not have levied execution.”
That leaves for consideration the property as to the value over and above the homestead right of $2500— allegedly about the sum of $8500. The case is one of first impression in this court. We did not rest our decision on any one particular rule. To determine whether the conclusion at which we arrived was right or wrong, we must bear in mind that the general rule, the prevailing view, mentioned in the original opinion (not wholly adopted by the trial court, see 37 C. J. S. 1097, Sec. 264), which gives no assistance to a fraudulent grantor as between the parties, is in direct conflict with the principle of equity which abhors unjust enrichment. And the question in any case like that before us always is as to whether the one or the other of these clashing and irreconcilable rules should predominate. The answer is not always easy. The general rule had its origin in a period when defaulting debtors were regarded almost as criminals and when thousands of them languished in jail without mercy for non-payment of debts. See Curtis vs. Perry, 6 Ves. Jun. 740, 747, 31 Engl. Rep. 1285, 1288, (1802), Baldwin vs. Cawthorne, 19 Ves. Jun. 166, 34 Engl. Rep. 480 (1812), Doe vs. Roberts, 2 B. & Ald. 367, 106 Engl. Rep. 401, 47 Mich. Law Rev. 877-906 “Coming Into Equity With Clean Hands,” 3 Aubrey, Rise and Growth of the English Nation 136. It is not surprising that in view of such social atmosphere the principle in relation to unjust enrichment in cases like that before us was ignored. But with changes in ideology, the time was bound to come when the latter would be more and more pressing for equal or superior recognition, depending on the circumstances. We pointed out in the original opinion that the Massachusetts court holds that a defendant “cannot rely upon any attempt of the plaintiff to de*51fraud third persons,” in order to evade an agreement to reconvey, and that it will not always take notice of evidence of fraud in connection with the original conveyance. Levy vs. Levy, 309 Mass. 486, 35 N. E. 2d 659, 661, and cases cited. We also noted in our former opinion that Carman vs. Athearn, 77 Cal. App. 2d 585, 175 P. 2d 926, 933, seems to hold that a fraudulent grantor may purge his fraud at any time, and will then be considered as coming into court with clean hands when seeking enforcement of an agreement to reconvey. The merits or demerits of such holding must, in the proper case, be judged, in part at least, by its contrast with the rule as to unjust enrichment, which latter in any case is an evil per se. Various exceptions have from time to time been engrafted on the general rule here considered. For a comparatively recent innovation by some courts see Finnegan vs. La Fontaine, 122 Conn. 561, 191 Atl. 337, Merz vs. Bank & T Co., 344 Mo. 1150, 130 S. W. 2d 611, Hurwitz vs. Hurwitz, 78 App. Cas. (D. C.) 66, 136 Fed. 2d 796, 148 A. L. R. 226 and Annotation, under which innocent heirs of a fraudulent grantor are not, in a case like that at bar, affected by the fraud of their ancestor. In our former opinion we quoted the view of 3 Scott on Trusts, page 2196, throwing doubt on the correctness and justice of the prevailing rule. It is not necessary to repeat the quotation here. Speaking on the subject along similar lines and incidentally it was said in Gowan’s Adm’r. vs. Gowan, 30 Mo. 472, 476: “It may be questioned whether the determination of courts to give no assistance in the case of fraudulent conveyances, as between the parties, has been promotive of the ends of justice and is founded upon sound morality. It is seldom that both parties are equally to blame in a transaction tinctured with fraud in each, and if they are, the doctrine seems to encourage a double fraud on the one side to punish the single fraud on the other.” In a note on Gallo vs. DeMichael, *52118 Conn. 487, 172 Atl. 922, found in 44 Yale Law Journal 173, 175-176, it is said: “The penalty imposed is necessarily accidental and not measured by the offense, and it inures to the benefit of the transferee, a private party who is equally culpable. If a penalty is to be imposed for this type of conduct, it should be made criminal; and the fine, proportioned to the gravity of the offense, should go to the state. Reconveyance should be freely obtainable on the legal merits of the case. By the granting of the reconveyance, moreover, subsequent creditors would benefit in easier recovery from the transferor. In the absence of such thoroughgoing reform, the punitive policy of the courts in all but particularly flagrant instances might well be minimized.” John H. Wigmore, speaking of the rule applicable in a case such as that at bar, and referring to the rule that the grantor cannot recover the property, states in 25 Am. L. R. 712-713 as follows: “But the whole notion is radically wrong in principle and produces extreme injustice. If A owes B $5,000 why should he not pay it whether B has violated a statute or not? Where the issue is as to the rights of two litigants, it is unscientific to impose a penalty incidentally by depriving one of the litigants of his admitted right. It is unjust, also, for two reasons: first, one guilty party suffers, while another of equal guilt is rewarded; secondly, the penalty is usually utterly disproportionate to the offense. If there is one part of criminal jurisprudence which needs even more careful attention than it now receives it is the apportionment of penalty to offense. Yet the doctrine now under consideration requires, with monstrous injustice and blind haphazard, that the plaintiff shall be mulcted in the amount of his right, whatever that may be. Take for example the case of Cambioso v. Maffet ( T Wash. D. C. 98), in which plaintiff and defendant were joint owners of a vessel. To avoid paying the tax on alien owners, the vessel was registered *53in the name of the defendant. For this illegality the plaintiff is denied the help of the courts in making the defendant account for the vessel’s profits. In this way, and in a hundred similar ways, a fine of thousands of dollars may be imposed for petty violations of law. One cannot imagine why we have so long allowed such an unworthy principle to remain.” (Italics supplied). The statement of a man of the eminece of Wigmore in the legal field that the prevailing view is monstrous can hardly be lightly brushed aside.
If what has been said means anything and has any merit ,as we think it has, then it follows that the general rule above mentioned cannot be applied rigidly, and must give way, at times at least, to the equitable principle which abhors unjust enrichment, and that is as far as we thought it advisable to go in the original opinion. This position is fully supported by the Restatement of the Law of Restitution, which — doubtless in view of what has heretofore been stated — seems to represent what we may call an intermediate view on the subject before us, and which, if we may judge by the past, will not unlikely gain support. It is stated in Sec. 140, page 562 that: “A person may be prevented from obtaining restitution for a benefit because of his criminal or other wrongful conduct in connection with the transaction on which his claim is based.” It may be noted that the statement contains no imperative. In the comment on that section on page 563 of the same work it is stated: “No definite rule can be stated which will determine in all cases whether restitution will or will not be granted since the courts consider all the circumstances involved in the particular case.” Five different factors which may be taken into consideration are enumerated without stating which shall predominate in a particular case, thus leaving that to the discretion of the court. One of the factors mentioned is: “how great a forfeiture would ensue from a failure to give *54relief.” The factors enumerated are not intended to be exclusive. John W. Wade, Professor of Law and an able and extensive writer on the subject of restitution of benefits acquired through illegal transactions has this to say in 95 Univ. of Pa. L. R., page 302 as follows: “Some think that relief should be somewhat more freely granted; some take the view that it should not be given so freely. One may agree or disagree with the specific holding reached in the particular case. But as long as the matter is within the general discretion of the courts, flexibility, with adjustment either way, is possible. It would seem decidedly unfeasible to attempt to reduce the law in this field to a series of inflexible rules which would seek to cover every possible situation.”
The evidence herein shows that the plaintiff’s role in the transaction herein involved was comparatively passive, the active role seemingly being played by plaintiff’s deceased husband and the defendant. After reconsidering the premises and the conclusion in the original opinion in the light of what has been here said, we think it unlikely that we were far from right or that an unjust result was reached. Rehearing will accordingly be denied.
Riner, C. J. and Kimrall, J. concur.