Hobbs v. Boatright

93 S.W. 934, 195 Mo. 693, 1906 Mo. LEXIS 279

• Court: Supreme Court of Missouri
• Decided: April 20, 1906
• Status: Published

Opinion

VALLIANT, J.

— This is a suit to recover the sum of $6,000 which the plaintiff avers was obtained from him by defendants Boatright and others by means of a fraudulent scheme in which they .were aided and abetted by the defendants the Exchange Bank and Stewart its cashier.

The evidence shows that the plaintiff was enticed from his home in Oklahoma by the allurement of a scheme in which he was made to believe he would assist his tempters in obtaining money from other persons by means of inducing them to bet on a foot race to come off at Webb City, which race was to be so fraudulently conducted as to make it sure the other persons would lose. Plaintiff yielded to the temptation, went to Webb City, put up his money and lost, and then and there discovered that the supposed victims, in the defrauding of whomhe was going to assist, were partners with his tempters in an organized gang of cheating gamesters; that this gang had been operating in this maner at Webb City for a considerable time, had victimized others in the same way, and that the band and its officials had knowledge of the conduct of these men, connived at' their nefarious schemes and assisted them in it, to the extent, at least-, of allowing the bank to be used to give the appearance of respectability and responsibility to Boatright and the other members of the gang. The trial resulted in a judgment against Boatright and his associates, and also against the bank and its cashier Stewart who alone have appealed and who are presumably the only ones out of whom the amount of the judg - ment could be realized.

I. The difficult question in the case is, upon which side of this controversy should the law o'f public policy be applied? Plaintiff schemed with men, as he supposed, to defraud others; his only disappointment was that the men with whom he thought he was scheming had readily schemed to defraud him and they did fleece him to the sum of $6,000. If we should now say to the plaintiff, you cannot recover because, although you did not accomplish what you intended, yet your purpose was to assist those men to defraud others^ and therefore you are as guilty as any of them, we would by so saying allow the gang and their aiders and abettors to go free, retain the booty and set their traps again. The doctrine that courts will not aid a plaintiff who is in pari delicto with the defendant is not a rule of universal application, it is based on the principle that to give the plaintiff relief in such case would contravene» public morals and impair the good of society; therefore, the rule should not be applied in a case in which to withhold the relief would to a greater extent offend public morals. To promote the good of the public is the highest aim of the courts in the application of this doctrine. Under the head of exceptions to the rule in 9 Cyc., p. 550, it is said: “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.” A question of what is public policy in a given case is as broad as a question of what is fraud in a given case and is addressed to the good common sense of the court.

In that view of the question it becomes proper for us to state a little more fully than we have above stated the facts which the evidence in this case discloses.

For several years prior to the date of the plaintiff’s troubles, there existed an organization in Webb City calling itself the Webb Oity Athletic Club, and professing to be composed of wealthy miners and other responsible business men in that vicinity who were fond of athletic sports and desired to give encouragement to such in a highminded way. That is' what they said of themselves; in the community, however, they were generally called the “Buckfoot gang,” and were understood as being engaged in promoting foot races in which they arranged with the racers in advance of the race, which one was to win. The reputation of the gang was such that bettors on the races could be obtained only from outside of that community, and in order to allure victims into their net emissaries were sent out who told seductive stories that appealed strongly to men to whom the hope of obtaining a dishonest gain with seeming immunity from punishment, was a temptation. Two of these emissaries, Wasser and Fisher, found the plaintiff in his home in Oklahoma and told him their story, which in effect was that Wasser had been running races for this athletic club, had won many races and much money for the club, but had not been treated fairly by them, had not been given his fair proportion of the money won; that it was arranged between him and Fisher that they would be the competing champions in a race to be run, the club men would, as usual, bet on Wasser, their favorite, and he would allow Fisher to beat him, and thus Wasser, who was a poor boy and had a father to take care of, would be enabled to get back from the unjust members of the club money that he had really earned, but which had been so unjustly withheld from him; that Mr. Boatright, who was the president of the club, knew of the scheme and would secretly aid them in accomplishing its purpose, but that he would have to act secretly lest the members of the club and the betting public would suspect something, therefore it was necessary to have an entire stranger who would be the ostensible bettor on Fisher. In the beginning the proposition contained no suggestion that the plaintiff would put up any money of his own on the race, but he was asked to bet only the money that would be given him by Boatright after he got to Webb City. Nevertheless it was adroitly suggested that it would give a much better air to the whole project if the plaintiff could carry with him a letter of credit from the bank in his home town to exhibit to a bank in Webb City and thus show that he was a man of substance at home. According to the testimony given by the plaintiff himself he was not promised any share of the money to be won but went into the scheme for pure benevolence for poor Wasser whom, however, he had never seen before. Plaintiff’s testimony would have been more candid if he had owned up to an agreement to share in the gains with Wasser, or had given a more plausible reason for taking the letter of credit with him. But the jury were doubtless right in giving credence to his story on the whole, making allowance for the natural reluctance of cpnfessing one’s own guilty motive.

The tempter came to the plaintiff on Friday and found him at first reluctant to take part in the fraudulent scheme, but the plaintiff, after holding the proposal in the balances, between an inclination to do right and a temptation to do wrong, until the following Monday morning, yielded and went to Webb City armed with his letter of credit.

They arrived in Joplin early in the morning and after breakfast at the hotel Fisher went with plaintiff to the park lying between Joplin and Webb City where Wasser with Boatright met them. Boatright told the plaintiff the same story that Wasser had told him. Boatright gave plaintiff $2,650 and instructed him to go the Exchange Bank and deposit it, and show his letter of credit to the bank cashier, and then to go over to a barroom just across the street. Fisher went with plaintiff to point out to him the bank; plaintiff deposited the money Boatright had given him, showed his letter of credit and told the cashier he was having a little deal with the athletic club and Mr. Boatright; the cashier told him if he wanted any money on his letter of credit he could get it. He asked the cashier if Mr. Boatright was a reliable man and the cashier answered that he was. Then, according to the program Boatright had given him, he and Fisher went across the street to the barroom and, as instructed by Boatright, plaintiff asked the barkeeper, “Have you a sprint in town?” Whereupon the barkeeper answered yes, and called up Boatright and others and introduced them to the plaintiff, plaintiff and Boatright both acting as if they had not met before. The conversation then turned onthefoot race and many men seemed anxious to bet on- Wasser; they all went up stairs to what they called the clubroom and then and there was some fine acting, manifesting enthusiasm to bet, which enthusiasm was increased with some apparent intoxication; plaintiff crossed over to the bank, drew money, returned and put it up in Boatright’s hands as stakeholder; the money so put up was quickly covered in sums of $500 or more by the apparently enthusiastic bettors on Wasser, and more money was needed by plaintiff to cover the demands; he went again to the bank and drew some of his own money and put it up and it was quickly covered. Then a seeming dispute arose by one man insisting that he had put up more money in the hands of Boatright as stakeholder than Boatright acknowledged, and» insisted on a count of the money in the stakeholder’s hands; the excitement appeared to be great, the plaintiff was given quietly to understand that in passing the money to and fro between the bank and Boatright, the stakeholder, some mistake had been made, and he was $3,000 short on stake money and that the man demanding a count was a dangerous one to encounter when angry, that bloodshed was likely to ensue and that in the affray all the money in the hands of the stakeholder would be taken; that the only safety was for the plaintiff to draw $3,000 more of his own money and pnt it in Boatright’s hand, who assured him positively that he would return it to him as soon as the race, which they had fixed to win, was over. The result was the plaintiff went again to the hank, told the cashier, “We got mixed over there and the boys were in trouble and I would have to draw the other money. I said, ‘Do you think those fellows are all right?’ He says, ‘Yes,’ and we went to work and fixed up a draft. ’ ’ Plaintiff then drew $3,000 more of his own money, went back to the saloon and gave it to Boatright; then the storm subsided, they all went to the park, the race was run, and the man that plaintiff bet on was beaten. Plaintiff demanded his money of Boatright, but the latter said he was only a stakeholder, had no control of it, that he was a ruined man — had disgraced his old father and would have to leave the country. He told the plaintiff that there was one way in which he could get even: that was to go back to Oklahoma and find wealthy cattlemen there whom he could inveigle into the same trap in which he had been caught, and they would give him forty per cent of the booty, but plaintiff declined the proposal. Plaintiff got home the next evening and the following morning went to the bank on which he had drawn, in hopes to stop the payment of his checks, but it was too late: they had been forwarded immediately from Webb City, and were presented and paid the day before plaintiff arrived.

The evidence shows that this Buckfoot gang had been engaged in practices of this kind for years, and this bank and its cashier had allowed it to be used to the extent at least that it was used in this instance, giving the gang, to strangers, the appearance of being backed by a respectable financial institution. The testimony is quite voluminous in its history of these nefarious practices running through several years before this plaintiff was victimized and it tends to show that in all the cases the defendant bank and its officers had such, connection with the transactions that they could not have helped knowing the nature of the practices and knowing that when the plaintiff presented his letter of credit and when he drew his checks he was going to he robbed of his money.

One of the cases growing out of these practices was tried in the U. S. Cir. Ct. S. W. D. of Missouri, where the evidence on this point was practically the same as in the case before us. [Wright v. Stewart, 130 Fed. 905.] In that case Judge Phillips, in a summary of the evidence, shows the conduct of this gang for years in such a light as to make it a matter of astonishment that it could be tolerated for so long a period in a civilized community.

Coming back now to the law question in the case and considering it in its application to the particular facts we are dealing with, does public policy require us to turn this plaintiff away because he was, in the single transaction in question, as guilty as the men who defrauded him? Will it contravene good morals or degrade the courts if we listen to this plaintiff with his confession of guilty purpose and if, notwithstanding his guilt, we give judgment in his favor against this gang of bad men who had been preying upon the community for years and who by playing upon this man’s cupidity had tempted him beyond his power to resist? Will we promote good morals to say to this gang and their friends and abettors, you have so debauched and degraded your victim that the law will not touch him or hear his complaint, therefore you may go free, keep what you took from him, and look out for another victim?

Before answering these questions we ought to consider the spirit rather than the letter of the law, and keep in view the purpose it was designed to accomplish. Whilst the principles on which this law is founded are never to be violated and the purpose of the law is never to he defeated, yet, in its application to the facts of a given case, courts are not circumscribed by inflexible rules, but exercise a large judicial discretion. Tbe doctrine has several times been before this court and has been considered in that light.

In Kitchen v. Greenabaum, 61 Mo. 110, the plaintiff owned a lottery ticket which had drawn a prize of $600, a fact known to defendant, but unknown to plaintiff ; defendant deceived the plaintiff by telling him his ticket had not drawn that prize, and having induced the plaintiff to believe that his ticket was of little if any value, bought it of him for $5, and collected the $600 prize. The court held that the plaintiff could not recover because he was guilty himself of violating the law in buying the lottery ticket. In the opinion, after quoting the maxim, in pari delicto, potior est conditio defen dentis et possidentis, as containing the law of the case, the court, per Sherwood, J., said that the maxim was not of universal application, and as an example of the exceptions he said: “Where the parties to the transaction, although concurring in the illegal act, are regarded as not equally guilty, in consequence of fraud, oppression, imposition or hardship, practiced by one party upon the other, thereby obtaining an unconscionable advantage. Under such circumstances, courts of equity have not hesitated to interfere in behalf of the le'ss guilty party, and against the chief mover in the unlawful enterprise. ’ ’ The writer of that opinion then proceeds to say arguendo that the exceptions do not apply to a case involving moral turpitude, but only to .an act malum proMbitum.

In Green v. Corrigan, 87 Mo. 359, plaintiff claiming to have been a partner of defendant in a certain contract with a waterworks company under which the works were built, sued to recover his share of the profits ; it turned out in the evidence that the plaintiff was the attorney of the waterworks company, and was intrusted by his client to fix the price to be agreed on for the work, and without his client’s knowledge made the contract with defendant for a share of the profits. There was a case of moral turpitude, yet the court held that the defendant was not equally guilty with the plaintiff, and therefore he was allowed to plead the illegality of the contract in his defense and thereby defeat the recovery.

What was said in the opinion in Kitchen v. Greenabaum, correctly expressed the law of that case, but what was there said in reference to the distinction between a transaction that was only malum prohibitum and one that was malum in se was not necessary to the decision because there was no question of that kind in the case.

In Green v. Corrigan which, as we have seen, involved a transaction malum in se and in which the defendant was allowed to plead the illegel contract and escape liability on the ground that the plaintiff was more guilty than he, the decision in Kitchen v. Greenabaum was referred to and approved; evidently, however, what was said in the former case apparently limiting' the exception to the rule to acts mala prohibita was regarded as obiter.

There are other decisions of this court on this subject cited in the briefs (Poston v. Balch, 69 Mo. 115; Williamson v. Baley, 78 Mo. 636; Sprague v. Rooney, 104 Mo. 358; Bell v. Campbell, 123 Mo. 1; Haggerty v. Storage Co., 143 Mo. 247); but it would render this opinion too long to discuss them. In all of those decisions this court has treated the law of this subject on the principle that it is designed to promote public morals and the public good. Courts treat the less flexible Statute of Frauds as designed to prevent fraud and refuse to apply it when to do so would promote fraud. So with this rule of law; it should never be applied when to do so would be detrimental to public morals.

This is the view of the most distinguished law-writers. In 1 Story’s Eq. Jur. (13 Ed.), sec. 300; it is said: “And indeed in cases where both parties are in delicto, concurring in an illegal act, it does not always follow that they stand in pari delicto; for there may be, and often are, very different degrees in their guilt. . . . And besides, there may be on the part of the court itself a necessity of supporting the public interests or public policy in many cases, however reprehensible the acts of the parties may be.” Was there ever a better opportunity for a court to punish the flagrantly guilty and set a wholesome example before the community than is afforded in this case? It may be difficult to apply the criminal law to such men, but sometimes requiring them by a civil suit to make good the lo'sses that they have caused, or helped others to cause, is a better punishment than the prison affords.

In 2 Pomeroy’s Eq. Jur. (3 Ed.), sec. 940, after stating the general rule that no action arises, in law or in equity, from an illegal contract, the author says: “The rule has sometimes been laid down as though it were equally universal, that where the parties are in pari delicto, no affirmative relief of any kind will be given to one against the other. This doctrine, though true in the main, is subject to limitations and exceptions which it is the special object of the present inquiry to determine.” Then in section 942 he says: “Lastly, when the contract is illegal, so that both parties are to some extent involved in the illegality — in some degree affected with the unlawful taint — but are not in pari delicto — that is, both have not, with the same knowledge, willingness and wrongful intent, engaged in the transaction, or the undertakings of each are not equally blameworthy . ■ .' . Such an unequality of condition exists so that relief may be given to the more innocent party in two distinct classes of cases: 1. It exists where the contract is intrinsically illegal, and is of such a nature thatthe undertakings or stipulations of each, if considered by themselves alone, would show the parties equally in fault, but there are collateral and incidental circumstances attending the transaction, and affecting the relations of the two parties, which render one of them comparatively free from fault.”

If the case at bar disclosed but one transaction, if we should shut our eyes to the other transactions of like character that distinguished the history of this Buckfoot gang, if our whole attention was confined to the scheme entered into by the plaintiff with Wasser and Fisher in Oklahoma and the denouement at Webb City, we could not say that one was less guilty than the other; it was a scheme of dishonest purpose and there is no justification or palliation of it, and if there was nothing else in the case to make the offense of one more enormous than, the other we would not listen for a moment to the plaintiff’s prayer for relief, and if we do listen to him and grant him what he asks it it not through any consideration of wrongs suffered by him-but in tender consideration for the welfare of that community whose laws have been defied, and whose public morals have been shocked by this gang of bad men and to bring them to the bar of justice.

The learned law-writer whose text we have last above quoted, in section 941, says: “To the foregoing rules there is an important limitation. Even where the contracting parties are in pari delicto, the courts may interfere from motives of public policy. Whenever public policy is considered as advanced by allowing either party to sue for relief against the transaction, then relief is given to him. ’ ’ In the case before us we hold that public policy is advanced by allowing the plaintiff to recover the money of which he was defrauded.

II. There is no evidence that Boatright or any of his gang divided the money obtained from the plaintiff with bank or its officers. If such was the fact it would in the very nature of the case be out of the power of the plaintiff to prove it. But the evidence tends to show that the officers of the bank knew the business these men were engaged in, knew their methods of enticing strangers into their net and fleecing them, yet knowing all this lent to the gang the appearance of respectability that the backing of a banking institution afforded. With this knowledge they allowed their bank to be used to effect the exchange and transference of money. If they got nothing more out of it than the exchange and the incidental bank use of the deposits they assisted bad men to do a bad deed for a small consideration.

We attach no importance to the fact that the cashier assured the plaintiff that Boatright and his associates were honorable men; because before the plaintiff went to the bank he knew from the transaction he himself had had with these men and the scheme they had entered into with him that they were dishonest men, and therefore the banker could only enlighten him as to their financial ability, unless purchance his inquiry was to learn if they possessed that quality which the learned counsel for appellant in their brief designates as “honor among thieves, ” a quality which the law does not recognize. It is not, therefore, on the theory the plaintiff trusted in the assurance given him by the cashier that these men were worthy of confidence, but because of the actual aid the bank, with knowledge of the facts, rendered this gang in fleecing the plaintiff.

III. There were a number of other similar transactions that had previously occurred in which the evidence tended to show that the bank allowed itself to be used to aid these men and of which it was notified by the victims as soon as they realized the fraud, which unfortunately for them, as it was also for this victim, owing to the expedition with which the checks had been forwarded by the bank for collection, was just too late to stop payment of the checks. It is urged for appellants that the introduction of evidence relating to other previous transactions of like character was erroneous. That testimony bore directly on the issne respecting the knowledge of the bank officers of the methods and course of conduct of these men, and it points to the fact that when the bank cashed the plaintiff’s checks, gave him the money and rushed the checks off for collection, its cashier knew or had every reason to believe that that was then presently going to occur which directly afterwards in fact did occur.

Some of the other similar transactions shown in the evidence occurred after the one in question in this case, and it was insisted that because they were of subsequent occurrence it was error to receive the evidence. There is some plausibility in that objection, but the evidence as affecting the issues in this case is not to be condemned as illegal by reason of what this count said in State v. Boatright, 182 Mo. 33, on which appellant relies. In that case Boatright, Ellis and Brumley, three of the gang, together with Stewart, the cashier of the bank, were indicted for grand larceny; a severance and change of venue were granted, Boat-right, Ellis and Brumley’s case was sent to Lawrence county, and Stewart’s to Barton county. The three former were convicted and sentenced to a term in the penitentiary and the cause came here on their appeal. The evidence showed that the injured man in that case had voluntarily deposited the money in the bank. This court said: “The first and most serious difficulty we encounter on this record is whether there was any evidence of a taking and asportation by these three defendants of the money alleged to have been deposited by Griffith with Stewart, or the bank of which he was cashier.” Then the court said that since Griffith voluntarily deposited the money in the bank there was no trespass and that there was no evidence that the bank’s possession was changed by turning the money over to these three defendants. So it was as bearing on the question of the taking and carrying away by the three defendants of the money deposited in the hank that this conrt held that the evidence of other transactions of similar character was not admissible, but we have no snch narrow issue here. Here the charge is that Boat-right and his associates obtained the plaintiff’s money by fraud, and that the bank and its cashier aided them. Evidence of similar transactions preceding and following the one in suit in such regular course as to show a concerted plan and an established scheme to inveigle and defraud the unwary is competent, because it tends to show the unlawful association and the fraudulent course of business. And in this case it tends to show that the bank through its officers knew the character of transactions their co-defendants were practicing, and it throws light on their motive and their plea of innocent banking in this transaction when it shows that after they knew that this plaintiff had been foully dealt with they went on in an even course dealing with these men and aiding them to victimize others in the same way. The testimony also bears on the question of public policy which we have above discussed. In the brief for respondent will be found a collection of authorities which sustain the ruling of the trial court in admitting this evidence.

IV. There is a good deal of discussion in the briefs as to the name to be given to the cause of action stated in the petition, whether we should call it a suit under section 3424, Revised Statutes 1899, to recover money lost in gambling, or one at common law for money obtained through fraud and deceit, or money obtained by defendants in the perpetration of a crime under section 2390, Revised Statutes 1899.

The petition states in substance that the defendants Boatright and others had, prior to the grievance complained of, conspired to have what it calls fake foot races run at Webb City on which strangers were enticed to bet and that the races were so fixed in advance that whichever one of the racers a stranger should bet on was sure to lose, that schemes to entice strangers were devised, and that plaintiff was caught in one of these schemes and inveigled into putting $6,000 into the hands of Boatright as stakeholder on what plaintiff supposed was a race, with the result that the man he bet on, who was one of the conspirators, was beaten in the race, as it was previously agreed between him and his co-conspirators he would be, and so plaintiff lost his money, and that the defendants, the Exchange Bank and J. P. Stewart, aided and abetted Boatright and his gang in perpetrating the fraud.

If the petition was intended to state a cause of action under section 3424 as for money lost at gambling, there is a good deal more of it than necessary. Fraud or unfairness in the game is not essential to the right of action given by that statute; and on the other hand, if there was no such statute the petition states a right of action at common law, that is, that defendants Boat-right and others obtained the plaintiff’s money by a fraudulent scheme in which they were assisted by the bank and its cashier Stewart. That is what the petition means.

Y. Appellants contend that since the case was submitted to the jury on the theory that it was. an action for fraud and deceit, the bank and its cashier cannot be held on the evidence tending to show that they represented to the plhintiff that Boatright and his associates were honorable men and worthy of trust, because they say the plaintiff knew to the contrary, and therefore could not have been misled thereby to his disadvantage.

We have already said that we attach no importance to that evidence, and it is not on that theory that we hold appellants liable, but because the evidence tends to show that they lent their influence and gave material aid to assist Boatright and the others in doing what they did, well knowing their scheme. If that is so, then they are liable as participating in the fraud committed by Boatright and his crew.

VI. Appellants complain that the instructions given at the request of the plaintiff assume that whatever defendant Stewart, the cashier, did, rendered not only himself hut the hank also liable.

' The instructions are to the effect that, if the plaintiff was defrauded, in the manner hereinbefore indicated, by Boatright and the others, and the cashier of the bank knew their scheme and assisted them in the manner indicated to operate it, he and the hank were both liable. There is nothing wrong in the instructions in that respect. The aid given, according to the evidence, was the aid of the hank; it was hanking business, first receiving the money which Boatright gave plaintiff with which to open the account, then cashing the checks covering not only that money but also $6,000' of plaintiff’s money besides, and rushing the checks off for quick collection knowing all the while, as the evidence tended to show and as the instructions required the jury to believe before they could hold appellants liable, that plaintiff was putting his money into the hands of men who were deceiving him. In that matter defendant Stewart acted ex officio, he was pro hac vice the bank, and whilst he cannot take refuge in the corporation to avoid his own personal liability, yet his act was the act of the bank, and it, too, is liable. [National Bank v. Graham, 100 U. S. 699.] We are not now dealing with a hank where there are innocent stockholders to suffer; this hank was owned and managed by the three Stew-arts, two brothers and a cousin, and if the plaintiff’s testimony is true they all had knowledge of the Buck-foot gang and their practices.

We have been favored with very able briefs by tbe learned counsel on botb sides of tbis controversy and we are tempted to refer to many of tbe cases cited and discuss tbem, but it would make tbis opinion too long.

We find no error in tbe record. Tbe judgment is affirmed.

All concur.