Horn v. Star Foundry Co.

23 W. Va. 522, 1884 W. Va. LEXIS 14
CourtWest Virginia Supreme Court
DecidedMarch 15, 1884
StatusPublished
Cited by15 cases

This text of 23 W. Va. 522 (Horn v. Star Foundry Co.) is published on Counsel Stack Legal Research, covering West Virginia Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Horn v. Star Foundry Co., 23 W. Va. 522, 1884 W. Va. LEXIS 14 (W. Va. 1884).

Opinion

Green, Judge:

The law question involved in this cause is, whether when two parties enter into a contract the purpose and effect of which is, that something by the terms of the contract is to be done which is contrary to public policy or. is fraudulent, and both of the parties to such contract are equally guilty, will a court either of law or of equity enforce such contract ? An examination of the authorities shows, that the proper answer to this question is, that as a general rule neither a [533]*533court of law or of equity will enforce such fraudulent or vicious contract. The maxim “m pari delicto potior est condi-tio defendentis,” that is, “when both parties are equally guilty the defendant shall prevail,” is very generally applicable to such a case.

As a general rule the reason why upon such fraudulent or' vicious contract neither the courts of law nor of equity will render either party any relief is, that it is obvious, that in refusing relief to either party in such a case the courts very generally adopt the best rule of discouraging the making of such contracts, and it is for this reason and not because the defend-' ant in such a case has any claim on his own account to any favor from the court, that the rule is generally ádopted, that the court in such a ease will furnish the plaintiff no redress. But if in a particular case it can be clearly shown, that the observenee of the rule that the plaintiff will be furnished no relief in such a case would tend to encourage such-fraudulent aud vicious practices by really giving effect to the objects, which the parties had in contemplation when such fraudulent and vicious schemes were devised, then the courts will not apply the rule, but will permit such fraudulent plaintiff to recover not because of any favor that the court is disposed to show him, but simply because in such a peculiar case the public policy requires, that such recovery or relief should he had against the fraudulent defendant. It rarely happens however, that public policy requires the courts to render relief to the plaintiff’on such fraudulent-or vicious contract, as it is obvious that as a general rule a party wishing to commit a fraud or to do or cause to be done something contrary to public policy can be most, effectually prevented from making a contract with an accomplice to carry out such fraud or vicious object, if he knows that by so doing he puts himself in the power of such fraudulent aud vicious accomplice ; and generally if the law will give him no relief against such fraudulent accomplice, though he commits ever so outrageous a violation of good faith with him, it puts him in the power of his fraudulent accomplice, and thus discourages him in entering into such fraudlent contracts. To show that these are correct views of the law it is only necessary to review the Virginia and 'West Virginia cases.

[534]*534The first Virginia case on this question is, Austin’s Administrator v. Winston’s Executrix, 1 H. & M. 32. The syllabus of the case is, “When a transaction between a debtor and his creditor is intended by them both to defraud other creditors of the debtor, but the latter under all the circumstances of the caséis not so culpable as the former, it would .seem, that a court of equity ought not altogether to refuse relief to the debtor, but to apportion the relief granted to the degree of criminality in both parties, so as on the one hand to avoid the encouragement of fraud and on the other to prevent extortion and oppression.” The decision in this case was rendered by a divided court, and the conclusion reached by the majority of the court was one, which evident]}' did not meet with the cordial approbation of even the majority, for Judge Carrington, one of the majority, concludes his opinion thus : “So far as respects myself, it is not to be considered that any principle is here fixed so as to operate as a precedent in other cases. This decree is adopted to fit the present case only ; and it is hoped so gross a fraud may not again be brought before this court.” Sec page 50. In subsequent Virginia cases this case was accordingly not regarded as settling the law, and when spoken of afterwards it was either impliedly disapproved or apologized for, because of the particular circumstances surrounding this particular case. I do not regard it as authority to be followed.

In Wise v. Craig, 1 H. &. M. 578, the court affirmed a decree of the chancellor but gave no opinion, and we cannot therefore know with any certainty what were' really their views. From the argument of counsel in the case we might perhaps inter, that the plaintiff' was guilty of no fraud, or that perhaps hemight have been unaware of the fraud of the defendant, which was gross. It may at any rate be safely said, that it was apparent that the parties were not in pari delicto. Relief was given the plaintiff in that case, but it cannot be said to throw any light, or if any, very little on the question we are considering.

In Chamberlayne et al. v. Temple, 2 Rand. p. 384, it was decided, that a voluntary or fraudulent conveyance was good between the parties, though made to delay, hinder and defraud creditors. This is in accordance with the almost uni[535]*535form decisions of the courts elsewhere. Sec Lessee of Barton v. The Heirs of Thomas Morris, 15 Ohio R. p. 408: Tremper et al v. Barton, jr., 18 Ohio 418; Douglas v. Dunlap et al., 10 Ohio 162. Similar decisions are to be found in other States. The basis of all these decisions is, that if a grantor in fraud of his creditors makes a deed to a grantee, the courts will regard it as void as to his creditors but good as to the grantor, and as operatingto convey the property included in the deed. It is obvious, that by so holding the courts discourage all such fradulent conveyances, for the party who makes such fraudulent conveyance is by these decisions properly left in a far worse condition than he was, when he engaged ip such fraudulent transactions. ' If his creditors discover the fraud, the property thus fraudulently conveyed will still be subjected to the payment of the debts of the grantor, and if they should be so unfortunate as not to discover the fraud, still the fraudulent grantor is not benefited by his fraud if the fraudulent grantee chooses to hold the property against him or to claim it under such fraudulent deed, which it is very probable he will do.. It is true, that if he does so, the fraudulent grantee profits largely by such decisions of the court, as he gets the property for nothing not only by defrauding the grantor, but by aiding in defrauding the grantee’s creditors. But the courts must render these decisions not that they may aid such fraudulent grantee, who if it is possible is in the transaction more base than the fraudulent grantor, but simply to protect -the public against frauds of this character, and this protection is best furnished by placing the fraudulent grantor in the complete power of the fraudulent grantee. Doubtless these decisions have prevented many conveyances to delay, hinder and defraud creditors, while decisions, which declared such fraudulent deeds between the grantor and grantee void would have greatly encouraged the making of such deeds. The creditors being perhaps unable to discover the fraud would be delayed and hindered, while the fraudulent grantor being capable of exposing the fraud at any time could at his pleasure cause the deed to be declared void, and have the property conveyed restored to him.

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Cite This Page — Counsel Stack

Bluebook (online)
23 W. Va. 522, 1884 W. Va. LEXIS 14, Counsel Stack Legal Research, https://law.counselstack.com/opinion/horn-v-star-foundry-co-wva-1884.