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2 F.(20) 702 of the plaintiffs and their associates as an tional Bank v. Esau (Okl. Sup.) 176 P. inducement to the contract.

514. If the verbal agreement alleged in The theory of the defense was threefold: the answer had been made with the full First, that the transfer of the shares of the knowledge of the stockholders of the OklaOklamade Company to the defendant and made Company and all of its stockholders his associates violated section 41 of article had exchanged their stock for Mid-State 9 of the Oklahoma Constitution, and sec- Company stock or at least had been given tions 11030, 11025, 11036, Comp. St. Okl. the opportunity to do so, it may be that 1921, and therefore the contract sued upon the transaction would have been lawful, but was illegal; second, that the agreement on that is not this case. The plaintiffs and the part of plaintiffs and their associates their associates, in consideration of a secret to secure the transfer to defendant and his bonus to be paid them, agreed to practice associates of sufficient shares of the Okla- a deception upon the general stockholders made Company to vest in the latter a con- of their company, to cause the transfer of trolling interest in the Oklamade Company, a majority of the stock of the Oklamade to conceal from the general stockholders Company to the defendant and his assothat the plaintiffs and their associates were ciates, and to make the latter the officers receiving for their Oklamade Company and directors of the Oklamade Company in stock in addition to the Mid-State Company order that the property and assets of the stock $1 per share bonus, and to resign as Oklamade Company might be transferred officers and directors of the Oklamade Com- to the Mid-State Company without considpany and elect the officers and directors of eration, leaving the stockholders who either the Mid-State Company also the officers and refused to exchange their stock or had no directors of the Oklamade Company, so opportunity to do so the owners of stock in that the latter might.consummate a transfer a corporation wholly without' assets. of the property and assets of the Oklamade [2] Counsel for plaintiffs contend that Company to the Mid-State Company with- the facts upon which the second defense is out consideration, was a fraud agreed to predicated can only be shown by proof of be perpetrated upon the general stockhold- a parol contract entered into prior to the ers, both as against the stockholders who written contract sued upon, and that such exchanged their stock share for share and proof is inadmissible. It is well settled that those who made no exchange and conse

where the effect of parol evidence, contraquently were left as stockholders in a cor- dicting the consideration expressed in the poration devoid of assets, and was a viola- instrument or showing the true consideration of the duties they owed as officers and tion to be different therefrom, would be to direetors of the Oklamade Company to the change or defeat the legal operation and general stockholders of that company; effect of the instrument or to add new matthird, that the contract was induced by false ter to an agreement complete on its face, and fraudulent representations.

such evidence is not admissible. At the trial the defendant offered to [3] But it is equally well recognized that prove these alleged defenses, but upon ob- the foregoing principle does not apply so jection the trial court refused to permit any as to preclude the admission of evidence to evidence, except that tending to prove the show that the consideration was vicious or third defense of false and fraudulent rep- illegal. If such evidence was not admissible resentations, and after the evidence was the parties by expressing on the face of closed the court held that the latter defense the contract a legal consideration could dehad not been established and directed a ver- feat the wise policy of the law which makes dict.

void a contract founded on an illegal con[1] Counsel for plaintiffs contend that sideration. the first alleged defense set up by defend- “The rule which forbids the introduction ant is not well taken for the reason that un- of parol evidence to contradict, add to, or der the Constitution and statute law of Ok- vary, a written instrument does not extend lahoma a merger of the Oklamade Company to evidence offered to show that a contract and the Mid-State Company could lawfully was made in furtherance of objects forbidbe effected by exchanging the stock of the den by statute, by the common law, or by Mid-State Company for the stock of the the general policy of the law.” 13 C. J. p. Oklamade Company and transferring the 770, 8966; Farrington v. Stucky et al. property, assets and franchises of the Okla- (C. C. A. 8) 165 F. 325, 330, 91 C. C. A. made Company to the Mid-State Company. 311; Martin v. Clarke et al., 8 R. I. 389, They rely upon the case of Collinsville Na- 398, 5 Am. Rep. 586; Friend v. Miller, 52 Kan. 139, 34 P. 397, 39 Am. St. Rep. 340; [7] If a contract falls within a general Roberts v. Arnall, 9 Ga. App. 328, 71 S. E. class void as against public policy it mat590; Muskogee Land Co. v. Mullins (C. ters not that it is free from any taint of C. A. 8) 165 F. 179, 91 C. C. A. 213, 16 fraud or corruption. The law regards the Ann. Cas. 387; note, 16 Ann. Cas. 388. general tendency of such contracts. Mc

2 F.(20)-45

In Muskogee Land Co. v. Mullins, supra, Mullen v. Hoffman, 174 U. S. 639, 19 S. the court said:

Ct. 839, 43 L. Ed. 1117. "Parol evidence is always competent to [8] Plaintiff's contend further that show that a written contract, fair and law- though an agreement is incidentally or inful on its face, is in truth contrary to law, directly connected with an illegal transacmorals, or public policy. Lingle v. Snyder, tion it will be enforced, provided it is sup87 C. C. A. 529, 160 Fed. 627.”

ported by an independent consideration [4] A contract which has for its object and the plaintiff does not require the aid of the perpetration of a fraud on a third per- the illegal transaction to make out his case, son is illegal and void. 13 C. J. 413, $8 and that the contract sued upon falls with343, 344; Douglas State Bank v. Lewin- in the rule. It may be granted that the sohn, 192 Ill. App. 364; Zabel et al. v. plaintiffs in this case could make out a New State Tel. Co., 127 Mich. 402, 86 N. prima facie case without disclosing the ilW. 949; American Manufacturing Co. et legality of the contract. This, however, al. v. Crescent Drug Co., 113 Miss. 130, would not prevent the defendants from 73 So. 883, L. R. A. 1917D, 482.

proving by parol evidence that the contract [5] Where one party to a contract occu- sued upon grew out of and was directly pies a confidential relation with a third per- connected with a prior illegal contract and son and for a secret consideration to be was entered into for the purpose of carrypaid by the other party to the contracting into effect unexecuted provisions of agrees to use his influence to effect a bar- such illegal contract. In discussing this gain between such other party and the third question the learned author of 3 Williston person, the contract is illegal as constitut- on Contracts, at $ 1753, said: ing or tending to constitute a fraud on a "The test is often suggested, as determin. third person. 13 C. J. p. 415, § 348; Tor- ing whether the relation of an illegal transpey v. Murray et al., 93 Minn. 482, 101 action is sufficiently close to the plaintiff's N. W. 609; Simon v. Garlitz, 63 Tex. Civ. alleged cause of action to preclude recovApp. 172, 133 S. W. 461; Skirvin v. Gard- ery, that if enforcement of the plaintiff's ner et al., 36 Okl. 613, 129 P. 729; Thom- claim does not require aid or proof of the as v. Caulkett, 57 Mich. 392, 24 N. W. 154, illegal contract or transaction, the plaintiff 58 Am. Rep. 369.

may recover. As a negative test this seems [6] Contracts are illegal and invalid sound; that is, a plaintiff, cannot be alwhich tend to induce officers of corpora- lowed to recover if as part of his case he tions to act in disregard of the true inter- is compelled to allege and prove unlawful ests of the corporation and its other stock- acts or agreements, but the converse does holders. 14a C. J. p. 122, § 1891; 13 C. not seem equally true. Even though his J. p. 418, s 349; Wood v. Manchester Fire case can be made out without indicating Ins. Co., 30 Misc. Rep. 330, 63 N. Y. S. anything unlawful proof must be admissi427; Id., 54 App. Div. 522, 67 N. Y. S. ble to show that the plaintiff is endeavoring 1150; Lasell v. Hannah, 37 Can. S. C. 324, to enforce an obligation, which is part of, 26 Can. L. T. Occ. Notes, 384; Cook et al. or so closely connected with an unlawful v. Sherman (C. C.) 20 F. 167; Maine plan, as to make recovery opposed to pubNorthwestern Development Co. v. Northern lic policy. "The line of proximity will vary Commercial Co. (D. C.) 213 F. 103; Car- somewhat according to the gravity of the lisle v. Smith et al. (D. C.) 234 F. 759. evil apprehended.' Parol evidence is alIn the last case above cited the president of ways competent to show that a written cona corporation agreed for compensation to tract, though lawful on its face, was illeassist others to gain control of the company gal or part of an illegal transaction; and by buying in its stock. The court held that illegality if serious need not be pleaded or the rendition of such services by the officer urged to enable the court to act upon it.” conflicted with his duties to the sharehold- In support of this text, Professor Willisers of the corporation and rendered the con- ton cites Lanham v. Meadows, 72 W. Va tract illegal and unenforcible, and this re- 610, 78 S. E. 750, 47 L. R. A. (N. S.) 592; gardless of the purity of his motives and Muskogee Land Co. v. Mullins, 165 F. 179, his good faith.

91 C. C. A. 213, 16 Ann. Cas. 387; Mc

2 F.(20) 702 Mullen v. Hoffman, 174 U. S. 639, 19 S. [12] The fraud set up as a third defense Ct. 839, 43 L. Ed. 1117; Way v. Greer, was not for the purpose of recovering dam196 Mass. 237, 81 N. E. 1002; Zeller v. ages for fraud and deceit, but as a basis for Leiter, 189 N. Y. 361, 82 N. E. 158. the equitable right of rescission. The de

[9] Where a contract grows immediate- fense was purely equitable in its nature ly out of and is connected with a prior il- and permissible under section 274b of the legal contract, the illegality of such prior Judicial Code, Act of March 3, 1915, 38 contract will enter into the new and render Stat. 956 (Comp. St. § 1251b). Since the it illegal, and the rule has been broadly issue arose in an equitable defense to a law stated that if the connection between the action it was triable by the court. Union original illegal contract can be traced and if Pacific R. Co. v. Syas (C. C. A. 8) 246 F. the latter is connected with and grows out of 561, 158 C. C. A. 531; Fay v. Hill (C. C. the former, no matter how many times and A. 8) 249 F. 415, 161 C. C. A. 389; Libin how many different forms it may be re- erty Oil Co. v. Condon Natl. Bank, 260 newed, it cannot form the basis of recov- U. S. 235, 43 S. Ct. 118, 67 L. Ed. 232. ery. 13 C. J. p. 509, 8 460; Armstrong v. In those cases it was held that where equiToler, 11 Wheat. 258, 6 L. Ed. 468; Tom- table defenses are set up in a law action kins v. Seattle Cons. & Dry Dock Co., 96 the equitable issues must first be disposed Wash. 511, 165 P. 384.

of by the court in the same manner as they [10] A new agreement, in furtherance of would be if the suit were in equity, and it or for the purpose of carrying into effect after a determination of such issues there any unexecuted provisions of a previous il- are any material issues left they should legal agreement is likewise illegal and void. then be tried, if the parties desire, to a 13 C. J. p. 509, § 460; Blasdel v. Fowle jury as at common law. et al., 120 Mass. 447, 21 Am. Rep. 533; (13, 14] In the deposition of Wiegel In re Canfield (D. C.) 190 F. 266; Id., 193 there is a letter written by Coyle which the F. 934, 113 C. C. A, 562; Coulter et al. v.

court did not consider on the issue of fraud. Robertson, 14 Smedes & M. (Miss.) 18, In our judgment it presented very substan29; Barton & Woodworth v. Port Jackson tial proof of the untruth of the alleged rep& U. F. Plank Road Co., 17 Barb. (N. Y.) resentation that the Oklamade Company 397, 408; Shelton v. Marshall, 16 Tex. 344. was operating at a profit. There is also

[11] There can be little doubt in this other evidence in the record tending to escase, if the allegations of defendant's an- tablish the allegations of fraud. The isswer are true, that the defendant and his sues raised by the third defense should be associates would never have purchased the retried by the court in strict accordance stock of the plaintiffs and their associates with the rule above laid down. However, in the Oklamade Company and paid there- if the court should find in favor of the defor an equivalent number of shares of the fendant on the issue of fraudulent repreMid-State Company stock and a bonus of sentations it should not decree a rescission $1 per share but for the agreement on the

on that ground, unless it be further found part of plaintiffs and their associates to that the contract is not illegal. keep the payment of this bonus secret and

tion of the illegality of the contract raised secure for the Mid-State Company a controlling interest in the Oklamade Company of defense should be determined independ

by defendant's answer in his second theory with a view of transferring the Oklamade Company's assets and property to the Mid- ently of the question of fraudulent repreState Company without consideration. If sentations, and if the contract is found to the allegations of the answer are true, the be illegal neither plaintiffs nor defendant written contract was directly connected with should be afforded any affirmative relief but the prior illegal agreement and was entered the case should be dismissed. 13 C. J. p. into for the purpose of carrying its unexe- 492, § 440. cuted provisions into effect.

For the foregoing reasons the judgment We therefore conclude that the court of the lower court is reversed with instrucerred in refusing to admit evidence in sup- tions to grant the defendant a new trial, port of the second defense.

and it is so ordered.

The quesFORDSON COAL CO. V. MAGGARD, Sheriff. [1] While it is the rule that the granting (Circuit Court of Appeals, Sixth Circuit. De

or refusing of a preliminary injunction is cember 2, 1924.)

discretionary, yet it is equally well settled

that if the plaintiff makes a case showing No. 4107.

a reasonable probability of prevailing on 1. Injunction Om 135-Sound discretion usually the final hearing, and if his damage will be requires temporary injunction, where irrepa: irreparable if the injunction is refused, rable damage shown, and defendant can be protected by bond.

while defendant can, by proper bond, be seWhere plaintiff shows reasonable probabil cured against any damage coming from the ity of prevailing, on final hearing, and that his temporary injunction, a sound discretion usdamage will be irreparable if injunction is refused, sound discretion usually requires that ually requires it to be granted. Louisville temporary injunction be granted, where defend- v. Louisville Co. (C. C. A. 6) 279 F. 956. ant by proper bond can be secured against any resulting damage.

[2] It has long been the rule of the Ken

tucky courts and of this court that a bill in 2. Taxation 608(9)-Injunction remedy to restrain enforcement of illegal tax, refund equity would lie to enjoin the enforcement provision not being adequate legal remedy. of an illegal tax upon land. Louisville

In Kentucky courts, and in the federal Trust Co. v. Stone, 107 F. 305, 309, 46 C. courts, bill in equity will lie to enjoin enforcement of illegal tax on land; Ky, St. § 162, pro

C. A. 299. Section 162 of the Kentucky viding for refunds, not being completely ade- Statutes has not given such a completely quate legal remedy.

adequate legal remedy as to change this rule 3. Taxation om 608(10)-Injunction not avail. in such a case as this. County v. Bosworth,

able because tax arbitrarily high, adequate 1e- 160 Ky. 312, 169 S. W. 742; Craig v. Tay. gal remedy being provided therefor.

Injunction will not lie to restrain enforce- lor, 192 Ky. 36, at page 58, 232 S. W. 395. ment of tax because assessment is arbitrarily Even if the section would otherwise apply high as compared with other lands similarly situated; KySt. § 4128, providing adequate to such alleged invalidity and such a tax as legal remedy by review and appeal, and, in case are here involved, it could only touch that of infringement of federal due process clause, fraction of the tax which may ultimately review in United States Supreme Court being effectual.

reach the state treasury. 4. Taxation m611(9)-Preliminary injunction

[3] One of plaintiff's claims is that the held required, where validity of tax assailed assessment of its lands was arbitrarily high for want of statutory notice.

as compared with other lands similarly sitWhere plaintiff's claim that necessary notice of assessment provided by Ky. St. $$ 4120- uated, and was therefore in law fraudulent 4123, was not given, involved questions of law, and in violation of the due process clause. illegality of tax sought to be restrained, sound Not only would we hesitate to review the discretion held to require preliminary injunc- District Judge's (probable) conclusion that tion.

plaintiff's showing on this point did not in

dicate any substantial probability of final Appeal from the District Court of the success, but for any such erroneous assessUnited States for the Eastern District of ment there is apparently a complete and Kentucky; Andrew M. J. Cochran, Judge. adequate remedy by the review and appeal

Injunction by the Fordson Coal Com- proceedings prescribed by section 4128 of pany against W. J. Maggard, as Sheriff, to the Kentucky Statutes, which brings such restrain collection of tax. From an order controversy ultimately to the Kentucky denying a preliminary injunction, plaintiff Court of Appeals. Sanford v. Roberts, 193 appeals. Reversed.

Ky. 377, 236 S. W. 571. If there is involvCleon K. Calvert, of Pineville, Ky. (w. ed an infringement of the federal due proR. Middleton, of Detroit, Mich., and Clif

cess clause, the Supreme Court of the Unitford B. Longley, of Detroit, Mich., on the ed States, on review of the state court,

would effectuate the federal guaranty. brief), for appellant. William Lewis, of London, Ky. (Lewis &

[4] The other claim is that plaintiff did Lewis, of London, Ky., and Will C. Hoskins, not have the necessary notice of the assessof Hyden, Ky., on the brief), for appellee. ment. Passing by every other question, we

are so far impressed with plaintiff's claim Before DENISON, DONAHUE, and as to the effect of sections 4120-4123, Ky. KNAPPEN, Circuit Judges.

St., that we think it should have considera

tion upon the final hearing, with the aid of DENISON, Circuit Judge. The District the thorough attention which it seemingly Court refused a preliminary injunction to did not have upon this motion, if, indeed, it prevent the collection of a tax, but continu- was at all developed and brought to the ated the restraining order pending this ap- tention of the District Judge. However that peal.

may be, it is a legal question outstanding

or

2 F.(20) 709 upon the record. This claim is that the In Error to the District Court of the first meeting of the board of supervisors, at United States for the Eastern District of which it is said plaintiff's agent attended Michigan; Charles C. Simons, Judge. and was heard, is only a meeting for as- Nick Link was convicted of subornation sessment; that the second meeting is one

of perjury under Criminal Code, s 126 for review; and that the taxpayer has an (Comp. St. $ 10296), and he brings error. absolute right to notice of the assessment Judgment affirmed. after it is made, in order that he may ap- H. A. Behrendt, of Detroit, Mich. (Behpear upon the review and be heard, or, if rendt & Behrendt, of Detroit, Mich., on the he had been present at the first meeting, brief), for plaintiff in error. may be further heard-in other words, that

James J. Spillane, Asst. U. S. Atty., of the notice which the statute directs, inter- Detroit, Mich. (Delos G. Smith, U. S. Atty., mediate these two meetings, is mandatory. of Detroit, Mich., on the brief), for the

This leads to the further claim, which we United States. also characterize as at least deserving preservation until the final hearing, that whe

Before DENISON, MACK, and DONAthe taxing authorities do not give the notice HUE, Circuit Judges. of section 4122 personally to owners agent, but resort to posting, it is not suffi- DENISON, Circuit Judge. Link asks a cient to post upon one out of the several review of his conviction under section 126 listed tracts belonging to the same owner, of the Criminal Code (Comp. St. § 10296) and that the effect of such single posting for subornation of perjury. does not go beyond the listed tract with [1] 1. The indictment undertook to allege which it may be sufficiently identified, and in the same count, first, the commission of upon which it may be properly posted. perjury by one Almashy, and then the subThese two claims, one of law and one which ornation thereof by Link. The false oath may be of fact or law, or both, when taken was made before a United States Commistogether, present a question which we think sioner, to procure, under the National Proshould be preserved alive until final hearing, hibition Act (Comp. St. Ann. Supp. 1923, and hence that a sound discretion required § 1013874 et seq.), a search warrant for a the provisional injunction.

house, and declared a purchase there by Accordingly the order below is reversed, Almashy. The indictment-allegation of Aland the preliminary injunction will issue mashy's perjury was in all respects comupon terms and security to be fixed by the' pletely formal, save that it omitted the word District Court.

"willfully." The allegation of subornation is—"one Nick Link, well knowing that the

affidavit LINK v. UNITED STATES.

aforesaid was knowingly, willfully and cor

ruptly made, as aforesaid, did feloniously (Circuit Court of Appeals, Sixth Circuit. De- willfully and corruptly suborn, incite and cember 8, 1924.)

procure, etc.” We are not prepared to say No. 4104.

that in view of the scope which the courts 1. Perjury 27-Subornation of perjury in- in late years have given to the curative efdictment, omitting word "willfully” in char- fects of R. S. § 1025 (C. S. 1916, § 1691), acterizing perjury, held sufficient.

Indictment for subornation of perjury, which and section 269 of the Judicial Code (Comp. alleged commission of perjury by one person and St. § 1246), we would now be as strict in subornation by another, but omitted the word requiring the presence of “willfully” in a held sufficient in view of other recitals of indict' perjury indictment, as were some of the ment and in view of Rev. St. $ 1025 (Comp. St. older decisions, like U. S. v. Edwards (C. $ 1691), and Judicial Code, 3 °269 (Comp. St. & C.) 43 F. 67, and U. S. v. Howard (D. C.) 1246).

132 F. 325 (though see U. S. v. Cruikshank, 2. Criminal law On 304(17)-Perjury w 33

(5)-Affidavit held sufficient proof of oath, in 92 U. S. 542, 23 L. Ed. 588). The strictabsence of objection.

ness would be particularly unnecessary in a In prosecution for subornation of perjury

case where the full circumstances stated where copy of affidavit was exhibited and sig

However nature was admitted by perjurer and counsel strongly suggested willfulness. without objection stated that affidavit was. that might be, when we find that the false "sworn to before J. S. H., U. S. Commission- oath was taken, knowing it to be false, and er," held, further proof that false oath was in fact taken or of official character of person then that its making was corruptly suborned who administered oath was unnecessary; the and procured by another, every suggested commissioner being, an officer of the court element of perjury carried by the word whose official position was judicially known to it.

"willfully” is to be found in the complete

SO

given

as

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