Marlatt v. Warwick and Smith.

the sheriff not knowing the amount of encumbrances, and Smith, although he knew, declining to give any information on the subject. He also made inquiry of the complainant's son, and he likewise made no reply. Mr. Dey says he had made up his mind to give $100 an acre for that farın, which would have amounted to $9400, or $2700 above encumbrances. Because of his inability to obtain any information as to encumbrances, Dey did not bid, and it was sold to Smith for $125.

That these devices to put the complainant's property beyond the reach of his other creditors, and within his own control or that of his friends, were the suggestions of the defendants, will not avail the complainant. He assented to them, and voluntarily aided in all the means that were employed to carry that purpose into effect.

In relation to the sale of the personal property, he says: "I did not tell the sheriff that I expected Warwick to buy at the sale. I said as little as I could say, for fear it might lead to suspicion. I said to Alfred Perrine, who was present that day, that Mr. Warwick was going to buy for me; he, Mr. Perrine, seemed to understand the business we were going at." He concocted with Warwick the secret sign by which Warwick's bidding was conducted. He staid away from the sale of the Dey farm, because his presence there might cause other persons to bid. According to his own. statement, he was present at an interview got up for the purpose of inveigling an innocent third person into the belief that the sale was to be bona fide, in order that he might be used as a witness to sustain it, if it was attacked by his other creditors; and he assented to what was then said for that purpose, because he believed it was a sham. He consented to, and acquiesced in the suppression of information as to the encumbrances on his real estate, that the defendants might buy it in low. He personally solicited persons not to bid at the sales, because the purchases were really for his benefit. A number of witnesses, called by himself, testify to such solicitations made by him at the sale of the personal prop

Marlatt v. Warwick and Smith.

erty; and the impression that so generally prevailed at the sale of the real estate, that the sale was for the complainant's benefit, was mainly caused by his own conduct, and by his efforts to aid the defendants in obtaining his property at low prices.

Giving the evidence its proper effect, it shows that there was an arrangement between the parties that the property should be purchased by the defendants for the complainant's benefit. It also proves that that arrangement was intended for the purpose of putting the complainant's property beyond the immediate reach of his other creditors, and that the complainant agreed to that arrangement, with full knowledge of its purpose. It also proves that the sales were fraudulently conducted to effectuate that purpose, and that the complainant aided in the fraudulent means that were employed in carrying it into effect. The transaction was illegal. Both parties are involved in that illegality. In such cases, “potior est conditio defendentis."

If credit is given to the complainant and his witnesses, the evidence of actual fraud, meditated between the parties, is irresistible. It constitutes, in fact, the main reliance of the complainant to overcome the effect of the denial in the defendants' answer of the making of any agreement for the purchasing of the property for his benefit. If that evidence was out of the case, in accordance with the well settled rules of equity practice he should be denied relief, because, the effect of the unqualified denial in the defendants' answer is not otherwise overcome.

But it is not necessary that there should be any actual fraud or moral turpitude in the transaction to bring it within the statute concerning fraudulent conveyances. Assuming that the purpose of the complainant was to dispose of his property in such a way that eventually it might be applied most beneficially for his creditors in payment of his debts, if the effect of the arrangement was in fact to hinder his creditors, and place the property beyond the reach of any of his creditors, it was in contravention of the statute, and illegal.

Marlatt v. Warwick and Smith.

It was so held in the Supreme Court, in Owen v. Arvis, 2 Dutcher 23, and in the Court of Chancery, in Servis v. Nelson, 1 McCarter 94. Those cases are in accordance with the uniform course of decision; and I am not aware of any case in which the principles upon which they depend, have been questioned. That such was the purpose of the arrangement, the complainant admits. The equity upon which he asks to have the agreement specifically performed, is that he may now have the property back in order to pay his creditors. He can make no claim to relief under pretence of the equities. of his creditors. The courts are still open for their relief, to set aside the transaction for their benefit. So far as he is concerned, the conveyance is valid. Sound policy requires a rigid adherence to the rule of law, that a conveyance, fraudulent as to creditors, is good as between the parties.

Nor should the courts be induced to refuse to give full effect to these well settled principles of law, because of any supposed injustice in permitting a party to retain the benefit of an illegal transaction to the prejudice of his confederate. In Baldwin v. Campfield, Chancellor Williamson says: “We must not be misled by any supposed hardships of the case. The conduct of the son-in-law (the defendant) in this transaction, may justly excite our indignation. Our sympathies are naturally with the old man whom he may have deceived and wronged, and yet we may not violate a single principle upon which law and equity are administered, to punish the one or vindicate the other." In Den v. Shotwell, 3 Zab. 474, Chief Justice Green says: "In dealing with illegal contracts, courts do not and cannot look to the interests of those who are parties to the illegal transaction. The law regards the welfare of society as paramount, and in enforcing the law, courts cannot impair its efficiency or cripple its operation, by considerations affecting the interests of those who are participes criminis. Salus populi suprema lex." In the same case in this court, 4 Zab. 791, Justice Ogden, in delivering the opinion of the court, says: "Courts will not aid a person, whose cause of action, either upon his own showing or other

Marlatt v. Warwick and Smith.

wise, appears to arise ex turpi causa, or from the transgression of positive law. They do not adopt this policy for the purpose of protecting a defendant, but from a determination not to assist such a plaintiff." "It is not for the defendant's sake," says Lord Mansfield, "that the objection is ever allowed, but it is founded on general principles of policy, which the defendant has the advantage of, contrary to the real justice between him and the plaintiff, by accident, if I may say so." so." Holman v. Johnson, 1 Cowp. 343. The objection is rather that of the public, speaking through the courts, than of the defendant as a party to the contracts. The law disallows all proceedings in respect of illegal contracts, not from any consideration of the relative position and rights of the parties, but upon grounds of public policy. Fry on Specific Performance 309.

"The old cases," says Mr. Justice Story, "often gave relief both at law and in equity, where the party would otherwise derive an advantage from his iniquity. But the modern doctrine has adopted a more severely just, and probably politic and moral rule, which is to leave the parties where it finds them, giving no relief and no countenance to claims of this sort." 1 Story's Eq. Jur., § 298, note 2.

It was said by the counsel of the complainant, that this objection not having been set up in the answer, cannot now be taken. The nature of the transaction did not appear on the face of the bill, and the defendants in their answer denied entirely the making of any agreement with the complainant for the redemption of the property by him. But it is not necessary that the objection should have been taken in the answer, to enable the court, as the representative of the public, to refuse to grant relief upon an illegal agreement. So strict are the courts in adhering to the principle of not aiding in the enforcement of an illegal agreement, that if the agreement as stated in the pleading does not appear to be illegal, but circumstances come out in the evidence that show that it is in fact tainted with illegality, the court will, ou its own motion, direct an inquiry into the matter. Par

Marlatt v. Warwick and Smith.

ken v. Whitby, 1 Turn. & Russ. 366; Evans v. Richardson, 3 Mer. 469.

It is just to the defendants to say, that in their answer they deny that they made any agreement with the complainant in relation to the purchase of the property for his benefit. This denial is sustained by the evidence of Warwick and of Norris, who was a party to one of these judgments. The Chancellor in his opinion declares himself unwilling to believe that the answer is untrue. It is not necessary to collate the evidence bearing on that point, or to express any opinion as to which side the weight of the evidence is on. I prefer to place my conclusion on the ground that the transaction through which the complainant seeks to obtain relief, is, on his own showing, such as not to entitle him to the relief he asks. It may be added, however, that the bill is not filed to set aside the sales for fraud or mistake, but for the specific performance of an agreement charged to have been made between the parties, for the reconveyance of the property to the complainant, after the claims of the defendants were satisfied. There is no allegation in the bill that the sales were procured by fraud, or of any mistake on the part of the complainant, nor is there any prayer for relief on such grounds. On the contrary, the complainant bases his right to relief solely on. the alleged agreement for redemption, and the defendants' answer is directed to that single point. No other issue is made by the pleadings. If the complainant has failed to establish the agreement he relies on, he should for that reason have failed in his suit.

The decree was affirmed by the following vote:

For affirmance CLEMENT, FORT, KENNEDY, VAIL, WALES, WOODHULL. 6.

For reversal-DALRIMPLE, DEPUE, ELMER, VREDENBURGH. 4.