Stewart v. Kearney

The opinion of the Court was delivered by Gibson, C. J. That a collusive contract binds the parties to it, is a principle which commends itself no less to the moralist than to the jurist; for no dictate of duty calls on a judge to extricate a a rogue from his own toils. On any other principle a knave might gain, but could not lose, by a dishonest expedient; and we should [455] but administer provocatives to unfair dealing, did we repair the cross accidents of an unsuccessful trick. It is, therefore, in accordance with a wise and liberal policy which requires the consequencés of a fraudulent experiment to be made as disastrous as possible, that a fraudulent bargainee is assisted — assisted for no merit of his own, but for the demerit of his confederate. For a principle so plainly established, as that which has grown out of this policy, I recur to no authority.. It is a rudimental one, which meets the eye at every turn of professional research; and we have applied it, though the representation were not in the shape of a warranty, wherever there was collusion to be discouraged. In Cook v. Grant, 16 Serg. & Rawle 198, the pretended recision of a sale was held to preclude a party to it from setting it up against his fellow; and in Bell v. Loughridge, (there misprinted Long-bridge,) the late chief justice prevented a creditor from insisting on the lien of his judgment, because he had given the debtor a feigned acquittance to save his land from condemnation by an inquest. In what respect is the principle of those cases, inapplicable to this? The effect of a sham sale on the title, was put as a point for direction; and the judge, premising that a party cannot have the aid of the court to enforce a sale intended to have been a fraud on creditors, directed that it would bind the right if the property were transferred to a second vendee ignorant of the fraudulent purpose; thus directly affirming that the law will not execute a collusive contract betwixt the parties to it, and leaving the jury to infer that, in the absence of intervening rights fairly acquired, it will unravel an executed contract to set the parties back to the point from which they started. Far otherwise. It not only sustains the contract when executed, but enforces it when executory; and the rule, as well as the exception, was mis-stated. In Montefiori v. Montefiori, 1 W. Bl. 364, the action was on a promissory note, drawn without consideration to give the payee a false credit in a marriage treaty; and Lord Mansfield shortly disposed of the defence, saying that betwixt confederates, “it shall be as represented to be; for no man shall set up his inequity, as a defence, any more than as a cause of action.” Then, whether the second vendee be a bona fide purchaser or not, he may insist on the sale against the original vendor, because his predecessor could have insisted on it. For the benefit of the fraudulent vendor, or those who stand in his place, by testament or descent, no action lies; but against the interests attempted to be defrauded, the sale is a nullity, and this action is maintainable in the name of the administrator, as a trustee for the creditors, according to Buehler v. Glonninger, 2 Watts 226, only so far as the property in contest may be needed for payment of debts, whose existence the plaintiff will be bound to show. For aught that appears in our paper.books, the state of the assets was not a subject of inquiry; but as the cause is ordered to another [456] jury, it may become a very material one; for if the estate shall turn out to be solvent, the action will not be maintainable at all. Judgment reversed, and a venire facias de novo awarded.