Hinnen v. Newman

[712] The opinion of the court was delivered by Johnston, J.: The foundation of the plaintiff’s action is a pretended sale to him of the horses hi controversy, at a public auction. The defendant, Samuel Newman, was employed by the executors of the estate of Samuel Horner, deceased, as an auctioneer to sell the property of the estate. Before the day set for the public auction, the plaintiff entered into a secret agreement with the defendant to attend the sale, and there purchase the horses in question for the defendant. In persuance of the agreement the plaintiff attended the sale, and without any notice to those interested in the estate, or to the bystanders, of his purpose, he bid in the property for the auctioneer, but in his own name. The horses having come into the possession of the defendant, the plaintiff now asks the court to assist him in reclaiming them. The whole transaction between these parties contravenes public policy and is clearly illegal, and the general rule is that an action founded upon an illegal transaction, where the parties are in pari delicto, cannot be maintained. In all such cases the courts refuse to assist the parties to carry out or to reap the fruits of the illegal transaction, but will leave them in the condition in which they were found. In applying this principle, the supreme court of the United States has said : “The law leaves the parties to such a contract as it found them. If either has sustained a loss by the bad faith of a particeps ariminis, it is but a just infliction for premeditated and deeply-practiced fraud, which, when detected, deprives him of anticipated profits, and subjects him to unexpected losses. • Fie must not expect that a judicial tribunal will degrade itself by the exertion of its powers by shifting the loss from the one to the other, or equalize the benefits or burdens which may have resulted by the violation of every principle of morals and of laws.” (Bartle v. Coleman, 4 Pet. 184.) Here, both of the parties before the court were directly concerned in the transaction. Together they secretly conspired to and did commit a wrong against others. The transaction tainted with illegality was voluntarily entered into and consum [713] mated by them. There was no constraint upon the plaintiff . compelling him to carry out the unlawful purpose, nor does any fact appear which affords him any excuse for his misconduct, or that would bring him within any of the exceptions to the rule that has been stated. He concedes that the transaction was illegal, but to escape the penalty which the law justly imposes upon a guilty participant, he says that the property was bid in in his own name, and paid, for with his own funds, and he claims that his right of action is based on these facts rather than on the illegal transaction, and that he can make out his cause of action without the aid' of that transaction. It is claimed that the true test for determining his right of recovery is by considering whether he can establish his case without the necessity of having recourse to the illegal transaction, and if so, he must prevail. ■ This test is applied for the only purpose of determining whether the parties before the court are in pari delicto, in which case they are remediless. (Broom’s Legal Maxims, 645; Holt v. Green, 73 Pa. St. 198; Wait’s Actions and Defenses, 64.) There is little necessity or room for the application of this test where the plaintiff and defendant are so obviously in equal fault as we have seen the parties are in this case. But if the test proposed is applicable, it will not avail the plaintiff. The only interest or right of possession which he has in the property is derived from the sale, which is confessedly illegal; To establish his case, he must show that he purchased the property at that sale, and he thereby brings the illegal transaction into the case. Both parties claim under that sale — the plaintiff because he bid in the property in his own name, and the defendant because it was bid in for him and not for the plaintiff. Neither of them can come into court with clean hands and ask anything under the fraudulent and illegal transaction. If the possession of the property was changed and the defendant were in court seeking to obtain possession of it, he would be refused assistance, although from the findings it appears that the property was purchased solely for him. He is in no better position [714] than the plaintiff, and would be entitled to no greater consideration. It has been said that— “The objection that a contract is immoral or illegal as between plaintiff and defendant, sounds at all times very ill in the mouth of the defendant. It is not for his sake, however, that the objection is ever allowed, but is founded on general principles of policy which the defendant has the advantage of, contrary to the rule of justice as between him and the plaintiff— by accident, if I may so say. The principle of public policy is this: Ex dolo malo non oritur actio. No court will lend its aid to a man who founds his cause of action upon an immoral or illegal act. If from the plaintiff’s own stating, or otherwise, the cause of action appears to arise ex turpi causa, or the transgression of a positive law of this country, there the court says he has no right to be assisted. It is upon that ground the court goes, not for the sake of the defendant, but because they will not lend their aid to such a plaintiff. So, if the plaintiff and defendant were to change sides, and the defendant were to bring his action against the plaintiff, the latter would then have the advantage of it, for where both are equally in fault, potior est conditio deféndentis.” (Holman v. Johnson, 1 Cowp. 343.) As the plaintiff’s right of action grows out of and rests solely upon the illegal transaction, and as he is equally culpable with the defendant, he must fail. The judgment of the district court is right and just, and will be affirmed. All the Justices concurring.