Gotwalt v. Neal

Bartol, J., delivered the opinion of this Court. We concur with the judge of the Superior Court in the opinion that the allegation of duress, in procuring the deed and warrant of attorney in this case, is not supported by the proof. Whatever may be said of the transactions at the office of Mr. Matthews, which took place on the 4th of December, 1860, when the first deed was executed, there is no evidence of any duress being used on the following day to induce the complainant to execute the deed of that date. So far as appears from the evidence, the execution of that deed was a voluntary act on the part of Gotwalt, unconstrained by any duress, compulsion or menace, and bo, far as the — 445 — case rests upon that averment in the bill, we are of opinion relief was properly refused by the Court below. It appears from the evidence, that Gotwalt, who was the clerk and salesman of Neal, was accused of having embezzled large sums of money of his employer, and without meaning to pronounce a judgment upon his guilt, ( which we are not now called on to do,) we are compelled to say, from the evidence in the record, the appellee had strong grounds to believe the charge to be true, and his object in demanding the deed was to obtain indemnity or reparation for his loss, which Gotwalt appears to have consented to give without other motive than a desire to make reparation for the wrong, combined with the hope of escaping a criminal prosecution. It is impossible to doubt, from the evidence in the record, that this last was the chief consideration moving Gotwalt to the execution of the deed. The inducement being a promise by Neal not to prosecute, Neal, in his answer, says: “that he did consent to abstain' from prosecuting the said Gotwalt for defrauding him and for the embezzlement of the money, in consideration of the said Gotwalt reimbursing him, as far as practicable, for the loss sustained at said Gotwalt’s hands.” And Matthews says, in his testimony, “he (Gotwalt) said he did not want to be prosecuted, and I told him that I had already assured him that Mr. Neal had no wish to prosecute him, that he felt nothing could be gained by it,” &c. We think it very clear, from an examination of the whole case, that the first deed was executed “for the purpose of compounding a threatened prosecution for embezzlement;” and that the same purpose continued and induced the execution of the papers on the 5th of December. The appellants have contended that for this reason they are void, and ought to be cancelled, and the question is whether Gotwalt is entitled, on this ground, to have the relief prayed. This question will be considered without regard to the frame of the bill, no exceptions having been taken for want of sufficient — 446 — averments; and besides, if it should appear from the proof that the complainants are entitled to relief on this ground, the case might be remanded and the necessary amendments to the pleadings be allowed. In considering this question we put Mrs. Gotwalt out of view, because not being a party to the deed, she has no interest in the controversy; her rights, whatever they may be, are unaffected by the deed, and we, therefore, exclude from our consideration, as inadmissible, all the evidence bearing on that part of the case. The law is well settled that contracts made in violation of law cannot be enforced. See Wildey vs. Collier & Wife, 7 Md. Rep., 273, and. authorities cited in the opinion of the Court. When, however, such contracts have been executed by the payment of the money thereon, or the conveyance and delivery of property, and application is made to a ■ Court of Equity, by one of the parties to the contract, to grant him relief by ordering the money to be repaid or the property to be returned, the rule which seems to be best established, both by the weight of authority and reason, is to refuse to grant relief and to leave the parties where they have placed themselves. In such case the maxim applies, in pa/ri delicto fotdor est conddtdo possidendis. In Collins vs. Blantern, 2 Wilson, 341, cited by this Court in Wildey vs. Collier, a bond given for the compounding of a felony was avoided by plea setting forth the illegality of the consideration for which it was given; it was held that where money has, in fact, been paid upon such 'consideration, it cannot be recovered back again, because m pari do-lido, dec. Ld. Ch. J. Wilmot said: “Whoever is a party to an unlawful contract, if he hath once paid the money stipulated to be paid in pursuance thereof, he shall not have the help of a Court to fetch it back again; — you shall not have a right of action when you come into a Court of Justice in this unclean manner to recover it back.” — 447 — The same doctrine is supported by many authorities; these are cited by Kent in his Commentaries,vol. 2, 467, notes, and in Story’s Equity, vol. 1, sec. 298, notes. After a careful examination of the cases on this subject, we are satisfied that the great current of authority supports the doctrine laid down in Collins vs. Blantern, although it may not be possible to reconcile all the cases. In Neville vs. Wilkinson, 1 Bro. Ch. R., 547., Lord Chancellor Thurlow is reported to have said, “that in all cases where money was paid for an unlawful purpose, the party, though pa,rticeps eriminis, might recover at law; and that the reason -was, that if Courts of Justice mean to prevent the perpetration of crime, it must not be by allowing a man wlvo has got possession to remain in possession, but by putting the parties back to the state in which they were before.” Mr. Justice Story, referring to the words of Tihjblow, Ld. Ch., says: “But this is pushing the doctrines to an extravagant extent, and effectually subverting tho maxim in pari delicto potior est conditio defendentis. The ground of reasoning upon which his lordship proceeded is exceedingly questionable in itself, and the suppression of illegal contracts is far more likely, in general, to be accomplished by leaving the parties without remedy against each other, and by thus introducing a preventive check naturally connected with a want of confidence, and a sole reliance upon personal honor. And so accordingly the modern doctrine is established.” 1 Story’s Eq. Jur., sea. 298. We think this criticism of Lord Thurlow’s reasoning is very just, and we may add that the broad and unqualified terms used by the Lord Chancellor do not seem to have been demanded by the case before him, nor justified by the decisions to which he referred, especially not by the case of Bromley vs. Smith, 6 Doug., 696, decided by Lord Mansfield. Among the eases we have examined, bearing on this subject, is, The Inhabitants of Worcester vs. Eaton, 11 Mass. — 448 — 368, decided in 1814. In many of its features, that ease bears a striking analogy to this. It was an action at law to recover a parcel of land, the demandants claimed under a deed from Betsey Flagg. The defendants claimed under a prior deed from the same person, which was impeached on the ground that it had been executed upon the consideration, and for the purpose of preventing a criminal prosecution of the grantor. The fact was established and the transaction was declared to be in violation of law. But it was held that Betsey Flagg, being particeps crimwiis, could not maintain an action to vacate the deed, and the demandants claiming under her were alike precluded from recovery. In a very able and elaborate opinion delivered by P-aekee, Chief Justice, the cases are examined and the law is thus stated. “ There have been some cases in England which look as if in all instances where a party has paid money upon an illegal transaction, he may recover it back again in an action for money had and received. But it is now unquestionably settled there, that an action for money so paid, cannot be maintained where the parties are really in pari delicto; and upon looking into all the cases upon the subject, some of which have already been referred to, it will appear that a distinction is maintained between those cases in which' one of the parties has, by an illegal act, taken an advantage of, and oppressed the other, and those in which it is not possible to distinguish between the parties as to the degree of their criminality. Thus, where usury has been paid, it is considered that the lender has availed himself of the distress of the borrower and has violated the law to extort from him more than the lawful rate of interest. In this case, an action for money had and received will lie for the excess. In the cases of Smith vs. Bromley, 6 Doug., 696, and Browning vs. Morris, 7 Cowp., 790, the doctrine as laid down by Lord Mansfield, is, that where certain acts are made unlawful by statute, to — 449 — protect unwary and ignorant people from oppression and extortion, there, although both parties are guilty of violating the law, vet, they are not equally guilty, and that in such cases the party from -whom the money is exacted shall recover it back from him who practices the oppression. Such are the cases of usury, of money paid to a creditor by a bankrupt to procure his signature to a certifícate, and money paid contrary to the laws regulating lotteries. But that in all acts which are unlawful on account of their immorality or because they are hostile to public policy, there the parties to the act are in jpari delicto, and jootior est condiüo defendentis. (Decided July 13th 1866.) “This distinction seems to have been ever afterwards observed in the English Courts, and being founded in sound principle, is -worthy of adoption as a principle of Common Law in this country.” In the same case it was held that a party seeking to vacate a deed of lands on the ground that it was executed upon an unlawful consideration, stands in the same position as a party seeking to recover back money paid upon such consideration. “A deed of bargain and sale signed, sealed, acknowledged, delivered and recorded, is an actual transfer of the land to the grantee as much as the delivery over of a sum of money, or of a personal chattel is a transfer of either of those.” Being of opinion in this case that the complainant, Jacob Gotwalt, is not entitled to relief upon any of the grounds suggested, we will sign a decree affirming the decree of the Superior Court, but without costs. Decree affirmed.