Ager v. Duncan (1875) · DecisionDepot

Ager v. Duncan

Name: California Superior Court Tentative Rulings
Creator: DecisionDepot
License: https://creativecommons.org/licenses/by-nc/4.0/

California Supreme Court Jul 1, 1875 No. No. 4763Published

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Holding. The court held that it will not enforce an executory contract founded on the mutual fraudulent intent of the parties, leaving them in the position in which it finds them.

Issues

Whether a note given with the intent to defraud creditors is enforceable when the parties are in pari delicto.
Whether the court will enforce an executory contract based on the mutual turpitude of the parties.

Disposition. Reversed and remanded

Quotations verified verbatim against the opinion

“As soon as the fraud is made to appear by either of. the parties, the court will refuse to interfere, and leaye them as they were.”

“In other words, it will not enforce a contract founded on the mutual turpitude of the parties to it.”

Synopsis

Promissory Note.—If A. and B. enter into partnership, and B. is to furnish, one thousand dollars as his part of the capital, and B. hands the money to C. to deliver to A., and A. when he receives it gives C. his promissory note for it, the note is given without consideration.

Enpoecinq Fraudulent Contract.—If an action is commenced on a note given and received with an intent to defraud creditors, as soon as the fraud is made to appear, the court will refuse to enforce payment, and will leave the parties as they were, no matter which party first exposes the fraud.

Courts will not Aid a Fraud.—A court will not enforce an executory contract founded on the mutual turpitude of the parties, and if the contract has been executed, it will not aid either party to escape its consequences.

By the Court: 1. It appears from the- findings--that the~note-sued~upon was-without consideration.

2. It does not appear that Quigley had any creditors to be defrauded. On the contrary, the inference from the seventh finding is that he had none. But if it be assumed that he had creditors, and that the note was given for the purpose of concealing from them the fact that he had an interest in the co-partnership, the findings show that Quigley and the plaintiff were in pari delicto in the fraudulent intent. The contract is executory, and the action is to enforce payment of the note given with this fraudulent intent. In such cases it is immaterial by which of the parties the fraudulent nature of the contract is disclosed to the court. As soon as the fraud is made to appear by either of. the parties, the court will refuse to interfere, and leaye them as they were. In other words, it will not enforce a contract founded on the mutual turpitude of the parties to it. And for the same reason, if the contract has been executed, the court will not aid either party to escape its consequences. (Chitty on Contracts, pp. 729, 730, 731, and authorities there cited; [328]Bailey v. Taber, 5 Mass. 296; Wheeler v. Russell, 17 Mass. 258; Farrar v. Burton, 5 Mass. 395; Holman v. Johnson, 1 Cowp. 343; Parsons v. Thompson, 1 H. Bl. 322; Roll v. Raguet, 4 Ohio, 400.)

Judgment reversed and cause remanded, with an order to enter judgment for the defendant.

Ager v. Duncan

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