Goudy v. Gebhart
Goudy v. Gebhart
Opinion of the Court
The action below was debt on a single bill obligatory executed by the intestate, Jacob G-ebhart, to said Osea G-ebhart; plea, non est factum, with a notice. On a trial by jury Osea G-ebhart, the plaintiff below, gave the single bill in evidence and rested. The administrator, defendant below, thereupon gave evidence tending to prove that the obligation was executed by Jacob as the consideration, or pretended consideration, of a sham sale of Osea’s personal property to Jacob for the purpose of placing the same beyond the reach of. Osea’s creditors. The testimony being closed the .administrator asked the court to charge the jury that if they found that the obligation was given under the circumstances, and for the consideration and purpose aforesaid, the action could not be maintained, which charge the court refused to give, and, on the contrary, charged the jury, in substance, that such an agreement, though void as against the creditors of Osea, was valid as between the parties, and would constitute no bar to a recovery on the obligation. To which refusal to charge, and the charge as given, the administrator excepted, and he now assigns the same matters for error. ’The question is thus presented whether an action can be maintained iby the obligee against the obligor, on a bond given as the consid
In Findley v. Cooley, 1 Blackf. 262, which was a suit on a promissory note, the court said: “ By the common law, and the statutes Ed. 3 and Hen. 7, as well as by the statutes 13 Eliz., conveyances to defraud creditors are not absolutely void. They have always been ■considered binding on the parties. Whether the statute 13 Eliz. ch. 5, is merely declaratory of the common law, or an extension of its operation, is rather an unsettled question.” And judgment was given for the ^plaintiff. But it is to be observed that no notice was taken by the counsel, or court, of the distinction between executed and executory contracts. A conveyance is an executed contract, and it is true that, as between the parties, it will not be disturbed. Such is the common law, such is the statute of Eliz., and such is our own statute as construed in Burgett v. Burgett, 1 Ohio, 460. But it does not follow that an executory contract, tainted with fraud, will be enforced. In equity we know it will not. The decisions are almost, or quite, uniform to this effect. In -St. John v. Benedict, 6 Johns. Chy. 117, Chancellor Kent said: “Shall this court help a party in the performance of an agreement mad* on purpose to defraud creditors ? The arrangement between the plaintiff and H. was confessedly made to defraud that purchaser [the purchaser at sheriff’s sale,] as well as other creditors; and this court will not interfere to enforce the specific performance of a contract, iniquitous and fraudulent in its very foundation.” See also Jones v. Read, 3 Dana, 540.
It may be said that chancery refuses relief because the party seeking it comes with impure hands ? But why impure ? What stains his hands ? The answer is, the illegal contract he has made; the fraud he has perpetrated, or attempted to perpetrate. But why should that be deemed a fraud in a court'of equity and not in a court of law ? What good reason can be given for such a distinction? Why should the plaintiff be allowed to recover on this bond because it is for the payment of money, when, if it was for the conveyance of land, no chancellor would decree its specific execution ? There may be fanciful reasons for such a diversity, but what solid reason can be given for it ? It is true that there are circumstances of extortion, oppression, or undue advantage, which warrant a chancellor in denying his aid to the
And again the court say: “ Whenever an agreement appears to' be illegal, immoral, or against public policy, a court of justice leaves the parties as it finds them; if the agreement be executed, the court will not rescind it; if executory, the court will not aid in its execution.”
But it is urged that a sale of property is not, per se, either illegal, immoral, or against public policy, and that if the intent of the transaction be to defraud creditors, it íb only as against them that it is illegal, immoral, etc. I confess I can not attach much weight to this refinement, which dissects a transaction and finds it very upright and laudable for one purpose and very corrupt and illegal for another. To my apprehension, the fraudulent motive is the very gist of the agreement, and taints the whole of it. A contract to build a house is, in itself, perfectly innocent; but if the house is knowingly built for an unlawful purpose the builder can not recover for his work. So it was ruled in Spurgeon v. McElvain, 6 Ohio, 444. The court said: “ The principle is of general apjfiication, that contracts contrary to sound morals, public policy, or forbidden by law, will not be executed by ^courts of justice.” And again, “ if one intend to aid another in an illegal object, he shall not be assisted by the law.”
Another question remains to be considered, namely, whether the-defense in question .is limited to cases where the facts are disclosed by the plaintiff’s testimony. It is a maxim of the law, counsel say, that no one shall be permitted to aver or prove his own turpitude ; and some elementary works and cases are cited where the proposition is thus stated. But an examination of the authorities will show *that this statement is too broad. The true rule is that no one is' allowed to set up his own iniquity to defeat an innocent person. But where the parties are particeps criminis, the-proof may come from the defendant. See Smith v. Hubbs, and Nellis v. Clark, supra. The views we have exjnessed render it. unnecessary to consider the other points made in the case. A majority of the court are of opinion that the charge to the jury was-erroneous, and the judgment must therefore be reversed.
Judgment reversed.
Case-law data current through December 31, 2025. Source: CourtListener bulk data.