Wise v. Craig, 1 Hen. & M. 578

The sole question raised in this case was, whether the conduct of the parties in the original transaction, which gave rise to the present suit, was such, as to bring them within the operation of the maxim, in pari delicto potior est conditio defendentis.

Adam Craig, claiming, as the administrator of Francis Graves, and as jointly interested with him in the original purchase, and as his assignee of the other moiety, the benefit of a contract entered into bjr the said Graves with a certain John Wise, of Alexandria, filed his bill in the late High Court of Chancery, in which he stated that a certain Windsor Brown being entitled to a certificate from the Commonwealth of Virginia, for 1,2601. with interest, on account of military services, died intestate and without issue; that James Bawrason took administration on his estate, sold the claim to Wise, and gave him a power of attorney, dated the 12th of May, 1791, author-ising him to receive any debts, dues, or demands of any nature, due to the estate of Windsor Brown; that Wise had previously purchased of Robert Dougherty, the supposed heir at law of Windsor Brown, all his right to this claim, and had received from him a power of attorney, dated the 27th of December, 1790, authorising him to receive it; that on the 16th day of May, 1791, Wise sold the claim to Craig and Graves for 6001. which sum was advanced by Craig, and paid to Wise by Graves; and by an indorsement on the power of attorney from Dougherty, Wise directed the certificates to be delivered to their agent; that this in-dorsement being without a date, the auditor (John Pendleton) refused to deliver the certificates, whereupon Wise, on the 23d of May, 1791, addressed a letter to him, which was duly authenticated, informing him that the indorsement had been made on the 16th; that Wise having refused or neglected to pay to Bawrason or Dougherty the consideration agreed to be given for the said claim, Bawrason, on the 21st of May, 1791, executed a second power of attorney to Dougherty, authorising him to draw the certificates for the whole amount of the claim, and Dougherty, on the same day, executed a similar power to Robert Pollard, in both of which all former powers of attorney were revoked; that Pollard, on the 23d of May, 1791, received certificates for the principal of Windsor Brown’s claim amounting to 1,2601. and interest equal to 5811.

Is. 4d. : that Graves having instituted a suit in his *own name against Wise, and Jesse Sims, whom he charged as being interested in the transaction, and being indebted to the complainant (Craig) in a much larger sum, transferred the whole claim to him ; and shortly afterwards, dying intestate, the complainant took administration on his estate.

It was further stated that Wise, in the year 1792, went to Ireland, where he purchased from the remaining heirs of Windsor Brown, for a mere trifle, the whole of their claim to his estate, and actually obtained a decree against Bawrason, his administrator, in September, 1796, for 5,387 dollars, 57 cents, besides interest, in consequence of which he was further bound to compensate the plaintiff, for the money advanced, either in the certificates or their value, or by a return of the 6001. with interest. The bill prays for discovery and for general relief.

The answer of Wise admits, in substance, the sale to Graves and the payment of the purchase money; but says that Graves was a great speculator, and knew full well the amount to which Windsor Brown was entitled, of which he (Wise) was entirely ignorant; that before he sold to Graves, a certain David Finley, in behalf of James Dykes, offered him 6501. for the powers of attorney of Bawrason and Dougherty, if he would guaranty their sufficiency, but he refused ; and Dykes was allowed time to ascertain their sufficiency; that Graves was perfectly satisfied with the powers of attorney, “expressed great anxiety to get the better of Dykes in the bargain, that he might disappoint the young speculators,” and that he told him “he knew not whether the powers were good or bad ; that he sold them just as they were; if they were good, Graves would be benefited by them: if they were bad, he must lose what he had paid for them, and that Graves agreed to purchase them in that way; and the bargain was concluded upon those terms;” that the form of the indorsements was prescribed by Graves himself; and on one of the powers of attorney a blank was left to insert the name of some person other than Graves, as he could not appear in Richmond; that if Graves had applied in time, he might have drawn the certificates, but having neglected to do so, Bawrason and Dougherty sold the claim to Dykes and Finley, the agents of Pollard, and executed a power of attorney to the latter; that when he obtained the power of attorney from Bawrason on the 12th of May, 1791, he had purchased of Dougherty his whole claim to Windsor Brown’s estate; and that although he went to Europe in *1792, and obtained a power of attorney from the remaining heirs of Windsor Brown, it was merely to authorise him to recover the estate to wnich they were entitled, but that he did not purchase any interest in it.

The answer of Jesse Simms declares that he was a disinterested negotiator between Wise and Graves, and no ways interested in the transaction; that Dykes and Graves both came to Alexandria to purchase the claim, well knowing its amount and value; that Dykes offered 6501. for it, if Wise would guaranty the powers to be sufficient; but Wise refused, and it was finally agreed that Dykes should have time to send to Richmond, in order to ascertain whether the powers were sufficient or not.

Graves finding that the bargain had progressed so far, procured from Simms, who was the barkeeper of Wise, and who transacted most of his business, a sight of the powers of attorney: he declared them sufficient, and gave 6001. for them, “taking them upon his own responsibility, it being distinctly understood that Wise was not to refund the purchase-money in case the powers proved insufficient; that Graves bought the said powers for better for worse, taking upon himself the risk of their sufficiency, and ex-‘ empting Wise from all liability in case they did not-prove sufficient.” The deposition of Jesse Simms was also taken at the instance of Wise, saving all just exceptions, &c.

It further proved that Graves, during the treaty, declared, “if Wise would not take the 6001. he would go and offer that sum to the administrator of Windsor Brown, and get another power of attorney revoking his.” It was proven by the deposition of Eaw-rason, that in the year 1791, Wise informed him that he had been to Richmond, and discovered a debt of about 40 or SOI. due to Windsor Brown from a gentleman in that place, and intending to return in a few days, if he would give him a power of attorney he would collect it; that he gave Wise a short power of attorney to enable him to collect the money from the supposed debtor.

The power of attorney (which is set out) authorises -Wise to “receive any debt or debts, dues or demands of any nature or kind soever, which may be due to the estate of Windsor Brown;” that at the time of making the power of attorney, he did not know that his intestate was entitled to one shilling from the public; and nothing on that subject ever passed between him and Wise, who had no right to transfer that ^instrument to any person ; and the first intimation he had of Wise’s having purchased the claim of Dougherty, was when Graves and Dykes came to Alexandria for the purpose of buying it, when a certain David Finley informed him that Dougherty had sold his claim to Wise for one hundred pounds, for which he had offered 6501.: finding that Wise had taken a most “flagrant advantage” of Dougherty, who was an ignorant man, fond of liquor, and easily imposed upon, he permitted him to sell it again.

He accordingly, executed a power of attor-rtey to Dougherty, who executed one to Djrkes and Finley; that he knew nothing of the negotiation between Graves and Wise, or he would have interfered immediately and put a stop to it by asserting his right. He confirmed the charge in the bill that Wise went to Europe in the year 1792, and procured powers of attorney from the remaining heirs of Windsor Brown, in virtue of which he had instituted a suit against him, and obtained a decree for 5,387 dollars, 55 cents, besides interest.

Several other witnesses proved the transaction to have been apparently fair on the part of Graves; who seemed to be highly pleased with his bargain, and that he had given what was then deemed the market price of the certificates.

No evidence was adduced of Wise’s having paid any consideration to Lawrason, whose deposition as to the mode in which Wise acquired the power of attorney from him remained un-impeached ; but it was proved that Wise introduced to Dougherty the subject of his claim on Windsor Brown’s, by asking him “what he thought of taking 1001. for a thing which he never heard tell of, and which he never might,” and purchased it for 1001. to be paid when the claim should be collected.

It also appeared, in evidence, that although Wise had obtained a decree against Eaw-rason for the sum mentioned in the bill, and in his deposition, yet that he acted merely under the powers of attorney from the heirs of Windsor Brown in Ireland, and had paid over to them all the monies collected from Eawrason by. virtue of the decree. On a hearing, in June, 1802, the Chancellor dismissed the bill as to Jesse Simms, and decreed 1 ‘that Wise should pay the complainant 6001. received from him by Wise, for what he had not power to dispone, and what the buyer did not obtain, with interest,” &c.

From which decree an appeal was taken to this Court. *Hay, for the appellant, relied in argument, wholly upon the position, that a Court of Equity will not decree the restitution of money paid on a contract, where the parties to that contract are in pari delicto.

Where men have been relieved from the effects of illegal or fraudulent contracts, it has been on the ground that the party seeking relief was not equally guilty; as in the case of a recovery for money paid under a usurious contract, or to the creditor of a bankrupt to induce him to sign a certificate ; in both which cases the pressure of the borrower’s or bankrupt’s situation excepted them from the operation of the rule. In the important case of Austin v. Winston, though there was some division in the opinion of the Court, yet all agreed there had been,a fraudulent combination in both.

The Judge who did not carry his opinion as far as some of the others, laid down the following rule: “The doctrine I subscribe to is this, that in cases of equal frauds committed against third persons, (I mean where the parties thereto are equally guilty,) although such frauds operate no injury to the rights of such third persons, and create, no rights in favour of the parties thereto, yet in that case possession stands for the right; and that one volunteer in such fraud, may, as against his equally guilty companion, retain any advantage he has gained. ” There is nothing in Graves’ situation to exclude him from the benefit of the general rule. — In 1791, Wise, who had previously for a mere trifle, purchased of Dougherty, the supposed heir of Windsor Brown, all his claim to the estate of his ancestor, fraudulently obtained from Eawrason the administrator of Windsor Brown, a general power of attorney, under the pretext of collecting some money which he said was due to the estate of Windsor Brown, from a gentleman in Richmond.

Eawrason was totally ignorant of the claim against the Commonwealth for the military services of his intestate; and nothing passed between him and Wise on the subject. If it was fraudulent, immoral, and unjust in Wise to attempt to sell those certificates in which he had no right or interest, and for receiving which he had no power; it was equally so in Graves to endeavour to get possession of them, with a full knowledge that Wise had no power to dispose of them.

All the papers were submitted to Graves: the power of attorney from Eawrason, upon the face of it, shews that Wise had no power to draw or to sell certificates ; and there is full evidence that Graves knew it: for, during the treaty, he endeavoured to intimidate Wise into a sale by telling him, *that if he would not accede to his offer of 6001. he would go and offer that sum to Eawra-son, who was then living in Alexandria, and get another power of attorney revoking his.

He entered into a negotiation with Wise for the purpose of obtaining those certificates, paid him 6001. knowing that he had no right to sell, and carefully concealed the transaction from Dougherty and Law-rason, who were both on the spot; but who, getting notice of it, defeated his projects by selling to others. On what principles of law or equity can he ask, from a Court, restitution of his money.

Wise had been offered 6501. for the same papers, by other speculators. 'They both knew that if application were made to Eawrason for more specific powers, the whole business would have exploded, and they would have been defeated in their views. They therefore both concluded that it was best to close the contract. Call and Randolph, for the appellee, contended that the principle on which Mr. Hay solely rested his argument, had no application to the present case.

Wise had purchased of Dougherty, the only heir at law of Windsor Brown, known in this country, his claim to the estate of his ancestor, for a less sum than it was worth; and, concealing his views from Eawrason, he fraudulently obtained from him a power of attorney sufficiently extensive in its operation to authorise the drawing of this claim; for it appears that the only objection of the auditor was, that the indorsement was without a date.

This was a fraudulent transaction of Wise atone, not a combination to injure a third person ; and there is no proof that Graves knew that Wise had practised a fraud on Dougherty. An attempt has been made to infer a fraud in Graves, because from the face of the papers it is presumed he must have known that Wise had no right to sell the claim. This is reversing the rule. Fraud must always be proved, and can never be presumed.

The intimidation held out by Graves to Wise, that if he did not let him have the papers, he would go to Eawrason and get new powers revoking his, was merely the language of a negotiator; he was endeav-ouring to make the best bargain he could. But admitting that Graves had got another power of attorney for Eawrason ; — although it might have availed him at law, yet it would not in equity: for knowing the right of Wise, he would have been a mere trustee for his use, and a Court of Equity ’"'would have compelled him to give up the papers.

If, indeed, Graves and Eawrason both had known the right of Wise, and had combined to defeat him, it would have been an illustration of the rule: they would have been in pari delicto. This is not like the case of Austin v. Winston. There both parties intended to perpetrate a fraud. Winston intended to defeat the Commonwealth, and Austin intended to repel its claim in the same way. In the present case, Wise was in possession of the papers; and Graves purchased them without any express or implied knowledge of any other claim to them, and without an intention to defraud any person.

To bring the case within the rule of equity, and the opinion of the Court in Austin v. Winston, there must be equal guilt: for “whensoever the criminality of one of the parties is held not to exist, and the transaction as to him, ceases to be scandalous, equity does not ref use to harken to his pretensions.” This is the doctrine laid down by one of the Judges in that case, which was not understood to have been denied by any of the others.

The law on subjects of this kind will be found in the same opinion. “It is on all hands admitted as a general, perhaps as a universal proposition, that in pari delicto potior est conditio defendentis: but in the application of this rule, some important distinctions have been solemnly and ably settled. It is said in them that the prohibitions enacted by positive law in respect of contracts are of two kinds; 1st. To prevent weak or necessitous men from being overreached, defrauded, or oppressed; and 2d.

Those prohibitions which are founded on reasons of policy and public expedience. ” No part of the conduct of Graves comes within the maxim just cited ; and the case is simply this, that Graves has paid a sum of money for property to which Wise could make no title. There is, consequently, nothing to impeach the decree of the Chancellor which directed the money to be refunded. By the whole Court (consisting of JUDGE DEEMING, ROANE, and TUCKER) the decree of the Chancellor was affirmed. Ante, 33. See in Judge Roane’s opinion, p. 42. See Judge Roane's opinion, p. 42, 43.

See Judge Roane’s opinion, p. 46, and the case there cited.