New J. Pomeroy, A Treatise on Equity Jurisprudence § 399 · 2017. 5. 4. · JOHN NORTON POMEROY,...

A TREATISEON

EQUITY JURISPRUDENCEAS ADMINISTERED IN

THE UNITED STATES OF AMERICA

ADAPTED FOR ALL THE STATES

AND

TO THE UNION OF LEGAL AND EQUITABLE REMEDIES

UNDER THE REFORMED PROCEDURE

By JOHN NORTON POMEROY, LL.D.

FIFTH EDITION

BY

SPENCER W. SYMONS

IN FIVE VOLUMES

VOLUME II

BANCROFT-WHITNEY COMPANYSAN FRANCISCO

THE LAWYERS CO-OPERATIVE PUBLISHING COMPANYROCHESTER, N. Y.

1941

Entered according to act of Congress in the years 1881,1882, and 1883, by

JOHN NORTON POMEROY,

In the office of the Librarian of Congress, at Washington.

Entered according to act of Congress in the year 1892, by

ANNIE R. POMEROY,In the office of the Librarian of Congress, at Washington.

COPYRIGHT, 1905,

BY CARTER P. POMEROY, HARRIET H. THOMPSON,AND JOHN NORTON POMEROY, JR.

COPYRIGHT, 1918,

BY HARRIET H. THOMPSON, JOHN NORTON POMEROY, JR.,

CHRISTINE M. BROOKE, AND HARRIET H. POMEROY.

COPYRIGHT, 1941,BY ANNE POMEROY SCHIRMER, HARRIET POMEROY SOLTAN,

CHRISTINE M. BROOKE, AND HARRIET P. THACHER.

SAN FRANCISCO

THE FILMER BROTHERS ELECTROTYPE COMPANY

TYPOORAPHERS AND STEREOTYPERS

EQUITY JURISPRUDENCE. [Pt. II, Ch. I

SECTION IV

HE WHO COMES INTO EQUITY MUST COME WITH CLEANHANDS

§ 397. General Meaning of This Principle.398. Is Based upon Conscience and Good Faith.399. Limitations upon Principle.400. Illustrations-Specific Performance.400a. - Injunction.401. - Fraud.401a. - Conveyances in Fraud of Creditors and Others.401b. - Right of Personal Representatives or Heirs to Relief.401c. Right of Fraudulent Grantee in Respect of Expendi-

tures for Taxes and Encumbrances.401d. - Transactions to Evade Payment of Taxes.401e. Maxim as Applied to Infants-Insane Persons.402. Illegality.402a. - Infringement Suits as to Patents, Copyrights and Literary

Property.402b. - Trademarks and Tradenames.402c. - Corporation and Stock Transactions.402d. - Industrial Disputes.402e. - Illegal Marriage.402f. - Accounting in Illegal Transactions.403. Limitation in Cases of Fraud and Illegality; Parties not in Part

Delieto.404. Conclusion.

§ 397. General Meaning of This Principle.-This maximis sometimes expressed in the form, He that hath committediniquity shall not have equity.19 Like the one describedin the preceding section, it is not, in its ordinary operationand effect, the foundation and source of any equitable es-tate or interest, nor of any distinctive doctrine of the

19. Annotation: 4 A. L. R. 46, 85. out of fraud or deceit"; "A rightThe maxim has been held to in- cannot arise to anyone out of his

elude within its operation certain own wrong"; "Both parties to theother maxims, to wit: "No right of litigation being equally at fault, theaction can arise out of an immoral defendant's position is the stronger."cause"; "No right of action can arise Annotation: 4 A. L. R. 46.

§ 397

S.MAXIM AS TO CLEAN HANDS.

equity jurisprudence; it is rather a universal rule guidingand regulating the action of equity courts in their inter-position on behalf of suitors for any and every purpose,and in their administration of any and every species of re-lief. Resembling the former maxim in this respect, itdiffers from that principle in some most important andessential features. 20 In applying the maxim, He who seeksequity must do equity, as a general rule regulating theaction of courts, it is necessarily assumed that differentequitable rights have arisen from the same subject-matteror transaction, some in favor of the plaintiff and some ofthe defendant; and the maxim requires that the courtshould, as the price or condition of its enforcing the plain-tiff's equity and conferring a remedy upon him, compelhim to recognize, admit, and provide for the correspondingequity of the defendant, and award to him also the properrelief. The maxim does not assume that the plaintiff hasdone anything unconscientious or inequitable; much lessdoes it refuse to him all relief; on the contrary, it grantsto him the remedy to which he is entitled, but upon con-dition that the defendant's equitable rights are protectedby means of the remedy to which he is entitled.1 On theother hand, the maxim now under consideration, He whocomes into equity must come with clean hands, is muchmore efficient and restrictive in its operation. It assumesthat the suitor asking the aid of a court of equity has him-self been guilty of conduct in violation of the fundamentalconceptions of equity jurisprudence, and therefore re-fuses him all recognition and relief with reference to thesubject-matter or transaction in question. It says thatwhenever a party, who, as actor, seeks to set the judicialmachinery in motion and obtain some remedy, has vio-lated conscience, or good faith, or other equitable principle,in his prior conduct, then the doors of the court will be

20. Quoted in annotation: 4 A. L. R. 129, 276 P. 753, 66 A. L. R. 143,45. quoting the text.

1. Teuscher v. Gragg, 136 Okla.

See. IV] § 397

EQUITY JURISPRJDENCE. [Pt. II, Ch. I

shut against him in limine; the court will refuse to in-terfere on his behalf, to acknowledge his right, or toaward him any remedy.'

§ 398. Is Based upon Conscience and Good Faith.-Theprinciple involved in this maxim is merely the expressionof one of the elementary and fundamental conceptions ofequity jurisprudence. We have seen (§§ 55, et seq.) that

2. U. S.-Primeau v. Granfield, 193F. 911, 114 C. C. A. 549, certioraridenied in 225 U. S. 708, 56 L. ed.1267, 32 S. Ct. 839; Keystone DrillerCo. v. General Excavator Co. 290 U. S.240, 78 L. ed. 293, 54 S. Ct. 146, af-firming 62 F. (2d) 48, rehearing de-nied 64 F. (2d) 39; Union CentralLife Ins. Co. v. Drake, 214 F. 536,131 C. C. A. 82; Michigan Pipe Co.v. Fremont Ditch etc. Co. 111 F.284, 49 C. C. A. 324.

Ala.-Harton v. Little, 188 Ala.640, 65 So. 951; Ashe-Carson Co. v.Bonifay, 147 Ala. 376, 41 So. 816.

Cal.-Miller v. Kraus (Cal. App.)155 P. 834; Allstead v. Laumeister,16 Cal. App. 59, 116 P. 296.

IU.-City of Chicago v. UnionStock Yards & Transit Co. 164 Ill.224, 45 N. E. 430, 35 L. R. A. 281.

Ind.-Miller v. Jackson Township,178 Ind. 503, 99 N. E. 102.

Ky.-Pineville Land & Lumber Co.v. Hollingsworth, 21 Ky. L. Rep. 899,53 S. W. 279.

Me.-Conners v. Conners Bros. Co.110 Me. 428, 86 A. 843.

Mass.-O'Gasapian v. Danielson,284 Mass. 27, 35, 187 N. E. 107, 89A. L. R. 1159; Caines v. Sawyer, 248Mass. 368, 374, 143 N. E. 326, 328.

Minn.-Scott v. Austin, 36 Minn.460, 32 N. W. 89, 864.

Mo.-Stierlin v. Tesehemacher, 333

Mo. 1208, 64 S. W. (2d) 647, 91A. L. R. 121.

Neb.-Lewis v. Holdrege, 56 Neb.379, 76 N. W. 890.

Olla.-King v. Antrim Lumber Co.70 Okla. 52, 172 P. 958, 4 A. L. R.21; Wellsville Oil Co. v. Miller, 44Okla. 493, 145 P. 344; InternationalLand Co. v. Marshall, 22 Okla. 693,98 P. 951, 19 L. R. A. (N. S.) 1056.

Nearly all of the above cases quoteor cite the author.

Annotation: 4 A. L. R. 44.

"He that hath committed iniquityshall not have equity. He that hathengaged in a fraudulent enterprisecannot complain that his associatein fraud has not kept the faith."Primeau v. Granfield, 103 F. 911,114 C. C. A. 549, certiorari deniedin 225 U. S. 708, 56 L. ed. 1267, 32S. Ct. 839.

3. Weegham v. Killefer, 215 F.168, 171, affirmed in 215 F. 289, 131C. C. A. 558, L. R. A. 1915A, 820;Primeau v. Granfield, 193 F. 911, 114C. C. A. 549, writ of certiorari de-nied in 225 U. S. 708, 56 L. ed. 1267,32 S. Ct. 839; Picture Plays TheatreCo. v. Williams, 75 Fla. 556, 78 So.674, 1 A. L. R. 1 (quoting the text);American Assn. v. Innis, 109 Ky.595, 604, 60 S. W. 388; Conners v.Conners Bros. Co. 110 Me. 428, 86A. 843; Avery v. Central Bank, 221Mo. 71, 87, 119 S. W. 1106; Sanders

§ 398

MAXIM AS TO CLEAN HANDS.

in the origin of the jurisdiction the theory was adoptedthat a court of equity interposes only to enforce the re-quirements of conscience and good faith with respect tomatters lying outside of, or sometimes perhaps opposedto, the law. The action of the court was, in pursuance ofthis theory, in a certain sense discretionary; and the terms"discretionary" and "discretion" are still occasionallyused by modern equity judges while speaking of theirjurisdiction and remedial functions. 4 Whatever may bethe strictly accurate theory concerning the nature of equi-table interference, the principle was established from theearliest days, that while the court of chancery could inter-pose and compel a defendant to comply with the dictatesof conscience and good faith with regard to matters out-side of the strict rules of the law, or even in contradictionto those rules, while it could act upon the conscience of adefendant and force him to do right and justice, it wouldnever thus interfere on behalf of a plaintiff whose ownconduct in connection with the same matter or transac-tion had been unconscientious or unjust, or marked by awant of good faith, or had violated any of the principlesof equity and righteous dealing which it is the purposeof the jurisdiction to sustain. While a court of equityendeavors to promote and enforce justice, good faith, up-rightness, fairness, and conscientiousness on the part ofthe parties who occupy a defensive position in judicialcontroversies, it no less stringently demands the same fromthe litigant parties who come before it as plaintiffs or ac-tors in such controversies. 5 This fundamental principle is

v. Cauley, 52 Tex. Civ. App. 261, 113 the conduct of the plaintiff be of-S. W. 560. fensive to the dictates of natural

Annotation: 4 A. L. R. 44. justice, then, whatever may be the

4. Mr. Justice Brewer, speaking rights he possesses and whatever use

for the court in Deweese v. Rein- he may make of them in a court of

hard, 165 U. S. 386, 390, 41 L. ed. law, he will be held remediless in

757, 759, 17 S. Ct. 340, 341, said: a court of equity."

"A court of equity acts only when 5. The text is quoted in Carmenand as conscience commands, and if v. Fox Film Corp. (C. C. A. 2d) 269

§ 398See. IV]

EQUITY JURISPRUDENCE. [Pt. I, Ch. I

expressed in the maxim, He who comes into a court ofequity must come with clean hands; and although not thesource of any distinctive doctrines, it furnishes a mostimportant and even universal rule affecting the entire ad-ministration of equity jurisprudence as a system of reme-dies and remedial rights.'

§ 399. Limitations upon Principle.-Broad as the prin-ciple is in its operation, it must still be taken with reason-able limitations; it does not apply to every unconscientiousact or inequitable conduct on the part of a plaintiff. Themaxim, considered as a general rule controlling the ad-

F. 928, 15 A. L. R. 1209, writ ofcertiorari denied in 255 U. S. 569,65 L. ed. 790, 41 S. Ct. 323; Weeg-ham v. Killefer, 215 F. 168; affirmed,215 F. 289, 131 C. C. A. 558, L. R. A.1915A, 820; Harton v. Little, 188Ala. 640, 65 So. 951; Picture Plays'Theatre Co. v. Williams, 75 Fla. 556,78 So. 674, 1 A. L. R. 1; Vulcan De-tinning Co. v. American Can Co. 72N. J. Eq. 387, 67 A. 339, 12 L. R. A.(N. S.) 102, Chafee, Cases on Equita-ble Relief Against Torts, 401; Wells-ville Oil Co. v. Miller, 44 Okla. 493,145 P. 344; Sanders v. Cauley, 52Tex. Civ. App. 261, 113 S. W. 560;David Adler & Sons Co. v. Maglio,200 Wis. 153, 228 N. W. 123, 66A. L. R. 1085.

6. Union Central Life Ins. Co. v.Drake, 214 F. 536, 131 C. C. A. 82;Michigan Pipe Co. v. Fremont Ditchetc. Co. 111 F. 284, 49 C. C. A. 324;Baird v. Howison, 154 Ala. 359, 45So. 668; Colby v. Title Ins. & TrustCo. 160 Cal. 632, 117 P. 913, 35L. R. A. (N. S.) 813, Ann. Cas.1913A, 515; Picture Plays TheatreCo. v. Williams, 75 Fla. 556, 78 So.674, 1 A. L. R. 1; Miller v. JacksonTownship, 178 Ind. 503, 99 N. E.

102; American Assn. v. Innis, 109Ky. 595, 60 S. W. 388; Gannett v.Albree, 103 Mass. 372, Chafee andSimpson, Cases on Equity, 1207; At-wood v. Fisk, 101 Mass. 363, 100 Am.Dec. 124; Prudential Life Ins. Co. v.La Chance, 113 Me. 550, 95 A. 223;Wellsville Oil Co. v. Miller, 44 Okla.493, 145 P. 344; Caldwell v. VirginiaFire & Marine Ins. Co. 124 Tenn.593, 138 S. W. 698; David Adler &Sons Co. v. Maglio, 200 Wis. 153,228 N. W. 123, 66 A. L. R. 1085;Grether v. Nick, 193 Wis. 503, 213N. W. 304, 215 N. W. 571, 55 A. L. R.525; practically all citing or quot-ing the author.

A court of equity will not aid atenant who, in connection withthe matter in controversy, has beenguilty of inequitable conduct towardhis landlord, or, in the case of ajoint tenancy, toward his cotenant.However, where the wrong of a ten-ant was not directly connected withthe subject-matter of the suit, thecase has been held not to be one forthe application of the principle in-volved in this maxim.


§ 399

Sec. IV] MAXIM AS TO CLEAN HANDS. § 399

ministration of equitable relief in particular controversies,is confined to misconduct in regard to, or at all eventsconnected with, the matter in litigation, so that it has insome measure affected the equitable relations subsistingbetween the two parties, and arising out of the transaction;it does not extend to any misconduct, however gross,which is unconnected with the matter in litigation, andwith which the opposite party has no concern. When acourt of equity is appealed to for relief it will not gooutside of the subject-matter of the controversy, and makeits interference to depend upon the character and con-duct of the moving party in no way affecting the equitableright which he asserts against the defendant, or the re-lief which he demands.7 [A court of equity is not an

7. Lewis's Appeal, 67 Pa. St. 153,166; Meyer v. Yesser, 32 Ind. 294.

In Lewis's Appeal, supra, thecourt say: "It is not every un-founded claim which a man maymake, or unfounded defense whichhe may set up, which will bar himfrom proceeding in a court of equity.The rule that he who comes intoequity must come with clean handsmust be understood to refer to will-ful misconduct in regard to the mat-ter in litigation: Snell's Equity, 25.All the illustrations given in Fran-cis's Maxims of Equity, 5, under themaxim, as he states it, He that hathcommitted iniquity shall not haveequity, show this."

U. S.-Keystone Driller Co. v. Gen-eral Excavator Co. 290 U. S. 240, 78L. ed. 293, 54 S. Ct. 146, affirming62 F. (2d) 48, rehearing denied 64F. (2d) 39; Cropper v. Davis, 243 F.310, 156 C. C. A. 90; American SugarRef. Co. v. McFarland, 229 F. 284,affirmed in 241 U. S. 79, 60 L. ed.899, 36 S. Ct. 498; Bentley v. Tib-bals, 223 F. 247, 138 C. C. A. 489;

Chute v. Wisconsin Chemical Co. 185F. 115 (reprehensible conduct of

plaintiff, subsequent to bringing suit,

and unconnected with cause of ac-

tion); Cunningham v. Pettigrew, 169

F. 335, 94 C. C. A. 457; Sperry &

Hutchinson Co. v. Louis Weber & Co.

161 F. 219; Camors-McConnell Co.

v. McConnell, 140 F. 412; affirmed

140 F. 987, 72 C. C. A. 681; Knapp

v. S. Jarvis Adams Co. 135 F. 1008,

70 C. C. A. 536; Trice v. Comstock,

121 F. 620, 57 C. C. A. 646, 61

L. R. A. 176; General Electric Co. v.

Wise, 119 F. 922; Shaver v. Heller

& M. Co. 108 F. 821, 834, 48 C. C. A.

48, 65 L. R. A. 878, affirming 102 F.

882; Liverpool & L. & G. Ins. Co. v.

Clunie, 88 F. 160; Coeur d'Alene

Cons. & M. Co. v. Miners' Union, 51

F. 260, 19 L. R. A. 382.

Ala.-Ashe-Carson Co. v. Bonifay,

147 Ala. 376, 41 So. 816; Bethea v.

Bethea, 116 Ala. 265, 22 So. 561;

Foster v. Winchester, 92 Ala. 497, 9

So. 83.

Cal.-American-Hawaiian Engineer-

ing & Construction Co. v. Butler, 165


avenger of wrongs committed at large by those who resortto it for relief, however careful it may be to withholdits approval from those which are involved in the sub-

497, 133 P. 280, Ann. Cas. 1916C,

44; Western U. Teleg. Co. v. Commer-

cial Pacific Cable Co. 177 Cal. 577,

171 P. 317; Bradley Co. v. Bradley,

165 Cal. 237, 131 P. 750; Miller v.

Kraus (-Cal. App.) 155 P. 834.

Colo.-Kirby v. Union P. R. Co. 51

Colo. 509, 119 P. 1042, Ann. Cas.

1913B, 461.

Conu.-Lyman v. Lyman, 90 Conn.399, 97 A. 312, L. R. A. 1916E, 643;

Yale Gas Stove Co. v. Wilcox, 64

Conn. 101, 128, 29 A. 303, 25 L. R. A.

90, 42 Am. St. Rep. 159, 173.

Del.-Delaware Surety Co. v. Lay-

ton (Del. Ch.), 50 A. 378.

Ga.-Brown v. Jacobs Pharmacy

Co. 115 Ga. 429, 41 S. E. 553, 57L. R. A. 547, 90 Am. St. Rep. 126.

III.-Carpenters' Union v. Citizens'

Committee, 333 Ill. 225, 164 N. E.

393, 63 A. L. R. 157; Barnes v.

Barnes, 282 Ill. 593, 118 N. B. 1004,4 A. L. R. 4; Pitzele v. Cohn, 217 Ill.

30, 75 N. E. 392; City of Chicago v.

Union Stock Yards Co. 164 Ill. 224,

45 N. E. 430, 35 L. R. A. 281; John

Anisfield Co. v. Edw. B. Grossman &

Co. 98 Ill. App. 180; Mossler v.

Jacobs, 66 Ill. App. 571.

Iowa.-Carr v. Craig, 138 Iowa,

526, 116 N. W. 720.

Ky.-American Ass'n v. Innis, 109

Ky. 595, 60 S. W. 388.

Me.-Mason v. Carrothers, 105 Me.

392, 74 A. 1030.

Mass.-Lurie v. Pinanski, 215 Mass.

229, 102 N. E. 629; Beekman v. Mar-

sters, 195 Mass. 205, 80 N. E. 817,11 L. R. A. (N. S.) 201, 122 Am. St.

Rep. 232, 11 Ann. Cas. 332.

Mich.-Cuba Colony Co. v. Kirby,149 Mich. 453, 112 N. W. 1133.

Mo.-Williams v. Beatty, 139 Mo.App. 167, 122 S. W. 323 (a priortrespass by plaintiff is no defense toinjunction against defendant's sim-ilar trespass) ; Viertel v. Viertel, 99Mo. App. 710, 75 S. W. 87.

N. J.-Neubeck v. Neubeck, 94N. J. Eq. 167, 119 A. 26 27 A. L. R.172; Shotwell v. Stickle,183 N. J. Eq.188, 90 A. 246; Hodge v. UnitedStates Steel Corp. 64 N. J. Eq. 90,53 A. 601; Woodward v. Woodward,41 N. J. Eq. 224, 4 A. 424.

N. Y.-Rice v. Rockefeller, 134N. Y. 174, 31 N. E. 907, 17 L. R. A.237, 30 Am. St. Rep. 658; Conlon v.Hosier, 165 N. Y. S. 745, 746.

Ohio.-Kinner v. Lake Shore & M.S. R. Co. 69 Ohio St. 339, 69 N. E.614, Chafee, Cases on Equitable Re-lief Against Torts, 381.

Okla.-Teucher v. Gragg, 136 Okla.129, 276 P. 753, 66 A. L. R. 143.

Tenn.-Upchureh v. A n d e rs o n(Tenn. Ch. App.) 52 S. W. 917.

Tex.-Sanders v. Cauley, 52 Tex.Civ. App. 261, 113 S. W. 560.

Vt.-Langdon v. Templeton, 66 Vt.173, 28 A. 866.

Wash.-Langley v. Devlin, 95 Wash.171, 163 P. 395, 4 A. L. R. 32.

W. Va.-Cheuvront v. Horner, 62W. Va. 476, 59 S. E. 964.

Wis.-Post v. Campbell, 110 Wis.378, 85 N. W. 1032.

Many of the above cases quoteor cite the text.

Annotation: 4 A. L. R. 65, 91.

§ 399


ject-matter of the suit, and which prejudicially affect therights of one against whom relief is sought.s The ruledoes not go so far as to prohibit a court of equity fromgiving its aid to a bad or a faithless man or a criminal.The dirt upon his hands must be his bad conduct in thetransaction complained of. If he is not guilty of inequi-table conduct toward the defendant in that transaction,his hands are as clean as the court can require.9

[Thus it has been held or stated that the fact that theplaintiff is a member of an illegal association or combina-tion, or a lawful association committing unlawful acts or

8. Kinn_ v. Lake Shore & M. S.R'y Co. 69 Ohio St. 339, 69 N. E.614, Chafee, Cases on Equitable Re-lief against Torts 381; Primeau v.Granfield, 180 F. 847 (rule laid downthat maxim applies only when prose-cution of suitor's rights itself in-volves the protection of wrong-doing); Ely v. King-Richardson Co.265 Ill. 148, 106 N. E. 619, L. R. A.1915B, 1052 (plaintiff an employeeof defendant, having been dis-charged for bad faith in organizinga rival company, sought an account-ing to determine his past compensa-tion; held, the maxim did not apply,as the relief was not founded in anyway on his wrongful conduct);Dempster v. Baxmyer, 231 Pa. 28,79 A. 805 (fact that plaintiff agreedto improper use of a portion of afund will not bar his right to anaccount for balance).

Where the superintendent ofbanks advanced the entire amountof the stockholders' statutory lia-bility to pay in full the depositorsof an insolvent bank, it was held, ina suit by the superintendent againsta stockholder to enforce such lia-bility, on the ground that the super-intendent was subrogated to the de-positors' rights, that the stockholder

II Equity Jur.-4

might not defend on the ground thatthe superintendent's act in advanc-ing the money was a technical vio-lation of the law. Love v. Robin-son, 161 Miss. 585, 137 So. 499, 78A. L. R. 608.

And see Chafee, Cases on Equi-table Relief against Torts, p. 383,note.

9. Carpenters' Union v. Citizens'Committee, 333 Ill. 225, 164 N. E.393, 63 A. L. R. 157; Dallavo v.Dallavo, 189 Mich. 350, 155 N. W.538.

The maxim does not repel all sin-ners from courts of equity, nor doesit apply to every unconscientiousact or inequitable conduct on thepart of the complainants. Neubeckv. Neubeck, 94 N. J. Eq. 167, 119A. 26, 27 A. L. R. 172.

It has been held that the prin-ciple of "unclean hands" can applyto the case of a complainant in acourt of equity, alleged to be taintedwith illegality, only when, in orderfor him to recover in the suit, it isnecessary for him to disclose thepreceding illegal transaction. Cohnv. Pitzele, 117 Ill. App. 342, affirmedin 217 Ill. 30, 75 N. E. 392.



employing unlawful methods, is no defense to a suit toenjoin ticket "scalping,"'" or infringement of a patent,"or unfair and fraudulent competition.' 2 This limitationon the doctrine has been frequently applied in cases in-volving labor disputes.13 For example it has been heldthat equitable relief cannot be denied because complainantis a member of an illegal combination in restraint of trade 14

or has violated some statutory provision unrelated to thematter in hand.1

5

[Perjury unconnected with or only indirectly connectedwith the subject-matter of a suit will not defeat the rightof a party to the suit to the relief prayed.',

10. Pennsylvania Co. v. Bay, 138F. 203; Kinner v. Lake Shore & M.

S. R'y Co. 69 Ohio St. 339, 69 N. E.614, Chaffee, Cases on Equitable Re-lief against Torts, 381.

And see Kirby v. Union Pac. R.Co. 51 Colo. 509, 119 P. 1042, Ann.Cas. 1913B, 461, Chafee, Cases onEquitable Relief Against Torts, 355.

11. General Electric Co. v. Wise,119 F. 922; United States Fire Es-cape Counterbalance Co. v. JosephHalsted Co. 195 F. 295.

12. Coca-Cola Co. v. Gay-Ola Co.200 F. 720, 119 C. C. A. 164.

13. Carpenters' Union v. Citizens'Committee, 333 Ill. 225, 164 N. E.393, 63 A. L. R. 157 (suit to enjoinillegal boycotting); Moore Drop

Forging Co. v. McCarthy, 243 Mass.554, 137 N. E. 919 (wherein the

failure of the employer's represen-tative to keep an engagement tomeet a committee of employees washeld not to prevent relief in another

controversy).But see Cornellier v. Haverhill

Shoe Mfrs. Ass'n, 221 Mass. 554, 109N. E. 643, L. R. A. 1916C, 218,wherein the plaintiff, suing for in-

junction against blacklisting, was

denied relief because he was in acombination to strike and joined inunlawful methods of conducting thestrike.

14. American Steel & Wire Co. v.Wire Drawers' & D. M. Unions, 90F. 608; Coeur d'Alene Cons. & M.Co. v. Miners' Union, 51 F. 260,19 L. R. A. 382 (suit to enjoin un-lawful interference by a laborunion).

15. Goldfield Consol. Mines Co. v.Goldfield Miners' Union, 159 F. 500.

Annotation: 66 A. L. R. 1092.16. Foster v. Winchester, 92 Ala.

497, 9 So. 83, wherein perjury wascommitted in procuring patent forland.

In Delaware Surety Co. v. Lay-ton (Del. Ch.), 50 A. 378, the plain-tiff sought an injunction to pre-vent the secretary of state fromtaking the plaintiff's certificate ofincorporation into another state foruse in a prosecution against itspresident and secretary for perjuryin swearing to the certificate; it washeld that such perjury was not soconnected with the subject-matteras to justify fhe application of thismaxim to the plaintiff's suit.

§ 399


[Fraud of agent.-The reprehensible conduct complainedof, it is said, must have been that of the person againstwhom the maxim is sought to be invoked, or, if it wasthat of an agent, to be chargeable to the principal it musthave been performed with his knowledge. 17 However,specific performance of a contract induced by the mis-representations of an agent has been refused although theplaintiff was unaware thereof until the institution of suit."'

[Necessity for injury to complainant.-The party to asuit, complaining that his opponent is in court with "un-clean hands" because of the latter's conduct in the trans-action out of which the litigation arose, or with whichit is connected, must show that he himself has been in-jured by such conduct, to justify the application of theprinciple to the case.19 The wrong must have been done tothe defendant himself and not to some third party.20

17. Todd Protectograph Co. v.Iledman Mfg. Co. 254 F. 829 (re-lief against unfair competition);Associated Press v. InternationalNews Service, 240 F. 983, modifiedin other respects in 245 F. 244, 157C. C. A. 436, 2 A. L. R. 317, affirmedin 248 TJ. S. 215, 63 L. ed. 211, 39S. Ct. 68, 2 A. L. Rl. 293.

The maxim assumes some degreeof moral guilt on the part of thecomplainant; that the fraud of anagent is imputed by law to his prin-cipal does not render the latter'shands "unclean," within the mean-ing of the maxim: Vulcan DetinningCo. v. American Can Co. 72 N. J.Eq. 387, 67 A. 339, 12 L. R. A.(N. S.) 102, per Garrison, J., revers-ing 70 N. J. Eq. 588, 62 A. 881. Sedquaere. Fraud, in equity, often con-sists in the unconscientious use of alegal advantage originally gainedwith innocent intent: See post, chap-ters on Actual and ConstructiveFraud, passim.

This case (Vulcan Detinning Co.etc.) is also reported in Chafee,Cases on Equitable Relief againstTorts, p. 401. And see note onp. 412.

18. Annotation: 4 A. L. R. 61.See § 400. And see Chafee and

Simpson, Cases on Equity, note, c.X, sec. 1, p. 1287.

19. Cochran Timber Co. v. Fisher,190 Mich. 478, 157 N. W. 282, 4A. L. R. 9; Bentley v. Tibbals, 223F. 247, 138 C. C. A. 489; Lyman v.Lyman, 90 Conn. 399, 406, 97 A.312, L. iR. A. 1916E, 643; First Nat.Bank v. Carter, 132 Md. 218, 103 A.463; Schroeder v. Turpin, 253 Mo.258, 271, 161 S. W. 716; Langdon v.Templeton, 66 Vt. 173, 182, 28 A.866; Galbraith v. Devlin, 85 Wash.482, 148 P. 589.

Annotation: 4 A. L. R. 58.20. Cochran Timber Co. v. Fisher,

190 Mich. 478, 157 N. W. 282, 4A. L. R. 9, holding that one secur-ing a deed to real estate through

See. IV] § 399

EQUITY JURISPRUDENCE.

[A wrong which has been righted may not be pleadedagainst a party to a suit in equity, on the theory that theparty charged therewith is in court with "unclean hands."Therefore one who has asserted the wrongful nature of anact, and recovered from the perpetrator damages in a courtof law, cannot, under the principle of this maxim, set upthe wrong in a suit in equity arising out of the transactionin connection with which the wrong was committed.1 ]

§ 400. Illustrations-Specific Performance.-I shall nowgive some examples to illustrate the circumstances un-der which this principle operates in the administration ofequitable relief, and the manner in which it is applied.The first instance which I shall mention is found in thefamiliar doctrine which controls the equitable remedy ofthe specific performance of contracts. A contract may beperfectly valid and binding at law; it may be of a classwhich brings it within the equitable jurisdiction, becausethe legal remedy is inadequate; but if the plaintiff's con-duct in obtaining it, or in acting under it, has been un-conscientious, inequitable, or characterized by bad faith,a court of equity will, refuse him the remedy of a specificperformance, and will leave him to his legal remedy byaction for damages. 2 It is sometimes said that the rem-

fraud is not prevented from quiet-ing his title against a subsequentgrantee from the common grantor,by the maxim that "he who comes l

into equity must come with cleanhands."

As to assignability of cause of ac-tion for fraud, see 4 Am. Jur., As-signments, p. 256, §§ 38, et seq.And see infra, §§ 1275, et seq.

In Langley v. Devlin, 95 Wash.171, 163 P. 395, 4 A. L. R. 32, it washeld that if a fraud practised on athird person by both parties to asuit in equity was separate and dis-tinct from a fraud previously per-

petrated by the defendant on theplaintiff, the latter fraud being thesubject-matter of the complaint inthe litigation, the defendant mightnot successfully invoke the principleof "unclean hands" against theplaintiff because of the plaintiff'sparticipation in the fraud practicedon the third person.

1. Loy v. Alston, 172 F. 90, 96C. 0. A. 578; Melair v. Benson, 63Or. 66, 126 P. 20; Huntzicker v.Crocker, 135 Wis. 38, 115 N. W. 340,15 Ann. Cas. 444.

Annotation: 4 A. L. R. 59.2. The text is quoted in Weegham

§ 400 [Pt. 11, Ch. I


edy of specific performance rests with the discretion ofthe court; but, rightly viewed, this discretion consistsmainly in applying to the plaintiff the principle, He whocomes into a court of equity must come with clean hands,although the remedy, under certain circumstances, isregulated by the principle, He who seeks equity must doequity (see § 392). The doctrine, thus applied, means thatthe party asking the aid of the court must stand in con-scientious relations towards his adversary; that the trans-action from which his claim arises must be fair and just,and that the relief itself must not be harsh and oppres-sive upon the defendant.3 By virtue of this principle, aspecific performance will always be refused when theplaintiff has obtained the agreement by sharp and un-scrupulous practices, by overreaching, by concealment ofimportant facts, even though not actually fraudulent, bytrickery, by taking undue advantage of his position, or byany other means which are unconscientious; and when thecontract itself is unfair, one-sided, unconscionable, or af-fected by any other such inequitable feature; and when thespecific enforcement would be oppressive upon the defend-ant, or would prevent the enjoyment of his own rights, orwould in any other manner work injustice. 4 This applica-

v. Killefer, 215 F. 168; affirmed, 215F. 289, 131 C. C. A. 558, L. R. A.1915A, 820.

3. Smith v. Price, 125 Ark. 589,189 S. W. 167 (quoting the text);Proctor v. Hansel, 205 Iowa, 542, 218N. W. 255, 58 A. L. R. 153; Teuscherv. Gragg, 136 Okla. 129, 276 P. 753,66 A. L. R. 143 (quoting the text).

4. U. S.-Willard v. Tayloe, 8 Wall.557, 565, 19 L. ed. 501, Chafee andSimpson, Cases on Equity, 1351, perField, J.; Cathcart v. Robinson, 5 Pet.264, 8 L. ed. 120; Carmen v. FoxFilm Corp. 269 F. 928, 15 A. L. R.1209 (citing the text), certiorari de-nied in 255 U. S. 569, 65 L. ed. 790,

41 S. Ct. 323; Union Central Life Ins.Co. v. Drake, 214 F. 536, 131 C. C. A.82; Michigan Pipe Co. v. FremontDitch etc. Co. 111 F. 284, 49 C. C. A.324.

Ala.-Harton v. Little, 188 Ala.640, 65 So. 951 (quoting the text).

Cal.-Cooper v. Pena, 21 Cal. 403,411.

Iowa.-Proctor v. Hansel, 205 Iowa,542, 218 N. W. 255, 58 A. L. R. 153.

Md.-Fox v. Fraebel, 140 Md. 54,116 A. 876.

Mass.-Florimond Realty Co. v.Waye, 268 Mass. 475, 167 N. E. 635;Banaghan v. Malaney, 200 Mass. 46,

See. TV] § 400

EQUITY JURISPRUDENCE. [Pt. IT, Ch. I

tion of the principle, better perhaps than any other, il-lustrates its full meaning and effect; for it is assumedthat the contract is not illegal; that no defense could beset up against it at law; and even that it possesses no fea-tures or incidents which could authorize a court of equityto set it aside and cancel it. Specific performance is re-fused simply because the plaintiff does not come into courtwith clean hands.

5

85 N. E. 839, 19 L. R. A. (N. S.) 871,128 Am. St. Rep. 378.

Mich.-Johnston Realty & Invest.Co. v. Grosvenor, 241 Mich. 321, 217N. W. 20; Wayne Woods Land Co.v. Beeman, 211 Mich. 360, 178 N. W.696.

Minn.-Enkema v. McIntyre, 136Minn. 293, 161 N. W. 587, 2 A. L. R.411.

Nreb.-Wilson v. Bergmann, 112Neb. 145, 198 N. W. 671, Chafee andSimpson, Cases on Equity, 1369.

N. Y.-Seymour v. Delancey, 6Johns. Ch. 222, 3 Cow. 455, 15 Am.Dec. 270, Chafee and Simpson, Caseson Equity, 1173.

Pa.-Schaeffer v. Jones, 293 Pa.529, 143 A. 197; Friend v. Lamb,152 Pa. 529, 25 A. 577, 34 Am. St.Rep. 672, Chafee and Simpson, Caseson Equity, 1362.

Tenn.-Caldwell v. Virginia F. &M. Ins. Co. 124 Tenn. 593, 139 S. W.698.

W. Va.-Dunean v. Duncan, 104 W.Va. 600, 140 S. E. 689.

Wts.-Gloede v. Socha, 199 Wis.503, 226 N. W. 950.

Eng.-Lamare v. Dixon, L. R. 6H. L. 414, 423, per Lord Chelmsford.

Annotation: 4 A. L. R. 70; 65A. L. R. 57, et seq.; 87 A. L. R.1345.

See, also, §§ 1404, 1405.

In Rust v. Conrad, 47 Mich. 449,11 N. W. 265, 41 Am. Rep. 720,Chafee and Simpson, Cases onEquity, 1446, Mr. Justice Cooleystated the rule to be that "when aparty comes into equity, it shouldbe very plain that his claim is anequitable one. If the contract isunequal; if he has bought land ata price which is wholly inadequate;if he has obtained the assent of theother parties to unreasonable provi-sions; if there are any indications ofoverreaching or unfairness on hispart, the court will refuse to enter-tain his case, and turn him over tothe usual remedies."

5. Gabrielson v. Hogan (C. C. A.2d) 298 F. 722; Harton v. Little, 188Ala. 640, 65 So. 951 (quoting thetext); Busch v. Baker, 79 Fla. 113,83 So. 704 (stating the general rulethat a misrepresentation or conceal-ment is not required to go to theextent of actionable fraud in orderto justify a chancellor in his dis-cretion in refusing to grant specificperformance of a contract inducedthereby); Carver v. Van Arsdale,312 Ill. 220, 143 N. E. 579; Keatingv. Frint, 291 Ill. 423, 126 N. E. 136;Frisby v. Ballance, 5 Ill. 287, 39 Am.Dec. 409; Carter v. Schrader, 187Iowa, 1245, 175 N. W. 329; Heitmanv. Clancy, 167 Iowa, 58, 148 N. W.1011; Shikes v. Gabelniek, 273 Mass.201, 173 N. E. 495, 87 A. L. R. 1339

§ 400

Sec. IV] MAXIM AS TO CLEAN HAANDS. § 400a

[§ 400a. -Injunction.-The maxim is likewise ap-plied in suits for injunctive relief. Equity will not grantan injunction to aid a party in the continuance of a legalwrong and trespass. Even though the defendant is alsotrespassing, equity will not adjust differences betweenwrongdoers. 6 The operation of the principle has been heldto preclude the granting of equitable relief to one whosepurpose, in bringing a suit for an injunction against theenforcement of a law or ordinance regulating the drilling

(holding that a party who has in-

tentionally made false statements is

not entitled to specific performance

although such statements were not

relied on); Riggins v. Trickey, 46

Tex. Civ. App. 569, 102 S. W. 918.

Annotation: 4 A. L. R. 62; 87

A. L. R. 1345.

The power of equity to grant spe-

cific performance will not be exer-

cised in aid of a contract secured

by conduct savoring of injustice. If

there are misrepresentations by orin behalf of the plaintiff on a ma-

terial point, or unfair or unethical

manipulations, even though insuffi-

cient to invalidate the contract, spe-

cific performance will neverthelessbe refused, for this relief will be

granted only upon equitable con-

siderations, in view of all the cir-

cumstances of the particular case.

Florimond Realty Co. v. Waye, 268

Mass. 475, 167 N. E. 635.

Overreaching or taking advantage

by a dealer, or his agent, of theignorance, old age, and physical dis-

ability of the owner of land willfurnish a sufficient ground for the

court, in the exercise of its discre-

tion, to refuse the specific perform-

ance of a contract thus secured, al-

though the contract was a legal con-

tract, and was not procured by such

fraud as to entitle the vendor to

avoid it. Banaghan v. Malaney,200 Mass. 46, 85 N. E. 839, 19 L. R. A.(N. S.) 871, 128 Am. St. Rep. 378.

Non-disclosure of facts as a de-fense to the specific enforcement ofcontracts in equity, see § 905.

6. Humphreys-Mexia Co. v. Arsen-eaux, 116 Tex. 603, 297 S. W. 225,53 A. L. R. 1147; Ilo Oil Co. v. Indi-ana N. G. & 0. Co. 174 Ind. 635, 92N. E. 1, 30 L. R. A. (N. S.) 1057(injunction sought against waste ofoil and gas by one who is commit-ting same acts).

An injunction restraining a ripa-rian owner from diverting waterfrom a reservoir made by a dam con-structed by the complainant, whichdams water back on the lands ofthe riparian proprietor, will not begranted, since it would aid in thecontinuance of a legal wrong andtrespass. Humphreys-Mexia Co. v.Arseneaux, supra.

It is held, in accordance with themaxim, that a plaintiff who main-tains a nuisance has no standing inequity to enjoin its unauthorizedabatement: Pittsburgh, C. C. & St.L. R'y Co. v. Town of Crothersville,159 Ind. 330, 64 N. E. 914.

And see Chafee, Cases on Equita-ble Relief Against Torts, p. 412,note, and cases and authorities therecited.


of oil wells, was merely to appropriate all of the oil andgas obtainable before others who had a community in-terest therein could reach it.7 Courts will not however,refuse an injunction to protect clear legal rights merelybecause the complainant may be actuated by motives whichthe court might not approve, particularly where the re-fusal of the injunction will not only deprive the complain-ant of his property, but will also grant the beneficial useof it to the defendant.8 Nor is relief denied where theconduct complained of is unrelated to the rights asserted(see § 399). 9 ]

§ 401. -Fraud.-Another familiar illustration ofthe principle may be found in all cases where the plain-tiff's claim is affected by his own fraud. Whatever bethe nature of the plaintiff's claim and of the relief whichhe seeks, if his claim grows out of or depends upon, or isinseparably connected with, his own prior fraud, a courtof equity will, in general, deny him any relief, and willleave him to whatever remedies and defenses at law hemay have.10 The maxim is more frequently invoked

7. Marrs v. Oxford (C. C. A. 8th)32 F. (2d) 134, 67 A. L. R. 1336.

8. Cityco Realty Co. v. Slaysman,160 Md. 357, 153 A. 278, 76 A. L. R.296, wherein the complainant hadreserved a one-foot strip of land be-tween a road built by it and thelands of the defendant, who refused tocontribute to the cost of the road,it was held that the complainantmight properly enjoin trespasses onthe one-foot strip by the defendant.

9. A railroad may enjoin a cityfrom removing its tracks, although ithas used its road for certain unau-thorized purposes not involved inthe suit; City of Chicago v. UnionStock Yards Co. 164 Ill. 224, 45 N. E.430, 35 L. R. A. 281.

10. Trice v. Comstock, 115 F. 765;

Hanley v. Sweeny, 109 F. 712, 48C. C. A. 612 (plaintiff by fraud pro-cured the insertion of his name aspurchaser in order confirming ad-ministrator's sale, and accordinglyequitable relief to set aside deed todefendant, the true purchaser, wasdenied); Richardson v. Walton, 49F. 888 (fraud by a partner precludesbill by him to set aside contract dis-solving partnership); Bagwell v.Johnson, 116 Ga. 464, 42 S. E. 732;Union Nat. Bank v. Hines, 177 Ill.417, 53 N. E. 83; Morrison v. Juden,145 Mo. 282, 46 S. W. 994; Recordv. Rochester Trust Co. - N. H.-- , 192 A. 177, 110 A. L. R. 1218;

Munn & Co. v. Americana Co. 83N. J. Eq. 309, 91 A. 87, L. R. A.1916D, 116, modifying 82 N. J. Eq.

§ 401 [Pt. III Ch. I


in cases upon fraudulent contracts.1" If a contract hasbeen entered into through fraud, or to accomplish anyfraudulent purpose, a court of equity will not, at the suitof one of the fraudulent parties,-a particeps doli,-whilethe agreement is still executory, either compel its execu-tion or decree its cancellation, nor after it has beenexecuted, set it aside, and thus restore the plaintiff tothe property or other interests which he had fraudulentlytransferred. 12 [A person who comes into court with a

63, 88 A. 330 (fraudulent misrepre-sentations as to editorship of publi-cation in suit for injunction to re-strain similar act); Roche v. Hoyt,71 N. J. Eq. 323, 64 A. 174; Farrowv. Holland Trust Co. 74 Hun, 585,26 N. Y. S. 502; White v. Cuthbert,10 App. Div. 220, 41 N. Y. S. 818(cancellation of note given to assistfraudulent attachment refused);Southern Mut. Aid Assn. v. Blount,112 Va. 214, 70 S. E. 487; Kallisonv. Poland (Tex. Civ. App.) 167 S. W.1104; Sanders v. Cauley, 52 Tex. Civ.App. 261, 113 S. W. 560; Robinsonv. Brooks, 31 Wash. 60, 71 P. 721(one who files a lien knowing it tocontain nonlienable items, cannotmaintain bill to foreclose it);Raasch v. Raasch, 100 Wis. 400, 76N. W. 591.


A creditor who obtains an assign-ment through fraud is not entitledto the aid of a court of equity toenforce his claim under the assign-ment: Commercial Nat. Bank v.Burch, 141 Ill. 519, 31 N. E. 420, 33Am. St. Rep: 331.

Knowingly and consciously mak-ing an untrue and excessive claimwill defeat the right to a lien undera statute: Camden Iron Works v.City of Camden, 64 N. J. Eq. 723,52 A. 477.

As another example, a party whofraudulently or wrongfully alters awritten instrument cannot maintaina suit to obtain the remedy of areformation: Marcy v. Dunlap, 5Lans. (N. Y.) 365; and see Bleak-ley's Appeal, 66 Pa. 187.

11. Harton v. Little, 188 Ala. 640,65 So. 951 (concealments in partner-ship agreement); Miller v. Kraus(Cal. App.) 155 P. 834, rehearingdenied in (Cal.) 155 P. 838 (mis-representations in partnership agree-ment); Langford v. Read, 69 Fla.198, 68 So. 723 (sham bid for con-struction work).

12. Creath v. Sims, 6 How. 192, 12L. ed. 110; Kitchen v. Rayburn, 86U. S. .(19 Wall.) 254, 22 L. ed. 64;Selz v. Unna, 73 U. S. (6 Wall.) 327,18 L. ed. 799; Wheeler v. Sage,1 Wall. 518, 17 L. ed. 646; Randallv. Howard, 67 U. S. (2 Black) 585,17 L. ed. 269; Bartle v. Nutt, 29U. S. (4 Pet.) 184, 7 L. ed. 825;Clark v. Buffalo Hump Min. Co. 122F. 243, 58 C. C. A. 607; Schermer-horn v. De Ohambrum, 64 F. 195, 12C. C. A. 81, 26 U. S. App. 212 (con-tract to defraud creditors); Allsteadv. Laumeister, 16 Cal. App. 59, 116P. 296; White v. Crew, 16 Ga. 416,420; Kirkpatrick v. Clark, 132 Ill.342, 24 N. E. 71, 22 Am. St. Rep.531, 8 L. R. A. 511; Paine v. Lake


claim which the pleadings show to have had its origin ina fraudulent transaction cannot ask a court of equity toact upon the conscience of a defendant, and force him to doright towards one whose own legal conscience is not voidof offense.1 3 ] Equity will leave such parties in exactlythe position in which they have placed themselves, refusingall affirmative aid to either of the fraudulent participants.The only equitable remedies which they can obtain arepurely defensive. Upon the same principle, wherever oneparty, in pursuance of a prior arrangement, has fraudu-lently obtained property for the benefit of another, equitywill not aid the fraudulent beneficiary by compelling aconveyance or transfer thereof to him; and generally,where two or more have entered into a fraudulent schemefor the purpose of obtaining property in which all are toshare, and the scheme has been carried out so that allthe results of the fraud are in the hands of one of theparties, a court of equity will not interfere on behalf ofthe others to aid them in obtaining their shares, but willleave the parties in the position where they have placedthemselves. 14 [One who wrongfully appropriates the

Erie etc. R. R. 31 Ind. 283; Pearcev. Ware, 94 Mich. 321, 53 N. W.1106; Stillwell v. Bell, 248 Mo. 61,154 S. W. 85 (wherein property wasto be reconveyed to grantor afterhe had procured a divorce from hiswife); Pendleton v. Gondolf, 85 N.J. Eq. 308, 96 A. 47; Reynolds v.Boland, 202 Pa. 642, 52 A. 19 (quot-ing the text); Bearden v. Jones(Tenn. Ch. App.) 48 S. W. 88;Swanson v. Sims, 51 Utah, 485, 170P. 774, 777; Smith v. Chilton, 84

Va. 840, 6 S. E. 142; Helsley v.Fultz, 76 Va. 671; Haymond v.Hyer, 80 W. Va. 594, 92 S. E. 854;Lowther Oil Co. v. Miller-SibleyOil Co. 53 W. Va. 501, 44 S. E. 433,97 Am. St. Rep. 1027 (specific per-

formance); McClintock v. Loisseau,31 W. Va. 865,.8 S. E. 612, 2 L. R. A.816.

In re Great Berlin S. Co. L. R.26 Ch. Div. 616; Reynell v. Sprye, 1De Gex, M. & G. 660, 688, 689 (deci-sion dismissing the cross-bill of thedefendant Sprye).


13. Picture Plays Theatre Co. v.Williams, 75 Fla. 556, 78 So. 674, 1A. L. R. 1.

14. Reynolds v. Boland, 202 Pa.642, 52 A. 19 (quoting the text).


Johns v. Norris, 22 N. J. Eq. 102;Walker v. Hill, 22 N. J. Eq. 513;Bleakley's Appeal, 66 Pa. St. 187;

§ 401 [Pt. 11, Ch. I

Sec. IV] MAXIM AS TO

property of another for hisaid of a court of equity in

Musselman v. Kent, 33 Ind. 452;Hunt v. Rowland, 28 Iowa, 349; Hi-bernia etc. Soc. v. Ordway, 38 Cal.679. In Johns v. Norris, 22 N. J.Eq. 102, where a widow, by a priorarrangement, procured a third per-son to buy in the real estate of herhusband at a foreclosure sale at aprice far below its real value, bycontrivances agreed upon to deterother persons from bidding, and bygiving out that the purchase was forthe benefit of the widow and herfamily, it was held that she was aparticipant in the fraud against theheirs and creditors, and did notcome into court with clean hands, ina suit to compel the confederate toconvey the land to her, and reliefwas therefore refused. In Walkerv. Hill, 22 N. J. Eq. 513, the samewas held with respect to an execu-tion debtor who had by a secret ar-rangement procured a person to buyin the property at the execution salefor the debtor's benefit, in such amanner as to be fraudulent againstother creditors and purchasers. Thecourt refused to grant relief by com-pelling a conveyance by the pur-chaser to the execution debtor. InBleakley's Appeal, 66 Pa. St. 187,the principle was applied under dif-ferent circumstances. One I. wasthe vendee under a land contract,and had paid part of the purchaseprice. A judgment was then recov-ered against him by L.; whereuponI. assigned the contract to B., ante-dating the assignment, so that itappeared to precede the recovery ofthe judgment. This assignment wasmade both by I. and B. for the pur-pose of defrauding L. B. after-

CLEAN HANDS. § 401

own use will not receive theany matter with which such

wards paid to the vendor in theland contract the residue of thepurchase-money. L. in the meantime issued an execution, and L'sinterest under the land contract wassold at execution sale, and boughtin by the judgment creditor, L. L.brings this suit against the vendorto compel a specific performance ofthe contract by a conveyance to him-self. Held, that L. was entitled tosuch specific performance and con-veyance by the vendor, without re-paying to B. the amount of the pur-chase price which he had paid to thevendor. Speaking of B.'s claim tobe repaid, the court said: "He (B.),standing thus before a chancellor,cannot ask him to make repaymentto him a condition to a degree re-moving the fraudulent obstructionhe threw in the way. The paymentis one of the very steps he took toconsummate the fraud upon L. Ifhe have a legal right of recovery,he must resort to his action at law;if he can have none, it is a test ofhis want of equity. And in addi-tion to all this, it is a rule that achancellor will not assist a party toobtain any benefit arising fromfraud. He must come into a courtof equity with clean hands. Itwould be a singular exercise ofequity which would assist a party,who had paid money to enable himto perpetrate a fraud, to recover hismoney, just when the chancellor wasengaged in thrusting out of the wayof his doing equity to the injuredparty the very instrument of thefraud. He who does iniquity shallnot have equity: Hershey v. Weit-ing, 14 Wright, 244." See, also,


reprehensible conduct is connected.1 5 A court of equitywill not aid one who, standing in a relation of confidence toanother, commits acts in violation of his trust which, areimmediately connected with the subject-matter of the liti-gation.' 6 ]

§401a. Conveyances in Fraud of Creditors andOthers.-One of the most common occasions for the en-forcement of this rule arises in cases where a debtor hasconveyed or assigned or in any manner transferred hisproperty for the purpose of defrauding his creditors, andafterwards seeks to set aside the transfer as against thegrantee or assignee and recover back the property. Thedoor of a court of equity is always shut against such aclaimant.17 [The same rule applies to a conveyance in

Odessa Tramways Co. v. Mendel,L. R. 8 Ch. Div. 235.

The text is quoted in Milhous v.Sally, 43 S. C. 318, 21 S. E. 268, 885,49 Am. St. Rep. 834. And see Law-ton v. Estes, 167 Mass. 181, 45 N. E.90, 57 Am. St. Rep. 450; Lyons v.Elston, 211 Mass. 478, 98 N. E. 93(A and B obtain deed of theirmother's property, by undue in-fluence; the deed was taken to A;equity will set the deed aside in be-half of C, another child, but not inbehalf of B).

15. Union Cent. L. Ins. Co. v.Drake, 214 F. 536, 131 C. C. A. 82(misappropriation of funds loanedfor purpose of satisfying mortgage);Bennett v. Stuart, 161 Ky. 264, 170S. W. 642 (fraudulent misappro-priation of money advanced to pur-chase mining land).

Annotation: 4 A. L. R. 54.In Hill v. Kavanaugh, 118 Ark.

134, 176 S. W. 336, 4 A. L. R. 1,it was held that a county treasurerwho placed public money in his per-

sonal account to obtain for himselfthe interest was not in court withclean hands in seeking subrogationafter the failure of the bank and anaccounting by him.

16. Annotation: 4 A. L. R. 83.

17. U. S.-Dent v. Ferguson, 132U. S. 50, 33 L. ed. 242, 10 S. Ct. 13.

Ala.-Baird v. Howison, 154 Ala.359, 45 So. 668.

Conn.-Brown v. Brown, 66 Conn.493, 34 A. 490 (property conveyed bythird party to defendant in trust forplaintiff, in order to defraud plain-tiff's wife).

Idaho.-Bowers v. Cottrell, 15Idaho, 221, 96 P. 936.

III.-Decker v. Stansberry, 249 Ill.487, 94 N. E. 940, Ann. Cas. 1912A,227; Brady v. Huber, 197 Ill. 291,64 N. E. 264, 90 Am. St. Rep. 161.

Ind.-Reed v. Robbins, 58 Ind.App. 659, 108 N. E. 780.

Kan.-Durand v. Higgins, 67 Kan.110, 72 P. 567 (grantor of convey-ance in fraud of creditors cannot

§ 401a

Sec. IV] MAXIM AS TO CLEAN HANDS. § 401a

fraud of the dower of the grantor's wife.1 8 And one who,in fraud of his creditors, has purchased property in the

have his title quieted as against suchconveyance).

Ky.-Commonwealth v. Filiatreau,161 Ky. 434, 170 S. W. 1182 (fraudu-lent conveyance of livestock to de-feat judgment creditor in bastardyproceedings); Carson v. Beliles, 121Ky. 294, 89 S. W. 208, 1 L. R. A.(N. S.) 1007 (conveyance in antici-pation of bastardy proceedings) ;Southwood v. Southwood, 30 Ky. LawRep. 307, 98 S. W. 304; Gillum v.Kirksey, 29 Ky. Law Rep. 422, 93S. W. 591 (secret trust to defraudcreditors not enforced) ; Hill v. Scott,12 Ky. Law Rep. 877, 15 S. W. 667.

Md.-Watts v. Vansant, 99 Md.577, 58 A. 433.

Mioh.-Brender v. Stratton, 216Mich. 166, 184 N. W. 486, 22 A. L. R.728 (applying rule to wife whojoined her husband in executing deedto defraud his creditors).

Miss.-Moore v. Jordan, 65 Miss.229, 3 So. 737, 7 Am. St. Rep. 641.

Mo.-Wertheimer-Swartz Shoe Co.v. Wyble, 261 Mo. 675, 687, 170S. W. 1128; -Creamer v. Bivert, 214Mo. 473, 113 S. W. 1118; Miller v.Miller, 206 Mo. 341, 103 S. W. 962.

N. H.-Record v. Rochester TrustCo. - N. H-. - , 192 A. 177, 110A. L. R. 1218.

Ohio.-Pride v. Andrews, 51 OhioSt. 405, 38 N. E. 84.

Okla.-King v. Antrim Lumber Co.70 Okla. 52, 172 P. 958, 4 A. L. R.21 (wherein the plaintiff prayed forthe removal of a cloud created by adeed recorded without delivery, andthereafter surreptitiously taken bythe grantee).

Pa.-Hukill v. Yoder, 189 Pa. 233,42 A. 122, 43 Wkly. Notes Cas. 347.

S. D.-Jones v. Jones, 20 S. D. 632,108 N. W. 23.

Va.-Nunnally v. Stokes, 116 Va.472, 82 S. E. 79.

Wash.-Langley v. Devlin, 95Wash. 171, 163 P. 395, 4 A. L. R.32; Boothe v. Bassett, 82 Wash. 95,143 P. 449, 7 A. L. R. 145 (whereinthe defendant did not plead thefraudulent nature of the transactionas an affirmative defense, but suchfraud was brought out in the plain-tiff's testimony); Snipes v. Kelleher,31 Wash. 386, 72 P. 67.

W. Va.-Hubbard v. Robrecht, 75W. Va. 566, 84 S. E. 379; Craig v.Craig, 54 W. Va. 183, 46 S. E. 371.

Annotation: 4 A. L. R. 100; 7A. L. R. 150; 3 Am. St. Rep. 727.

In Palmer v. Palmer, 100 Neb.741, 161 N. W. 277, a conveyanceof real estate by the plaintiff tothe defendant, to defeat alimonywhich plaintiff anticipated would beawarded to his wife in a suit fordivorce which he contemplated in-stituting, was successfully pleadedby the defendant in a suit to setaside the conveyance.

It has been held that whether theintent to perpetrate a fraud on thecreditors of the grantor in a con-veyance to defraud creditors aroseat the time of the conveyance orthereafter, it is equally connectedwith the subject-matter of the suit.Conlon v. Hosier, 165 N. Y. S. 745,746.

18. Creighton v. Roe, 218 Ill. 619,75 N. E. 1073, 109 Am. St. Rep. 310;Derry v. Fielder, 216 Mo. 176, 115


name of a third person as grantee, will be denied reliefwhen he seeks to recover the property, 19 although an en-forceable trust would otherwise have arisen.2 0 If, how-ever, the grantee recognizes the trust and reconveys theproperty to the grantor, the courts will not interfere withthe latter's possession, no question being raised as to the

S. W. 412 (no resulting trust whenconveyance was taken in name ofthird party in order to cut off dowerof purchaser's wife).

In Bush v. Rogan, 65 Ga. 320, 38Am. Rep. 785, it is held that thegrantee can maintain ejectmentagainst the grantor; but see Kirk-patrick v. Clark, 132 Ill. 342, 24N. E. 71, 8 L. R. A. 511, 22 Am. St.Rep. 531.

In Asam v. Asam, 239 Pa. 295, 86A. 871, it was held that where thebill against the holder of the legaltitle did not show a purpose to de-fraud the wife, so that it was pos-sible that such arrangement mighthave been made with the full knowl-edge and approval of the wife, themere suspicion of fraud attendantupon the transaction, not amountingto fraud in law, was insufficient toprevent the enforcement of a result-ing trust-the property having beenpurchased by the complainant andtitle having been taken in the nameof the defendant.

19. Higginbotham v. Boggs (C. C.A. 4th) 234 F. 253, 148 C. C. A.155; Southworth v. Hiuffaker, 79Colo. 364, 246 P. 261; Haggerty v.Wilmidgton Trust Co. - Del. Ch.-, 194 A. 134; De France v.

Reeves, 148 Iowa, 348, 125 N. W.655; Burtrum v. Chetopa StateBank, 143 Kan. 495, 54 P. (2d) 1206;Shamo v. Benjamin, 155 Ky. 373,159 S. W. 798; Gross v. Pennsyl-

vania Mortg. & Loan Co. 101 N. J.Eq. 51, 137 A. 89; Boothe v. Bas-sett, 82 Wash. 95, 143 P. 449, 7A. L. R. 145; Burt v. Timmons, 29W. Va. 441, 2 S. E. 780, 6 Am. St.Rep. 664.

Annotation: 117 A. L. R. 1465.20. See Am. Law Inst. Restate,

ment of the Law of Trusts, vol. 2,pp. 1301, 1359, §§ 422, 444.

A minority of the courts take theview that, where one paying thepurchase price of property causesthe title thereto to be taken in thename of another for the purpose ofavoiding creditors, a resulting trustnevertheless arises, and that therule applies that where a party toan action may prove his case with-out showing fraud on his part, thefact that the transaction on whichthe action is based may have beentainted with improper motives orconduct will not serve as a defensein equity, so that the fraudulentpurpose of the purchaser is no de-fense in an action by him to havea resulting trust declared and theproperty conveyed to him. Hazle-ton v. Lewis, 267 Mass. 533, 166N. E. 876; Lufkin v. Jakeman, 188Mass. 528, 74 N. E. 933; Gerace v.Gerace, - Mass. - , 16 N. E.(2d) 6, 117 A. L. R. 1459; Monahanv. Monahan, 77 Vt. 133, 59 A. 169,70 L. R. A. 935.


§ 401a

See. IV] MAXIM AS TO CLEAN HANDS. § 401b

rights of creditors.1 The grantee cannot successfully setup the original fraudulent conveyance. 2 ]

[§ 401b. Right of Personal Representative orHeirs to Relief.-The right of the personal representativeto attack or set aside a conveyance or transfer made byhis decedent in fraud of creditors is frequently denied bythe courts on the ground that the personal representativestands in the shoes of the decedent.3 Neither the fraudu-lent grantor, nor his administrator, nor his heirs can en-force or undo the corrupt transaction. 4 Other cases, how-

1. Cartledge v. McCoy, 98 Ga.560, 25 S. E. 588; Payne v. Hutson,264 Ill. App. 508; Johnston v. Jick-ling, 141 Iowa, 444, 119 N. W. 746;

Olson v. Peterson, 88 Kan. 350, 128

P. 191; O'Gasapian v. Danielson, 284

Mass. 27, 35, 187 N. E. 107, 89A. L. R. 1159; Hyland v. Iyland,

278 Mass.. 112, 179 N. E. 612;

Hughes v. Hughes (Tex. Com. App.)

221 S. W. 970, affirming (Tex. Civ.

App.) 191 S. W. 742; Fargo v. Ladd,6 Wis. 106.


Relief is not denied to a party to

a conveyance claimed to be fraudu-lent as to creditors if he can make

out his case without reference tothe fraudulent elements in the facts,

in a suit to which no defrauded

creditor is a party. O'Gasapian v.

Danielson, 284 Mass. 27, 35, 187

N. E. 107, 89 A. L. R. 1159.

2. Either because of special cir-

cumstances, or in direct conflictwith the decisions supporting the

right, as against his grantee's credi-

tors, of a grantor after a reconvey-

ance to him of property fraudu-

lently conveyed in the first instance,

there are a number of decisions

which deny him the protection in-

tended to be afforded by the recon-veyanee, and, no question arising asbetween his own creditors and thoseof the grantee, permit the latter tofollow the property into. the gran-tor's hands. Annotation: 89 A. L. R.1177.

See, also, annotation: 4 A. L. R.102, as to various fact situations inwhich it has been held that theprinciple was not applicable.

And see infra, § 403, as to partiesnot in pari delicto.

3. Moore v. Schneider, 196 Cal.380, 238 P. 81; Arteaga v. Arteaga,169 Ga. 595, 151 S. E. 5; CiceroTrust & Say. Bank v. Schermann,252 Ill. App. 449; Stierlin v. Tesche-meacher, 333 Mo. 1208, 64 S. W. (2d)647, 91 A. L. RB. 121; Bank of WillowSprings v. Lillibridge, 316 Mo. 968,293 S. W. 116; Bankers' Trust Co. v.Bank of Rockville Center Trust Co.114 N. J. Eq. 391, 168 A. 733, 89A. L. R. 697; Harrison v. Davis(Tex. Civ. App.) 58 S. W. (2d) 1025(dictum).

Annotation: 91 A. L. R. 134; 50L. R. A. (N. S.) 320; 18 Ann. Cas.37; Ann. Cas. 1915B, 212.

4. Stierlin v. Tesehemacher, 333


ever, accord to the representative the right to sue to setaside such conveyances. 5 And a right of action is by stat-ute sometimes given to the representative.6 ]

[§ 401c. Right of Fraudulent Grantee in Re-spect of Expenditures for Taxes and Encumbrances.-Onewho knowingly takes a conveyance or assignment to aidand abet a scheme to defraud creditors cannot hold thefraudulent instrument, or any interest under it, as againstthe creditors, for the satisfaction of taxes paid or encum-brances discharged upon the property. He is not regardedas coming into court with clean hands.7 A contrary ruleis, however, supported by a few decisions. s If, however,the grantee is not guilty of actual fraud, but is chargeablewith knowledge of such facts that the law holds him guilty

Mo. 1208, 64 S. W. (2d) 647, 91A. L. R. 121.

5. Howell v. Howell, 211 Iowa, 70,

232 N. W. 816; Marion County Nat.

Bank v. Smith, 205 Iowa, 203, 217

N. W. 857; Combs v. Roark, 206 Ky.

454, 267 S. W. 210; Williams v.

Harth, 156 Ky. 702, 161 S. W. 1102;Re McCluskey, 116 Me. 212, 100 A.

977; Weil v. Marquis, 256 Pa. 608,

101 A. 70; Quackenbush v. Graf, 37

S. D. 385, 158 N. W. 409.Annotation: 91 A. L. R. 134.

The holdings are ordinarily placed

on the ground that the plaintiff acts

not only as representative of theheirs of the estate, but also as

trustee of the creditors. Chester

County Trust Co. v. Pugh, 241 Pa.124, 88 A. 319, 50 L. R. A. (N. S.)

320, Ann. Cas. 1915B, 211.6. Ives v. Ives, 177 Ark. 1060, 9

S. W. (2d) 1062; Day v. Dullam, 235

Mich. 516, 209 N. W. 561; Hause v.

Coblentz, 22 Ohio App. 17, 153 N. E.255; Graham v. Perry, 200 Wis. 211,

228 N. W. 135, 68 A. L. R. 267.


7. Burt v. C. Gotzian & Co. 102F. 937, 43 C. C. A. 59, writ of certio-rari denied in 179 U. S. 684, 45 L. ed.

385, 21 S. Ct. 916 (taxes and en-

cumbrances); Lynch v. Burt, 132 F.

417, 67 C. C. A. 305; Morley Bros. v.

Stringer, 133 Mich. 690, 95 N. W.

978 (fraudulent grantee who pays

a mortgage is not entitled to reim-

bursement from plaintiff in a credi-

tor's bill); Sheridan v. McCormick,

39 N. D. 641, 168 N. W. 59, 8 A. L. R.

523; Greig v. Rice, 66 S. C. 171, 44

S. E. 729; Lynch v. Murray, 86 Vt.1, 83 A. 746 (taxes and interest on

mortgage).


8. Ackerman v. Merle, 137 Cal.

169, 69 P. 983 (mortgage); Smith

v. Grimes, 43 Iowa, 356 (assignment

of liens to grantee).

Annotation: 8 A. L. R. 533.In Hutchinson v. Park, 72 Ark.

509, 82 S. W. 843, the questions in

issue were between the parties to

the fraud, the action being by the

grantors, and not by their creditors,

to set aside the conveyance.

§ 401c

Sec. IV] MAXIM AS TO CLEAN HANDS. § 401d

of constructive fraud, it would seem that, on the settingaside of the conveyance, he is equitably entitled to reim-bursement for sums expended by him in good faith to dis-charge taxes or prior mortgages on the property.' And asimilar rule is applied to those who claim through thegrantee, as to sums expended in good faith to dischargeprior liens on the property.10 And, in an action for anaccounting of rents and profits or the proceeds of the prop-erty, the fraudulent grantee is ordinarily entitled to anallowance for such expenditures. 11 ]

[§ 401d. - - Transactions to Evade Payment ofTaxes.-The right to enforce a mortgage, supported by avalid consideration, is not defeated by the fact that themortgage was taken by the mortgagee in the name of athird person or executed in the form of an absolute deedin order to evade payment of taxes by the mortgagee.12

9. Lynch v. Burt, 132 F. 417, 67C. C. A. 305; Tibbetts v. Terrill, 26Colo. App. 64, 140 P. 936; Printz v.Brown, 31 Idaho, 443, 174 P. 1012(mortgage and taxes); La SalleOpera House Co. v. La Salle Amuse-ment Co. 289 Ill. 194, 124 N. E. 454(violation of Bulk Sales Act); Adamsv. Young, 200 Mass. 588, 86 N. E.942 (violation of Bulk Sales Law;rule approved); Hicks v. Beals, 83Or. 82, 163 P. 83, L. R. A. 1917D,1067 (violation of Bulk Sales Law);Anderson v. Fuller, 16 S. C. Eq.(1 M'Mull.) 27, 36 Am. Dec. 290;Carpenter v. Scales (Tenn.), 48 S. W.249 (where an advance for taxes wasmade in good faith by grantee atthe time of the conveyance); Dick-enson v. Patton, 110 Va. 5, 65 S. E.529 (payment of purchase moneylien).

Annotation: 8 A. L. R. 535.10. Lynch v. Burt, 132 F. 417, 67

C. C. A. 305; Tompkins v. Sprout,

55 Cal. 31; Tibbetts v. Terrill, 26Colo. App. 64, 140 P. 936.

Annotation: 8 A. L. R. 537.11. Gordon, Rankin & Co. v.

Tweedy, 74 Ala. 232, 49 Am. Rep.813; Young v. Ward, 115 Ill. 264,3 N. E. 512; Hamilton Nat. Bank v.Halsted, 134 N. Y. 520, 31 N. E.900, 30 Am. St. Rep. 693; Loos v.Wilkinson, 113 N . Y. 485, 21 N. E.392, 4 L. R. A. 353, 10 Am. St. Rep.495.

Annotation: 8 A. L. R. 539.However, the Maryland court in

Strike's Case, 1 Bland, Ch. (Md.)57, affirmed in 2 Harr. & G. 191, re-jected the claim of the fraudulentgrantee, who was a party to thefraud, to an allowance, on an ac-counting for rents and profits, forsums paid for taxes, street assess-ments, and ground rent, to whichthe property was subject.

12. Davies v. Lutz, 110 Kan. 657,205 P. 637; Berridge v. Gaylord, 108


In such case the turpitude of the mortgagee is no groundfor a discharge of the mortgagor from the payment of hisjust debt. The revenue laws, it is said, provide ample pun-ishment for the evasion by taxpayers of their just dues."3

Moreover the intent to evade taxes is regarded as collateralto the contract.

1 4

[On the other hand where a conveyance was executedmerely for the purpose of evading taxes, it appears that thecourts will deny relief when the grantor or his heirs seek toset aside the deed. The parties are regarded as being inequal wrong." The case is analogous to situations where

Kan. 105, 193 P. 1066, 21 A. L. R.393.

Annotation: 21 A. L. R. 396.In Johnson v. Harvey, 83 Kan.

471, 112 P. 108, the court held in-sufficient a statement in the answerto a suit to foreclose a mortgage inthe form of a warranty deed, thatone reason for putting the mortgagein the form of a deed was to avoidthe payment of taxes.

In Berridge v. Gaylord, supra, itis stated that Sheldon v. Pruessner,52 Kan. 579, 35 P. 201, 22 L. R. A.709, goes no further than to holdthat, if the mortgagee, while retain-ing the beneficial ownership, makesa mere colorable assignment in orderto escape the payment of taxes, anda foreclosure is attempted in thename of the assignee, no recovery canbe had in that action.

In Drexler v. Tyrrell, 15 Nev. 114,it was held however (one of thethree justices dissenting) that amortgage which is made in the nameof someone other than the lender ofthe money, in order to escape the

payment of taxes, is wholly void.13. Alter v. Clark, 193 F. 153;

Waterbury v. McKinnon, 146 F. 737,77 C. C. A. 294, affirming 136 F.489; Callicott v. Allen, 31 Ind. App.

561, 67 N. E. 196; Crowns v. ForestLand Co. 99 Wis. 103, 74 N. W. 546.

14. Alter v. Clark, 193 F. 153.Annotation: 114 A. L. R. 372.But where a property owner leased

premises and, in order to make therent appear small for taxing pur-poses, executed two instruments, oneof which purported to be the lease,and the other a contract for serviceswhich the landlord was bound underthe lease to render, it was held thathe was precluded by his unlawfulpurpose from asking the assistanceof a court in enforcing either thelease or the collateral agreement,even though the subterfuge suc-ceeded only for a time. Alexanderv. Rayson [1936] 1 K. B. 169, 114A. L. I. 357.

15. Annotation: 118 A. L. R. 1184.In Blake v. Ogden, 223 Ill. 204, 79

N. E. 68, where the husband broughtsuit to set aside a deed of his wife'sproperty executed by him and her,the court held that where the plain-tiff's allegations admitted that thedeed was made for the express pur-pose of depriving the state of in-heritance taxes, equity would notinterfere to set aside the deed.

In Andreas v. Andreas, 84 N. J.Eq. 375, 94 A. 415 (affirmed in 85

§ 401d

Sec. IV] MAXIM AS TO CLEAN HANDS. § 401e

a grantor makes a conveyance for the purpose of defraud-ing his creditors and thereafter seeks to have his convey-ance set aside. The state is the creditor, the taxpayer, thedebtor, and the statute is designed to discourage convey-ances to defeat the tax debt. In such situations the ruleis that the conveyances of real property to defraud credi-tors, though void as to creditors are nevertheless validand binding on the parties themselves and their personalrepresentatives."0 ]

[§ 401e. Maxim as Applied to Infants-Insane Persons.Infants are no more entitled than adults to gain benefitsto themselves by fraud. The fact that a contract has beendishonestly or dishonorably obtained may, in some circum-stances, be a bar to relief in equity.17 Thus relief is fre-

N. J. Eq. 210, 96 A. 39), a suit by ahusband to compel his wife to re-

convey to him property which he hadpreviously deeded to her, the courtheld that, inasmuch as it had been

shown that the transfer was madefor the purpose of obtaining a re-

duction of taxes, the suit must fail,as the transaction was void as

against public policy.

In Delgado v. Delgado, 42 N. M.

582, 82 P. (2d) 909, 118 A. L. R.1175, the court denied the right of

heirs of a grantor to set aside awarranty deed executed by the lat-

ter to her son, an honorably dis-

charged soldier from the United

States army, who, as such, was

exempt up to a certain amount oftaxes on real estate owned by him,

even though the court assumed forthe purposes of the decision that

the sole object of the transfer of theproperty was to defraud the state of

its revenue.

And see Collins v. Becklenberg,

236 Ill. App. 324, wherein a common-

law trust was organized merely toevade taxation.

16. Delgado v. Delgado, 42 N. M.582, 82 P. (2d) 909, 118 A. L. R.1175.

17. Carmen v. Fox Film Corp.(C. C. A. 2d) 269 F. 928, 15 A. L. R.1209, Chafee, Cases on Equitable Re-lief Against Torts, 396 (writ ofcertiorari denied in 255 U. S. 569,65 L. ed. 790, 41 S. Ct. 323), denyingthe right to a moving picture actressto disaffirm a contract to render ser-vices, made during minority, so asto enable her to fulfill a contractnegotiated with another personunder the misrepresentation thatshe was free to enter into thesecond contract.

In Weegham v. Killefer, 215 F.168, affirmed 215 F. 289, 131 C. C. A.558, L. R. A. 1915A, 820, the com-plainants sought an injunction torestrain the defendant from playingbaseball with any club other thantheir own. It was found by thecourt that he was a player of unique,


quently denied to infants who have induced contracts byfraudulent representations that they were of full age.This is a matter which is dealt with in another place (see§945).

[In respect of the right to enforce performance of agree-ments to adopt, or to provide for, a child taken into afamily, the circumstances may be such as to preclude theapplication of the maxim of clean hands, although thechild may have been mischievous and, to some extent, dis-obedient. Specific performance is decreed upon a propershowing if such relief would not be unfair, inequitable, orunjust.ls On the other hand, where, because of miscon-duct on the part of the child, good conscience and naturaljustice do not require an enforcement to the contract,specific performance will not be awarded. 19

[The equitable maxim that he who comes into equitymust come with clean hands will not preclude recovery ona fire insurance policy covering property set on fire bythe assured while insane.2 0

places no stigma of unclean

exceptional, and extraordinary skill.But complainants, knowing that hehad entered into an unenforceableagreement to play as a member ofanother club, had induced him, bythe offer of a larger salary, to breakhis agreement and play with theirown club. Then he was induced torepudiate the agreement with thecomplainants and to enter into anew agreement to play with the clubwith which he had originally con-tracted. An injunction was soughtby complainants to restrain himfrom doing so. This was refused onthe ground that complainants' con-duct in inducing him to break hisunenforceable agreement was suchmisconduct in regard to the matter

This is so because the lawhands upon either a litigant

in litigation as honest and fair-minded men would condemn andpronounce wrongful, and, although,insufficient to constitute the basisof a legal action, was quite sufficientto bar relief in equity. The com-plainants' hands were not clean.

18. Burns v. Smith, 21 Mont. 251,53 P. 742, 69 Am. St. Rep. 653; Tut-tle V. Winchell, 104 Neb. 750, 178N. W. 755, 11 A. L. R. 814.

19. Winne v. Winne, 166 N. Y.263, 59 N. E. 832, 82 Am. St. Rep.647; Ball v. Brooks, 173 N. Y. S.746.

Annotation: 11 A. L. R. 819.20. Hier v. Farmers Mut. F. Ins.

Co. 104 Mont. 471, 67 P. (2d) 831,110 A. L. R. 1051.

§ 401e [Pt. II, Ch. I


who is insane, or one who is representing the insane per-son's interests in such a case."]

§ 402. Illegality.--Another very common occasion forinvoking the principle is illegality (see §§ 929, et seq.).'Wherever a contract or other transaction is illegal, andthe parties thereto are, in contemplation of law, in paridelicto, it is a well-settled rule, subject only to a few specialexceptions depending upon other considerations of policy,that a court of equity will not aid a particeps criminis,either by enforcing the contract or obligation while it isyet executory, nor by relieving him against it, by setting itaside, or by enabling him to recover the title to propertywhich he has parted with by its means. 3 The principle is

1. Hier v. Farmers Mut. F. Ins.Co. 104 Mont. 471, 67 P. (2d) 831,

110 A. L. R. 1051.

With respect to a loss caused by the

burning of property by a mentally in-

competent or insane insured the rule

stated in 6 Couch on Insurance, § 1483,

is as follows: "An insane person can

form no wrongful or fraudulent de-

sign in destroying his own property,

so far as insurers are concerned, and

the insurers are liable, although in-

sured himself burns the property

when insane, since the burning of

the property by the insured while

insane will not absolve the insurer

from liability, in the absence of any

provision to that effect in the

policy.?'


2. Colby v. Title Ins. & Trust Co.

160 Cal. 632, 117 P. 913, 35 L. R. A.

(N. S.) 813, Ann. Cas. 1913A, 515;

Woodail v. Peden, 274 Ill. 301, 113

N. E. 607; Basket v. Moss, 115 N. C.

448, 20 S. E. 733, 48 L. R. A. 842,

44 Am. St. Rep. 463; Edwards v.

Boyle, 37 Okla. 639, 133 P. 233;

Booker v. Wingo, 29 S. C. 116, 7

S. E. 49, all citing the text.

The subjects treated in this andthe following paragraph are dis-cussed more at length in §§ 937-942.

3. U. S.-Jackman v. ContinentalNat. Bank, 16 F. (2d) 728, 51A. L. R. 336; Roberts v. Criss (C. C.A. 2d) 266 F. 296, 11 A. L. R. 698;Danciger v. Stone, 187 F. 853 (ashipper cannot enjoin state officersseizing liquors while in interstate com-merce if he is violating the liquorlaws of the state in other ways).

Ark.-Shattuck v. Watson, 53 Ark.147, 13 S. W. 516, 7 L. R. A. 551.

Ga.-Camp v. Aetna Ins. Co. 170Ga. 46, 152 S. E. 41, 68 A. L. R. 1166.

llI.-Vock v. Vock, 365 Ill. 432, 6N. E. (2d) 843, 109 A. L. R. 1170;International Coal & Min. Co. v.

Nicholas, 293 Ill. 524, 127 N. E. 703,10 A. L. R. 1010; Lines v. Willey,253 Ill. 440, 97 N. E. 843 (a convey-ance made for an unlawful purpose,viz., to enable the grantees, women,to vote at a drainage district election

at which they could not legally voteunless they actually owned land, can-not be set aside or reformed by thegrantor or his heirs).


thus applied in the same manner when the illegality ismerely a malum prohibitum, being in contravention to somepositive statute, and when it is a malum in se, as being

Mass.-Berman v. Coakley, 243Mass. 348, 137 N. E. 667, 26 A. L. R.92; Cornellier v. Haverhill Shoe Mfrs.Assn. 221 Mass. 554, 109 N. E. 643,L. R. A. 19160, 218; Downey v.Charles S. Gove Co. 201 Mass. 251,

87 N. E. 597, 131 Am. St. Rep. 398(violation of statute prohibiting so-licitation of purchase of intoxicating

liquors).

Mo.-Wertheimer-Swartz Shoe Co.v. Wyble, 261 Mo. 675, 170 S. W.1128; Modern Horse Shoe Club v.

Stewart, 242 Mo. 421, 146 S. W. 1157(violation of charter of club and oflaw prohibiting sale of liquor withoutlicense) ; Garrett v. Kansas City Coal

Min. Co. 113 Mo. 330, 20 S. W. 965,35 Am. St. Rep. 713; Barnum v. Bar-num, 177 Mo. App. 68, 164 S. W. 129.

Mont-Re First Trust & Say. Bank,45 Mont. 89, 122 P. 561, Ann. Cas.1913C, 1327.

N. J.-Cameron v. International Al-liance T. S. E. 118 N. J. Eq. 11, 176A. 692, 97 A. L. R. 594 (stating therule); Brooks v. Cooper, 50 N. J. Eq.761, 26 A. 978, 21 L. R. A. 617,35 Am. St. Rep. 793.

N. M.-Delgado v. Delgado, 42

N. M. 582, 82 P. (2d) 909, 118A. L. R. 1175.

N. C.-Harvey v. Linville Imp. Co.118 N. C. 693, 24 S. E. 489, 32 L. R. A.265, 54 Am. St. Rep. 749.

Ohio.-Markley v. Mineral City, 58Ohio St. 430, 51 N. E. 28, 65 Am. St.

Rep. 776.

W. Va.-Medford v. Levy, 31 W.

Va. 649, 8 S. E. 302, 2 L. R. A. 368,13 Am. St. Rep. 887.

Annotation: 4 A. L. R. 64, 80, 104.

A champertous contract will notbe enforced: Burnes v. Scott, 117U. S. 582, 29 L. ed. 991, 6 S. Ct. 865;Boone v. Chiles, 10 Pet. (U. S.) 1779 L. ed. 388; Casserleigh v. Wood(C. C. A.) 119 F. 308, 309, 56 C. C. A.212; Rust v. Larue, 4 Litt. (Ky.) 411,412, 14 Am. Dec. 172; Harrison v.Harman, 85 W. Va. 538, 102 S. E.224.

An injunction will not issue atthe suit of a person conducting anillegal business to restrain a policecaptain from stationing officers con-tinuously on the premises: Weiss v.Herlihy, 23 App. Div. 608, 49 N. Y. S.81.

An injunction will not issue to re-strain a postmaster from interferingwith plaintiff's mail, when plaintiffhas been engaged in a fraudulentscheme: Public Clearing House v.Coyne, 121 F. 927.

Agreements in unreasonable re-straint of trade or tending to monop-oly are illegal and will not be en-forced in equity: American Biscuit& Mfg. Co. v. Klotz, 44 F. 721; Pa-cific Postal Tel. Cable Co. v. WesternUnion Tel. Co. 50 F. 493 (injunc-tion); Parish v. Schwartz, 344 Ill.563, 176 N. E. 757, 78 A. L. R. 1032;Chicago Gas-Light & Coke Co. v.People's Gas Light etc. Co. 121 Ill.530, 13 N. E. 169, 2 Am. St. Rep.124 (specific performance); SouthChicago City Ry. Co. v. CalumetElectric St. R'y Co. 171 Ill. 391,49 N. E. 576 (specific performance);Perry v. United States School Furni-ture Co. 232 Ill. 101, 83 N. E. 444(judgment creditor, whose judgmentwas obtained on a contract in viola-

§ 402


contrary to public policy or to good morals. 4 Among thelatter class are agreements and transfers the considerationof which was violation of chastity,5 compounding of a

tion of the anti-trust law, cannotmaintain a creditor's bill against afraudulent grantee of the judgmentdebtor).

4. Greer v. Payne, 4 Kan. App.153, 46 P. 190; Harris v. Hardridge,7 Ind. Ter. 532, 104 S. W. 826 (nospecific performance of a contractto transfer land, where at the timestatute prohibited transfer, thoughthe prohibition was afterward re-moved); Vincent v. Moriarty, 31App. Div. 484, 52 N. Y. S. 519.

A court of equity will not lend itsaid to one who, in connection withthe matter in controversy, has, withnotice of the existence of a contractof employment, so dealt with a partythereto as, in effect, to inducehim to break the contract. Wee-gham v. Killefer, 215 F. 289, 131C. C. A. 558, L. R. A. 1915A, 820,affirming 215 F. 168. Annotation:4 A. L. R. 78.

A contract or conveyance againstthe policy of the United States landlaws is illegal, and will not be en-forced: Dial v. Hair, 18 Ala. 798, 54Am. Dec. 179 (specific performancerefused); Beck v. Flournoy Livestock& R. E. Co. 65 F. 30, 12 C. C. A.497, 27 U. S. App. 618 (injunctionagainst interference by governmentrefused); Kennedy v. Lonabaugh, 19Wyo. 352, 117 P. 1079, Ann. Cas.1913E, 133 (accounting refused onagreement for illegal acquisition ofcoal lands).

In York Coal & Coke Co. v. Hamil-ton, 182 Ky. 345, 206 S. W. 616, thesuit was to quiet title, and wasbrought by one who had, under anabandoned survey, secured a patent

to lands which he knew had beenpatented by another. It was heldthat he was not in court with cleanhands.

A contract to stifle bidding at ajudicial sale will not be specificallyenforced: Camp v. Bruce, 96 Va. 521,31 S. E. 901, 43 L. R. A. 146, 70 Am.St. Rep. 873.

In Public Service Commission v.Brooklyn Heights R. Co. 105 Misc.254, 172 N. Y. S. 790, P. U. R.1919B, 258, it was held that yearsof delay on the part of a street rail-way company to provide needed carsprecluded it from objecting that anorder requiring the furnishing of carswas inequitable, because of the highprices due to war conditions.

5. Chateau v. Singla, 114 Cal. 91,45 P. 1015, 33 L. R. A. 750, 55 Am,St. Rep. 63; Watkins v. Nugen, 118Ga. 372, 45 S. E. 262; Brindley v.Lawton, 53 N. J. Eq. 259, 31 A. 394(bill to compel restoration of stockgiven in consideration of illicitrelations cannot be sustained).

Benyon v. Nettlefield, 3 Macn. &G. 94, 102, 103; Bodly v. -, 2 Cas.Ch. 15, per Lord Nottingham.

And see Am. Law Inst. Restate-ment, Contracts, p. 1098, § 589.

In the following cases relief wasgiven, in some to the man or hisrepresentatives; in others to thewoman, upon contracts of the samegeneral nature; but on examinationnone of them will be found in oppo-sition to the principle: the exactquestion either was not raised bythe pleadings, or the considerationwas not, in the view of the court,illegal: Sismey v. Eley, 17 Sine. 1;


felony [or forbearance to prosecute for a crime,]0 gamblingor a lottery,7 false swearing,or breach of good morals.s

Knye v. Moore, Sim. & St. 61;

Matthew v. Hanbury, 2 Vern. 187;

Robinson v. Cox, 9 Mod. 263; Clark

v. Periam, 2 Atk. 333; Marchioness

of Annandale v. Harris, 2 P. Wins.432; Hall v. Palmer, 3 Hare, 532.

6. Treadwell v. Torbert, 119 Ala.

279, 24 So. 54, 72 Am. St. Rep. 918;

Shattuck v. Watson, 53 Ark. 147, 13

S. W. 516, 7 L. R. A. 551 (promisenot to prosecute for forgery); Ber-

man v. Coakley, 243 Mass. 348, 137

N. E. 667, 26 A. L. R. 92; Atwood v.

Fisk, 101 Mass. 363, 100 Am. Dec.

124 (promise not to prosecute for

embezzlement); Harrington v. Bige-

low, 11 Paige (N. Y.), 349; Moore

v. Adams, 8 Ohio (8 Ham.), 372, 32

Am. Dec. 723; George v. Curtis, 45

W. Va. 1, 30 5. E. 69; Rock v.

Mathews, 35 W. Va. 531, 14 S. E.

137, 14 L. R. A. 508; Swartzer v.

Gillett, 1 Chand. (Wis.) 207, 209,

210.Annotation: 4 A. L. R. 81.

See 12 Am. Jur., Contracts, p. 695,

§ 193; Am. Law Inst. Restatement,

Contracts, p. 1053, § 548.But see Davies v. London etc.

Co. L. H. 8 Ch. Div.-469. This and

other cases of the same class in

which relief is given are explained

in § 403.7. Board of Trade v. O'Dell Com-

mission Co. 115 F. 574 (bucket

shop); Baxter v. Deneen, 98 Md.

181, 57 A. 601, 64 L. R. A. 949, 1Am. St. Rep. 147; Paine v. France,

26 Md. 46; Stewart v. Parnell, 147

Pa. 523, 23 A. 838, 29 Wkly. Notes

Cas. 537; Weakley v. Watkins, 7Humph. (Tenn.) 356, 357.

Annotation: L. R. A. 1918C, 251.

the commission of any crime,It should be observed, how-

See Am. Law Inst. Restatement,Contracts, p. i006, §§ 520, et seq.

But where money had been loanedexpressly to enable the borrower topay a gambling debt, it does notcome within the rule, and can berecovered back: Ex parte Pyke, 8Ch. Div. 754, 756, 757; Johnson v.M Million, 178 Ky. 707, 199 S. W.1070, L. R. A. 1918C, 244; Appletonv. Maxwell, 10 N. M. 748, 65 P. 158,55 L. R. A. 93. Annotation: L. R. A.1918C, 252.

One lending money to pay carddebts cannot recover it if he hasany percentage or commission on themoney staked in the play. White'v. Wilson, 100 Ky. 367, 38 S. W.495, 37 L. R. A. 197.

8. In re Arthur Average Assn.L. R. 10 Ch. 542; In re South Walesetc. Co. L. R. 2 Ch. Div. 763; Sykesv. Beadon, L. R. 11 Ch. Div. 170,183, 197; Thomson v. Thomson, 7 Ves.470; Regby v. Connol, L. R. 14 Ch.Div. 482, 491. In the first two casesabove named, it was held that anassociation, illegal because not or-ganized in conformity with cer-tain mandatory statute, cannot be"wound up" by a court of equity.In Sykes v. Beadon, L. R. 11 Ch.Div. 170, a company had beenformed for the purpose of makinginvestments and dealing in securi-ties, all the members having signedarticles of association. This asso-ciation was held illegal, because itviolated certain statutes, and, amongothers, the acts against lotteries. Alarge amount of capital had beensunk, and the managers or trusteeshad committed some gross breaches

§ 402


ever, in order to avoid any misapprehension and seeminginconsistency in the decisions, that there are agreementswhich appear, at first blush, to be founded upon an im-moral consideration, or which would at one time perhapshave been regarded as contrary to public policy, whichcourts of equity do not consider to be illegal, and whichthey will therefore enforce, if properly coming withintheir jurisdiction. Of this kind are some contracts madeupon the consideration of an improper cohabitation being

of their trust. This suit was broughtby a share-holder against some ofthe trustees, to compel them to carryout the trusts, and to make themliable for the sums lost through theirbreaches of trust. The questionswere very fully discussed by Jessel,M. R., who held that the suit couldnot be maintained. He said (p.193): "Now, the authorities on thesubject seem to be quite plain whenyou come to examine them. They

are really to this effect, that youcannot ask the aid of a court ofjustice to carry out an illegal con-tract; but in cases where the con-tract is actually at an end, or isput an end to, the court will inter-fere to prevent those who have,under the illegal contract, obtainedmoney belonging to other persons onthe representation that the con-tract was legal, from keeping thatmoney." Again, he said at page197: "1 think the principle is clearthat you cannot directly enforce anillegal contract, and you cannot askthe court to assist you in carryingit out. You cannot enforce it in-directly; that is, by claiming dam-ages or compensation for the breachof it, or contribution from the per-sons making the profits realizedfrom it. It does not follow thatyou cannot, in some cases, recover

money paid over to third persons inpursuance of the contract; and itdoes not follow that you cannot, inother cases, obtain, even from theparties to the contract, moneyswhich they have become possessedof by representations that the con-tract was legal, and which belongedto the persons who seek to recoverthem; but I am bound to say I thinkthere is no pretense for saying thatan illegal contract will in any waybe enforced or aided by a court oflaw or equity."

In Wegby v. Connol, L. R. 14 Ch.Div. 482, 491, a member of a "tradesunion" had been expelled for violat-ing certain rules of the societywhich were stringently in restraintof trade, and he brought this suitto be restored to his rights of mem-bership and the property rights be-longing thereto. Trades unions hadbeen legalized by an act of Parli-ment for certain specified purposes,but not for all purposes. The courtheld that, independent of the stat-ute, the society and the articies of

agreement between its memberswere clearly illegal, because con-trary to public policy; that the suitdid not c

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