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In LANGLEY V. DEVLIN (reported herewith) ante, 32, it is held that if a fraud practised on a third person by both parties to a suit in equity was separate and distinct from a fraud previously perpetrated by the defendant on the plaintiff, the latter fraud being the subject-matter of the complaint in the litigation, and was suggested by the defendant, the latter may not successfully invoke the principle of "unclean hands" against the plaintiff because of such plaintiff's participation in the fraud practised on such third person.

In Rice v. Findlay Co. (1910) 19 Pa. Dist. R. 601, a suit for the specific performance of a contract for the purchase by the defendant of real estate of the plaintiff, it was held that the plaintiff, who was seeking to take advantage of fraudulent misrepresentations affecting the property and inducing the execution of the contract involved in the suit, which representations were made by a third person, and unknown to the plaintiff until the institution of the suit, was in court with "unclean hands" in seeking the relief prayed.

It has been held that whether the intent to perpetrate a fraud on the creditors of the grantor in a conveyance to defraud creditors arose at the time of the conveyance or thereafter, it is equally connected with the subjectmatter of the suit. Conlon v. Hosier (1917) 165 N. Y. Supp. 746.

Where the parties to the suit have been guilty of fraud in connection with the subject-matter of the litigation, and are in pari delicto, the court, in the application of the principle of "unclean hands," will leave them as it finds them, refusing its aid to either. Peacock v. Terry (1850) 9 Ga. 147; Pinckston v. Brown (1857) 56 N. C. (3 Jones, Eq.) 494. Thus, in the case last cited, the court said: "Fraud vitiates every contract into which it enters, and equity will grant relief by declaring it void. and decreeing the instrument executed under it to be delivered up, and this whether the fraud be actual or constructive. The party, however, claiming this relief, must come into court

with clean hands. If he has been a particeps criminis in the concocting of the fraud, equity will leave him to his legal remedy; in other words, will not interfere between the parties, but stand neuter. Relief is not granted where both parties are truly in pari delicto."

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The fact that a litigant has no remedy at law will not influence a court of equity to disregard the principle of this maxim by lending to him its aid in the matter in litigation if, in connection therewith, he has been guilty of fraud. Miller v. Kraus (1916) - Cal. App., 155 Pac. 834, rehearing denied in (1916) Cal. —, 155 Pac. 838, wherein the court said: "The suggestion that the plaintiff has no remedy at law or any legal relief against the defendant argues nothing against the right and the duty of a court of equity to refuse to grant aid to a party as to a transaction which has been brought into existence solely by the fraud practised by him upon the party against whom he seeks relief as to said transaction. A court of equity, in the administration of its principles, does not concern itself about what may or may not be done in another forum. It does not stop to inquire whether the party may or may not have a remedy at law with respect to the matter as to which, under its principles, it is required to refuse relief or aid of any character. To know that the transaction is unconscionable, or has been brought about by the party seeking its interposition through his own wrongdoing, misconduct, or fraudulent acts, is an end to the inquiry, so far as that court is concerned; and if it be true that the party has no adequate remedy in the ordinary course of law, or none at all, it is, as stated, no argument against the exercise by a court of equity of the jurisdiction made peculiar to it by virtue of the fundamental conceptions of that branch of our jurisprudence."

b. Application of rule.

The rule that equitable relief will be denied to one who has been guilty of fraud in respect to the transaction in

volved in his suit appears to have been applied in the following cases:

United States.-Kitchen v. Rayburn (1874) 19 Wall. 254, 22 L. ed. 64 (fraudulent misrepresentations as to value of railroad bonds); Farley v. St. Paul, M. & M. R. Co. (1882) 14 Fed. 117 (fraudulent concealment by receiver); California Fig Syrup Co. v. Stearns (1896) 33 L.R.A. 56, 20 C. C. A. 22, 43 U. S. App. 234, 73 Fed. 812 (fraudulent misrepresentations as to ingredients of medicinal preparation); California Redwood Co. v. Litle (1897) 79 Fed. 854 (misrepresentations in application for homestead); Toledo Computing Scale Co. v. Computing Scale Co. (1906) 74 C. C. A. 89, 142 Fed. 919 (fraudulent misrepresentations in merchants' scale as to weight of goods purchased); Memphis Keeley Institute v. Leslie E. Keeley Co. (1907) 16 L.R.A. (N.S.) 921, 84 C. C. A. 112, 155 Fed. 964 (fraudulent misrepresentations as to curative qualities of "remedy"); Primeau v. Granfield (1911) 114 C. C. A. 549, 193 Fed. 911, writ of certiorari denied in (1912) 225 U. S. 708, 56 L. ed. 1267, 32 Sup. Ct. Rep. 839 (fraudulent misrepresentations concerning mining stock).

Alabama.-Baird v. Howison (1908) 154 Ala. 359, 45 So. 668 (conveyance of real estate to defraud creditors); Harton v. Little (1914) 188 Ala. 640, 65 So. 951 (concealments in partnership agreement).

Arkansas.-Livingston v. Cochran (1878) 33 Ark. 294 (fraudulent conduct of probate judge connected with sale of real estate ordered and approved by probate court).

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Illinois. Dunning

9 Ga. 137 (conveyance of real estate to defraud creditors); Bagwell v. Johnson (1902) 116 Ga. 464, 42 S. E. 732 (conspiracy to defraud creditors by conveying property, pleaded in defense of suit for reconveyance). V. Bathrick (1866) 41 Ill. 425 (plaintiff and defendants, acting separately, endeavored to defraud third person, who was in ill health and in dire need of financial aid, out of his land); Kassing v. Durand (1891) 41 Ill. App. 93 (conveyance of land in fraud of creditors); Commercial Nat. Bank v. Burch (1892) 141 Ill. 519, 33 Am. St. Rep. 331, 31 N. E. 420 (creditor securing assignment of corporate assets by fraudulent representations).

Indiana.-A. N. Chamberlain Medicine Co. v. H. A. Chamberlain Medicine Co. (1909) 43 Ind. App. 213, 86 N. E. 1025 (false advertising as to properties of medicine).

Iowa.-Bacon v. Early (1902) 116 Iowa, 532, 90 N. W. 353 (reconveyance fraudulently withheld from record).

Kentucky.-Uhl v. Reynolds (1901) 23 Ky. L. Rep. 759, 64 S. W. 498 (land grant procured by fraud); County Bd. of Edu. v. Hensley (1912) 147 Ky. 441, 42 L.R.A. (N.S.) 643, 144 S. W. 63 (fraudulent misrepresentations and concealments of infant as to his age); Bennett v. Stuart (1914) 161 Ky. 264, 170 S. W. 642 (fraudulent misrepresentations concerning mining property); Com. v. Filiatreau (1914) 161 Ky. 434, 170 S. W. 1182 (fraudulent conveyance of live stock to defeat judgment creditor in bastardy proceedings).

Maryland.-Roman v. Mali (1875) 42 Md. 513 (fraudulent scheme of attorney and his client to defraud creditors of latter).

Michigan.-Massi v. Levine (1905) 139 Mich. 140, 102 N. W. 665 (fraudulent conveyance of real estate to defeat claim against bondsmen of defaulting administratrix).

Missouri.-Grocers' Journal Co. v. Midland Pub. Co. (1907) 127 Mo. App. 356, 105 S. W. 310 (purchase of trade journal by complainant, its merger into his own publication, and discontinuance of name of merged paper, in

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Nebraska. Goble (1894) 43 Neb. 49, 61 N. W. 131 (preventing bidding at sheriff's sale).

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New Jersey. Johns v. Norris (1871) 22 N. J. Eq. 110 (fraudulent scheme of one of plaintiffs and defendant to stifle competitive bidding at sheriff's sale of real estate by deterring others from bidding by representations that defendant was bidding for such plaintiff, in suit to declare a trust in property in favor of latter); Sternberger v. Young (1907) 73 N. J. Eq. 586, 75 Atl. 807 (fraud practised on principal by purchaser and real estate agent, who had property of first-mentioned person for sale, disclosed in suit by agent against purchaser to enforce fraudulent agreement); Munn & Co. v. American Co. (1914) 83 N. J. Eq. 309, L.R.A.1916D, 116, 91 Atl. 87, modifying (1913) 82 N. J. Eq. 63, 88 Atl. 330 (fraudulent misrepresentations as to editorship of publication in suit for injunction to restrain similar act); Pendleton v. Gondolf (1915) 85 N. J. Eq. 308, 96 Atl. 47 (fraudulent wiretapping scheme to swindle third persons disclosed in suit by one participant against the other, who was a supposed employee of a telegraph company, to recover money lost in the transaction).

New York. Fetridge v. Wells (1857) 4 Abb. Pr. 144 (fraudulent misrepresentations as to ingredients of medicinal preparation); Farrow v. Holland Trust Co. (1893) 74 Hun, 585, 26 N. Y. Supp. 502 (fraudulent scheme of land development company, involving negotiating of spurious promissory notes); Fay v. Lambourne (1908) 124 App. Div. 245, 108 N. Y. Supp. 874, order affirming without opinion in (1909) 196 N. Y. 575, 90 N. E. 1158 (business of alleged mind-reading and telling of past and future events

pleaded in defense of suit to enjoin use by another of name used by complainant in such adventure).

North Carolina.-Turner v. Eford (1859) 58 N. C. (5 Jones, Eq.) 106 (conveyance of real estate to defraud creditors pleaded in defense of suit for reconveyance of property); Harrell v. Wilson (1891) 108 N. C. 97, 12 S. E. 889 (fraudulent scheme to prevent competitive bidding at public sale of real estate disclosed in suit between conspirators to set aside sale); Bank of New Hanover v. Adrian (1895) 116 N. C. 537, 21 S. E. 792 (fraudulent mortgaging of real estate to defraud creditors of defendant disclosed in suit to foreclose mortgage).

North Dakota.-CROSS v. FARMERS' ELEVATOR CO. (reported herewith) ante, 13 (purchasing stock of corporation through "dummies" to gain control of corporation, in violation of agreement between stockholders, pleaded in defense of suit for cancelation of sales of stock, made for purpose of depriving plaintiff of such control).

Oklahoma.-KING v. ANTRIM LUMBER Co. (reported herewith) ante, 21 (deed of real estate executed to minor to defraud creditors of grantor, but undelivered to grantee, or in escrow, surreptitiously taken by grantee, disclosed in suit to remove cloud from title, caused thereby).

Pennsylvania.-Hershey v. Weiting (1865) 50 Pa. 244 (assignment by plaintiff to defendant of corporate stock, other personalty, and dower rights in real estate to defraud creditors of plaintiff, pleaded by latter in suit for cancelation of said assignments); Reynolds v. Boland (1902) 202 Pa. 642, 52 Atl. 19 (assignment of interest in association of individuals engaged in formation of company to operate coal leases, with understanding that interest should be reassigned on formation of company, assignment having been made because of strained relations of two of the associates and desire of one that the other should sever relations with association, and for purpose of deceiving former, all disclosed in suit instituted to compel reassignment); Binkley v. Nolt (1911) 46 Pa. Super. Ct. 531

(fraud of administrator in permitting judgment through collusion with plaintiff to be rendered against his decedent's estate without sufficient defense pleaded by him in proceeding to reopen case and for new trial); Palmer v. Harris (1869) 60 Pa. 159, 100 Am. Dec. 557 (fraudulent misrepresentations in trademarked label of place of manufacture of article labeled therewith, pleaded in defense of suit for injunction restraining counterfeiting of trademark by defendant printer, and sale of it by him to other manufacturers); Bleakley's Appeal (1870) 66 Pa. 187 (fraudulent antedating and assignment of contract for purchase of real estate for purpose of defeating claim of judgment creditor pleaded in support of bill filed by such creditor for cancelation of assignment).

Tennessee. Swan v. Castleman (1874) 4 Baxt. (Tenn.) 257 (fraudulent conveyance of real estate, to which plaintiff was party, pleaded in defense of suit against innocent third person, who claimed property under color of title, for rent of premises); Bearden v. Jones (1897) Tenn. 48 S. W. 88 (fraudulent misrepresentations and concealments by both parties to suit as to value of supposed mining property, disclosed in suit to recover money invested, and cross suit to compel performance of contract of purchase); Harton v. Lyons (1896) 97 Tenn. 180, 36 S. W. 851 (conveyance of real estate to hinder and delay creditors).

Utah. Swanson v. Sims (1918) Utah,, 170 Pac. 774 (provision fraudulently inserted in contract).

c. Qualification of rule.

The assignment of a claim for collection in the form of an absolute conveyance has been held not in itself to evince a fraudulent intent, so as to preclude the obtaining by the assignor, in a court of equity, of relief from a fraud perpetrated on him by his assignee in transferring the claim to a third person, in breach of his trust. Thurston v. McLellan (1909) 34 App. D. C. 294.

In Lord v. Smith (1908) 109 Md. 42, 71 Atl. 430, the placing by an em

ployer of his bank account in the name of a trusted employee, for the purpose of protecting the property and credit of others, which he had borrowed in starting a new business, from the creditors of a defunct firm of which he had been a member, and to pay the debts of which he had previously surrendered all of his property, was held not to be a fraudulent assignment of the funds to defeat his creditors, precluding him from obtaining the relief prayed by him in a suit in which his trusted employee claimed the ownership of the business adversely to him. In First Nat. Bank v. Carter (1918) Md. 103 Atl. 463, it was held that one who had purchased certain real estate through an agent to whom the deed was executed, and who in turn conveyed the property to the principal, was not guilty of fraudulent conduct, and was not in court with "unclean hands" because of the transaction, in seeking to have a cloud removed from his title, which cloud was occasioned by the fact that a judgment had been rendered against the agent previously to the purchase, of which judgment the principal knew nothing until after the transaction had been completed.

The fact that one who became a surety on a replevin bond had acted in the capacity of arbitrator of a dispute as to the ownership of certain property which had been transferred in fraud of the creditors of the transferrer, and in that capacity had learned of the fraudulent nature of the transfer, has been held not to cause him to be in court with "unclean hands" in suing the judgment debtors for the amount of a judgment against them which he was compelled to pay as such surety, and to subject the property referred to to the payment of his claim. Shapira v. Paletz (1900) 59 S. W. 774.


Where the party wronged has recovered damages in an action at law against the perpetrator of a fraud, he cannot, under the principle involved in this maxim, set up the fraud in a suit in equity arising out of the matter which was tainted with the fraud, the wrong having been righted. There

fore one who has recovered a judgment for the amount of a promissory note from another who fraudulently induced him to execute it cannot, under the principle of this maxim, defeat a recovery on the note in an action thereon by the holder by setting up the fraud. Loy v. Alston (1909) 96 C. C. A. 578, 172 Fed. 90, wherein the maxim was invoked and the court said: "When Alston discovered that he had been fraudulently induced to give the other part of the note which he made to borrow money to pay for an interest in the lease which he bought of Loy [who perpetrated the fraud], he had a choice of remedies. He might have rescinded the purchase and have recovered back the consideration which he had paid, including a release of that part of the note applicable thereto if the bank held it with notice of the fraud, as is claimed, or he could have affirmed the sale and the note and have recovered the difference between the value of the interest in the lease as it was and its value as Loy represented it to be. He made his election. He chose the latter alternative, and he has recovered his judgment for $6,500 [against Loy et al.], on the ground that his entire note was valid, and that he would be obliged to pay it. In this state of the case, he cannot be permitted to recover of Loy upon this judgment on the ground that his note is valid, and that he is liable to pay it and to defeat Loy's collection of this note in this suit in the same court on the ground that this note, or a part of it, is void, and he is not liable to pay it. A court of equity will not tolerate and sustain positions so inconsistent."

ciple of the maxim to defeat her right of action.

Similarly in Huntzicker v. Crocker (1908) 135 Wis. 38, 115 N. W. 340, 15 Ann. Cas. 444, the joinder of a wife in a conveyance by her husband to defeat his creditors, pleaded in defense of a suit instituted by the wife against the assignee in bankruptcy of her husband for a settlement of her inchoate right of dower in the land, after said conveyance had been judicially declared void at the suit of the said assignee in bankruptcy, was held to be no justification for the application of the prin

In Hunter v. Suderwski (1912) 171 Ill. App. 529, the complainant brought the defendants into court on a writ of interpleader. After the dismissal of the complainant from the suit and the rendition of a decree for certain of the defendants, the remaining defendant appealed. The appellant claimed as mortgagee the legal title to a fund which was the subject-matter of the suit, and which was a sum of money paid to the complainant in the court below, a court officer, by a judgment creditor of the mortgagor of certain real estate which had been sold at a foreclosure sale, to redeem the property against the sale. The certificate of sale had been issued to the appellant. The appellees claimed that he held the certificate in trust for them. Both the appellant and one of the appellees testified in the foreclosure suit that the appellant was the owner of the note secured by the mortgage, and the appellant claimed that the appellees were in court with "unclean hands" in representing the fact of ownership to be otherwise. The court held that this principle had no application to the instant case.

Fraud unconnected with the matter in controversy, or only indirectly connected therewith, will not prevent the rendition of a decree in a court of equity in favor of the party against whom it is set up, on the theory that the latter is in court "with unclean hands." Knapp v. S. Jarvis Adams Co. (1905) 70 C. C. A. 536, 135 Fed. 1008; Bossert v. S. Jarvis Adams Co. (1905) 70 C. C. A. 23, 135 Fed. 1015; Foster v. Winchester (1890) 92 Ala. 497, 9 So. 83; Bradley Co. v. Bradley (1913) 165 Cal. 237, 131 Pac. 750; Pitzele v. Cohn (1905) 217 Ill. 30, 75 N. E. 392; Johns v. Norris (1871) 22 N. J. Eq. 110; Conlon v. Hosier (1917) 165 N. Y. Supp. 746; Ihrig v. Ihrig (1916) 78 W. Va. 360, 88 S. E. 1010.

Thus, in Bradley Co. v. Bradley (1913) 165 Cal. 237, 131 Pac. 750, the court said: "It is not every wrongful act, nor even every fraud, which prevents a suitor in equity from obtaining relief. His misconduct must be so

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