Green v. Corrigan

• Decision Date: 31 October 1885
• Citation: 87 Mo. 359
• Parties: GREEN v. CORRIGAN, Appellant.
• Court: Missouri Supreme Court

87 Mo. 359

GREEN

v.CORRIGAN, Appellant.

Supreme Court of Missouri.

October Term 1885.

Appeal from Jackson Special Law and Equity Court.--A. COMINGO, ESQ., Special Judge.

REVERSED.

The contract of partnership which is the basis of this suit is as follows:

“Articles of agreement made and entered into this tenth day of March A. D., 1874, between Thomas Corrigan, party of the first part, and Amos Green, party of the second part, witnesseth that said party of the second part having obtained for said party of the first part, a contract with the National Water Works Company, for all work in the construction of water works at the City of Kansas, in the state of Missouri. It is hereby agreed that in consideration of the advice and services so rendered and to be rendered by the party of the second part, he is to have one-half interest in all profits resulting from said contract and work; also, to furnish half of all funds needed.

Witnesseth our hands, the day and year above mentioned.

[Signed.]

THOMAS CORRIGAN,

AMOS GREEN.”

Broadhead, Slayback & Haeussler and C. V. Scott for appellant.

(1) If the consideration of a contract, either in whole or in part, be illegal it defeats the entire contract and it is wholly immaterial whether the contract discloses such illegality or it be established by evidence aliunde, the principle being the same in either event. Sumner v. Sumner, 54 Mo. 340. (2) Contracts in violation of public policy are as illegal, to all intents and purposes, as if they were expressly prohibited by statute. When a contract involves moral turpitude, is malum in se, courts of equity will not interfere in behalf of a guilty party, even when the contract is an executed one and the purpose of the action is to compel the other party to disgorge gains made under such contract. Miller v. Marble, 21 Ill. 152; 23 Barb. 9; 1 McLean, 460. The utmost limit to which courts of equity will go is to interfere in behalf of the least guilty party against the chief mover in the unlawful enterprise, where the offence was malum prohibitum and not in its nature essentially or necessarily immoral or violative of public policy. Kitchen v. Greenbaum, 61 Mo. 110. (3) Where an attorney has been retained by one he cannot enforce a contract based on services or assistance to an opposite party. Weeks on Attys., sec. 120; Garrard v. Waddington, 16 Johns. 486; Herrick v. Cotley, 30 How. Pr. 208; Peltz v. Long, 40 Mo. 537; McDonald v. Wagner, 5 Mo. App. 56. (4) A court of equity will not lend its aid in the division of profits derived under a transaction illegal in its nature or contrary to public policy, although it has been fully executed and the profits are in the hands of one partner. Sykes v. Beasdon, 11 Ch. Div. 469 (1879); Wilson v. Murray, 23 N. J. Eq. 257; Craft v. McConnoughy, 79 Ill. 346; Todd v. Lafferty, 30 N. J. Eq. 254; King v. Winants, 71 N. C. 469; Kitchen v. Greenbaum, 61 Mo. 110; Pollack's Principles of Contracts, 244, notes 329; Snell v. Dwight, 120 Mass. 9; Wilson v. Fletcher, 7 Gratt. 1. (4) There can be no partnership in an illegal contract. Story on Part., sec. 6; 1 Story's Eq. Jur., secs. 222-240.

Tichenor & Warner also for appellant.

(1) The contract let to Corrigan was a fraud upon the company. The fraud was introduced into the same at the instance of plaintiff and solely for his benefit. (2) This action is not for a settlement of a partnership actually entered upon and in which plaintiff put his money, but it is a suit upon an agreement to compel defendant to divide profits. Plaintiff is asking this court to reward him for violating his duty towards his principal, the company. (3) More than this, so sacred is this claim that this court is asked to compel Corrigan not to give up plaintiff's share, to-wit: the raised part of the profits, but to give plaintiff one-half of his half of the profits, the contract having been repudiated by his company for the very act on account of which he is seeking a reward. (4) The sole consideration of the agreement sued upon is a contract malum in se, and one repudiated for that reason. (5) Had not plaintiff's interest in the contract been discovered, had the contract not been repudiated, had the double profits been paid by the corporation, and been divided as intended, the corporation could have recovered back the one-half profits so received by plaintiff. If plaintiff can recover, then, under the circumstances just named, plaintiff would have been entitled to recover one-half of the profits received by Corrigan on account of his having been compelled by the company to disgorge. (6) It seems there were two profits contemplated by the contract with the corporation, one-half of them legitimate and deserved, and the other half illegitimate and fraudulent. Corrigan was to get his half for the risk he assumed upon the contract and for money invested and work done. Green was to “stand in” as to the other half in order to get his pay for other matters. (7) The contract to be carried out by the so-called partnership was a fraud on the company and on that account void. Story on Contracts, sec. 582; Todd v. Rafferty, 30 N. J. Eq. 259; Farley v. Railroad, 14 Fed. Rep. 114; Sykes v. Beasdon, 11 Law Rep. [Ch.] 195; Snell v. Dwight, 120 Mass. 9; King v. Winants, 71 N. C. 469; Fletcher v. Watson, 7 Gratt. 1; Atlee v. Fink, 75 Mo. 100; Bierbauer v. Worth, 5 Fed. Rep. 337; Parkersburg v. Brown, 106 U. S. 503.R. O. Boggess for respondent.

(1) The appellant held no such relation to the water works company or to any of the persons doing business in its name as to entitle him to complain of any dereliction of duty or want of fidelity on the part of respondent in his relations to said company as its attorney or otherwise. Buford v. Packet Co., 3 Mo. App. 159; Chapman v. Callahan, 66 Mo. 290; McIndoe v. City of St. Louis, 10 Mo. 575; Chambers v. City of St. Louis, 29 Mo. 543; Henry County v. Allen, 50 Mo. 231; National Bank v. Matthews, 98 U. S. 621; Thornton v. National Exchange Bank, 71 Mo. 221, 228-9; Shewalter v. Pirner, 55 Mo. 219; Martindale v. Railroad, 60 Mo. 508; Gold Mining Co. v. National Bank, 96 U. S. 640. (2) The respondent and appellant made the contract out of which this litigation has arisen understandingly and whether it was legal or illegal, moral or immoral, in consonance with or contrary to public policy, its objects and purposes having been consummated. In its consummation appellant has received and now has in his possession a large sum of money which, under the circumstances, belongs to respondent. Kinsman v. Parkhurst, 18 How. 289; McBlair v. Gibbs, 17 How. 233; Bartlett v. Holbrook, 1 Gray. 114; Wilder v. Adams, 2 W. & M. 329; Armstrong v. Toler, 11 Wheat. 258.

Amos Green and H. M. Withers also for respondent.

(1) The contract on its face constitutes the parties equal partners, under the law as laid down by text writers and expounded by numerous decisions of the Supreme Court of Missouri as well as those of other states. Collyer on Partnership, ch. 1 and sec. 1; Story on Partnership, sec. 18, note 3; also secs. 20, 21, 22, 23; Lengle v. Smith, 48 Mo. 276; Wear v. Johnson, Ib. 234; Whitehead v. Shikle, 43 Mo. 537; Brownley v. Elliot, 38 New Hampshire, 287; Freeman v. Bloomfield, 43 Mo. 391; Lucas el al. v. Cole et al., 57 Mo. 143; Stevens v. Faucet, 24 Ill. 483; Berthold v. Goldsmith, 24 Howard, 541. (2) A silent partner stands in the same position as any other partner and his rights and liabilities are the same. Harvey v. Varney, 98 Mass. 118; Parsons on Part. 47, 57; Parsons on Mercantile Law, 167. (3) If a contract contains different and advisable considerations or covenants, some of which are legal and others illegal, the court will reject the illegal and sustain the legal and uphold this contract. 2 Chitty on Contracts (11 Ed.) 1001, 1002; Peltz et al. v. Eichele, 62 Mo. 171; United States v. Bradley, 10 Peters, 393; Presbury v. Fisher and Bennett, 18 Mo. 50; Koontz v. Hannibal Savings and Insurance Co., 42 Mo. 126; Workman v. Campbell, 46 Mo. 305. (4) An attorney or agent is not under disability to contract in regard to matters in which the principal or client is interested while the relations exist and such contracts are not in law void; but may be avoided by the client or principal where their rights are affected, or they may elect to hold the attorney or agent as a trustee, or when damage has accrued an action will lie at the instance of the client or principal. But such contracts can only be avoided by the injured party and are good as to all others; no third party can take any advantage of them, not even the assignee of a client; the relation is purely personal, and if the party, client or principal take no step to avoid such contract no one else can. Perry on Trusts, sec. 203, 206, 198; 2 Chitty on Contracts, 1037 (11 Ed.); Wharton's Treatise on Agents, p. 578, sec. 576; Brown v. Mali, 42 Md. 513; McMahon v. Smith, 6 Hesk. (Tenn.) 167. When a client or principal permits an attorney or agent to accept and retain interest more or less conflicting with those of the client, or the relation he sustains to the client, without objecting when it became known to them, they are estopped from disputing them. Wharton on Trusts, sec. 375; Marsh v. Whitman, 21 Wallace, 178. When an attorney purchases adverse to interest of client, assignee of client cannot set it up. Cowen v. Bennett, 18 Mo. 257; Reid v. Mullins, 48 Mo. 344; Bigelow on Frauds, 222; Kitchen v. Railroad, 69 Mo. 224; Twinlick Oil Co. v. Marbury, 1 Otto, 557. (5) A stranger or person not in pari delicto cannot take advantage of a fraud upon a third party. Reid v. Mullins, 48 Mo. 344; Chitty on Contracts (11 Ed.) 1037. (6) A contract is not void as against public policy, unless it affects the state or the public. 2 Chitty on Contracts (11 Ed.) 982.

HENRY, C. J.

This action was commenced in the Jackson county special law and equity court to compel a settlement of an alleged partnership between plaintiff and defendant in...