PARTIES CONCERNED. CHAPTER I. THE PARTY DEFRAUDED. § 1. SUBJECT OF THE CHAPTER. In a previous chapter1 we had to consider the question whether a defrauded party must, on account of technical laws of procedure, join others with him as nominal or real parties plaintiff, and whether he must join others than the real or chief wrong-doer as parties defendant; in other words we had then to consider questions of adjective law. Now we have to consider whether, irrespective of the joinder of others, the plaintiff in the suit brought has a cause of action; in other words we have to consider a question of substantive law. § 2. THE PERSON INTENDED. Must a person have been the intended victim of a fraud, in order to enable him to gain the ear of the courts? The answer to this question must be special; it will differ for different branches of the subject. One answer must be given for the law relating to deception, another for the law relating to circumvention. This is not the place for considering the several answers in detail; for that, reference should be made to special subjects of the law to be considered later. It will be enough in the present place to say, in regard to the law of deception, that the courts will give appropriate 1 Joinder of Parties, ante, p. 108. ter on Definition of Fraud, for the meaning and use of these two terms. redress or relief for actionable misrepresentation to any one to whom the same was made or for whom it was intended, and only to such; and this whether it was made to a single individual, or to several persons, or to a particular class of persons, or to the public, or again to A to be conveyed to B.1 In regard to the law of circumvention the main question is, whether a subsequent creditor, i. e. one who has become a creditor after a particular conveyance made by his debtor, can proceed against such conveyance as a fraud upon himself when no fraud was intended against him. Upon this question it will be enough here to say that, according to the law of most of the states, the debtor, in making the conveyance will not be deemed to have committed a fraud upon subsequent creditors in the absence of any intent to delay or defraud them; while according to the law of some of the states, and of England, it will be sufficient that the debtor intended by the conveyance to delay or defraud existing creditors; the conveyance will then be deemed fraudulent also in regard to subsequent creditors.3 After these special answers to the first question proposed, and subject to them, it may, it seems, be laid down further, and in general, as applicable equally to deception and to circumvention, that both he who was the intended object of a fraud, practised upon him to his hurt, and he who, though not actually and personally intended, has sustained damage from it in the natural course of things, as effect follows cause in contemplation of law, may, under ordinary conditions, call upon the courts for redress or protection. The question will 1 Richardson v. Silvester, L. R. 9 Q. B. 34; Swift v. Winterbotham, L. R. 8 Q. B. 244; Peek v. Gurney, L. R. 6 H. L. 377; Zabriskie v. Smith, 13 N. Y. 322; Carvill v. Jacks, 43 Ark. 454; Watson v. Crandall, 78 Mo. 583; Davidson v. Vorse, 52 Iowa, 384. 2 Laughton v. Harden, 68 Maine, 208, 212; Carter v. Grimshaw, 49 N. H. 100, 105; Savage v. Murphy, 34 N. Y. then become one simply of proximate cause, so far as cases not covered by statute are concerned. Thus where the fraud is intended to operate upon A, but instead, and in the natural course of things, from what may properly be regarded as presumptive intention, operates upon B, B will be entitled to the aid of the court against the perpetrator.1 But if the fraud did not work harm to the plaintiff, he has no cause of action, whatever may have been the effect upon others.2 And if in the case of false representations it appear that the party seeking 1 Benzein v. Lenoir, 1 Dev. Eq. 225; Clifford v. Brooke, 13 Ves. 131. 'It is no defence either in the civil or criminal code that the blow was not designed to injure the person stricken, but another. Neither is it in this court.' Henderson, J. in Benzein v. Lenoir (1828), at p. 260. See also Emmons v. Moore, 85 Ill. 304. The defendant did not mean to defraud the plaintiff. But if evidence had been produced that he parted with the deeds for the purpose of defrauding any one, Lord Bacon's maxim would apply to such a case of fraud, intended against one person, taking effect upon another; which principle prevails also in trespass and the criminal law, as in the case of a squib, by which, having passed through several hands, a person lost an eye. Scott v. Shepherd, 2 W. Black. 892. So a stone being thrown in a street where many people are passing, which does not hit the person at whom it was thrown, but kills another against whom it was not directed.' Lord Erskine, in Clifford v. Brooke (1806), at p. 132. This, it will be seen, is a special application of the rule in the text, to cases of fraudulent conveyances, which, as we have said, is not generally accepted in this country. But that is a matter only of the construction of statute, and not a dispute about the principle itself of proximate cause. It may be doubted however whether Lord Erskine's proposition is widely true. Certainly it is not to be inferred from the text, though it might be inferred from the language just quoted, that any one who may casually hear a statement may act upon it, and then upon its turning out to his hurt, maintain an action upon it by showing it to be false and fraudulent. Such a person could not properly consider himself presumed to have been intended; and the case must be brought within the rule of deception previously stated, as the authorities there cited clearly declare. 2 Bell v. Johnson, 111 Ill. 374. 'It is a familiar rule that only the person against whom the fraud is committed, or a person who is injured by it, can maintain a bill to have the fraudulent transaction impeached. If, as claimed by appellant, he acquired all of Croom's title to this land by his tax deed, then Croom had no title out of which he could be defrauded by Woodruff, Johnson, or any one else. If on the contrary appellant's tax deed was void, then he had no title out of which he could be defrauded by Woodruff or Johnson. If he had no title, it does not concern him whether Woodruff or Johnson has defrauded Croom or not.' Walker, J. in Bell v. Johnson. also Day v. Lown, 51 lowa, 364. See relief knew the real state of facts, or stood in such a relation to them as to be bound, in contemplation of law, to know them, he could not prevail; not on the ground indeed that he consented (he doubtless did not consent) to the wrong, within the maxim volenti non fit injuria,' but because he was not in law deceived, a subject which will be developed in a later chapter. This brings us to cases of consent. § 3. CONSENT: PARTICEPS CRIMINIS. As a general rule a party cannot set up his own fraud as a ground upon which to rest his action or defence; nemo allegans turpitudinem suam audiendus est.'1 Thus a person cannot avail himself of a lien the discharge of which has been fraudulently prevented by his own acts; nor can one have a negotiable note cancelled against a holder with notice, where such one has executed the note in fraud. A party to a fraud is barred by his misconduct from alleging that he has been injured thereby, not only towards the person with whom he may have contracted, but also towards third persons, or the state, upon whom the fraud may have been intended to operate. Thus where a creditor entered into a secret arrangement with his debtor, in fraud of a general composition deed which he and the other creditors had executed, but was outwitted in the matter by the debtor, it was held that the creditor must abide by the consequences of his conduct. The other creditors could not be made to suffer, in order to enable him 'to get even' with the debtor. It was no ground, the court 1 White v. Hunter, 23 N. H. 128; Woods v. Kirk, 28 N. H. 324; Carey v. Brown, 92 U. S. 171; Barnes v. Brown, 32 Mich. 146; Compton v. Bunker Hill Bank, 96 Ill. 301; Jerome v. Bigelow, 66 Ill. 452; Smith v. Rowley, 66 Barb. 503; Overshiner v. Wisshart, 59 Ind. 135. 2 Carey v. Brown, supra. 8 Overshiner v. Wisshart, 59 Ind. 135. Ex parte Oliver, 4 De G. & S. 359; Post v. Marsh, 16 Ch. D. 395; Greene v. Bateman, L. R. 5 H. L. 591; Brackenbury v. Brackenbury, 2 Jac. & W. 391; Doe d. Roberts v. Roberts, 2 Barn. & Ald. 367. held, for disturbing a fraudulent agreement between A and B to injure C, that A had outwitted B. So too the courts will refuse to enforce an agreement to publish a book bearing a false title, likely to deceive the public.2 In accordance with the general rule no suit at law or in equity to compel a division of profits can be maintained against an alleged copartner in a scheme tainted with fraud against the government or individuals. Public morals, public justice, and the well-established principles of all judicial tribunals, alike forbid the interference of the courts in aid of such enterprises. The law leaves the parties to the transaction where it found them. If either has sustained a loss by the bad faith of the other, the result is but just. A judicial tribunal will not shift the loss from one party to another, or equalize the benefits or burdens which may have resulted from the unlawful scheme.3 So also where a fraud is contrived against several, and is successful against one only, that one cannot call upon the others upon whom the fraud was intended to contribute towards his loss.4 This rule of law that a person shall not take advantage of his own wrong is equally applicable whether such wrong be intentional or not. If intentional, it would be a gross fraud to allow him to profit by it; if unintentional when committed, he makes it in effect intentional by afterwards attempting to derive a benefit from it, since in so doing he adopts it.5 It has accordingly been held that if an officer, whose duty it is in cases of default in tax-suits to draft a decree enforcing the lien of the tax, should insert in the decree, whether intentionally or by negligence, a clause that summons has been served, contrary to the fact, he cannot afterwards become a purchaser of the property at the tax-sale." 1 Ex parte Oliver, supra. 2 Post v. Marsh, supra, Fry, J. cent misrepresentation by a party, in- 4 Grubb v. Cottrell, 62 Penn. St. 23. |