November term caused no delay of the trial, and nowise prejudiced the plaintiff. This being shown; and sufficient excuse for the omission it is the duty of this court to retain the cause, without regard to the motive which impelled the removal. Upon filing the record, an order may be entered denying the motion to remand.
See Railt'oad Co. v. Koontz, 104 U. S. 5.
M. & M. Ry. Co. and others.·
(Circuit Oourt. D. Minnesota.
WILL NOT AID A FRAUDULENT TRANSACTION OR BREAQR OJ' TRUST.
A court of equity will not aid parties in the consummation or perpetration of a fraud, nor give any assistance Whereby either of the parties connected with a betrayal of a trust can derive any advantage therefrom; nor will it unravel a tangled web of fraud for the benefit of any one enmeshed therein, through 'whoseageI;lcy the ,veb wall woven. Especially must this be. the rule where one is both advisory a,nd fiduciary, seeks its of its own officers, , asslstance to compel alleged confederates to share with him the spoils ItCquired through his own cOI;lcealments slid deceits in the betrayal of his truSts.
Griffith ·tJ Knlght, (JilmantJ Olough, and Davis, O'Briell £t,Wilson, for complainants. B. Galushfl" Geo. B. Young, and Bigelow, Flandrau £t Squires for defendants. 'rRE4T, n. J. , This case is the court onajoint plea and the evidence pertaining thereto. Counsel on either side have given the largest aid the court, by oral arguments, elaborate briefs, and full citations pf ,&qthorities; and ,therefore, however interesting an exhaustive review might be if time permitted, the task is unnecessary. It must sufficei,to staj;6thatthe snpposeq conflict of authority, when the cases araanalyzed, disappears. so far at least as the rules of equity decisive of the questions now to be determined are involved. It is a controlling maxim that a court of equity will not aid parties in the perpetration ur co,nsummation of a frav-d, nor give any assistance ;\V,herebyeitheJ,' of the parties connected with a. betrayal of a trust .'.ilOrive any,advantage therefrom. It is case does fall wit4in, the gener&l rule, because the fraudulent scheme ended with the purchase of the bonds, and the aid of the court is not invoked to Elnforce the same. It is clearly shown, however, that such pmchase was Ilierely;th'e initiatory
·Reversed. See 7 Sup. Ct. Rep. 634.
VARLEY V. ST. PAUL, )II! & M. BY. 00.
step towards effecting the main design. The theory, of the bill, the plaintiff's own testimony, and all the facts and circumstances proved, demonstrate that plaintiff's scheme was to acquire thelarge railroad properties through the acquisition and use of the .depreciated bonds. The plaintiff urges that he devised the plan, and that, withput the sistance be alone could give, the plan would: goes even further in disclosing that it was onlythrQugp ,concealment of his connection with the operations could suc6ess be realized. :'IIe held an eminently fiduciary relation to all in the property it was tluoogh information thus committed to his management; acquired and concealed from the beneficiaries, also from. the state and United States courts, that the contemplated fraud 'could .be effected. It may be conceded that in private trusts, ,where constructive frauds .have been consummated and the wronged parties do not, complain, courts, have ·refused to listen to volunteers, or, as between parties litiga,nt, examine into the means whereby the or the other has become charge!! with a new trust towards his associates. This rule rests largely on the, reason that the court is called upon, not to ascertain the sources whence the fund was derived, in t}J.e beneficiaries complaining, merely to decide whether or i13 about to be violat.ed. a ,new trust was created which ..has It may betbat there is discenlible in adjudged cases a distinction: be,tween acts mala prohibita. and mala in se. through which funds have come into the'hand of Qne confederatefor the benefit of 8011,-: acts which have no intrinsio turpitude further than is implied inthe violation of a mere statutory prohibition. The case cited for plaintiff (Brooks v. Martin, 2 Wall. 70) contains th,at element, and seems to be' shaded with the thought that the parties sought to be proteoted by the statute not only failed to but most of expressly all that had been done; That oase was Pethem culiar in many of its features, and, like the, English cases oited in the opinion, is clearly distinguishable from the transaotions now under review. In those cases, there was 'no ,act of moral turpitUde, called for investigalike the betrayal of trust for selfish greed, the relationship of the litIgant parties,. independent tion,. ' of. prior dealings between them and others.' ,.', In Brooks Martin the court e,xamined into the assignment obtain,ed by Brooks.frolU his partner, Martin, through a<;tual fraud, and ruled that he could not shield himself from the consequences of that fraud by, showing a prior violation of apropjbited aotin which they
were participants, even if such a violation, consummated, furnished the trust fund assigned. To hold otherwise would have permitted a person to escape the consequences of one fraud by setting up another and distinct fraud in which the litigants had previously participated. Toescape the result of a fraudulent assignment, Brooks urged on the cqurt as a defense that said fraudulent assignment was eonnected with a joint fra.ud theretofore committed. Such a defense the court refused to consider. There is another class of cases-the most pointed of all-the rigid enforcement of whose rules is essential to the pure administration of justice. l'hose rules not only forbid one charged with an official duty of a fiduciary nature from betraying his trust for private gain or any purpose whatever, and among other pE)nalties subjects him to whatever 109s may fall upon him throngh the dishonesty of his confed. erates. That statutory effected by a resolute refusal to give him any aid towards the against his confederates of their fraudalent schemEl. Courts will not and ought not to be made the agencies whereby frauds are to be in any respect recognized or aided. l'hey will not unravel a tangled web of fraud for the benefit of any one enmeshed therein through whose agency the web was woven. Especially must that be the rule where a trusted officer of a court, whose position is both advi'sory and fiduciary, seeks its assistance to cOmpel alleged confederates to share with him the spoils acquired through his concealments and deceits, which he admits were deemed by his and himself necessary to their success through his betrayal of 'his trusts. , Theplaintiffconceived a Bcheme to wreck the vast interests which it was his duty to protect. He had acquired in his fiduciary capacity ,through which the ,desired end could be reached. It was necessary for him to'have confederates, that he should impart to his secret infotilllition; he should continue through'the progress of the scheme to advise, with and inform them of what, from time to time, became kridwri to him; that his oonnection with them should be concealed from the courts, to whose orders he was subject, and which had a right to,relyupo# his fidelity. Through a betrayal of his trust under such ci!'cumstances, RCMrding to his 'Version of thE! facts, these vast railroad 'properties'have been secured; and a profit realized of possibiy $15,OOO,O()Q or mote. His pretense now istbat through such bett-ayals Qf official artdquasi judicial trusts, his alleged have amassed properties, moneys, and values to a vast anib'unt, with an understanding from the bilginuills that they were
FARLEY V; ST. PAUL, M. & M. BY. 00.
to reward him for his betrayals' by sharing with him one-sixth or somo other portion of the spoils. They deny his averments, and he charges that they repudiate the fraudulent contract they made with him. As they do not divide the spoils, this suit is brought to compel them and the railroad defendant, as if by specific performance, to issue to him his proportionate share of its capital stock, and also grant him proportionate parts of profits and gains and also interests in undivided property yet remaining. This is a strange dE:mand to present, to a coort of equity. To what extent the alleged confederates are blameworthy or culpable, if at all, could be made -to appear only after answer and full proofs. The court, however, must dispose of the case as now presented. A (ew days ago a demurrer, interposed was overruled, on the ground, substantially, that the theory of the bill was to require of the court the' enforcement against the railroad defendant not only a division of alleged corrupt spoils, ,a part of which to the possession of the co-defendants, but of the remaining assets, undivided; also a partition of property, etc., as just; st&ted. Thus the powers 'of a court of equity were invoked 'to eI1fdrce the executi0n of a fraud on itself as a court as well as, l,lpon others. Surely no principle of equity, morals, or law can countenance such a. demand, and no court worthy of its.trust would lend its aid to further a. scheme so abhorrent to an recognized rtMes of right and justice. It is charged, however, and for the purposes of case may be admitted, that Mr. Kennedy, agent of the Amsterdam committee,was advised hy plaintiff during the prowess of the scheme that he, the plaintiff, was secretly betraying his trust. If so, t,he grij,vity of plain.' tiff's offense was not lessened by thus adding a new confederate to !lis, fraudulent plans, especially one whose relations were eminently.fidu:ciary towards his principal, the Amsterdam committee, the court, and others interested. Plaintiff's cause 6f action is based upon inherent turpitude, and hence the fundamentalmax:im applies, "Ex'turpi causa," etc.; therefore, anqther' tnaxib1 has potential force, vii. : "Potior est conditio dejimdentfC: ,.' courts 'of. equity will not recognize as valid, groundedjitf 'hor will it undertake unravel a web of fraud for the purpose of enabling bfthe fraudulent'parti'es, after such judi.: cial disentanglement, to co'nsum.mate 'h1s fraudulent designs. The party complaining must come before ,the courtwith clean hands; 'Inof bisbill,nor by his8worn' this case he has not, by the te£ timony, either clean hiuids,within tha rules of equity, nor any ca.-use-
of action which' can be upheld without a flagrant violation of the most positive and clearly-defined rules governing such cases. The plea is sustained and the bill dismissed, with costs.
D. J., concurred.
(Circuit Dourt, D. Daliforma. February 6, 1882.)
APPltAT.-FINAL DltCRltE-DISSOLU'I:.ION OF PARTNERSHIP.
Whether a decree in' a suit for a dissolution of partnership which determines the rights of the parties, and directs that the property be sold, and that certain sums be paid out to the various parties for costs, fees, and expenses, and that the remainder be divided pr(J rata, according to their respective interests, hetween the parties, but without providing for the debts of the partnership, is a final decree, quoore.
Real put into the partnershlp by one of the parhes at an agreed valuation becomes partnership property without a conveyance from the owner, and such owner holds the legal title in trust for the partnership as assets of the partnership estate.
3. SAME-DJVIBION ON DISSOLUTION.
Where real estate held bY,a partnership cannot be divided between the part. ners, or it is reqJlired to pay the partnership debts, the court, upon a decree of dissolution, may order the sale thereof, and the proceeds to be appropriated to the partnership debts, and the surplus to be divided between the partners.
4. ERRORS NO'l' REVIEWABLE.
Errors in orders and' proceedings IUbsequent to rendition of the decree, from which no appeal can be taken, cannot be considered.
6. COSTS IN EQUI'rY.
In an equity suit costs are in the sound discretion of the c!>urt.
Appeal from the Consular Court of Yokohama.
E. D. Sawyer, for appellant. (Jeorge A. Nourse, for respondent.
SAWjER, C. J. From the record intbis case it appears that prior to the fifteenth day of June, 1876, the plaintiff and the defendant were each engaged iupusiness atYokohama, in Japan, as brewers; entered into a copartnership to carryon and that on that day the business of brewing. The defendant seems to have been the owner of a larger establishmeIl;t than. the plaintiff. It was agreed that the value of the defendant's land,hrewery, and what is called his plant (by I suppOSe, is meant the implements and fixtUres