J. Pomeroy, a Treatise on Equity Jurisprudence §

A TREATISE

ON EQUITY JURISPRUDENCE

AS 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 COMPANY SAN FRANCISCO

THE LAWYERS CO-OPERATIVE PUBLISHING COMPANY ROCHESTER, 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.

SAN FRANCISCO THE FILMER BROTHERS ELECTROTYPE COMPANY TYPOORAPHERS AND STEREOTYPERS § 397 EQUITY JURISPRUDENCE. [Pt. II, Ch. I

SECTION IV HE WHO COMES INTO EQUITY MUST COME WITH CLEAN HANDS § 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 maxim is sometimes expressed in the form, He that hath committed iniquity shall not have equity.19 Like the one described in the preceding section, it is not, in its ordinary operation and effect, the foundation and source of any equitable estate or interest, nor of any distinctive doctrine of the

19. Annotation: 4 A. L. R. 46, 85. out of fraud or deceit"; "A right The maxim has been held to in- cannot arise to anyone out of his elude within its operation certain own wrong"; "Both parties to the other maxims, to wit: "No right of litigation being equally at fault, the action 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. See. IV] S.MAXIM AS TO CLEAN HANDS. § 397 equity jurisprudence; it is rather a universal rule guiding and regulating the action of equity courts in their interposition on behalf of suitors for any and every purpose, and in their administration of any and every species of relief. Resembling the former maxim in this respect, it differs from that principle in some most important and essential features. 20 In applying the maxim, He who seeks equity must do equity, as a general rule regulating the action of courts, it is necessarily assumed that different equitable rights have arisen from the same subject-matter or transaction, some in favor of the plaintiff and some of the defendant; and the maxim requires that the court should, as the price or condition of its enforcing the plaintiff's equity and conferring a remedy upon him, compel him to recognize, admit, and provide for the corresponding equity of the defendant, and award to him also the proper relief. The maxim does not assume that the plaintiff has done anything unconscientious or inequitable; much less does it refuse to him all relief; on the contrary, it grants to him the remedy to which he is entitled, but upon condition that the defendant's equitable rights are protected by means of the remedy to which he is entitled.1 On the other hand, the maxim now under consideration, He who comes into equity must come with clean hands, is much more efficient and restrictive in its operation. It assumes that the suitor asking the aid of a court of equity has himself been guilty of conduct in violation of the fundamental conceptions of equity jurisprudence, and therefore re- fuses him all recognition and relief with reference to the subject-matter or transaction in question. It says that whenever a party, who, as actor, seeks to set the judicial machinery in motion and obtain some remedy, has violated 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. § 398 EQUITY JURISPRJDENCE. [Pt. II, Ch. I shut against him in limine; the court will refuse to interfere on his behalf, to acknowledge his right, or to award him any remedy.'

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

2. U. S.-Primeau v. Granfield, 193 Mo. 1208, 64 S. W. (2d) 647, 91 F. 911, 114 C. C. A. 549, certiorari A. L. R. 121. denied in 225 U. S. 708, 56 L. ed. Neb.-Lewis v. Holdrege, 56 Neb. 1267, 32 S. Ct. 839; Keystone Driller 379, 76 N. W. 890. Co. v. General Excavator Co. 290 U. S. Olla.-King v. Antrim Lumber Co. 240, 78 L. ed. 293, 54 S. Ct. 146, af- 70 Okla. 52, 172 P. 958, 4 A. L. R. firming 62 F. (2d) 48, rehearing de- 21; Wellsville Oil Co. v. Miller, 44 nied 64 F. (2d) 39; Union Central Okla. 493, 145 P. 344; International Life Ins. Co. v. Drake, 214 F. 536, Land Co. v. Marshall, 22 Okla. 693, 131 C. C. A. 82; Michigan Pipe Co. 98 P. 951, 19 L. R. A. (N. S.) 1056. v. Fremont Ditch etc. Co. 111 F. Nearly all of the above cases quote 284, 49 C. C. A. 324. or cite the author. Ala.-Harton v. Little, 188 Ala. Annotation: 4 A. L. R. 44. 640, 65 So. 951; Ashe-Carson Co. v. "He that hath committed iniquity Bonifay, 147 Ala. 376, 41 So. 816. shall not have equity. He that hath Cal.-Miller v. Kraus (Cal. App.) engaged in a fraudulent enterprise 155 P. 834; Allstead v. Laumeister, cannot complain that his associate 16 Cal. App. 59, 116 P. 296. in fraud has not kept the faith." IU.-City of Chicago v. Union Primeau v. Granfield, 103 F. 911, Stock Yards & Transit Co. 164 Ill. 114 C. C. A. 549, certiorari denied 224, 45 N. E. 430, 35 L. R. A. 281. in 225 U. S. 708, 56 L. ed. 1267, 32 Ind.-Miller v. Jackson Township, S. Ct. 839. 178 Ind. 503, 99 N. E. 102. 3. Weegham v. Killefer, 215 F. in 215 F. 289, 131 Ky.-Pineville Land & Lumber Co. 168, 171, affirmed v. Hollingsworth, 21 Ky. L. Rep. 899, C. C. A. 558, L. R. A. 1915A, 820; 911, 114 53 S. W. 279. Primeau v. Granfield, 193 F. C. C. A. 549, writ of certiorari de- Me.-Conners v. Conners Bros. Co. nied in 225 U. S. 708, 56 L. ed. 1267, 110 Me. 428, 86 A. 843. 32 S. Ct. 839; Picture Plays Theatre Mass.-O'Gasapian v. Danielson, Co. v. Williams, 75 Fla. 556, 78 So. 284 Mass. 27, 35, 187 N. E. 107, 89 674, 1 A. L. R. 1 (quoting the text); A. L. R. 1159; Caines v. Sawyer, 248 American Assn. v. Innis, 109 Ky. Mass. 368, 374, 143 N. E. 326, 328. 595, 604, 60 S. W. 388; Conners v. Minn.-Scott v. Austin, 36 Minn. Conners Bros. Co. 110 Me. 428, 86 460, 32 N. W. 89, 864. A. 843; Avery v. Central Bank, 221 Mo.-Stierlin v. Tesehemacher, 333 Mo. 71, 87, 119 S. W. 1106; Sanders See. IV] MAXIM AS TO CLEAN HANDS. § 398 in the origin of the jurisdiction the theory was adopted that a court of equity interposes only to enforce the re- quirements of conscience and good faith with respect to matters lying outside of, or sometimes perhaps opposed to, the law. The action of the court was, in pursuance of this theory, in a certain sense discretionary; and the terms "discretionary" and "discretion" are still occasionally used by modern equity judges while speaking of their jurisdiction and remedial functions. 4 Whatever may be the strictly accurate theory concerning the nature of equitable interference, the principle was established from the earliest days, that while the court of chancery could inter- pose and compel a defendant to comply with the dictates of conscience and good faith with regard to matters outside of the strict rules of the law, or even in contradiction to those rules, while it could act upon the conscience of a defendant and force him to do right and justice, it would never thus interfere on behalf of a plaintiff whose own conduct in connection with the same matter or transaction had been unconscientious or unjust, or marked by a want of good faith, or had violated any of the principles of equity and righteous dealing which it is the purpose of the jurisdiction to sustain. While a court of equity endeavors to promote and enforce justice, good faith, up- rightness, fairness, and conscientiousness on the part of the parties who occupy a defensive position in judicial controversies, it no less stringently demands the same from the 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 Carmen and as conscience commands, and if v. Fox Film Corp. (C. C. A. 2d) 269 § 399 EQUITY JURISPRUDENCE. [Pt. I, Ch. I expressed in the maxim, He who comes into a court of equity must come with clean hands; and although not the source of any distinctive doctrines, it furnishes a most important and even universal rule affecting the entire administration of equity jurisprudence as a system of remedies and remedial rights.'

§ 399. Limitations upon Principle.-Broad as the principle is in its operation, it must still be taken with reasonable limitations; it does not apply to every unconscientious act or inequitable conduct on the part of a plaintiff. The maxim, considered as a general rule controlling the ad-

F. 928, 15 A. L. R. 1209, writ of 102; American Assn. v. Innis, 109 certiorari denied in 255 U. S. 569, Ky. 595, 60 S. W. 388; Gannett v. 65 L. ed. 790, 41 S. Ct. 323; Weeg- Albree, 103 Mass. 372, Chafee and ham v. Killefer, 215 F. 168; affirmed, Simpson, Cases on Equity, 1207; At- 215 F. 289, 131 C. C. A. 558, L. R. A. wood v. Fisk, 101 Mass. 363, 100 Am. 1915A, 820; Harton v. Little, 188 Dec. 124; Prudential Life Ins. Co. v. Ala. 640, 65 So. 951; Picture Plays' La Chance, 113 Me. 550, 95 A. 223; Theatre Co. v. Williams, 75 Fla. 556, Wellsville Oil Co. v. Miller, 44 Okla. 78 So. 674, 1 A. L. R. 1; Vulcan De- 493, 145 P. 344; Caldwell v. Virginia tinning Co. v. American Can Co. 72 Fire & Marine Ins. Co. 124 Tenn. N. J. Eq. 387, 67 A. 339, 12 L. R. A. 593, 138 S. W. 698; David Adler & (N. S.) 102, Chafee, Cases on Equita- Sons Co. v. Maglio, 200 Wis. 153, ble Relief Against Torts, 401; Wells- 228 N. W. 123, 66 A. L. R. 1085; ville Oil Co. v. Miller, 44 Okla. 493, Grether v. Nick, 193 Wis. 503, 213 145 P. 344; Sanders v. Cauley, 52 N. W. 304, 215 N. W. 571, 55 A. L. R. Tex. Civ. App. 261, 113 S. W. 560; 525; practically all citing or quot- David Adler & Sons Co. v. Maglio, ing the author. 200 Wis. 153, 228 N. W. 123, 66 A court of equity will not aid a A. L. R. 1085. tenant who, in connection with 6. Union Central Life Ins. Co. v. the matter in controversy, has been Drake, 214 F. 536, 131 C. C. A. 82; guilty of inequitable conduct toward Michigan Pipe Co. v. Fremont Ditch his landlord, or, in the case of a etc. Co. 111 F. 284, 49 C. C. A. 324; joint tenancy, toward his cotenant. Baird v. Howison, 154 Ala. 359, 45 However, where the wrong of a ten- So. 668; Colby v. Title Ins. & Trust ant was not directly connected with Co. 160 Cal. 632, 117 P. 913, 35 the subject-matter of the suit, the L. R. A. (N. S.) 813, Ann. Cas. case has been held not to be one for 1913A, 515; Picture Plays Theatre the application of the principle in- Co. v. Williams, 75 Fla. 556, 78 So. volved in this maxim. 674, 1 A. L. R. 1; Miller v. Jackson Annotation: 4 A. L. R. 58. Township, 178 Ind. 503, 99 N. E. 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 events connected with, the matter in litigation, so that it has in some measure affected the equitable relations subsisting between 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, and with which the opposite party has no concern. When a court of equity is appealed to for relief it will not go outside of the subject-matter of the controversy, and make its interference to depend upon the character and conduct of the moving party in no way affecting the equitable right which he asserts against the defendant, or the relief which he demands. 7 [A court of equity is not an

7. Lewis's Appeal, 67 Pa. St. 153, Chute v. Wisconsin Chemical Co. 185 166; Meyer v. Yesser, 32 Ind. 294. F. 115 (reprehensible conduct of In Lewis's Appeal, supra, the plaintiff, subsequent to bringing suit, unconnected with cause of ac- court say: "It is not every un- and founded claim which a man may tion); Cunningham v. Pettigrew, 169 make, or unfounded defense which F. 335, 94 C. C. A. 457; Sperry & he may set up, which will bar him Hutchinson Co. v. Louis Weber & Co. F. 219; Camors-McConnell Co. from proceeding in a court of equity. 161 The rule that he who comes into v. McConnell, 140 F. 412; affirmed 140 F. 987, 72 C. C. A. 681; Knapp equity must come with clean hands must be understood to refer to will- v. S. Jarvis Adams Co. 135 F. 1008, ful misconduct in regard to the mat- 70 C. C. A. 536; Trice v. Comstock, ter in litigation: Snell's Equity, 25. 121 F. 620, 57 C. C. A. 646, 61 All the illustrations given in Fran- L. R. A. 176; General Electric Co. v. cis's Maxims of Equity, 5, under the Wise, 119 F. 922; Shaver v. Heller maxim, as he states it, He that hath & M. Co. 108 F. 821, 834, 48 C. C. A. committed iniquity shall not have 48, 65 L. R. A. 878, affirming 102 F. equity, show this." 882; Liverpool & L. & G. Ins. Co. v. Clunie, 88 F. 160; Coeur d'Alene U. S.-Keystone Driller Co. v. Gen- Cons. & M. Co. v. Miners' Union, 51 eral Excavator Co. 290 U. S. 240, 78 F. 260, 19 L. R. A. 382. L. ed. 293, 54 S. Ct. 146, affirming 62 F. (2d) 48, rehearing denied 64 Ala.-Ashe-Carson Co. v. Bonifay, F. (2d) 39; Cropper v. Davis, 243 F. 147 Ala. 376, 41 So. 816; Bethea v. 310, 156 C. C. A. 90; American Sugar Bethea, 116 Ala. 265, 22 So. 561; Ref. Co. v. McFarland, 229 F. 284, Foster v. Winchester, 92 Ala. 497, 9 affirmed in 241 U. S. 79, 60 L. ed. So. 83. 899, 36 S. Ct. 498; Bentley v. Tib- Cal.-American-Hawaiian Engineer- bals, 223 F. 247, 138 C. C. A. 489; ing & Construction Co. v. Butler, 165 § 399 EQUITY JURISPRUDENCE. [Pt. II, Ch. I avenger of wrongs committed at large by those who resort to it for relief, however careful it may be to withhold its approval from those which are involved in the sub-

497, 133 P. 280, Ann. Cas. 1916C, Mich.-Cuba Colony Co. v. Kirby, 44; Western U. Teleg. Co. v. Commer- 149 Mich. 453, 112 N. W. 1133. cial Pacific Cable Co. 177 Cal. 577, Mo.-Williams v. Beatty, 139 Mo. 171 P. 317; Bradley Co. v. Bradley, App. 167, 122 S. W. 323 (a prior 165 Cal. 237, 131 P. 750; Miller v. trespass by plaintiff is no defense to Kraus (-Cal. App.) 155 P. 834. injunction against defendant's sim- Colo.-Kirby v. Union P. R. Co. 51 ilar trespass) ; Viertel v. Viertel, 99 Colo. 509, 119 P. 1042, Ann. Cas. Mo. App. 710, 75 S. W. 87. 1913B, 461. N. J.-Neubeck v. Neubeck, 94 Conu.-Lyman v. Lyman, 90 Conn. N. J. Eq. 167, 119 A. 26 27 A. L. R. 399, 97 A. 312, L. R. A. 1916E, 643; 172; Shotwell v. Stickle,183 N. J. Eq. Yale Gas Stove Co. v. Wilcox, 64 188, 90 A. 246; Hodge v. United Conn. 101, 128, 29 A. 303, 25 L. R. A. States Steel Corp. 64 N. J. Eq. 90, 90, 42 Am. St. Rep. 159, 173. 53 A. 601; Woodward v. Woodward, Del.-Delaware Surety Co. v. Lay- 41 N. J. Eq. 224, 4 A. 424. ton (Del. Ch.), 50 A. 378. N. Y.-Rice v. Rockefeller, 134 Ga.-Brown v. Jacobs Pharmacy N. Y. 174, 31 N. E. 907, 17 L. R. A. Co. 115 Ga. 429, 41 S. E. 553, 57 237, 30 Am. St. Rep. 658; Conlon v. L. R. A. 547, 90 Am. St. Rep. 126. Hosier, 165 N. Y. S. 745, 746. III.-Carpenters' Union v. Citizens' Ohio.-Kinner v. Lake Shore & M. Committee, 333 Ill. 225, 164 N. E. S. R. Co. 69 Ohio St. 339, 69 N. E. 393, 63 A. L. R. 157; Barnes v. 614, Chafee, Cases on Equitable Re- Barnes, 282 Ill. 593, 118 N. B. 1004, lief Against Torts, 381. 4 A. L. R. 4; Pitzele v. Cohn, 217 Ill. Okla.-Teucher v. Gragg, 136 Okla. 30, 75 N. E. 392; City of Chicago v. 129, 276 P. 753, 66 A. L. R. 143. Union Stock Yards Co. 164 Ill. 224, Tenn.-Upchureh v. A n d e rs o n 45 N. E. 430, 35 L. R. A. 281; John (Tenn. Ch. App.) 52 S. W. 917. Anisfield Co. v. Edw. B. Grossman & Tex.-Sanders v. Cauley, 52 Tex. Co. 98 Ill. App. 180; Mossler v. Civ. App. 261, 113 S. W. 560. Jacobs, 66 Ill. App. 571. Vt.-Langdon v. Templeton, 66 Vt. Iowa.-Carr v. Craig, 138 Iowa, 173, 28 A. 866. 526, 116 N. W. 720. Wash.-Langley v. Devlin, 95 Wash. Ky.-American Ass'n v. Innis, 109 171, 163 P. 395, 4 A. L. R. 32. Ky. 595, 60 S. W. 388. W. Va.-Cheuvront v. Horner, 62 Me.-Mason v. Carrothers, 105 Me. W. Va. 476, 59 S. E. 964. 392, 74 A. 1030. Wis.-Post v. Campbell, 110 Wis. Mass.-Lurie v. Pinanski, 215 Mass. 378, 85 N. W. 1032. 229, 102 N. E. 629; Beekman v. Mar- Many of the above cases quote sters, 195 Mass. 205, 80 N. E. 817, or cite the text. 11 L. R. A. (N. S.) 201, 122 Am. St. Annotation: 4 A. L. R. 65, 91. Rep. 232, 11 Ann. Cas. 332. Sec. IV] MAXIM AS TO CLEAN HANDS. § 399 ject-matter of the suit, and which prejudicially affect the rights of one against whom relief is sought.s The rule does not go so far as to prohibit a court of equity from giving its aid to a bad or a faithless man or a criminal. The dirt upon his hands must be his bad conduct in the transaction complained of. If he is not guilty of inequitable 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 the plaintiff is a member of an illegal association or combination, or a lawful association committing unlawful acts or

8. Kinn_ v. Lake Shore & M. S. might not defend on the ground that R'y Co. 69 Ohio St. 339, 69 N. E. the superintendent's act in advanc- 614, Chafee, Cases on Equitable Re- ing the money was a technical vio- lief against Torts 381; Primeau v. lation of the law. Love v. Robin- Granfield, 180 F. 847 (rule laid down son, 161 Miss. 585, 137 So. 499, 78 that maxim applies only when prose- A. L. R. 608. cution of suitor's rights itself in- And see Chafee, Cases on Equi- volves the protection of wrong- table Relief against Torts, p. 383, doing); Ely v. King-Richardson Co. note. 265 Ill. 148, 106 N. E. 619, L. R. A. 9. Carpenters' Union v. Citizens' 1915B, 1052 (plaintiff an employee Committee, 333 Ill. 225, 164 N. E. of defendant, having been dis- 393, 63 A. L. R. 157; Dallavo v. charged for bad faith in organizing Dallavo, 189 Mich. 350, 155 N. W. a rival company, sought an account- 538. ing to determine his past compensa- The maxim does not repel all sin- tion; held, the maxim did not apply, ners from courts of equity, nor does as the relief was not founded in any it apply to every unconscientious way on his wrongful conduct); act or inequitable conduct on the Dempster v. Baxmyer, 231 Pa. 28, the complainants. Neubeck 79 A. 805 (fact that plaintiff agreed part of v. Neubeck, 94 N. J. Eq. 167, 119 to improper use of a portion of a A. 26, 27 A. L. R. 172. fund will not bar his right to an account for balance). It has been held that the prin- Where the superintendent of ciple of "unclean hands" can apply banks advanced the entire amount to the case of a complainant in a of the stockholders' statutory lia- court of equity, alleged to be tainted bility to pay in full the depositors with illegality, only when, in order of an insolvent bank, it was held, in for him to recover in the suit, it is a suit by the superintendent against necessary for him to disclose the a stockholder to enforce such lia- preceding illegal transaction. Cohn bility, on the ground that the super- v. Pitzele, 117 Ill. App. 342, affirmed intendent was subrogated to the de- in 217 Ill. 30, 75 N. E. 392. positors' rights, that the stockholder Annotation: 4 A. L. R. 64. II Equity Jur.-4 § 399 EQUITY JURISPRUDENCE. [Pt. II, Ch. I employing unlawful methods, is no defense to a suit to enjoin ticket "scalping,"'" or infringement of a patent," or unfair and fraudulent competition.' 2 This limitation on the doctrine has been frequently applied in cases involving labor disputes.13 For example it has been held that equitable relief cannot be denied because complainant is a member of an illegal combination in restraint of trade 14 or has violated some statutory provision unrelated to the 5 matter in hand.1 [Perjury unconnected with or only indirectly connected with the subject-matter of a suit will not defeat the right of a party to the suit to the relief prayed.',

10. Pennsylvania Co. v. Bay, 138 denied relief because he was in a F. 203; Kinner v. Lake Shore & M. combination to strike and joined in S. R'y Co. 69 Ohio St. 339, 69 N. E. unlawful methods of conducting the 614, Chaffee, Cases on Equitable Re- strike. lief against Torts, 381. 14. American Steel & Wire Co. v. And see Kirby v. Union Pac. R. Wire Drawers' & D. M. Unions, 90 Co. 51 Colo. 509, 119 P. 1042, Ann. F. 608; Coeur d'Alene Cons. & M. Cas. 1913B, 461, Chafee, Cases on Co. v. Miners' Union, 51 F. 260, Equitable Relief Against Torts, 355. 19 L. R. A. 382 (suit to enjoin un- 11. General Electric Co. v. Wise, lawful interference by a labor 119 F. 922; United States Fire Es- union). cape Counterbalance Co. v. Joseph 15. Goldfield Consol. Mines Co. v. Halsted Co. 195 F. 295. Goldfield Miners' Union, 159 F. 500. 12. Coca-Cola Co. v. Gay-Ola Co. Annotation: 66 A. L. R. 1092. 200 F. 720, 119 C. C. A. 164. 16. Foster v. Winchester, 92 Ala. 13. Carpenters' Union v. Citizens' 497, 9 So. 83, wherein perjury was Committee, 333 Ill. 225, 164 N. E. committed in procuring patent for 393, 63 A. L. R. 157 (suit to enjoin land. illegal boycotting); Moore Drop In Delaware Surety Co. v. Lay- Forging Co. v. McCarthy, 243 Mass. ton (Del. Ch.), 50 A. 378, the plain- 554, 137 N. E. 919 (wherein the tiff sought an injunction to pre- failure of the employer's represen- vent the secretary of state from tative to keep an engagement to taking the plaintiff's certificate of meet a committee of employees was incorporation into another state for held not to prevent relief in another use in a prosecution against its controversy). president and secretary for perjury But see Cornellier v. Haverhill in swearing to the certificate; it was Shoe Mfrs. Ass'n, 221 Mass. 554, 109 held that such perjury was not so N. E. 643, L. R. A. 1916C, 218, connected with the subject-matter wherein the plaintiff, suing for in- as to justify fhe application of this junction against blacklisting, was maxim to the plaintiff's suit. See. IV] MAXIM AS TO CLEAN HANDS. § 399 [Fraudof agent.-The reprehensible conduct complained of, it is said, must have been that of the person against whom the maxim is sought to be invoked, or, if it was that of an agent, to be chargeable to the principal it must have been performed with his knowledge. 17 However, specific performance of a contract induced by the misrepresentations of an agent has been refused although the plaintiff was unaware thereof until the institution of suit."' [Necessity for injury to complainant.-The party to a suit, complaining that his opponent is in court with "unclean hands" because of the latter's conduct in the transaction out of which the litigation arose, or with which it is connected, must show that he himself has been injured by such conduct, to justify the application of the principle to the case.19 The wrong must have been done to the defendant himself and not to some third party.20

17. Todd Protectograph Co. v. This case (Vulcan Detinning Co. Iledman Mfg. Co. 254 F. 829 (re- etc.) is also reported in Chafee, lief against unfair competition); Cases on Equitable Relief against Associated Press v. International Torts, p. 401. And see note on News Service, 240 F. 983, modified p. 412. in other respects in 245 F. 244, 157 18. Annotation: 4 A. L. R. 61. C. C. A. 436, 2 A. L. R. 317, affirmed See § 400. And see Chafee and in 248 TJ. S. 215, 63 L. ed. 211, 39 Simpson, Cases on Equity, note, c. S. Ct. 68, 2 A. L. Rl. 293. X, sec. 1, p. 1287. The maxim assumes some degree 19. Cochran Timber Co. v. Fisher, of moral guilt on the part of the 190 Mich. 478, 157 N. W. 282, 4 complainant; that the fraud of an A. L. R. 9; Bentley v. Tibbals, 223 agent is imputed by law to his prin- F. 247, 138 C. C. A. 489; Lyman v. cipal does not render the latter's Lyman, 90 Conn. 399, 406, 97 A. hands "unclean," within the mean- 312, L. iR. A. 1916E, 643; First Nat. ing of the maxim: Vulcan Detinning Bank v. Carter, 132 Md. 218, 103 A. Co. v. American Can Co. 72 N. J. 463; Schroeder v. Turpin, 253 Mo. Eq. 387, 67 A. 339, 12 L. R. A. 258, 271, 161 S. W. 716; Langdon v. (N. S.) 102, per Garrison, J., revers- Templeton, 66 Vt. 173, 182, 28 A. ing 70 N. J. Eq. 588, 62 A. 881. Sed 866; Galbraith v. Devlin, 85 Wash. quaere. Fraud, in equity, often con- 482, 148 P. 589. sists in the unconscientious use of a Annotation: 4 A. L. R. 58. legal advantage originally gained 20. Cochran Timber Co. v. Fisher, with innocent intent: See post, chap- 190 Mich. 478, 157 N. W. 282, 4 ters on Actual and Constructive A. L. R. 9, holding that one secur- Fraud, passim. ing a deed to real estate through § 400 EQUITY JURISPRUDENCE. [Pt. 11, Ch. I [A wrong which has been righted may not be pleaded against a party to a suit in equity, on the theory that the party charged therewith is in court with "unclean hands." Therefore one who has asserted the wrongful nature of an act, and recovered from the perpetrator damages in a court of law, cannot, under the principle of this maxim, set up the wrong in a suit in equity arising out of the transaction in connection with which the wrong was committed.1 ]

§ 400. Illustrations-Specific Performance.-I shall now give some examples to illustrate the circumstances under which this principle operates in the administration of equitable relief, and the manner in which it is applied. The first instance which I shall mention is found in the familiar doctrine which controls the equitable remedy of the specific performance of contracts. A contract may be perfectly valid and binding at law; it may be of a class which brings it within the equitable jurisdiction, because the legal remedy is inadequate; but if the plaintiff's conduct in obtaining it, or in acting under it, has been unconscientious, inequitable, or characterized by bad faith, a court of equity will, refuse him the remedy of a specific performance, and will leave him to his legal remedy by action for damages. 2 It is sometimes said that the rem- fraud is not prevented from quiet- petrated by the defendant on the ing his title against a subsequent plaintiff, the latter fraud being the grantee from the common grantor, subject-matter of the complaint in by the maxim that "he who comes l the litigation, the defendant might into equity must come with clean not successfully invoke the principle hands." of "unclean hands" against the As to assignability of cause of ac- plaintiff because of the plaintiff's tion for fraud, see 4 Am. Jur., As- participation in the fraud practiced signments, p. 256, §§ 38, et seq. on the third person. And see infra, §§ 1275, et seq. 1. Loy v. Alston, 172 F. 90, 96 In Langley v. Devlin, 95 Wash. C. 0. A. 578; Melair v. Benson, 63 171, 163 P. 395, 4 A. L. R. 32, it was Or. 66, 126 P. 20; Huntzicker v. held that if a fraud practised on a Crocker, 135 Wis. 38, 115 N. W. 340, third person by both parties to a 15 Ann. Cas. 444. suit in equity was separate and dis- Annotation: 4 A. L. R. 59. tinct from a fraud previously per- 2. The text is quoted in Weegham See. TV] MAXIM AS TO CLEAN HANDS. § 400 edy of specific performance rests with the discretion of the court; but, rightly viewed, this discretion consists mainly in applying to the plaintiff the principle, He who comes into a court of equity must come with clean hands, although the remedy, under certain circumstances, is regulated by the principle, He who seeks equity must do equity (see § 392). The doctrine, thus applied, means that the party asking the aid of the court must stand in conscientious relations towards his adversary; that the transaction from which his claim arises must be fair and just, and that the relief itself must not be harsh and oppressive upon the defendant.3 By virtue of this principle, a specific performance will always be refused when the plaintiff has obtained the agreement by sharp and un- scrupulous practices, by overreaching, by concealment of important facts, even though not actually fraudulent, by trickery, by taking undue advantage of his position, or by any other means which are unconscientious; and when the contract itself is unfair, one-sided, unconscionable, or affected by any other such inequitable feature; and when the specific enforcement would be oppressive upon the defendant, or would prevent the enjoyment of his own rights, or would in any other manner work injustice. 4 This applica- v. Killefer, 215 F. 168; affirmed, 215 41 S. Ct. 323; Union Central Life Ins. F. 289, 131 C. C. A. 558, L. R. A. Co. v. Drake, 214 F. 536, 131 C. C. A. 1915A, 820. 82; Michigan Pipe Co. v. Fremont 3. Smith v. Price, 125 Ark. 589, Ditch etc. Co. 111 F. 284, 49 C. C. A. 189 S. W. 167 (quoting the text); 324. Proctor v. Hansel, 205 Iowa, 542, 218 Ala.-Harton v. Little, 188 Ala. N. W. 255, 58 A. L. R. 153; Teuscher 640, 65 So. 951 (quoting the text). v. Gragg, 136 Okla. 129, 276 P. 753, Cal.-Cooper v. Pena, 21 Cal. 403, 66 A. L. R. 143 (quoting the text). 411. 4. U. S.-Willard v. Tayloe, 8 Wall. Iowa.-Proctor v. Hansel, 205 Iowa, 557, 565, 19 L. ed. 501, Chafee and 542, 218 N. W. 255, 58 A. L. R. 153. Simpson, Cases on Equity, 1351, per Md.-Fox v. Fraebel, 140 Md. 54, Field, J.; Cathcart v. Robinson, 5 Pet. 116 A. 876. 264, 8 L. ed. 120; Carmen v. Fox Film Corp. 269 F. 928, 15 A. L. R. Mass.-Florimond Realty Co. v. 1209 (citing the text), certiorari de- Waye, 268 Mass. 475, 167 N. E. 635; nied in 255 U. S. 569, 65 L. ed. 790, Banaghan v. Malaney, 200 Mass. 46, § 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 assumed that the contract is not illegal; that no defense could be set up against it at law; and even that it possesses no features or incidents which could authorize a court of equity to set it aside and cancel it. Specific performance is refused simply because the plaintiff does not come into court 5 with clean hands.

85 N. E. 839, 19 L. R. A. (N. S.) 871, In Rust v. Conrad, 47 Mich. 449, 128 Am. St. Rep. 378. 11 N. W. 265, 41 Am. Rep. 720, Mich.-Johnston Realty & Invest. Chafee and Simpson, Cases on Co. v. Grosvenor, 241 Mich. 321, 217 Equity, 1446, Mr. Justice Cooley N. W. 20; Wayne Woods Land Co. stated the rule to be that "when a v. Beeman, 211 Mich. 360, 178 N. W. party comes into equity, it should 696. be very plain that his claim is an Minn.-Enkema v. McIntyre, 136 equitable one. If the contract is unequal; if he has bought land at Minn. 293, 161 N. W. 587, 2 A. L. R. 411. a price which is wholly inadequate; if he has obtained the assent of the Nreb.-Wilson v. Bergmann, 112 other parties to unreasonable provi- Neb. 145, 198 N. W. 671, Chafee and sions; if there are any indications of Simpson, Cases on Equity, 1369. overreaching or unfairness on his N. Y.-Seymour v. Delancey, 6 part, the court will refuse to enter- Johns. Ch. 222, 3 Cow. 455, 15 Am. tain his case, and turn him over to Dec. 270, Chafee and Simpson, Cases the usual remedies." on Equity, 1173. 5. Gabrielson v. Hogan (C. C. A. Pa.-Schaeffer v. Jones, 293 Pa. 2d) 298 F. 722; Harton v. Little, 188 529, 143 A. 197; Friend v. Lamb, Ala. 640, 65 So. 951 (quoting the 152 Pa. 529, 25 A. 577, 34 Am. St. text); Busch v. Baker, 79 Fla. 113, Rep. 672, Chafee and Simpson, Cases 83 So. 704 (stating the general rule on Equity, 1362. that a misrepresentation or conceal- Tenn.-Caldwell v. Virginia F. & ment is not required to go to the M. Ins. Co. 124 Tenn. 593, 139 S. W. extent of actionable fraud in order 698. to justify a chancellor in his dis- W. Va.-Dunean v. Duncan, 104 W. cretion in refusing to grant specific performance of a contract induced Va. 600, 140 S. E. 689. thereby); Carver v. Van Arsdale, Wts.-Gloede v. Socha, 199 Wis. 312 Ill. 220, 143 N. E. 579; Keating 503, 226 N. W. 950. v. Frint, 291 Ill. 423, 126 N. E. 136; Eng.-Lamare v. Dixon, L. R. 6 Frisby v. Ballance, 5 Ill. 287, 39 Am. H. L. 414, 423, per Lord Chelmsford. Dec. 409; Carter v. Schrader, 187 Annotation: 4 A. L. R. 70; 65 Iowa, 1245, 175 N. W. 329; Heitman A. L. R. 57, et seq.; 87 A. L. R. v. Clancy, 167 Iowa, 58, 148 N. W. 1345. 1011; Shikes v. Gabelniek, 273 Mass. See, also, §§ 1404, 1405. 201, 173 N. E. 495, 87 A. L. R. 1339 Sec. IV] MAXIM AS TO CLEAN HAANDS. § 400a [§ 400a. -Injunction.-The maxim is likewise applied in suits for injunctive relief. Equity will not grant an injunction to aid a party in the continuance of a legal wrong and trespass. Even though the defendant is also trespassing, equity will not adjust differences between wrongdoers. 6 The operation of the principle has been held to preclude the granting of equitable relief to one whose purpose, in bringing a suit for an injunction against the enforcement of a law or ordinance regulating the drilling

(holding that a party who has in- avoid it. Banaghan v. Malaney, tentionally made false statements is 200 Mass. 46, 85 N. E. 839, 19 L. R. A. not entitled to specific performance (N. S.) 871, 128 Am. St. Rep. 378. although such statements were not Non-disclosure of facts as a de- relied on); Riggins v. Trickey, 46 fense to the specific enforcement of Tex. Civ. App. 569, 102 S. W. 918. contracts in equity, see § 905. Annotation: 4 A. L. R. 62; 87 6. Humphreys-Mexia Co. v. Arsen- A. L. R. 1345. eaux, 116 Tex. 603, 297 S. W. 225, The power of equity to grant spe- 53 A. L. R. 1147; Ilo Oil Co. v. Indi- cific performance will not be exer- ana N. G. & 0. Co. 174 Ind. 635, 92 cised in aid of a contract secured N. E. 1, 30 L. R. A. (N. S.) 1057 by conduct savoring of injustice. If (injunction sought against waste of there are misrepresentations by or oil and gas by one who is commit- in behalf of the plaintiff on a ma- ting same acts). terial point, or unfair or unethical An injunction restraining a ripa- manipulations, even though insuffi- rian owner from diverting water cient to invalidate the contract, spe- from a reservoir made by a dam con- cific performance will nevertheless structed by the complainant, which be refused, for this relief will be dams water back on the lands of granted only upon equitable con- the riparian proprietor, will not be siderations, in view of all the cir- granted, since it would aid in the cumstances of the particular case. continuance of a legal wrong and Florimond Realty Co. v. Waye, 268 trespass. Humphreys-Mexia Co. v. Mass. 475, 167 N. E. 635. Arseneaux, supra. Overreaching or taking advantage It is held, in accordance with the by a dealer, or his agent, of the maxim, that a plaintiff who main- ignorance, old age, and physical dis- tains a nuisance has no standing in ability of the owner of land will equity to enjoin its unauthorized furnish a sufficient ground for the abatement: Pittsburgh, C. C. & St. court, in the exercise of its discre- L. R'y Co. v. Town of Crothersville, tion, to refuse the specific perform- 159 Ind. 330, 64 N. E. 914. ance of a contract thus secured, al- And see Chafee, Cases on Equita- though the contract was a legal con- ble Relief Against Torts, p. 412, tract, and was not procured by such note, and cases and authorities there fraud as to entitle the vendor to cited. § 401 EQUITY JURISPRUDENCE. [Pt. III Ch. I of oil wells, was merely to appropriate all of the oil and gas obtainable before others who had a community interest therein could reach it.7 Courts will not however, refuse an injunction to protect clear legal rights merely because the complainant may be actuated by motives which the court might not approve, particularly where the refusal of the injunction will not only deprive the complainant of his property, but will also grant the beneficial use of it to the defendant.8 Nor is relief denied where the conduct complained of is unrelated to the rights asserted (see § 399). 9 ]

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

7. Marrs v. Oxford (C. C. A. 8th) Hanley v. Sweeny, 109 F. 712, 48 32 F. (2d) 134, 67 A. L. R. 1336. C. C. A. 612 (plaintiff by fraud pro- 8. Cityco Realty Co. v. Slaysman, cured the insertion of his name as 160 Md. 357, 153 A. 278, 76 A. L. R. purchaser in order confirming ad- 296, wherein the complainant had ministrator's sale, and accordingly reserved a one-foot strip of land be- equitable relief to set aside deed to tween a road built by it and the defendant, the true purchaser, was lands of the defendant, who refused to denied); Richardson v. Walton, 49 contribute to the cost of the road, F. 888 (fraud by a partner precludes it was held that the complainant bill by him to set aside contract dis- might properly enjoin trespasses on solving partnership); Bagwell v. the one-foot strip by the defendant. Johnson, 116 Ga. 464, 42 S. E. 732; 9. A railroad may enjoin a city Union Nat. Bank v. Hines, 177 Ill. from removing its tracks, although it 417, 53 N. E. 83; Morrison v. Juden, has used its road for certain unau- 145 Mo. 282, 46 S. W. 994; Record thorized purposes not involved in v. Rochester Trust Co. - N. H. the suit; City of Chicago v. Union -- , 192 A. 177, 110 A. L. R. 1218; Stock Yards Co. 164 Ill. 224, 45 N. E. Munn & Co. v. Americana Co. 83 430, 35 L. R. A. 281. N. J. Eq. 309, 91 A. 87, L. R. A. 10. Trice v. Comstock, 115 F. 765; 1916D, 116, modifying 82 N. J. Eq. Sec. IV] MAXIM AS TO CLEAN HANDS. § 401 in cases upon fraudulent contracts.1" If a contract has been entered into through fraud, or to accomplish any fraudulent purpose, a court of equity will not, at the suit of one of the fraudulent parties,-a particeps doli,-while the agreement is still executory, either compel its execution or decree its cancellation, nor after it has been executed, set it aside, and thus restore the plaintiff to the property or other interests which he had fraudulently transferred. 12 [A person who comes into court with a

63, 88 A. 330 (fraudulent misrepre- As another example, a party who sentations as to editorship of publi- fraudulently or wrongfully alters a cation in suit for injunction to re- written instrument cannot maintain strain similar act); Roche v. Hoyt, a suit to obtain the remedy of a 71 N. J. Eq. 323, 64 A. 174; Farrow reformation: Marcy v. Dunlap, 5 v. Holland Trust Co. 74 Hun, 585, Lans. (N. Y.) 365; and see Bleak- 26 N. Y. S. 502; White v. Cuthbert, ley's Appeal, 66 Pa. 187. 10 App. Div. 220, 41 N. Y. S. 818 11. Harton v. Little, 188 Ala. 640, (cancellation of note given to assist 65 So. 951 (concealments in partner- fraudulent attachment refused); ship agreement); Miller v. Kraus Southern Mut. Aid Assn. v. Blount, (Cal. App.) 155 P. 834, rehearing 112 Va. 214, 70 S. E. 487; Kallison denied in (Cal.) 155 P. 838 (mis- v. Poland (Tex. Civ. App.) 167 S. W. representations in partnership agree- 1104; Sanders v. Cauley, 52 Tex. Civ. ment); Langford v. Read, 69 Fla. App. 261, 113 S. W. 560; Robinson 198, 68 So. 723 (sham bid for con- v. Brooks, 31 Wash. 60, 71 P. 721 struction work). (one who files a lien knowing it to 12. Creath v. Sims, 6 How. 192, 12 contain nonlienable items, cannot L. ed. 110; Kitchen v. Rayburn, 86 maintain bill to foreclose it); U. S. .(19 Wall.) 254, 22 L. ed. 64; Raasch v. Raasch, 100 Wis. 400, 76 Selz v. Unna, 73 U. S. (6 Wall.) 327, N. W. 591. 18 L. ed. 799; Wheeler v. Sage, Annotation: 4 A. L. R. 85. 1 Wall. 518, 17 L. ed. 646; Randall A creditor who obtains an assign- v. Howard, 67 U. S. (2 Black) 585, ment through fraud is not entitled 17 L. ed. 269; Bartle v. Nutt, 29 to the aid of a court of equity to U. S. (4 Pet.) 184, 7 L. ed. 825; enforce his claim under the assign- Clark v. Buffalo Hump Min. Co. 122 ment: Commercial Nat. Bank v. F. 243, 58 C. C. A. 607; Schermer- Burch, 141 Ill. 519, 31 N. E. 420, 33 horn v. De Ohambrum, 64 F. 195, 12 Am. St. Rep: 331. C. C. A. 81, 26 U. S. App. 212 (con- Knowingly and consciously mak- tract to defraud creditors); Allstead ing an untrue and excessive claim v. Laumeister, 16 Cal. App. 59, 116 will defeat the right to a lien under P. 296; White v. Crew, 16 Ga. 416, a statute: Camden Iron Works v. 420; Kirkpatrick v. Clark, 132 Ill. City of Camden, 64 N. J. Eq. 723, 342, 24 N. E. 71, 22 Am. St. Rep. 52 A. 477. 531, 8 L. R. A. 511; Paine v. Lake § 401 EQUITY JURISPRUDENCE. [Pt. 11, Ch. I claim which the pleadings show to have had its origin in a fraudulent transaction cannot ask a court of equity to act upon the conscience of a defendant, and force him to do right towards one whose own legal conscience is not void of offense.1 3 ] Equity will leave such parties in exactly the position in which they have placed themselves, refusing all affirmative aid to either of the fraudulent participants. The only equitable remedies which they can obtain are purely defensive. Upon the same principle, wherever one party, in pursuance of a prior arrangement, has fraudulently obtained property for the benefit of another, equity will not aid the fraudulent beneficiary by compelling a conveyance or transfer thereof to him; and generally, where two or more have entered into a fraudulent scheme for the purpose of obtaining property in which all are to share, and the scheme has been carried out so that all the results of the fraud are in the hands of one of the parties, a court of equity will not interfere on behalf of the others to aid them in obtaining their shares, but will leave the parties in the position where they have placed themselves. 14 [One who wrongfully appropriates the

Erie etc. R. R. 31 Ind. 283; Pearce formance); McClintock v. Loisseau, v. Ware, 94 Mich. 321, 53 N. W. 31 W. Va. 865,.8 S. E. 612, 2 L. R. A. 1106; Stillwell v. Bell, 248 Mo. 61, 816. 154 S. W. 85 (wherein property was In re Great Berlin S. Co. L. R. to be reconveyed to grantor after 26 Ch. Div. 616; Reynell v. Sprye, 1 he had procured a divorce from his De Gex, M. & G. 660, 688, 689 (deci- wife); Pendleton v. Gondolf, 85 N. sion dismissing the cross-bill of the J. Eq. 308, 96 A. 47; Reynolds v. defendant Sprye). Boland, 202 Pa. 642, 52 A. 19 (quot- Annotation: 4 A. L. R. 79. ing the text); Bearden v. Jones 13. Picture Plays Theatre Co. v. (Tenn. Ch. App.) 48 S. W. 88; Williams, 75 Fla. 556, 78 So. 674, 1 Swanson v. Sims, 51 Utah, 485, 170 A. L. R. 1. P. 774, 777; Smith v. Chilton, 84 Va. 840, 6 S. E. 142; Helsley v. 14. Reynolds v. Boland, 202 Pa. Fultz, 76 Va. 671; Haymond v. 642, 52 A. 19 (quoting the text). Hyer, 80 W. Va. 594, 92 S. E. 854; Annotation: 4 A. L. R. 99. Lowther Oil Co. v. Miller-Sibley Johns v. Norris, 22 N. J. Eq. 102; Oil Co. 53 W. Va. 501, 44 S. E. 433, Walker v. Hill, 22 N. J. Eq. 513; 97 Am. St. Rep. 1027 (specific per- Bleakley's Appeal, 66 Pa. St. 187; Sec. IV] MAXIM AS TO CLEAN HANDS. § 401 property of another for his own use will not receive the aid of a court of equity in any matter with which such

Musselman v. Kent, 33 Ind. 452; wards paid to the vendor in the Hunt v. Rowland, 28 Iowa, 349; Hi- land contract the residue of the bernia etc. Soc. v. Ordway, 38 Cal. purchase-money. L. in the mean 679. In Johns v. Norris, 22 N. J. time issued an execution, and L's Eq. 102, where a widow, by a prior interest under the land contract was arrangement, procured a third per- sold at execution sale, and bought son to buy in the real estate of her in by the judgment creditor, L. L. husband at a foreclosure sale at a brings this suit against the vendor price far below its real value, by to compel a specific performance of contrivances agreed upon to deter the contract by a conveyance to him- other persons from bidding, and by self. Held, that L. was entitled to giving out that the purchase was for such specific performance and con- the benefit of the widow and her veyance by the vendor, without re- family, it was held that she was a paying to B. the amount of the pur- participant in the fraud against the chase price which he had paid to the heirs and creditors, and did not vendor. Speaking of B.'s claim to come into court with clean hands, in be repaid, the court said: "He (B.), a suit to compel the confederate to standing thus before a chancellor, convey the land to her, and relief cannot ask him to make repayment was therefore refused. In Walker to him a condition to a degree re- v. Hill, 22 N. J. Eq. 513, the same moving the fraudulent obstruction was held with respect to an execu- he threw in the way. The payment tion debtor who had by a secret ar- is one of the very steps he took to rangement procured a person to buy consummate the fraud upon L. If in the property at the execution sale he have a legal right of recovery, for the debtor's benefit, in such a he must resort to his action at law; manner as to be fraudulent against if he can have none, it is a test of other creditors and purchasers. The his want of equity. And in addi- court refused to grant relief by com- tion to all this, it is a rule that a pelling a conveyance by the pur- chancellor will not assist a party to chaser to the execution debtor. In obtain any benefit arising from Bleakley's Appeal, 66 Pa. St. 187, fraud. He must come into a court the principle was applied under dif- of equity with clean hands. It ferent circumstances. One I. was would be a singular exercise of the vendee under a land contract, equity which would assist a party, and had paid part of the purchase who had paid money to enable him price. A judgment was then recov- to perpetrate a fraud, to recover his ered against him by L.; whereupon money, just when the chancellor was I. assigned the contract to B., ante- engaged in thrusting out of the way dating the assignment, so that it of his doing equity to the injured appeared to precede the recovery of party the very instrument of the the judgment. This assignment was fraud. He who does iniquity shall made both by I. and B. for the pur- not have equity: Hershey v. Weit- pose of defrauding L. B. after- ing, 14 Wright, 244." See, also, § 401a EQUITY JURISPRUDENCE. [Pt. II, Ch. I reprehensible conduct is connected.1 5 A court of equity will not aid one who, standing in a relation of confidence to another, commits acts in violation of his trust which, are immediately connected with the subject-matter of the litigation.' 6 ]

§401a. Conveyances in Fraud of Creditors and Others.-One of the most common occasions for the enforcement of this rule arises in cases where a debtor has conveyed or assigned or in any manner transferred his property for the purpose of defrauding his creditors, and afterwards seeks to set aside the transfer as against the grantee or assignee and recover back the property. The door of a court of equity is always shut against such a claimant.17 [The same rule applies to a conveyance in

Odessa Tramways Co. v. Mendel, sonal account to obtain for himself L. R. 8 Ch. Div. 235. the interest was not in court with The text is quoted in Milhous v. clean hands in seeking subrogation Sally, 43 S. C. 318, 21 S. E. 268, 885, after the failure of the bank and an 49 Am. St. Rep. 834. And see Law- accounting by him. ton v. Estes, 167 Mass. 181, 45 N. E. 16. Annotation: 4 A. L. R. 83. 90, 57 Am. St. Rep. 450; Lyons v. 17. U. S.-Dent v. Ferguson, 132 Elston, 211 Mass. 478, 98 N. E. 93 U. S. 50, 33 L. ed. 242, 10 S. Ct. 13. (A and B obtain deed of their Ala.-Baird v. Howison, 154 Ala. mother's property, by undue in- 359, 45 So. 668. fluence; the deed was taken to A; Conn.-Brown v. Brown, 66 Conn. equity will set the deed aside in be- 493, 34 A. 490 (property conveyed by half of C, another child, but not in third party to defendant in trust for behalf of B). plaintiff, in order to defraud plain- 15. Union Cent. L. Ins. Co. v. tiff's wife). Drake, 214 F. 536, 131 C. C. A. 82 Idaho.-Bowers v. Cottrell, 15 (misappropriation of funds loaned Idaho, 221, 96 P. 936. for purpose of satisfying mortgage); III.-Decker v. Stansberry, 249 Ill. Bennett v. Stuart, 161 Ky. 264, 170 487, 94 N. E. 940, Ann. Cas. 1912A, S. W. 642 (fraudulent misappro- 227; Brady v. Huber, 197 Ill. 291, priation of money advanced to pur- 64 N. E. 264, 90 Am. St. Rep. 161. chase mining land). Annotation: 4 A. L. R. 54. Ind.-Reed v. Robbins, 58 Ind. In Hill v. Kavanaugh, 118 Ark. App. 659, 108 N. E. 780. 134, 176 S. W. 336, 4 A. L. R. 1, Kan.-Durand v. Higgins, 67 Kan. it was held that a county treasurer 110, 72 P. 567 (grantor of convey- who placed public money in his per- ance in fraud of creditors cannot 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 such Pa.-Hukill v. Yoder, 189 Pa. 233, conveyance). 42 A. 122, 43 Wkly. Notes Cas. 347. Ky.-Commonwealth v. Filiatreau, S. D.-Jones v. Jones, 20 S. D. 632, 161 Ky. 434, 170 S. W. 1182 (fraudu- 108 N. W. 23. lent conveyance of livestock to de- Va.-Nunnally v. Stokes, 116 Va. feat judgment creditor in bastardy 472, 82 S. E. 79. proceedings); Carson v. Beliles, 121 Wash.-Langley v. Devlin, 95 Ky. 294, 89 S. W. 208, 1 L. R. A. Wash. 171, 163 P. 395, 4 A. L. R. (N. S.) 1007 (conveyance in antici- 32; Boothe v. Bassett, 82 Wash. 95, pation of bastardy proceedings) ; 143 P. 449, 7 A. L. R. 145 (wherein Southwood v. Southwood, 30 Ky. Law the defendant did not plead the Rep. 307, 98 S. W. 304; Gillum v. fraudulent nature of the transaction Kirksey, 29 Ky. Law Rep. 422, 93 as an affirmative defense, but such S. W. 591 (secret trust to defraud fraud was brought out in the plain- creditors not enforced) ; Hill v. Scott, tiff's testimony); Snipes v. Kelleher, 12 Ky. Law Rep. 877, 15 S. W. 667. 31 Wash. 386, 72 P. 67. Md.-Watts v. Vansant, 99 Md. W. Va.-Hubbard v. Robrecht, 75 577, 58 A. 433. W. Va. 566, 84 S. E. 379; Craig v. Mioh.-Brender v. Stratton, 216 Craig, 54 W. Va. 183, 46 S. E. 371. Mich. 166, 184 N. W. 486, 22 A. L. R. Annotation: 4 A. L. R. 100; 7 728 (applying rule to wife who A. L. R. 150; 3 Am. St. Rep. 727. joined her husband in executing deed In Palmer v. Palmer, 100 Neb. to defraud his creditors). 741, 161 N. W. 277, a conveyance Miss.-Moore v. Jordan, 65 Miss. of real estate by the plaintiff to 229, 3 So. 737, 7 Am. St. Rep. 641. the defendant, to defeat alimony Mo.-Wertheimer-Swartz Shoe Co. which plaintiff anticipated would be v. Wyble, 261 Mo. 675, 687, 170 awarded to his wife in a suit for S. W. 1128; -Creamer v. Bivert, 214 divorce which he contemplated in- Mo. 473, 113 S. W. 1118; Miller v. stituting, was successfully pleaded Miller, 206 Mo. 341, 103 S. W. 962. by the defendant in a suit to set aside the conveyance. N. H.-Record v. Rochester Trust It has been held that whether the Co. - N. H-.- , 192 A. 177, 110 intent to perpetrate a fraud on the A. L. R. 1218. creditors of the grantor in a con- Ohio.-Pride v. Andrews, 51 Ohio veyance to defraud creditors arose St. 405, 38 N. E. 84. at the time of the conveyance or Okla.-King v. Antrim Lumber Co. thereafter, it is equally connected 70 Okla. 52, 172 P. 958, 4 A. L. R. with the subject-matter of the suit. 21 (wherein the plaintiff prayed for Conlon v. Hosier, 165 N. Y. S. 745, the removal of a cloud created by a 746. deed recorded without delivery, and 18. Creighton v. Roe, 218 Ill. 619, thereafter surreptitiously taken by 75 N. E. 1073, 109 Am. St. Rep. 310; the grantee). Derry v. Fielder, 216 Mo. 176, 115 § 401a EQUITY JURISPRUDENCE. [Pt. II, Ch. I name of a third person as grantee, will be denied relief when he seeks to recover the property, 19 although an en- forceable trust would otherwise have arisen.2 0 If, however, the grantee recognizes the trust and reconveys the property to the grantor, the courts will not interfere with the latter's possession, no question being raised as to the

S. W. 412 (no resulting trust when vania Mortg. & Loan Co. 101 N. J. conveyance was taken in name of Eq. 51, 137 A. 89; Boothe v. Bas- third party in order to cut off dower sett, 82 Wash. 95, 143 P. 449, 7 of purchaser's wife). A. L. R. 145; Burt v. Timmons, 29 In Bush v. Rogan, 65 Ga. 320, 38 W. Va. 441, 2 S. E. 780, 6 Am. St. Am. Rep. 785, it is held that the Rep. 664. grantee can maintain ejectment Annotation: 117 A. L. R. 1465. against the grantor; but see Kirk- 20. See Am. Law Inst. Restate, patrick v. Clark, 132 Ill. 342, 24 ment of the Law of Trusts, vol. 2, N. E. 71, 8 L. R. A. 511, 22 Am. St. pp. 1301, 1359, §§ 422, 444. Rep. 531. A minority of the courts take the In Asam v. Asam, 239 Pa. 295, 86 view that, where one paying the A. 871, it was held that where the purchase price of property causes bill against the holder of the legal the title thereto to be taken in the title did not show a purpose to de- name of another for the purpose of fraud the wife, so that it was pos- avoiding creditors, a resulting trust sible that such arrangement might nevertheless arises, and that the have been made with the full knowl- rule applies that where a party to edge and approval of the wife, the an action may prove his case with- mere suspicion of fraud attendant out showing fraud on his part, the upon the transaction, not amounting fact that the transaction on which to fraud in law, was insufficient to the action is based may have been prevent the enforcement of a result- tainted with improper motives or ing trust-the property having been conduct will not serve as a defense purchased by the complainant and in equity, so that the fraudulent title having been taken in the name purpose of the purchaser is no de- of the defendant. fense in an action by him to have 19. Higginbotham v. Boggs (C. C. a resulting trust declared and the A. 4th) 234 F. 253, 148 C. C. A. property conveyed to him. Hazle- 155; Southworth v. Hiuffaker, 79 ton v. Lewis, 267 Mass. 533, 166 Colo. 364, 246 P. 261; Haggerty v. N. E. 876; Lufkin v. Jakeman, 188 Wilmidgton Trust Co. - Del. Ch. Mass. 528, 74 N. E. 933; Gerace v. -, 194 A. 134; De France v. Gerace, - Mass. - , 16 N. E. Reeves, 148 Iowa, 348, 125 N. W. (2d) 6, 117 A. L. R. 1459; Monahan 655; Burtrum v. Chetopa State v. Monahan, 77 Vt. 133, 59 A. 169, Bank, 143 Kan. 495, 54 P. (2d) 1206; 70 L. R. A. 935. Shamo v. Benjamin, 155 Ky. 373, Annotation: 117 A. L. R. 1472. 159 S. W. 798; Gross v. Pennsyl- See. IV] MAXIM AS TO CLEAN HANDS. § 401b rights of creditors.1 The grantee cannot successfully set up the original fraudulent conveyance. 2 ]

[§ 401b. Right of Personal Representative or Heirs to Relief.-The right of the personal representative to attack or set aside a conveyance or transfer made by his decedent in fraud of creditors is frequently denied by the courts on the ground that the personal representative stands in the shoes of the decedent.3 Neither the fraudulent grantor, nor his administrator, nor his heirs can enforce or undo the corrupt transaction. 4 Other cases, how-

1. Cartledge v. McCoy, 98 Ga. tended to be afforded by the recon- 560, 25 S. E. 588; Payne v. Hutson, veyanee, and, no question arising as 264 Ill. App. 508; Johnston v. Jick- between his own creditors and those ling, 141 Iowa, 444, 119 N. W. 746; of the grantee, permit the latter to Olson v. Peterson, 88 Kan. 350, 128 follow the property into. the gran- P. 191; O'Gasapian v. Danielson, 284 tor's hands. Annotation: 89 A. L. R. Mass. 27, 35, 187 N. E. 107, 89 1177. A. L. R. 1159; Hyland v. Iyland, See, also, annotation: 4 A. L. R. 278 Mass.. 112, 179 N. E. 612; 102, as to various fact situations in Hughes v. Hughes (Tex. Com. App.) which it has been held that the 221 S. W. 970, affirming (Tex. Civ. principle was not applicable. App.) 191 S. W. 742; Fargo v. Ladd, And see infra, § 403, as to parties 6 Wis. 106. not in pari delicto. Annotation: 89 A. L. R. 1168. 3. Moore v. Schneider, 196 Cal. Relief is not denied to a party to 380, 238 P. 81; Arteaga v. Arteaga, a conveyance claimed to be fraudu- 169 Ga. 595, 151 S. E. 5; Cicero lent as to creditors if he can make Trust & Say. Bank v. Schermann, out his case without reference to 252 Ill. App. 449; Stierlin v. Tesche- the fraudulent elements in the facts, meacher, 333 Mo. 1208, 64 S. W. (2d) in a suit to which no defrauded creditor is a party. O'Gasapian v. 647, 91 A. L. RB.121; Bank of Willow Danielson, 284 Mass. 27, 35, 187 Springs v. Lillibridge, 316 Mo. 968, 293 S. W. 116; Bankers' Trust Co. v. N. E. 107, 89 A. L. R. 1159. 2. Either because of special cir- Bank of Rockville Center Trust Co. 114 N. J. Eq. 391, 168 A. 733, 89 cumstances, or in direct conflict with the decisions supporting the A. L. R. 697; Harrison v. Davis (Tex. Civ. App.) 58 S. W. (2d) 1025 right, as against his grantee's creditors, of a grantor after a reconvey- (dictum). ance to him of property fraudu- Annotation: 91 A. L. R. 134; 50 lently conveyed in the first instance, L. R. A. (N. S.) 320; 18 Ann. Cas. there are a number of decisions 37; Ann. Cas. 1915B, 212. which deny him the protection in- 4. Stierlin v. Tesehemacher, 333 § 401c EQUITY JURISPRUDENCE. [Pt. II, Ch. I ever, accord to the representative the right to sue to set aside such conveyances. 5 And a right of action is by statute sometimes given to the representative. 6 ]

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

Mo. 1208, 64 S. W. (2d) 647, 91 7. Burt v. C. Gotzian & Co. 102 A. L. R. 121. F. 937, 43 C. C. A. 59, writ of certio- 5. Howell v. Howell, 211 Iowa, 70, rari denied in 179 U. S. 684, 45 L. ed. 232 N. W. 816; Marion County Nat. 385, 21 S. Ct. 916 (taxes and en- Bank v. Smith, 205 Iowa, 203, 217 cumbrances); Lynch v. Burt, 132 F. N. W. 857; Combs v. Roark, 206 Ky. 417, 67 C. C. A. 305; Morley Bros. v. 454, 267 S. W. 210; Williams v. Stringer, 133 Mich. 690, 95 N. W. Harth, 156 Ky. 702, 161 S. W. 1102; 978 (fraudulent grantee who pays Re McCluskey, 116 Me. 212, 100 A. a mortgage is not entitled to reim- 977; Weil v. Marquis, 256 Pa. 608, bursement from plaintiff in a credi- 101 A. 70; Quackenbush v. Graf, 37 tor's bill); Sheridan v. McCormick, S. D. 385, 158 N. W. 409. 39 N. D. 641, 168 N. W. 59, 8 A. L. R. Annotation: 91 A. L. R. 134. 523; Greig v. Rice, 66 S. C. 171, 44 The holdings are ordinarily placed S. E. 729; Lynch v. Murray, 86 Vt. on the ground that the plaintiff acts 1, 83 A. 746 (taxes and interest on not only as representative of the mortgage). heirs of the estate, but also as Annotation: 8 A. L. R. 530. trustee of the creditors. Chester 8. Ackerman v. Merle, 137 Cal. County Trust Co. v. Pugh, 241 Pa. 169, 69 P. 983 (mortgage); Smith 124, 88 A. 319, 50 L. R. A. (N. S.) v. Grimes, 43 Iowa, 356 (assignment 320, Ann. Cas. 1915B, 211. of liens to grantee). 6. Ives v. Ives, 177 Ark. 1060, 9 Annotation: 8 A. L. R. 533. S. W. (2d) 1062; Day v. Dullam, 235 In Hutchinson v. Park, 72 Ark. Mich. 516, 209 N. W. 561; Hause v. 509, 82 S. W. 843, the questions in Coblentz, 22 Ohio App. 17, 153 N. E. issue were between the parties to 255; Graham v. Perry, 200 Wis. 211, the fraud, the action being by the 228 N. W. 135, 68 A. L. R. 267. grantors, and not by their creditors, Annotation: 91 A. L. R. 136. to set aside the conveyance. Sec. IV] MAXIM AS TO CLEAN HANDS. § 401d of constructive fraud, it would seem that, on the setting aside of the conveyance, he is equitably entitled to reim- bursement for sums expended by him in good faith to discharge taxes or prior mortgages on the property.' And a similar rule is applied to those who claim through the grantee, as to sums expended in good faith to discharge prior liens on the property.10 And, in an action for an accounting of rents and profits or the proceeds of the property, the fraudulent grantee is ordinarily entitled to an allowance for such expenditures. 11 ]

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

9. Lynch v. Burt, 132 F. 417, 67 55 Cal. 31; Tibbetts v. Terrill, 26 C. C. A. 305; Tibbetts v. Terrill, 26 Colo. App. 64, 140 P. 936. Colo. App. 64, 140 P. 936; Printz v. Annotation: 8 A. L. R. 537. Brown, 31 Idaho, 443, 174 P. 1012 11. Gordon, Rankin & Co. v. (mortgage and taxes); La Salle Tweedy, 74 Ala. 232, 49 Am. Rep. Opera House Co. v. La Salle Amuse- 813; Young v. Ward, 115 Ill. 264, ment Co. 289 Ill. 194, 124 N. E. 454 3 N. E. 512; Hamilton Nat. Bank v. (violation of Bulk Sales Act); Adams Halsted, 134 N. Y. 520, 31 N. E. v. Young, 200 Mass. 588, 86 N. E. 900, 30 Am. St. Rep. 693; Loos v. 942 (violation of Bulk Sales Law; Wilkinson, 113 N . Y. 485, 21 N. E. rule approved); Hicks v. Beals, 83 392, 4 L. R. A. 353, 10 Am. St. Rep. Or. 82, 163 P. 83, L. R. A. 1917D, 495. 1067 (violation of Bulk Sales Law); Annotation: 8 A. L. R. 539. Anderson v. Fuller, 16 S. C. Eq. However, the Maryland court in (1 M'Mull.) 27, 36 Am. Dec. 290; Strike's Case, 1 Bland, Ch. (Md.) Carpenter v. Scales (Tenn.), 48 S. W. 57, affirmed in 2 Harr. & G. 191, re- 249 (where an advance for taxes was jected the claim of the fraudulent made in good faith by grantee at grantee, who was a party to the the time of the conveyance); Dick- fraud, to an allowance, on an ac- enson v. Patton, 110 Va. 5, 65 S. E. counting for rents and profits, for 529 (payment of purchase money sums paid for taxes, street assess- lien). ments, and ground rent, to which Annotation: 8 A. L. R. 535. the property was subject. 10. Lynch v. Burt, 132 F. 417, 67 12. Davies v. Lutz, 110 Kan. 657, C. C. A. 305; Tompkins v. Sprout, 205 P. 637; Berridge v. Gaylord, 108 § 401d EQUITY JURISPRUDENCE. [Pt. II, Ch. I In such case the turpitude of the mortgagee is no ground for a discharge of the mortgagor from the payment of his just 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 collateral 1 4 to the contract. [On the other hand where a conveyance was executed merely for the purpose of evading taxes, it appears that the courts will deny relief when the grantor or his heirs seek to set aside the deed. The parties are regarded as being in equal wrong." The case is analogous to situations where

Kan. 105, 193 P. 1066, 21 A. L. R. 561, 67 N. E. 196; Crowns v. Forest 393. Land Co. 99 Wis. 103, 74 N. W. 546. Annotation: 21 A. L. R. 396. 14. Alter v. Clark, 193 F. 153. In Johnson v. Harvey, 83 Kan. Annotation: 114 A. L. R. 372. 471, 112 P. 108, the court held in- But where a property owner leased sufficient a statement in the answer premises and, in order to make the to a suit to foreclose a mortgage in rent appear small for taxing pur- the form of a warranty deed, that poses, executed two instruments, one one reason for putting the mortgage of which purported to be the lease, in the form of a deed was to avoid and the other a contract for services the payment of taxes. which the landlord was bound under In Berridge v. Gaylord, supra, it the lease to render, it was held that is stated that Sheldon v. Pruessner, he was precluded by his unlawful 52 Kan. 579, 35 P. 201, 22 L. R. A. purpose from asking the assistance 709, goes no further than to hold of a court in enforcing either the that, if the mortgagee, while retain- lease or the collateral agreement, ing the beneficial ownership, makes even though the subterfuge suc- a mere colorable assignment in order ceeded only for a time. Alexander to escape the payment of taxes, and v. Rayson [1936] 1 K. B. 169, 114 a foreclosure is attempted in the A. L. I. 357. name of the assignee, no recovery can 15. Annotation: 118 A. L. R. 1184. be had in that action. In Blake v. Ogden, 223 Ill. 204, 79 In Drexler v. Tyrrell, 15 Nev. 114, N. E. 68, where the husband brought it was held however (one of the suit to set aside a deed of his wife's three justices dissenting) that a property executed by him and her, mortgage which is made in the name the court held that where the plain- of someone other than the lender of tiff's allegations admitted that the the money, in order to escape the deed was made for the express pur- payment of taxes, is wholly void. pose of depriving the state of in- 13. Alter v. Clark, 193 F. 153; heritance taxes, equity would not Waterbury v. McKinnon, 146 F. 737, interfere to set aside the deed. 77 C. C. A. 294, affirming 136 F. In Andreas v. Andreas, 84 N. J. 489; Callicott v. Allen, 31 Ind. App. Eq. 375, 94 A. 415 (affirmed in 85 Sec. IV] MAXIM AS TO CLEAN HANDS. § 401e a grantor makes a conveyance for the purpose of defrauding his creditors and thereafter seeks to have his conveyance set aside. The state is the creditor, the taxpayer, the debtor, and the statute is designed to discourage conveyances to defeat the tax debt. In such situations the rule is that the conveyances of real property to defraud creditors, though void as to creditors are nevertheless valid and binding on the parties themselves and their personal representatives."0 ]

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

N. J. Eq. 210, 96 A. 39), a suit by a law trust was organized merely to husband to compel his wife to re- evade taxation. convey to him property which he had 16. Delgado v. Delgado, 42 N. M. previously deeded to her, the court 582, 82 P. (2d) 909, 118 A. L. R. held that, inasmuch as it had been 1175. shown that the transfer was made 17. Carmen v. Fox Film Corp. for the purpose of obtaining a re- (C. C. A. 2d) 269 F. 928, 15 A. L. R. duction of taxes, the suit must fail, 1209, Chafee, Cases on Equitable Re- as the transaction was void as lief Against Torts, 396 (writ of against public policy. certiorari denied in 255 U. S. 569, In Delgado v. Delgado, 42 N. M. 65 L. ed. 790, 41 S. Ct. 323), denying 582, 82 P. (2d) 909, 118 A. L. R. the right to a moving picture actress 1175, the court denied the right of to disaffirm a contract to render ser- heirs of a grantor to set aside a vices, made during minority, so as warranty deed executed by the lat- to enable her to fulfill a contract ter to her son, an honorably dis- negotiated with another person charged soldier from the United under the misrepresentation that States army, who, as such, was she was free to enter into the exempt up to a certain amount of second contract. taxes on real estate owned by him, In Weegham v. Killefer, 215 F. even though the court assumed for 168, affirmed 215 F. 289, 131 C. C. A. the purposes of the decision that 558, L. R. A. 1915A, 820, the com- the sole object of the transfer of the plainants sought an injunction to property was to defraud the state of restrain the defendant from playing its revenue. baseball with any club other than And see Collins v. Becklenberg, their own. It was found by the 236 Ill. App. 324, wherein a common- court that he was a player of unique, § 401e EQUITY JURISPRUDENCE. [Pt. II, Ch. I quently denied to infants who have induced contracts by fraudulent 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 agreements to adopt, or to provide for, a child taken into a family, the circumstances may be such as to preclude the application of the maxim of clean hands, although the child may have been mischievous and, to some extent, dis- obedient. Specific performance is decreed upon a proper showing if such relief would not be unfair, inequitable, or unjust.ls On the other hand, where, because of misconduct on the part of the child, good conscience and natural justice do not require an enforcement to the contract, specific performance will not be awarded. 19 [The equitable maxim that he who comes into equity must come with clean hands will not preclude recovery on a fire insurance policy covering property set on fire by the assured while insane.2 0 This is so because the law places no stigma of unclean hands upon either a litigant

exceptional, and extraordinary skill. in litigation as honest and fair- But complainants, knowing that he minded men would condemn and had entered into an unenforceable pronounce wrongful, and, although, agreement to play as a member of insufficient to constitute the basis another club, had induced him, by of a legal action, was quite sufficient the offer of a larger salary, to break to bar relief in equity. The com- his agreement and play with their plainants' hands were not clean. own club. Then he was induced to 18. Burns v. Smith, 21 Mont. 251, repudiate the agreement with the 53 P. 742, 69 Am. St. Rep. 653; Tut- complainants and to enter into a tle V. Winchell, 104 Neb. 750, 178 new agreement to play with the club N. W. 755, 11 A. L. R. 814. with which he had originally con- 19. Winne v. Winne, 166 N. Y. tracted. An injunction was sought 263, 59 N. E. 832, 82 Am. St. Rep. by complainants to restrain him 647; Ball v. Brooks, 173 N. Y. S. from doing so. This was refused on 746. the ground that complainants' con- Annotation: 11 A. L. R. 819. duct in inducing him to break his 20. Hier v. Farmers Mut. F. Ins. unenforceable agreement was such Co. 104 Mont. 471, 67 P. (2d) 831, misconduct in regard to the matter 110 A. L. R. 1051. Sec. IV] MAXIM AS TO CLEAN HANDS. § 402 who is insane, or one who is representing the insane person's interests in such a case."] § 402. Illegality.--Another very common occasion for invoking the principle is illegality (see §§ 929, et seq.).' Wherever a contract or other transaction is illegal, and the parties thereto are, in contemplation of law, in pari delicto, it is a well-settled rule, subject only to a few special exceptions 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 is yet executory, nor by relieving him against it, by setting it aside, or by enabling him to recover the title to property which he has parted with by its means. 3 The principle is

1. Hier v. Farmers Mut. F. Ins. The subjects treated in this and Co. 104 Mont. 471, 67 P. (2d) 831, the following paragraph are dis- 110 A. L. R. 1051. cussed more at length in §§ 937-942. With respect to a loss caused by the 3. U. S.-Jackman v. Continental burning of property by a mentally in- Nat. Bank, 16 F. (2d) 728, 51 competent or insane insured the rule A. L. R. 336; Roberts v. Criss (C. C. stated in 6 Couch on Insurance, § 1483, A. 2d) 266 F. 296, 11 A. L. R. 698; is as follows: "An insane person can Danciger v. Stone, 187 F. 853 (a form no wrongful or fraudulent de- shipper cannot enjoin state officers sign in destroying his own property, seizing liquors while in interstate com- so far as insurers are concerned, and merce if he is violating the liquor the insurers are liable, although in- laws of the state in other ways). sured himself burns the property Ark.-Shattuck v. Watson, 53 Ark. of when insane, since the burning 147, 13 S. W. 516, 7 L. R. A. 551. the property by the insured while Ga.-Camp v. Aetna Ins. Co. 170 insane will not absolve the insurer Ga. 46, 152 S. E. 41, 68 A. L. R. 1166. from liability, in the absence of any provision to that effect in the llI.-Vock v. Vock, 365 Ill. 432, 6 policy.?' N. E. (2d) 843, 109 A. L. R. 1170; Annotation: 110 A. L. R. 1060. International Coal & Min. Co. v. 2. Colby v. Title Ins. & Trust Co. Nicholas, 293 Ill. 524, 127 N. E. 703, 160 Cal. 632, 117 P. 913, 35 L. R. A. 10 A. L. R. 1010; Lines v. Willey, (N. S.) 813, Ann. Cas. 1913A, 515; 253 Ill. 440, 97 N. E. 843 (a convey- Woodail v. Peden, 274 Ill. 301, 113 ance made for an unlawful purpose, N. E. 607; Basket v. Moss, 115 N. C. viz., to enable the grantees, women, 448, 20 S. E. 733, 48 L. R. A. 842, to vote at a drainage district election 44 Am. St. Rep. 463; Edwards v. at which they could not legally vote Boyle, 37 Okla. 639, 133 P. 233; unless they actually owned land, can- the Booker v. Wingo, 29 S. C. 116, 7 not be set aside or reformed by S. E. 49, all citing the text. grantor or his heirs). § 402 EQUITY JURISPRUDENCE. [Pt. II, Ch. I thus applied in the same manner when the illegality is merely a malum prohibitum, being in contravention to some positive statute, and when it is a malum in se, as being

Mass.-Berman v. Coakley, 243 A champertous contract will not Mass. 348, 137 N. E. 667, 26 A. L. R. be enforced: Burnes v. Scott, 117 92; Cornellier v. Haverhill Shoe Mfrs. U. S. 582, 29 L. ed. 991, 6 S. Ct. 865; Assn. 221 Mass. 554, 109 N. E. 643, Boone v. Chiles, 10 Pet. (U. S.) 177 L. R. A. 19160, 218; Downey v. 9 L. ed. 388; Casserleigh v. Wood Charles S. Gove Co. 201 Mass. 251, (C. C. A.) 119 F. 308, 309, 56 C. C. A. 87 N. E. 597, 131 Am. St. Rep. 398 212; Rust v. Larue, 4 Litt. (Ky.) 411, (violation of statute prohibiting so- 412, 14 Am. Dec. 172; Harrison v. licitation of purchase of intoxicating Harman, 85 W. Va. 538, 102 S. E. liquors). 224. Mo.-Wertheimer-Swartz Shoe Co. An injunction will not issue at v. Wyble, 261 Mo. 675, 170 S. W. the suit of a person conducting an 1128; Modern Horse Shoe Club v. illegal business to restrain a police Stewart, 242 Mo. 421, 146 S. W. 1157 captain from stationing officers con- (violation of charter of club and of tinuously on the premises: Weiss v. law prohibiting sale of liquor without Herlihy, 23 App. Div. 608, 49 N. Y. S. license) ; Garrett v. Kansas City Coal 81. Min. Co. 113 Mo. 330, 20 S. W. 965, An injunction will not issue to re- 35 Am. St. Rep. 713; Barnum v. Bar- strain a postmaster from interfering num, 177 Mo. App. 68, 164 S. W. 129. with plaintiff's mail, when plaintiff Mont-Re First Trust & Say. Bank, has been engaged in a fraudulent 45 Mont. 89, 122 P. 561, Ann. Cas. scheme: Public Clearing House v. 1913C, 1327. Coyne, 121 F. 927. N. J.-Cameron v. International Al- Agreements in unreasonable reliance T. S. E. 118 N. J. Eq. 11, 176 straint of trade or tending to monop- A. 692, 97 A. L. R. 594 (stating the oly are illegal and will not be en- rule); Brooks v. Cooper, 50 N. J. Eq. forced in equity: American Biscuit 761, 26 A. 978, 21 L. R. A. 617, & Mfg. Co. v. Klotz, 44 F. 721; Pa- 35 Am. St. Rep. 793. cific Postal Tel. Cable Co. v. Western N. M.-Delgado v. Delgado, 42 Union Tel. Co. 50 F. 493 (injunction); Parish v. N. M. 582, 82 P. (2d) 909, 118 Schwartz, 344 Ill. A. L. R. 1175. 563, 176 N. E. 757, 78 A. L. R. 1032; Chicago Gas-Light & Coke Co. v. N. C.-Harvey v. Linville Imp. Co. People's Gas Light etc. Co. 121 Ill. 118 N. C. 693, 24 S. E. 489, 32 L. R. A. 530, 13 N. E. 169, 2 Am. St. Rep. 265, 54 Am. St. Rep. 749. 124 (specific performance); South Ohio.-Markley v. Mineral City, 58 Chicago City Ry. Co. v. Calumet Ohio St. 430, 51 N. E. 28, 65 Am. St. Electric St. R'y Co. 171 Ill. 391, Rep. 776. 49 N. E. 576 (specific performance); W. Va.-Medford v. Levy, 31 W. Perry v. United States School Furni- Va. 649, 8 S. E. 302, 2 L. R. A. 368, ture Co. 232 Ill. 101, 83 N. E. 444 13 Am. St. Rep. 887. (judgment creditor, whose judgment Annotation: 4 A. L. R. 64, 80, 104. was obtained on a contract in viola- Sec. IV] MAXIM AS TO CLEAN HANDS. § 402 contrary to public policy or to good morals. 4 Among the latter class are agreements and transfers the consideration of which was violation of chastity,5 compounding of a tion of the anti-trust law, cannot to lands which he knew had been maintain a creditor's bill against a patented by another. It was held fraudulent grantee of the judgment that he was not in court with clean debtor). hands. 4. Greer v. Payne, 4 Kan. App. A contract to stifle bidding at a 153, 46 P. 190; Harris v. Hardridge, judicial sale will not be specifically 7 Ind. Ter. 532, 104 S. W. 826 (no enforced: Camp v. Bruce, 96 Va. 521, specific performance of a contract 31 S. E. 901, 43 L. R. A. 146, 70 Am. to transfer land, where at the time St. Rep. 873. statute prohibited transfer, though In Public Service Commission v. the prohibition was afterward re- Brooklyn Heights R. Co. 105 Misc. moved); Vincent v. Moriarty, 31 254, 172 N. Y. S. 790, P. U. R. App. Div. 484, 52 N. Y. S. 519. 1919B, 258, it was held that years A court of equity will not lend its of delay on the part of a street rail- aid to one who, in connection with way company to provide needed cars the matter in controversy, has, with precluded it from objecting that an notice of the existence of a contract order requiring the furnishing of cars of employment, so dealt with a party was inequitable, because of the high thereto as, in effect, to induce prices due to war conditions. him to break the contract. Wee- 5. Chateau v. Singla, 114 Cal. 91, gham v. Killefer, 215 F. 289, 131 45 P. 1015, 33 L. R. A. 750, 55 Am, C. C. A. 558, L. R. A. 1915A, 820, St. Rep. 63; Watkins v. Nugen, 118 affirming 215 F. 168. Annotation: Ga. 372, 45 S. E. 262; Brindley v. 4 A. L. R. 78. Lawton, 53 N. J. Eq. 259, 31 A. 394 A contract or conveyance against (bill to compel restoration of stock the policy of the United States land given in consideration of illicit laws is illegal, and will not be en- relations cannot be sustained). forced: Dial v. Hair, 18 Ala. 798, 54 Benyon v. Nettlefield, 3 Macn. & Am. Dec. 179 (specific performance G. 94, 102, 103; Bodly v. -, 2 Cas. refused); Beck v. Flournoy Livestock Ch. 15, per Lord Nottingham. & R. E. Co. 65 F. 30, 12 C. C. A. And see Am. Law Inst. Restate- 497, 27 U. S. App. 618 (injunction ment, Contracts, p. 1098, § 589. against interference by government In the following cases relief was refused); Kennedy v. Lonabaugh, 19 given, in some to the man or his Wyo. 352, 117 P. 1079, Ann. Cas. representatives; in others to the 1913E, 133 (accounting refused on woman, upon contracts of the same agreement for illegal acquisition of general nature; but on examination coal lands). none of them will be found in oppo- In York Coal & Coke Co. v. Hamil- sition to the principle: the exact ton, 182 Ky. 345, 206 S. W. 616, the question either was not raised by suit was to quiet title, and was the pleadings, or the consideration brought by one who had, under an was not, in the view of the court, abandoned survey, secured a patent illegal: Sismey v. Eley, 17 Sine. 1; § 402 EQUITY JURISPRUDENCE. [Pt. II, Ch. I felony [or forbearance to prosecute for a crime,]0 gambling or a lottery,7 false swearing, the commission of any crime, or breach of good morals.s It should be observed, how-

Knye v. Moore, Sim. & St. 61; See Am. Law Inst. Restatement, Matthew v. Hanbury, 2 Vern. 187; Contracts, p. i006, §§ 520, et seq. Robinson v. Cox, 9 Mod. 263; Clark But where money had been loaned v. Periam, 2 Atk. 333; Marchioness expressly to enable the borrower to of Annandale v. Harris, 2 P. Wins. pay a gambling debt, it does not 432; Hall v. Palmer, 3 Hare, 532. come within the rule, and can be 6. Treadwell v. Torbert, 119 Ala. recovered back: Ex parte Pyke, 8 279, 24 So. 54, 72 Am. St. Rep. 918; Ch. Div. 754, 756, 757; Johnson v. Shattuck v. Watson, 53 Ark. 147, 13 M Million, 178 Ky. 707, 199 S. W. S. W. 516, 7 L. R. A. 551 (promise 1070, L. R. A. 1918C, 244; Appleton not to prosecute for forgery); Ber- v. Maxwell, 10 N. M. 748, 65 P. 158, man v. Coakley, 243 Mass. 348, 137 55 L. R. A. 93. Annotation: L. R. A. N. E. 667, 26 A. L. R. 92; Atwood v. 1918C, 252. Fisk, 101 Mass. 363, 100 Am. Dec. One lending money to pay card 124 (promise not to prosecute for debts cannot recover it if he has embezzlement); Harrington v. Bige- any percentage or commission on the low, 11 Paige (N. Y.), 349; Moore money staked in the play. White' v. Adams, 8 Ohio (8 Ham.), 372, 32 v. Wilson, 100 Ky. 367, 38 S. W. Am. Dec. 723; George v. Curtis, 45 495, 37 L. R. A. 197. W. Va. 1, 30 5. E. 69; Rock v. 8. In re Arthur Average Assn. Mathews, 35 W. Va. 531, 14 S. E. L. R. 10 Ch. 542; In re South Wales 137, 14 L. R. A. 508; Swartzer v. etc. Co. L. R. 2 Ch. Div. 763; Sykes Gillett, 1 Chand. (Wis.) 207, 209, v. Beadon, L. R. 11 Ch. Div. 170, 210. 183, 197; Thomson v. Thomson, 7 Ves. Annotation: 4 A. L. R. 81. 470; Regby v. Connol, L. R. 14 Ch. See 12 Am. Jur., Contracts, p. 695, Div. 482, 491. In the first two cases § 193; Am. Law Inst. Restatement, above named, it was held that an Contracts, p. 1053, § 548. association, illegal because not or- But see Davies v. London etc. ganized in conformity with cer- Co. L. H. 8 Ch. Div.-469. This and tain mandatory statute, cannot be other cases of the same class in "wound up" by a court of equity. which relief is given are explained In Sykes v. Beadon, L. R. 11 Ch. in § 403. Div. 170, a company had been 7. Board of Trade v. O'Dell Com- formed for the purpose of making mission Co. 115 F. 574 (bucket investments and dealing in securi- shop); Baxter v. Deneen, 98 Md. ties, all the members having signed 181, 57 A. 601, 64 L. R. A. 949, 1 articles of association. This asso- Am. St. Rep. 147; Paine v. France, ciation was held illegal, because it 26 Md. 46; Stewart v. Parnell, 147 violated certain statutes, and, among Pa. 523, 23 A. 838, 29 Wkly. Notes others, the acts against lotteries. A Cas. 537; Weakley v. Watkins, 7 large amount of capital had been Humph. (Tenn.) 356, 357. sunk, and the managers or trustees Annotation: L. R. A. 1918C, 251. had committed some gross breaches Sec. IV] MAXIM AS TO CLEAN HANDS. § 402 ever, in order to avoid any misapprehension and seeming inconsistency in the decisions, that there are agreements which appear, at first blush, to be founded upon an immoral consideration, or which would at one time perhaps have been regarded as contrary to public policy, which courts of equity do not consider to be illegal, and which they will therefore enforce, if properly coming within their jurisdiction. Of this kind are some contracts made upon the consideration of an improper cohabitation being of their trust. This suit was brought money paid over to third persons in by a share-holder against some of pursuance of the contract; and it the trustees, to compel them to carry does not follow that you cannot, in out the trusts, and to make them other cases, obtain, even from the liable for the sums lost through their parties to the contract, moneys breaches of trust. The questions which they have become possessed were very fully discussed by Jessel, of by representations that the con- M. R., who held that the suit could tract was legal, and which belonged not be maintained. He said (p. to the persons who seek to recover 193): "Now, the authorities on the them; but I am bound to say I think subject seem to be quite plain when there is no pretense for saying that you come to examine them. They an illegal contract will in any way are really to this effect, that you be enforced or aided by a court of cannot ask the aid of a court of law or equity." justice to carry out an illegal con- In Wegby v. Connol, L. R. 14 Ch. tract; but in cases where the con- Div. 482, 491, a member of a "trades tract is actually at an end, or is union" had been expelled for violat- put an end to, the court will inter- ing certain rules of the society fere to prevent those who have, which were stringently in restraint under the illegal contract, obtained of trade, and he brought this suit money belonging to other persons on to be restored to his rights of mem- the representation that the con- bership and the property rights be- tract was legal, from keeping that longing thereto. Trades unions had money." Again, he said at page been legalized by an act of Parli- 197: "1 think the principle is clear ment for certain specified purposes, that you cannot directly enforce an but not for all purposes. The court illegal contract, and you cannot ask held that, independent of the stat- the court to assist you in carrying ute, the society and the articies of it out. You cannot enforce it in- agreement between its members directly; that is, by claiming dam- were clearly illegal, because con- ages or compensation for the breach trary to public policy; that the suit of it, or contribution from the per- did not come within the operation sons making the profits realized of the statute; and therefore a court from it. It does not follow that of equity could give the plaintiff no you cannot, in some cases, recover relief. In Carey v. Smith, 11 Ga. § 402a EQUITY JURISPRUDENCE. [Pt. II, Ch. I terminated, and those providing for children born from 9 such cohabitation.

[§ 402a. -Infringement Suits as to Patents, Copy- rights and Literary Property.-The principle under consideration is applicable to a complainant who seeks pro-

539, 547, both parties had been en- In Fisher v. Apollinaris Co. L. R. gaged in transactions violating the 10 Ch. 297, 302, 303, it was held by statutes concerning banking. See, the court of appeal, as a general also, Johnson v. Shrewsbury etc. rule, that where an offense is of R'y, 3 De Gex, M. & G. 914, per such a nature that the offender may Knight Bruce, L. J.; Aubin v. Holt, be proceeded against either crimi- 2 Kay & J. 66, 70, per Page Wood, nally cr civilly, or both, and he is V. C. prosecuted criminally, there is noth- One who by agreement with an ing illegal nor improper in a com- officer of the bank, changed a public promise of the whole proceedings; account to an individual one, in or- such agreement of compromise is der to profit from the interest on valid, and will be enforced by such account, has been prevented, equity, if coming within the equita- after the insolvency of the bank, ble jurisdiction. It should be ob- from showing that the account was served, however, that this rule is, a public one in order to hold the confined to those wrongs which are stockholders of the bank liable for capable at the common law of being the deposit. Hill v. Kavanaugh, 118 prosecuted both civilly and crimi- Ark. 134, 176 S. W. 336, 4 A. L. R. 1. nally; it does not, of course, extend 9. With respect to contracts upon to offenses for which modern stat- the consideration mentioned in the utes have given an action at law text, see the following cases: Sis- for damages, such as homicide. mey v. Eley, 17 Sim. (Eng.) 1; It was held, however, in Windhill Knye v. Moore, 1 Sim. & St. 61; Local Board v. Vint, 45 Ch. Div. Matthew v. Hanbury, 2 Vern. 187; 351, that any agreement to com- Robinson v. Clark, 9 Mod. 263; Clark promise or postpone a prosecution v. Periam, 2 Atk. 333; Marchioness for a public offense-as an interfer- of Annandale v. Harris, 2 P. Wms. ence with a public highway-is 432; Hall v. Palmer, 2 Hare, 532. illegal; and Fisher v. Apollinaris It is now settled that an agree- Co. L. R. 10 Ch. 297, so far as it ment of separation between a hus- holds otherwise, is overruled. See band and wife is not illegal, not further, § 936. against public policy, and if drawn Where the prosecution is of a in a proper form, so that there are character that in no way involves two parties capable of contracting, the interests of the public, an agree- will be specifically enforced at the ment for its settlement is not illegal. suit of either spouse. The earlier Annotation: 117 Am. St. Rep. 523. decisions were undoubtedly the See 12 Am. Jur., Contracts, p. 697, other way (see § 932). § 194. See. IV] MAXIM AS TO CLEAN HANDS. § 402a tection from a court of equity against the violation or infringement of rights in patents, literary property, and copyrights. If he does not come into court with clean hands with regard to the subject-matter of the suit, he will be denied relief.10 Thus one who was shown to have used corrupt methods in having the validity of a patent upheld and its infringement enjoined, has been denied relief in a subsequent infringement suit involving other patents, where the devices covered by all the patents were important, if not essential parts of the same mahine. 11 The court will not, however, go outside of the subject- matter of the controversy, and make its interference depend upon conduct not affecting the equitable right asserted by the defendant, or the relief which he demands (see § 399). 12 One who was alleged to have made certain misrepresentations with respect to rating his customers, was held not debarred from procuring the aid of equity to

10. In Stone & McCarrick v. Du- in defense of a suit for an injunc- gan Piano Co. 220 F. 837, 136 tion restraining similar acts of the C. C. A. 583, it was held that the defendant. author of a book which contained 11. Keystone Driller Co. v. Gen- made-to-order advertisements for the eral Excavator Co. 290 U. S. 240, 78 use of dealers who should be licensed L. ed. 293, 54 S. Ct. 146, affirming by the author to use them, and 62 F. (2d) 48, rehearing denied 64 which contained statements which F. (2d) 39. could not be true as to the business 12. In Edward Thompson Co. v. of all of the licensees, was not en- American Law Book Co. 122 F. 922, titled to the protection of a court 59 C. C. A. 148, 62 L. R. A. 607, of equity in the enjoyment of his there are dicta to the effect that the copyright for the reason that the publisher of a law encyclopaedia particular advertisements were not which in some instances was guilty of copyrightable, being deceptive of "piracy" in copying the language of the public, and the plaintiff was copyrighted works without the con- guilty of inequitable conduct. sent of the owners of the copyrights In Munn & Co. v. Americana Co. has no standing in a court of equity 83 N. J. Eq. 309, 91 A. 87, L. R. A. to complain of infringement of its 1916D, 116, modifying 82 N. J. Eq. copyright by a rival encyclopaedia, 63, 88 A. 330, the maxim was ap- consisting in copying lists of cases plied to the case of a plaintiff who and authorities from complainant's was guilty of misrepresentations as work. But qiaere, whether complain- to the editorship of a publication, ant's misconduct was not unconnected which misrepresentations were pleaded with the matter in litigation. § 402b EQUITY JURISPRUDENCE. [Pt. II, Ch. I protect his business and copyrights in books used by him in a collection and rating business."5 [As to what constitutes unconscientious or inequitable conduct which will debar a complainant from obtaining relief, it has been held that a news service which had habitually taken items published by other news agencies as "tips" to be investigated, was not thereby debarred from suing to enjoin the pirating of the complainant's news service by the appropriation and republication of itenis thereof without further investigation. 1 4 ]

[§ 402b. - Trademarks and Tradenames.-One who is guilty of misrepresentations affecting the public in conducting his business and advertising his products is not entitled to the aid of a court of equity if the representations are directly connected with the subject-matter of the suit in which the aid of the court is sought.1 5 This rule is frequently applied in suits to enjoin alleged infringement of trademarks and tradenames (see § 934), or corporate names, 1 of those who have misrepresented the properties

13. Cropper v. Davis, 243 F. 310, Cases on Equitable Relief Against 156 C. C. A. 90. Torts, chap. IV, pp. 379, et seq., note. 14. International News Service v. In Fay v. Lambourne, 124 App. Associated Press, 248 U. S. 215, 63 Div. 245, 108 N. Y. S. 874, order L. ed. 211, 39 S. Ct. 68, 2 A. L. R. affirmed without opinion in 196 293, affirming 245 F. 244, 157 N. Y. 575, 90 N. E. 1158, a business C. C. A. 436, 2 A. L. R. 317, which which was alleged mind-reading and modified 240 F. 983. the supposed telling of past as well In Vulcan Detinning Co. v. as future events was held to be in Assmann, 185 App. Div. 399, 173 itself a fraudulent deception of the N. Y. S. 334, it was held that a public, justifying the application of corporation was not precluded from the principle of "unclean hands" to relief against the illicit use of a the suit of a person seeking to en- secret process because of the fact join the use by another of his busi- that it introduced a spy into the ness name used in such venture. works of the rival concern solely to 16. A. N. Chamberlain Medicine obtain evidence of the infringement Co. v. H. A. Chamberlain Medicine of its rights, and not for the pur- Co. 43 Ind. App. 213, 86 N. E. 1025. pose of copying any methods of the Annotation: 66 A. L. R. 1028, s. rival. 115 A. L. R. 1255. 15. Annotation: 4 A. L. R. 92. It was held in Warshawsky & Co. See also, Chafee and Pound, v. A. Warshawsky & Co. 257 Ill. Sec. IV] MAXIM AS TO CLEAN HANDS. § 402b of articles, particularly proprietary medicines, advertised for sale to the public at large, and in suits to protect the exclusive rights of the owner in a trademark or trade- marked label containing misrepresentations as to the identity of the manufacturer of the labeled article, or false representations as to the place of manufacture (see § 934). But if a statement, apparently deceptive, is in fact true, the case is not one for the application of the principle of the maxim, and the aid prayed of a court of equity should not for that reason be denied.1" Nor has the principle application where the representations are not connected with the matter in litigation (see § 399),11 or where such representations amount to mere "trade boasting."19]

App. 571, that the fact that plain- poration has no relation to the re- tiff's business of selling used auto- lief sought. United States Light & mobile accessories was not strictly Heating Co. v. United States Light within its charter powers could not & Heating Co. of N. Y. 181 F. 182. be relied upon as showing that This view may vary, however, ac- plaintiff had not come into court cording to the wording of the stat- with clean hands in an action to utes under which the license is re- enjoin defendant corporation from quired. Annotation: 66 A. L. R. using a corporate name similar to 1011. plaintiff's. 17. Annotation: 4 A. L. R. 99. A domestic corporation which has 18. Shaver v. Heller & M. Co. 108 adopted a name similar to that al- F. 821, 48 C. C. A. 48, 65 L. R. A. ready employed by a foreign cor- 878, affirming 102 F. 882. poration, for the purpose of appro- To an injunction against a com- priating some of the business of the bination to destroy complainant's latter, does not come into court with business it is no defense that com- clean hands and is not entitled to plainant has on some occasions sold protection as against the foreign spurious goods: Brown v. Jacobs corporation. Great Western Live Pharmacy Co. 115 Ga. 429, 41 S. E. Stock Commission Co. v. Great West- 553, 57 L. R. A. 547, 90 Am. St. Rep. ern Commission Co. 187 Ill. App. 126. 196. 19. Dr. Peter H. Fahrney & Sons The failure of a foreign corpora- Co. v. Ruminer, 153 F. 735, 82 tion to obtain a license to do busi- C. C. A. 621. ness in a state does not prevent it In C. F. Simmons Medicine Co. v. from suing in equity to obtain re- Mansfield Drug Co. 93 Tenn. 84, 23 lief against a domestic corporation S. W. 165, a statement made in good which had adopted a similar name, faith, that "this is the original and since the wrong imputed to the cor- only genuine Simmons liver medi- § 402c EQUITY JURISPRUDENCE. [Pt. II, Ch. I

[§ 402c. - Corporation and Stock Transactions.- The maxim is applied in various situations where relief is sought in courts of equity with respect to corporation and stock transactions. One who stands as the fraudulent holder of shares of stock of a corporation will not be al- lowed, in a court of equity, to attack the validity of the action of the board of directors with regard to such stock." A promoter who, in violation of subscription agreements, has obtained control of a corporation, may not complain in equity that such control has been taken away from him through sales of stock by the directors of the corporation. 1 [It is ordinarily held that corporate securities acts, existing in the several states, commonly known as Blue Sky Laws, are primarily for the benefit of the buyer or subscriber. A stock subscription which has been made without complying with the Blue Sky Law cannot be enforced against the subscriber.2 But if the buyer is not in part delicto with the seller (and he is generally not so regarded), the general rule is that he may, within a reasonable time, recover his money, or property exchanged for stock, by tendering back the stock received by him.3 The buyer cine," was held not to debar the pro- 135 S. E. 616; Superior Producing & prietor from relief against unfair Ref. Co. v. Handlan, H. & Co. 100 competition, though there were in W. Va. 547, 131 S. E. 857. fact other remedies on the market, Annotation: 87 A. L. R. 105. made from the same formula. In O-So-White Products Co. v. 20. Picture Plays Theatre Co. v. Richards Mfg. Co. 238 Mich. 443, Williams, 75 Fla. 556, 78 So. 674, 1 213 N. W. 866, it was held that A. L. R. 1. specific performance would not be 1. Cross v. Farmers Elevator Co. granted of a contract for the sale 31 N. D. 116, 153 N. W. 279, 4 of securities, where the sale was A. L. R. 13. illegal under the Blue Sky Law, in 2. United Bank & T. Co. v. Joyner, that the provision of law requiring stock of the plaintiff corpora- 40 Ariz. 229, I1 P. (2d) 829; Coast the have been accepted for filing Amusements v. Stineman, 115 Cal. tion to App. 746, 2 P. (2d) 447; Witt v. by the corporation commission had Trustees' Loan & Say. Co. 33 Ga. not been complied with. App. 802, 127 S. E. 810; Burlington 3. Ala.-Gill Printing Co. v. Good- Hotel Corp. v. Bell, 192 N. C. 620, man, 224 Ala. 97, 139 So. 250. Sec. IV] MAXIM AS TO CLEAN HANDS. § 402c will be denied relief only where the record shows that he is equally culpable with the seller,4 and, mere knowledge Ark.-Blanks v. American Southern Or.-Salo v. Northern Say. & L. Trust Co. 177 Ark. 832, 9 S. W. (2d) Assn. 140 Or. 351, 12 P. (2d) 765. 310. Utah.-Buttrey v. Guaranteed Secu- Cal.-Western Oil & Ref. Co. v. rities Co. 78 Utah, 39, 300 P. 1040. Venago Oil Corp. 218 Cal. 733, 24 P. W. Va.-Conway v. Bailey, 91 W. (2d) 971, 88 A. L. It. 1271; Eber- Va. 324, 112 S. E. 579. hard v. Pacific Southwest L. & M. Wis.-Bechtel v. Columbia Casu- Corp. 215 Cal. 226, 9 P. (2d) 302, alty Co. 198 Wis. 114, 223 N. W. 303. 568. Ga.-Brannan, B. & Co. v. Ramsaur, Annotation: 87 A. L. R. 107. 41 Ga. App. 166, 152 S. E. 282. A purchaser of stock in ignorance Title Guar- Idaho.-Intermountain of the failure to comply with a stat- 16 anty Co. v. Egbert, 52 Idaho, 402, ute which provides that no security P. (2d) 390. shall be sold unless and until notice Ill.-Caldwell v. Cole, 326 Ill. 502, of intention to sell and data rela- 158 N. E. 159. tive to the security offered shall be lnd.-Elliott v. Kern, 90 Ind. App. filed with the public service commis- 453, 161 N. E. 662, 169 N. E. 46. sion, which is empowered to forbid Kan.-Daniels v. Craiglow, 131 the sale if of the opinion that it is Kan. 500, 292 P. 771. fraudulent or will result in fraud, is not in pari delicto with the seller so Ky.-Smith v. Crawford, 228 Ky. as to preclude him from rescinding 420, 15 S. W. (2d) 249. the transaction and recovering back v. Emerton, 280 Mass.-Kneeland the price paid. Kneeland v. Emer- Mass. 371, 183 N. E. 155, 87 A. L. ton, 280 Mass. 371, 183 N. E. 155, It. 1. 87 A. L. Rt. 1. Mich.-Volger v. William C. Roney One having a single transaction in & Co. 259 Mich. 460, 244 N. W. 129. exchanging corporate stock owned by Minn.-Marin v. Olson, 181 Minn. him with a foreign corporation which 327, 232 N. W. 523. has not obtained the consent of the Miss. - Bankers' Mortg. Co. v. corporation commission to sell its State (Miss.) 141 So. 335. stock within the state, and is not therefore entitled to do so, is not, in Mo.-Landwehr v. Lingenfelder case he acted under the bona fide be- (Mo. App.) 249 S. W. 723. lief that the corporation was so au- Neb.-Rhines v. Skinnor Packing thorized, in pari delicto, so as to be Co. 108 Neb. 105, 187 N. W. 874. prevented from rescinding the con- N. H.-Kenalos v. H1. V. Greene tract. Edward 'v. loor, 205 Mich. Co. 81 N. H. 426, 128 A. 335. 617, 172 N. W. 620, 15 A. L. R. 256. N. Y.-Garey v. Perez F. Huff Co. 4. Western Oil & Ref. Co. v. 135 Misc. 138, 238 N. Y. S. 38. Venago Oil Corp. 218 Cal. 733, 24 N. C.-McNair v. Southern States P. (2d) 971, 88 A. L. 1i. 1271; Ran- Finance Co. 191 N. C. 710, 133 S. E. dall v. California Land Buyers' Syn- 85. dicate, 217 Cal. 594, 20 P. (2d) 331; § 402d EQUITY JURISPRUDENCE. [Pt. II, Ch. I of the terms of the permit or of the fact that no permit has been issued, may not alone be sufficient to raise the guilt of the purchaser or subscriber to that degree.' [§ 402d. Industrial Disputes.-By the operation of this principle, equitable relief from the consequences of labor disputes has frequently been denied both to employers and labor unions who have been guilty of misconduct in connection with the disputes.0 While they may conduct their own affairs in any way that does not violate the law, neither the employer nor the employee may be guilty of conduct that invades the rights of the other in regard to, or at all events connected with, the matter in litigation, without forfeiting all right to resort to the extraordinary powers of equity7 A court of conscience will not extend its strong arm to protect one who has pur-

Walker v. Harbor R. & Dev. Corp. far as said decisions are in conflict 214 Cal. 46, 3 P. (2d) 557; Olds v. with the Eberhard case they have Simmons, 123 Cal. App. 275, 11 P. been overruled. Julian Merger (2d) 36; Campbell v. 6. International Alliance, T. S. E., Mines, 111 Cal. App. 649, 295 P. v. Rex Theatre Corp. (C. C. A. 7th) 1040. 73 F. (2d) 92; Cornellier v. Haver- Ref. Co. v. 5. Western Oil & hill Shoe Mfrs' Assn. 221 Mass. 554, Oil Corp. 218 Cal. 733, 24 Venago 109 N. E. 643, L. R. A. 1916C, 218; P. (2d) 971, 88 A. L. R. 1271; Ran- David Adler & Sons Co. v. Maglio, dall v. California Land Buyers' 200 Wis. 153, 228 N. W. 123, 66 Syndicate, 217 Cal. 594, 20 P. (2d) A. L. R. 1085. 331; Walker v. Harbor R. & Dev. Annotation: 66 A. L. R. 1090; 95 Corp. 214 Cal. 46, 3 P. (2d) 557; A. L. R. 50; 97 A. L. R. 1349; 106 Olds v. Simmons, 123 Cal. App. 275, A. L. R. 372. 11 P. (2d) 36. In Cornellier v. Haverhill Shoe The federal court in Cecil B. De- Mfrs' Assn. 221 Mass. 554, 109 N. E. Mille Productions, Inc., v. Woolery 643, L. R. A. 19,16C, 218, an employee (C. C. A.) 61 F. (2d) 45, which arose who had participated in a strike car- in California, reached a contrary ried on by unlawful means was held conclusion as to the rights of pur- precluded from obtaining relief chasers of royalty -interests where against a black list issued because the permit of the commissioner of of the strike. corporations has not been obtained. The federal court relied on Califor- 7. David Adler & Sons Co. v. nia decisions prior to Eberhard v. Maglio, 200 Wis. 153, 228 N. W. 123, Pacific Southwest L. & M. Corp. 215 66 A. L. R. 1085. Cal. 226, 9 P. (2d) 302, 303. In so Sec. IV] .MAXIMAS TO CLEAN HANDS. § 402d sued such a course of conduct. It will leave the applicant for relief where he has deliberately chosen to place himself.s Thus a breach of contract by an employer, for the deliberate purpose of provoking a controversy with the union, is ground for denying an injunction against subsequent acts of violence by the union.9 And where the members of a local union, working in the territory of another local union which called a strike, quit work in sympathy with the striking union, in violation of the terms of a contract between their union and the employers under whom they were working, an injunction was refused in favor of the local union against a lockout, adopted by the employers as a retaliatory measure."0 [In several cases the question has arisen as to whether an employer who is a member of an employers' association organized to fight the unions, or who has conspired with other employers to destroy or hinder the unions, or who has entered into a combination with other manufac- turers to depress wages, 1 is without clean hands. Such membership or combination is ordinarily held not to preclude the employer from obtaining relief against unjusti- fiable invasions of his rights.12 And a complainant is not

8. David Adler & Sons Co. v. Garment Workers, 77 Hun, 215, 28 Maglio, 200 Wis. 153, 228 N. W. N. Y. S. 321, reversing 5 Misc. 448, 123, 66 A. L. R. 1085. 26 N. Y. S. 152. So, a person cannot complain of 9. David Adler & Sons Co. v. a wrongful act of a combination to Maglio, 200 Wis. 153, 228 N. W. 123, boycott where he himself was for- 66 A. L. R. 1085. merly a member of the combination. Annotation: 66 A. L. R. 1091. Beechley v. Mulville, 102 Iowa, 602, 10. McGrath v. Norman, 221 App. 70 N. W. 107, 71 N. W. 428, 63 Am. Div. 804, 223 N. Y. S. 288; Moran v. St. Rep. 479. Lasette, 221 App. Div. 118, 223 N. Y. An injunction will not be granted S. 283. against the sending of circulars to Annotation: 95 A. L. R. 50. complainant's customers, urging them 11. New York C. Iron Works Co. not to patronize complainant, where v. Brennan, 116 N. Y. S. 457. complainant has, by similar methods, 12. Forstmann & H. Co. v. United sought to prevent the employment Front Committee, 99 N. J. Eq. 230, of those with whom he is in con- 133 A. 202; Cooks', Waiters' & Wait- troversy. Sinsheimer v. United resses' Local Union V. Papageorge

II Equity Jur.- 5 1 § 402d EQUITY JURISPRUDENCE. [Pt. II, Ch. I to be denied equitable relief because he has declared war on a union by discharging all members found in his employ.1" But, on the other hand, it has been held that, if it appears that the plaintiff has entered into a conspiracy to destroy the defendant union and to oppress its members and prevent workers generally from obtaining a living, the plaintiff will be turned out of court, even though it appears that both the plaintiff and the defendants are of equal guilt.14 And an injunction against at- tempting to induce plaintiff's employees to abandon plaintiff's employ and join the union, in violation of their contracts of employment, has been denied to one who has attempted to reduce the wage scale provided for in an agreement with the union, without the latter's consent, and without resort to the readjustment machinery agreed 1 5 upon. [It has been held that the employer's refusal to arbi- trate or to accept mediation is not ground for denying equitable relief against unlawful acts in furtherance of a strike.16 And the failure of the employer's representative to meet a committee of employees was held not such bad faith as to preclude the employer from obtaining relief in equity, where the committee were notified that he would not be able to meet them until a later date, and they made 17 no effort to see him at that time. [It is obvious that in these disputes each case is largely controlled by its own facts. In some cases relief is

(Tex. Civ. App.) 230 S. W. Annotation: 66 A. L. Ri. 1092. 1086; Trade Press Pub. Co. v. Mil- 15. Segenfeld v. Friedman, 117 waukee Typographical Union, 180 Misc. 731, 193 N. Y. S. 128. Wis. 449, 193 N. W. 507. 16. Thomson Mach. Co. v. Brown, Annotation: 66 A. L. R. 1091. 89 N. J. Eq. 326, 104 A. 129, 108 A. 13. Gill Engraving Co. v. Docrr 116; Berg Auto Trunk & Specialty (D. C. S. D. N. Y.) 214 F. 111. Co. v. Wiener, 121 Misc. (N. Y.) 796, Annotation: 66 A. L. R. 1090. 200 N. Y. S. 745. 14. Schwartz & Jaffee v. Hillman, 17. Moore Drop Forging Co. v. 115 Misc. (N. Y.) 61, 189 N. Y. S. McCarthy, 243 Mass. 554, 137 N. E. 21; Runes v. Fisher, 4 Ont. Rep. 60. 919. Sec. IV] MAXIM AS TO CLEAN HANDS, § 402d granted where it appears that the parties are not in pari delicto.As Other cases are held not to be governed by the operation of the principle since the conduct of the moving party is considered not to be immediately connected with the subject-matter of the litigation (see § 399).19]

18. Lauf v. E. G. Shinner & Co. show that an employer, seeking an (C. C. A. 7th) 82 F. (2d) 68; Joe injunction against picketing, had Dan Market v. Wentz (Mo. App.) maliciously induced members of the 20 S W. (2d) 567. union to violate their union obliga- Annotation: 66 A. L. R. 1091, tions, and was, therefore, without 1093; 106 A. L. R. 372. "clean hands." In International Organization, U. M. 19. In Niles-Bemet-Pond Co. v. W., v. Red Jacket Consol. Coal & Coke Iron Molders' Union, 246 F. 851, a Co. (C. C. A. 4th) 18 F. (2d) 839 (cer- corporation owning a controlling in- tiorari denied in 275 U. S. 536, 72 L. terest in another corporation was ed. 413, 48 S. Ct. 31), the fact that held not to be precluded, on the certain of the complainant companies theory that it was in court with "un- had once operated under union rules clean hands," from obtaining an in- and had paid the "check-off" re- junction restraining striking work- quired by the union was held not men of the plant of the latter con- to make them in pari delicto with the cern from committing unlawful acts union, so as to prevent the issuance in furtherance of the strike, because of an injunction in their favor against of the breach by the subsidiary com- unlawful acts of the union. pany of an agreement entered into An employer is not deprived of with its workmen on the occasion his right to the interposition of of a previous strike, which agree- equity to protect him against a boy- ment induced the men to return to cott upon the theory that he first their work. The reason given for boycotted the union by taking a this ruling was that the breach re- stand which he knew would, under ferred to was not immediately con- the rules of the union, prevent mem- nected with the subject-matter of bers in regular standing who wished the litigation. to retain their membership, from be- The fact that a labor union, in a ing employed by him, where he dis- controversy with employers, had em- tinctly stated that he did not desire ployed force, intimidation and physi- thereby to have any of his employees cal violence, has been held not so quit their work, and that he would connected with the subject-matter of still maintain the union prices. Barr the controversy as to prevent the v. Essex Trades Council, 53 N. J. Eq. union coming into a court of equity 101, 30 A. 881. to enjoin an unlawful boycott, main- And see New England Wood Heel tained by a committee not directly Co. v. Nolan, 268 Mass. 191, 167 interested in a dispute between em- N. E. 323, 66 A. L. R. 1079, in which ployers and employees, where such the evidence was held insufficient to boycott illegally interfered with the § 402e EQUITY JURISPRUDENCE. [Pt. II, Ch. I [§ 402e. Illegal Marriage. - Illegality affecting a marriage contract has been held to be sufficient, in the application of the principle of "unclean hands," to justify a court of equity in refusing to lend its aid to either of the parties thereto in a suit arising out of the contract, provided the rules of public, policy are not violated. ° Therefore unlawfully entering into a miscegenetic marriage has been held sufficient to justify a refusal of its aid by a court of equity to a party thereto seeking the annulment of such a marriage.1 On the other hand the maxim has no application where its enforcement would result in sustaining an act declared by statute to be void, or against public policy.2 In such cases, the interest of right of the complainants to a free 106 N. E. 567; Schaffer v. Krestovni- market for their labor and to free- kow, 88 N. J. Eq. 192, 102 A. 246, dom of contract with employers, and judgment affirmed on rehearing in if successfully carried out would 88 N. J. Eq. 523, 103 A. 913, and on eventually result in the destruction appeal in 89 N. J. Eq. 549, 105 A. of the union. Carpenters' Union v. 239; Stokes v. Stokes, 128 App. Div. Citizens' Committee, 333 Ill. 225, 164 838, 113 N. Y. S. 142, 145. N. E. 393, 63 A. L. R. 157. Annotation: 4 A. L. R. 72. And In Ely v. King-Richardson Co. see 24 Marquette L. Rev. 212. 265 Ill. 148, 106 N. E. 619, L. R. A. In Bays v. Bays, 105 Misc. 492, 1915B, 1052, it appeared that the 174 N. Y. S. 212, a boy who procured employees of a corporation organ- a woman to marry him, and his ized a rival concern, and induced marriage license, by falsely stat- employees of the older company to ing his age, was held to be in court break their contracts of employment with unclean hands in seeking an with that concern and enter the em- annulment because of his non-age. ploy of the new company. It was held that the acts complained of 1. Marre v. Marre, 184 Mo. App. were so unconnected with the subject- 198, 168 S. W. 636. matter of the suit, which was to re- Annotation: 4 A. L. R. 81. cover compensation for the services 2. Simmons v. Simmons, 19 F. of the organizers of the new com- (2d) 690, 57 App. D. C. 216, 54 pany, earned while they were em- A. L. R. 75; Szlauzis v. Szlauzis, 255 ployees of the older concern, that Ill. 314, 99 N. E. 640, L. R. A. they would not preclude a recovery 1916C, 741, Ann. Cas. 1913D, 454 by the complainants under the prin- (marriage contracted within the time ciple of the maxim, "He who comes prohibited by statute and made void into equity must come with clean by such statute); Arado v. Arado, hands." 281 Ill. 123, 117 N. E. 816, 4 A. L. R. 20. Ewald v. Ewald, 219 Mass. 111, 28 (incestuous marriage); Heflinger Sec. IV] MAXIM AS TO CLEAN HANDS. § 402e society intervenes, and the state is regarded as a third party.3 It is the duty of both parties to make restitu- tion by having the marriage annulled promptly.4 The courts therefore annul a marriage although the party seeking relief knew when he married of a former undissolved marriage, or cohabited with his spouse after such informa- tion was obtained.5 Even in this situation, however, it has been held that a person who marries another, knowing that the latter has a husband or wife living, is not an "innocent or injured party," and the courts will refuse a formal decree of nullification. 6 The question appears to v. Heflinger, 136 Va. 289, 118 S. E. the nullity of their marriage in a 316, 32 A. L. R. 1088; Hahn v. Hahn, divorce proceeding against him, the 104 Wash. 227, 176 P. 3. rule of pari delicto and the equita- Annotation: 54 A. L. R. 85. ble principle of "clean hands" being See also Heflinger v. Heflingej, inapplicable, since the state is an in- 136 Va. 289, 118 S. E. 316, 32 A. L. R. terested third party. 1088, wherein the court said that the 4. Martin v. Martin, 54 W. Va. equitable doctrine of "clean hands" 301, 302, 46 S. E. 120, 1 Ann. Cas. did not prevent either party to a 612, wherein an aunt and nephew, marriage contracted before a cer- citizens of West Virginia, went to tain period after the divorce of one Pennsylvania and were married, and of the parties had elapsed, in viola- returned to West Virginia and lived tion of a state statute, and rendered together as husband and wife for void thereby, from maintaining an eighteen years, and at the time of action to have the void marriage suit had a son ten years old. declared a nullity. 5. Seacord v. Seacord, 33 Del. 485, 3. Simmons v. Simmons, 19 F. (2d) 139 A. 80. 690, 57 App. D. C. 216, 54 A. L. R. 6. Mallon v. Mallon, 87 Pa. Super. 75; Lynch v. Lynch, 34 R. I. 261, Ct. 42, 43; Baker v. Baker, 84 Pa. 83 A. 83; Heflinger v. Heflinger, 136 Super. Ct. 544. Va. 289, 118 S. E. 316, 32 A. L. R. In Tyll v. Keller, 94 N. J. Eq. 1088; Martin v. Martin, 54 W. Va. 426, 120 A. 6, in an action by a hus- 301, 46 S. E. 120, 1 Ann. Cas. 612. band to annul a marriage on the In Simmons v. Simmons, 19 F. ground that at the time it was con- (2d) 690, 57 App. D. C. 216, 54 tracted his wife was married to an- A. L. R. 75, it was held that the other man, it was held that in order fact that one who, when he married to obtain the annulment it was another, knew that the latter's di- necessary for him to show by a pre- vorce had been fraudulently ob- ponderance of the evidence that tained and was therefore void, ren- when he married his wife he was dering their marriage void under ignorant of the fact that she had a the District of Columbia Code, will husband living from whom she had not preclude him from setting up not been divorced. The court said: § 402f EQUITY JURISPRUDENCE. [Pt. 11, Ch. I be largely as to whether the marriage, in the particular jurisdiction, is regarded as contrary to the public policy of the state, so as to justify the intervention of the court on behalf of society. 7 [Reprehensible conduct of a litigant which is unconnected or indirectly connected with the marriage contract, such as illicit cohabitation prior to the marriage, will not, in the application of the maxim, preclude a recovery in a court of equity of the relief prayed." And in a suit brought after the termination of the marriage by death, to enforce property rights, the widow is not to be denied relief on the ground that her marriage was in contravention of statute, where the statute had no extraterritorial effect and the widow did not return to the state after her marriage which was legal under the laws of the state where contracted.9 ] [§ 402f. - Accounting in Illegal Transactions.- Courts of equity will not in general decree an accounting as to matters growing out of an illegal or immoral transaction in which parties have jointly engaged."° But re-

"If he had this knowledge, and, not- Annotation: 4 A. L. R. 73. withstanding it, went through the 9. Loughran v. Loughran, 292 U. S. marriage ceremony with the respond- 216, 78 L. ed. 1219, 54 S. Ct. 684, ent, and cohabited with her for more reversing 66 F. (2d) 567, 62 App. than a year, the fact that he after- (D. C.) 262, rehearing denied, 292 ward tired of his bargain did not U. S. 615, 78 L. ed. 1474, 54 S. Ct. entitle him to the relief that he now 861. seeks from a court of equity." See 10. McMullen v. Hoffman, 174 also White v. Kessler, 101 N. J. Eq. U. S. 639, 43 L. ed. 1117, 19 S. Ct. 369, 139 A. 241, and Keller v. Linsen- 839; Primeau v. Granfield, 193 F. myer, 101 N. J. Eq. 664, 139 A. 33. 911, 114 C. C. A. 549, writ of certio- The New York courts have appar- rari denied in 225 U. S. 708, 56 ently made a distinction between L. ed. 1267, 32 S. Ct. 839 (plain- the case of one under disability as tiff's cause of action for an account- to the relief and that of one not ing inextricably bound up in the under disability as to the relief. proof that the business was that of Annotation: 54 A. L. R. 83. defrauding investors in mining 7. See the cases cited in this para- schemes); Miller v. Kraus (Cal. graph. App.) 155 P. 834 (plaintiff's deceit 8. Lyman v. Lyman, 90 Conn. 399, in inducing defendant to become his 406, 97 A. 312, L. R. A. 1916E, 643. partner, defense to suit for account- Sec. IV] MAXIM AS TO CLEAN HANDS. § 402f lief is sometimes granted after the transaction has been completed and closed, and nothing is asserted but title to the money which has arisen from the transaction (see § 403). 11 It is also held, in cases where the parties are not in pari delicto, and where there are elements of public policy more outraged by the conduct of one than of the other (see § 403), that equity will decree an accounting. 2 A cotenant who has not participated in the letting of the common property for immoral use will not be denied an ing); Warshow v. A. Elwood & Son, purchases with the funds of one and 83 Conn. 430, 76 A. 531 (agreement resold the property purchased, and between plaintiff and defendant to there remained in the hands of the defraud public in sale of misbranded other partner money and property goods); Fryer v. Harker, 142 Iowa, which were the result of such illegal 708, 121 N. W. 526, 23 L. R. A. business, the former may maintain (N. S.) 477; Central Trust & Safe a bill for an accounting of such Deposit Co. v. Respass, 112 Ky. 606, money and property against the other. 66 S. W. 421, 56 L. R. A. 479, 99 Brooks v. Martin, 2 Wall. (U. S.) 70, Am. St. Rep. 317; Conners v. Con- 17 L. ed. 732. But in Ioge v. ners Bros. Co. 110 Me. 428, 86 A. George, 27 Wyo. 423, 200 P. 96, 18 843 (stockholder's bill to compel di- A. L. R. 469, it was said, arguendo, rectors to account for use of cor- that the fact that the transaction, porate funds for corrupt purposes; under a contract invalid as against relief denied, since plaintiff knew of public policy, is fully completed, will the use and did not object); Hart v. not sustain an action for accounting Deitrich, 69 Neb. 685, 96 N. W. 144 and division of profits. (partner who absconds with firm 12. Berman v. Coakley, 243 Mass. funds cannot subsequently obtain 348, 137 N. E. 667, 26 A. L. R. 92, an accounting in equity); Vande- wherein it was held that equity has grift v. Vandegrift, 226 Pa. 254, jurisdiction of a suit by a client for 75 A. 365, 18 Ann. Cas. 404; Teoli v. accounting by his attorney of money Nardolillo, 23 R. I. 87, 49 A. 489 paid the attorney to settle a crimi- (accounting between partners en- nal prosecution which the attorney gaged in unlawful business). falsely represented to the client was Annotation: 23 L. R. A. (N. S.) about to be instituted against him. 478; 99 Am. St. Rep. 326; 18 Ann. Where money has been received Cas. 404. by an agent or joint owner, by force See I Am. Jur., Accounts and Ac- of a contract which was illegal, he counting, p. 302, § 54. cannot protect himself from account- 11. Daniel v. Daniel, 116 Wash. 82, ing for what was so received by 198 P. 728, 27 A. L. H. 177, stating, setting up the illegality of the trans- arguendo, that there is authority to action in which it was paid to him. the contrary. Kinsman v. Parkhurst, 18 How. Where two partners made illegal (U. S.) 289, 15 L. ed. 385. § 403 EQUITY JURISPRUDENCE. [Pt. 11, Ch. I accounting of his share of the rents and profits because the property was leased for such purposes.1 3 [To bar the right of the complainant to an accounting, it is also the rule that the illegal or immoral transaction in which he was engaged must affect the right which he demands (see § 399).14 The fabrication of evidence as to some items in an account will not bar relief as to other items or claims. 15 And it has been held that where the husband and wife own property as tenants by the entirety, the wife, even though she has deserted her husband without justifiable cause and is living in adultery, is entitled to an accounting of the rents collected by her husband from the common property.1-]

§ 403. Limitation in Cases of Fraud and Illegality; Par- ties not in Pari Delicto.-Upon the general doctrine stated in the preceding paragraphs concerning the effect of fraud and illegality upon the remedial rights of parties seeking the aid of equity, there are certain limitations, founded mainly upon motives of policy, which require a brief mention. Wherever a case falls within the limitation, and not within the general rule, the court may give relief against

13. Daniel v. Daniel, 116 Wash. 82, Conn. 101, 29 A. 303, 25 L. R. A. 198 P. 728, 27 A. L. R. 177. 90, 42 Am. St. Rep. 159. Annota- 14. In an action to hold the pro- tion: 4 A. L. R. 82. moter accountable to the company for 15. Barnes v. Barnes, 282 Ill. 593, secret profits realized on the sale 118 N. E. 1004, 4 A. L. R. 4. of the patents to the company, based Where an assignment of a fund to upon the concealment from the lat- a party to a fraudulent scheme was ter of the fact of an agreement be- fraudulent only as to a part of the tween the promoter and the patentee fund, of which an accounting was to divide the proceeds of the sale, sought, the maxim was held not to it was held that the illegality of the be applicable in respect of the part contract made by the company for which was not tainted with the the purchase of the patent was so fraud. Dempster v. Baxmyer, 231 unconnected with the matter in liti- Pa. 28, 79 A. 805. Annotation: 4 gation as not to bar the relief sought A. L. R. 100. in the action by the company under T6. Neubeck v. Neubeck, 94 N. J. the principle of "unclean hands." Eq. 167, 119 A. 26, 27 A. L. R. 172. Yale Gas Stove Co. v. Wilcox, 64 Sec. IV] MAXIM AS TO CLEAN HANDS. § 403 the improper transaction, or may even enforce the obligation arising from the tainted agreement, at the suit of one of the parties thereto. The first of these limitations may be given in the following general formula, and all the others may be regarded as merely particular deductions or corollaries from it. Assuming that a contract is fraudulent, or against public policy, or illegal, still, where the parties to it are not in pari delicto, and where public policy is considered as advanced by allowing either, or at least the most excusable of the two, to sue for relief, relief may be given to him, either against the transaction by setting it aside and restoring him to his original position, or even, 17 in some cases, by enforcing the contract, if executory.

17. This general limitation is thus miliar case of a borrower suing to stated by Knight Bruce, L. J., in have the usurious contract and secu- the great case of Reynell v. Sprye, rities surrendered up and canceled, 1 De Gex, M. & G. 660, 679: "But and where, in a composition pur- where the parties to a contract porting to be effeeted on terms of against public policy, or illegal, are equality by an insolvent with all his not in pari delicto (and they are not creditors, secret bargains are made always so), and where public policy with some of them by which they is considered as adi'anced by allow- are to obtain more favorable terms ing either, or at least the most ex- than the others, or where, in an as- cusable of the two, to sue for relief signment by an insolvent, a secret against the transaction, relief is arrangement is made with the as- given to him, as we know from vari- signee in order to secure benefits out ous authorities." of the property to the debtor or his The whole subject is discussed in family, such agreements, being in a most able and exhaustive manner, fraud of creditors, will be set aside the authorities are reviewed, and the by a court of equity, even at the contracts to which the rule applies suit of the insolvent himself. Such are described and classified by Sel- relief, however, is plainly not given den and Comstock, JJ., in Tracy v. out of consideration for the debtor, Talmage, 14 N. Y. 162, 67 Am. Dec. but solely for the purpose of pro- 132. and by some of the opinions in tecting the creditors: See Eastabrook the great case of Curtis v. Leavitt, v. Scott, 3 yes. 456; Cullingworth 15 N. Y. 9. v. Loyd, 2 Beav. 385, 390, note; Mc- Among the ordinary instances Neill v. Cahill, 2 Bligh, 228; Bel- where equity will set aside a fraudu- lamy v. Bellamy, 6 Fla. 62, 103, and lent or illegal transaction at the cases cited. suit of the party supposed to be The following are some particular comparatively innocent, wholly on illustrations: In Benyon v. Nettle- grounds of public policy, is the fa- fold, 3 Macn. & G. 94, a gentleman § 403 EQUITY JURISPRUDENCE. [Pt. II, Ch. I The second limitation I cannot better state than in the carefully considered language of Sir George Jessel: "You cannot ask the aid of a court of justice to carry out an illegal contract; but in cases where the contract is actually at an end, or is put an end to, the court will interfere to prevent those who have, under the illegal contract, obtained money belonging to other persons, on the representation that the contract was legal, from keeping that money. ...It does not follow that you cannot, in some cases, recover money paid over to third persons in pursuance of the contract; and it does not follow that you cannot, in other cases, obtain, even from the parties to the contract, moneys which they have become possessed of by representations that the contract was legal, and which belong had given a deed containing cove- Bowles, 13 Sim. 513, the plaintiff nants binding him to pay an annuity had given to Simpson, for the bene- to trustees for the benefit of a cer- fit of Bowles, his promissory notes, tain woman during her life. The which said defendants had obtained real consideration of this deed was from the plaintiff by threatening to continued furtive cohabitation with accuse him of having cheated Bowles the woman as his mistress; but an- at cards, and to sue him for the pen- other consideration was stated in alties for that offense under a cer- the deed, so that it was valid on its tain statute. It was held that the face. An action at law was brought plaintiff was entitled to a decree for against him to recover the unpaid the surrender of and cancellation of amount of the annuity. It was well the notes, even on the assumption settled that he would have a perfect that he had actually been guilty of defense at law if the real facts as the alleged cheating. to the consideration could be brought See also, the following cases: out in evidence. He then filed a bill U. S.-Daniels v. Benedict, 50 F. in equity for the purpose solely of 347 (divorce fraudulently obtained). obtaining a discovery from the other parties as to the real nature of the Ala.-Mobile & 0. R. Co. v. Dis- mukes, 94 Ala. 131, 10 So. 289, 17 consideration, but not asking any L. R. A. 113. relief against the instrument. Upon demurrer to the bill the court held Ariz.-Coleman v. Coleman, 48 that while a suit for relief could not Ariz. 337, 60 P. (2d) 441, 106 be maintained under these cireum- A. L. R. 1309 (where conveyance, stances, a suit for discovery alone in claimed to be fraudulent, was made aid of the defense at law was by the plaintiff, an ignorant man, to proper, and a discovery would be his well-educated son, at the son's compelled. solicitation). In Osbaldiston v. Simpson and Cal-Donnelly v. Rees, 141 Cal. 56, See. IV] MAXIM AS TO CLEAN HANDS. 403 to the persons who seek to recover them. ' ' s One of the parties to an illegal contract may therefore, in some cases, maintain a suit against a third person to recover money which the latter has received under the contract.19 In

74 P. 433 (conveyance obtained by 395; Ford v. Harrington, 16 N. Y. undue influence). 285; Conlon v. Hosier, 165 N. Y. S. Ill.-Herrick v. Lynch, 150 Ill. 283, 745, 774. 37 N. E. 221. B. I.-Foley v. Greene, 14 R. I. 618, 51 Am. Rep. 419. Iowa.-Williams v. Collins, 67 Iowa, 413, 25 N. W. 682; Davidson Tenn.-Bendet v. Ellis, 120 Tenn. v. Carter, 55 Iowa, 117, 7 N. W. 466. 277, 111 S. W. 795, 18 L. R. A. (N. S.) 114, 127 Am. St. Rep. 1000. Ky.-Harper v. Harper, 85 Ky. 160, 3 S. W. 5, 7 Am. St. Rep. 583, Utah.-Gorringe v. Reed, 23 Utah, and note; Anderson v. Merideth, 82 120, 63 P. 902, 90 Am. St. Rep. 692. Ky. 564. Vt.-Harrington v. Grant, 54 Vt. 236. Md.-Baker v. Howard County Hunt, 171 Md. 159, 188 A. 223, 107 Wash.-Melbye v. Melbye, 15 Wash. A. L. R. 1312 (applying the rule as 648, 47 P. 16. to right to injunctive relief against Wis.-Clemens v. Clemens, 28 Wis. the overrunning of the complainant's 637, 9 Am. Rep. 520. land by defendant's pack of fox- See Am. Law Inst., Restatement, hounds, although the complainant had Contracts, p. 1120, § 604. shot some of the hounds while they For cases where the parties were were molesting his poultry). not in pari delicto, see post, § 942, Mass.-Berman v. Coakley, 243 and notes. Mass. 348, 137 N. E. 667, 26 A. L. R. Equitable relief has been granted 92; Harris v. Carmody, 131 Mass. 51, to a plaintiff against unlawful inter- 41 Am. Rep. 188. ference with a contract existing between him and another, although, Miss.-O'Conner v. Ward, 60 Miss. in some minor respect, the plaintiff 1025. himself had violated provisions of Mo.-Holliway v. Holliway, 77 Mo. the contract. Husting Co. v. Coca 392. Cola Co. 205 Wis. 356, 237 N. W. 85, Neb.-Kleeman v. Peltzer, 17 Neb. 238 N. W. 626, 84 A. L. R. 22. 381, 22 N. W. 793. 18. Sykes v. Beadon, L. R. 11 Ch. N. J.-Arnold v. Searing, 73 N. J. Div. 170, 193, 197. Eq. 262, 67 A. 831. 19. Thus if a trust should be N. Y.-Adams v. Irving Nat. Bank, created whereby A was illegally to J16 N. Y. 606, 23 N. E. 7, 6 L. R. A. pay money to the trustee, B, for the 491, 15 Am. St. Rep. 447; Schoener benefit of C, the beneficiary could v. Lissauer, 107 N. Y. 111, 112, 13 not compel A to make the payment; N. E. 741; Boyd v. De ]a Montagnie, but if A should voluntarily pay over 73 N. Y. 498, 29 Am. Rep. 197; Eadie the money into the hands of B, the v. Slimmon, 26 N. Y. 9, 82 Am. Dec. beneficiary, C, could then maintain § 403 EQUITY JURISPRUDENCE. [Pt. II, Ch. I order, however, that such legal relations may arise inci- dentally and collaterally from an illegal contract, the illegality itself must not be of a nature intrinsically immoral or evil; it must be an illegality resulting from a suit and recover the money, and upon quite different circumstances. B could not set up the illegality of It has been regarded as a leading the original trust as a defense, and case, and has been followed by sub- thus retain the property. Thom- sequent decisions; but some of the son v. Thomson, 7 Ves. 470; Tenant reasoning of Lord Cottenham, in his v. Elliott, I Bos. & P. 3; Farmer v. opinion, is sharply criticised, and Russell, I Bos. & P. 296; Sharp v. shown to be unsound, by Sir George Taylor, 2 Phill. Ch. 801; Joy v. Jessel, in the case, already quoted, Campbell, 1 Schoales & L. 328, 339; of Sykes v. Beadon, L. R. 11 Ch. MeBlair v. Gibbs, 17 How. 232, 237, Div. 170, 195, 196. 15 L. ed. 132; Brooks v. Martin, 2 In McDonald v. Lund, 13 Wash. Wall. 70, 81, 17 L. ed. 732; Tracy 412, 43 P. 348, it was held, chiefly v. Talmage, 14 N. Y. 162, 67 Am. in reliance on these English cases, Dec. 132. that when plaintiff had been en- In Tenant v. Elliott, I Bos. & P. 3, gaged with defendant in an illegal there was an illegal contract be- gambling business, and after the tween the plaintiff and a third per- business had terminated left in de- son. The defendant received money fendant's hands the undivided prof- in pursuance of the contract from its of the business, under an agree- that third person to the use of the ment that he was entitled to a plaintiff. It was held that the certain portion thereof, the plaintiff plaintiff could recover such money might recover the sum thus left on from the defendant, although he deposit. It is plain that this deci- could not have enforced the con- sion is quite unsupported by the tract against the third person. English cases cited, in all of which In Farmer v. Russell, 1 Bos. & P. the fruits of the illegal transaction 296, there was an illegal contract were deposited with a third party. between the plaintiff and a third In Worthington v. Curtis, L. R. person, by which the plaintiff agreed 1 Ch. Div. 419, 423, 424, a father to deliver certain counterfeit coins took out a policy of life insurance to the third person for a stipulated in the name of and on the life of price. The defendants were carriers his son, in whose life he had no in- employed by the plaintiff to deliver surable interest, which policy was the articles and receive the price, in fact intended by the father for which they did. The plaintiff suing his own benefit alone. The policy, the carriers to recover the money in as between the company and the as- their hands, the defense of illegality sured, was illegal and void, under was set up, but overruled, and the certain statutes. The son died in- plaintiff was held entitled to main- testate, and the company volunta- tain the suit. Sharp v. Taylor, 2 rily paid the sum insured by the Phill. Ch. 801, was decided in ac- policy to his administrator. Held, cordance with the same rule, but that although neither the father nor Sec. IV] MAXIM AS TO CLEAN HANDS. § 403 motives of expediency or policy. In all the cases where a right of action arising collaterally from an illegal contract has been thus recognized and enforced, it will be found

the administrator of the son could be locked up forever. In the next have maintained any action on the place, it appears to me to be clear policy against the company on ac- that illegality resulting from pres- count of its illegality, yet the money sure, and illegality resulting from an having been voluntarily paid by the attempt to stifle a prosecution, do not company, as between the father and fall within that class of illegalities the estate of the son, the father was which induce the court to stay its entitled to such money, and could hand, but are of a class in which recover the same. the court has actively given its as- In Davies v. London etc. Ins. sistance in favor of the oppressed Co. L. R. 8 Ch. Div. 469, 477, the party, by directing the money to be manager of the company accused one repaid." He cites, as sustaining this of their agents, named Evans, of conclusion, the case of Williams v. embezzlement, and threatened to Bayley, L. R. 1 H. L. 200; and the prosecute him. In order to prevent case of Osbaldiston v. Simpson, 13 the threatened prosecution, the Sim. 513, the facts of which are plaintiff, in pursuance of an agree- stated ante, is also directly in point. ment to that effect with the man- See, also, Ex parte Pyke, L. R. 8 Ch. ager, deposited a sum of money with Div. 754, in which it was held that a third person, and now sues to re- money loaned to enable the borrower cover it back. The company de- to pay a bet illegal by statute could fended on the ground that the agree- be recovered back. ment was illegal, and that the court For another and different mode in would not aid a particeps criminis. which the general limitation described Held, that even if the agreement was in the text may operate, see Powell illegal, as compounding a felony, the v. Knowler, 2 Atk. 224. A and B court would interfere in a case where had made an agreement for the di- the money was actually in the hands vision and conveyance to each other of trustees, or where pressure had been of parts of certain land which they used to obtain it. The court said expected to recover. This contract (p. 477): "It is said that, assuming was champertous and illegal, and the contract to be illegal, Davies was could not, as a contract, be enforced. equally a party to that illegal con- But one of the parties, who had thus tract, and that therefore the court agreed to convey a portion of the will stay its hand, and then the maxim, land to the other, by a clause in his In pari delicto melior est conditio de- will directed the agreement to be per- fendentis, will prevail. But, in the formed, and created a trust for that first place, there is great difficulty in purpose. It was held that the trust applying that principle to a case thus created by the will should be where money has been placed in me- enforced against the trustee, although dio, and where the court must do the original contract was also thereby something with it, or else leave it to specifically performed. § 404 EQUITY JURISPRUDENCE. [Pt. 11, Cb. I that the agreement was illegal because opposed to some statute, or to so-called public policy." [The rule that relief may be granted in some situations where the parties are not in pcari delicto does not ordinarily apply where the actor in the fraud or wrong doing is the one who is seeking the aid of equity. Thus one who, with intent to defraud his creditors, placed the title to his property in the name of the defendant, may not obtain affirmative equitable relief in respect of such property on the ground that the defendant did not participate in his fraudulent design. 1 However, where public policy is considered as advanced by allowing either party to sue for relief against the transaction, then relief is given to him (see § 941).2]

§ 404. Conclusion.-The special rules contained in the foregoing paragraphs will serve to illustrate the meaning and operation of the principle, He who comes into a court of equity must come with clean hands; but they by no means exhaust its scope and effect. It is not alone fraud or illegality which will prevent a suitor from entering a court of equity; any really unconscientious conduct, connected with the controversy to which he is a party, will repel him from the forum whose very foundation is good

20. For cases illustrating the rule Y. S. 25; Boothe v. Bassett, 82 which sometimes permits a party to Wash. 95, 143 P. 449, 7 A. L. R. an agreement prohibited by statute, 145. or ultra vires, and not involving a Annotation: 7 A. L. R. 150. malum in se, to recover money or 2. Missouri, K. & T. Trust Co. v. property in the hands of the other Krumseig, 77 F. 32, 23 C. C. A. 1, party, see post, § 942; Bond v. Mont- 40 U. S. App. 620 (usurious con- gomery, 56 Ark. 563, 20 S. W. 525, 35 tract); Cox v. Donnelly, 34 Ark. Am. St. Rep. 119, citing this para- 762 (contract in violation of the graph of the text (statute imposed homestead act); Duval v. Wellman, penalty on one party only, who was 124 N. Y. 156, 158, 26 N. E. 343 the party defendant in the suit). (marriage brokerage contract); Bas- 1. Allstead v. Launmeister, 16 Cal. ket v. Moss, 115 N. C. 448, 48 L. App. 59, 116 P. 296; O'Brien v. R. A. 842, 20 S. E. 733, 44 Am. St. O'Brien, 188 App. Div. 309, 177 N. Rep. 463. See. IV] MAXIM] AS TO CLEAN HANDS. § 404 conscience.3 [A court of equity acts only when and as conscience commands; and, if the conduct of the plaintiff be offensive to the dictates of natural justice, then, whatever may be the rights he possesses, and whatever use he may make of them in a court of law, he will be held remediless in a court of equity.4 Misconduct which will bar relief in a court of equity need not necessarily be of such nature as to be punishable as a crime or to constitute the basis of legal action. Under this maxim, any willful act in regard to the matter in litigation, which would be condemned and pronounced wrongful by honest and fair- minded men, will be sufficient to make the hands of the applicant unclean. 5]

3. The text is quoted in Brotz- Barnum, 177 Mo. App. 68, 164 S. W. man's Appeal, 119 Pa. 645, 13 A. 129; Pendleton v. Gondolf, 85 N. J. 483; in Weegham v. Killefer, 215 Eq. 308, 96 A. 47. F. 168; affirmed, 215 F. 289, 131 Annotation: 4 A. L. Ii. 62. C. C. A. 558, L. R. A. 1915A, 820; 4. Deweese v. Reinhard, 165 U. S. in Murray v. Barnes, 146 Ala. 688, 386, 390, 41 L. ed. 757, 758, 17 S. Ct. 40 So. 348; in Anders v. Sandlin, 340, 341; David Adler & Sons Co. 191 Ala. 158, 67 So. 684; in Vulcan v. Maglio, 200 Wis. 153, 228 N. W. Detinning Co. v. American Can Co. 123, 66 A. L. R. 1085. 70 N. J. Eq. 588, 62 A. 881; in Bear- 5. Cornellier v. Haverhill Shoe man v. Dux Oil & Gas Co. 64 Okla. Mfrs' Assn. 221 Mass. 554, 561, 109 147, 166 P. 199; in Sanders v. Cau- N. E. 543, 645, L. R. A. 19160, 218, ley, 52 Tex. Civ. App. 261, 113 S. W. quoting Weegham v. Killefer (D. C.) 560; and cited in Baird v. Howison, 215 F. 168, 171. 154 Ala. 359, 45 So. 668; Barnum v.