John G. Powell & Co. v. Inman, 52 N.C. 28, 7 Jones 28 (1859)

Dec. 1859 · Supreme Court of North Carolina

52 N.C. 28, 7 Jones 28

JOHN G. POWELL & Co. v. ROBERT INMAN.

A note given to one in failing circumstances, in order to cheat his creditors, by giving to the maker a plausible pretext .for claiming his property, is void in the hands of one to whom it was endorsed for collection, after becoming clue..

Action of debt on a sealed note, tried before ITeatii, J., at the Spring Term, 1859, of Columbus county.

The defendant pleaded “ general issue, no assignment, and illegal consideration.”

The note in question,.bore date 29th of January, 1857, and was for the payment of $370, on the 1st of March ensuing. It was endorsed by Jesse Inman, the payee, to the plaintiffs, on the 18th of March, 1857, for the purpose of enabling them to collect it, as agents.

The defendant offered to prove that Jesse Inman was pecuniarily embarrassed ; that executions were in the hands of officers; that it was agreed between the maker of the note and the payee, that the former should set up a fraudulent claim to.all the personal property of the payee, and for the purpose of giving color to the transaction, the note in question was made; that it was never intended to be paid, but was to be given up by the said Jesse, who was to remain in possession of the said personal property. The plaintiffs’ counsel objected to the reception of this testimony, and it was ruled out by the Court. Defendant’s counsel excepted.

Yerdict and judgment for the plaintiffs. Appeal by the defendant.

Strange, for the plaintiffs.

Leiteh, for the defendant.

Battle, J.

The endorsement by the payee of the note, sued on after it was due, for the purpose of enabling the plaintiffs to collect it ^s his agents, did not. confer upon them any greater right, as against the maker, than the payee himself had. If, as against the payee, the note was liable to the objection of having been given upon an illegal consideration, he certainly could not be allowed to obviate the difficulty by assigning it to an agent to collect for him. The law, denouncing a contract founded in fraud, would be untrue to itself, if it allowed itself to be defeated by so simple and obvious a contrivance.

~We must, therefore, treat the present suit as if it were brought in the name of the payee, Jesse Inman, instead of his endorsees and agents, the plaintiffs. So treating it, we are clearly of opinion, that the testimony, which was offered for the purpose of showing that the note was executed with the fraudulent intent to cheat the creditors of the payee, by giving to the maker a plausible pretext for claiming all his property, ought to have been received, because, if true, it furnished a complete defense against the action.

No principle is better established than that a contract, the consideration of which is the doing of an act, either malum in se or malum prohibitum is void, and no action at law can be sustained upon it; Thorpe v. Farmer, 4 Dev. and Bat. Rep. 122 ; Blythe v. Lovingood, 2 Ire. Rep. 20 ; Ramsay v. Woodard, 3 Jones’ Rep. 508; Ingram v. Ingram, 4 Jones’ Rep. 188. Here, the consideration upon which the bond was given, was manifestly illegal, its object being the purpose of hindering and defeating the creditors of the payee, and out of such an illegal contract, no action can accrue to him. Ex dolo malo nonoritior actio. It can hardly be necessary to remark, that the fact of the note’s being under seal, cannot prevent the legality of the consideration, upon which it was founded, from being enquired into. A seal may prevent the enquiry, whether the instrument was given without any consideration, but not whether the consideration was contrary to the policy of the law, and, therefore, illegal and void. See Garner v. Qualls, 4 Jones’ Rep. 223. Our opinion being that there was error in rejecting the testimony to which we have adverted, the judgment in the Court below' must be reversed, and a venire de novo awarded.

Per Curiam,

Judgment reversed. ■