The Nonpartisan Leader Newspaper, September 14, 1916, Page 11

-L FRAUDULENT - “get-rich- quick” game guaranteed to keep crooks from losing anything if they ‘are caught at it and to net them good profits if they are not caught —what pirate would want anything bet- . _ter? ‘You make good money easily-if ' you are not caught, and if you are caught - . you don’t lose anything. - That ought to . be a good, safe, profitable game for un- . % acmpulous persons. is open in North Dakota a little _ game of this kind, and it has been made * perfectly safe for anybody dishonest * enough to play it, under a decision of - the supreme court. The North Dakota supreme court has held that when persons conspire at a tax sale to eliminate competition by bidders, _ those in.conspiracy can not be made ‘to " ‘suffer financially by the loss of thair . “investment.” ‘They ean ‘get their " money back. In making this ruling the supreme court has acted exactly oppo- site to courts in other states, which have - held that persons who engage in frauds shall lose their money. Other states have _ made it unprofitable. to be caught at frauds -in tax certificate deals, while North Dakota, through the decision men- tioned, has made it easy for these - caught. They get their money back if caught ‘and if not caught they pocket - the proceeds. . ADAMSON SHOWS HOW | - COURT HELPS SWINDLERS J. C. Adamson of the Devils Lake bar, ..who was eliminated as a candidate for : the supreme court in the recent pri- maries, has analyzed this’ decision of the North Dakota court for the Leader. The decision was written by Judge Fisk and concurred in by Judges Spaulding, _ Burke, Goss and Bruce. Three of these judges, Fisk, Spaulding and Burke; are xup for election this fall, opposed by the three candidates mdorsed by the Non- parhsan league, Robinson, Birdzell and Grace. : Attorney Adamson’s analysis of the decision and its effect is gien by him in the following article: “ INVESTMENTS IN EQUITY By J. C. Adamson ' The term “investment” has so . fre- quently and clearly been defined by the ~ courts of last resort of the various -. states of the Union that it would seem ms though a court would have no diffi- . culty, at first glance, in determining _what is, or is not, an investment. The word “invest” has been judicially ‘, defined as “to surround with, or place in, as property in business, to place so that it will be safe and yield a profit It . iseommonlyunderstoodasgumgmoney- 3 !orsomeothetproperty Drake v. Crane, 137 Mo. 85. 29 S. W. 990; 27 L. R. A. 653. It implies the outlay of money in some 'pemanmfomsoastoyieldanin- .. come. Deso'byv.Tete.31La.Ann.809 83 Am. Rep. 232. “Invest” means putting out money on j interest either by way of loan or pur- . chase of income producing property. Shaman v. , 7 Colo. App. L. Umv.DoM.SSN.J.Eq.lSG. . -Duncan v. Ma.ryhnn Sav. Ins. 10 + Gill. 299, Shoemaker v. Smxfl:, 3731mi.123. N. E. Mt. Life Ins. Co. v. Phillips, A a N. Dakota Supreme Court Has Done It; Adamson Scores Extraordinary Decision cover assuuss sirustios J. C. A.DAMSON A\ issumeofataxdeedandforthecan» eellatwnofataxoerhfieate,allegmgm his complaint that the certificate was void because secured by the defendant under™ the following circumstances: that at the tax sale at which the certificate in question was issued the defendant andothets entered into' an agreement \ sustained the demurrer on the gmund that absence of a pleaded tender. was fatal and the complaint therefore did not state a cause for action. The plaintiff thereupon appealed to the supreme court from the order sustaining the demurrer “to the complaint. . The supreme court, in an' opinion by - The supreme court has made it not only safe but profitable for tax title sharks to get together - and rig up prices to suif themselves. If they are caught at it they can have their money back. It’s anly an “investment” says our supreme court in a decision written by Fisk and concurred in by Spaulding, Burke, Goss and Bruce. Courts of other states have taken just the opposite position. These other ¢ourts-believe it the duty of the courts to aid in making swindling unprofitable. remium on Fraud it) the complaint did not state a cause of action. / NOT SHOWN IN CASE It will be noticed that the court assumes that the sole object of defend- _ant in securing the tax certificates in the’ manner in which he did was to secure to himself an excessive rate of interest, But was it? Where is there. any ground for such an assumption in the record before the court? None whatever. The court might, if inclined to go outside of the record and indulge in presumptions of that character, assume that the object of the defendant in securing the certifi- cate was to secure the property, as defendant well knew that the rate of interest carried by the certificate would . shortly equal the value of the property. In view of the position taken by the North Dakota sapreme court in the case of N—. vs. M—.,, supra, it will interest the student of equity to examine the case of Nichols v. Russell, (Mo.) 123 S. W. 1023, a case where the facts, pleadings and position of defendant at the argu- ment were identical with that of defend- ant in the North Dakota case. MISSOURI COURT HELD EXACTLY THE OPPOSITE The Missouri court, holding that the sale was void because zll competitive bidding was eliminated by agreement of the bidders at the sale, and answering the argument of defendant that the com- . plaint failed to state a cause of action because of lack of pleaded tender of the amotnt of the defendant’s bid zt the sale, and that the plaintiff, being in a court of equity, must do equity by making and pleading such tender, says: “He (the purchaser) .invokes against’ his adversary the maxim that ‘he who seeks equity. must do equity,” but is for- getful of the cther maxim that ‘he who has committed an inequity shall not have equity’ and ‘he who comes into cquity must come with clean hznds.” . Defend- ant comes not with clean hands, not as the innocent victim of a mere mistake, “but as one who sought to wrong his neighbor. There is no equity for him. It ‘'would be a mockery of Justice to say that a man when checkmated in his attempt to perpetuate a fravd still may recover from the ob,)ect of kis ‘unlawfal aggression his outlay in the furtherance of that attempt.” A careful comparison of the two cases frem Missouri and North Dakota with facts, pleadings and argument at the bar of he court identical, and the mauner in which each court applied the maxims of equity should prove both interesting and instructive to the student of equity, familiar with its maxims and the true manner of their application. “ATTEMPTED FRAUD” SAYS MISSOURI COURT OF ACT That which the North Dakota supreme court ferms an investment the Missouri court brands as money expended in ¢ furtherance of an attempted = frand, That which the North Dakota. court says is equity the Missouri court says is not equity; that it would be a mockery, of justice for a court to compel a hendtm Itlsia.milmrlawt.hatltxsonly'bm all proceedings are regulat and in strict 141 Mass. -535. ‘ - - . conformity to law that the tax sale pure State v. Bartley, (Neb.) §9. N."W. to eliminate all competitive bidding, Judge Fisk, concurred in” by Chief chaser acquires the lien of the state: : 907. that such sagreement was carried out and Justice Spaulding and Associate Justices Where the transaction is tainted with The court in State’ v. Bartley supra has defined investment-as follows: “In- vestment in common speech means the loaning or. putiing out of money at in- .. terest s0 as to produce an income. It inmplies the contractual telahnn of bor- rower and lendet.” o Now then, is money expended in fur- therance of an attempted fravd an in- vestment? At first glance the average lawyer would say “no,” and that xo court, either law or equity, would so hold. But let us examine the holding of the North Dakota supreme court in the case of N . V. M———., 185 N. W. 663, where we meet this identical ques- . . tion. The facts in that case are, brief- ly, as follows: NO COMPETITIVE: BmDEG ; ' AT SALE FOR TAXES : ‘: v The pla.mhfi broughb the action in his . capacity as admzmstrator to restrain the there was no competitive bidding at the sale; that the purpose-of sach agreement was that each bidder might secure his proportionate share of the certificates at the maximum Trate of interest, 24 per cent; thnt this was a fmuduponflwplam ‘. To which ° eomplamt the defendant interposed a demurrer, thereby admit- ting - the - allegations of the complaint, and on the argument of the demurrer the defendant took the position that the com- plaint failed to state a cause of action because the plaintiff did not tender back to the defendant the amouinit of defend- ant’s bid at the sale and plead such " tender;’ that the plaintiff being in a courtofequitymnst&;eqmtybytmd— ering to defendant the amount of his bxdatthehxule,whnhheteunedhis investment. * The dmtnct oourt nfter argument, Burke, Goss and Bruce, says: “This is strictly an equitable action to be deter- mined on equitable principles * * * *, “He who, seeks equity must do “equity * & ¢ 8 stifle competitive bidding had for its sole - -object the obtaining of =n excessive rate “of interest * * * & Defendant should not be permitted to profit in the least throngh his wrongful act, hence he should not be permitted to recover investment * * * * Tt is the plaintiff andnotfixeddendantwhoxsmvuhng the aid of equity in this case.” "-So the uppellate court” affirmed ‘the judgment appealed from, holding there- bythtmephmhflhadftfledand ‘refused” to tender 'to defendant the amount ‘of defendant’s bid at’ the tax sale (lns “mvestment, as the court terms The unlawfal igreemgnt to - fraud the lien does not survive the fraud, hence the holder of the certificate acquires no rights in the property which a court of law can enforce, much less a court - of - equity. This principle: was ignored in N—. vs. M— The writer is mclmed to ‘think that where “A” promotes a mock auction sale against “B” (ashxsalesmdesignmd where competitive bidding is elimin< ated by agreement of the - -prospective bnidem) and attempts to use it as = wehicle in which to transport the lien uf the state to himself, that “A” will find himself engaged in a hazardous umder- takmgandthath:sw_hxclezshableto develop both engine and tire troubles along the route if the facts are discov- ered by “B” in the various states of the union, aside from North Dakota. The court’s holdmg in . the case of (Contmued on page 17) JEEEIN P—— q(xah‘».m*&/‘yw 44‘ e S A A 4 b : i ] é