KYNE v. KYNE (1940)

The plaintiff caused a writ of execution to be levied on moneys consisting of currency and coins in the possession of the defendant Tom Kyne. Three different claimants, Wild, Wilson and Eby, separately filed three third-party claims. Code Civ.Proc. sec. 689. Later the plaintiff filed a petition asking that said claims be heard and determined. Notice was duly given and the petition was heard before the trial court sitting without a jury. After the hearing the court caused a judgment to be entered in favor of each of said third-party claimants for the amount claimed by each, less a commission of five per cent, and from that judgment the plaintiff has appealed.

The facts pertinent to each claim are quite similar. They differ only as to dates, amounts, majorities, and the names of the claimants. The defendant for many years has maintained, and now maintains, a fixed place of business at No. 1 Opal street, San Francisco. He accepts, as a commissioner, bets on the happening of different events. To the better he issues a ticket showing the nature of the bet and accepts the money wagered by the intended better. He retains a coupon showing the same facts. There was testimony that he attempts to so conduct the business that other betters take the opposite side and deposit funds and receive tickets showing the facts. There was testimony that the defendant, ordinarily, did not put up his own funds on either side, but the record does not show that he never did. When the event has transpired the defendant, under the practice followed by him, deducts a commission of five per cent from each deposit so received by him and pays according to the terms of the betting agreement, to the winner of the bet so made at defendant's place of business.

A general election was held in California on Tuesday, November 8, 1938. The democratic nominee for governor was Culbert Olson and the democratic nominee for United States senator was Sheridan Downey. Prior to November 8 (midnight), 1938, the claimant, Julius Wild, placed with the defendant five bets in the total sum of $1,500, and deposited in the manner above stated $1,500. During the same period, and in the same manner, the claimant, Earl Eby, made four bets in the total sum of $790, and the claimant, Robert M. Wilson, made seven bets in the total sum of $1,650. Each of said bets was based on one of said candidates and on the guess that such candidate would win. But some bets were based on guesses of the majorities of the respective candidates. As the event transpired the claimants won each bet. Considering all of the terms of the bets the claimant Wild won $1,500, the claimant Eby won $790 and the claimant Wilson won $1,465. No claimant at any time attempted to disaffirm, but each sought to enforce the said illegal agreement. In framing his claim the claimant Wild asserted title to $3,000, Eby asserted title to $1,580, and the claimant Wilson asserted title to $3,115. The judgment awarded to each the amount so claimed less five per cent due the defendant under the betting agreement.

The defendant testified that when above-mentioned deposits were made he placed them in a valise and so kept them until the election was over. On the morning of November 10, 1938, he took the valise, which then contained about $10,000, to his place of business. Later he paid some small bets. Still later, at about 10:30 a.m., the sheriff came into defendant's office, levied the above-mentioned writ, and took from said moneys $7,702.87. Defendant testified that down to that time he had not deducted any of his commissions of five per cent. There was no evidence any one of said deposits was kept separate, was marked, or was identified in any other manner than as set forth above.

The plaintiff cites sections 60, 61, 330 and 337a of the Penal Code and contends the above agreements were utterly void and may not be the basis of an action at law or in equity. That contention is the settled law of California. Matthews v. Lopus, 24 Cal.App. 63, 140 P. 306; Schenck v. Hirshfeld, 22 Cal.App. 709, 136 P. 725. The rule as to the test is also well settled. In Berka v. Woodward, 125 Cal. 119, at page 127, 57 P. 777, at page 779, 45 L.R.A. 420, 73 Am.St.Rep. 31, the court quoted with approval as follows: “The test * whether a demand connected with an illegal transaction is capable of being enforced at law, is whether the plaintiff requires the aid of the illegal transaction to establish his case. If the plaintiff cannot open his case without showing that he has broken the law, the court will not assist him, whatever his claim in justice may be upon the defendant.” The claimants reply that they concede the foregoing rules without reservation. However, they assert that in this proceeding the claim of one of the erring parties against the other erring party is not involved but that the claimants are challenging the rights of this plaintiff, a third party, and that the foregoing authorities and the cases there cited are not applicable. They stress the fact that they are making no claim against any better nor against Tom Kyne. They assert they are making their claim against this plaintiff and the sheriff acting as her agent. They particularly contend that whatever might have occurred in the past, neither this plaintiff nor the sheriff were parties to any illegal transaction. Where, as here, it is claimed that a person has entered into an illegal transaction, there is no case in this state that purports to state the law as to the rights of such person to recover and enforce his claim against a stranger. In Kearney v. Webb, 278 Ill. 17, 115 N.E. 844, at page 847, 3 A.L.R. 1631, at page 1635, the supreme court of Illinois said: “No court of law or equity has ever denied a recovery to a party simply because he has been a violator of the law, if he can show his right to such recovery without reference to any illegal contract, and without causing the court to recognize or sanction any illegal conduct on his part.” In the case of Matta v. Katsoulas, 192 Wis. 212, 212 N.W. 261, at page 262, 50 A.L.R. 291, at page 292, the supreme court of Wisconsin said: “The rule that the law will not enforce an illegal contract has application only as between the immediate parties to the contract.” To that case is appended an extended note. Numerous cases are cited by the editor supporting the text of the decision. The case entitled Kearney v. Webb, supra, decided by the supreme court of Illinois, is particularly in point as it involved the following facts: Thomas Kearney and Henry Becker were the proprietors of a gambling hall in St. Louis. They entrusted to John Snyder and John McGuire $1,536.75 to be used in conducting a crap game. The game was in full progress when the defendant, as the state's attorney, together with police officers, appeared, raided the gambling room, and took possession of the paraphernalia therein together with all of said moneys. After all of the criminal actions had been wholly disposed of, the defendant, as the state's attorney, retained possession of and refused to surrender the moneys which he had taken. As proprietors of the house and owners of the moneys, Kearney and Becker commenced an action for moneys had and received. The trial court rendered a judgment in favor of the plaintiffs. The district court reversed the judgment but on certiorari the supreme court reversed the district court and affirmed the judgment rendered by the trial court. On the authority of the foregoing cases it is clear the claimants had a cause of action against the plaintiff for moneys had and received. But that right is limited to the amount of the stake or deposit. Restatement of the Law, Contracts, sec. 524.

However, the plaintiff earnestly suggests that this is an action to determine the rights of third-party claimants and that they have not identified their property. We think the point may not be sustained under the facts introduced in evidence. Each claimant testified he took so much of his money and deposited it with Kyne. The latter testified he received the money, put it in a valise, so retained it, and had it in his possession in the valise when the sheriff made his levy. There is no evidence to the contrary. In support of the judgment we must assume the trial court so found the fact. That evidence clearly established the identity of a fund. Lathrop v. Bampton, 31 Cal. 17, 89 Am.Dec. 141. The fact that the sheriff did not take the entire fund did not preclude the claimants from asserting their rights against that portion of the fund taken by the sheriff. Under similar facts it was held proper for a court of equity to take jurisdiction of the entire fund and administer it. Dauler et al. v. Hartley, 178 Pa. 23, 35 A. 857.

In presenting their claims the claimants inserted certain irrelevant facts. However, it is not even claimed that the written claims did not set forth facts showing the amount, title, and possession of the deposit which each of the claimants put up. Apparently they misconceived their rights but it is the settled law of this state that although a party misconceives the relief to which he is entitled, if, within the scope of his proof, he establishes any cause of action he should not be sent out of court without such relief as he has shown he was entitled to receive. Hillyer v. Eggers, 32 Cal.App. 764, 766, 164 P. 27. Therefore, the surplusage contained in the written claims may be disregarded. In presenting their claims each claimant was in effect presenting a cause of action for specific moneys had and received. As shown above they identified the fund and were entitled to carve out of it the deposit made by each. Newport v. Hatton, 195 Cal. 132, 150, 231 P. 987. They were also bound to prove two things, to-wit: the right of each to the money and the defendant's possession. In Merchants' Bank of Macon v. Rawls, 7 Ga. 191, 50 Am.Dec. 394, on page 395, the supreme court of Georgia said: “The plaintiff in this action relied upon his counts for money had and received. We view it as an action brought by the bank for money claimed to belong to it, ex aequo et bono, in the hands of the defendant. By the proofs it seems that Mr. Rawls, whilst he was president of the bank, sold two judgments belonging to the bank to Joseph Bond, and received the money. This suit goes for that money. The principles upon which the equitable action for money had and received depends are settled. It lies in all cases for the plaintiff's money in the hands of the defendant, which in equity and good conscience he has no right to retain, and it is necessary for the plaintiff, generally, to prove only two things, to wit: his right to the money, and the defendant's possession. In this case the court below held, that he must go further, and prove that the defendant had not accounted for it. That decision gave rise to the first exception.” (Italics ours.) To the general proposition that the claimant need prove only his title and the defendant's possession, the court cited many authorities. True, in the instant case much evidence was introduced of and concerning the transactions between each claimant, Tom Kyne, and others. However, that evidence was wholly immaterial. Kearney v. Webb, supra. As we have shown above, in order to prove their claims the claimants were not bound to introduce any evidence whatever concerning the bets and the immaterial evidence so introduced may be wholly disregarded. Each proved his title and it is not even claimed that the plaintiff had any title other than by virtue of the writ levied by the sheriff. Tom Kyne asserted no title whatever.

The trial court allowed each claim as presented deducting therefrom five per cent. The amount was ascertained by taking into consideration the illegal betting agreement. As shown above evidence of that agreement was improperly admitted. The judgment should have been for the amount of the stake deposited by each claimant—no more, no less.

The judgment is reversed.

I concur in the reversal of the judgment of the trial court but I cannot agree with the portions of the majority opinion which indicate that the third-party claimants were entitled to some relief in this proceeding. I therefore dissent from said portions of the majority opinion as I am of the view that the judgment should be reversed with directions to the trial court to enter judgment denying any relief to the third-party claimants.

This was a proceeding “for the purpose of determining title to the property in question”. Code Civ.Proc. sec. 689. The property in question was the money upon which the sheriff had levied. I find nothing in the record which would warrant a judgment determining that the third-party claimants had title to said money or any part thereof.

Said section 689 provides that “for the purpose of determining title, the third party claimant shall have the burden of the proof”. The money in question was in the possession of the defendant Kyne at the time of levy and it presumptively belonged to him. Code Civ.Proc. sec. 1963, subds. 11 and 12. The third-party claimants could not prove title in themselves by a mere showing that they had previously paid or delivered certain sums to defendant Kyne. Code Civ.Proc. sec. 1963, subds. 7 and 8. It was therefore necessary under the circumstances for the third-party claimants to prove the nature of their transactions with defendant Kyne in their attempt to show any interest in the money or any claim whatever against defendant Kyne. Such proof was not only material but it was absolutely indispensable. The claimants made such proof and they contend that it showed that defendant Kyne was a trustee, bailee or stakeholder in said transactions, that defendant Kyne had no title to the money and that they were therefore entitled to judgment determining that title was in them. I believe there are two complete answers to this contention.

First, it appears from the evidence presented by the claimants themselves that defendant Kyne was not a trustee, bailee or stakeholder in said transactions but was a principal in all of said transactions. Each transaction of each individual claimant was had solely with defendant Kyne and in each such transaction the claimant “bought” a ticket evidencing his bet with defendant Kyne. The testimony was that the claimant “bet him (Kyne) $1,500” or some other amount. In speaking of the transactions defendant Kyne testified that he would “sell” the tickets. No bet of any claimant was made contingent upon the ability of defendant Kyne to obtain any other bet but each transaction constituted a firm transaction between the defendant Kyne and the individual claimant at the time of the delivery of the ticket and the payment of the purchase price, the defendant Kyne agreeing to pay the amount specified on the ticket in the event of the happening of the specified contingency. The fact that defendant Kyne may have ordinarily endeavored to “balance” the bets in order that he would incur no risk and in order that he would be certain to profit to the extent of at least five per cent of the total amount bet did not change the nature of said transactions. Each bet made was essentially a bet made by the individual claimant with defendant Kyne and title to the money, paid by the claimant to defendant Kyne as the purchase price of his ticket, passed to defendant Kyne at the time of the purchase of the ticket. The mere fact that the defendant Kyne, who was the judgment debtor in the main action here, saw fit to keep his money in a valise rather than to deposit it in his bank account cannot be accorded any significance. Under the testimony said claimants were at most mere creditors of defendant Kyne by reason of their transactions with defendant Kyne and they were not entitled, as such creditors, to any relief in this proceeding to determine title.

Second, even if it be assumed, contrary to the fact, that the evidence concerning said transactions tended to show that it was the intention of the parties that defendant Kyne should be a mere trustee, bailee or stakeholder, I nevertheless believe that the third-party claimants should be denied any relief in the instant case. In making their essential proof regarding their transactions with defendant Kyne, they were compelled to disclose and did disclose that both they and defendant Kyne had committed criminal offenses in entering into said transactions. Pen.Code, secs. 60, 61 and 337a. Under these circumstances, it appears settled that they were not entitled to any relief. Matthews v. Lopus, 24 Cal.App. 63, 140 P. 306; Schenck v. Hirshfeld, 22 Cal.App. 709, 136 P. 725; see, also, Haruko Takeuchi v. Schmuck, 206 Cal. 782, 276 P. 345; Conte v. Busby, 115 Cal.App. 732, 2 P.2d 458; Chateau v. Singla, 114 Cal. 91, 45 P. 1015; Berka v. Woodward, 125 Cal. 119, 57 P.2d 777, 45 L.R.A. 420, 73 Am.St.Rep. 31; Smith v. California Thorn Cordage Co., 129 Cal.App. 93, 18 P.2d 393; Butler v. Agnew, 9 Cal.App. 327, 99 P. 395; Schur v. Johnson, 2 Cal.App.2d 680, 38 P.2d 844; Asher v. Johnson, 26 Cal.App.2d 403, 79 P.2d 457.

As was said in Matthews v. Lopus, supra, 24 Cal.App. at page 68, 140 P. at page 308, “Necessarily, under the circumstances, the plaintiff, in attempting to state a cause of action, was not only required to plead his own turpitude in the transaction, but was compelled to admit that the transaction itself constituted a crime under the laws of this state. As has heretofore been stated, the law, as administered either in courts of law or of equity, will not, obviously, interpose to grant relief to the parties to such a transaction from any of the effects thereof, but will leave them where it finds them”. And in Schenck v. Hirshfeld, supra, 22 Cal.App. at page 711, 136 P. at page 726, the court said, “So in this case, when plaintiffs deposited the $500 with defendant, they committed a misdemeanor; defendant likewise committed a misdemeanor in accepting the money on the conditions stated. Shall the courts then lend their aid to enable persons who have committed a public offense to recover the property which was used in the perpetration thereof? It would seem that the plaintiffs, upon their own statement of the facts, have shown themselves not to be entitled to seek any aid in a court of justice.” The authorities above cited do not confine the application of the foregoing rules to controversies involving only the parties to the illegal transactions as contended by the claimants. See Schur v. Johnson, supra; Asher v. Johnson, supra; Conte v. Busby, supra.

As the controlling principles of law appear to be well settled in this jurisdiction, authorities from other jurisdictions cannot be helpful to the third-party claimants in the instant case. It may be stated, however, that in Kearney v. Webb, 278 Ill. 17, 115 N.E. 844, 3 A.L.R. 1631, which is strongly relied upon by the claimants, the money was taken from the possession of the gambling hall proprietors and it presumptively belonged to them. They were not required to prove any prior illegal transactions in order to establish their claim against the officials who had raided their establishment and had taken the money from their possession.

For the foregoing reasons, I believe the judgment should be reversed with the directions above stated.

STURTEVANT, Justice.

I concur: NOURSE, P.J.