## Facts

- The Higginses sold a tract to Brown and Gilman and, as part of that transaction, granted them a contractual right of first refusal to buy an adjoining tract if the Higginses later chose to sell it.
- In the same set of arrangements, real estate agent Lienna McCulley obtained a contract right to handle any sale of the adjoining tract if the contracting or sale occurred before June 1, 1971, entitling her to a commission.
- In April 1971, the Higginses agreed to sell the adjoining tract to Philip and Barbara Green for $30,000; the Greens paid $100.
- To avoid McCulley’s commission, the parties intentionally dated the contract June 2, 1971, rather than the actual date of contracting.
- After execution, the parties addressed Brown and Gilman’s right of first refusal by preparing and sending a sham contract reflecting a $40,000 price between the Higginses and a Green-controlled corporation, coupled with notice to Brown and Gilman to exercise or waive their right at that inflated price.
- Brown and Gilman declined to purchase on the sham terms.
- The Higginses then refused to convey to the Greens; the Greens tendered the remaining $29,900 and sued for specific performance.
- The Higginses counterclaimed seeking to quiet title and obtain damages.
- The district court found both sides willfully participated in the fraudulent scheme targeting McCulley’s commission rights and Brown and Gilman’s contractual right, denied equitable relief to both, and dismissed both the petition and counterclaim.

## Issues

1. Whether the clean hands doctrine barred the Greens from obtaining specific performance where the contract and related conduct involved intentional deception directed at third parties.
2. Whether the clean hands doctrine also barred the Higginses from equitable relief on their counterclaim to quiet title and related remedies based on their participation in the same misconduct.
3. Whether the district court abused its discretion by denying equitable relief to both parties and dismissing both claims.

## Decision

- The Kansas Supreme Court affirmed.
- The court held the Greens were barred from specific performance because their misconduct was willful and directly connected to the transaction for which equitable relief was sought.
- The court held the Higginses were likewise barred from equitable relief on their counterclaim because they were active participants in the same fraudulent conduct.
- The district court did not abuse its discretion in denying relief to both sides and leaving the parties as it found them.

## Legal Principles

- A court of equity may deny relief to a party who seeks equitable remedies but has engaged in inequitable conduct directly related to the matter in litigation.
- The clean hands doctrine protects the integrity of the court and may apply even when the misconduct is directed at third persons, so long as it bears a direct relation to the subject of the suit and affects the parties’ equitable relations.
- Application of the doctrine is discretionary and depends on the gravity of the misconduct and its connection to the controversy; deliberate fraud in connection with the transaction at issue justifies denial of equitable relief.

## Conclusion

Because both buyer and seller intentionally used fraudulent devices to defeat third-party contractual rights in connection with the sale, neither could obtain equity: the Greens were denied specific performance and the Higginses were denied quiet title and related equitable relief.


Green v. Higgins, 217 Kan. 217, 535 P.2d 446 (Kan. 1975)