Shelton v. Marshall

Wheeler, J. This was a suit by plaintiff, who is appellant, upon a promissory note. The defence relied on was that it was given in the State of Mississippi, for slaves introduced into that State as merchandize, and for sale, after the 1st day of May, 1833, in violation of the Constitution of the State.— The clause of the Constitution, on which the' defence rests, was adopted as an amendment, in 1832 ; and is as follows : “ The introduction of slaves into this State, as merchandize, or for sale, shall be prohibited, from and after the first day of May, 1833.” The effect of this provision came under considera: tion in the Courts of the State, in several cases ; and it was held, that it was not merely directory to the Legislature, and inoperative without legislative action ; but was, in itself, prohibitory, and operated, per se, a prohibition ; rendering con — 351 — tracts, made in contravention thereof, void. (Oases cited in Brien v. Williamson, 7 How. Miss. 15-16 ; Collins v. McCargo, 6 Sm. & Marsh. 128.) After the State Court had decided the question, it came before the Supreme Court of the United States, in the case of Groves v. Slaughter ; and a contrary opinion was maintained by a majority of the Court; holding that the provision of the Constitution was not, per se, an effective prohibition; but was simply mandatory upon the Legislature, and that legislative action was essential to carry the prohibition into effect. (15 Peters R. 449.) The decision of the Federal Court, in the case of Groves v. Slaughter, caused the High Court of Errors and Appeals of the State, to review their own decision, and re-examine the question ; which they did in the case of Brien v. Williamson, (7 Howard Miss. R. 14.) The result was a unanimous and decided adherence to their former decisions ; from which there has been no departure ; but on the contrary, the conclusions of the Court have been reaffirmed in numerous decisions since pronounced ; and remain the settled law of the State, as firmly established as any principle of the public law of a State can be, by the uniform decisions of its highest judicial tribunals, upon questions referred to their ultimate determination. The consequence is, that it is the settled law of Mississippi, that the introduction of slaves into the State, as merchandize, and their sale, is contrary to the public and constitutional policy of that State ; and that such sale, and all contracts in contravention of the law, are void. We hold it to be clear and indisputable, that every State has the right to decide, for itself, all questions of its own local, internal policy ; and to declare the meaning and effect of its own constitution and laws. Whether they are in harmony with the constitution and laws of the United States, may be a different question ; that question does not arise in the present case. The Courts of Mississippi had the right to determine — 352 — the effect of the State Constitution. That question, they have conclusively determined : and their determination of it .is, in our judgment, conclusive upon all other Courts wherein the law of the State is drawn in question. As respects the power of the States, over the subject of the constitutional inhibition in question, what we deem the sound and correct doctrine, was stated by Chief Justice Taney, in the case of Groves v. Slaughter. “ In my judgment, (he said,) “ the power over this subject is exclusively with the several “ States ; and each of them has a right to decide for itself, “ whether it will or will not allow persons of this description “ to be brought within its limits, from another State, either for “ sale or for any other purpose ; and, also, to prescribe the “ manner and mode in which they may be introduced, and to “ determine their condition and treatment within their respect- “ ive territories; and the action of the several States upon “ this subject cannot be controlled by Congress, either by vir- “ tue of its power to regulate commerce, or by virtue of any “ other power conferred by the Constitution of the United “ States.” (15 Peters R. 508.) What the public and constitutional policy and law of the ■ State of Mississippi was, and its effect upon contracts made in contravention thereof, having been settled by the decisions of its own judicial tribunals, cannot, with propriety, be considered an open question in this Court. The Courts of the State had the right to determine,—they have determined that question. If the decisions of those Courts required further support, after the research and ability by which it was maintained by Chief Justice Sharlde, in the case of Brien v. Williamson, it might be found in the decisions of the Courts of other States, in suits, where the legality of similar contracts made in the State of Mississippi was brought in question. Thus, in the ease of Cotton v. Brien, (6 Robinson, 115,) the question came directly under discussion in the Supreme Court of Louisiana. And though the Court thought proper to consider the question — 353 — an. open one in that Court, in view of the conflict between the then recent decisions of the State and Federal Courts, their unanimous opinion was in accordance with the opinion of the State Court. “ Upon a question which concerns our own citizens, (the Court said) although growing out of the constitu- “ tional or legislative provisions of a sister State, when there is “ a conflict between the Federal and State tribunals, as to the “ just construction of such provisions, we feel authorized to look “ upon the question as a new one, and to decide for ourselves.” And in a clear and concise Opinion by Judge Bullard, the conclusions of the State Court in Mississippi are maintained.— The same question came before the Supreme Court of Tennessee, about the same time, in the case of Yerger v. Rains, (4 Humph. 259.) And although that Court did not treat the question as an open one ; but on the contrary, considered it as being conclusively determined by the decisions of the Courts of the State of Mississippi, notwithstanding the conflict between the State and Federal Courts ; yet they took occasion to express their concurrence in opinion with the State Court. It is an universal principle, that a contract, which is invalid by the law of the place where it is made, will be held to be invalid in all other places or countries, where it may be drawn, in question. The only question, therefore, is, whether the contract here in question was invalid by the laws of Mississippi, where it was made. It is insisted that it was not, because, although the present note was given in lieu of, and was substituted for, a note given for the purchase of slaves introduced into the State of Mississippi as merchandize, contrary to law, it was not given by the same person who made the purchase and gave the first note, but by a different person, the present defendant, who is not shown to have been a party to the illegal contract. It is insisted, however, that it sufficiently appears by the evidence, that a good consideration did, in fact, pass, from Boteler, the purchaser of the slaves, to Marshall, the — 354 — defendant; but if it does not so appear, in the absence of proof to the contrary, it must be presumed that there was a good and sufficient consideration passing from the purchaser to the defendant, as the ground of his promise ; and that the latter is not affected by the illegality of the original promise, for which it was substituted. If the present, however, was but the mere substitution of a new security, made and given to carry into effect the original illegal and void contract, the mere change in the form of it would not relieve it from the effect of the illegality of the original consideration ; but the new security must be held to be equally as invalid as that for which it was substituted. How the original note came to be given up, and the present substituted in its place, does not very clearly appear. In his answer to the interrogatories first propounded, the plaintiff states, that ho does not know what consideration passed from Boteler to the defendant for his assuming of the payment of the debt, which the first note was given to secure ; but in Ms subsequent answers he states, though not in response to any question directly to that point, that he has been informed and believes that Boteler sold property to the defendant on account of his indebtedness to the plaintiff. He does not state what property, or who was his informant; he states that his lawyer made the arrangement by which he became possessed of the note now in suit; but he does not undertake to give an account of the manner of the transaction. He does not recollect whether the defendant was a party to the first note, thinks he was not, or if he was, it was in the character of surety only. Boteler and defendant both bought negroes of him about the same time, but their purchases were several, and he thinks the defendant paid for those purchased by himself. The deposition of Boteler leaves the true history of the transaction, by which the present was substituted for the note originally given, in nearly the same uncertainty and doubt. It seems that Boteler was unable to pay for the negroes he purchased : and that he made a trans355 far of them to secure the purchase money. It is evident, that the note in suit was given for the unpaid balance of the purchase money, due from Boteler ; but whether the original note was the joint note and contract of Boteler and the defendant; and the latter was substituted in his place and took his purchase, upon his inability to make payment: or whether some other, and what consideration passed from Boteler to the defendant for the promise of the latter, does not satisfactorily appear. The answers of the plaintiff to interrogatories tend to the conclusion that the purchases were severally and not jointly made ; and that each purchaser gave his several note ; but his recollection is so indistinct, as to particulars : and the evidence upon the whole so unsatisfactory, as to afford but little ground for anything but conjecture, as to what was the true character of the transaction. It, however, is certain, that the original • note was given for the purchase of slaves introduced and sold in violation of law ; and that it was consequently illegal and void. It was taken up and the present note given in its stead; and no new or different consideration passed from the plaintiff. It undoubtedly is true, as his counsel insists, that, in the absence of anything appearing to the contrary, the presumption must be that the note was given upon a good and sufficient consideration. But when it is shown that the consideration of the note, for which the present is a substitute, was illegal, and that the present was made in furtherance of the original illegal contract, that presumption is repelled. But, if we adopt the view of the case taken by the plaintiff’s counsel: that is, that a good consideration did pass from Bofeler to the defendant, does that relieve the contract from its original illegality, and entitle the plaintiff to recover upon it ? Several cases are cited by counsel for the plaintiff, which are supposed to maintain his right, in their view of the case. None of them, however, are precisely in point, or go quite the length, which it would be necessary to go to maintain the right of the — 356 — plaintiff in this case. The strongest case cited for the plaintiff, is Farmer v. Russell, (1 Bos. and P. 296,) where the Court of Common Pleas held, that if A receive money of B, to the use of 0, it may be recovered by C in an action for money had and received, though the consideration on which B paid it be illegal. But the reporters add a query whether the case would be varied, if A were a party to the contract between B and 0. The decision of the case was made to rest upon the ground that money was put into the hands of A, for the plaintiff’s use : and this money the plaintiff might recover in the action for money had and received, without letting in any inquiry into the illegal contract upon which it was paid. The case was thus put by counsel, in argument: “ Suppose money “ be put into the hands of the plaintiff’s clerk, for the plain- “ tiff’s use, shall he be allowed to say, this money was put into “ my hands for your use, but being the consideration of an il- “ legal contract, I shall put it into my own pocket ? ” Eyre, Chief Justice, said: “If I could be satisfied that the defend- “ ant in this case ought to be considered as insuring an illegal “ contract, I should be of opinion that the demand, necessarily “ connected with an illegal contract, and tending to facilitate “ the execution of it, would be vitiated by that contract; but “ my doubt is, whether he can be so considered.” “ It seems to “ me that the plaintiff’s demand arises simply out of the circum- “ stance of money being put into the defendant’s hands to be “ delivered to him. This creates an indebitatus, from which “ an assumpsit in law arises, and on that an action on the case “ may be maintained.” * * * * * “ The case therefore is “brought to this, that money is got into the hands of a person “ who was not a party to the contract, who has no pretence to “ retain it, and to whom the law could not give it by rescind- “ ing the contract. Though the Court will not suffer a party “ to demand a sum of money in order to fulfill an illegal con- “ tract, yet there is no reason why the money in this case “ should not be recovered, notwithstanding the illegal contract — 357 — “ was void.” Justice Bullér said, the action did not arise upon the ground of the illegal contract. But the money having been paid by another to the plaintiff’s use, the illegal contract was out of the question. Justice Heath was of the same opinion. He looked upon the matter in the same light as if the money had been paid into the hands of a broker, who could never be allowed to say that it was paid in on an illegal consideration. “ In the case of a stake holder, the Court would “ inquire into the transaction ; but the distinction is, that “ whether the consideration be good or bad, a man may re- “ cover his own money, though not that of another person.”— Justice Rooke dissented, and assigned his reasons at length.— He thought if the plaintiff had no merits, he ought not to be heard in a Court of justice, however great the demerits of the defendant might be. And Chief Justice Eyre, in conclusion. said if it were possible to mix the original transaction with the contract on which the action was brought, he agreed with his brother Rooke in all his conclusions. It thus appears that the decision of that case was placed upon a ground, which cannot be applied, by the same reasoning, to the present case. Though the argument might be urged with much plausibility, that, if a plaintiff may recover money paid, upon an illegal contract, to a third person for his use, upon an assumpsit implied in law, he ought to be allowed to recover upon an express promise in consideration of property conveyed to him, in furtherance of such a contract. Yet the cases are not the same ; and no decision has been cited, where a recovery has been adjudged in the latter case. The true principle, or ground of the decision, in the case of Farmer v. Russell, I apprehend, is that suggested by Justice Heath ; that a man may recover his own money, however his title may have been originally acquired ; and that when money is placed in the hands of one person for another’s use, it is his money for whose use it was paid. I can perceive no other principle upon which to reconcile the cases. — 358 — “ Questions upon illegal contracts, (it was said by Chief “Justice Marshall, in Armstrong v. Toler, 11 Wheat. 258, “ 271,) have arisen very often, both in England and in this “ country ; and no principle is better settled, than that no ae- “ tion can be maintained on a contract, the ■ consideration of “ which is either immoral in itself, or prohibited by law. How “ far this principle is to affect subsequent contracts, the direct “ and immediate consideration of which is not immoral or ille- “ gal, is a question of considerable intricacy, on which many “ controversies have arisen, and many decisions have been “ made.” Several of the English cases are reviewed by the Chief Justice ; and in all of them, where the plaintiff’s right was maintained, it was upon the same or similar grounds to those on which the action was maintained in the case of Farmer v. Russell: that is, the payment of money upon which the new contract was founded. But in Sturs v. Laishley, (6 Term R. 61,) where a broker, who had been concerned in stock jobbing transactions, and had paid the losses, drew a bill of exchange for the amount on the defendant, and after its acceptance, indorsed it to a person who knew of the illegal transaction on which it was drawn, the Court hold, that such indorsee could not recover on the bill. Yet, Lord Kenyon said, that if the plaintiff had lent the money to the defendant to pay the differences, and had afterwards received the bill for the money so lent, he might have recovered on it. The difference in principle between the case decided and that put by the Chief Justice, may not be very discernible. The distinction is supposed to be founded on the legal ground, that the money lent would constitute a new consideration, and be the foundation of a new contract, which could not be vitiated by a knowledge of the purpose for which the money was lent and the bill drawn. . (11 Wheat. 276.) But the plaintiff doubtless paid a consideration for the indorsement to him of the bill: and it is quite as difficult to perceive any solid ground for the distinction taken in that case, as for taking a distinction be — 359 — tween the case, of Farmer v. Russell and the present; which must be taken, if indeed the American authorities, to which we shall presently refer, as more directly in point to the .present, can be reconciled, upon principle, with Farmer v. Russell and other' cases to the same effect. There are other cases cited by counsel lor the plaintiff, which require notice. The case of Armstrong v. Toler, before cited, (11 Wheat. 258,) is thus put by Chief Justice Marshall: “ The case supposed.is, .that A, during a war, contrives a plan “ for importing goods on his own account from the country of “ the enemy, and that' goods are sent to B, by the same vessel. “ A, at the reqnest of B, becomes surety for the payment of “ the duties which accrue on the goods of B, and is compelled “ to pay them ; can he maintain an action on the promise of “B, to return this money ? ” The Circuit Court had held the-opinion.that such an action could be sustained ; and the Supreme Court affirmed the judgment. “ The case (the Court “ said) does not suppose A to be concerned, or in any manner “ instrumental in promoting the illegal importation of B, but “.to have been merely engaged himself in a similar illegal “ transaction, and to have devised the plan for himself, which “ B afterwards adopted. The contract with the Government “for the payment.of duties, is a substantive, .independent con- “ tract, entirely distinct from the unlawful importation. The “ consideration is not infected with the vice of the importa- “ tion. If the amount of the duties be paid by A for B,. it is “ the payment of a debt due in good faith from B to the Gov- “ ernment: and if it may not constitute the consideration of a “ promise to repay it, the reason must be, that two persons who “ are separately engaged in an unlawful trade, can make no “ contract with each other ; at any rate, no contract, which, “ in any manner, respects the goods unlawfully imported by “ either of them. This would be, to connect distinct and in- “ dependent transactions with each other, and to infuse into “ one which was perfectly fair and legal in itself, the contanr — 360 — “ inating matter which infected the other. This would intro- “ duce extensive mischief into the ordinary affairs and transac- “ tions of life, not compensated by any one accompanying ad- “ vantage.” The principle is illustrated by examples, showing that where the contract is entirely disconnected with the illegal act and is founded on a new consideration, it is not affected by the act,' although it was known to the party to whom the promise was made : as, if a friend should advance money to defend against a prosecution for the illegal act, the money would be advanced for a lawful purpose; and a promise to repay it would be upon a lawful consideration. (Id. 270.) But the case does not go the length of holding, that, where the contract grows out of and is necessarily connected with the illegal act, and the plaintiff was a party to it, seeking to recover a debt contracted in a violation of the law, as in the present case, the action can be maintained. On the contrary, it is expressly held, that, if the illegal act is the result of a scheme between the plaintiff and defendant, or if the plaintiff has any interest in the subject matter of it, which in that case, was the goods illegally imported, if they were consigned to him with his privity in order that he might protect them from the owner, a promise to pay any advances made under such understanding or agreement, is utterly void. And it is laid down, that where a contract grows immediately out of, and is connected with an illegal or immoral act; or if the contract be in part only connected with the illegal consideration, and growing immediately out of it, though it be, in fact, a new contract, a Court of justice will not lend its aid to enforce it. In the case cited from 2nd Nott and McCord, (127,) the plaintiff was not a party to the illegal contract. The consideration of the promise upon which he recovered was a lawful consideration, entirely distinct from the unlawful transaction between the parties thereto. Of course an unlawful act or contract between others, to which he was not privy, could not affect his right to recover upon a lawful contract, made with — 361 — one or both of the parties. In fine, the distinction which the cases cited by counsel for the plaintiff maintain, is, that where the contract was disconnected from the original, unlawful act, and was founded on a new and distinct consideration, an action might be maintained upon it, although it could not be maintained upon a contract directly arising out of the illegal act: and such seems to be the doctrine of the cases generally upon this subject. (See 4 Burr. 2069 ; 3 Term, 418 ; 8 Id. 562 ; 3 Ves. Jun. 612 ; 13 Ves. 313 ; 5 Taunt. 521; 7 Id. 430 ; 4 Barnw. and Ald. 211 : 5 Id. 335 ; Bridge v. Hubbard, 15 Mass. 92.) It would be very difficult to maintain the right of the plaintiff, upon the authority of those cases. The case of Bridge v. Hubbard (last above cited) is an authority clearly the other way. A borrower of money, upon an usurious contract, took up his note and gave a new note, to which he was not a party. It was held, that the fact, that the parties liable on the note were not privy to the usurious bargain, was not of any importance, if the true destination of the note was to secure such a bargain, made by others, for the use of him who was to reap the fruits of the bargain. (Id. 95.) Cases in point have been decided by the Courts in Mississippi ; whose decisions, it will be admitted, must be entitled to peculiar weight in the determination of this case. Thus, in Coulter v. Robinson, (14 Sm. and Marsh. 18,) where A made a loan of depreciated bank notes to B, at par, and took his note for the nominal amount; afterwards, C, being indebted to B, for a valuable consideration, agreed with him, in consideration of his indebtedness, to discharge his debt by taking up B’s note to A, and substituting his own ; and he accordingly gave his note to A for the amount of B’s note : and A gave up his note, and subsequently sued C upon the note thus given in lieu of B’s : it was held that the taint of usury still existed in the transaction ; and A could only recover of C the actual value of the depreciated paper loaned B, without interest.— The Court said: “ It is settled, that where an original con362 “ tract is illegal, any subsequent contract which carries it into “ effect, is also illegal. Where the consideration of a contract “ is impeached for illegality, if the subject matter of the con- “ tract can be traced back to an original illegal contract, the “ substituted security is void; And this principle applies,: if “ the parties, sought to be charged on .the substituted security, “ were ignorant of the illegality of the original contract, if the party seeking a recovery was a privy to the original, illegal “ contract.” This principle, applied to the present case, would, be decisive against the right of the plaintiff to recover upon the note in suit. The Court refer to their decision in the case of Adams v. Roan, (8 Sm. and Marsh. 624,) as a direct authority in support of the principle. In that case, the plaintiffs were the assignees of two promissory notes, the payment of which was secured by a mortgage of lands. The notes and mortgage were assigned by the payee to the plaintiffs in payment for slaves, introduced into the State, as merchandize, in contravention of law. The assignees brought suit to foreclose •the mortgage. There was no question as to the validity of the notes assigned. Yet the Court held that the illegality of the consideration for the assignment, deprived the plaintiffs of all right of recovery against the maker. There, as in this case, the note, or rather bill of exchange, originally given for the purchase of the slaves, had been taken up ; and the notes in suit assigned to the plaintiffs in consideration thereof. The Court said : “ But it is contended that the consideration of the “ indorsement and assignment of the notes and mortgage was “ not the purchase money of slaves, but was a consideration.ex- “ tended by Runnels, to Rowan and Harris, in settlement and “ compromise, and for surceasing the suit, which Rowan and “ Harris had instituted upon the bills of exchange given for “ the purchase money of the slaves, and that they were.exempt- “ ed, by this new consideration, from the fatal effects of the “ original contract, it having been cancelled by this payment. “ This latter contract was, however, equally void. It was be363 “ tween the same parties and related to the first void contract, “ and its illegal consideration. It cannot be permitted that “ the parties to a contract, void by law, may evade the provi- “ sions of that law, by giving up the security originally taken, “ and substituting another in its place. It is well settled, that “ when an original contract is illegal, any subsequent contract, “ which carries it into effect, .is also illegal. And, whenever, “ in cases of this character,' the subject matter of the contract “ can be traced back, between privies, to an original illegal “ contract, the substituted security is void ; and even if the “ parties, liable in the last security, were not privy, to the ille- “ gal bargain, the same result has been held to prevail, if the “true destination of such security was to secure such a foar- “ gain, made by others, for the use of him who was to reap .the “ fruits of the bargain.” (Id. 688-9 ; and see the case of Gelling v. McCargo, 6 Sm. and M. 128 ; and also Cotton v. Brien, 6 Robinson, (La.) R. 115.) It is clear, therefore, that if suit had been brought upon this note, in the State of Mississippi, where it was made, it would have been held that it was void by reason of the illegality of the original consideration, and consequently no recovery could have been had upon it. This unquestionably is the law of the case, as settled by the Courts of the State where the contract was made. Being the law of the contract there, it ought to be so held here ; upon the principle before stated, that a contract, which is invalid by the law of the place where it is made, will carry with it no obligatory force elsewhere; and cannot be enforced in the Courts of any other country. If it will not support an action where it was made, it will not authorize a recovery elsewhere. We therefore conclude that the plaintiff was not entitled to recover in this action ; and consequently that there is no error in the judgment. It is, therefore, affirmed. Judgment affirmed.