Romano v. Bono

Hooley, J. The court finds that there was a partnership as alleged in the complaint. However, it appears that the plaintiff is faced with an insuperable barrier which precludes recovery. This barrier is the illegality which taints the agreement upon which the action is brought. The Alcoholic Beverage Control Law forbids secret partnerships and requires licenses to be issued in the name of the true owner of the business. Since the agreement alleged by the plaintiff contemplated that the true owners of the business were to remain and did remain concealed and that a “ dummy ” was to act and did act for them as owners, and that the license was to be taken in the name of the “ dummy,” the said agreement is illegal. One of the true owners of the business having been previously convicted of a crime, it is readily apparent why the application was not made in the names of the real parties. Unquestionably the license would not have been issued. Hence the subterfuge. Therefore, it is obvious that the agreement contemplated and resulted in violations of the Alcoholic Beverage Control Law and the Penal Law. [898] In view of the fact that such violations of law were all integral parts of the agreement, there can be no recovery by plaintiff. (Sturm v. Truby, 245 App. Div. 357: Morgan Munitions Co. v. Studebaker Corp., 226 N. Y. 94.) The cases cited by plaintiff (Rosasco Creameries, Inc., v. Cohen, 276 N. Y. 274; Sajor v. Ampol, Inc., 275 id. 125, and Fosdick v. Investors Syndicate, 266 id. 130) are easily distinguishable. In each of these cases the illegality was collateral. The transactions sued upon were legal, but plaintiff had failed to comply with a statute requiring registration or licensing. The unfortunate result of this situation is that the defendants will benefit in effect by their own wrongdoing. Nevertheless the court can do nothing to remedy this, as it is well settled that where parties to an illegal contract are in pari delicto the court will leave them in statu quo. In view of this determination it becomes unnecessary to pass upon the effect of the general release. Judgment for defendants.