Kreiss v. Seligman

Selden, J. The complaint in this action that the defendant is indebted to the plaintiff for goods, wares, merchandises, groceries and lumber, sold and delivered, generally, without any specification of the property sold. The plaintiff, however, has furnished a bill of particulars, containing a large number of charges for beer sold and delivered. The answer — 440 — sets up that the beer for which the plaintiff seeks to recover, was sold by the plaintiff to the defendant with full knowledge that the latter intended to sell the same at retail, without license, and in violation of the excise laws; and relies upon this as a defence to that part of the action. To this answer the plaintiff has demurred, specifying the causes of demurrer. It is well settled that the only effect of a bill of particulars is to limit the testimony on the trial to the items contained in the bill; and that a party cannot plead or answer to such a bill. The answer must be to the pleading and not to the bill of particulars, which forms no part of the record. (Starkweather v. Kittle, 17 Wend. 20. Anon. 19 Id. 226, and note. Dibble v. Kempshall, 2 Hill, 124.) The code has not changed the law in this respect. But this objection to the answer cannot be noticed here, for the reason that it is not specified as one of the causes of demurrer. By section 153 of the code, a plaintiff, in demurring to an answer, is required to state the grounds of the demurrer; and although not expressly said, it is necessarily to be inferred, that he is to be confined to the objections thus specifically taken. It becomes necessary, therefore, to examine the main question presented, which is, whether one who sells goods to another with knowledge that the vendee intends to convert them to an unlawful use, as in this case, spirituous liquors to be sold at retail, without license, can maintain an action for the purchase money. Now it is abundantly settled, and there is no necessity for citing authorities to prove, that a contract for the commission or performance, or which contemplates the commission or performance of any crime, or wrongful act, or act prohibited by law, is void, and can not be enforced. But the principle contended for here goes much farther. It is not claimed that the contract made by the plaintiff was in itself unlawful, or that it provided in any way for the doing of any wrongful act. The sale by the plaintiff was, so far as appears, in the ordinary course of business, and in itself considered, such as he had a — 441 — perfect right to make. And it was no part of the contract,of sale that the property should be used for any unlawful purpose; nor did the fact that such a use of it was contemplated, constitute any 'portion of the inducement of the plaintiff to sell. But he knew that the purchaser did entertain the design, at the time of the purchase, of reselling the property in violation of the excise laws. Did this knowledge by the plaintiff of the vendee’s intention, vitiate the contract of sale, and render it illegal and void? Before proceeding to the examination of the authorities upon this question, I may remark, that the defendant is here setting up his own turpitude in bar of the plaintiff’s claim. He does not deny that he has had the property and used it for his own benefit, but says that at the time he purchased he intended to use the goods in an unlawful manner,-which the plaintiff knew, and therefore the defendant is not bound to pay. This, however, is no objection to the defence, if the case falls within the settled rule, in obedience to which courts have uniformly refused to lend their aid to enable one party to an unlawful contract to enforce it against another. As between the parties to such a contract, no matter to what extent one has obtained the advantage, the law will afford no aid to the other; and this rule rests upon thé soundest principles of public policy. The question here is, whether this is such a case. It is not alleijged that the \ design of appropriating this property 'to' an unlawful use was ‘actually carried out; but only that the defendant intended so to appropriate it. An intention which, for aught that appears, he may have abandoned the day after the purchase. Now it can -hardly fail to strike any one, that the rule here insisted upon would afford some facilities for roguery. A party, after having obtained possession of property to a large amount, under an avowed intent to make some use of it which the law prohibits, may avail himself of the locus penitenticB, converting the property to a lawful use, and then protect himself by this defence against liability for the purchase money; and this ultimate design may have been secretly harbored from the beginning, without the possibility of proof. — 442 — It will also occur to any one whose attention is turned to this subject, that while the intention to commit a crime, or to do an unlawful act, when nothing is done to carry that intention into effect, is not a crime, nor in any way punishable; yet the rule contended for here would impose a severe penalty or forfeiture upon one who did not even participate in the unlawful design, but simply knew of it; and that, too, for the benefit of the only • party who entertained the wrongful intent. In this view, the proposition would seem to be repugnant to our common sense; and yet there are authorities which perhaps may be considered as countenancing the doctrine. It will be necessary, therefore, to examine the authorities bearing upon the question, somewhat critically. One of the earliest cases in which this question or one analogous to it arose, is that of Faickney v. Reynous, (4 Burr. 2069.) There the plaintiff and one of the defendants had been jointly concerned in certain stockjobbing transactions which were illegal, and prohibited by act of parliament. The plaintiff had advanced £3000 in compromising and closing up these transactions, for one half of which the defendants had given their bond, upon which the action was brought. These facts were pleaded by the defendants, and the court, upon demurrer, held it no defence. Lord Mansfield, in speaking of the giving of the bond by the defendant, says: “ This is not prohibited. He is not concerned in the use which the other makes of the money ; he may apply it as he thinks proper. But certainly this is a fair honest transaction between these two.” The next case which I think it necessary to notice, is that of Holman v. Johnson, (1 Cowp. 341.) The plaintiff, Holman, a resident of Dunkirk, had sold to the order of the defendant a quantity of tea, knowing that it was intended to be smuggled by him into England; but the plaintiff himself had no concern in the smuggling, but merely sold the tea in the ordinary course of business. The action was brought for the price of the tea, and the above facts appearing, the question was whether the plaintiff could recover. It was held that he could. Lord Mansfield delivered the opinion in this case also. He says, spealdng — 443 — of the sale of the tea: “ The contract is complete, and nothing is left to he done. The seller indeed knows what the buyer is going to do with the goods—lint has no concern in the transaction itself. It is not a bargain to be paid in case the vendor should succeed in landing the goods; but the interest of the vendor is totally at an end, and his contract complete by the delivery of the goods at Dunkirk.” These two cases fully bear out the position taken by the plaintiff here—that when the contract is honest and lawful as between the parties themselves, and does not per se provide for any thing contrary to law, it will not be vitiated because one of the parties contemplates by some future use of the property to violate some law, and that is known to the other party. The last case, especially, is undistinguished in principle from the present. But there are some later cases which are supposed to have established a somewhat different rule. The cases of Biggs v. Lawrence, (3 Durnford & East, 454,) Clugas v. Penaluna, (4 Id. 466,) and Waymell v. Reed, (5 Id. 599,) were all cases in which the plaintiff had sold goods abroad, knowing that they were to be smuggled into England; and so far were like the case of Holman v. Johnson, above cited. But they differed from that case in this, that in each of these three cases the plaintiff had done some act in addition to the sale, which went in aid and furtherance of the defendant’s design to violate the revenue laws; such as packing the goods in a peculiar manner to facilitate their being smuggled; and for this reason alone it was held in these cases that the plaintiff could not recover. In the last case, Waymell v. Reed, Buller, Justice, states the distinction in the clearest terms. He says: “In Holman v. Johnson, the seEer did not assist the buyer in the smuggling. He merely sold the goods in the common and ordinary course of trade. But this case does not rest merely on the circumstance of the plaintiff’s knowledge of the use intended to be made of the goods; for he actually assisted the defendants in the act of smuggling, by packing the goods up in a manner most convenient for that purpose.” These cases, therefore, in — 444 — ste.ad of impairing the authority of the case of Holman y. Johnson, go to fortify and sustain it. The case of Lightfoot et al v. Tenant, in the. English common pleas, (1 Bos. & Pull. 551,) is one of the earliest cases in which any thing has been said having a tendency to establish the position taken by the defendant here; but if closely examined, that case will not be found to support the doctrine. That was a motion for judgment non obstante veredicto. The opin- , ion of Ch. J. Eyre, was not given there with his accustomed .. clearness and precision. He does, indeed, seem to argue that ' bare knowledge by the vendor that the vendee intended to make a prohibited use of the goods would defeat a recovery for the price; yet he subsequently puts the decision most distinctly upon the ground that the jury had found that the wrongful use to be. made of the goods entered into and formed a part of the original contract of sale. He says: “ But the jury having found for the plea, the court can not say that tl>e plaintiffs had noth- • ing to do with, the future destination of the goods; unless it was impossible to state a case in which they could have any thing to do with it. I think it was not disputed that if the. plaintiffs’ contract extended to the future destination of the goods, such a contract would be void. It seems, therefore, hardly necessary to enter into an examination of the four cases which were cited from Cowper and the Term, Reports.” The four cases here alluded to, were Holman v. Johnson, and the three cases above cited from Durnford and East. This extract therefore conclusively proves that the decision was put, upon grounds entirely distinct from those cases, and was not. intended to impair their force or authority. It may be difficult to reconcile all that was said by the learned chief justice in this case, with the principle adopted in Holman v. Johnson; but there is nothing in the point decided here, which is inconsistent with that case. It may be well, before leaving this case of Lightfoot v. Tenant, to note that the plea which had been, found by the jury for the defendant averred that the illegal design in regard to the destination of the goods had been actually carried out by the vendee. — 445 — The next case having a direct bearing upon the question, is that of Langton and others v. Hughes and others, in the court of king’s bench, in England, (1 Maule & Selw. 593,) and as this is one of the strongest cases in favor of the doctrine contended for by the defendant, it will be necessary to give it a careful examination. The case was this: a statute of 42 Geo. 3, prohibited brewers from using any thing but malt and hops in, the brewing of beer. A subsequent statute, 51 Geo. 3, prohibited druggists from selling to brewers certain articles used by them in contravention of the previous statute. The plaintiffs, who were druggists, after the first of these statutes, but before the last, had sold to the defendants, who were brewers, certain drugs, knowing that they were to be used by the defendants in their business, contrary to the provisions of the prior statutes; and this action was brought to recover the price of the articles so sold. It was conceded that the statute of 51 Geo. 3, having been passed after the sale, did not affect the case, and yet the court held that the plaintiffs could not recover. Now it would indeed seem that the court, in deciding this case, must have adopted the principle contended for here by the defendant. But the case has some peculiar features, and does not appear to me to have been very well considered. In the first place, although the decision appears to come directly in conflict with the principle of Holman v. Johnson, a leading case, yet that case is not referred to either by the counsel or the court. Two of the judges, Ellenborough and Le Blanc, refer not to the cases themselves, but to the principles of the cases of Biggs v. Lawrence and the other cases in Durnford and East, cited above, as sustaining their decision, without adverting to the distinction taken in those very cases, between one who aids and assists the vendee in carrying out his illegal design, and one who barely knows of the existence of such design, but does nothing in fdrtherance of it. And Bayley, Justice, cites Lightfoot v. Tenant, as an authority for the doctrine of this case, while, as I have before shown, that case decided nothing inconsistent with the case of Holman v. Johnson. Again; a close examination of the opinion given in the case — 446 — under consideration, will show, I think, a little hesitation in the minds of the judges, whether to rest their decision upon the statutes or upon the principles of the common law. Lord Ellenborough, in speaking of the act of 42 Geo. 3, says: “ There is a distinct prohibition in the act against causing or procuring to be mixed, any ingredient except malt and hops; and a person who sells drugs with a knowledge that they are meant to be mixed, may be said to cause or procure quantum in illo the drugs to be mixed.” And Le Blanc, Justice, after stating the question, says: “ That depends upon the provisions of 42 Geo. 3, coupling them in their construction with those of 51 Geo. 3.” So, while one of these judges was endeavoring to make out that the act of the plaintiff was a direct violation of the first statute, the other seemed to think that the latter act, although passed after the sale, could in some way be brought to bear upon the case. Upon the whole, I think it will be apparent to any one who reads this case attentively, in connection with the previous cases on the subject, that the decision here was really produced by the statute of 51 Geo. 3. Had the sale been made after that act was passed, the plaintiff could not have recovered. The case was so clearly within the mischief intended to be prevented, that the act was suffered, perhaps unconsciously, to control the decision. At all events, I cannot consider this case as overruling that of Holman v. Johnson, confirmed, as the latter had been, by the subsequent cases to which I have referred. We come then to two later cases in the English courts, which are supposed to sustain the defence here. The first of them is the case of Cannan v. Bryce, (3 Barn. Sp Aid. ¿79.) There the defendant had lent money to a firm, which afterwards became bankrupt, for the purpose of paying a balance due upon certain illegal stockjobbing transactions, and which had been applied to that object. The defendant having afterward received money belonging to the bankrupts, the assignees brought their action to recover those moneys, and it was held that the defendant had no right to apply them in payment of his demand for the money loaned. — 447 — The other case is that of McKinnell v. Robinson, (3 Mees. & Wels. 434.) That was an action of assumpsit, for money-lent, &c. The defendant pleaded that the money was lent in a certain common gambling room, for the purpose of the defendant’s illegally playing and gaming therewith; and on demurrer the plea was held good. Now, at first view, these cases might appear to go the length contended for by the defendant here. But it will be observed that they are distinguished from the case before us, as well as from the case of Holman v. Johnson, in this, at least, that in both the cases under review, the illegal use was the express purpose for which the money was lent; and this circumstance is noticed and relied upon by the court, in giving its opinion in both the cases. In the case of Carman v. Bryce, Abbott, Ch. J. says: “ It will be recollected that I am speaking of a case wherein the means were furnished with a full knowledge of the object to which they were to be applied, and for the express purpose of accomplishing that object.” In the case of McKinnell v. Robinson, Lord Abinger lays down the doctrine thus: “ This principle is, that the repayment of money lent for the express purpose of accomplishing an illegal object, cannot be enforced.” This language, used in both these cases, “ for the express purpose,” is equivalent to saying that the motive and object of the lender in loaning the money was, that it should be applied to the unlawful use. He being thus a participator in the unlawful act, would not, of course, be permitted, upon the principle of any of the cases, to recover. These cases, therefore, do not seem to me to go far enough to sustain the defence set up here. The defendant’s counsel has cited two cases from our own courts, upon which he relies. The first, is that of Ruckman v. Bryan, (3 Denio, 340.) The marginal note of that case is as follows: “ Money knowingly lent to be staked on the event of a horse race, can not be recovered back.” But on looking into the facts of the case, we find that the plaintiff himself made the bet of $3000, in which he allowed the defendant to take an interest of $600, and loaned the latter the money for his share. — 448 — The case clearly does not bear out the note; although the latter may be correct, if the words “ to be staked” are understood to mean that the motivé object of the lender in making the' loan, was that it should be staked. But upon the case itself it should seem that there could be no doubt. The plaintiff was himself not only a participator, but the principal, in the illegal transaction. He loaned the money to be used in carrying out, not a contract to which he was not a party, like many of the cases, but his own personal contract. No recovery could be had in such a case without overruling all the authorities upon the subject. The other case is that of Morgan v. Groff. (5 Denio, 364.) The money there was not loaned to be used by the defendant, upon his own account, but was sent to the defendant to be by him used in betting upon the election, for the plaintiff. As in the last case, therefore, the plaintiff was himself the principal in the illegal design. The contract between him and the defendant was, that the latter should take the money and appropriate it for the benefit of the plaintiff, to a purpose prohibited by law. The express contract, therefore, between the parties, was clearly tainted with turpitude; and had the suit been brought to enforce that contract, the case would have been too clear for argument. The action, however, was founded upon an implied undertaking to return money which the defendant had actually received, belonging to the plaintiff. But the court held, in substance, that the law would not raise, by implication, a contract to refund the money, under the circumstances. This case, although in some respects peculiar and new, has no direct bearing upon the question involved here. I see nothing, therefore, in either of the cases decided in our own courts, which can aid us in coming to a correct conclusion in this. It was said upon the argument, that the supreme court of Vermont had lately passed upon the question, and held as contended for by the defendant here. As I have not been able to lay my hand upon that authority, I can say nothing in regard to it. There may have been something in that case to distinguish it from the one before us. — 449 — My conclusion from this review of the cases is, that there is no case which has been brought to my notice, with the exception of that of Langton v. Hughes, which goes the length necessary to sustain this defence; and that that case comes in direct conflict, not only with the case of Holman v. Johnson, but with the spirit of many other cases, and ought not to be followed. The doctrine established by the authorities to which I have referred, and others upon the subject, I hold to be this. That where a party who sells goods or advances money to another with knowledge of a design on the part of the latter to put the goods or money to an unlawful use, does any act whatever, beyond the bare sale, &c. in aid or furtherance of the unlawful object, he can not recover. Or if the illegal use to be made of the goods or money, enters into the contract, and forms the motive or inducement in the mind of the vendor or lender, to the sale or loan, then he can not recover. The latter proposition may, however, require to be qualified, by the addition, provided the goods or money are actually used. to carry out the contemplated design—as no case has arisen in which this distinction has been insisted upon—although it was perhaps involved and virtually decided in the case of McKinnell v. Robinson, (3 Mees. Wels. 434,) before cited. But 1 think it is not established, and will never become the settled law, that bare knowledge on the part of a vendor that the vendee intends to put the goods to an illegal use, which intention may or may not be followed up, will vitiate the sale and deprive the party of all remedy for the purchase money. Such a doctrine would be .repugnant to all the reasoning upon which the principles of our criminal code in regard to the punishment of principals and accessories in crime are founded; reasoning which is equally applicable to penalties of the kind insisted upon here. It would be to punish a party as accessory to a wrong, when no wrong may have been, committed. The doctrine relied upon by the defendant does not reach this case; because here the illegal design does not enter into or — 450 — form any part of the plaintiff’s contract; nor has he done any thing to aid in its accomplishment. Judgment for the plaintiff upon the demurrer, with leave to the defendant to amend within twenty days upon payment of costs.