Samuel Streit & Co. v. Sanborn

The opinion of the court was delivered by Royce, J. The consideration for the note for which the note declared upon was given, was intoxicating liquor sold by the payees of the note, through their agent, Knight, under such circumstances that it is conceded that as between the parties to the [706] note, the transaction was of such an illegal character that the payees could not enforce its collection. The note was in due course of business negotiated and indorsed to the plaintiffs while current, for a valuable consideration, and without any notice as to what it was given for. The question presented upon the above statement of facts, is, whether the plaintiffs’ right to maintain their action, is defeated by § 32, ch. 94, of the Gen. Sts. Said section declares that “ no action of any kind shall be had or maintained in any court in this state, for the recovery or possession of intoxicating liquor, or the value thereof, except such as is .sold or purchased in accordance with the provisions of this chapter.” This act was passed in 1852, and previous to that time, the law regulating the traffic in intoxicating drinks did not contain any. such provision. It simply made the sale of intoxicating drinks by persons not authorized, illegal, and inflicted penalties upon parties making such sales. The notes declared upon in the cases cited and relied upon by the plaintiffs, of Pindar v. Barlow, 31 Vt. 529, and Converse v. Foster, 32 Vt. 828, were given previous to the passage of the act of 1852, and the question presented for adjudication in those cases was, whether, as against a bona fide holder for value without notice, the defendant could avail himself of the illegality of the consideration as a defence to the notes. The court held, that in a suit between the parties to a note, the illegality of the consideration might be set up as a defence ; but that as against a bona fide holder of such a note, who acquired it while current, for value, and without notice, the illegality of the consideration would not constitute a defence. It will be seen by reference to those cases, that the construction to be given to the act of 1852 was not presented, or necessary to the determination of the issue made. And while the opinions expressed by the learned judges who delivered the respective opinions in those cases, as to what the rights of the holders of such paper might be under the act of 1852, are entitled to great consideration, we cannot regard either as an authority upon the construction to be given to the act. The rule that where, a transaction is declared by statute to be illegal, and that all securities given in consideration of such illegal trans [707] action are void, is too familiar to require the citation of authorities in its support. And courts will, no more enforce such securities for the benefit of bona fide holders, than for the benefit of a party- to the transaction. The right of recovery, therefore, in this case, must depend upon the construction to be given to the act of 1852. It has been claimed in argument, that inasmuch as the statute does not in express terms make securities given for intoxicating liquors illegally sold, void, that they are not to be held as void, or voidable, except as between the parties to the illegal sale. But we understand that where the language employed in a statute is equivalent to an express, declaration that such securities are void, it is all that is required. By enacting that no action should be had or maintained to recover for the value of intoxicating liquors, except such as should be sold in accordance with the provisions of the law regulating its sale, it is clear that the legislature intended, and have in effect rendered, such securities worthless to the possessor, for the reason that no court in the state can entertain any suit to enforce the obligation of any such security. . And we hold that the obvious and natural import of the language made use of in this statute, without resorting to any forced or subtle construction, is, to make all such securities absolutely void. If there was any ambiguity in the language or intent of the statute, it would be the duty of the court to inquire what the law upon the subject had been, and what change in it was intended to be made by the statute wo are now considering. If the subject is examined in this view, it will be found that the legislation for many years previous to 1852, upon the subject of the traffic in intoxicating liquors, had all been aimed at its suppression, except in the manner provided by law; and the object sought to be accomplished was, to check the growing evil of intemperance. Hence, they declared the traffic in it by unauthorized persons, to be illegal; and the courts uniformly held, that as between the parties to any such transaction, the consideration for the promise to pay, was open to inquiry, and that no recovery could be had where the consideration for the promise rested upon such a transaction. Parties engaged in such illegal transactions, .then resorted to the expedient of negotiating the [708] notes received by them upon such sales; and the court held in the oases above cited, and upon long-established and universally well-recognized principles of mercantile law, that in the hands of bona-fide holders without notice, the consideration for such notes could not be inquired into. It is probable that knowledge of these decisions, and that parties were thus enabled to defeat the plain spirit and intent of the law, prompted the legislature of 1852 ; and unless the act of that year is to receive the construction we have given to it, no useful purpose was accomplished by its enactment, for it left the law regulating the rights of the holders of such paper, just as it stood before. The statute of Massachusetts referred to by the court in Pindar v. Barlow, and Converse v. Poster, contains a provision that all securities given in whole or in part for the price of liquor sold in violation of law, should be void against all persons holding the same with notice of such illegal consideration, either direct or implied by law ; and under that statute, their courts may well have held that negotiable paper given upon such a consideration, was good in the hands of a bona-fide holder without notice. We have no occasion to review the numerous cases which have been cited by the learned counsel for the plaintiffs. Their authority has been expressly recognized in the cases above inferred to, and numerous others in this state. They are not applicable here, for the reason, that under our statute, we hold that this note is absolutely void. By holding otherwise, the court would be placed in the strange position of sustaining by its decision, the validity of the note, when the legislature had deprived the holder of all legal remedy in the courts of the state for its collection. By permitting a recovery in this case, we think it might be justly said that the judiciary power had defeated the manifest intent of the legislature. The judgment of the county court is reversed, and judgment rendered for the defendant. \