Shaw v. Carpenter

The opinion of the court was delivered by Royce, Ch. J. This cause was heard upon the report of a special master appointed to ascertain and report the amount due on the mortgage described in the petition. It appears from the report that on the 24th day of July, 1872, one Benj. D. Peterson, who was then engaged in the business of bottling cider, soda, and mineral waters, at the city of Burlington, sold the good will of the business and all his stock, — tools, bottles, machinery, and fixtures, then in use by him in said business, as specified in certain inventories, which were signed by the said Peterson, to the defendant Carpenter. Upon said inventories the various articles sold were separately carried out, with a separate price for each item. The footings of the separate pages were brought forward upon the last page, where the aggregate correctly appeared of the sum $3221.81. To this . amount an item of $116 was added, which was included in the — 160 — note first due. It is not found what the consideration for that item was. The good will of the business was included in the sale, and was not estimated in the inventory. It is probable that it may have been estimated by the parties at that time. For the amount so ascertained the defendant Carpenter executed four promissory notes payable to said Peterson, or order, and secured the same by the mortgage sought to be forclosed. Said notes have all been paid, but the last, which was for $800 ; and that fell due on the 24th of July, 1876. ' The interest on that note was paid to the 24th of July, 1876. On the 28th day of October, 1872, and before the maturity of any of said notes, Peterson sold them and the mortgage for an adequate consideration to the petitioner ; the petitioner, then believing the notes to be based on a valid and legal consideration, and not suspecting that any illegal element entered into the consideration. Of the property sold by Peterson to Carpenter, and which formed a part of the consideration of said notes, the master has found there were the following goods, in kind and amount: Lager beer, $23.94; Cider, $422 ; Ale, $209.38 ; Porter, $6.72; Alcohol, $2.25. The defendant Carpenter claims that if any part of the consideration for the notes was illegal, they are void ; that no recovery could be had upon them ; and that a court of equity cannot grant any relief to the petitioner. The first inquiry is, was the sale of any of the articles above enumerated prohibited by law ? It is found that the lager beer was not an intoxicating drink, and its sale was not then prohibited, the act forbidding its sale having been passed in 1878. The sale of the cider was not illegal, unless the place where it was sold was a place of public resort. The question as to what constitutes a place of public resort, under s. 3800 of R. L., does not appear to have been before this court, except in the case of State v. Pratt, 34th Vt. 323; and in that it was submitted to the jury to find from the evidence whether the place where it was shown the intoxicating liquor was furnished was a place of public resort or not. The sale of spirituous or intoxicating liquor, or of mixed — 161 — liquor, of which a part is spirituous or intoxicating, is prohibited generally; its sale is made illegal, without reference to the place where the sale is made. The sale of cider is not generally prohibited, and its sale is only made illegal when it is sold at or in a victualling house, tavern, grocery, shop, or cellar, or other place of public resort, or at any place to an habitual drunkard. If the defendant would avoid payment for the cider, he must show that the sale was an illegal sale, that it was prohibited by law. The only ground upon which it is claimed the sale was illegal is, that it was made at or in a place of public resort. The master has not found that the sale was made at or in the establishment of Peterson, which it is claimed was a place of public resort; or where it, in fact, was made ; or that the cider was in or about that establishment; or where it was, when sold. So that, from what appears in the report, the court cannot hold, as matter of law, conceding that the establishment of Peterson was a place of public resort, that the sale of the cider was illegal. But we do not think the establishment of Peterson was a place of public resort, or, rather, such a place as rendered the sale of the cider illegal by reason of its having been there made. The words, “ place of public resort,” in the statute, are used in connection with the victualling house, tavern, grocery, shop, and cellar, in which the selling or furnishing of cider is absolutely prohibited. We all understand that such places are resorted to, to a greater or less extent; and hence they become, and are known as, places of public resort. But in the ascertainment of what is meant by “ other places of public resort ” we have to inquire as to what places were intended to come within that description. The legislature did not intend to prohibit the sale of cider as an article of commerce. This is evident from the fact that its manufacture and sale are .not generally prohibited. Its sale is only prohibited in particular places, and to an habitual drunkard. And whether a place is a place of public resort must depend upon the evidence which gives character to the place. . In order to constitute it such a place as would render a sale of cider made at it illegal, it must appear that it was a place resorted to by the public for the purchase of cider. The fact that it is not — 162 — drank at the place where it is obtained would not probably be regarded as controlling, if it appears that those who want it can and will be supplied at such place. The design of the legislature was to remove the temptation to its use, by putting it out of the power of those addicted to its use to obtain it, to use as a beverage at the places enumerated in the statute. This establishment was for the bottling of cider and other beverages for the market. It was a sort of warehouse, where cider and other drinks were prepared and stored in bulk; and the eider was put up in bottles for the market, and, when thus prepared was mostly sold at wholesale to dealers out of town, on orders received by mail. Some was sold to wholesale dealers in town, upon orders. There were no conveniences for selling it to be drank on the premises, and none was so sold or drank. And it was not a place that people resorted to for the purpose of buying cider, or that was generally resorted to for any purpose. This, in our judgment, does not show that the establishment was such a place of public resort as was intended by the statute. • The ale, porter, and alcohol were intoxicating liquors, and, notwithstanding the ale and porter were in a damaged condition and unpalatable, as long as their intoxicating properties remained, it was illegal to sell them. The sale of the alcohol was prohibited ; and the belief of Peterson that it was to be used for a legitimate and proper purpose, connected with the manufacture of a non-intoxieating drink, did not make the sale legal. State v. Pratt, 34 Vt. 323. The sale of the ale, porter, and alcohol being illegal, the consideration for the notes, as far as the value of those articles went to make up the amount for which the notes were given, was an illegal consideration. The important question in the case is, as to the effect that such partial illegality of consideration is to have upon the rights of the parties. Robinson v. Bland, administratrix of Sir John Bland, 2 Burr. 1077, has always been regarded as a leading case; and opinions were given in it by Lord Mansfield and Justices Denison and Wilmot. The declaration contained three counts ; the first, upon a bill of exchange ; the second, for money — 163 — lent and advanced ; and the third, for money had and received. A verdict was found for the plaintiff for ¿£672, the amount of the bill of exchange. It was found that the consideration for the bill of exchange was ¿£300, lent by the plaintiff to Sir John Bland at the time and place of play; and ¿£372 were lost at the same time and place by Sir John Bland to the plaintiff at play. It was held that the ¿£372, part of the consideration for the bill, being for money lost at play, could not be recovered, all such securities being void under the statute ; and that a part of the consideration for the bill being illegal, no recovery could be had under the first count; that the plaintiff was entitled to the ¿£300 lent, and was allowed to recover it, under the count for money lent and advanced. Judge Denison says there is a distinction between the contract and security. If part of the contract arises upon a good consideration, and part of it upon a bad one, it is divisible. But it is otherwise as to the security. That, being entire, is bad for the whole. Judge Wilmot : “ As to contracts being good and the security void, — the contracts may certainly be good, though the security be void.” The same principle as to such a security being void was enunciated in Scott v. Gilmore, 3 Taunt. 226. See also Yundt v. Roberts, 5 Serg. and Rawle, 139; Phillips v. Cockayne, 3 Campbell, 119; Edgell v. Stanford, 6 Vt. 551. These two first cases have oftenest been quoted as authority for the rule that has generally prevailed in the English and American courts, that where a part of the consideration for a security is illegal the whole security is void. The cases referred to by counsel for defendant were all cases where attempts were made to enforce such securities, and the cases of Hinesburgh v. Sumner, 9 Vt. 23, and Woodruff v. Hinman, 11 Vt. 592, were of the same kind. In none of these cases was the court called upon to decide what the effect of holding the security void would be upon the original contract, where that was bad, in part, upon a good and legal consideration. In Carlton v. Woods, 28 N. H. 290, the question was pre — 164 — sented. The declaration, in that case, contained counts upon several promissory notes, and a count for goods sold and delivered. The plaintiff agreed to sell the defendant a stock of goods and groceries at cost and freight. A schedule of the articles was made, and the cost of each. The sum total of the cost of all the articles was divided into several parts, and the notes declared upon were given for the same. Among the articles so sold were some spirituous liquors illegally sold, the price of which formed a part of the consideration for the notes. A verdict was taken for the plaintiff, for the cost of the goods remaining unpaid, except the spirituous liquors ; and judgment was to be rendered on the verdict, or it was to be set aside, as the opinion of the court should be. It was held that the counts upon the notes were not maintainable ; that the consideration of the several notes was, in part, illegal, and, therefore, no recovery could be had upon them ; that the legal effect of the contract was, that each article was to be valued separately, and that the sale and delivery of each article formed the consideration for the promise to pay for it; that the contract was divisible ; and, while the separate value of the articles sold could be ascertained, as fixed by the parties, the principle is not readily seen, which would defeat the right of recovery for the stipulated price of that portion, the sale of which was legal; and judgment was rendered on the verdict. The same was substantially held in Walker v. Lovell, in the same volume, 138. The law does not favor any party in evading payment, while he retains the consideration. The notes which were given for the good will and property sold to Carpenter were all infected with illegality, and the defence of illegality attached to all of them ; so that', if what is now claimed as a defence can be allowed, if proceedings had been instituted to compel payment before anything had been paid, the entire claim could have been defeated, notwithstanding Carpenter had received, and was in the enjoyment of the property, upon the ground that the portion of the property above enumerated was illegally sold. It has somewhere been said, that the declaring such a security void was to be regarded as a punishment of the party for having made an illegal contract. — 165 — The loss of the property illegally sold would generally be considered a sufficient punishment, certainly, when the sale was only malum prohibitum, and no wrongful intention appears. But a court of equity could never hold that one might be deprived of his entire fortune, because, in the consideration agreed to be paid for it, there was intermingled some article the sale of which was prohibited. We regard the case of Carlton v. Woods, supra, as sound law and well sustained by authority. Its application works out just and equitable results, and we shall apply the principles there enunciated in the decision of this case. Peterson could have recovered against Carpenter in an action of assumpsit, for all that was sold to him, except the ale, porter, and alcohol. The mortgage would be treated as security for the debt due from Carpenter, on account of the property legally sold to him. Peterson might have foreclosed the mortgage, and thus have compelled payment of the debt. The petitioner, by his purchase of the notes and mortgage, acquired all the rights, legal and equitable, of Peterson. He could maintain a suit at law for his own benefit, in the name of Peterson, or a petition in equity, as assignee of the mortgage, to foreclose it. And in the disposition of such a petition it is the duty of a court of equity, which has been said to be the great sanctuary of plain dealing and honesty, to compel the payment of that portion of the debt that was secured by it, that was legally and fairly contracted. The decree of the Court of Chancery is reversed and cause remanded, with mandate that a decree be entered for the petitioner for the amount due on the note for $800 described in the petition, with interest after deducting therefrom the sums of $209.38, $6.72, and $2.25, being .for the ale, porter, and alcohol illegally sold,— as of the date of the note. If the amount due cannot be ascertained from the computations made by the master, it is to be ascertained in such manner as the court may direct.