Melchoir v. McCarty

LyoN, J. The general rule of law is, that all contracts which are repugnant to justice, or founded upon an immoral consideration, or which are against the general policy of the common law, or contrary to the provisions of any statute, are void; and that, if a party claiming a right to recover a debt is obliged to trace his title or right to the debt through any such illegal contract, he cannot recover, because he cannot be allowed to prove the illegal contract as the foundation for his right of recovery. It is quite immaterial whether such illegal contract be malum in se, or only malum prohibitum. In either caso the maxim, ex turpi causa non oritur actio, is applicable. And a contract in violation of a statute is void although the statute fails to provide expressly that contracts made in violation of its provisions shall not be valid. It is sufficient that it is prohibited, and its invalidity follows as a legal consequence. The cases which affirm these principles are very numerous and uniform. We will cite but a few of them. Swartzer v. Gillett, 1 Chand., 207; Kellogg v. Lakin, 3 id., 133; Bryan v. Reynolds, 5 Wis., 200; Fay v. Oatley, 6 id., 42; Maxwell v. Reed, 7 id., 582; Ætna Ins. Co. v. Harvey, 11 id., 394; Miller v. Larson, 19 id., 463; Phalen v. Clark, 19 Conn., 421; Finn v. Donahue, 35 id., 216; Gray v. Hook, 4 Coms., 449; Nellis v. Clark, 4 Hill, 424; Mills v. Rice, 6 Gray, 458; Dodson v. Harris, 10 Ala., 566; Pepper v. Haight, 20 Barb., 429; Martin v. Wade, 37 Cal., 168; Hoover v. Pierce, 27 Miss., 13; Day v. McAllister, 15 Gray, 432; Toler v. Armstrong, 4 Wash. C. C., 297. [255] There are, however, exceptions to the rule that a party cannot recover upon an illegal contract, the grounds of which are thus stated by Lord Mansfield in Clarke v. Shee, 1 Cowper, 197: “ There are two sorts of prohibitions enacted by positive law in respect of contracts. 1st. To protect weak or necessitous men from being overreached, defrauded or oppressed. There the rule, in pari delicio potior est conditio defendentis, does not hold, and an action will lie; because, where the defendant imposes upon the plaintiff, it is not par delictum ; ” and he instances, as an illustration, the case of a bankrupt, who pays money to a creditor in consideration that such creditor sign his certificate. In such case, although the bankrupt is a party to the illegal transaction, he may maintain an action to recover back the money so illegally paid, because he is the oppressed party and not equally guilty with the other. On the same principle, actions have been sustained by wards against guardians, and by clients against attorneys, to set aside executed illegal contracts, where the guardians or the attorneys had taken advantage of the fiduciary relation to impose upon and mislead their wards or clients. On the same principle, also, statutes against usury frequently give the borrower an action against the lender to recover back the usury which he has paid. Laws of 1859, ch. 160, sec. 8. II. The selling of intoxicating liquors without license, or on Sunday, is prohibited by law. Taylor’s Statutes, ch. 85, secs. 5 and 20; and ch. 183, sec. 6. Such contracts are not within the exceptions to the general rule above stated. Hence, were this an action on the original indebtedness, the plaintiff could not recover were it made to appear that the debt was for the price of liquor sold without license, or sold on Sunday. But the action is not, in form, for the original indebtedness, but is upon an account alleged to have been subsequently stated by and between the parties; and it is claimed that the plaintiff is not compelled to resort to the illegal contract to maintain his action, but only to the account stated, which is said to be in the [256] nature of, or equivalent to, a new promise. Homes v. DeCamp, 1 Johns., 34. III. This brings us to inquire as to the effect of stating an account, or, what seems to be the same thing, of a new promise, based upon, an original illegal contract. Greenleaf, in his Treatise on the Law of Evidence, says: “ In support of the count upon an account stated, the plaintiff must show that there was a demand on his side, which was acceded to by the defendant. * * * * * The admission must have reference to past transactions, that is, to a subsisting debt, or to a moral obligation founded on an extinguished legal obligation, to pay a certain sum.” Vol. 2, § 126. The rule was stated in another form by the late Mr. Justice Paine, in Frey v. Fond du Lac, 24 Wis., 204, as follows: “It is a general rule, that a promise to pay for a past consideration, for which there is not and never has been any legal liability on the part of the party promising, does not make a contract binding in law. It is placed on the same footing with a promise which does not purport to be for any consideration whatever.” The same principle was applied in the case of Hooker v. Knab, 26 Wis., 611, and is doubtless sustained by nearly all of the adjudged cases. Smith v. Ware, 13 Johns., 257; Western Bank v. Mills, 8 Gray, 539; Gray v. Hook, 4 Coms., 449; Chenery v. Barker, 12 Gray, 345; Holden v. Cosgrove, id., 216. But to the rule last above stated there is an exception of one class of cases. Where a contract, otherwise valid, is void by reason of having been made on Sunday, as where property is sold and delivered on that day on credit, a subsequent promise to pay for the goods, made on any day other than Sunday, is valid, and an action can be maintained on such new promise. The cases are not uniform in stating the reasons for this exception, but they all recognize its existence. It is not mentioned in either of the two cases decided by this court, last above cited, and indeed it had no application to either of them. The general rule there stated must, however, in a proper case, be [257] applied subject to this exception. Williams v. Paul, 6 Bing., 653 (19 Eng. C. L., 192); Reeves v. Butcher, 31 N. J. Law (2 Vroom), 224; Ryno v. Darby, 5 Green (20 N. J. Eq.), 231; Adams v. Gray, 19 Vt., 358; Stebbens v. Peck, 8 Gray, 553; Smith v. Case, 2 Oregon, 190. IY. It necessarily follows, tbat tbe circuit court correctly excluded tbe testimony offered by tbe defendant to show tbat tbe liquor with wbicb be was charged in tbe account stated was sold to bim by tbe plaintiff on Sunday, but tbat tbe testimony which was offered to prove tbat the plaintiff, when be sold tbe liquor, bad no license to sell tbe same, should have been received, and its rejection was error. If tbe parties stated an account between them, on any day except Sunday, tbe plaintiff is entitled to recover tbe amount found due bim upon such accounting, unless it be made to appear tbat tbe original indebtedness of tbe defendant was for intoxicating liquors sold bim by tbe plaintiff without license, in wbicb case be cannot recover. By the Court.— Tbe judgment of tbe circuit courtis reversed, and a new trial awarded.