Mandlebaum v. Gregovich

By the Court, Hawley, J.: The only question to be determined in this case is whether or not a traveling merchant, who has sold goods, wares and merchandise without having procured the license required by section 67 of the revenue act, can maintain an action to recover their value. This section provides that: ‘ ‘ Every traveling merchant * * selling or offering to sell any goods * * * shall pay for such license twenty-five dollars per month, * * * and it is hereby made the duty of * * * all peace officers to demand the license of any such * * * drummer or other person named herein, and if such person be found not to have a license as required by law, the person so offering any goods, wares or merchandise for sale shall be guilty of a misdemeanor, and on conviction shall be fined in any sum not less than fifty nor more than five hundred dollars.” (Stat. 1877, 79.) ’ This section does not prohibit the sale of goods by any person who has failed to procure the license, but it imposes a penalty against every one who sells or offers for sale any goods, wares and merchandise without having the license so to do. The penalty only attaches to the person who violates the provisions of the law. It does not affect the contract for the sale of the goods. The fine is imposed not for selling the goods, but for the failure to procure the license. [93] Numerous authorities are cited by respondent’s counsel, which announce the general doctrine “ that a penalty implies a prohibition, though there be no prohibitory words in the .statute, and that an agreement in violation of the statute pro~ Mbiting or enjoining an act absolutely or only under a penalty oannot be enforced.” This principle is applied in all cases where the subject matter of the contract is forbidden by the statute (Brackett v. Hoyt, 29 N. H. 264; Williams v. Tappan, 23 N. H. 391; Bull v. Harragan, 17 B. Mon. 352; Ferdon v. Cunningham, 20 How. Pr. 154; Best v. Bauder, 29 How. Pr. 492; Swords v. Owen, 43 How. Pr. 176), or is in violation of a statute for the protection of the public against imposition or fraud (Woods v. Armstrong, 54 Ala. 154; Bensley v. Bignold, 5 Barn. & Ad. 335; D’Allex v. Jones, 37 Eng. Law & Eq. 475), or for the protection of the public health or morals (Griffith v. Wells, 3 Denio. 226), or where the contract is against public policy. The case under consideration is clearly distinguishable from the cases cited by respondent’s counsel. They have no special application to the facts of this case. Section 67 of the revenue act of this state was not enacted for the purpose of prohibiting or regulating the business of selling goods, wares and merchandise. We agree with the court in Best v. Bauder, supra., that if the statute made the contract illegal it would make no difference whether the license was imposed for revenue purposes or not. (Storey on Contracts, sec. 758.) Although the court in Best v. Bauder questioned the correetness of the distinction stated in Bell v. Quinn, 2 Sandf. 146, and in Griffith v. Wells, supra., it nevertheless based its decision upon the ground that the statute contained “ a direct prohibition against selling as a peddler without a license;” and that ‘ ‘ irrespective of the j)enalty a peddler is * * "x‘ prohibited from selling his goods ox commodities without a license.” Bronson, C. J., in delivering the opinion of the court in Griffith v. Wells, supra., said : ‘ ‘ When a. license to carry on a particular trade is required for the sole purpose of rais [94] Ing revenue, and the statute only inflicts a penalty by way of securing payment of the license money, it may be that a sale without a license would be valid. * * * But if the statute looks beyond the question of revenue, and has in view the protection of the public health or morals, or the prevention of frauds by the seller, then, though there .be nothing but a penalty, a contract which infringes the' statute cannot be supported. ” The distinction in the application of the principles relied .upon by respondent is stated in clear, plain and explicit terms by the supreme court of Iowa in Dillon v. Allen: ‘‘The distinction between the eases may be made plain by a little further consideration. In the case before us the statute forbids the use of threshing machines wanting in certain contrivances for the protection of those employed about them. The contract in this case was for the use of such a machine, and was performed by such use. The very act performed under the contract was forbidden by the statute, and the parties thereto were in pari delicto. In the other cases * * * the statute provides that any person who shall sell a town lot before the plat is recorded, shall be subject to a prescribed penalty. The statute does not forbid selling the lots before the plat is recorded, but Axes a-penalty against the owner of the land plotted for failing to record the plat. The sale is not unlawful; the corpús clelicto prescribed in the statute is the omission to record the ¡flat. The purchaser was guilty of no violation of law; the contract was not forbidden. It is therefore valid.” (46 Iowa 302.) It is apparent, upon an examination of the revenue act, that the legislature did not intend to prohibit the sale of goods by a traveling merchant without a license, or to make such sales illegal. This was not the object, intent or purpose of the law. A license is required and a penalty imposed upon local merchants and persons engaged in other business in the same manner as upon the traveling merchants. The legislature intended by section 67, as well as by other sections, to raise money for revenue purposes — to compel traveling merchants, as well as local merchants, to contribute to [95] the revenue of the state for carrying on and conducting their-business within this state. “ The purpose,” as was said by the court in Aiken v. Blasdel, “was not to diminish, restrain, control or regulate business. The transaction of all kinds of business was just as legal after the passage of the law as before. The law is strictly a revenue law, the sole object being to get-money into the treasury, and that is accomplished by requiring all persons that engage in certain kinds of business to contribute a certain amount towards paying the liabilities of the government. Its object is to raise money, and not to regulate the business of the country. If a man engages in the kind of business referred to, he is engaged in a legal business, whether he has a license or not. If he has no license he has. no legal right to do it, and subjects himself to the penalty. The law, we-think, was intended to operate upon the person, and not upon> the business. If the object of the law had been to prohibit certain kinds of business, or to regulate it with a view to its. effect upon public morals or public security, by limiting it in. its extent, or the place where it is to be carried on, or the persons who shall conduct it, ox otherwise, in all such cases, the law operates upon the business as well as the person; revenue mainly in such cases is not the object — it is only incidental, or the means by which the law regulates and controls the business. The act in question imposes no restrictions upon the business; all are at liberty to engage therein where and when and to any extent they choose, upon paying for the license.” (41 Vt. 666.) We are of opinion that the plaintiff is entitled to maintain this action for the value of the goods, wares and merchandise sold and delivered to the defendant, notwithstanding the fact that at the time of the sale he had not procured the license required by section 67 of the revenue act. (Drexler v. Tyrrell, 15 Nev. 136-37; Lindsey v. Rutherford, 17 B. Mon. 245; Hill v. Smith, Morris, Iowa, 75; Smith v. Mawhood, 14 M. & W. 452; Johnson v. Hudson, 11 East. 180; Brown v. Duncan, 10 B. & G. 93; Witherell v. Jones, 3 Barn. & Ad. 222; Armstrong v. Toler, 11 Wheat. 260; Storey on Contracts, sec. 759, etc.) [96] ' The court erred in declaring” the contract' for the sale of the* goods illegal, and it also erred in dissolving the attachment. The-judgment of the district-court is-reversed and. tire cause-remanded for a. new trial.