Lowenburg v. Klein

W. H. Cook, J., delivered the opinion of the court. Joseph Lowenburg exhibited bis bill of complaint in the chancery court of Warren county against Joseph Klein and the People’s Savings Bank & Loan Company, seeking to enjoin the presentation and payment of a certain check for the sum of one thousand five hundred dollars, and praying for the cancellation of the check. A preliminary injunction was issued, and upon the final hearing there ivas a decree dissolving the injunction and dismissing the bill and aAvarding the defendant Klein one hundred fifty dollars as attorney’s fees, and from this decree the complainant prosecuted this appeal. The bill of complaint filed by appellant charged that on the 16th day of December, 1919, he drew a check on the People’s Savings Bank & Loan Company for the sum of one thousand five hundred dollars payable to himself, and that he indorsed the check in blank and delivered it to ap-pellee Klein; that Klein presented the check to the bank and had the same certified;- that the check was without legal consideration, and that he had received nothing of Aralue therefor; that appellee Klein had refused to surrender the check or to give him any consideration for the same; and that unless restrained the check would be presented for payment and paid by the defendant bank. The bank filed no answer, but the defendant Klein answered the bill, denying the allegation thereof^ and praying for the dissolution of the injunction and for statutory damages and solicitor’s fees. Upon the hearing of the cause, the complainant, Lowen-burg, was the only witness introduced, and from his testimony it appears that about the time the near approach of national prohibition was disturbing the minds of so many — 294 — people the appellant became greatly agitated about his supply of liquors. One Gilbert, who operated a saloon at Delta, La., across the river from Yicksburg, maintained headquarters at the grocery store of defendant Klein, and appellant went to Klein’s store to interview Gilbert, and he was informed that “Gilbert was over the river,” and he thereupon opened negotiations with Klein for the purchase of a supply of liquors. Klein made him a price of one hundred dollars per case, but this price was not satisfactory and the deal was not closed. The following week negotiations were resumed, but Klein had then advanced the price to one hundred twenty dollars per case, and appellant still refused to pay the price. On the following Monday the supreme court of the United States sustained the validity of the National Prohibition Act (41 Stat. 305), and thereupon Klein advanced the price to one hundred fifty dollars per case. Appellant evidently concluded that further delay was dangerous, and thereupon he closed the trade for ten cases of whisky at one hundred fifty dollars per case, and gave Klein his check for one thousand five hundred dollars in payment therefor, and Klein promised that he would have the liquor delivered at appellant’s residence the following night. It was agreed that the delivery would be made by a certain “fisherman” named Bennett, who operated along the river front, and who used in his business the significant cry, “Catfish for sale.” Bennett was well known to appellant, and he appears to have been entirely satisfied with the arrangements. Night came' on and the whisky was not delivered at appellant’s residence and the long dro.utli still prevails in appellant’s home. Upon receipt of the check Klein at once went to the bank and had the check certified, and has failed and refused to deliver the liquor or surrender the check; hence this suit. The action of the learned chancellor in dissolving the injunction and dismissing the bill was correct. The transaction in which these parties were engaged was in violation of the positive statutory enactments and declared pub295 lie policy of "botli the national and state governments, and the courts will not lend their aid to either party. The possession of this liquor in the home of appellant would have been in violation of section 2, chapter 189, Acts of Mississippi legislature of 1918, and appellant had fully performed his part of this illegal agreement for the sale and delivery of the whisky, and, since the parties were in pari delicto, our courts will not entertain a suit for the relief of either against the other, but will leave them where they find them. 9 Cyc. 546; 15 Am. & Eng. Ency. Law, 997, 998, 999, 1001; Wooten v. Miller, 7 Smedes & M. 386; Deans v. McLendon, 30 Miss. 343; McWilliams v. Phillips, 51 Miss. 196; Williams v. Simpson, 70 Miss. 113, 11 So. 689; Woodson v. Hopkins, 85 Miss. 171, 37 So. 1000, 38 So. 298, 70 L. R. A. 645, 107 Am. St. Rep. 275. In McWilliams v. Phillips, 51 Miss. 196, Judge Simrall, speaking for the court, said: “All the parties participated in the violation of the law and are in pari delicto. In such cases the court will not, where the contract has been executed, interfere for the relief of either party; but will leave them in their respective conditions. Where a contract is executory, they will likewise refrain from lending aid to carry it into effect.” In the case of Woodson v. Hopkins, supra, in an able and exhaustive opinion, the authorities on this subject are collected and analyzed, and Chief Justice Whitfield, speaking for the court, there said: “The true doctrine as to the inability of either party to a contract against public policy being permitted to invoke the aid of a court of law or equity is thus stated in the same authority (15 Am. & Eng. Ency. of Law, pp. 998, 999, 1001) : ‘Where illegal contracts are executed by the parties, then the same principle of public policy which leads courts to refuse to act when called upon to enforce them will prevent the court from acting to relieve either party from the consequence of the illegal transactions. In such cases the defense of illegality prevails, not as a protection to the defendant, but as a disability in the plain — 296 — tiff.’ The court does not give effect to the contract, but merely refuses its aid to undo what the parties have already done.’ ‘The fact that the party seeking to enforce executory provisions of an illegal contract, though they consist only of promises to pay money, has performed the contract on his part, and that, unless the other party is compelled to perform, he will derive a benefit therefrom, will not induce the court to enforce such provisions. Nor can the party' performing, on his part, the provisions of an illegal contract, recover on the ground of an implied promise on the part of the party receiving the benefits therefrom to pay therefor, as the law will imply no promise to pay for benefits received under an illegal contract by reason of the performance thereof by the other party.’ “The same doctrine is admirably stated in 9 Cyc. of Law, 546: ‘No principle of law is better settled than that a party, to an illegal contract cannot come into a court of law and ask to have his illegal objects carried out; nor can he set up a case in which he must necessarily disclose an illegal purpose as the ground-work of his claim. The rule is expressed in the maxim, “Ex dolo malo non oritur actio " and in “In pari delicto potior est conditio defenden-tisThe law, in short, will not aid either party to an illegal agreement; it leaves the parties where it finds them. Therefore neither a court of law nor a court of equity will aid the one in enforcing it, or give damages for a breach of it, or set it aside at the suit of the other, or, when the agreement has been executed, in whole or in part, by the payment of money or the transfer of other property, lend its aid to recover it back. The object of the rule refusing relief to either party to an illegal contract, where the contract is executed, is not to give validity to the transaction but to deprive the parties of all right to have either enforcement of, or relief from, the illegal agreement. While it may not always seem an honorable thing to do, yet a party to an illegal agreement is permitted to set up the illegality as a defense, even though it may be alleging his own turpitude. Money paid under an agree — 297 — ment which is executed, whether as the consideration or in performance of the promise, cannot be recovered back where the parties are in pari delicto. And goods delivered or lands conveyed under an illegal agreement are subject to the same rule. Courts will not,, even with the consent of the parties, enforce an illegal contract. And it would seem to follow that an illegal agreement cannot be rendered legal by ratification. An agreement void as against public policy cannot be rendered valid by invoking the doctrine of estoppel.’ . . . “The true doctrine was correctly put long ago in Wooten v. Miller, 7 Smed. & M. 386, the court saying:’ ‘We have nothing to say in behalf of the morality of the transaction nor in favor of those who make the defense; but as they interpose the law as a shield, we cannot do less than say it covers and protects them.’ And again in Deans v. McLendon, 30 Miss. 343, where the court said: ‘Courts of justice, in the observance of these rules, are not influenced by any considerations of respect or tenderness for the party who insists upon the illegality of a contract, but exclusively by reasons of public policy. The object is to punish the active agent in the violation of a law by withholding from him the anticipated fruits of his illegal act, and thus, by deterring all persons from violating its mandates, to give sanctity to the law and security to the public.’ And in McWilliams v. Phillips, 51 Miss. 196, where the court say: ‘If both, however, concur in the illegal act and are in equal fault, the modern doctrine is that a court will not entertain the claim of either against the other to carry into effect the-illegal contract.’ And in Williams v. Simpson, 70 Miss. 115, 11 So. 689, we call special attention to the fact that in every one of these four Mississippi cases the contract was an executed one, the last one being the case of a merchant who merely failed to pay a sufficient privilege tax, and the one in 51 Miss, a case where a liquor dealer had simply' failed to pay the required tax — cases where the acts were merely mala prohibita. . . . — 298 — “We declare the law in Mississippi now to be as it was stated to be in the four cases: Hoover v. Pierce, 26 Miss. 627; 30 Miss. 343; 51 Miss. 196; and 70 Miss. 113, 11 So. 689 — viz.: That neither a court of law nor a court of equity, in this state, will entertain a suit for relief by either of two parties in pari delicto against the other, where the contract is against public policy. The plain truth is, on principle, that the contrary doctrine holds out a premium to those who violate the law, since, according to that doctrine, if they can only hurry fast enough to consummate their villainy, the law will help one to get from the other his part of the stolen plunder.” The doctrine of locus poenitentiae invoked by appellant cannot aid him under the facts of this case. Appellant has fully performed his part of the illegal contract, and has placed himself in a position where the courts will not relieve him. In 15 Am. & Eng. Ency. of Law, p. 1007, we find, in reference to this doctrine, the following statement: “It seems, however, that the cases in which the principle that a party can avail himself of a locus poenitentiae to' retrace his steps has been recognized to fall more properly under the principle that the courts will grant relief from illegal contracts where the party seeking relief was not in pari delicto. “To deprive a party of the right to repudiate an illegal contract and recover money paid thereon, it is not necessary that the illegal object should have been fully executed; it is sufficient if there has been a partial execution of such illegal object.” In the application of the doctrine that the courts will not in any way lend their aid to either of the parties to an illegal agreement, we have reached the conclusion that the allowance of attorney’s fees to the defendant was erroneous. It is the contention of appellee that the right to attorney’s fees upon the dissolution of an injunction is statutory, and that this right is in no wise dependent upon the legality or illegality of the transaction upon which the — 299 — suit is based. This distinction is entirely too refined. It is true that the right to damages and attorney’s fees upon the dissolution of an injunction is statutory, but when an illegal agreement underlies and is the basis of the entire litigation, and the parties are in pari delicto, the courts will not lend their aid to the enforcement of this right, and will not aid the defendant in securing the sinews of war to fight the legal battles which are thrust upon him on account of his participation in an illegal agreement, but will leave them in their respective positions. The decree of the court below in so far as it awards ap-pellees attorney’s fees will therefore be reversed; otherwise the decree is affirmed. Affirmed in partx and reversed in part.