tion as a security not champertous. agreement to supply funds to carry on a suit in considera- terest in litigation of having a share of the property, if recovered, will not be regarded as being, per se, opposed to public policy. "Indeed, cases may be easily supposed in which it would be in furtherance of right and justice, and necessary to resist oppression, that a suitor who had a just title to property and no means except the property itself, should be assisted in this manner." (g)] 25 SECTION II.-CONTRACTS ILLEGAL BY STATUTE. Prohibition implied. § 818. When contracts are prohibited by statute, the prohibition is sometimes express, and at others implied. Wherever the law imposes a penalty for making a contract, it impliedly express or forbids parties from making such a contract, and when a contract is prohibited, whether expressly or by implica- ever penalty tion, it is illegal, and cannot be enforced. Of this there is no doubt. (h) 26 Implied when is imposed. Distinction But the question frequently arises whether, on the true construction of a statute, the contract under consideration has really been prohibited, and in determining this point much weight has been attributed to a distinction held to exist between two classes of statutes, those passed merely for (g) Per Committee of Privy Council in Ram Coomar Coondoo v. Chunder Canto Mookerjee, 2 App. Cas. 186, 210. between statfor revenue utes passed purposes and others. Dillon v. Allen, 46 Iowa 299; Caldwell v. 25. McPherson v. Cox, 96 U. S. 404, 285; Sawyer v. Smith, 109 Mass. 220; 416; Duke v. Harper, 66 Mo. 51. (h) Bensley v. Bignold, 5 B. & Ald. 335; Forster v. Taylor, 5 B. & Ad. 887; Cope v. Rowlands, 2 M. & W. 149; Chambers v. Manchester and Milford Railway Co., 5 B. & S. 588; 32 L. J., Q. B. 268; In re Cork and Youghall Railway Co., 4 Ch. 748. 26. The Imposition of a Penalty is in General Equivalent o a Prohibition. -Bank of United States v. Owens, 2 Pet. 538; Columbia, &c., Co. v. Halderman, 7 W. & S. 233; Seidenbender v. Charles, 4 S. & R. 159; Holt v. Green, 73 Penna. 198; Mitchell v. Smith, 1 Binn. 110; Berkholder v. Bertein, 65 Penna. 496, 505; Gregory v. Wilson, 36 N. J. L. 315, 316; Smith v. Arnold, 106 Mass. 269; Libby v. Downy, 5 Allen 299; Miller v. Post, 1 Allen 434; Woods v. Armstrong, 54 Ala. 150. A Forbidden Contract cannot be Enforced. "The law will not lend its support to a claim founded on its own violation." Coppell v. Hall, 7 Wall. 542, 559; Auding v. Levy, 57 Miss. 51; Decell v. Lewenthal, 57 Miss. 331; Colten v. McKenzie, 57 Miss. 418; James v. Josselyn, 65 Me. 138; Block v. McMurry, 56 Miss. 217. The parties are left in the position in which they have placed themselves. Gunderson v. Richardson, 56 Iowa 56, 58. See ante note 1. revenue purposes, and those which have in contemplation, wholly or in part, the protection of the public, or the promotion of some object of public policy. It is necessary to review the cases, as the principles established by them seem to be imperfectly stated in some of the textbooks. Johnson v. : § 819. The leading case on this point is Johnson v. Hudson, (i) decided by the King's Bench in 1809. Different statutes Hudson. had provided, 1st, that all persons dealing in tobacco should, before dealing therein, take out a license under penalty of £50 and 2ndly, that no tobacco should be imported, either wholly or in part manufactured, under penalty of forfeiture of the tobacco, the package, and the ship. In this state of the law, the plaintiffs, who had never before dealt in that article, received a consignment of tobacco manufactured into segars, which they duly entered at the customhouse, and then sold to defendant without taking out a license. The court held that the action was maintainable, observing " that here there was no fraud upon the revenue, on which ground the smuggling cases had been decided; nor any clause making the contract of sale illegal, but, at most, it was the breach of a mere revenue regulation which was protected by a specific penalty; and they also doubted whether this plaintiff could be said to be a dealer in tobacco within the meaning of the act." Brown v. § 820. Next, in 1829, Brown v. Duncan (j) came before the same court. The statutes provided, 1st, that no distiller should, Duncan. under penalty, deal in the retail sale of spirits within two miles of the distillery; and 2d, that in taking out a license for distilling, the names of the persons taking out the license should be inserted. One of five partners in a distillery was engaged in the retail trade within two miles of the distillery, and his name was, it seems, intentionally omitted in taking out the distillers' license. The partners then appointed an agent to sell their whiskey in London, and the defendant guaranteed the fidelity of the agent. In the action by the partners to enforce this contract, its illegality was pleaded. The court held that the plaintiffs could recover on the authority of Johnson v. Hudson, saying "there has been no fraud on the part of the plaintiffs on the revenue, although they have not complied with the regulations which it has been thought wise to adopt in order to secure, as far as (i) 11 East 180. (j) 10 B. & C. 93. See, also, Wetherell v. Jones, 3 B. & Ad. 221. * * may be, the conducting of the trade in such a way as is deemed most expedient for the benefit of the revenue. These cases are very different from those where the provisions of acts of parliament have had for their object the protection of the public, such as the acts against stock-jobbing and the acts against usury. It is different, also, from the case where a sale of bricks required by act of parliament to be of a certain size was held to be void because they were under that size. There the act of parliament operated as a protection to the public as well as to the revenue, securing to them bricks of the particular dimensions. Here the clauses of the act of parliament had not for their object to protect the public, but the revenue only.” (k) Cope Row § 821. In 1836, Cope v. Rowlands (1) was decided in the Exchequer, and it was held that a city of London broker could not maintain an action for his commissions in buying and sell- lands. ing stock, unless duly licensed according to the 6 Anne, c. 16, § 4, which provides that if any person should act as a broker in making sales, &c., without such license, he shall forfeit £25 "for every such offence." In the course of the argument, Parke, B., said: "Very considerable doubt was thrown on the distinction which has been taken between breaches of laws passed for revenue purposes, and others, in the case of Brown v. Duncan, and when it comes to be considered, I think that distinction will be overruled." The court took the case under consideration, and the decision was delivered by the same learned Baron, who again said: "It may be safely laid down, notwithstanding some dicta apparently to the contrary, that if the contract be rendered illegal, it can make no difference, in point of law, whether the statute which makes it so has in view the protection of the revenue, or any other object. The sole question is, whether the statute means to prohibit the contract." Notwithstanding this statement, the learned Baron went on to say that the question before the court was whether the statute under discussion "is meant merely to secure a revenue to the city, or whether one of the objects be the protection On the former supposition, the contract with a broker for his brokerage is not prohibited by the statute; in the latter of the public. * * (k) The law relating to the manufacture and sale of spirits is consolidated and amended by 43 and 44 Vict., c. 24, (The Spirits Act, 1880.) As regards the subject of this treatise see especially 100-102; and 126-130 (as to the sale of methylated spirits.) (1) 2 M. & W. 149; and see Fergusson v. Norman, 5 Bing. N. C. 76, approving Cope v. Rowlands and Barton v. Piggott, L. R., 10 Q. B. 86. it is." The court then decided that the benefit and security of the public formed one object of the statute, and that the plaintiff was not entitled to recover. hood. § 822. Again, in 1845, the same point was discussed in the same Smith v. Maw- court, in Smith v. Mawhood, (m) where the defence in an action for goods sold and delivered was based on the allegation that the goods were tobacco, and that the plaintiff had not complied with the law requiring him to have his name painted on the house in which he carried on his business, in the manner specified in the law, under penalty that the person so offending should forfeit £200. Held, that plaintiff could maintain his action. Parke, B., said: "I think the object of the legislature was not to prohibit a contract of sale by dealers who have not taken out a license pursuant to the act of parliament. If it was, they certainly could not recover, although the prohibition were merely for the purpose of revenue. But, looking to the act of parliament, I think its object was not to vitiate the contract itself, but only to impose a penalty on the party offending, for the purpose of the revenue." The other judges concurred, and Alderson, B., pointed out, as a controlling circumstance in construing the statute, that the penalty was "for carrying on the trade in a house in which the requisites were not complied with; and that there is no addition to his criminality if he makes fifty sales of tobacco in such a house." This distinction seems to be as sound as it is acute. In Cope v. Rowlands, the broker was not allowed to recover, because, by the law, each sale was an offence, punished by a separate penalty; but in Smith v. Mawhood there was but one offence, punished by but one penalty, viz., the offence of failing to paint a proper sign on the house in which the business was done. Making a sale in such a house was not declared by the law to be an offence. Cundell v. § 823. In the Court of Common Pleas, in 1847, all the foregoing cases were cited and considered in Cundell v. Dawson. (n) Dawson. At the close of the argument, Wilde, C. J., said, that considering the diversity of dicta and decisions on the subject, the court would not pronounce any judgment without looking into the cases more carefully, and the matter was therefore held under advisement from the 23d of April to the 8th of May, when the Chief Justice delivered the opinion of the court. The action was for the price (m) 14 M. & W. 463. (n) 4 Com. B. 37 of coals, and the defence was that the plaintiff had violated the statute 1 and 2 Vict., c. 101, by failing to deliver to the defendant a ticket as required by that statute, stating the quantity and description of the coals delivered. The statute directed such delivery, under penalty, in case of default, of £20 "for every such offence." The Chief Justice said: "The statutes which have given rise to the question of the right to recover the price of goods by sellers who have not complied with the terms of such statutes, are of two classes-the one class of statutes having for their object the raising and protection of the revenue: the other class of statutes being directed either to the protection of buyers and consumers, or to some object of public policy. The present case arises upon a statute included in the latter class. * *The class of statutes enacted simply for the security of the revenue, do not apply to the present case: and various determinations which are contained in the books, upon the construction of those statutes, and the effect of a non-compliance with their enactments by the seller of goods, rest upon principles not applicable to the present case." The court then held, on the authority of Little v. Pool, (o) that the coal acts (p) were intended to prevent fraud in the delivery of coals; to protect the buyer; and judgment was therefore given for the defendant. § 824. In 1848, the same court adverted to the same distinction in Ritchie v. Smith. (q) The case was a very clear one. It Ritchie v. was a bargain between parties, by which the buyer was to Smith. be enabled to carry on a retail trade in spirits on part of the vendor's premises, under the vendor's license, so as to make one license cover both trades. The statute 9 Geo. IV., c. 61, (r) inflicted a penalty, when liquor was sold to be drunk on the premises, without such license, of not more than £20 nor less than £5, " for every such offence." Wilde, C. J., said that "it is impossible to look at this agreement without seeing that the parties contemplated doing an illegal thing, in the infraction of a law enacted not simply for revenue purposes, but for the safety and protection of the public morals." All the judges, Coltman, Maule, and Williams, put the judgment on the same ground, (0) 9 B. & C. 192. (p) The coal act, 1 and 2 Vict., c. 101, does not apply where coals are unloaded directly from the vessel in which they were shipped onto the wharf of the purchaser. Blandford v. Morrison, 15 Q. B. 724, and 19 L. J., Q. B. 533. (g) 6 C. B. 462. (r) The penalties now in 'force for the sale of intoxicating liquors without license are those imposed by 35 and 36 Vict., c. 84, 3, (Licensing Act, 1872.) |