204 A.D. 392 | N.Y. App. Div. | 1923
Lead Opinion
The plaintiff, a California corporation, entered into a written agreement with the defendant dated July 19, 1920, a copy of which is annexed to the complaint and the making of which is admitted by the answer. The contract was that plaintiff agreed to sell and deliver to the defendant “ for lawful use and under government permit ” 700 barrels of Barbera wine at seventy-two and one-half cents per gallon and 300 barrels of Zinfandel wine at seventy cents per gallon. “ Prices are naked F. O. B. Cars California shipping point, * * *. Payment for the wine to be cash against bill of lading attached to sight draft for each shipment. All wine to be shipped before December 1, 1920, pro
The action is to recover the purchase price of the wine and storage expenses less the $3,500 paid by defendant. The defendant has not either by motion or upon the argument questioned the sufficiency of the complaint. We will, therefore, only consider the sufficiency of the defense and counterclaim, which are directly attacked by the plaintiff.
The answer admits the making of the contract, but denies the other material allegations of the complaint and sets up an affirmative defense that the wines in question contained more than one-half of one per cent of alcohol and were intoxicating liquors and were and are intended to be used for beverage purposes and were governed by the provisions of the National Prohibition Act and the regulations of the Secretary of the Treasury and the National Prohibition Commissioner made pursuant thereo; that the words “lawful use” referred to in the contract were intended to mean that the sale was to be permitted and allowed by the National Prohibition Commissioner or his duly appointed subordinates; that the government permits referred to in said contract were intended to mean the permits to be issued by the National Prohibition Commissioner in accordance with the law; that between July nineteenth, the date of the making of the contract, and the the other days referred to therein, the defendant made repeated applications to the National Prohibition' Commissioner and his duly appointed subordinates to issue a permit to purchase and transport the wine set forth in the contract, and that although due and reasonable efforts were made to obtain the same the National Prohibition Commissioner and his duly appointed subordinates refused to issue said permits or permit the purchase or transportation of any of said wine, without any fault, omission or act of commission or negligence on the defendant’s part. As a counterclaim the answer “ repeats and realleges each and every paragraph in said complaint numbered ‘ First ’ and ‘ Second ’ and each and every
.The contract having been annexed to the complaint and the defendant having admitted it to be the contract between the parties, its scope and effect must be determined from the instrument itself, and not from the allegations of the parties. The construction sought to be put upon the contract by the defendant would render it an illegal contract. The sale or transportation of intoxicating liquors for beverage purposes is prohibited by the Eighteenth Amendment to the Constitution of the United States and the act of Congress, enacted to enforce it. If the sale and transportation of such liquors could be made for a lawful purpose, the contract must be construed to have been entered into with that purpose in view. Where one construction of a contract would render it illegal and another legal, the latter must be adopted, for it will not be presumed that the parties had thereby agreed to do an illegal act. (Lorillard v. Clyde, 86 N. Y. 387.) Not alone would this be the presumption, but the parties have expressly stated in the contract that the plaintiff agreed to sell and deliver these wines “ for lawful use and under government permit.” If, therefore, there was a lawful use of these wines for which the government would issue a permit, it was that use that was contemplated. Section 3 of title 2 of the National Prohibition Act of October 28, 1919 (41 U. S. Stat. at Large, 308), provides, so far as material to this consideration: “Liquor for nonbeverage purposes and wine for sacramental purposes may be manufactured, purchased, sold, * * * transported, * * * but only as herein provided, and the Commissioner may, upon application, issue permits therefor.” Title 2, section 1, subdivision 7, of said Act (Id. 307, 308) gives to the Commissioner with the approval of the Secretary of the Treasury authority to make regulations to carry out the provisions of the act. The regulations prescribed by the National Prohibition Commissioner and by the Commissioner of Internal Revenue and approved on January 16, 1920, by the Secretary of the Treasury to enforce this measure are known as Internal Revenue Regulations 60. As they existed at the time this contract was made and during the period of its performance, they were substantially as follows, so far as material to this case: Under article 3, section
The following section (55) sets forth at length the requirements for the application to obtain such permit, among which are, that it must be made in triplicate and where transportation is involved one or two additional copies must be furnished; it must contain all the names of the respective parties, the proposed purchaser and seller, the quantity of goods desired to be purchased or transported, and when approved by the Prohibition Director it constitutes a permit. When the permit is approved all copies are sent to the vendor, who is required to set forth, in blank spaces provided therefor, the particular character of the goods, sufficiently to identify them. He is then required to return one copy to the Director, to file one copy at his place of business and if transportation is involved, send the remaining copies to the applicant who retains one copy and delivers the other or others to the carrier. The carrier is not permitted under article 16 to accept any goods for transportation until he receives an approved copy of permit on form 1410.
It was these permits bn form 1410 that the defendant under the terms of the contract agreed to obtain and without which it was impossible for the contract to be performed. In this requirement may be found the reason for the contract not vesting at the option
The order should be reversed, with ten dollars costs and disbursements, and the motion granted, with ten dollars costs.
Clarke, P. J., Dowling and McAvoy, JJ., concur; Smith; J., dissents in part.
Dissenting Opinion
Under an allegation in the answer of illegality in the purpose of a contract the defendant may prove that the contract though legal in form was entered into for such illegal purpose. The presumption of legality where a contract is capable of two interpretations — one denoting a legal contract and the other an illegal contract —is a primary presumption only and may be overcome by proof of an illegal purpose intended. Under the allegations of the answer the defendant may prove that the wine was illegally sold to be used as a beverage and the court will give no aid to either party to a contract thus tainted. The counterclaim should be stricken out because under its allegations recovery is sought upon an illegal contract.
Order reversed, with ten dollars costs and disbursements, and motion granted, with ten dollars costs.