Fairly v. Wappoo Mills

44 S.C. 227 | S.C. | 1895

Lead Opinion

The opinion of the court was delivered by

Mr. Chief Justice MoIver.

The plaintiff brings this action to recover the amount of his commissions as a broker, agreed upon by special contract, as he claims, upon the amount of a sale of 2,000 tons of a certain fertilizer, negotiated by the plaintiff for the defendant to the Caddo Fertilizer Company, the commissions being ten cents per ton. The defendant, in its answer, admits the allegations contained in the first paragraph of the complaint, which, in substance, are that plaintiff is a broker in the city of Charleston, S. O., carrying on a brokerage business in fertilizers, &e., and that defendant is a duly chartered corporation under the laws of this State, having its office and place of business in the county of Berkeley. Defendant denies each and every allegation in the second paragraph of the complaint except such as is specifically admitted in the answer, to wit: “That the contract of sale attached to the complaint as exhibit A, and made a part thereof, was brought about by the plaintiff; but this defendant alleges that there existed at the date thereof a custom in this business to pay brokerage or commission only on the amount of stuff actually sold and delivered under such contract. The contract of sale thus referred to is a contract for the sale of 2,000 tons of the fertilizer mentioned by defendant to the Caddo Fertilizer Company upon the terms therein mentioned, amongst which were that the fertilizer should be delivered “f. o. b. cars here”— Charleston; and shipment to be made of “four hundred tons per month, during September, October, November, and December, 1890, and January, 1891. Seller paying brokerage at ten cents per ton.” This contract is dated “Charleston, S. C., June 5th, 1890,” and is signed by the defendant company through its president, and “Accepted. Caddo Fertilizer Co.”

The defendant, in its answer, sets upa second defence, alleging that the purchase was made by the plaintiff, “representing the Caddo Fertilizer Company,” on the terms above stated; that about the time designated for the first shipment of 400 tons, the plaintiff, still representing the Caddo Fertilizer Company, requested defendant not to make said shipment; that about the time designated for the second shipment, the plaintiff, still representing the Caddo Fertilizer Co., requested defendant not to makejsaid second shipment; that about the time designated for the third shipment, the plaintiff, still representing the Caddo Fertilizer Co., requested defendant to ship to said company a cargo of the fertilizer, “by vessel, for the price of $9.50 per ton, f. o. b. vessel,” and that defendant did ship by vessel 684.21 tons of said fertilizer to the said company, “drawing upon them, at the request of the plaintiff, at thirty days for the purchase money for same; that when this draft became payable, the plaintiff, still representing the Caddo Fertilizer Co., urged the defendant to renew and extend the said draft for sixty days longer, for the reason that the Caddo Fertilizer Co. were not able to pay the first draft at that time,” and the defendant having negotiated said draft, was compelled to take up the same, and accept the note of the Caddo Fertilizer Co., payable at sixty days; that shortly after the failure of the Caddo Fertilizer Co. to pay the first draft, the plaintiff, still representing the said company, requested defendant to send them another shipment; but defendant, “considering the said agreement broken by reason of the several breaches hereinabove mentioned, refused to make the desired shipment.” The defendant, therefore, alleges that the entire amount of fertilizers sold by it to the Caddo Fertilizer Co. is 684.21 tons, upou which it is admitted defendant became liable to pay the brokerage agreed upon, to wit: the sum of $68.43, all of which has been paid except the sum of forty-three cents, which defendant has always been and is now willing to pay.

For third defence the defendant alleges that the plaintiff never obtained a license as broker for the year 1890, as required by an ordinance of the city council of Charleston. This ordinance was by consent incorporated in the “Case,” and is printed in the record, and its terms will hereinafter be more particularly referred to. While we have thus endeavored to state substantially the pleadings, it will be necessary for a more full understanding of the questions involved in this appeal, that the reporter should embrace in his report of the case copies of the complaint with the exhibit thereto, the answer, and the ordinance referred to in the third defence.

The plaintiff gave notice, that on the trial of the case he would move to strike out the first, second, and third defences set up in the answer, upon the ground that the allegations therein made do not state facts sufficient to constitute either a defence or counter-claim, and also for judgment by default. This motion was heard by his honor, Judge Townsend, who granted this motion, and held that the plaintiff was entitled to judgment by default for the amount of his claim, to wit: the sum of $132. From this judgment defendant appeals on the several grounds set out in the record, which need not be repeated here, as they, together with the decree of the Circuit Judge, should be incorporated in the report of the case.

1 While the controversy presented by this appeal arose upon the motion to strike out the several defences set up in the answer, it is, practically, nothing more nor less than a demurrer to the answer, and will be so considered. It follows, therefore, that all the facts well pleaded in the answer must be regarded as true, and the general question is, conceding the facts stated in the answer, whether they are sufficient to sustain anyone or more of the defences relied upon. Counsel for appellant, in their argument here, while conceding that the answer, in form, sets up but three defences, yet they claim that the answer really sets up four distinct defences, inasmuch as two of them have been somewhat inartistically united together as one. We see no objection to so regarding the answer, and will, therefore, consider the several defences as stated in the argument of counsel for appellant.

2 The first is thus stated: “That there exists a custom in the fertilizer trade by which brokerage is only allowed on the amount of material actually delivered under a contract, whatever may be the amount named in the contract.” The question raised by this defence has been before the courts of the several States as well as those of England, in very many cases, most of which, we suppose, have been cited by counsel in their elaborate arguments. We have examined all of the cases cited to which we have been able to obtain access, and in the light of these authorities, without undertaking to cite all of them, we propose to consider the question which we are called upon to decide. It seems to us that the very decided weight of authority is in favor of the proposition, that evidence of custom and usage is not admissible to explain or vary the terms of an express contract, whether written or verbal, u nambiguous in its terms, unless it be to show the meaning of certain terms used in such contract, which by well established custom or long usage have acquired a meaning different from that which they primarily bear, for the reason that when parties in making a contract use terms which by usage or custom have acquired a certain meaning, they must, in the absence of any evidence to the contrary, be assumed to have used such terms in such acquired sense.

In the absence of any authority in this State upon this question (for we do not think the case of Mordecai v. Jacobi, 12 Rich., 548, throws any light upon the question), we are compelled to resort to the authorities elsewhere. In Globe Milling Co. v. Elevator Co., 46 N. W. Rep., 306, the question was, whether the title to certain grain sold vested in the vendee. By the terms of the contract of sale, the grain was sold for “cash on delivery,” which had not been complied with, but vendee sought to sustain his claim by proof of a custom prevailing in that locality, whereby the title was regarded as having passed when certain things were done, whatever might be the terms of the sale agreed upon by the parties. But the court said: “A local usage cannot be proved to contradict a contract. * * * If by the contract of sale of this wheat, it was for cash on delivery, the usage cannot make it a sale on a credit.”

In Page v. Cole, 120 Mass., 37, the action was to recover damages for the breach of a contract for the sale of a “milk route,” and evidence as to the meaning and effect which that term had acquired by usage prevailing in that locality was held competent.

In Walls v. Bailey, 49 N. Y., 464, the action was to recover the amount due plaintiff for plastering which he had contracted to do at so much per square yard, and it was held competent to prove that the custom was to measure the openings for windows and doors, as well as the solid walls. In that case it was said that ‘ ‘Every legal contract is to be interpreted in accordance with the intention of the parties, and usage, when it is reasonable, uniform, and well settled, not in opposition to fixed rules of law, not in contradiction to the express terms of the contract [italics ours], is deemed to form a part of the contract, and to enter into the intentions of the parties.”

In Hinton v. Locke, 5 Hill (N. Y.), 437, the action was on a contract to pay the plaintiff so much per day for his services, and it was held competent to show that the universal custom in that locality was to count a day as ten hours. Of course, the term “day” could not be regarded as meaning twenty-four hours, and hence it was competent to show how many hours was regarded as a day. In that case, however, Branson, J., in delivering the opinion of the court, expressly disapproves of the case of Smith v. Wilson, 3 Barn. & Ad., 728, where upon a contract to pay so much a thousand for all the rabbits in a certain warren, it was held competent to show that in that part of the country the custom was to construe the term “thousand” as meaning one hundred dozen or twelve hundred, because he said that would be allowing the custom to contradict the express terms of the contract. His language is: “Ho usage or custom can be set up for the purpose of controlling the rules of law; nor is such evidence admissible where it contradicts the agreement of the parties.”

In Ware v. Heyward Rubber Co., 3 Allen, 84, the plaintiff claimed one-half commissions on goods consigned to him for sale, but not sold and turned over to consignor, basing his claim upon a custom prevailing in that locality. Held, that evidence of such a custom was incompetent. Chapman, J., in delivering the opinion of the court, used this language: “This being a written and express contract, the evidence offered in respect to the usage of commission merchants to charge one-half commissions when goods consigned to them in the ordinary way for sale are taken back, is not applicable to this case; for an express contract cannot be controlled or varied by usage;” and this was the point upon which the case turned.

In Ford v. Tirrell, 9 Gray, 401, the action was upon a contract to build an octagonal cellar wall, at eleven cents per foot, and the question was as to the mode of measurement to be adopted in order to ascertain the amount of work done. The court seems to have held that, as the contract was silent as to the mode of measurement, it was competent to introduce evidence as to the custom or usage in such cases, by which the mode of measurement should be determined, citing 1 Green], on Evid., § 292.

In Barton v. McKelway, 22 N. J., 165, the action was on a written contract for the delivery of a specified number of morns multicanlis trees, of not less than one foot in height, and the question was as to the mode of measuring the height of the trees. Held, that it was competent to show that it was the universal custom prevailing amongst dealers in such articles, to measure only the ripe, hard wood, rejecting the green, immature top. The court, in its opinion, say that the true office of such evidence is “to interpret the otherwise indeterminate intention of the parties, and the nature and extent of their contract, and fix and explain the meaning of words.”

In Wilcox v. Wood, 9 Wend., 345, the question was as to when, at what hour, a lease from the 1st of May to the 1st of May in a succeeding year terminated, and it was held competent to show that, by universal custom, such a lease would terminate at twelve M. on the 1st of May.

In Grant v. Maddox, 15 Mees. & W., 737, the court went as far as in any other case which we have examined. In that case, the action was upon a contract to pay the plaintiff for her services as an opera singer, so much per week for each week in the three years for which she was engaged, and the controversy was as to whether plaintiff was entitled to receive the stipulated sum for each week during the whole of the three years, or only for each week during the theatrical season of those years. The court held that it was competent to prove a custom, by which a year was regarded as only the theatrical season, and not the whole calendar year.

In Higgins v. Moore, 34 N. Y., 417, the question was whether a purchaser of grain in the city of New York, negotiated by a broker, would be discharged by payment of the purchase price to the broker. Held, that he would not, as the broker’s agency terminates when he makes the sale, and he has no authority to receive the purchase money; and that evidence of any local usage in New York, to the contrary, was not admissible to control the general rule of law.

In Bower v. Jones, 21 E. C. L. R., 224, it was held that where there was an express agreement that the principal should be responsible for bad debts, proof that the custom of the trade was that commissions should not be allowed on bad debts, could not be received, because in violation of the express terms of the agreement.

From this review of the cases cited above, as well as from the examination of others which we have not deemed it necessary to cite, it is obvious that there is not entire harmony in the decisions, but we are of opinion that the proposition laid down at the outset of this discussion is supported by the weight of authority as well as by reason.

3 Our next inquiry is, whether the contract which constitutes the basis of this action is of such a character as to require or warrant a resort to evidence of custom or usage in order to explain any ambiguity therein, or to interpret the meaning of terms used therein which have acquired some secondary meaning. We are unable to discover any ambiguity iu the terms of the contract. The amount of the article sold, the price, the times of delivery, and the time and mode of payment, are all distinctly specified; and we are equally unable to discover any terms used therein which require interpretation. We do not see, therefore, how the first defence can be sustained.

4 The second defence set up in the answer is thus stated in the argument of counsel for appellant: “That the plaintiff himself brought about such changes in the original contract of sale as precluded his right to commissions under it.” An examination of the answer will show that this defence, as above stated, is not therein stated, for all the allegations in reference to the several changes in the terms of the contract of sale, are stated to have been proposed or insisted upon by the plaintiff, as agent of the purchaser, and not as broker — the language of the answer in each instance being that the several alterations were requested by the plaintiff, “representing the Caddo Fertilizer Company,” and not by him as broker. Now, it is conceded that the plaintiff had effected a valid contract for the sale of the fertilizers, assented to in writing by both vendor and vendee, as evidenced by the signatures of both of these parties, it seems to us that the plaintiff’s connection with the matter as broker terminated, and he was then entitled to his commissions. If, afterwards, acting as the agent or the representative of the purchaser, the plaintiff sought to procure from the defendant some modification of the terms of the sale, we do not see how this could affect his right to commissions which had previously been earned.

5 The third defence set up in the answer, is stated in the argument of counsel for appellant in these words, “That the customer or purchaser produced by the plaintiff was not able to pay for the material according to the terms agreed upon.” In the first place, we do not find any allegation in the answer that the purchaser, the Caddo Fertilizer Co., was not able to pay for the fertilizer purchased; and there is no allegation of insolvency. The nearest approach to such an allegation is, that the purchaser did not meet the draft drawn upon it when it became payable, and requested an extension, “for the reason that the Caddo Fertilizer Co. were not able to pay the first draft, at that time [italics ours]. This allegation does not usually or necessarily imply insolvency (Akers v. Rowan, 33 S. C., 451), aud something more is necessary to establish a charge of insolvency. It only implies an inability to meet the draft at maturity, and not an inability to pay the debt, or a want of sufficient assets to do so. The ease just cited shows that the interpretation placed upon the words “insolvent” and “insolvency,” as used in the U. S. Bankrupt Act, by the Supreme Court of the United States, is not recognized here, in cases not arising under such bankrupt act, but that those terms must be interpreted as signifying “that condition in which a debtor is found, when his property is insufficient to yield a fuud sufficient to pay his debts, through the agency of the process of law.” It is very manifest* that there is no allegation in the answer which would bring this case within the rule above stated; and hence, upon this ground, the allegations of the answer are not sufficient to sustain this third defence.

6 In addition to this, while it may be true, as a general proposition, that a broker, before he is entitled to his commissions, must produce a purchaser willing and able to comply with the terms of the contract of sale, yet if the purchaser produced by the broker is accepted by the seller, without any misrepresentation on the part of the broker as to the financial ability of the proposed purchaser, and without the suppression by the broker of any knowledge he may have as to the financial condition of such purchaser, then the burden of proof is upon the seller, to show that the proposed purchaser is notable to comply with the terms of the contract. It seems to us, after a careful examination of the cases cited upon this point, some of which we will notice below, that the true rule upon this subject is well stated in Coleman v. Meade, 13 Bush (Ky.), 358, as follows: “The broker undertakes to furnish a purchaser, and is bound to act in good faith in presenting a person as such, and when one is presented, the employer is not bound to accept him or to pay the commission, unless he [the purchaser] is ready and able to perform the contract on his part, according to the terms proposed; but if the principal accepts him, either upon the terms previously proposed or upon modifications then agreed upon, and a valid contract is entered into between the principal and the person presented by the broker, the commission is earned. But if, as was the case in McGavock v. Woodlief (20 How., 221), the principal rejects the purchaser, and the broker claims his commission, he must show not only that the person furnished was willing to accept the offer precisely as made, but, in addition, that he was an eligible purchaser — by which we understand, was a person able to carry out the contract, and such as the principal was bound, as between himself and the broker, to accept.”

This distinction between a case in which the seller accepts the purchaser offered by the broker, and a case in which the seller rejects such purchaser — which we think is a just and proper distinction — appears to be ignored in some of the cases, and disregarded or rejected in others. In Kimberley v. Henderson, 29 Md., 512, it was held that a broker is not entitled to his commissions unless he finds a purchaser able and willing to carry out his contract, and a sale is actually made. In • that case the broker did find a purchaser, who was accepted by the seller, and the contract was actually executed; but as the contract contained a stipulation that if either party failed to comply with the contract, he should pay to the other the sum of $1,000, and as the proposed purchaser failed to comply and paid the forfeit, the court held that the broker could not recover his commissions on the purchase price agreed upon, but only on the amount of the forfeit received by the .vendor. That case is not, therefore, exactly in point. The cases of Duclos v. Cunningham, 102 N. Y., 678; Iselin v. Griffith, 62 Iowa, 668, and McLaughlin v. Wheeler, 47 N. W. Rep., 816, simply hold the general doctrine that a broker, before he can claim his commissions, must produce a purchaser able and willing to comply, and do not go into the question of the effect of the seller accepting the proposed purchaser.

The ease of Butler v. Baker, 17 R. I., 582 (23 Atl. Rep., 1019), in its dicta is the strongest cited by appellant upon this point. In that case the broker found a purchaser, and presented him to the owner of the land, who accepted him and entered into a contract upon the terms proposed. But when the last payment was to be made the purchaser was unable to do so, and the court held that the broker was not entitled to his commissions. The conclusion reached in that case seems to have been rested partly upon the ground that the vendor knew nothing of the financial condition of the purchaser, and was not informed as to his condition by the broker, which the court said it was his duty to do. It is also there said that the cases differ as to the question upon whom the burden of proof rests as to the financial condition of the purchaser — -some holding that the burden of proof is upon the broker, upon the ground that he undertakes to find a purchaser able and willing to buy, and cites the cases, amongst which we find the case of Coleman v. Meade, supra, which, as we have seen, does not so hold, when the vendor accepts the purchaser, but just the contrary; and then cites other cases showing that the burden of proof rests upon the vendor; concluding that portion of the opinion in these words: “It is not necessary for us to decide this question,” for the reason that no testimony was offered by the broker to show the purchaser’s financial ability, while the defendant did offer such testimony as would justify the jury in finding that the purchaser was unable to comply with the contract. It is obvious, therefore, that the case of Butler v. Baker affords no authority‘as to the question of the burden of proof.

In Love v. Miller, 21 Am. Rep. (Ind.), 192, it was held that where a broker, employed for that purpose, produces a purchaser, who enters into a valid contract wdth the owner of certain real estate for the purchase of the same, the broker has earned his commissions, notwithstanding the fact that the purchaser afterwards declines to perform his part of the contract. In that case nothing is said as to the financial ability of the proposed purchaser. In Vinton v. Baldwin, 45 Am. Rep. (Ind.), 447, it was held that a person employed to procure a loan for a commission is entitled to his commission on finding a person able and willing to make the loan, although the proposed borrower afterwards declined to accept the loan. In that case the court likened the case to that of a broker employed to sell real estate, in which case the court said: “It is uniformly held that the commissions are earned when a purchaser is found able and willing to buy on the terms proposed * * * and does not depend upon the ultimate consummation of the sale.”

From this review of the authorities, and after due consideration of the reasons upon which they are based, we are of the opinion that the facts stated in the answer are not sufficient to sustain the third defence, and, therefore, there was no error in sustaining the demurrer to that defence.

7 It only remains for us to consider what is stated in the answer as to the third defence, but styled in the argument the fourth defence. That defence, it is claimed in the argument of the counsel for appellant, raises the following question: “Can a broker, who has not procured a license to do business, required by a valid city ordinance, maintain an action to recover his commissions?” It is alleged in the answer, and the demurrer admits it to be true, that the plaintiff had failed to procure a license to do business as a broker in the city of Charleston for the year 1890, during which year the transaction here in question took place, as required by an ordinance passed by the city council of Charleston, under the authority conferred upon said city council by an act of the General Assembly of this State. Acts of 1881, 17 Stat., 582. This act simply invests the city council with authority to require the payment of a license fee from any person engaged in any calling, business, or profession within the limits of the city of Charleston, with certain exceptions which need not be stated, and authorizes the city council to pass such ordinances as may be necessary to carry the intent and purposes of the act into full effect. The intent and purpose of the act, as declared in its title, is to authorize the city council to impose “a license tax” on persons engaged in any business in the said city. But there is nothing in the act declaring it to be unlawful for a person to engage in any business for which a license may be required, without obtaining such license.

In pursuance of the authority thus conferred, the city council of Charleston, in December, 1889, passed an ordinance, set out in the record, which provides substantially as follows: Sec. 1. “That every person * * * engaged in, or intending to engage in, any trade, business, or profession hereinafter mentioned, shall obtain, on or before the 20th day of January, A. D. 1890, a license therefor,” &c. Sec. 2 provides, “That if any person or persons shall exercise or carry on any trade, business, or profession, for * * * which a license is required by this ordinance, without taking out such license, he, she, or they shall, for each and every offence, be subject to a penalty not exceeding $100, * * * and the same shall be entered up as a judgment of the court, and execution shall issue against the property of the defendant, as for the collection of other taxes and penalties.” The other provisions of the ordinance do not seem to be pertinent to the question made in this case, except that brokers are mentioned as amenable to the provisions requiring a license. It will be observed that the ordinance contains no express provision making it unlawful for a person to engage in business as a broker, but simply imposes a penalty upon a person who does not obtain a license. It is conceded, and properly conceded, that if the law requiring a license actually and in terms declares that the business in question is unlawful, unless the requirement of a license is complied with, then the carrying on of the business without such license is prohibited, and a contract made under it cannot be enforced in a court of justice. For, as is said in one of the cases hereinafter cited, it would be “altogether anomalous, not to use any harsher term, to hold that a court of justice should enforce a contract founded upon an act which is absolutely forbidden by the law-making department of the government;” or, as is said in another case: “It would, indeed, be a strange anomaly if a contract, made in violation of a statute, and prohibited by a penalty, could be enforced in the courts of the same country whose laws are thus trampled upon and set at defiance.” See McConnell v. Kitchens, 20 S. C., at page 439, and O'Donald v. Sweeny, 5 Ala., 468.

It seems to us, however, that even where the statute does not, in express terms, declare the act unlawful or prohibit the carrying on of the business in question without a license, yet if it appears from a consideration of the terms of the legislation in question, that the legislative intent was to declare the act unlawful or to prohibit the carrying on of the business without a license, then no contract in pursuance of such business can be enforced. In other words, the inquiry is as to the legislative intent, and that may be found, not only in the express terms of the statute, but also may be implied from the several provisions thereof. See Harris v. Runnels, 12 How., 79, and Niemeyer v. Wright, 40 Am. Rep., 720. An important element which enters into the inquiry as to the legislative intent, seems to be whether the license is required simply as a mode of raising revenue — a tax pure and simple — and that the penalty is imposed as a means of enforcing the payment of such tax, and not for the purpose of prohibiting the busiuess; for while some of the cases do lay down the broad proposition that the imposition of a penalty implies a prohibition, we do not think that such is the necessary implication, as it may be imposed simply for the purpose of enforcing the payment of the license tax, and if so, then prohibition is not to be implied. We will next notice the cases cited in the argument, which, we think, show that the weight of authority as well as of reason support the views hereinbefore set forth.

The case of Westmoreland v. Bragg, 2 Hill, 414, is not in point, for the reason that the statute not only forbids the carrying on of the business of an apothecary without a license, but also expressly declares all contracts made by an unlicensed apothecary, in the course of his business, “utterly void and of no effect.” In McConnell v. Kitchens, 20 S. C., 430, the action was upon a contract for the sale of fertilizers, which the court held illegal and void, because the act regulating the sales of such articles had not been complied with, and that such act was not designed simply for the collection of revenue, but to protect the public from imposition and fraud, and hence a sale of any such article without a compliance with the requirements of the statute was illegal and void. It is obvious that the case docs not apply to the case now under consideration. ,

In Miller v. Ammon, 145 U. S., 421, the action was on a contract for the sale of wine, held to be “spirituous or vinous liquor,” by a person not having a license so to sell, and the court held that the contract could not be enforced. But in that case the ordinance of the city of Chicago requiring a license, expressly forbid the sale of spirituous or vinous liquor without a license, and did not, as in this case, simply require a person engaged in such business to obtain a license. That case, therefore, differs from the case now under consideration. In Holt v. Green, 13 Am. Rep. (Penn.), 737, it was held, by a divided court (Sherswood and Williams dissenting), that a commercial broker, who had not procured a license as required by the act of Congress, is not entitled to recover his commissions upon a sale made by him. The court, in its opinion, admits that there is a conflict of authority upon the question. In Johnson v. Hullings, 49 Am. Rep. (Penn.), 131, the court simply follows Holt v. Green. Buckley v. Humason, 16 L. R. A., 423, simply decides, that where a statute or an ordinance duly authorized, makes a particular business unlawful for unlicensed persons, any contract made in such business by one not authorized is void. In the notes to that ease a good many authorities are collected, which seem to show that the weight of authority is in favor of the view that the mere requirement of a license does not make the business unlawful without such license, unless the statute or ordinance either expressly or impliedly declares the business to be unlawful if carried on by a person without a license, and this implication may arise from the fact that the Statute has in view the protection of the public health or morals, or the prevention of frauds upon the public.

In the case of Mandlebaum v. Gregovich, 28 Pac. Rep., 121, the true distinction in cases of this kind is well pointed out in the following language: “Numerous authorities are cited by respondent’s counsel which announce the general proposition that a penalty implies a prohibition, though there be no prohibitory words in the statute, and that the agreement in violation of the statute, prohibiting or enjoining an act absolutely, or only under a penalty, cannot be enforced. This principle is appljed in all cases where the subject matter of the contract is forbidden by the statute [citing the eases], or is in violation of a statute for the protection of the public against imposition or fraud [citing the cases, but omitting the case of McConnell v. Kitchens, supra, which is on that line], or for the protection of the public health or morals [as in the ease of sales of spirituous liquors], or where the contract is against public policy.” But the court goes on to show that the contract there in question did not fall within either of those classes, and hence there was no illegality in the sale, but simply an illegality in the conduct of the seller, in not procuring a license, for which he may be subjected to a penalty, but the sale itself was not unlawful.

In Shippey v. Edwards, 9 Ala., 200, the action was on a note, to which the defence was, that the note was given on Sunday, in violation of the statute forbidding the transaction of any worldly business on Sunday, with certain exceptions, and subjecting the offending party to a penalty; and it was held that the contract, made on Sunday, was void. The court does go on to say: “It has been repeatedly held that a penalty inflicted by a statute upon an offence implies a prohibition, and a contract relating to it is void, even where it is not expressly declared by the statute that the contract shall be void.” But this is a mere dictum, for in that case the statute did, in express terms, forbid the making of any contract, except as excepted, on Sunday, and hence there was no necessity for implying a prohibition from the imposition of a penalty. The case of Woods v. Armstrong, 54 Ala., 150, is very much like our own case of McConnell v. Kitchens, supra, and falls under that class of cases mentioned in Mandlebaum v. Gregovich, supra, where the sale of the fertilizers was made in violation of a statute intended to prevent imposition or fraud.

The cases of Johnson v. Hudson, 11 East., 180, Cope v. Rowlands, 2 M. & W., 149, and Smith v. Mawhood, 14 Id., 452, show that the true inquiry in all cases of this kind is, whether the legislative intent was to declare the business unlawful if carried on without a license, or simply to impose a penalty upon the person who engages in such business without a license. If the former, then no contract made in the pursuit of such business can be enforced; but if the latter, then it may be, and the penalty is simply for the purpose of requiring the person engaging in the business to pay the license tax imposed.

Looking at this case in the light of these authorities, it seems to us that there is nothing, either in the statute or in the ordinance passed in pursuance of such statute, which indicates an intention to declare the business of broker unlawful if carried oh without a license, but that the real object was to enforce the payment of the license tax, by imposing a penalty on the person who may engage in such business without paying the license tax. The history of the act of 1870, under which the city council of Charleston undertook to impose license taxes on certain occupations pursued within the city of Charleston, as well as that of the act of 1881-82 above referred to, which was passed to repair the defect in the act of 1870, may be traced in the cases of Charleston v. Oliver, 16 S. C., 47, and the case between the same parties, practically, in 21 S. C., 318, and shows very clearly that the sole object of this legislation was simply to enable the city council of Charleston to impose license taxes in aid of the revenue of the city, and not for the purpose of making any business or occupation unlawful. Indeed, the very terms of the city ordinance show that it was not the ob-' ject to make the business of a broker unlawful, for it expressly contemplates that the business of a broker may be lawfully carried on in the city of Charleston, for a part of the year— until the 20th of January of that year — without a license, which is a clear indication that it was no part of the legislative intent to condemn the business of a broker, as contrary to the public policy of the city, and that the imposition of a penalty upon a person who engages in the business of a broker after the date, without obtaining a license, was solely for the purpose of enforcing the payment of the license tax on brokers, and not for the purpose of declaring such business unlawful.

We do not think, therefore, that there was any error in sustaining the demurrer to what is stated in the answer as a third defence, which is, however, claimed in the argument to be a fourth defence. Under this view the other questions discussed in the argument, as to the place of the contract, and as to the effect of the interstate commerce law, do not arise, and need not, therefore, be considered.

The judgment of this court is, that the judgment of the Circuit Court be affirmed.

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Rehearing

8 In this case'a petition was filed by appellant, praying a rehearing of the case, but the petition was refused by an order passed June 10, 1895,

Per Curiam.

A careful consideration of this petition fails to satisfy us that any material fact or principle of law has been either overlooked or disregarded, and hence there is no ground for a rehearing. It is, therefore, ordered, that this petition be dismissed, and that the stay of remittitur heretofore granted be revoked.

Case Details

Case Name: Fairly v. Wappoo Mills

Court Name: Supreme Court of South Carolina

Date Published: May 30, 1895

Citation: 44 S.C. 227

Court Abbreviation: S.C.