136 F. 489 | U.S. Circuit Court for the District of Montana | 1905
This is an action by Rebecca McKinnon, a resident and citizen of Canada, against Edna R. Waterbury, John W. James, and H. W. Rodgers, residents and citizens of the state of Montana. The bill is brought to foreclose a mortgage executed on March 23, 1900, by Edna R. Waterbury, conditioned for the payment of the sum of $5,500 and interest, according to a certain promissory note, to secure which the mortgage was executed. Complainant alleges that the interest on the note has been paid by the defendant up to December 23,1903, but that no part of the principal has been paid, and that the defendant is in default. The prayer is that a receiver be appointed to collect the rents and profits, and that the mortgage be foreclosed, and that the usual decree for sale be made, and that the interests of the defendants James and Rogers, if any they have, be declared subsequent tó the plaintiff’s mortgage. The .defendant Edna R. Waterbury, for answer, admits signing the note described in the complaint, but denies that there was any consideration therefor passing from the said defendant to the said complainant; and she avers that the real party in interest, and the person to whom the note was in fact made, executed, and delivered,
In my judgment, the doctrine of public policy cannot be invoked by the defendant to discharge her from the payment of her debt, which is justly due. She has received the full consideration of a contract which in itself did not require the doing of anything wrong, and which was not forbidden by the laws of the state. We must not confuse the contract itself with a collateral or incidental purpose of the mortgagee, which, though wrong, yet should not be a bar to the enforcement of the
“Where to draw the precise line between the cases is which the vendor’s knowledge of the purchaser’s intent to make an unlawful use of the goods will vitiate the contract, and those in which it will not, may be difficult. Perhaps it cannot be done by exact definition. The whole doctrine of avoiding contracts for illegality and immorality is. founded on public policy. It is certainly contrary to public policy to give the aid of the courts to a vendor who knew that his goods were purchased, or to a lender who knew that his money was borrowed, for the purpose of being employed in the commission of a criminal act, injurious to society or to any of its members.”
A mortgagee who knows that his money is borrowed for the purpose of being employed in the commission of a criminal act cannot appeal to the courts to enforce the contract, upon the ground of public policy. But the principle, as stated, contemplates that the loan be made for the purpose of employment in the commission of a wrong. If, for example, the borrower in this case secured the loan to enable her to start a gambling house, and the lender knew of it, the contract would not be enforced; the ground in such a case being that the lender, having knowledge of the illegal end in view, will be deemed to have 'aided the illegal object at the time he made the contract. But that is not this case, for here there was no purpose to use the money for an unlawful purpose or for an illegal end. The owner of the note may be dealt with for having failed to pay taxes due to the state, but the mortgage debt is a valid one between the parties, and may be enforced. Hanover Nat. Bank v. First Nat. Bank, 109 Fed. 421, 48 C. C. A. 482; Crowns v. Forest Land Co. (Wis.) 74 N. W. 546; Nichols v. Weed Sewing Machine Co., 27 Hun, 200; Jones on Mortgages, § 619; Callicott v. Allen (Ind. App.) 67 N. E. 196.
The exceptions to the answer of the defendant are sustained.