39 Mass. 181 | Mass. | 1839
delivered the opinion of the Court. The first ground of the defence is, that the action was prematurely commenced. The entry in the book given to the plaintiff by the cashier of the bank, is undoubtedly good evidence of a promise to pay the amount of the deposit on the 10th day of August ; and if this was a valid and legal promise, this action cannot be maintained. But it is very clear, that this promise or agreement that the deposit should remain in the bank for the t'me limited, is void by virtue of the Revised Stat. c. 36, § 57, which provides that no bank shall make or issue any note, bill, check, draft, acceptance, certificate or contract, in any fa -m whatever, for the payment of money, at any future day certain, or with interest, excepting for money that may be borrowed of the Commonwealth, with other exceptions not material in the present case.
The agreement that the deposit should remain until the 10th day of August amounts in law, by the obvious construction and meaning of it, to a promise to pay on that day. This
It is therefore very clear, we think, that no action can be maintained on the defendants’ express promise, and that if the plaintiff be entitled to recover in any form of action, it must be founded on an implied promise.
The second objection, and that on which the defendants’ counsel principally rely, proceeds on the admission that the contract is illegal; and they insist that where money has been paid by one of two parties to the other, on an illegal contract, both being participes criminis, no action can be maintained to recover it back. The rule of law is so laid dowm by Lord Kenyon, in Howson v. Hancock, 8 T. R. 577, and in other cases. This rule may be correctly stated in respect to contracts involving any moral turpitude, but when the contract Js merely malum prohibitum, the rule must be taken with some qualifications and exceptions, without which it cannot be reconciled with many decided cases. The rule as stated by Comyns, in his treatise on contracts, will reconcile most of the cases which are apparently conflicting. “ When money has been paid upon an illegal contract, it is a general rule, that if the contract be executed, and both partiei arc in pan delicto.
The rule, with these qualifications and distinctions, is well supported by the cases collected in Comyns and by later decisions. The question then is, whether, in conformity with these principles, upon the facts agreed, this action can be maintained.
The first ground on which the plaintiff’s counsel rely, in answer to the defendants’ objection is, that there was no illegality in making the deposit, and that the illegality of the transaction is confined to the promise of the bank, and the security given for the repayment, that alone being prohibited by the statute.
The leading case on this point is that of Robinson v. Bland, 2 Burr. 1077. That was an action on a bill of exchange given for money lent and for money won at play. By the Si. 9 Anne, c. 14, it was enacted that all notes, bills, bonds, judgments, mortgages or other securities for money won or lent at play, should be utterly void. The court held, that the plaintiff was not entitled to recover on the bill of exchange, but that he might recover on the money counts for the money lent, although it was lent at the same time and place that the other money for which the bill was given, was won. The same principle was laid down in the cases of Utica Ins. Co. v. Scott, 19 Johns. R. 1 ; Utica Ins. Co. v. Caldwell, 3 Wendell, 296 ; and Utica Ins. Co. v. Bloodgood, 4 Wendell, 652. In these cases the decisions were, that although the notes were illegal and void
The next answer to the objection of the defendants is, that although the plaintiff may be considered as being particeps criminis with the defendants, they are not in pari delicto. It is not universally true, that a party, who pays money as the consideration of an illegal contract, cannot recover it back. Where the parties are not in pari delicto, the rule potior est conditio defendentis, is not applicable. In Lacaussade v. White, 7 T. R. 535, the court say, “ that it was more consonant to the principles of sound policy and justice, that wherever money has been paid upon an illegal consideration it may be recovered back again by the party who has thus improperly paid it, than, by denying the remedy, to give effect to the illegal contract.”
This principle however is not by law allowed to operate in favor of either party, where the illegality of the contract arises from any moral turpitude. In such cases the court will not undertake to ascertain the relative guilt of the parties, or afford relief to either.
But where money is paid on a contract which is merely prohibited by statute, and the receiver is the principal offender, he may be compelled to refund. This is not only consonant to the principles of sound policy and justice, but is now so settled by authority, whatever doubts may have been entertained ie specting it in former times.
In the case of Smith v. Bromley, 2 Dough 696, note, it was decided, that the plaintiff was entitled to recover in an action for money had and received, for money paid by the plaintiff to the defendant for the purpose of inducing him to sign the certificate of a bankrupt, the plaintiff’s sister. Lord Mansfield laid down the doctrine on this point, which has been
On this distinction it has ever since been held, that where usurious interest has been paid, the excess above the legal inter est may be recovered back by the borrower in an action for money had and received. So money paid to a lottery-office-keeper as a premium for an illegal insurance, is recoverable back, in an action for money had and received. Jaques v. Go lightly, 2 W. Bl. 1073. But in Browning v. Morris, Cowper, 790, it was decided, that where a lottery-office-keeper pays money in consequence of having insured the defendant’s tickets, such contract being prohibited by the St. 17 Geo. 3, c. 46, he cannot recover it back, though the premium of insurance paid by the insured to the lottery-office-keeper might be. The distinction, on which this case was decided, -is very material in the present case. Lord Mansfield referred to the determination in Jaques v. Golightly, where it was said, “ that the statute is made to protect the ignorant and deluded multitude, who, in hopes of gain and prizes, and not conversant in calculations, are drawn in by the office-keepers.” And he adds, “it is very material, that the statute itself, by the distinction it makes, has marked the criminal ; for the penalties are all on one side ; upon the office-keeper. The man who makes the contract is liable to no penalty. So in usury, there is no penalty upon the party who is imposed upon.” The same distinction is noticed and enforced by Lord Ellenborough, in Williams v. Hedley, 8 East, 378. In that case it was decided, that where money was paid to a plaintiff to compromise a qui tarn action for usury, it might be recovered back in an action for money had and received ; because the prohibition and
The principle is, in every respect, applicable to the present case, and is decisive. The prohibition is particularly levelled against the bank, and not against any person dealing with the bank. In the words of Lord Mansfield, “ the statute itself, by the distinction it makes, has marked the criminal.” The plaintiff is subject to no penalty, but the defendants are liable for the violation of the statute to a forfeiture of their charter. To decide, that this action cannot be maintained, would be to secure to the defendants the fruits of an illegal transaction, and would operate as a temptation to all banks to violate the statute, by taking advantage of the unwary, and of those who may have no actual knowledge of the existence of the prohibition of the statute, and who may deal with a bank without any suspicion of the illegality of the transaction on the par' o the bank.
It was so decided in Walker v. Chapman, Lofft, 342, /here money had been paid, in order to procure a place in the customs, but the place had not been procured ; and in an action brought by the party who paid the money, it was held, that he should recover, because the contract continued executory. This case was cited with approbation by Butter J. in Lowry v. Bourdieu, 2 Dougl. 470 ; and the distinction between contracts executed and executory, he said, was a sound one. The .same distinction has been recognized in actions brought to recover back money paid on illegal wagers, where both parties were in pari delicto. The case of Tappenden v. Randall, 2 Bos. & Pul. 467, was decided on that distinction. Heath I. said, “ it seems to me, that the distinction adopted by Mr. Justice Butter between contracts executory and executed, if taken with those modifications which he would necessarily have applied to it, is a sound distinction. Undoubtedly there may oe cases where the contract may be of a nature too grossly immoral for the court to enter into any discussion of it; as where one man has paid money by way of hire to another to murder a third person. But where nothing of the kind occurs, I think there ought to be locus pcenitentice, and that a party «hould not be compelled against his will to adhere to the contract.’’ The same distinction is recognized in several other cases. 5 T. R. 405 ; 1 H. Bl. 67 ; 7 T. R. 535 ; 3 Taunt. 277 ; 4 Taunt. 290.
In the case of Aubert v. Walsh, 3 Taunt. 277, the authorities were considered, and the law was definitively settled as above stated ; and it does not appear that it has ever since been doubted. In Utica Ins. Co. v. Kip, 8 Cowen, 20, the same principle is recognized, although the case was not expressly decided on that point. The distinction seems to be founded in wise policy, as it has a tendency in some measure
It is however denied by the defendant’s counsel, that the contract in question was executory, within the true intent and meaning of these decisions, and the doctrine now laid down. This question has not been much discussed, and it is not necessary to decide it in the present case, the Court being clearly of opinion, that the plaintiff is entitled to recover on the other grounds mentioned. We have considered the question as to the distinction between executory and executed contracts, because it may be of some importance that the law in that respect should not be supposed to be doubtful in our opinion; which might be inferred, perhaps, if we should leave this question unnoticed.
The only remaining question is, whether the plaintiff was bound to make a demand on the bank before he commenced his action. The general rule is, that where money is due and payable, an action will lie without any previous demand. Bu/ where money is deposited in a bank in the usual course oi business, we should certainly hold, that a previous demand would be requisite. But if money should be obtained by a bank by fraud, or, as in the present case, by means of an ille • gal contract, the bank claiming to hold it under such contract, there can be no good reason given why the bank should be exempted from the operation of the general rule. In Clark v, Moody, 17 Mass. R. 145, it was held, that if a factor should render an untrue account, claiming a greater credit than he was entitled to, the principal would have a right of action without a demand.
If the defendants had sold to the plaintiff a post-note payable at a future day, it could hardly be doubted that an action would lie to recover back the consideration money, without any previous demand ; and there seems to be no substantial distinction between such a case and the one in question.
Judgment on default.