JULY 1829. Carrington V. Caller. known to their agent, the Register, who, notwithstanding his knowledge and avowed disapprobation of the conduct of the company, proceeded to sanction the sale by issuing certificates. After this, the government could not complain, and the simple question presented for our consideration, is, whether these lands thus acquired by a fraud upon the United States, but which they have waived, could be afterwards sold, without such sales being contaminated by the taint of the original transaction. I admit if it were an attempt on the part of the plaintiffs to establish a claim against the defendants, which would require them to go into that transaction, and it were immoral or contrary to public policy, the Courts would refuse their aid, and they could not recover. But if on the contrary, the notes which are the foundation of the present actions, are so disconnected with, and separated from the original sale, as to be sustained by a new and different consideration, then the actions will lie, and the judgments below should be reversed. All will concede that Courts of justice will not open their forums to enforce contracts which are illegal, immoral, prohibited or contrary to public policy. For to do this would be to sanction by law, what the law itself forbids. This principle, though it approves itself to the good sense of all, and appears simple in its character, is nevertheless, as observed by Chief Justice Marshall in the case cited in 11th Whcaton, sometimes difficult of application; and Courts should take care whilst they observe, not to pervert or abuse it. It might be urged that it would tend to discourage immoral and fraudulent contracts, to restrict the subsequent sale of articles so purchased, by prohibiting the recovery of the consideration for which they should be sold. But it is manifest this would be throwing unwholesome restraints upon commerce, and in many instances furnishing facilities to frauds by the very means employed to prevent them. There must then be some rule, which at once guides the a7 Taunton application of the principle to salutary purposes, and prevents its pervertion. In the case of Simpson v. Bloss, a it is said "that the test, whether a demand connected with an illegal transaction is capable of being enforced at law, is whether the plaintiff requires any aid from the illegal transaction to establish his claim." The doctrine of this case is to be found in other books of high authority, and seems to my mind, to strike the safe and sensible medium between the two extremes. Then the whole case, as be 246. JULY 1829. Caller. fore insinuated, resolves itself into this inquiry, whether the consideration of the notes in these actions, are so separated from the original transaction, as to require no aid Carrington from that transaction to enforce their collection? It is admitted they were given for the purchase money of the land, sold by the company at the second sale. But it is contended that as this second sale was contemplated by, and provided for, in the articles of association, it must be viewed as part of one and the same transaction. If this be so, all who purchased at that sale could avoid their contracts, and Meggison must be released as well as Caller. It becomes important then, that this position should be well considered. This single circumstance, that one agreement provides that another should be made, cannot of itself so contaminate the second contract that it should not be sustained. For if such a provision in the original articles of association would have extended to the first sale made by the company, it would equally have affected any other distant and more remote dispositions of the proceeds of the sale, which such articles might have provided for. Suppose for example, they had provided that the lands should be sold, the purchase money laid out in a steam boat, to be plied between certain ports for a number of years, and the profits then divided. Would not the principle contended for prove, that as all these transactions were provided for in the first agreement, every contract made in pursuance of such provisions, could be avoided by reason of the impolicy of the first arrangement out of which they grew; and that too, notwithstanding there might be new and distinct considerations for the support of each? This, it appears to me, is the length to which the argument would carry us, and it evidently leads to consequences too wild and detrimental, to be seriously contended for by any. Should it be said that the notes given for the purchase money at the second sale shall not be collected, because the proceeds were to be divided between the parties to the unlawful combination; then, although the United States, who alone were injured by this combination, waived the fraud practised upon their rights by confirming the sale and conveying a title, the purchasers could not sell again for their own emolument, but must hold the land without the power of alienation. In the cases cited by the defendant's counsel, from 6th, 8th, and 13th Johnson, it was laid down that if two persons agree, that but one shall bid at a sale by auction, with an understanding that JULY 1829. Carrington v. Caller. a Page 109. the person not bidding should share the profits of the purchase, Courts will not enforce the contract. The reason of this is obvious, for in the first place there was no consideration to support the contract, and in the next place it could not be enforced without going directly into the impolitic transaction. But to make these cases parallel with those now under consideration, we will suppose that the bidders at the auction sale had made a further stipulation, that the articles bought should be resold to third persons for their common benefit, that at such second sale notes were taken and sued on, and the defendants resisted a recovery on the ground of the fraud committed on the rights of the owners of the property sold at auction. Could such a defence prevail, especially after the owners had, with a full knowledge of the fraud, sanctioned the sale by making a title? I presume it could not. But let us more directly apply the test before referred to, as laid down in 7th Taunton, and see whether these notes be founded on the same consideration with the first contract. For if they be so distinct and separate, that the plaintiffs could prove their consideration without deriving aid from the original agreement, they may, and should recover. The first contract, though it provided for the sale which produced the consideration of the notes sued on, was itself evidently sustained by a different consideration. Its consideration was the money advanced by the stockholders; that of these notes, the price of the land sold by the company. The undertaking of the first contract was, to do and have done certain acts for the benefit of all concerned; but the notes contain a promise to pay money to the persons to whom they were given. There is both a difference in the consideration, and the promise or undertaking founded on it. If then, aside from the provisions of the statute of frauds, no notes had been given, and suits had been brought to recover the price of the land, they could have been sustained, on proof of a sale of land to which there was a good title, the possession thereof by the purchasers, and their having bid it off upon the terms proposed. And if they who sold the land, had transfered their claim in the purchase money to the plaintiffs, the names of the vendore might have been used for the benefit of those really interested. Hence it is apparent that in such a state of things, there would have been no call for aid from the original transaction. Gow on Partnerships, a after stating several cases in which recoveries could not be had, assigns as a reason: "that in all those cases the clain of the plaintiff could not be established except through the illegal contract." Then I should say, on the supposition that this association was contrary to sound policy, that if one of the parties were to sue to enforce its execution, or to recover the money advanced to carry it into effect, or if one of the stockholders were to claim of the committee their proportion of the profits, they would be compelled to develope the original agreement itself, to get at their rights, and therefore a Court would not aid them. But the purchasers having entered into another contract, for a new and distinct consideration,"it would be carrying the doctrine to an unwarrantable length to protect them in both the possession of the land they bought, and the price they agreed to give for it, merely because it was stipulated in the articles of association that there should be a second sale, and that sale did take place. I would ask, if the second sale had been held without being provided for in the first agreement, and notes had not been taken, would not the proof, in an action for the purchase money, have been the same as under the existing circumstances? Where would there have arisen a greater necessity to derive aid from the first agreement in the one case than the other? I can perceive none. Yet it is virtually admitted, that but for the articles providing for the second sale, recoveries could be had. This is said to be the fatal link which so closely binds the two transactions that they must be considered as one and the same. But furthermore, these defendants ask in effect for a rescission of the contracts, contrary to the consent, and without the default of the other party, and for their own exclusive benefit. For they hold on to the land whilst they refuse to pay its price. This is so manifestly contrary to the plainest principles of natural justice and common honesty, that it would certainly require a peculiar concurrence of extraordinary circumstances, and a stern application of a most rigid rule, to sustain such a defence. And it is even said that Caller, who not only enjoys his purchase, but for ought we can know may have reaped a rich harvest from being a member of the impolitic association complained of, is from that very circum stance, in a better condition than Meggison who did not belong to the company. This I cannot believe. Courts of justice do not thus directly favor a particeps criminis. It is only where the party claiming of them has to require aid from an illegal transaction, that they escape lia JULY 1829. Carrington V. Caller. JULY 1829. Carrington V. Caller. bility; and as that is not necessary in the present cases, Judgment affirmed. NOTE. For the plaintiffs, the following authorities were cited. To shew that none but the government could complain, 4 Cowen 744, 5 John. 47, 2 Henn. and Munf. 245, 3 Bibb 515. That the second sale could not be affected by fraud, Gow 105, 5 Taunton 181, 4 John. 204, 7 Taunton 246, 11 Wheaton 258. That the contract cannot be rescinded because the plaintiff cannot be placed in statu quo, 1 Term Rep. 154, 225, 5 East 449, Hardin 602, 4 Mass. 502. 3 Starkie Ev. 1646, 1614, 6 Munford 366, 1 N. R. 263. That proceeding to complete a contract after fraud is discovered, is a waiver of it, Term Rep. 390, 4 Esp. 264, 10 Wheaton 392, 3 Campbell 69. The following authorities were relied on for the defendants: as to the insufficiency of the delivery of the notes: 1 John. Cases 114, 12 John. Rep. 418, 10 Mass. Rep. 456, Miner's Alabama Rep. 103. As to the alteration of the note by filling the names of the payees, 2 Starkie's Ev. 479, 480, 19 John. Rep. 391, Bullers N. P. 267, 4 Cranch 60, 3 Am. Dig. 183. That the contract was against public policy, 13 Johns. Rep. 112, 6 Ib. 194, Cowp. 39, 1 Comyn on Contracts 28, 36, 37, Douglass 450, 3 Term Rep. 22, 551, Selwyn N. P. 130, 2 Caines Rep. 147, 444. That the notes were void for fraud, 2 Caines 147, 8 John. Rep. 253, Powell on Contracts 176, 185. That money extorted by duress of goods, may be recovered back in assumpsit, 2 Strange 915. |