was exerted the contract is voidable at law; if undue influence, then in equity. Consequently such contracts may be ratified when the person under compulsion regains freedom of action. "One entitled to repudiate a contract on the ground of duress should, like one who attempts to repudiate a contract on the ground of fraud, act promptly." A promissory note obtained by duress is nevertheless enforceable in the hands of a bona fide holder for value.2

1 Oregon, etc., R. Co. v. Forrest, 128 N. Y. 83.

1

2 Fairbanks v. Snow, 145 Mass. 153; Deputy v. Stapleford, 19 Cal. 302.

CHAPTER IX

UNLAWFUL AGREEMENTS

No valid contract can be made unless its object is one permitted by the law. A contract may be illegal either because expressly prohibited by statute, or by definite rules of the common law, or because it is opposed to the policy of the law.

$96. Contracts in Violation of Statute. If the statute expressly prohibit a contract it is void, and there is no room for construction. But if the statute merely imposes a penalty upon the doing of an act, or directs that a trade shall only be carried on under certain conditions, or if the penalty is imposed for the protection of the revenue or of the public, then the contract may or may not be illegal. The statute must be examined as a whole to find out whether or not the legislature meant that contracts in breach of it should be void.1

The following rulings may be mentioned by way of partial illustration of the manner in which contracts apparently in violation of statutes are dealt with by the Courts. Where a statute provides that no person shall engage in a certain business without having paid a tax or license, sales made by one who has not complied with it are nevertheless valid, because the object of the statute is to raise revenue.2

A statute which provides that hawkers and peddlers shall take out licenses before making sales and imposes a fine in general terms for its violation does not operate to prevent an

1 Harris v. Runnels, 12 How. 79; Lester v. Bank, 33 Md. 564; Ruckman v. Bergholz, 37 N. J. L. 437.

2 Larned v. Andrews, 106 Mass. 435.

unlicensed peddler from recovering the price of goods sold, since the object of the statute is to raise revenue.3

It is sometimes said that if the penalty for carrying on a business without a license is imposed once for all, it will be construed as a revenue statute merely, and not as designed to make illegal contracts by a person acting without a license; but that if the penalty is imposed for each transaction by an unlicensed person, it will be considered that the object of the law was to prohibit each transaction. But this is not a rule of universal application. Notwithstanding the imposition of a penalty for each offense, the statute may still have designed to raise revenue by the penalty and not to have made the contract illegal. Where a statute directed that real estate brokers should pay for a license and imposed a fine for each transaction made by a broker without a license, it was held that the object of the statute was to raise revenue, and that a broker who had acted without a license could recover compensation for his services.4

If the object of the legislature in requiring certain persons to be licensed or certain goods to be inspected before sale is to protect the public or to regulate and supervise a certain business, then a transaction in violation of the statute is illegal. A pharmacist, or medical man, or dentist, for instance, who acts without a license, can recover no compensation for his services. When a statute provides that fertilizers shall not be sold without certain labels or without inspection, a sale in violation of the statute is illegal.5

3 Banks v. McCosker, 82 Md. 518. An unlicensed innkeeper cannot recover for board and lodging, since the purpose of the statute is to protect the public. Randall v. Tull, 89 Me. 443; 38 L. R. A. 143. So there can be no recovery for the services of an unlicensed stallion. Smith v. Robertson, 106 Kỵ. 472; 45 L. R. A. 510.

4 Coates v. Locust Point Co., 102 Md. 291; Walker v. Baldwin, 103 Md. 352. But see Douthart v. Congdon, 197 Ill. 355; Johnson v. Hulings, 103 Pa. 498; Seitz v. Brewers Co., 141 U. S. 510, where a different conclusion was reached in the construction of somewhat similar statutes.

5 Wood v. Armstrong, 54 Ala. 150; McConnell v. Kitchens, 20 S C. 430.

$97. Gaming and Wagering Contracts. Statutes in most of the States prohibit certain kinds of gambling transactions. It is sometimes provided, as was done by 16 Car. II, ch. 7, that if any person by playing at any game shall lose money or property "upon ticket or credit," he shall not be compellable to pay the same. Other statutes are similar to 9 Anne, ch. 14, which enacted that any security given for money won by playing cards or any other game, or by betting on the hands of players, or for repaying money knowingly lent for such gaming or betting, at the time and place of such play, "shall be utterly void, frustrate and of none effect." In some cases the statute provides that money lost and paid may be recovered. Under the statute of 9 Anne, it was held that a promissory note given for a gambling debt was void even in the hands of a holder for value without notice.1 But the Negotiable Instruments Act, in force in some States, provides that a bona fide holder takes free from the defect of illegal consideration.

Money lent to me for the express purpose of being used for gambling cannot be recovered. But where a person loses a wager and requests another to pay it, which is done, or where one lends money for that purpose, it may recovered unless such transaction is expressly prohibited by statute.3

When the money wagered by the parties is put in the hands of a stakeholder, either party may notify him not to pay it over, and it is then his duty to return it. This notice may be given even after the happening of the event upon which

1 Emerson v. Townsend, 73 Md. 234; Gough v. Pratt, 9 Md. 526. Cf. Harper v. Young, 112 Pa. 419.

2 Tyler v. Carlisle, 79 Me. 310; Raymond v. Leavitt, 46 Mich. 447. But if not so used the money may be recovered. Tyler r. Carlisle, supra. Mere knowledge on the part of the lender that the money will be so used does not prevent recovery when he is not a confederate. Waugh v. Beck, 114 Pa. 422.

3 Read v. Anderson, 13 Q. B. D. 779; Pyke v. Lyster, 8 Ch. D. 754; Dewey on Wagers, 329. See, Carney v. Plummer [1897], 1 Q. B. 634; Armstrong v. Am., etc., Bank, 133 U. S. 433; Cathran v. Ellis, 125 III.

the wager depended. The obligation of the stakeholder to return the stake upon demand "does not arise out of any gaming agreement, but out of the revocation of an authority given in furtherance of a gaming agreement."5

The general rule in America, independently of any statute, is that a wagering contract is illegal and void as being against public policy.

But a contract for the sale of stock or of goods to be delivered at a future day is valid, although at the time of making the contract the vendor did not have the property in his possession, nor had contracted to buy it, nor had any expectation of becoming possessed of it otherwise than by going into the market and there buying it and although a margin be deposited as security.

Such contract, however, is only valid when the parties really intend that the goods are to be delivered by the seller and the price to be paid by the buyer; and if, under the guise of such a contract, the real intent be merely to speculate in the rise or fall of prices, and the goods are not to be delivered, but one party is to pay to the other the difference between the contract price and the market price of the goods at the date fixed for executing the contract, then the whole transaction is a wager and is null and void. Both parties must have the illegal intent, to settle differences..

4 Fisher v. Hildreth, 117 Mass. 558; McAllister v. Hoffman, 16 S. & R. 147; McDonough v. Webster, 68 Me. 530; Burge v. Ashley & Smith [1900], 1 Q. B. 744.

5 Diggle v. Higgs, 2 Ex. D. 422.

Appleman v. Fisher, 34 Md. 551; Ridgely v. Riggs, 4 H. & J. 358; Irwin . Williar. 110 U. S. 508; Hatch r. Douglas, 48 Conn. 116; Cole v. Milmins, 88 Ill. 349. In some States even this contract is prohibited by statute.

7 Irwin v. Williar, 110 U. S. 508; White v. Barber, 123 U. S. 322; Hoogewerff v. Flack, 101 Md. 371; Billingslea v. Smith, 77 Md. 524; Stewart v. Schall, 65 Md. 307; Shaw v. Clark, 49 Mich. 384; Kingsbury v. Kirwan, 77 N. Y. 612. A promissory note based on such a transaction is good in the hands of a bona fide holder. Crawford v. Spencer, 92 Mo. 498.

8 MacDonald v. Gessler, 208 Pa. 177: Donovan v. Daiber, 124 Mich. 49.