Case ID: mo_358/html/0646-01.html
Source: Caselaw Access Project
Author: {"author": "BRADLEY, C. PEE CURIAM:", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Frank DeMayo, Respondent, v. Leonard A. Lyons and Anna B. Lyons, Appellants.
    No. 40751.
    216 S. W. (2d) 436.
    Division One,
    December 13, 1948.
    Rehearing Denied, January 7, 1949.
    
      
      Lillie. IvnUjHt- ami* Waller 'A. R'aijftioiuVU)v appellants.'
    
      
      Walter W. ,Galvin for respondent.
   [436]

BRADLEY, C.

Respondent has filed a motion to- dis- • miss the. appeal in this cause, which motion was taken with the case. ■ The ground of the motion is that appellants’ statement does-not comply with Rule 1.08 as to a fair and concise statement of the facts ■ without argument, ete. The statement would not be commended as a. model; few would so grade. . Dismissal of an appeal is a drastic pen-: alty and such penalty will not be applied unless fully warranted by the violations [437] complained of. See Neal v. Kansas City Public Service Co., 353 Mo. 779, 184 S. W. (2d) 441. We do not think that. the appeal should be dismissed, hence the motion to dismiss is overruled; . . .

Hereinafter the term appellant has reference to defendant Leonard A. Lyons unless otherwise noted. The cause is for an accounting;' was referred; the trial court approved the report of the referee; rendered a general judgment in favor of plaintiff (respondent.) and-against appellant in the sum of $22,004.09. The judgment was- made an equitable lien upon certain whiskey and-the warehouse receipts-therefor. Motion for a new trial was overruled and this appeal fol-' lowed. ■. '

On or about January 29, 1944, the Bismarck Grill, Inc. was operating a retail liquor store and restaurant at the northeast corner of 9th and "Walnut,'Kansas City. '"'The capitál stock was:$2,000.00,'-and'there-were 100 shareSof $20.00.'each: Appellant'owned 98> shares, his. wife,: defendant Anna B. Lyons,'one share, and-bis sister "one share..- 'Ap-' pellant was manager. AL-that time the- American'Distilling Company, Peoria, Illinois/was selling-some of its stock todicensed liquor dealers-at $105.00'-per share. Those who bought this stock .could buy-from the distilling company/on each share,. 16 cases- of special- .privilege brand whiskey .at $28.00-per. case, -and'.-2 cases of-■ -prerogative brand at"$42.00- per case-.' 'Bespondent. and.appellant.- agreed to pun-chase, in the name of-the Bismarck Grill, 90' shares-, b'f the-distilling company stock and did so. --And.they agreed that there -would be pur--chásed 'from the distilling company, in the- name of 'the Bismarck Grill, as much liquor as 'could be -purchased on the-90 -shares. The Bismarck Grill was.to sell the'liquor. and the-profits Were to. be divided equally between; respondent’-and appellant.- - Bespondent,'for his payment on half .of the-stock purchase,- gaVe his - Check,- .on-.Jahu’ary 29, 1944,- to appellant for $5580-.0Q. .This was $855.00: in 'excess: of: one half of the cost of the, stock. All told,' before. the cause was filed, respondent turned-over: to appellant -chefelts in connection with their liqu.or enterprise totaling $16,101.33. '0.n the 90 shares of - stock there were.-pürchased- from--the' distilling;-company, 1440 bases of 'the' spe-ciaLprivilege brand at $28¡00 per case .and 180 cases of'prerogative at $42:00-per case.- . -■ : ■=. . hi >• . !.-■■■,•;> •

The Bismarck Grill, in Makihg the .various-purchases in its-name' from the distilling company, was financed through the Commerce Trust Company, Kansas City. ''From February 2,'to'Sep'ttehrbei 9j’1944-i the Grill executed 4-demand notes" to-th'é trust' company -aggregating" $37;201.30/ Defendant Anna B.-Lyons,"as president Of the'BisMárCkGrill, signed these notes’ for 'the -Grill'. November 17, 1944,'a notó-te the' trust company for- $23,814'.5'8 was signed only- by- Anna B. Lyons, personally. The last’mentioned'noté was in part a reh'éw'al' note of unpaid balances bn prior-notes. "These notes'were secured by a deed of trust given by defendants on'some real property and’ by the assignment to the trust 'company'of the warehouse 'receipts issued" on the whiskey as-the’ different purchases were placed in the-warehouse. The trust company was made a party defendant, but at the hearing before-the referee, it-'appeared-that the trust company'liad been paid in full. After the trust company was paid in full there still remained 'in the warehouse/ and' undisposed' of; 6Ó8 eases of the special privilege brahd'and 155 cases of'prerogative. The trust com-' pany was enjoined from tráhsferfihg, pending this cause, the warehouse receipts which it had’held"as collateral.'-' ■ ' ' ‘ , - '

'The Bismarck Grill/for 'some reason; lost its license to’sell liquor;' its fixtures, etc. were sold. Thereafter appellant carried on in the name of his wife. 'Bespondent was receiving ho réturníá on his money outlay and frequently asked appellant about a settlement. Appellant always-said that be would get to it, but never did. Finally, according^ to respondent, in July or August 19'45, appellant told bim that be (respondent) “didn’t own any of the whiskey purchased from the distilling company”, and that “be wasn’t going to give me nothing.” Appellant claimed that there was to be no settlement until’all of the liquor, •1620-eases, was sold, and since all had not been sold, no settlement was due.' Also, appellant claimed and so testified that respondent [438]-demanded and that he, appellant, acting for the Bismarck Grill;‘ turned over to respondent 142 cases of the liquor purchased from -the distilling company. This was denied by respondent.

.-.It-was-'found by:the referee that appellant received $60.00-per ease for:-742 eases of the privilege brand, and $70.00 per case for 25 cases of the prerogative, a total of $46,270.00 and the .referee found that-'-respondent did not receive any of the liquor that had been .disposed of1 or any of the proceeds derived from the sale of said liquor. The referee further found that appellant had paid the trust company in full for the money borrowed and that.after doing so he had remaining -from the proceeds of the liquor sales, the sum of $11,805.52, and that respondent was entitled to one half, $5,902.76, of said remaining amount. The $5,902.76, plus the $16,101.33 advanced to appellant by respondent, go to make the $22,004.09, the amount of the judgment rendered , by the court.

■ : We'have dealt sufficiently with the facts to give a fair picture of the-background which gave rise to this cause. The principal ground assigned’ to overturn the judgment rendered is that the whole arrangement between respondent and appellant was illegal and void ab initio and that such-being so, respondent cannot prevail. In the brief appellant says that “the alleged partnership between plaintiff and-Leonard A. Lyons for the purchase and sale of whiskey was illegal, void and in violation of the criminal laws of the United States and this state for the reason plaintiff did not have a license to deal in intoxicating liquors and was not qualified to obtain such a license by-reason of being an unnaturalized alien, and by reason of having been convicted of a felony.’-’

The record shows that respondent is an unnaturalized alien and .that he was convicted in the federal court during national prohibition of two felony violations of the national prohibition act, one in Missouri and one in Kansas, and that he served time for such violations in the federal prison at Leavenworth. Also, it appears that appellant had a brush- in Kansas with the national prohibition law, and that he served time in Ohio for manslaughter. It will be conceded that respondent could not qualify for liquor license. See Sec. 4906 R. S. 1939, Mo. RSA Sec. 4906; Wilson v. Burke, 356 Mo. 613, 202 S. W. (2d) 876.

TTe're is the picture Reépondént-'had' no liqu’orlicense and could not -qualify' for a liquor license,'yet he acquired, for ¡the purpose;-of, sale by’the Grill; -a- half interest in 1620' cases "of-whiskey yrhich ¡cost; $47:,880.00 'wholesale. The Bismarck ..Grill, a corporation,-; owned; and .’managed- by appellant, and licensed-to sell .intoxicating-¡liqUoiv was to sell this whiskey- and. the profits were to.bé-divided-equally between respondent and:appellant/ In "the. course of carrying'out’ this arrangement respondent advanced to.'appellant $16,101.33.. Ap-. pellant, according to ; respondent/s .ease, breached:-his part-lof ‘ the agreement to-account to- respondent for half of:-the., profits realized: from the sale of the liquor.’ In the face of this background, the; judg.ment 'rendered makes respondent-whole, -except- interest,:.un- -his- monfey. outlay and gives him in addition thereto half of.'the profits realized .on-the whiskey sold. ■■ - s •' . . : . , , . .....,

To support the contention that respondent is in no'position to maim, tain'this'cause appellants citer Leeper v. Kurth et al., 349 Mo. 938, 163 S. W. (2d) 1031; Moore et al. v. Carter et al., 356 Mo. 351, 201 S. W. (2d) 923; Rainer v. Western Union Telegraph Co.(Mo. App.), 91 S. W. (2d) 202; Finley v. Williamson, 202 Mo. App. 276, 215 S. W. 743; Jackson v. City of Columbia et al. (Mo. App.), 217 S. W. 869; State v. Parker Distilling Co., 236 Mo. 219, 139 S. W. 453.

■ The-Leeper'case'was to cancel.a deed- made in fraud of creditors-;; relief was denied. In the Moore case a-defendant-in-a-cross -action, songht to quiet-title t’o- land in -herself. Shediad.placed the legal title in her husband to protect the land from her - creditors. -Her request-for relief was denied.- In the. Rainer ease- damages, resulting-from delay in delivery of a-telegram- was-denied because the plaintiff had-no statutdry permit ¡(license), to- operate the truck- in- Avhich -milk.was transported and-damaged because of-the delay in-delivering’the telegram. , The Finley-ease-was in replevin to 'recovers hbusehold goods; Relief-was'denied because the- household .[439]. ¡goods were sold'to be Used in a bawdy houseand the plaintiff. vender so knew'. - The Jackson case was in replevin to recover-liquor -taken from- plaiiitiffi’s- -possession by. .the city marshal. • Relief, was -denied- because'the plaintiff-'had the liquor for the purpose of selling it in violátion-'of the- -law.-•; The- governing principle in all-these eases-is-that-neither-law nor equity-can be.invoked to redress-a--wrong t-hat has ¡resulted--from the ¡injured partyV°wn wrongful and illegal-.conduct; -‘The--principle is-’wélk settled that ‘no court, will lend its aid to -a .man who founds his cáuse of action upon an immoral or illegal act-.’ -This is--a principle founded upon public policy ‘not for the sake of the defendant) but-for the law’s sake, and that only. MeDearmott v. Sedgwick et al., 140 Mo. 172, 1. c. 181, 39 S. W. 776.

The general.rule;-is .that money paid-Out; orCillegal; contracts may be recovered back ,in an action for money bad and'received while the contracts remaiipexecutoiy because a. violation of. the law.is thus .ayqided.,by the abaudonm.ept of the illegal. contract, .The law allows for repentance, trat, if the .illegal contract is, executed such money cannot be recoyerefl b.aelh,. The,law in.such ease'will, leave'the parties where they have placed .themselves Idel v. Hamilton-Brown, Shoe Co. et al., 343 Mo. 373, 121 S. W. (2d) 817, 1. c. 821, and cases there cited; 17 CJS, Contracts, Sec. 277, p. 664. In the present case-there remáined ¡upspld, a..¡considerable, aniount of.the whiskey purchased from .the. distilling-company, but.-that fact could not operate to-make the unlawful agreement between respondent and appellant .executory. It is a felony .to sell intoxicating liquor without a license .[Sec..4900 .R,.S..,1939, Mo. -ESA) Sec.-4900(g)],..and;neither respondent .nor:,ap-(peliapt-had a license fo sell ¡intoxicating liquor.., AYhile -the liquor, was sold by thp Bismarck Grill, yet, under the. agreement respondent - and appellant wpre. to .personally get, all the .profit, .and in, such- situation the Bismarck Grill.-was.no more than,the agent of respondent and appellant. - Respondent. anfl; appellant were for all practical .purposes .(profits).spiling intoxicating.liquors without a license., Jn. other words they wpre. in the. liquqr business. ‘ ‘ The- liquor ¡ business dn ■ this-, state h.qs been outlawed ,hy legislation and it can only be, ¡conducted -lawfully,by securing adipense.from the state authorizing it ;to-he done.” State v. Parker Distilling Co., 236 Mo. 219, 1. c. 272, 139 S. W. 453, 1, c. 467.

.Respondent contends that the facts do not. reflect-such ¡an illegal .taint ¿S .to .bar recovery.., As supporting such contention, the- following, cásgs are cited; Van Tine v. Hilands (N. Y.), 131 Fed. 124; Corporaton Trust Co. v. Logan et. al. (Del.), 52 Fed. Supp. 999; Gasoline, Products Co. v. Champlin Refining Co. (Me.), 46 Fed. (2d) 511; People ex rel. Nelson v. Homewood State Bank, 294 Ill. App. 52, 13 N. E. 285; Maxwell v. Maxwell, 1 La. App. 413; Carlisle et al. v. National Development Co. et al., 108. Okla. 18, 234 Pac., 629; Wagner v. Worrell et al., 76 Calif. App. (2d) 172, 172 Pac. (2d) 751; Wann v. Kelly (Minn.), 5 Fed. 584.

The facts in nope of ¡the cases,-cited are similar to- the present facts, ‘unless it be'the Wann, ease to which we;again’refer, infra. The Van .Tine ease5iwas for an,accounting ,of.the profits in a joint venture in the purchase and sale of stock. It was held .that the' fact that the defendant illegally received certain commissions in, obtaining, the stock' was no defense to the-p'íaintiff’-s sfiif for an ' accounting.' The Corporation Trust- Company’1 case:-also involved transactions' in" connection with the purchase of stock and" especially whether the transactions involved were exempt under the federal securities act. 15 ITSCA, See. 77a et seq. There is nothing in that ease pertinent here. The Gasoline Products Company case was to recover for royalties. It was held that the agreement- involved was not inherently illegal. It is stated in that ease that courts will not permit a party to retain’the benefits of a contract and at the same time avoid its burdens unless public interests clearly require the contrary. That of course is the general rule, but as we have pointed, but, supra, the present setup is, in effect, denounced by our statute as a felony.

The Wann case, supra, was to recover plaintiff’s'portion of profits resulting [440] from a stock deal agreement. It- was claimed by the defense that the deal was illegal, a mere gambling’transaction,' and that for that reason plaintiff could not recover. ' But recovery Was permitted. The court said: “It is urged by Kelly (defendant)' that the business in which the parties engaged was contrary to public policy and illegal, and therefore he can retain all the profit which resulted therefrom without recognizing his associates jointly interested,' 'and that a court will not enforce the plaintiff’s claim. Such is not the law. •The agreement between the parties related to a single transaction;’and when'the business closed, and Kelly received the profits, he Was in duty bound to pay over to the plaintiff his part of it. If the speculation was contrary to public policy and illegal, it had been closed, wound up, and the illegal object of it had been accomplished.”

It is stated in 17 CJS, Contracts, Sec. 277, cited supra, that'“the rule supported by the weight of authority is that.the courts will not aid in the division of profits of an illegal transaction between associates.” But there is a minority rule which the Wann case' seems to follow.' In 17 CJS, Contracts, Sec. 280, it is stated that'“while there are cases to the- effect that, as long as a party retains the benefit of an -agreement he will not be allowed to avail himself of its illégaíity, they are contra to the weight of authority and are opposed £o the’ general rule.” It would appear from the Missouri eases reviewed,.supra, that we follow the general ride. Able counsel for respondent in the present case cites no Missouri case which follows the minority rule and we have not found such case.

In such situations as respondent’s case reflects, it seems harsh to deny relief, but on the other hand equity will not’afford redress to those whose hands are unclean and -the law will leáve transgressors, in such circumstances, where they place themselves. ’

The judgment should be reversed and it-is so ordered.

‘Dattón and Van Osdol, GO., concur.

PEE CURIAM:

The foregoing opinion by Bradley, C., is adopted as the opinion of the court.

All the judges concur.,