Case Name: JAMES BLYTHE vs G. W. LOVINGGOOD
Court: Supreme Court of North Carolina
Jurisdiction: North Carolina
Decision Date: 1841-12
Citations: 2 Ired. 20
Docket Number: 
Parties: JAMES BLYTHE vs G. W. LOVINGGOOD.
Judges: 
Reporter: North Carolina Reports
Volume: 24
Pages: 20–23

Head Matter:
JAMES BLYTHE vs G. W. LOVINGGOOD.
An executory contract, the consideration of which is contra bonos morei, or against the public policy or the laws of the State, or in fraud of the State, or of any third person, cannot be enforced in a Court of Justice.
When commissioners, appointed to sell lands for the State, at public auction, declared, as one of the conditions of the sale, that if the highest bidder did not comply with his contract, the next highest bidder should have the lands; and an agreement was made between the highest bidder and the next highest, that the latter should give the former his note for one hundred dollars, in consideration that the former should not comply with his bid, and thereby permit the latter to obtain the land at an under bid: Held, that such note was void, on the ground of its fraudulent consideration.
This was an appeal from the judgment of the Superior Court of Law of Cherokee County, at Fall Term, 1841, his Honor Judge Manly presiding. The plaintiff declared upon a promissory note, not under seal. Upon the trial it appeared that, at the public sale of lands belonging to the State, in Cherokee County, it was stipulated by the commissioners, on the part of the State, as one of the conditions of the sale, that if the highest bidder did not give bond, before a certain hour on the day succeeding the sale, the next highest bidder might come forward and take the land ; and so toiies quoties. The plaintiff and defendant were both bidders for a certain parcel of land, (the plaintiff the highest and the defendant the next) and it was agreed between them, that if the plaintiff would fail to comply, and allow the land, according to the conditions of the sale, to be taken by the defendant, he, (the defendant) would give him one hundred dollars. The note sued upon was given in pursuance of that agreement. The recovery was objected to on the part of the defendant, upon the ground that the agreement, constituting the consideration, was fraudulent, and the note void. The Court instructed the Jury that the consideration was sufficient in law to support the action, and a verdict was returned for the plaintiff. From the judgment, pursuant to that verdict, the defendant appealed.
Francis for the defendant,
to show that the contract was against public policy, and void, cited the following authorities, Jones v Randall, Cowp. 39. Jordan v Lashbrook, 7 T. R. 631. Cockshatt v Bennett, 2 T. R. 763. Smith v Greenlee, 2 Dev. 126.
Bynum contra,
contended that the contract was not against public policy, and, at all events, only the party defrauded could take advantage of the fraud. And he cited Comyns on contracts Wells v Mitchell, 1 Ired. R. 487. Graham v Reed, 2 Dev. 364.

Opinion:
Daniel, J.
If the plaintiff intended to comply with the terms of the sale, but failed in consideration of the defendant's executing to him the note, then the conspiracy had the effect of depriving the State of so much of the purchase money as made up the difference between the two bids ; and such a transaction, we think, was fraudulent towards the State. The plaintiff's counsel contends, that, if the parties intended to defraud the State, it could be taken advantage of by the _State only, and not by the defendant, who has reaped the benefit, and was a particeps criminis in the transaction. We are °*'a <^®3rent opinion. The law prohibits every thing which is contra bonos mores, and, therefore, no contract, which originates in an act contrary to the true principles of morality, can be made the subject of complaint in the Courts oí Justice. It has been repeatedly decided in England, that the vendor of goods could not recover the price of the vendee, when he had aided the vendee, either in packing or otherwise, to defraud the revenue laws of that country. Clugas v Penabena, 4 T. R. 466. Waywell v Reed, 5 T. R. 599. So a contract, which is a fraud on a third person, may, on that account, be void as to the parties to it, as where A suceeeded B in a house, and, not being able to pay for the furniture^ proposed to D, his friend, to advance money for him, who accordingly treated with B, and agreed to puchase the furniture for A at £,70, which sum he paid B; but there was a private agreement between A and B, that A should pay a further sum of £30, over and above the £70; and, in pursuance thereof, A gave B two promissory notes of £15 each, for that sum: Held, that he could not recover on the notes, as the private agreement was a fraud upon D, who had advanced the £70 in confidence that it was the whole consideration. Jackson v Ducharie, 3 T. R. 551. So where a surety gave a guaranty to A for a certain amount of goods to be sold to B, and the latter agreed to pay 10s. per ton beyond the market price, in liquidation of an old debt due to A, without communicating the bargain to the surety; held, that it was a fraud upon the latter, and the guaranty was void, Pidcock v Bishop, 10 Eng. C. L. 197. Lord Mansfield said, (in Holman v Johnston, Cowp. 343.,) " the objection that a contract is immoral or illegal, as between plaintiff and defendant, sounded at all times very ill in the mouth of the defendant. It is not for his sake, however, that the objection is even allowed; but it is founded in general principles of policy, which the defendant has the advantage of, contrary to the real justice as between him and the plaintiff, by accident, if I may say so. The principle of public policy is this : ex dolo malo non ori- ten actio. No court will lend its aid to a man, who founds his cause of action upon an immoral or illegal act. If, from the plaintiff's own stating or otherwise, the action appears to arise ex tenpi causa, or the transgression of a positive law of the country, then the court says he has no right to be assisted. It is upon this ground the court goes; not for the sake of the defendant, but because they will not lend their aid to such a plaintiff." We are of the opinion that the agreement in this case was in pursuance of a fraudulent design to deprive the State of a fair price for its land, and that the plaintiff ought not to recover. There must be a new trial.
Per Curiam. New trial awarded.