Case Name: George Schmidt v. Jacob Barker
Court: Louisiana Supreme Court
Jurisdiction: Louisiana
Decision Date: 1865-12
Citations: 17 La. Ann. 261
Docket Number: 
Parties: George Schmidt v. Jacob Barker.
Judges: 
Reporter: Louisiana Annual Reports
Volume: 17
Pages: 261–268

Head Matter:
George Schmidt v. Jacob Barker.
In the absence of any special agreement or understanding between a banker and a depositor, whore the deposit is an irregular one; when an open account is lcept; where moneys are deposited in bank to be drawn out, not in tho identical funds deposited; where moneys deposited are mingled with the cash assets of the bank, and used indifferently with his own; the relations between a bank and its depositors are well and definitely fixed by our own law and jurisprudence, and by that of other countries, in which business is transacted with such institutions.
Such deposits are not real deposits, but are loans for use to the banker. The money so deposited transfers the property to the loanee; and the relation between a bank and its customers, in regard to irregular deposits so made, is simply one of debtor and creditor.
Legal agreements having the effects of laws upon the parties, none but the parties can abrogate or modify them; and it is incumbent on courts to give legal effect to all such contracts, according to tho true intent of all the parties.
This court has often held that it will not lend its aid to settle disputes relative to contracts reprobated bylaw. It will notice their illegality ex offu-io, and allow it, without any plea, at any stage of the proceedings. Parties cannot he heard who ask relief from a violation of law. The law leaves them where their conduct has placed them, and "in pari o udio meKor est coiidilio posxedentis”
Every condition of a thing impossible, or contra "bonos mores, or prohibited by law, is null, and ronders void tho agreement which depends on it.
He who binds himself unwillingly, and under constraint, is not deemed, in the eye of the law, a participant in an illicit covenant.
If, from the plaintiff’s own stating, the cause of action appears to arise from a transgression of a positive law of the country, the court, will not lend their aid.
Ü. PPEAL from the Sixth District Court of New Orleans, Leaumont, J.
Durant 16 Homor for plaintiff.
1. A stim of money deposited with a banker is not a real deposit. L. C. 2904. The only real deposit. L. C. 2934.
2. Money thus deposited is “a loan for use” to the banker. See L. C. 2883, 2884; Story on Bailments, g 64, p. 65; Matthews, Finley & Go. v. Their Creditors, 10 An. 342; Sims v. Bean, 10 An. 346; Grant on Banking, page 1.
3. Loan for use transfers the property to the loanee. Troplong, Dépot, 1115, § 116; Potliier, Contract de Bienf. p. 71; Melville v. Dodge, 6 Murray, Granger and Scott; See 60 Eng. Com. Law Bep. p. 455; Pott y. Glegg, 16 Exchequer, 323.
4. In such a case the banker must pay, under all circumstances. L. C. 2891 el seq.; Pothier, Contract de Bienf. p. 108, ?¿ 50, chap. 4; Potliier on Obligations, No. 622, p. 337 of Evans’ translation; 2 vol. $ 622 of the Paris edition, 1813. See also U. S. Bank v. Bank of Georgia, 10 Wheat. 346, et seq.; Commercial Bank v. Hughes, 17 Wend. p. 100.
Jacob Barker pro se.
-Now into court comes Jacob Barker, appellant, representing to this honorable court that the court below erred in giving-judgment against him in the above entitled suit, the claim being founded on illegal and worthless notes received under an express agreement to bo returned in the same description of paper, which says: “Deposits in this bank are received only on condition that the amount is to be drawn in Confederate currency;” and further, the balance in the bank book, introduced by plaintiff, is stated to be Confederate notes. The banking-currency of the city was exclusively of that character at the time. The said agreement was also introduced by plaintiff.
The Confederate notes were not demanded or refused; always held subject to order of plaintiff, and were filed in the above entitled cause with the answer.
Defendant insists that it was not competent for a military commander to change the obligation of contracts by any military order, however much they may have a right to interpret any contract brought before it for adjudication.
Defendant insists that the military orders relied on by the appellee do not apply to this case.
In a case of collections of seventy thousand dollars by the State Bank of Louisiana for a Tennessee bank, in which Mr. Barker was counsel for the Tennessee bank, tried before General Butler, he decided in favor of the State Bank of Louisiana, using the following language: “ That he saw no propriety in interposing the authority of the United States between the bank who sent the Confederate notes to be circulated here and the bank who received them, and consequently permitted the latter to return them in kind.”
In a case similar to this, a case in which Mr. Barker was interested, was brought before Judge Bell, of the provost court of the Department of the Gulf, in which he decided “that the military authority did not come here to annul contracts or to furnish parties with an excuse for violating faith.”
Mr. Barker begs to refer to a case in Illinois, (see A. L. Freeman’s reports, 32 Illinois, Osgood v. McConnell,) where the judges say, among other things: to permit such proof would be to alter, change or modify the agreement of the parties, which cannot be allowed.
Mr. Barker also begs leave to refer to the Digest of Opinions of the Judge Advocate General of the Army, p. 30, wherein it is stated, among other things, “that Confederate notes are illegal and disloyal publications, and as such are ordered te be destroyed wherever found; an application, therefore, on the part of a foreign resident, to restore a quantity of such notes to him as their former possessor, either in their original form or in Federal currency of an equal amount, cannot be entertained. ”
Mr. Barker begs leave further to refer this most honorable court to the opinion of Chancellor- Kent, in the case of Griswold v. Waddington, in the Court of Errors of New York. See Johnson’s Reports, vol. 16, p. 485, in which the Chancellor says:
“If, from the plaintiff’s own stating, or otherwise, the caixse of action appears to arise from a transgression of a positive law of the country, the court will not lend their aid. ”
“It would be difficult to state any principle of law more plainly founded in common sense and true policy, than that which declares, that a plaintiff must not appear, from his own showing, to have infringed the law of the land; and if he does, he cannot avail himself of the law to enforce a contract made in opposition to law. The plaintiff must recover upon his own merits; and if he has none, or if he discloses a case founded upon illegal dealing, and founded on an intercourse prohibited by law, he ought not to be heard, whatever the demerits of the defendant may be. There is, to my mind, something monstrous in the proposition, that a court of law ought to carry into effect a contract founded upon a breach of law. It is encouraging disobedience, and giving to disloyalty its unhallowed fruits. There is no such mischievous doctriné to be deduced from the books. There arc cases in which a contract, fair and lawful, as between the two individuals who are parties to it, is not to be contaminated by other transactions, which might precede, or which might be the result of the contract. But even if an agent be a party to an original transaction, and the money in his hand be the proceeds of the illegal contract, no recovery can be had. (Vide, on this subject, Lord Kenyon, and Askhurst J. in Taylor v. Blair, 3 Term Bep. 454; Rooke J. in 1 Bos. and Pull., 296; Story J. in Bales v. Mayberry, 2 Gallison, 560; Hurd v. Kniclcerbaclcer, 5 Johns. Bep. 327; ITodgson v. Temple, 5 Taunton, 181; Faileney v. Beynous, 4 Burr, 2069; Petrie v. Hannay, 3 Term Bep. 418; and the disapprobation of those two cases, in 14 Vesey, 192, ex parte Daniels.) Lord Alvanley lays down the true rule in Monlc v. Abel, 3 Bos. and Pull. 25,) when he declares, that “ the principle to be extracted from the cases on this subject is, that no man can come into a British court of justice to seek the assistance of the law, who founds his claims upon a contravention of the British laws.
I now conclude that, as the contract in this case was founded upon dealings during the late war, between the plaintiffs, who were resident citizens of'the United States, and Henry W., who was a natural born and a resident subject of Great Britain, it was an unlawful contract, and cannot be enforced in the courts of this country.
Mr. Barker’s bank has always been in the habit of receiving gold, silver, treasury notes and bank notes, paying its depositors in like funds, without reference to the fluctuations in value. He was particularly unfortunate in relation to deposits of gold and silver, and the sale thereof, the great advance being subsequent to his sales. This did not furnish any excuse for not paying back gold to those who had deposited gold, under the printed regulations of his bank.
Suppose that the deposit had been in counterfeit money, or a trunk of plate, could the bank be considered answerable for anything else ?

Opinion:
Ids:dey, J.
The plaintiff claims from the defendant, as the owner of the Bank of Commerce, in New Orleans, the sum of four hundred dollars, being the balance which he avers to be due to him, on moneys deposited by him in said bank, between the 17th day of January and the 1st day of April, 1862. He complains that this balance is due and payable to him in legal tender notes of the United States, but that the said defendant has illegally and wrongfully, without his consent, caused the plaintiff's bank book to be balanced, as a balance of account in Confederate notes, which the plaintiff himself terms "the treasonable issue of rebels in arms against the United States. "
All these allegations arc traversed by the defendant, who, however,admits that the said balance is correct as to amount, but sets up, in his' defence, a special contract, by which he avers that deposits were received in his bank, at the period stated, only on the condition that the amount was to be drawn for in Confederate currency. And he further specially avers, that the balance of account was struck in the manner alleged by the plaintiff, with his full knowledge, and at his special request.
The only question at issue, thén, between the parties, is the mode in which the admitted balance is to be drawn out oí the bant; in legal tender notes or in Confederate notes.
In the absence of any special agreement, or understanding, between a banter and a depositor, when the deposit is an irregular one ; when an account is tept; where moneys are deposited in bant, to be drawn out, not in the indentical funds deposited; where moneys deposited are mingled with the cash assets of the bant, and used indifferently with his own; the relations between a bant and its depositors are well and definitely fixed by our own law and jurisprudence, and by that of other countries in which business is transacted with such institutions.
Such deposits are not real deposits, but are loans for use to the banter, The money so deposited transfers the property to the loanee; and the relation between a bant and its customers, in regard to irregular deposits so made, is simply one of debtor and creditor. See Arts. L. C. 2904, 2883, 2934, 2884. See the case of Matthews, Finley & Co. v. Their Creditors, 10 An. 343; and that of Sims v. Bean, 10 An. 346; Grant on Banking, p. 1; Marine Bank v. Fulton Bank, Wallace's Report, 2 vol. p. 252.
But the defendant relies on his contract with the plaintiff; and, if the agreement is a legal one, he might well invote Art. 1940 C. C.; which says that, "Legal agreements, haying the effect of law uiDon the parties, none but the parties can abrogate or modify them, and it is incumbent on courts to give legal effect to all such contracts, according to the true intent of all the parties." See sec. 2 of the same Article.
What was the agreement between these parties ? It is that produced by the plaintiff himself; and it precedes in the bank book the statement of the account. It is as follows:
"Bank of Commerce, New Orleans, January 17, 1862. Deposits in this bank are received only on condition that the amount is to be drawn in Confederate ourrencyand the currency is what the plaintiff himself calls the treasonable issue of rebels in arms against the United States.
This court has often held that it will not lend its aid to settle disputes relative to contracts reprobated by law. It will notice their illegality ex •officio, and allow it without any plea at any stage of the proceedings. Parties cannot be heard who ask relief from a violation of law. The law leaves them where their conduct has placed them, and in pari causa 'melior esi conditio possedeniis. Davis v. Holbrook, 1 An. 178; State v. Lazarie et al., 12 An. 166; Gravier's Curator v. Canaby's Executor, 17 La. 132.
Article 2026, Louisiana Code, prescribes that " every condition of a thing impossible, or contra bonos mores (repugnant to moral conduct), or prohibited by law, is null and void, and renders void the agreement which depends on it;" and Pothier (art. 1, chap. 3, part 3) defines the conditional obligation as that "qui est suspendue par la condition sous laquelle elle a été contractée, qui n'est pas accomplie."
And in what light' can this court, constituted as it is, and recognizing, as supreme and paramount to all other laws, the constitution and statutes of the United States, view a condition, on which a deposit is received, and which condition, voluntarily acceded to by the depositor, provides for and contemplates the aiding of the circulation of the treasonable issue of rebels in arms against the United States; of an issue put in circulation for tlie express purpose of facilitating and carrying on the rebellion ; and which, issue, on the yery face of it, anticipates and purposes a disruption and dismemberment of the general government: as the notes so issued were only to be payable "six months after the ratification of peace between the Confederate States and the United States."
Such a condition in a contract is, in the words of the law, " a nullity, and renders void the agreement which depends on it."
The plaintiff was a party to this illicit contract, and his right to stand in judgment depends upon the nature of his connection with the obnoxious condition, and upon the contingency as to whether its illegality lies properly at his door.
Many of the French commentators draw a clear destination between cases wherein both parties to the contract are compromitted illicitly, and where one alone is guilty of infringing the law.
Gilbert in his Code annoté, vol. 1, id. 503, in his notes to Article* 1133 C. N., says: "Les auteurs distinguent sur ce point entre le cas oil la convention est illicite seulement du coté d'une des parties, et celui ou elle est illicite des deux cdtés. Dans le premier cas, celui qui n'a ríen promis d'illicite est fondé a répéter ce qu'il a payé; dans le second, ni l'une ni l'autre des parties ne sont admises á exereer des répétitions l'une contre l'autre." V. Pothier, No. 43 etsuiv.; Toullier, t. 6, No. 126; Duranton, t. 2, p. 687; Delomcourt, t. 2, p. 687, edit, de 1819.
Cette distinction est prise de Paul et d'Ulpieu, dans les'lois 3 et 4, |2, de Condict áb iarp causa.
It is hardly necessary to add, as was said in the ease of Gravier's Curator v. Carraby's Executor, 17 La. p. 128, that a fortiori the law will not lend its aid to enforce the performance of such contracts in the first instance. Duranton, with his usual aptness at illustration, demonstrates such a ease as would save one of the contracting parties from the effect of an illicit agreement. It would be one in which his participation therein was caused by the force of circumstances that he could not resist, without entailing on him grievous injury. That author says: " Quelquefois cepen-dant, la cause de l'obligation de l'une des parties est illicite, sans que l'objet de l'obligation de l'autre le soit: tel est le cas oú vous vous obligez a me restituer un dépot que mon p'ere vous a confié, sans en avoir retiré une reconnaissance, et que vous exigiez une promesse de ma part de vous payer pour cela une certaine somme.
"L'objet de cette obligation, la restitution du depot, est tres licite, mais la cause de mon obligation de vous payer la somme est illicite, non pas sans doute par rapport a moi, mais par rapport a vous qui avez exige une promesse pour faire ce que l'équité et le droit vous oblígeaient de faire sans aucune rétribittion. " Duranton, Art. 366, liv. 3, tit. 3.
In the example suggested by this author, he who binds himself unwillingly and under constraint is not deemed, in the eye of the law, a participant in an illicit covenant. But was this the case with the plaintiff in this suit? Olearly not; but the very reverse of it. His acquiescence in a contract that violated the law, and tended to endanger the public safety, was entirely voluntary, of Ms own free will, and with his eyes open,
His participation in the illegal contract was immoral, being, as it was, in violation of law. See the case of Davis v. Holbrook, 1 An. 175.
What was due to plaintiff by his contract with the defendant? Foui-hundred dollars in Confederate money. If the shadow of a legal cause of action were disclosed in this case by the plaintiff, it is so coupled with the illicit condition as to be inseparable from it.
The whole contract is an absolute nullity; and quod nullum esl confir-man nequit, quod nullum esl, nullum produait ejfelcum. " Nemo audilur propriam turpiludinen allegans. "
The doctrine taught by Chancellor Kent, in the case of Griswold v. Waddington, in the Court of Errors, New York, meets our fullest approbation. He says: "If from the plaintiff's own stating, the cause of action appears to arise from a transgression of a positive law of the country, the court will not lend their aid."
It would be difficult to state any principle of law more plainly founded on common sense and true policy, than that which declares that a plaintiff must not appear, from his own showing, to have infringed the law of the land; and, if ho does, he cannot avail himself of the law to enforce a contract made in opposition to lavr. The plaintiff must recover on his own merits; and if he has none, or if he disclose a case founded upon illegal dealing, and founded on an intercourse prohibited by law, he oughji not to be heard, whatever the demerits of the defendant may be.
"There is," says the Chancellor, "to my mind, something monstrous in the proposition ¿hat a court of law ought to carry into effect a contract founded upon a breach of law. It is encouraging disobedience and giving-disloyalty its unhallowed fruits.
There is no such mischievous doctrine to be found in the books."
The judgment of the lower court, which was in favor of the plaintiff, must be reversed.
It is therefore ordered, adjudged and decreed, that the action of the plaintiff be dismissed, and that plaintiff pay the costs in both courts.