Court Opinion

ID: 6539673
Source: CourtListenerOpinion
Date Created: 2022-07-19 22:14:35.210127+00
Date Added: 2024-06-11T15:55:47.039073
License: Public Domain

Harrison, J., dissenting, says: It is contended -that “ Confederate notes,” having been issued and put ill circulation in aid and promotion of the rebellion, all contracts in1 consideration of or stipulating for the payment of them, were in contravention of law, and void. From this conclusion, I dissent. I understand the rule' in relation to contracts, which grow out of or are the sequences of immoral or illegal transactions, to be, as thus laid down in Story on Contracts: “ If the illegality do not form a portion of the contract, but be entirely collateral and capable of complete separation therefrom, it will be binding. ■ But if the illegality be inherent, so that it constitutes a portion of the consideration, the contract will be void.” 1 Story on Con., sec. 621. Justice Washington, in Toler v. Armstrong, 4 Wash. C. C. R., 297, gives a very clear application of the rule. He says : “ The principle of the rule is, that no one ought to be heard in a court of justice, who seeks to enforce a contract founded in, or arising out of, moral or political turpitude. The rule itself has sometinfes been carried to inconvenient lengths, the diffi•culty being, not in any unsoundness in the rule itself, but in its fitness to the particular cases to which it has been applied. Does the taint in the original transaction infect and vitiate every contract growing out of it, however remotely connected with it? This would be to extend the rule beyond the policy which produced it, and would lead to the most inconvenient consequences. Carried out to such an •extent, it would deserve to be entitled ‘ a rule to enc'ourage and protect fraud.’ So far as the rule operates to discourage the perpetration of an immoral or illegal act, it is founded in the strongest reason; but it can not safely be pushed further. If, for example, the man who imports goods for another, by means of a violation of the laws of his country, is disqualified from founding any action upon such illegal transaction for the value or freight of the goods, or for other advances made on them, -he is justly punished for the -immorality of the act, and a powerful discouragement- from the perpetration of it is provided by the rule. “But, after the act is accomplished, no new contract ought to be affected by it. It ought not to vitiate the - contract of the retail merchant, who buys these goods from the importer ; that of - the tailor, who purchases from the merchant, or of the customers of the former, amongst whom the goods are distributed in clothing, although the illegality of the original act was known to each of these persons at the time he contracted. “ I understand the rule, as now clearly settled, to be that, where the contract grows immediately out of and is connected with an illegal or an immoral act, a court of justice will not lend its aid to enforce it; and, if the contract be in part only -connected with the illegal transaction, and growing immediately out of it, though it be in fact a new contract,' it is equally tainted by it. The case before supposed, of any action for the value of goods illegally imported for another, or for freight and expense attending it, founded upon a promise, express or implied, exemplifies a part of the above rule. The latter part of it may be explained- by the following case: as, if the importation was the result of a scheme to consign the goods to the friend of the owner, with the privity of the former, that he might protect and defend them for the owner,, in ease they should be brought into jeopardy, in consequence of some intended violation of law, I should consider a bond or promise, afterwards given by the owner to his friend, to indemnify him for his advances, on account of any proceedings against the property, or otherwise, as constituting a part of the res gesta, or of the original transaction, though it purports to be a new contract. “ Bor, it would clearly be a promise growing immediately out of and connected with the illegal act. It would be, in. fact, all one transaction, and the party to whom the promise was made would, by such a contrivance, contribute, in effect, to the success of the illegal measure. But if the promise be unconnected with the illegal act, and is founded on a new consideration, it is not tainted by the act, although it was known to the party to whom the promise was made, and although he was the contriver and conductor of the illegal act.” This very clear exposition of the law was, in the same case,, upon error, in the Supreme Court of the United States, approved by Chief Justice Marshall, in his opinion affirming the judgment of the circuit court. Armstrong v. Toler, 11 Wheat., 25. Brom it it is seen that the validity of a contract is not affected by the mere fact that it emanates from or is the sequence of an illegal or immoral transaction; but, to be infected by its turpitude, it must be so immediately connected with the transaction as to be in aid and furtherance of it; or, in other words, the illegality must be inherent and constitute a part of it. Many cases might be cited, in illustration of the above mentioned rule, but I will only refer to- a few. In Tenant v. Elliott, 1 Bos. and Pull., 3, the defendant, a broker, effected, in violation of the navigation laws, an insurance for the plaintiff, a British subject, on goods from Ostend to the Bast Indies, on board an imperial ship. The ship being lost, the underwriters paid the amount of the insurance to the defendant, who refused to pay it over to the plaintiff. It was held that the illegality of the original transaction did not affect the implied promise of the defendant, arising out of the receipt of the money for the plaintiff, and that the plaintiff' was entitled to recover. In Farmer v. Russell, et al., ib., 296, the defendants, common carriers, conveyed for the plaintiff, to a person at Portsmouth, a quantity of counterfeit half pence, to be distributed among the sailors, and received from him, on account of the same, a sum of money for the plaintiff, a part of which they refused to account for, and to recover which was the object of the suit. The plaintiff recovered, upon the ground that the cause of action was not founded on the illegal transaction, but on another totally distinct promise. . In Faikney v. Reymous, et al., 4 Burr, 2069, the plaintiff was allowed to recover on a bond, given by the defendants, to secure the payment of one half of a loss sustained in certain illegal transactions, in which the plaintiff’ and one Eichardson were jointly concerned, the whole of which he had paid. In Petrie, et al., v. Hannay, 3 T. R., 418, the plaintiffs’ testator and the defendant, having been engaged together in illegal stock speculations, and having incurred losses, they came to a settlement with their broker, one Portis, who had paid their losses for them. . Plaintiffs’ testator paid the whole amount advanced, except £811, part of the defendant’s share, and for that drew a bill in favor of Portis, on the defendant, which he accepted. The bill, not being paid when it became due, Portis, after the testator’s death, brought an action on it against the plaintiffs, and recovered the amount, the illegality of the transaction not being pleaded. The plaintiffs, to be reimbursed the amount recovered of them on the bill, brought an action against the defendant for money paid for him. The court held that they were entitled to recover. McBlair v. Gibbs, et al., 17 How., 232, if possible, is still more directly in point in this case. The administrator of Lyde Goodwin filed a bill against the executors of Bobert Oliver, to recover the proceeds of a share in an association called the Baltimore Mexican Company, which had a claim against the Mexican Government, founded on a contract with General Mina, in 1816, for advances and supplies in fitting out a military expedition against the dominions of the King of Spain, that was allowed under the Convention of 1889, for the adjustment of claims of citizens of the United States againsjt the Bepublic of Mexico. The proceeds of the share had been paid over to the defendants, and they set up a right to retain the same under an assignment of the share, by Goodwin himself, to Oliver, in 1839, for the relinquishment of a debt he owed Oliver. It was urged against the claim of Oliver’s executors that the contract with General Mina, being in violation of the neutrality act of 1794, the sale and assignment of it from Goodwin to Oliver, before its recognition and fulfillment by the Mexican Government, was also illegal, and consequently no interest therein passed to the executors. The court, however, say: “ But this position is not maintainable. The transaction, out of which the assignment to Oliver arose, was uninfected with any illegality. * * * The assignment was subsequent, collateral to, and wholly independent of the illegal transactions- upon which the principal contract was founded. Oliver Avas not a party to these transactions, nor in any Avay connected Avith them. It may be admitted that even a subsequent collateral contract, if made in aid and in furtherance of the execution of one infected with illegality, partakes of its nature, and is equally in violation of law ; but that is not this case. Oliver, by the assignment, became simply owner in the place of Goodwin; and as to any public policy, or concern, supposed to be involved in the making or in the fulfillment of such contracts, it was a matter of entire indifference to which it belonged. The assignee took it liable to any defense, legal or equitable, to which it Avas subject in the hands of Goodwin. In consequence of the illegality, the contract was invalid, and incapable of being enforced in a court of justice. The fulfillment depended altogether upon the voluntary act of Mina, or of those representing him.” • r ■ ¿.t - The eases referred to in the opinion of tlie-court, as sustaining the objection raised to the validity of such*.contracts, have no application to the point in controversy. . - In each of the cases, so referred to, the illegal act was a part of the contract. Thus, in the ease, juj Massachusetts, of The Springfield Bank v. Merrick, et al., the note sued on was payable in notes of banks of another State which, by a statute, it was made unlawful for any bank in the St&te of Massachusetts to reeoive or in any manner deal in.. In Hunt v. Knickerbocker, the plaintiff sought to recover for lottery tickets, which he had furnished the defendant to sell; the sale of which was prohibited by law. Patton v. Nicholson was _ a suit for. the price of a license or pass from the public enemy, during the late war with Great Britain, to be used on board an American vessel; and Craig, et al., v. The State of Missouri was an action on a note, the consideration of which was loan office certificates, or -bills of credit, issued by the State of Missouri to the defendants, in violation of the Constitution of the United States. But it is insisted that as it was the intention and purpose, when the Confederate notes were issued and put in circulation, that they should circulate as currency- — as a means of maintaining the rebellion ; negotiations and dealings in them were in the fulfillment and execution of such purpose, and consequently in aid of the rebellion, and were therefore against public policy. When it is recollected that for several years these notes constituted the only circulating medium in the State, and passed from hand to, hand as money, in the Business transactions of the people, and that necessity compelled such use, the objection that such dealings and use were against public policy, must obviously appear to be without foundation. That it was not against the policy of the State at that time, which was in the military occupation of the Confederate States, and the laws and authority of the United States within it wholly excluded or suspended, admits of no question. Castine, in Maine, during the war with Great Britain, was for several months occupied by the British forces. Judge Story, in the case of the United States v. Hayward, 2 Gall., 485, which grew out of such occupation, said: “ By the conquest and occupation of Castine, that territory passed under the allegiance and sovereignty of the enemy. The sovereignty of the United States over the territory was, of course, suspended, and the laws of the United States could no longer be rightfully enforced, or be obligatory upon the inhabitants who remained and submitted ip the conquerors. Castine, therefore, could not, strictly speaking, be deemed a part of the United States, for its sovereignty no longer extended over the place.” The same principle was held to apply to the occupation of Tampico, and the State of Tamaulipas, by the troops of the United States, in the war with Mexico. Fleming v. Page, 9 How., 603. Iialleck says: “Wars of insurrection, of rebellion, and of revolution, come under the general head of civilwars, and are governed by the same rules, so far as regards international law and the laws of toar.” Mements of International Law and the Laws of War, 153. Speaking of the declaration of war and its effects, the same author says: “Its effects upon the relations of the citizens of a belligerent State, with their own government, belong to constitutional or municipal law rather than to general public law; nevertheless, as there are certain general principles which govern these relations, in all countries and under all governments, it may be proper to allude to them. For example, any place, port, town, fortress, or section of country, occupied by the enemy, is, for most purposes, regarded in law as hostile territory, so long as such occupation is continued. If the place so occupied was previously neutral, or a part of our own territory, it is no longer regarded as such, for it would be absurd to suppose that persons who are hostile themselves, or who are .under a hostile authority, are to exercise the same civil rights as neutrals or citizens in. time of peace. The relations of the government to a place or territory, so occupied or situated, are of a military character, and consequently are not regulated by the civil laws, which are made for the conditions of peace.” P. 166. In the ease. of Thorington v. Smith, decided by the Supreme. Court of the United States at the present term, Chief Justice Chase says: “ The whole territory controlled by it (the Government of the Confederate States) ivas thereafter held to be enemies’ territory, and the inhabitants of that territory were held, in most respects, for enemies. To the extent, then, of actual supremacy, however, unlawfully gained, in all matters of government, within its military lines, the power of the insurgent government can not be questioned. That supremacy would not justify acts of hostility to the United States. How far it should excuse them must be left to the lawful government upon the reestablishment of its authority: But it made civil obedience to its authority not only a necessity, but a duty. Without such obedience civil order Avas impossible.” See Am. Law Review, January, 1870; Mrs. Alexander’s cotton, 2 Wallace, 404. The question presented, in the case before the court, the validity of contracts for the payment of Confederate notes, made during the Avar, within the lines of the Confederate forces, is directly decided in the case of Thorington v. Smith, Speaking of such contracts, the Chief Justice says: “ It seems to follow, as a necessary consequence, from the actual supremacy of the insurgent government, as a belligerent, within the territory where it circulated, and the necessity of civil obedience on the part of all who remained in it, that this currency must be regarded, in courts of law, in the same light as if it had been issued by a foreign government, temporarily occupying a part of the territory of the United States. Contracts stipulating for payments in that currency can not be regarded as made in aid of the foreign invasion in the one case, or of the domestic insurrection in another. They have no necessary relation to the hostile government, whether invading or insurgent; they are transactions in the ordinary course of civil society, and, although they may indirectly and remotely promote the ends of the unlawful government, are without blame, except when proved to have been entered into with actual intent to further the invasion or insurrection.” Martin v. Hortin, 1 Bush., 629; Green v. Sizer, 40 Miss., 530. I think the authorities I have presented are conclusive.