Court Opinion

ID: 9621003
Source: CourtListenerOpinion
Date Created: 2023-08-22 05:50:23.208139+00
Date Added: 2024-06-11T18:04:57.079161
License: Public Domain

On rehearing.
W. C. Winslow and Boy Harland, both of Salem, for appellants.
Frank E. Nash (King, Wood, Miller, Anderson & Nash, of Portland, on brief) for respondents.
Affirmed.
LATOURETTE, J.
Plaintiff in its petition for rehearing raises the point that we erred in our former opinion in allowing to defendants “a credit or setoff against charges made after removal of O. P. A. controls.” It was not until we called for supplemental briefs on the rehearing that we were enlightened on the point now made, and, upon due consideration, we hold the point well taken for the following reasons:
It will be observed that the parties entered into the contract involved in December, 1941. O. P. A. regula*651tions "became effective in March, 1942, and terminated on November 10, 1946. Transactions continued between the parties until June, 1947. Plaintiff’s amended complaint is predicated on a running account between the parties over the period, summing up the various charges made against defendants amounting to $46,958.15, and an aggregate payment on the account of $39,220.70, leaving a balance of $7,737.45, the amount for which plaintiff sued. The record, however, shows over the years that there were monthly charges and monthly payments made on the account, and on October 31,1946, ten days before the end of O. P. A. regulations, the unpaid balance was $2,007.14. During November further charges aggregated $2,033.82, and on November 30, the account was reduced by payments to $2,040.96.
In our former opinion we held that both parties were in pari delicto because the law prohibited plaintiff from making overcharges and, likewise, prohibited defendants from paying overcharges. It is a well-recognized rule that a party to an illegal contract, made so by a prohibition of law, cannot obtain relief in law or in equity arising out of the contract. In 17 C. J. S., Contracts, 656, § 272, we read:
“No principle of law is better settled than that a party, to an illegal contract cannot come into a court of law and ask to have his illegal objects carried out; nor can he set up a case in which he must necessarily disclose an illegal purpose as the groundwork of his claim. The rule is expressed in the maxims, Ex dolo malo non oritur actio, and In pari delicto potior est conditio defendentis. The law in short will not aid either party to an illegal agreement; it leaves the parties where it finds them. The general rule is the same both at law and *652in equity. Likewise, the general rule is the same whether the contract is executory or executed.”
Again in 12 Am. Jur., Contracts, 721, § 212, we find:
“The rule which limits the enforcement of rights growing out of illegal agreements is generally-applied only in cases where the parties are in pari delicto. The rule is often expressed by saying that in cases where the parties are in pari delicto the law will leave them where it finds them.”
In Mancourt-Winters Goal Co. v. Ohio & Michigan Coal Co., 217 Mich. 449, 451, 454, 187 N. W. 408, the Supreme Court of Michigan in a ease somewhat parallel to the one at bar held that where a seller of coal increased the price in violation of federal law, both seller and purchaser were in pari delicto, and that the purchaser would not be permitted to offset illegal charges against subsequent legal charges. In that case arising during the first World War, plaintiff entered into a contract with defendant to furnish defendant with coal at a certain price per ton. Later on the president of the United States promulgated an order under the Lever Act freezing the price of coal at a certain figure. Thereafter the seller raised the price of coal above the presidential fixing order, which increased price was voluntarily paid by the defendant for c-oal thereafter delivered. Accounts were squared between the parties up to March, 1918. Thereafter plaintiff continued to deliver coal to defendant in March and April of that year, whereupon plaintiff demanded payment for the March and April deliveries. Quoting from the opinion, we read:
“The defendant says ‘no, the demand made by you for the 45 cents additional was an illegal demand and in violation of the president’s order, and we will set off these illegal charges which we have *653heretofore paid against the coal delivered to us in March and April.’ Plaintiff was not content with this solution. It sued defendant and at the trial, after the testimony was closed, both sides requested the court for a directed verdict. After considering the matter the trial court directed a verdict for the plaintiff for the March and April coal at the contract price of $2.75 a ton. Defendant now insists in this court that the trial court’s view of the law was not the proper one.”
The court further said:
“Counsel discuss the character of the account and assert that it was an open one and that defendant was entitled to recover the balance due thereon. They also discuss other questions, but we think they are not material under our view of the case. Our view is that the contract adding 45 cents a ton to the consideration made it an illegal contract. That both parties were in pari delicto. It is also our view that the contract was executed except as to the deliveries in March and April, and as to those the trial court properly allowed a recovery in the contract price of $2.75. The court, undoubtedly, had a right to enforce the unexecuted part of the contract in accordance with the original contract because that was a legal one.”
In a long line of decisions, beginning with Ah Doon v. Smith, 25 Or. 89, 34 P. 1093, we have consistently held that a party to an illegal contract, such as we have in this case, is not permitted to obtain any relief arising out of an illegal contract.
As defendants made payments on the accounts rendered to them by the plaintiff, they were credited on the items of the account, both legal and illegal, and to permit defendants now to offset the illegal payments against future legal charges would in effect allow them *654to recover illegal payments theretofore made, contrary to all the law on the subject.
The record shows that the charges made by plaintiff against defendants after O. P. A. control ceased in November, 1946, greatly exceeded the amount now sued for, so that the claim made by plaintiff in the present action is in reality based on legal charges made against defendants.
For the above reasons, the former opinion reversing the judgment of the lower court is hereby overruled, and the judgment of the trial court is now affirmed.
In Banc