Exchange Contracts. made the subject of an indictment for conspiracy (x); and no action CH. XX. s. 6. can be maintained upon such agreement. This was held in Scott Stock v. Brown & Co. (y), in which the defendants were stockbrokers, and were sued for rescission of a contract to buy the shares and recovery of the purchase-money, on the ground that the defendants had delivered their own shares to the plaintiff, instead of purchasing them on the Stock Exchange. It Much buying and selling of stocks and shares is done by brokers "Outside brokers" who are not members of a Stock Exchange. In Exchange Teleand "Tape graph Co. v. Gregory (z), under a contract made between the plain- prices." tiffs and the London Stock Exchange, valuable information as to Telegraph the prices of stocks and shares from time to time during any day Co. v. Gregory. was collected on the Stock Exchange and supplied to the plaintiffs, and printed on tapes and sheets of letterpress in their office. was part of the terms of the contract between the plaintiffs and their subscribers that the information should not be communicated to non-subscribers. The defendant, an outside broker who had once been a subscriber, but with other outside brokers had not been allowed so to continue by the plaintiffs on the request of the Stock Exchange Committee, obtained the information from a subscriber, and posted it up in his office. He was restrained by injunction from continuing to publish it, and from continuing to induce any subscriber of the plaintiffs to supply him with it in breach of the subscriber's contract with the plaintiffs. (x) See Reg. v. Aspinall (1876), 2 Q. B. D. 48. (y) Scott v. Brown, [1892] 2 Q. B. 724, C. A. (z) Exchange Telegraph Co. v. Gregory & Co., [1896] 1 Q. B. 147, C. A. Effect of illegality in general. lands. SECT. 1.-Illegal Contracts in General. WHENEVER the contract which a party seeks to enforce, be it express or implied, is expressly or by implication forbidden by the common or statute law, no Court, either of law or equity, will Cope v. Row lend its assistance to give it effect (a). For although, in general, the agreements into which parties enter have the force of laws over those parties, because Modus et conventio vincunt legem; yet this rule does not apply where the interests of the public, or of morality, are affected by the agreement, and may be injured by the observance of its provisions. Foreign contract. Missouri Nor will a foreign contract be enforced in this country, if it be against the law of this country, even although it may be valid by the law of the country where it was made (b), but a contract Steamship Co., made in this country may be enforced, although it was made with the intention of violating the law of a foreign country (c) ; and a clause in a contract void by the law of the foreign country in which it was made may be enforced in this country, if the whole contract shows that the parties intended it to be governed by English In re. (a) Per Parke, B., Cope v. Rowlands (1836), 2 M. & W. 149, 157; per Giffard, L. J., Re Cork and Youghal Rail. Co. (1869), L. R., 4 Ch. 748, 762; Sykes v. Beadon (1879), 11 Ch. D. 170. (b) Grell v. Levy (1854), 16 C. B., N. S. 73; Hope v. Hope (1857), 26 L. J., C. P. 417, App. (c) Per Lord Kenyon, Smith v. Mar connay (1796), Peake, Add. Ca. 81. law, and the particular clause is not immoral or forbidden by C. XXI. s. 1. positive law (d). Illegal, &c., The test, as to whether a demand connected with an illegal trans- (Generally). action be capable of being enforced is, whether the plaintiff requires Test of to set up and rely on such transaction, in order to establish his illegality. case (e). Where, therefore, to an action on a covenant to pay money, the defendant pleaded, that there had been an illegal agreement that, for a price to be paid to the plaintiff, land should be sold and conveyed to the defendant for an illegal object; that the land was conveyed to the defendant for that object; and that afterwards, -a part of the purchase-money remaining unpaid,the defendant, to secure payment thereof to the plaintiff, made the covenant in the declaration mentioned: it was held that, although the plea did not allege that the covenant was given in pursuance of the illegal agreement, still, as the law would not enforce the original illegal contract, so neither would it allow the parties to enforce the covenant for payment of the purchase-money, because, by the original bargain, it was tainted with illegality (ƒ). be founded But it is not sufficient, in order to bring the plaintiff within this Action must rule, that he should merely be obliged to give evidence of an on illegal illegal contract as part of his case; for the rule applies only where contract. the action is founded upon the illegal contract, and is brought to enforce it (g). Thus, either party to an illegal contract may rescind it whilst it remains executory, and may recover from the other any money which he may have paid to him thereunder, although, to enable him to do so, he must prove as part of his case that he had entered into an illegal contract (h). And so, where A. procured B. to grant him a lease of premises, by a false representation as to the purpose for which they were to be used; and A. took possession, and converted them into a brothel; whereupon B. forcibly expelled him; it was held that A. might maintain ejectment against B., because the term had vested in A., and therefore he was not calling on the Court, in that action, to aid him in enforcing an illegal agreement (i). If there be in the same deed certain covenants which are against Part avoidlaw, and others which are not, the deed, although void as to the ance. former, is good as to the rest. And the law is the same as to (d) Missouri Steamship Co., In re (1888), 42 Ch. D. 321, C. A. (e) See Fivaz v. Nicholls (1846), 2 C. B. 501, 512, 513; Taylor v. Chester (1869), L. R., 4 Q B. 309; Simpson v. Bloss (1816), 7 Taunt. 246; Begbie v. Sewage Phosphate Co. (1875), L. R., 10 Q. B. 491. (f) Fisher v. Bridges (1854), 3 E. & B. 642, Ex. Ch. ; and see Geere v. Mare (1863), 2 H. & C. 339; Clay v. Ray (g) Per Cur., Taylor v. Bowers (1876), (h) Per Bramwell, B., Bone v. Eckless (1860), 29 L. J., Ex. 438, 440; aud see ante, p. 89. (i) Feret v. Hill (1854), 15 C. B. 207. CH. XXI. s. 1. bonds, where the condition is, in part, against law. But where Mala prohi bita. Illegality may be established by parol evidence. Illegality may be taken advantage of by either party. Taylor v. you cannot sever the illegal from the legal part of a covenant, the whole is void (k); and if a contract be made on several considerations, one of which is illegal, the whole contract is void, and that whether the illegality be at common law or by statute (1). But where the consideration is tainted by no illegality, and some of the promises only are illegal, the illegality of these does not communicate itself to, or taint the others, except when, owing to some peculiarity in the contract, its parts are inseparable (m). An old distinction between mala prohibita and mala in se has been long exploded (n). Although, in general, parol evidence is not admissible, as between the parties to a written instrument, to contradict or add to its provisions, yet facts may be pleaded and evidence. given, in order to show that the instrument is void on the ground of fraud or illegality, however regular such instrument itself may appear to be, and whether it be by parol or under seal (0). objection may be taken "The objection," said immoral or illegal as And as the benefit of the public, and not the advantage of the defendant, is the principle upon which a contract is allowed to be impeached on account of illegality; so this by either of the parties to such contract. Lord Mansfield (p), "that a contract is between plaintiff and defendant, sounds at all times very ill in the mouth of the defendant. It is not for his sake, however, that the objection is ever 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; . . . . not for the sake of the defendant, but because the Court will not lend their aid to such a plaintiff. So, if the plaintiff and defendant were to change sides, and the defendant were to bring his action against the plaintiff, the latter would then have the advantage of it; for where both are equally in fault, potior est conditio defendentis." Thus, in Taylor v. Chester (q), the plaintiff failed to recover the half of a 501. bank-note deposited with the defendant to secure a debt due from the plaintiff to the defendant for wine and suppers (k) See Baker v. Hedgecock (1888), 39 Ch. D. 520, per Chitty, J., and the cases there cited; Byrne, Ex parte, Burdett, In re (1888), 20 Q. B. D. 314, C. A. (1) Waile v. Jones (1835), 1 Scott, 730; Shackell v. Rosier (1836), 3 Scott, 59; Featherstone v. Hutchinson (1590), Cro. El. 199; Lound v. Grimwade (1888), 39 Ch. D. 605. (m) See Price v. Green (1847), 16 M. & W. 346, Ex. Ch. ; M'Allen v. Churchill (1826), 11 Moore, 483. (n) Bensley v. Bignold (1822), 5 B. & A. 341, per Best, J. (0) Collins v. Blantern (1767), 2 Wils. 341, 347; Wright v. Crookes (1840), 1 Scott, N. R. 685, 698; Abbott v. Hendricks (1840), 1 M. & G. 791; Gaslight Co. v. Turner (1839), 7 Scott, 779, 794. (p) Holman v. Johnson (1775), Cowp. 341, 343. (q) Taylor v. Chester (1869), L. R., 4 Q. B. 309; and see Ex parte Caldecott (1876), 4 Ch. D. 150, C. A. tracts in General. supplied to the plaintiff by the defendant in a brothel kept 'by her. CH. XXI. s. 1. And as a general rule the trustee of a bankrupt is in no better Illegal Con. position than the bankrupt, except where there is an offence against the bankruptcy laws, or the money is paid away in fraud on the creditors, where the trustee can recover back money so paid, although the bankrupt could not, because he was in pari delicto (r). So where parties to a contract against public policy, or illegal, Relief in equity where are not in pari delicto; but public policy is considered as advanced parties not in by allowing either, or at least the more excusable of the two, to sue pari delicto. for relief against the transaction,-a Court of Equity will grant such relief (s). But equitable terms may be imposed on a plaintiff who seeks to set aside an illegal contract, as the price of the relief he asks (t). The presumption of law is in favour of the legality of a contract; and therefore, if it be reasonably susceptible of two meanings, one legal, and the other not, that interpretation is to be put upon it which will support and give it operation (u); and it lies upon the party-even a defendant-attempting to set aside a transaction for illegality to prove it (x). Therefore, where a plaintiff declared that the defendant, who had chartered a ship, put on board a dangerous commodity, by which a loss happened, without due notice to the captain or other person employed in the navigation; it was held that it lay upon him to prove this averment: for it was not to be presumed that the defendant had been guilty of an omission, which would amount to a criminal neglect of duty (y). So, in an action against a carrier for the loss of goods, delivered to him at Dublin to be conveyed to Liverpool, it was objected for the defendant, that unless the goods were proved to have been duly entered at the custom-house, the importation would be illegal, and the contract with the carrier void; but it was held that the defendant could not raise this objection, without proving the non-entry of the goods (2). And where a contract which can be performed legally, is sought to be avoided on the ground that the parties intended to perform it in an illegal manner; it is necessary to show that they knew what the law was, and intended to break it (a). (r) Ex parte Wolverhampton Banking Co. (1884), 14 Q. B. D. 32; distinguishing Ex parte Caldecott (1876), 4 Ch. D. 150, C. A. (s) Per Bruce, L. J., Reynell v. Sprye (1852), 21 L. J., Ch. 633, 651, App. (t) Per Giffard, L. J., Re Cork and Youghal Rail. Co. (1869), L. R., 4 Ch. 748, 762. (u) Mittelholzer v. Fullarton (1842), 6 Q. B. 989, Ex. Ch. ; per Lord Abinger, C. B., Lewis v. Davison (1839), 4 M. & W. 654, 657; per Lord Ellenborough, C.C. C. J., Rex v. The Inhabitants of Hasling- (x) Per Bowen, L. J., in Hire-Purchase (y) Williams v. East India Co. (1802), 3 East, 192; 6 R. R. 589. (z) Sissons v. Dixon (1826), 5 B. & C. 758. (a) Waugh v. Morris (1873), L. R., 8 Q. B. 202. Presumption of law is in favour of the legality of a contract. |