having conspired together for the conversion of its assets, each becomes liable for any act done by one of them in furtherance of the common design.'

A personal liability for damages on the part of the official in case the other contractor should sue for violation of contract, is calculated to be a strong incentive to the official to act contrary to the true interests of the company and of its stockholders."

Thus it is held in West v. Camden, 135 U. S. 507, 34 L. ed. 254, that a contract with the president, who holds, as trustee, a controlling interest in the stock of a joint-stock company, that plaintiff should be permanently retained as vice-president of such company at a salary of at least $5,000 per annum, is void as against public policy.

That the consideration of such contract was the sale to the company of the property and business of a competing firm in which the plaintiff was partner, and that plaintiff would unite with co-partners in such sale, and that defendant was interested as a stockholder in the purchasing company, does not make the contract valid.

his

When the company, of which defendant was president, decided to reduce its expenses and a new board of directors was chosen, who elected as vice-president, in place of plaintiff, who had held the office and discharged its duties for five years, another person who agreed to serve without salary, plaintiff has no remedy against defendant on the contract.

But a contract by a railroad company, in settlement of a claim for personal injuries, to give an employé permanent employment upon a switch engine, is not void as contrary to public policy in binding the company to employ him even if incapable of service, as it will not compel the company to employ in that event.'

1

Wayne Pike Co. v. Hammons (Ind.) 10 Ry. & Corp. L. J. 43.

'Bliss v. Matteson, 45 N. Y. 22; 1 Morawetz, Corp. §§ 516, 519. Jessup v. Chicago & N. W. R. Co.

Iowa,

48 N. W. Rep. 77.

CHAPTER VI.

WHEN COURTS WILL AND WHEN THEY WILL NOT RELIEVE.

§ 23. No Relief in Case of Fraudulent, Illegal or Immoral Contracts. a. Illegality need not be Pleaded.

b. Illegal in Part-Individuals may Release Damages.

c. Courts will not Enforce against Public Policy.

24. Relief from Illegal Contracts.

a. In Pari Delicto-Ultra Vires.

b. Independent of Contract-Locus Pænitentiæ.
c. Upon Executed Contract.

23. No Relief in Case of Fraudulent, Illegal or Immoral Contracts. No right of action can spring out of an illegal contract; and this rule applies, not only when the contract is expressly illegal, but whenever it is opposed to public policy.'

Contracts entered into through fraud are illegal and void, and parties thereto are, in contemplation of law, in pari delicto, and neither law nor equity will afford relief to either of them."

A contract wholly void is void as to everybody whose rights would be affected by it if valid.' The courts of this country have uniformly refused to assist either party in the enforcement of a contract to violate the law.*

Courts will take notice, of their own motion, of illegal contracts which come before them for adjudication, and will leave the parties where they have placed themselves."

'Cleveland, C. C. & I. R. Co. v. Closser, 9 L. R. A. 754, 126 Ind. 348.

McClintock v. Loisseau, 2 L. R. A. 816, 31 W. Va. 865; Cobbs v. Hixson, 4 L. R. A. 682, note, 75 Mich. 260.

Kellogg v. Howes, 6 L. R. A. 588, 81 Cal. 170.

Michigan Bank v. Niles, 1 Dougl. 401, 41 Am. Dec. 583; Jackson v. Shawl, 29 Cal. 271: Mitchell v. Smith, 4 U. S. 4 Dall. 269, 1 L. ed. 828, 1 Binn. 110, 2 Am. Dec. 417; Maybin v. Coulon, 4 U. S. 4 Dall. 298, 1 L. ed. 841; Duncanson v. M'Lure, 4 U. S. 4 Dall. 308, 1 L. ed. 845.

Richardson v. Buhl, 6 L. R. A. 457, 77 Mich. 632; Nichols v. Ruggles, 3 Day, 145, 3 Am. Dec. 262.

a. Illegality need not be Pleaded. The illegality of the contract in suit can be considered, although not affirmatively pleaded.' Parties concerned in illegal agreements are to be left without remedy against each other.' The law aids no one to violate its behests, but leaves a party as it finds him, remediless to the consequences of his own folly and turpitude.'

One who advances money to a majority stockholder to enable him to recover in his own name and for his own use a judgment properly belonging to the corporation, and with knowledge that the corporation was being thereby deprived of its property, will not be allowed his advances, on the distribution of the fund thus realized.'

Courts will not decree the nullity of the contract sought to be enforced, but will simply abstain from dealing with it or adjudicating any rights arising thereunder, or giving their aid for the division of results, although ascertained, between the parties."

Courts will not relieve a party from the consequence of his intentional fraudulent or his negligent act."

Where a scheme or contract is malum in se, and the parties to it are in pari delicto, the law refuses to aid either of them against the other, but leaves them where they placed themselves by their own acts.'

Where the parties are concerned in illegal agreements or other transactions whether they are mala prohibita or mala in se, 1Oscanyan v. Winchester Rep. Arms Co. 103 U. S. 261, 26 L. ed. 539; Armstrong v. Toler, 24 U. S. 11 Wheat. 258, 6 L. ed. 468; Hannay v. Eve, 7 U. S. 3 Cranch, 242, 2 L. ed. 427; Patton v. Nicholson, 16 U. S. 3 Wheat. 204, 4 L. ed. 371.

Kirkpatrick v. Clark, 8 L. R. A. 511, 132 Ill. 342; Riedle v. Mulhausen, 20 Ill. App. 68; Canton Masonic Mut. Benev. Soc. v. Rockhold, 26 Ill. App. 141; Harrison v. McCluney, 32 Mo. App. 481; Cambioso v. Maffett, 2 Wash. C. C. 98; Bartle_v. Nutt, 29 U. S. 4 Pet. 184, 7 L. ed. 825; Craig v. Missouri, 29 U. S. 4 Pet. 410, 7 L. ed. 903.

'Am. L. Ins. & T. Co. v. Dobbin, Hill & D. 259; Nellis v. Clark, 20 Wend. 24, 4 Hill, 424; Perkins v. Savage, 15 Wend. 412; De Groot v. Van Duzer, 20 Wend. 393.

Davis v. Gemmell (Md.) 9 Ry. & Corp. L. J. 442.

'Texas & P. R. Co. v. Southern P. R. Co. 41 La. Ann. 970, 40 Am. & Eng. R. Cas. 475; Samuel v. Oliver, 130 Ill. 73.

'Rowland v. Martin (Pa.) 4 Cent. Rep. 760.

Burt v. Place, 6 Cow. 431; Nellis v. Clark, 20 Wend. 24, 4 Hill, 424; Thomas v. Richmond, 79 U. S. 12 Wall. 349, 20 L. ed. 453; Smith v. Hubbs, 10 Me. 71; Schermerhorn v. Talman, 14 N. Y. 94; Knowlton v. Congress & E. Spring Co. 57 N. Y. 518; Howson v. Hancock, 8 T. R. 575.

courts of equity follow the rule of law as to participators in crime, and will not grant relief in accordance with the maxim "in pari delicto potior est conditio defendentis."

It is contrary to public policy to give the aid of the courts to the vendor, who knew that his goods were purchased, or to the lender who was aware that his money was borrowed, for the purpose of being employed in the commission of a criminal act injurious to society or to any of its members.'

A party to an illegal trust combination, who, in pursuance of the agreement, has furnished goods in the name of the trustee, cannot claim the proceeds as against a receiver of the trust assets, although he withdrew from the combination before the receiver was appointed."

Where losses have been made in an illegal transaction, a person who lends money to the loser with which to pay the debt can recover the loan, notwithstanding his knowledge of the fact that the money was to be so used.' The rule however seems to be less exacting in some states. Where one conveys land to secure the grantee's public influence, to defeat the extension of a street across his land, and the grantee dies before re-conveying, the heirs will not be compelled to re-convey to the grantor.*

Where two or more parties have united in a transaction to defraud another or others, or the public, or the due administration of justice, or where it was against public policy, or contrary to good morals, no one of them can maintain a suit thereon against any other."

A court of equity will not lend its aid to require an account of profits and a division thereof, although the contract has been executed.'

Whatever the parties have fraudulently or illegally contracted to execute, the law refuses to compel the contractor to execute, 'Hanauer v. Doane, 79 U. S. 12 Wall. 342, 20 L. ed. 439.

Pittsburgh Carbon Co. v. McMillin, 7 L. R. A. 46, 24 Abb. N. C. 96.
'Armstrong v. American Exch. Nat. Bank, 133 U. S. 433, 33 L. ed. 747.
4Labbe v. Corbett, 69 Tex. 503.

Slocum v. Wooley, 9 Cent. Rep. 659, 43 N. J. Eq. 451.

•York v. Merritt, 77 N. C. 213; Wright v. Rindskopf, 43 Wis. 344. 'Craft v. McConoughy, 79 Ill. 346.

but it will enforce a by-law of a press association suspending a member for the use of other local news agencies.

An agreement of a director of a corporation with its attorney to use his vote to the disadvantage of the corporation, and for personal interests, is immoral and will not be enforced."

Parties to a contract which is void as against public policy cannot be relieved, one against the other, on the ground that the thing contracted for was lawful and beneficial in itself, and that one has received and retained the benefit under it. Nor will courts assist a person who has participated in a transaction forbidden by statute, to assert rights growing out of, or to relieve himself from the consequences of his own illegal act.*

Equity will not relieve from securities executed to shield a person from prosecution for a felony of which he is guilty, upon the ground that execution for such purpose rendered them void. One who has executed and delivered securities in consideration of a promise to refrain from a prosecution for felony of a person guilty thereof cannot, after his illegal purpose has failed from causes other than a breach of the contract, and a prosecution has been commenced by third parties, rescind the contract and recover back the securities."

The moment the fact of illegality appears, the court will refuse relief to either party, but will leave them where their illicit agreement placed them."

Wherever two or more persons are engaged in a fraudulent transaction to injure another, neither law nor equity will interfere to relieve either of those persons against the other, from the consequences of their own misconduct.'

Where property is transferred in fraud of creditors, equity will 1Pepper v. Haight, 20 Barb. 438; Mathews v. N. Y. Asso. Press, 40 N. Y. S. R.593. Attaway v. Third Nat. Bank, 10 West. Rep. 412, 93 Mo. 485.

'Gleason v. Chicago, M. & St. P. R. Co.

Iowa, 43 N. W. Rep.517.

Parsons v. Randolph, 4 West. Rep. 865, 21 Mo. App. 353.

5 Shattuck v. Watson, 7 L. R. A. 551, 53 Ark. 147. "Allison v. Hess, 32 Iowa, 389; Bartle v. Nutt, 29 U. S. 4 Pet. 184, 7 L. ed. 825; Irwin v. Wells, 1 Mo. 9; Hamilton v. Close, 25 Mo. 166; Brown v. Finley, 18 Mo. 375; Tyler v. Larimore, 2 West. Rep. 177, 19 Mo. App. 445.

'Dent v. Ferguson, 132 U. S. 50, 33 L. ed. 242.