KOHl'l II. MELCHEB.
641
KOHN
et al.
II. MELCHER. W. D.
(04n'cuft Oourt, S. D.
Iowa,
October 7,1811O.)
1.
CONTRACTS-VALIDITy-PuBLIC POLICy-INTOXICATING LIQUOR.
Where liquor is sold to a pharmacist for the express purpose of enabling him to retail it as a beverage, in violation of law, the price of such liquor cannot be recovered by SUit, even though the Rale itself was not illegal.
2.
INTOXICATING LIQUOR-CONSTRUCTION OF STATUTE.
Code Iowa, § 1550, which provides that payments made for intoxicating liquor sold in violation of the prohibitory law shall be deomed to have been made upon a promise of repayment, does not apply to payments made by a registered pharmacist for liquor intended to be sold by him contrary to law, and which he purchases in the original packages from a resident of another state. .
At Law. fendant.
Action on notes and counter-claim.
Wright, Baldwin &: Haldane, for plaintiffs. Lehmann &: Park, RockafeUow &: Scott, and WiUard &: Fletcher, for deBHrnAs, J. In this cause the parties waived a jury, and submitted' the case to the court. The evidence shows the.following facts: (1) The firm of Kohn & Adler, plaintiffs herein, are now, and for years past have been, engaged in the business of selling spirituous liquors at wholesale; the headquarters thereof being established at Rock Istaud. Ill., of which state the plaintiffs are now, and have been for years, citizens. (2) 'fhedefendant, during the peri!ld of time involved in this case, has been 8 resident of Atlantic, Cass county, Iowa, engaged in the drug business, holding a permit from the coul1ty'authoritiesto sell spirituous liquors for medicinal, culinary, and sacramental purposes. (3) That the defendant, under cover of his permit to sell for legal purposes, has been engaged in the business of selling intoxicating liquors aea beverage. in quantities to suit purchasers, or, in other words, has been practically run. ning a saloon'in connection with his business as a druggist: the liquors sold being drunk on defendant's premises, or carried away, at the option of the purchasers. (4) Since June 25, 1884, plaintiffs have sold and delivered to defendants spirituous liquors to the amount of $3.840.80, upon which defendant has paid the sum of$2,959.70, leaVing a balance due on December 1,1885, of $8t:l7.10; which is partly evidenced by three promissory notes,-two bearing date September 15, 1885, for $124.25 each, and the third bearing date September 20, 1885, by defendant, and payable to order of plaintiffs. (5) The liquors thus sold were contracted for and delivered as follows: Every few weeks Edward Kohn, one of the plaintiffs, would visit defendant's, place of business at Atlantic, Iowa, and defendant would then and there contract with him for the purchase of such liquor!) as he then needed. The liquors so purchased would from time to time be forwarded from Rock Island, Ill., to Atlantic, Iowa, by rail, being delivered to the railway company at Rock Island, Ill. (6) The paymeIjts made upon the aecount were usually made at Atlantic, Iowa, to Edward Kohn in person, although in some instances the sums paid were rt'mittea by letter to plaintiff at Hock Island. Ill. (7) Edward Kohn, and,t/lrough him, his said firm, plaintiffs herein, knew that defendant was engaged in selling the liquors furnished him in the manner already stated. . (8) The defendant, in making the monthly reports to the county auditor of:
v.43F.no.10-41
6421 the sales. and profit thereon derived from the sales. of spirituous liquors. under the requirements of the state falsely, the amounts thereof, and the profit dflrived and' intentionallY' Concealed the fact that he was engaged in'!1elling solely for the four legal purposes contemplated by the provisions of the statute of Iowa. (1:1) In qr,der aid the defendant In ;coneeaJing the f-aat that he was. in vio-. intoxicating latb>ti' q{ t»e ,raws, of 'Iowa, tanni ng an establishment liquors could'be purchased ,and ils,6aaS a beverage, ibva.sagreed between plaintiffs. represented by Ed ward ,Kohn. and. the defendant, at Atlantic, , that t'W4dnvoiee1l oithe liquors sold to defendant by plaintiffs should be made a.Dd tutp,lll.hed.b.ythe lilt.tel'. one.·.. of which Show tbe. act.ual price llgrOOd. . to. liquprs, other a .higher fictitiqus price; the latter,invoice to be shown in case a quelltioDshoulda.rise.between tnt! county autborities and the defendant to the amount of profit realized by dpfendant in selling under his permit as a druggist. It w&slikewise agreed that a portioll,of the liquors sold should be shipped to Atlantic. toa .fictitious consignee. so as t lJ ,9idin, tbe of liquors act,naJly received by defendant. It was likewise agreed that a portion of the Jiq liars sbould be inclosed in and barrels. in such It mallner as to cOllceal the nature of the contents thereof; thereon. contents were hardware. ero,ck'g(lOds'OI:her than lIqUors. In pursuance 'of the agreementtithu8 made, the plaintifl'ifdid. from titn'e'tbtimei furnish to defendanttbefills6 invoices agl1ee<l!oltpon, awl.didshipa sold to defendant under a fictitious. name. as consJgneee·.and: did pack port.ions. of the liquors and so mark,thelll.as,to,collcell],tne real ,nature pf their contents. (10) The liquors sold to ,defenc;lant by phdntj:ffs. when received, ani's plltc;e,of business at. Atlantic. Jowa.· were not sold by htm.inthe original paokagesHbut the package/!. were the contents retailed insmalt· quanUti1l8'l wllich facts Wl!re known to, the plaintiffs. (11) Plaintiffs brought this suit to the Mal'ch term. 1886.:of this court. to reeovtll1lthe ,amount due: upon the' tbreepromissory Dotes bereinbefore' dea balance of an the total sum claimed to be due: being8liB1ioilO,iwitbintE'r:est. ,' (12) :(J?be [defendant. by answer, pleads the illegality of. the sales under the, prohlbitwy,Uquor la.woftbe state of. Iowa. and by a counter-claim seeks to recover judgment in the sum of $6;396.09 against plaintifl's for moneys alleged to have bee.n, paid to plaintiffs forliqnofs sold by plaintiffs in :violation of tbe statute of Lowa, and under the circumstances recited in tbe foregoing findings of fact; the megal agreements setfortb intbenintb. finding being expressly deeJaredupun in saidcounter·claim. :'In support of the right of recovery,on'part of plaintiffs, it is argued that the case'ofLei8y v.Hardin, 135: U.S. 100. 10·Sup.Ct. Rep. 681, of ,plaintiffs toma:kethe sales of liquors to the defendan't;' making such salesthey''rere acting under the protection ;(If the the United Statel!; and liquo... inY9kecl,to defeat their right of recovery. If the facts of the case presented no other question than: tlia:tOf a citizen of 'Illinois importing liquors into Iowa, and selling the in tl1e original pa.ckages, t,hen the doctrine a;tlDOunced in puted facts of the case. For years past, it has state ' of. Iowa sale of on the established for
liMy.
643 use as a' beverage. Provision has been made for the sale of such liquors for certain named uses, and to cover that end the statute provides for licensing parties to make sales of liquors for lawful purposes. It has also been the settled policy of the state for years past to regulate the business of pharmacists, so far as the same includes the compounding and selling ofrnedicines, poisons, andintoxicat.ing liquors. In1882 the legislature passed an act providing for the examination of parties ing to carryon such business, for the issuing of certificates to those found competent,defining the duties of such pharmacists, and expressly forbidding such registered pharmacists from selling intoxicating, liquors as fl, beverage'. To authorize pharmacists to sell liquots for mechanical and purposes, they are required to procure a license for pose, under the provisions Of the statute regulating the sale of ,As a means looking to the prevention of the abuse of the license to sell the statute requires the party holding the liquors for legal license to make stated reports to the county auditor of the quantity of liquors sold by him, and the price thereof; and the statute regulating pharmacists makes it a penal offense for one eng,aged in such business to selIliqnors for use as a beverage. It appears from the evidence in this case that the defendaut, who was a registered pharmacist, constantly and intentionally violated the provisions of the statute in question, and, under the guise of carrying on the business of II> registered pharmacist, he engaged in the business of running a saloon, selling intoxicating liquors by the drink or other quantity to suit purchasers. The plaintiffs well knew the visions of the laws of Iowa above referred to, well knew that the defendant waS violating the same,well kuewthat the liquors sold to defendant were to be used by defendant in the violation of the laws of the state, well knew that defendant, to carryon said business, was compelled to perjure himself in making oath to the monthly statements furnished the auditor, and with this knowledge the plaintiffs in Iowa contracted, from time to time, to sell the liquors in question to defendant, and agreed to aid him in such wrong-doing by furnishing double invoices, one of which, by falsely stating the price of the liquors, would sustain the perjured statements made,by defendant to the auditor; and further agreed to ship part of the liquors to a.fictitious. consignee, and to so pack other portions of the liquors as to conceal their real nature,-all of which agreements were carried out by plaintiffs. By aiding the defendant in thus violating the laws of Iowa, the sales made by plaintiffs would be increased; because the larger the business of defendant in this particular, the great.erneed of purchasing from plaintiffs. To recover the balance due from defendant, and resulting from transactions of the nature indicated, the plaintiffs now ask the aid ofthe court. ' It is refused. One who has actively participated in a transaction which involves a violation of the statutes of the state, or the commission ofacts contrary to well-recognized public policy or to the criminal laws of the state, or which are injurious to the public morals, cannot successfUlly inVoke the aid of the judicial tribunals to enable him to secure the results of :his wrong-doing.
644 .
J'EDERAL REPORTER,
vol. 43.
In Hanauer v. Doane, 12 Wall. 342, it was held that an action would not lie for the price of goods sold with knowledge that they were in fact purchased. for the Confederate states government, and in the opinion is cited approvingly the language of Chief Justice EYRE in Lightfoot v. Te'l'!ant, 1 Bos. & P. 551, thltt "no man ought to furnish another with the means of trangressing the law, knowing that he intended to make that use of them;" and, in summing up the conclusions reached upon a consideration of the authorities, it is said: "The whole doctrine of avoiding contracts for illegality and immorality is founded on public policy. It is certainly contrary to public policj' to give the aid of. the courts to a vendor who knew that his goods were purchased. or to a lender who knew that his money was borrowed. for the purpose of being employed in the commission of 8 criminal act, injurious to society or to any . of its members. " In .Tri8t v. Ohild, 21 Wall. 441, a contract for the performance of lobby services in aid of a bill providing for payment of a claim against the government was held void, it bp,ing said that"tn our jurisprudence a contract may be illegal and void because U is contrary to a constitution or statute. 01' inconsistent with sound policy and good morals, Lord MANSFIELD said: ·Many contracts which are not against morality are still void as being against the maxims of sound policy.' It is a rule of the common law, of universal application. that where a contract. exprllSs or implied, is tainted with either of the vices last named, as to the consideration or the thing to be done, no alleged right founded upon it can be enforced in a court of justice." In Meguire v. Corwine, 101 U. S. 108, it is said: "Frauds of the class to which the one disclosed belongs are an unmixed evil. Whether forLJiddenby a statute, or condemned by public policy, the result is the same. No legal right can spring from sucha source." In Teal v. Walker, 111 U. S. 242, 4 Sup. Ct. Rep. 420, it was held that a contract between the mortgagor and mortgagee in Oregon, to the effect that upon default in payment the possession of the premises should be surrendered to the mortgagee, was contrary to the settled statutory policy of that state, which secured to the mortgagor the possession of the property until aJter foreclosure and sale; and, "although not expressly proh:bited by law, yet, like all contracts opposed to the public policy of the state, it cannot be enforced." In Gibbsv. Gas Co., 130 U. S. 396, 9 Sup. Ct. Rep. 553, it is said: ·"The distinction between malum in seand malum prohibitum has long since been exploded, and, 'as there can be no civil right where there can be no legal remedy, and there ran be no legal remedy for that wbich is itself illegal,' (Bank v. Owens, 2 Pet. 527.) it is clear that con tracts in direct violation of statutes expressly forbidding their execution cannot be enforced." The statute of Iowa expressly forbids a registered pharmacist from ilelling intoxicating liquors as a beverage, and makes a violation of the statutory prohibition an offense punishable by a fine... The plaintiffs and defendant combined together to evade this stat:ute; resorting to fraud and perjury to accomplish that purpose, and the selling the liquors, furnishing falfre invoices, forwarding the same to a fictitious consignee, and
KOHN '11. MELCHER.
in concealed packages, were all· parts of the illegal transaction of which plaintiffs are now seeking to recover the fruits. The entire transaction between the parties, in all its steps, is tainted with fraud and per:jury, and was intended to aid defendant in violating the settled :111'1 statute of the state, in forbiddiu!! the sale of intoxicating Eq U01';:; as a beverage, and the maintenance of a saloon under the guise of a registered. pharmacy; and no right of action can be based upon such a transaction. Upon the matters declared upon in plaintiffs' petition, for the reasons stated, no recovery can be had,and the like result follows as to the counter-claim filed by defendant. Section 1550 of the Code of Iowa provides, in substance, that all payments made for intoxicating liquors sold in violation of the prohibitory law are deemed to be without consideration, and to have been made and received as upon It promise to repay the same on demand. If the sale made by plaintiffs had been held void by reason of the express provisions of the prohibitory statute, then it might well be that payments made therefol' could be recovered back. Section 1550 of the Code refers only to the provisions of chapter 6, tit. 11, thereof, known as the "Prohibitory Liquor Law," and does not include the statute regulating pharmacists. If the defense to plaintiffs' action was based solely on the fact that they hadllJported into Iowa, and sold to defendant in original packages, intoxicating liquors, then, under the doctrine announced in Lei8y v. Hardin, the court would have. been compelled to hold that to importations of that character the statute of Iowa was not applicable; and, as in such event the plaintiffs would have had the right to sell the liquors, money paid therefor could not be recovered back. The ground, however, upon which the plaintiffs' right of action for the liquors sold is defeated is that the plaintiffs sold the liquors to the defendant as a registered pharmacist, well knowing that the statute of Iowa regulating pharmacists forbade such pharmacist from selling icating liquors as a beverage; and, in order to aid defendant in evading the statute, they forwarded the liquors in concealed packages, to a fictitious consignee, and furnished false invoices as a protection to defendant in making the false statement sworn to by him, thus actively aiding defendant in the commission of perjury, as well as in" other violations of law. The claim of plaintiffs is defeated, therefore, upon the ground of pub. lic policy, and not upon the provisions of the statute as such. This same principle defeats the right of recovery upon the counter-claim interposed by defendant. In pleading the counter-claim, the defeudant recites the frauds, perjuries, and violations of law and good morals in which he and plaintiffs participated, and thus shows that, according to the ordinary rule, he has forieited all right to invoke judicial aid to recover back the sums paid by him in furtherance of the illegal business he was engaged in. Section 1550 of the Code, as already said, that money paid for intoxicating liquors sold in violation of chapter 6, tit. 11, of the Code, may be recovered back; but it does not enact that money paid in the course of a transaction violating the provisions of the
illht1l»llnpy statute, or of repeated ,be. recovered back by one; of 'V'fQl1g·doers. If the. right totecoyer back,thesums paid bydefendant;w;as based solely upon the provisions ,of section 1550 oOhe Gode of Iqlvl;\, it would be questionable whether Qourt would he justified in entertaining the cou1'lter.claim. ,This ,sectionis a part orthe ch!\.ptllli' with the subject of sales 9$ IiqUOJ;S, ·and in the enactment of the chapter the legislllturewas exercising, the pQlicepo,we/.': of ;the state. While the section authori7<es the recovery bac::k ,paid for intoxicating liquors sold contrE\ry· to the provisions of the statute, and, thus enllbles ,the vendee to r,naiptain an, actiQnther¢for, civil in.fotm, yet it is entirely 01ear that tbes6ctionwas not enacted for the protection of the vendee. He is in apllrticipant in the violation of the statute, and, no ground exlists forJegislating for his benefit in the particular named. The right 'to: recover back moneys paid for intoxicating liquors illegally .sold was conferred upon the vendee as a means of deterring parties from !I(l!ling liquors contrary. to the statute, and as a punishment in case the slllt1l!,were in fa.ct made. 1t is one of the prOVisions of the statute, adopted for the purpose of preventing violatiQns of the statute,or,in other words, itiJl an aid to the enforeement of one of the police statutes of the state, ,a.ndti:le q\l6Stion is whether, under the decision of the supreme court in InBurance Co., 127 U. S" 265, 8 Sup. Ot. Rep. 1370. this C<)Q'rt 911gbt to tlndertake the enforcement thereof. In the view taken of facts, it is not necessary to decide this :question,:as, irrespective there<:>f,good ground for holding that defendant cannot recover upon his counter-claim. Thaconclusioll reached .is that plaintiffs cannot maintain their action for the reasons stated, and judgment thereon must bein favor of defendant at cost of plaintiffs, and that the defendant cannot maintain his counterclaim, and judgment tb.ereon must be in favor of plaintifts, at cost of defendant.
SOUTHERLAND 'D. NORTHERN PAC. (Circuit Oourt, D. Minnll8ota. '!l4Il'l'BR Am>. ."
R. Co.
October 18,181l0.) '.' .
In an &Qt1on against a railroad companyfol' personal injuries, the evidence showed that plaintifr was employed by defendant to make up tralns in its yard; that, while . .coupling 9arll in the yard at night, his foot caught in a pile of ashes left on the . track, him to fall and be run bveJ,'; and that it was. the duty of the section foreman,to keep the traOk olear. There was evidence that asbes were not usually yard. that the evidence a .r81'(j,ict for plaii;ltifl.
" .f
1Q4n a,
ftfc{)(Y(UJ.14,
-.Q,n motion'.for new trial. Barnard,. for plaintiff. Ir., fO,r defendant.