(c). Conversely, the absence of a penalty, or the failure of a c. But abpenal clause in the particular instance, will not prevent the sence of pe Court from giving effect to a substantive prohibition (a). nalty does not alter express prohibi D. What may not Bank of England. (D). What the law forbids to be done directly cannot be made tion. lawful by being done indirectly. In Booth v. Bank of England (b) a joint stock bank pro- be done dicured its manager to accept certain bills on the understanding rectly must not be done that the bank would find funds, these bills being such as the indirectly. bank itself could not have accepted without violating the pri- Booth vileges of the Bank of England. It was held by the House of Lords, following the opinion of the judges, that this proceeding "must equally be a violation of the rights and privileges of the Bank of England, upon the principle that whatever is prohibited by law to be done directly cannot legally be effected by an indirect and circuitous contrivance:" for the acceptor was merely nominal, and the bills were in fact meant to circulate on the credit of the bank. U. S. v. Owens. In Bank of United States v. Owens (c) (Supreme Court, U.S.) Bank of the charter of the bank forbade the taking of a greater rate of interest than six per cent., but did not say that a contract should be void in which such interest was taken. Anote payable in gold was discounted by a branch of the bank in a depreciated local paper currency at its nominal value, so that the real discount was much more than six per cent. The Court held this transaction void, though there was no express prohibition of an agreement to take higher interest, and though the charter spoke only of taking, not of reserving interest. Parts of the judgment. are as follows: "A fraud upon a statute is a violation of the statute." "It cannot be permitted by law to stipulate for the reservation of that which it is not permitted to receive. In those instances in which Courts are called upon to inflict a penalty it is necessarily otherwise; for then the actual receipt is generally necessary to consummate the offence. But when the restrictive policy of a law alone is in contemplation, we hold it to be an universal rule that it is unlawful to contract to do that which it is unlawful to do.” (a) Sussex Peerage ca. 11 Cl. & F. at pp. 148-9. (b) 7 Cl. & F. 509, 540, upholding Bank of England v. Anderson, 2 Keen (c) 2 Peters 527. Where conditions "There can be no civil right where there can be no legal remedy, and there can be no legal remedy for that which is itself illegal. . there is no distinction as to vitiating the contract between malum in se and malum prohibitum" (a). The cases are similar in principle in which transactions have been held void as attempts to evade the bankruptcy laws: thus, to take only one late example, a stipulation that a security shall be increased in the event of the debtor's bankruptcy is void (b). of When conditions are prescribed by statute for the conduct prescribed any particular business or profession, and such conditions are for conduct not observed, agreements made in the course of such business or of particular trade profession &c. non-observance of them E. avoids (E) are void if it appears by the context that the object of the legislature in imposing the condition was the maintenance of public order or safety or the protection of the persons if the con- dealing with those on whom the condition is imposed : ditions are for general agreements poses; (F) are valid if no specific penalty is attached to the specific public pur- transaction, and if it appears that the condition was imposed for F. not if for merely administrative purposes, e. g. the convenient collection merely administraof the revenue (c). tive purpo ses. Illustrations. The following are instances illustrating this distinction :- AGREEMENT VOID. Ritchie v. Smith, 6 C. B. 462, 18 L. J. C. P. 9. The owner of a licensed house underlet part of it to another person, in order that he might there deal in liquor on his own account under colour of his lessor's licence and without obtaining a separate licence. This agreement was void, its purpose being to enable one of the parties to infringe an Act passed for the protection of public morals: (the licensing Acts are of this nature, and not merely for the benefit of the revenue, for this reason, that licences are not to be had as a matter of right by merely paying for them). For the same reason and also because there is a specific penalty for each offence against the licensing law, it seems that a sale of liquor in an unlicensed house is void (d). Hamilton v. Grainger, 5 H. & N. 40. (a) 2 Peters 536, 539. (b) Ex parte Mackay, 8 Ch. 643. it in a rather more general form. (d) For the penal enactments now in force see the Licensing Act, 1872, 35 & 36 Vict. c. 94, ss. 3-8. Taylor v. Crowland Gas Co. 10 Ex. 293, 23 L. J. Ex. 254. A penalty being imposed by statute on unqualified persons acting as conveyancers (a), the Court held that the object was not merely the gain to the revenue from the duties on certificates, but the protection of the public from unqualified practitioners; an unqualified person was therefore not allowed to recover for work of this nature. Cp. Leman v. Houseley, L. R. 10 Q. B. 66. Fergusson v. Norman, 5 Bing. N. C. 76. When a pawnbroker lent money without complying with the requirements of the statute, the loan was void and he had no lien on the pledge (b). In Stevens v. Gourley, 7 C. B. N. S. 99, 29 L. J. C. P. 1, a builder was not allowed to recover the price of putting up a wooden shed contrary to the regulations imposed by the Metropolitan Building Act, 18 & 19 Vict. c. 122. The only question in the case was whether the structure was a building within the Act. But note that here the prohibition was for a public purpose, namely to guard against the risk of fire. Burton v. Piggott, L. R. 10 Q. B. 86. By 5 & 6 Wm. 4, c. 50, s. 46, a penalty is imposed on any surveyor of highways who shall have an interest in any contract, or sell materials, &c. for work on any highway under his care, unless he first obtain a licence from two justices. The effect of this is that an unlicensed contract by a surveyor to perform work or supply materials for any highway under his care is absolutely illegal, and the justices have no discretion (under s. 44) to allow payments in respect of it. CONTRACT NOT AVOIDED. Bailey v. Harris, 12 Q. B. 905, 18 L. J. Q. B. 115. A contract of sale is not void merely because the goods are liable to seizure and forfeiture to the Crown under the excise laws. Smith v. Mawhood, 14 M. & W. 452. The sale of an exciseable article is not avoided by the seller having omitted to paint up his name on the licensed premises as required by 6 Geo. 4, c. 81, s. 25. Probably this decision would govern the construction ofthe very similar enactment in the Licensing Act, 1872 (35 & 36 Vict. c. 94, s. 11). Smith v. Lindo, 4 C. B. N. S. 395, in Ex. Ch. 5 C. B. N. S. 587. One who acts as a broker in the City of London without being licensed under 6 Ann. c. 68 (Rev. Stat: al. 16) and 57 Geo. 3, c. lx. (c) (a) Now by 33 & 34 Vict. c. 97, 8. 60. (b) The present Pawnbrokers Act (1872; 35 & 36 Vict. c. 93, s. 51) enacts that an offence against the Act by a pawnbroker, not being an offence against any provision relating to licences, shall not avoid the con tract or deprive him of his lien. (c) These acts are repealed as to the power of the city court to make rules, &c., but not as to the necessity of brokers being admitted, by the somewhat obscurely framed London Brokers Relief Act, 1870, 33 & 34 Vict. c. 60. G. Agree ment not void though for bidden, if statute ex pressly so provides. H. Agree cannot recover any commission, but a purchase of shares made by And see further, as to statutory prohibitions of this kind, Ben- And in general an made is void if made. agreement which the law forbids to be But an agreement forbidden by statute may be saved from being void by the statute itself, and on the other hand an agreement made void or not enforceable by statute is not necessarily illegal. An agreement may be forbidden without being void, or void without being forbidden. (G). Where a statute forbids an agreement, but says that if made it shall not be void, then if made it is a contract which the Court must enforce. By 1 & 2 Vict. c. 106, it is unlawful for a spiritual person to engage in trade, and the ecclesiastical court may inflict penalties for it. But by s. 31 a contract is not to be void by reason only of being entered into by a spiritual person contrary to the Act. It was contended without success in Lewis v. Bright (a) that this proviso could not apply when the other party knew with whom he was dealing. But the Court held that the knowledge of the other party was immaterial; the legislature meant to provide against the scandal of such a defence being set up. And Erle, J. said that one main purpose of the law was to make people perform their contracts, and in this case it fortunately could be carried out. (H). Where no penalty is imposed, and the intention of the ment may legislature appears to be simply that the agreement is not to be enforced, there neither the agreement itself nor the performance of it is to be treated as unlawful for any other purpose. be simply not enforceable, but not otherwise unlawful. Modern legislation has produced some very curious results of this kind. In several cases the agreement cannot even be called void, being good and recognizable by the law for some purposes or for every purpose other than that of creating a right of action. These cases are reserved for a special chapter (b). (a) 4 E. & B. 917,24 L. J. Q. B. 191. (b) See ch. XII. On Agreements of Imperfect Obligation. 1 civil law. Void but not abso The distinction between an enactment which imposes a Lex perfecta and penalty without making the transaction void, and one which minus makes the forbidden transaction void, is expressed in the civil quam perlaw by the terms (which are classical) minus quam perfecta lex fecta in the and perfecta lex (a). A constitution of Theodosius and Valentinian (Cod. 1. 14. de leg. 5) enjoined that all prohibitory enactments were to be construed as avoiding the transactions prohibited by them (that is, as leges perfectae) whether it were so expressed or not. In the case of wagers the agreement is null Wagers. and void by 8 & 9 Vict. c. 109, s. 18, and money won upon a wager cannot be recovered either from the loser or from a stake- lutely illegal. holder (with a saving as to subscriptions or contributions for Fitch ". prizes or money to be awarded "to the winner of any lawful Jones. game, sport, pastime, or exercise"). Wagers were not as such unlawful or unenforceable at common law (we shall have to recur to this under the head of "public policy"): and since the statute does not create any offence or impose any penalty, a man may still without violating any law make a wager, and if he loses it pay the money or give a note for the amount. The consideration for a note so given is in point of law not an illegal consideration, but merely no consideration at all. The difference is important to the subsequent holder of such a note. If the transaction between the original parties were fraudulent or in the proper sense illegal, the burden of proof would be on the holder to show that he was in fact a holder for value; but here the ordinary presumption in favour of the holder of a negotiable instrument is not excluded (b). In like manner "if a party loses a wager and requests another to pay it for him, he is liable to the party so paying it for money paid at his request:" as where a broker is employed in fictitious dealings in shares which are really wagers on the price of shares, and according to custom. himself pays the amount due (c). This goes farther than an earlier case in which it was held, in a somewhat guarded manner, that payment by the drawer of racing debts of the acceptor is a good consideration for a bill of exchange (d). But under another modern statute (5 & 6 Wm. 4, c. 41, s. 1) (a) See Sav. Syst. 4. 550. (b) Fitch v. Jones, 5 E. & B. 238, 24 L. J. Q. B. 293, see judgments of Lord Campbell, C. J. and Erle, J. (c) Rosewarne v. Billing, 15 C. B. 577. R |