Caution as to use of terms. Summary. same manner or to the same extent as they may with regard to other things. (We have already seen that the specific operation of contract is none other than to set bounds to the party's freedom of action as regards the subject-matter of the contract.) Agreements falling within this third description are void as being against Public Policy. We speak for shortness of the agreement itself as contrary to positive law, to positive morality, or to public policy, as the case may be. But we must bear in mind that this is not exact, for the nullity of the agreement itself is in every case a matter of positive law. The distinction is in the reasons which determine the law to hold the agreement void, not in the nature or operation of the law itself. We have then in the main three sorts of agreements which rangement are unlawful and void, according as the matter or purpose of The ar only approximate. them is A. Contrary to positive law. (Illegal.) B. Contrary to positive morality recognized as such by law. (Immoral.) C. Contrary to the common weal as tending (a) To the prejudice of the State in external relations. (b) To the prejudice of the State in internal relations. (c) To improper or excessive interference with the lawful actions of individual citizens. (Against public policy.) These principles, be it observed, are not confined within the bounds of our present subject. Their application, so far as it goes, in the region of criminal law-whether wholly felicitous or not, it is not for us here to say-is nothing else than the common law doctrine of conspiracy. The arrangement here given is believed to be on the whole the most convenient, and to represent distinctions which are in fact recognized in the decisions which constitute the law on the subject. But like all classifications it is of course only approximate and here more especially, where there is perhaps a wider field for judicial discretion than in any other part of the law, one must expect to find many cases which may nearly or quite as well be assigned to one place as to another. The : authorities and dicta are too numerous to admit of any detailed review. Nor indeed would this be very desirable if it were possible. We have not to deal with such a state of things as in a foregoing chapter made it necessary to examine with some minuteness the leading decisions on the extent of corporate powers. Here the general rules are (with some few exceptions on certain topics) sufficiently well settled, so far as the nature of the case admits of general rules existing. Any given decision, on the other hand, is likely to be rather suggestive than conclusive when applied to a new set of facts. Some positive rules for the construction of statutes have been worked out by a regular series of decisions. But with this exception we find that the case-law on most of the branches of the subject presents itself as a clustered group of analogies rather than a linear chain of authority. We have then to select from these groups a certain number of the more striking and as it were central instances. The statement of the general rules which apply to all classes of unlawful agreements indifferently will be reserved, so far as practicable, until we have gone through the several classes in the order above given. A. Agreements contrary to positive law. or Classes of ments. trary to positive law. ment to commit of 1. The simplest case is an agreement to commit a crime indictable offence: "If one bind himself to kill a man, burn a house, maintain a A. Consuit, or the like, it is void "(a). With one or two exceptions on which it is needless to dwell, 1. Agreeobviously criminal agreements do not occur in our own time and in civilized countries, and at all events no attempt is made fence, void. to enforce them. It is said that in the last century a bill was filed in Chancery by a highwayman against his fellow for a partnership account, but the story is at least doubtful (b). The Sometimes question may arise, however, whether a particular thing agreed doubtful if to be done is or is not an offence, or whether a particular agree- ance of ment is or is not on the true construction of it an agreement to agreement commit an offence. In the singular case of Mayor of Norwich offence. v. Norfolk Ry. Co. (e), the defendant company, being authorized Mayor of to make a bridge over a navigable river at one particular place, Norfolk (a) Shepp. Touchst. 370. (b) See Lindley, 1. 188. (c) 4 E. & B. 397, 24 L. J. Q. B. 105. perform would be Norwich v. Ry. Co. had found difficulties in executing the statutory plan, and had begun to build the bridge at another place. The plaintiff corporation took steps to indict the company for a nuisance. The matter was compromised by an arrangement that the company should not discontinue their works, but-complete them in a particular manner intended to make sure that no serious obstruction to the navigation should ensue and an agreement was made by deed, in which the company covenanted to pay the corporation £1000 if the works should not be completed within twelve months, whether an Act of Parliament should within that time be obtained to authorize them or not. The corporation sued on this covenant, and the company set up the defence that the works were a public nuisance and therefore the covenant to complete them was illegal. The Court of Queen's Bench was divided on the construction and effect of the deed. Erle, J. thought it need not mean that the defendants were to go on with the works if they did not obtain the Act. "Where a contract is capable of two constructions, the one making it valid and the other void, it is clear law the first ought to be adopted." Here it should be taken that the works contracted for were works to be rendered lawful by Act of Parliament. Coleridge, J. to the same effect he thought the real object was to secure by a penalty the speedy reduction of a nuisance to a nominal amount, which was quite lawful, the corporation not being bound to prosecute for a nominal nuisance. Lord Campbell, C. J. and Wightman, J. held the agreement bad, as being in fact an agreement to continue an existing unlawful state of things. The performance of it (without a new Act of Parliament) would have been an indictable offence, and the Court could not presume that an Act would have been obtained. Lord Campbell said, "In principle I do not see how the present case is to be distinguished from an action by A. against B. to recover £1000, B. having covenanted with A. that within twelve calendar months he would murder C., and that on failing to do so he would forfeit and pay to A. £1000 as liquidated damages, the declaration alleging that although B. did not murder C. within the twelve calendar months he had not paid A. the £1000" (a). The question was also discussed whether the covenant was ultra vires or not on the (a) 4 E. & B. 441. WRONGFUL AS AGAINST THIRD PERSONS. part of the company. But of this we have spoken in a former chapter. It seems impossible to draw any conclusion in point of law from such a division of opinion (a). But the case gives this practical warning, that whenever it is desired to contract for the doing of something which is not certainly lawful at the time, or the lawfulness of which depends on some event not within the control of the parties, the terms of the contract should make it clear that the thing is not to be done unless it becomes or is ascertained to be lawful. ulterior ob ject is an Moreover a contract may be illegal because an offence is con- When the templated as its ulterior result. For example, there is nothing unlawful in printing, but no right of action can arise for work offence. done in printing a criminal libel (b). But this depends on the more general considerations which we reserve for the present. ment for persons is 2. Again an agreement will be illegal, though the matter of it 2. Agree. may not be an indictable offence, if it contemplates any civil civil wrong injury to third persons. Thus an agreement to divide the to third profits of a fraudulent scheme, or to carry out some object in void. itself not unlawful by means of a trespass, breach of contract, or breach of trust is unlawful and void. It is submitted that this must be taken as established, notwithstanding a doubt expressed in a work of no small authority. Were it not so, the absurd consequence would follow that B. might sue A. in a civil court on an agreement between them for entering into which they were at the same time being tried as conspirators in the Crown court. The cases cited in support of the proposition "that a contract is not illegal or void simply because private rights are interfered with by the act stipulated for " do not seem by any means to bear it out (c): and there is direct authority the other way. A. applies to his friend B. to advance him the price (a) Not only was the Court equally divided, but a perusal of the judgments at large will show that no two members of it really looked at the case in the same way. reporters (4 E. & B. 397) add not without reason to the head-note: Et quaere inde. The (b) Poplett v. Stockdale, 1 R. & M. 337. (c) Notes to Collins v. Blantern, 1 Sm. L. C. 348. An agreement to of certain goods which he wants to to buy of C. B. treats with C. for the sale, and pays a sum agreed upon between them as the price. It is secretly agreed between A. and C. that A. shall pay a further sum: this last agreement is void as a fraud upon B., whose intention was to relieve A. from paying any part of the price (a). Again, A. and B. are interested in common with other persons in a transaction the nature of which requires good faith on all hands, and a secret agreement is made between A. Agreement and B. to the prejudice of those others' interest. Such are in in fraud of fact the cases of agreements "in fraud of creditors": that is, where there is an arrangement between a debtor and the general body of the creditors, but in order to procure the consent of some particular creditor, or for some other reason, the debtor or any person on his behalf secretly promises that creditor some advantage over the rest. All such secret agreements are void, securities given in pursuance of them may be set aside, and money And other paid under them ordered to be repaid (b). Moreover the other not bound creditors who know nothing of it and enter into the arrangement by the com- on the assumption "that they are contracting on terms of equality position. creditors is void. creditors as to each and all" are under such circumstances not bound by any release they give (c). And it will not do to say that the underhand bargain was in fact for the benefit of the creditors generally, as where the preferred creditor becomes surety for the payment of the composition, and the real consideration for this is the debtor's promise to pay his own debt in full; for the creditors ought to have the means of exercising their own judgment (). The principle of these rules was thus explained by Erle, J. in Mallalieu v. Hodgson :-(e) "Each creditor consents to lose part of his debt in consideration that the others do the same, and each creditor may be considered to stipulate with the others for a release from them to the debtor in consideration of the release by him. Where any creditor, in fraud of the agreement to accept the composition, stipulates for a preference to himself, his stipulation is altogether void-not only can he take no ad (a) Jackson v. Duchaire, 3 T. R. 551. (b) McKewan v. Sanderson, 15 Eq. at p. 234, per Malins V.-C. See Leake 403-5. (c) Dauglish v. Tennent, L. R. 2 Q. B. 49, 54. (d) Wood v. Barker, 1 Eq. 139. (e) 16 Q. B. 689, 20 L. J. Q. B. 339, 347. |