principal and agent so long as it is not executed (a). It is the same where the agent is authorized to apply in an unlawful manner any part of the moneys to be received by him on account of the principal; he must account for so much of that part as he has not actually paid over (a). The language of the statute 8 & 9 Vict. c. 109, s. 18, which says that no money can be recovered "which shall have been deposited in the hands of any person to abide the event upon which any wager shall have been made" does not prevent either party from repudiating the wager at any time before the event and recovering his own deposit from the stakeholder (b). recover not exe Where money has been paid under an unlawful agreement, Money but nothing else done in performance of it, the money may be able back, recovered back. But in the decision which establishes this ex- where ception it is intimated that it probably would not be allowed if agreement the agreement were actually criminal or immoral (c). And the cuted. action cannot be maintained by a party who has not given previous notice that he repudiates the agreement and claims his money back (d). In a recent case in equity somewhat of the same kind the plaintiff had assigned certain leasehold property to a trustee with the intention of defeating his creditors; afterwards under an arrangement with his creditors he sued for the recovery of the property, having undertaken to pay them a composition in case of success. The Court held that, as the illegal purpose had not been executed, he was entitled to a reconveyance. It will be observed however that the plaintiff was in effect suing as a trustee for his creditors, so that the real question was whether the fraud upon the creditors should be continued against the better mind of the debtor himself (e). The cases above mentioned as to recovering money from agents or stakeholders are also put partly on this ground, which however does not seem necessary to them (ƒ). (a) Bone v. Ekless, 5 H. & N. 925, 29 L. J. Ex. 438. (b) Varney v. Hickman, 5 C. B. 271. (c) Tappenden v. Randall, 2 B. & P. 467. (d) Palyart v. Leckie, 6 M. & S. 290. (e) Symes v. Hughes, 9 Eq. 475. 221. Mearing v. Hellings, 14 M. & delicto. of creditor's compo. sition. Parties not In certain cases the parties are said not to be in pari delicto, in pari namely where the unlawful agreement and the payment take Purchase place under circumstances practically amounting to coercion. The chief instances of this kind in courts of law have been assent to payments made by a debtor by way of fraudulent preference to purchase a particular creditor's assent to his discharge in bankruptcy or to a composition. The leading case is now Atkinson v. Denby (a). There the defendant, one of the plaintiff's creditors, refused to accept the composition unless he had something more, and the plaintiff paid him £50 before he executed the composition deed. It was held that this money could be recovered back. "It is true" said the Court of Exchequer Chamber "that both are in delicto, because the act is a fraud upon the other creditors, but it is not par delictum, because the one has the power to dictate, the other no alternative but to submit." On the same ground money paid for compounding a penal action contrary to the statute of Elizabeth may be recovered back (b). But where a bill is given by way of fraudulent preference to purchase a creditor's assent to a composition, and after the composition the debtor chooses to pay the amount of the bill, this is a voluntary payment which cannot be recovered (c). Like doctrine of equity. In equity the application of this doctrine has been the same in substance, though more varied in its circumstances. Courts of Equity do not as a rule order the return of money, or exercise their peculiar jurisdiction of setting aside instruments, when the parties are in pari delicto. The qualification is thus expressed by Knight Bruce, L. J.: "Where the parties to a contract against public policy or illegal are not in pari delicto (and they are not always so) and where public policy is considered as advanced by allowing either, or at least the more excusable of the two, to sue for relief against the transaction, relief is given to him, as we know from various authorities, of which Osborne v. Williams [see below] is one" (d). (a) 6 H. & N. 778, 30 L. J. Ex. 361, in Ex. Ch. 7 H. & N. 934, 31 L. J. Ex. 362: the chief earlier ones are Smith v. Bromley, 2 Doug. 695, Smith v. Cuff, 6 M. & S. 160. (b) Williams v. Hedley, 8 East 378. (c) Wilson v. Ray, 10 A. & E. 82. (d) Reynell v. Sprye, 1 D. M. G. 660, 679. On this principle relief was given and an account decreed in Special grounds of Osborne v. Williams (a), where the unlawful sale of the profits relief, of an office was made by a son to his father after the son had obtained the office in succession to his father and upon his recommendation, so that he was wholly under his father's control in the matter. In Reynell v. Sprye (b) an agreement bad for champerty was set aside at the suit of the party who had been induced to enter into it by the other's false representations that it was a usual and proper course among men of business to advance costs and manage litigation on the terms of taking all the risk and sharing the property recovered. And in a later case a mortgage to secure a loan of money which in fact was lent upon an immoral consideration was set aside at the suit of the borrower on the ground that the interest of others besides parties to the corrupt bargain was involved (c). A wider exception is made, as we have seen above, in the case of agreements of which the consideration is future illicit cohabitation between the parties. The treatment of this kind of agreements is altogether somewhat anomalous and ill-defined, and may be considered open to review by a Court of Appeal should occasion arise. Apart from this particular question, there seems to be no reason why the analogy of the cases in equity where agreements have been set aside should not apply to the legal right of recovering back money paid. If this be correct, the rule and its qualifications will be to this effect: of the rule as qua 7. Money paid or property delivered under an unlawful agree- Statement ment cannot be recovered back, nor the agreement set aside at the suit of either party, unless nothing has been done in the lified. execution of the unlawful purpose beyond the payment or delivery itself (and the agreement is not positively criminal or immoral?) or unless the agreement was made under such circumstances as between the parties that if otherwise lawful it would be voidable in equity at the option of the party seeking relief (d)—or, in the case of a suit to set aside the agreement, unless in the judgment of the Court the interests of third persons require that it should be set aside. (a) 18 Ves. 379. (b) 1 D. M. G. 660, 679. (d) This form of expression is not positively warranted by the autho- 8. Conflict 8. Where a difference of local laws is in question, the lawof laws in fulness of a contract is to be determined by the law governing the substance of the contract (that is, the law of the place where it is to be performed, if any particular place of performance is expressed by the contract or implied in its nature, or otherwise the law of the place where the contract is made). space. Lex loci solutionis prevails: unless excluded Exception 1.-An agreement entered into by a citizen in vioby prohi- lation of a prohibitory law of his own state cannot in any case bitory be enforced in any court of that state. municipal law of the forum: or unless Exception 2.-An agreement contrary to common principles of the agree- justice or morality, or to the interests of the state, cannot in any case be enforced. ment is contrary to common justice or interests of the State. As to the tion. What we here have to do with is in truth a fragment of a much larger subject, namely the consideration of the local law governing obligations in general (a). The main proposition is well established, and it would be first excep- idle to attempt in this place any abridgment or re-statement of what is said upon it by the writers on Private International Law to whose works the reader is referred in the last note. The first exception is a simple one. The municipal laws of a particular state, especially laws of a prohibitory kind, are as a rule directed only to things done within its jurisdiction. But a particular law may positively forbid the subjects of the state to undertake some particular class of transactions in any part of the world: and where such a law exists, the courts of that state must give effect to it. A foreigner cannot sue in an English court on a contract made with a British subject, and itself lawful at the place where it was made, if it is such that British subjects are forbidden by Act of Parliament to make it anywhere (b). It may be doubted whether such a contract would be recognized even by the courts of the state where it was made, unless the prohibition were of so hostile or restrictive a character as between the two states (a) For the treatment of it in this connexion, see Savigny, Syst. 8. 269-278 ($ 374 C.); Westlake on Private Intern. Law, 176, 180; Story, Conflict of Laws, §§ 243 sqq. 258 sqq.; Wharton, §§ 482-497. (b) Santos v. Illidge, in Ex. Ch. 8 C. B. N. S. at p. 874, 29 L. J. C. P. at p. 350, per Blackburn J. (e.g. if the rulers of a people skilled in a particular industry should forbid them to exercise or teach that industry abroad) as not to fall within the ordinary principles of comity. The authorities already cited (p. 234 above) as to marriages within the prohibited degrees contracted abroad by British subjects may also be usefully consulted as illustrating this topic. second The second exception is by no means free from difficulties As to the touching its real meaning and extent (a). There is no doubt exception. that an agreement will not necessarily, though it will generally, be enforced if lawful according to its proper local law. The reasons for which the court may nevertheless refuse to enforce it have been variously expressed. We read that agreements must be held void apart from all question of local law if they are "in their own nature founded in moral turpitude and are inconsistent with the good order and solid interests of society" (b); or if they are contrary to the law of nature or hurtful to the purity of morals"; that "no state can be justified in directing its tribunals to enforce obligations which it holds to be founded in wrong" (c). Sometimes it is said in still more general terms that an agreement must be lawful by the law of the country where it is sued upon: but this form of statement at any rate may be dismissed as too wide. tions con of civilized a wholly It may be taken for granted that the courts of a civilized Transac state cannot give effect to rights alleged to be valid by some trary to local law, but arising from a transaction plainly repugnant to common the jus gentium in its proper sense-the principles of law and principles morality common to civilized nations. In other words, a local nations, or law cannot be recognized, though otherwise it would be the founded on proper law to look to, if it is in derogation of all civilized laws. foreign This indeed seems a fundamental assumption in the adminis- system of family tration of justice, in whatever forum and by whatever procedure, relations, rather than a specific proposition of either municipal or inter- can't be renational law. Likewise it is clear that no court can be bound to enforce rights arising under a system of law so different (a) "Whether an action can be supported in England on a contract which is void by the law of England, but valid by the law of the country where the matter is transacted, is a great question": per Wilmot, J. (b) Story, § 258. (c) Westlake, 180. cognized. |