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malum prohibitum, an action might be maintained on it, if the malum did not appear on the record. On this principle, the case of Faikney v. Reynous (a) was decided, in which it was held, that, if a person pay money for another in consideration of a transaction prohibited by act of Parliament, but not malum in se, and take a bond for the re-payment of the money, he may recover in an action on the bond, notwithstanding the statute. This doctrine was carried still further in the subsequent case of Petrie v. Hannay (6), where, two persons having jointly engaged in a stock-jobbing transaction, and incurred losses, and employed a broker to pay the differences, one of them, who had repaid the broker, with the privity and consent of the other, the whole sum, was allowed to recover a moiety from that other, notwithstanding the 7 Geo. 2, c. 8. So, also, in one case the Court of Chancery directed an account between two persons who had contracted to be jointly concerned in ship insurances, contrary to the 6 Geo. 1, c. 18, s. 12, Lord Loughborough observing, that though he would not execute the contract against law, yet he should do great injustice if he did not decree an account of transactions which had arisen out of the contract (c).
But the doctrine laid down in the cases just cited has long been exploded ; and it is now clearly settled that whether the subject of a contract be malum prohibitum, or malum in se, there can be no partnership founded upon it, so as to give the contractors a remedy either against each other, or against third persons, at law or in equity.
Even before the case of Petrie v. Hannay, Lord Kenyon decided that an underwriter of a policy of insurance could not, upon the loss of the vessel, recover a moiety of the loss from a person who had agreed to take half the risk: because, upon the plaintiff's own shewing, there was a partnership in the insurance, contrary to the statute. “This party,” said Lord Kenyon, “cannot apply to a Court of justice to enforce a contract founded in a breach of the law (d).” So, in the case of Mitchell v. Cockburne (e), where A. and B. had engaged in partnership for the insurance of ships, contrary to the statute 6 Geo. 1, c. 18, and A. had paid the whole of the losses incurred,
(a) 3 T. R. 418.
(d) Sulliran v. Greaves, Park, Insur. 8.
(e) 2 H. Bl. 379.
it was held, that he could not maintain an action against B. to recover a share of the money that had been so paid. And the case of Mitchell v. Cockburne, was fully confirmed by that of Aubert v. Maze (a). There, the cause having been referred to an arbitrator, he found, that the plaintiff was indebted to the defendant in a certain sum,“ being one moiety of divers sums of money paid by the defendant for and on account or losses on policies of insurance, underwritten by agreement between the said plaintiff and the said defendant, at their joint risk, and for their joint benefit.” He accordingly awarded that sum to the defendant, subject to the opinion of the Court of Common Pleas, as to whether the defendant was entitled to recover the money so paid on account of an illegal partnership. The Court held that he was not; and set aside the latter part of the award.
It will be observed, that in the preceding cases, the actions were all brought in affirmance of the illegal contract : but if a partnership be contrary to law, no action can be founded on it by the parties implicated, even if it be brought in disaffirmance of the contract. Thus, in Booth v. Hodgson (6), an action was brought by the assignees of Browne, a bankrupt, against the bankrupt's copartners, to recover certain sums received for premiums on policies of insurance, in which the bankrupt and the defendants were jointly interested as partners, though the policies had been effected in the sole name of the bankrupt. It was urged, in behalf of the plaintiffs, that the statute 6 Geo. 1, c. 18, only prohibited contracts of insurance made by partners; but that here the assurances were made by one person only; and that, although, if the object of the action had been to enforce any contract of insurance made in violence of the statute, the act would have furnished a decisive answer to it, yet that objection did not apply here, because the action was brought in disaffirmance of the partnership insurances. But the Court of King's Bench held, that the plaintiffs were not entitled to recover. “It is a maxim in our law,” said Lord Kenyon, “that a plaintiff must shew that he stands on a fair ground, when he calls on a Court of justice to administer relief to him. Now, is that the case with these plaintiffs? They avow that they have insured in di
(a) 2 B. & P. 571.
lawful, the 6 Geo. 1, being in this (6) 6 T. R. 405. But marine in- respect repealed by 5 Geo. 4, c. 114, surances by partnerships are now see pp. 37, 38.
rect violation of the statute; all their claim arises out of this transaction, which is contrary to the act of Parliament, and yet they wish the Court to give effect to it.” Grose, J.—“The plaintiffs wish to consider the case as if the partnership had never existed, and then they say, taking this to be an insurance only by Browne, it is a valid contract, and his assignees may recover the premiums received on his account.
But we cannot decide on a part of the case; and, taking the whole together, an assumpsit cannot be raised from one part of the case when the other parts of it negative an assumpsit.” Lawrence, J.-" As between Browne and the assured, it would be unjust that the former should be permitted to set up the secret partnership; but as between him and his partners, he cannot be suffered to disaffirm the partnership. There seems to be no justice on the part of the plaintiffs, who wish to receive all the premiums without accounting to the other partners, by endeavouring to imply a promise contrary to the truth of the case.”
Upon the same principles, where the illegal contract of partnership is not executed, but executory only, none who were parties to it can, by action or otherwise, recover the money advanced for the purpose of establishing the partnership (a). Therefore, where money was advanced to S. by B., one of several partners, out of the partnership funds, on account of payments to be made on policies of assurance underwritten by S. on account of himself and B., in pursuance of a previous agreement between them to become sharers in profit and loss on such policies, and S. became bankrupt, it was held, that the surviving partners of B. could not prove the monies so advanced as a debt under the commission against S. (6).
It remains to be observed, that Courts of equity, following the principles of these later decisions of Courts of law, will dismiss so much of a hill as seeks an account of illegal partnership transactions. Much doubt had been thrown upon the case of Watts v. Brookes, by the observation of Lord Eldon in Aubert v. Maze. His Lordship saying, that if Watts v. Brookes was to be considered as a case in which it was dryly decided, that, if a Master, in the course of taking an account, find certain sums paid on account of any of these illegal transactions, he may, on
(a) Per Lord Ellenborough, 1 M. & S. 755.
(6) Ex parte Bell, Ibid.
the ground of consent to such payment, view them in the same light as the other items of the account; it did not appear to him, Lord Eldon, that that case proceeded upon a principle sufficiently consistent with the act of Parliament, to justify the adoption of it. And afterwards, the case of Watts v. Brookes was expressly overruled by the decision of Sir William Grant, in Knowles v. Haughton (a).
The object of the bill, in that case, was to establish a partnership between the plaintiff and the defendant, in the business of brokers and underwriters, praying an account and payment of a moiety of the profits. The plaintiff went into evidence to prove the partnership, which was denied by the answer; the defendant insisting that the partnership between the parties, as underwriters, could not legally subsist. The counsel for the plaintiff cited the case of Watts v. Brookes, insisting, that the object of the statute was only to avoid the contract as against the assured, and that the statute was satisfied by the appearance of only one name. Sir William Grant, however, on the authority of Sullivan v. Greaves, and Mitchell v. Cockburne (6), dismissed so much of the bill as sought an account of the profits of the underwriting business, and directed an account of the other business upon the footing of partnership (c).
(a) 11 Ves. 168; 2 Hov. Supp. shared between the plaintiffs and 253.
defendants in thirds. The plaintiffs (6) Ante, p. 33.
made several purchases in conseC) In a subsequent case, how- quence of this agreement, and the ever, Sir W. Grant seems to have whole of the money arising from recurred to the old principles.—The the re-sales was received by the plaintiffs, Marsh and Ebsworth, defendants; the plaintiffs receiving were partners in the trade of Spanish no part of such money. The bill wool brokers in London ; and the prayed an account of the partnerdefendants were partners in the trade ship transactions, and payment of of Blackwell-hall factors. By a pa- what should be found due to the rol agreement entered into between
plaintiffs, and for a receiver to colthe plaintiffs and defendants, it was lect the outstanding (debts of the agreed, that any parcels of wool of- copartnership. The defendants, by fered in the market, on which a their answer, insisted (amongst profit might be expected, should be other things)—“That the plaintiffs purchased on account of the de- did and do still carry on the busifendants by the plaintiffs ; and that, ness of wool-brokers in partneron the re-sales thereof, which the ship, in the city of London aforeplaintiffs were afterwards to make, said, under the style or firm of the profit and loss thereon should be Marsh & Ebsworth, and that such
Upon the principles on which the later decisions on this subject have been founded, it has been held, that a debt arising from notes issued in violation of the statutes passed for the protection of the Bank of England, cannot be proved under a commission of bankrupt. And therefore, where A., a partner in the Leith Banking Company, which consisted of more than six partners, opened an office at Carlisle, and circulated there promissory notes drawn by the Company's cashier in Scotland, and made payable to the bearer, on demand, at the Company's office in Leith, (a proceeding then contrary to the Bank acts, which restricted partners exceeding the number of six from issuir notes payable on demand); it was held, upon the bankruptcy of a debtor of A., that A.'s proof should be reduced, so far as it was founded on the notes of the Company, payable to bearer on demand, which were issued to the bankrupt by
VI. 3. We have endeavoured to investigate the doctrines held by Courts of law and equity regarding illegal partnerships in general, by an examination of cases which occurred under the 6 Geo. 1, c. 18; which statute, for the purpose of creating a monopoly for two corporations, namely, the Royal Exchange and London Assurance Companies, restrained all other corporations or partnerships from assuring ships or merchandize at sea, and from lending money on bottomry, and declared all policies of assurance and bottomry bonds of such other corporations to be ipso facto void, and all agreements by them for lending money on bottomry, usurious. But it unnecessary to enter into a particular examination of the cases which have been determined upon this branch of the act (6);
business of wool-brokers is, buying and selling of wools on account of other persons; and that those who act as such brokers are restricted by a bond given by them to the Lord Mayor of the city of London, and by an oath which they take on obtaining a license from the Mayor and Aldermen of the city of London to act as brokers within the same city, from buying and selling wools in their own names and on their own
account." But Sir Wm. Grant, M. R., directed the account as prayed. Marsh v. Blakesly, Rolls, Nov. 30, 1812.
(a) Ex parte Randleson, Mont. & MʻA. 86.
(6) See Reed v. Cole, 3 Burr. 1512; Lees v. Smith, 7 T. R. 338; Harrison v. Miller, Id. 340, n.; Mitchell v. Cockburne, 2 H. Bl. 379; Everth v. Blackburne, 2 Stark. 66; Strong v. Harvey, 3 Bing. 304.