CH. XXI. s. 5. Illegal, &c., Contracts (By Statute). No distinction between an instrument partly void by statute, and one partly void at common law. Separability of bad part of contract from good. Entire contract, partly void under Statute of Frauds. Matters pro hibited under a penalty. SECT. 5.-Contracts Illegal or Void by Statute. It is laid down in some of the older cases, that there is a distinction between a deed or condition, which is void in part by statute, and one which is void in part at common law―the rule in the former case being said to be, that if the contract was bad or void in any part, it was void in toto. "A statute," it was said, "is like a tyrant-where he comes he makes all void; but the common law is like a nursing father-it makes only void that part where the fault is, and preserves the rest" (h). But this distinction must now be understood to apply only to cases where the statute enacts that an agreement or deed made in violation of its provisions shall be wholly void (i). And if this be not so, then, provided the good part be separable from and not dependent on the bad, that part only will be void which contravenes the provisions of the statute (k). Thus a covenant in a lease that the tenant should pay the landlord's property-tax-although illegal and void, does not affect the validity of the rest of the instrument (1), and although the grant of a rent-charge on a benefice may be void as regards the charge; yet a personal covenant in the deed of grant, to pay the rent, is not therefore invalid (m). But if part of an entire parol contract be void under the Statute of Frauds for want of writing, the contract is void in toto (n). Clearly, if a statute expressly prohibit the transaction in respect whereof an agreement is entered into (o), such agreement will be invalid. And a contract may be illegal, although it be not in contravention of the specific directions of a statute, provided it be opposed to the general policy and intent thereof (p); and the rule is the same although there be no clause expressly prohibiting a certain act, but merely a penalty for doing it. So, it was ruled by Holt, C.J., in Bartlett v. Vinor (q), and by Lord Hatherley, In re (h) Per Wilmot, C.J., Collins v. Blantern (1767), 2 Wils. 347, 351. (i) Per Gibbs, C.J., Doe v. Pitcher (1815), 6 Taunt. 359, 369. (k) See Payne v. Mayor of Brecon (1858), 3 H. & N. 572; Pallister v. Mayor of Gravesend (1850), 9 C. B. 774. (1) Gaskell v. King (1809), 11 East, 165; 10 R. R. 462; and see Wigg v. Shuttleworth (1810), 13 East, 87; Howe v. Synge (1812), 15 East, 440. (m) Mouys v. Leake (1799), 8 T. R. 411; Gibbons v. Hooper (1831), 2 B. & Ad. 734. See also Greenwood v. The Bishop of London (1814), 5 Taunt. 727; 15 R. R. 627; where the Court separated the simoniacal part of a transaction from that part which was legal, and allowed the latter to prevail. (n) Mechelen v. Wallace (1837), 7 A. & E. 49; Head v. Baldrey (1837), 6 A. & E. 459. (0) As an agreement to perform at an unlicensed theatre; Levy v. Yates (1838), 8 A. & E. 129. (p) Steaines v. Wainwright (1839), 8 Scott, 280. (q) Bartlett v. Vinor (1693), Carth. 252. Cork, &c., Rail. Co. (r), and is now quite settled (s). But a sale at a market of an animal diseased within the meaning of the Diseases of Animals Act, 1894, which prohibits the sending diseased animals to market, does not render the seller liable to the purchaser for damages resulting from the disease (†). CH. XXI. s. 5. (By Statute). Accordingly it has been held that a sale of coals, without the delivery by the vendor of the ticket required by statute (u), is void (x). So, a contract to carry on a business in partnership, in a manner prohibited by statute under a penalty, is void (y); and the effect of sect. 193 of the Public Health Act, 1875, by which servants of a local authority may not be interested in any con- Contract by tract with such authority, and any servant so interested "shall forfeit and pay" 50l., is that any such contract is illegal, public authoand that the contracting servant cannot sue the local authority thereon (z). interested servant of rity. according to A statute prescribing "registration," unless it makes regis- Omission to tration imperative under pain of nullity, is merely directory, and register the registration a matter of procedure. This seems to follow statute. from the case in which the House of Lords upheld the validity of debentures not registered under sect. 43 of the Companies Act, 1862 (a). Rule where the statute imposes a merely for the purpose of revenue. But if a contract be made in violation of the provisions of a statute, and the effect of such statute be merely to impose a penalty on the offending party, for the benefit of the revenue, penalty, and not to prohibit the act done, or avoid the contract itself, the fact of such provisions not having been complied with will not invalidate the contract (b). And, accordingly, it has been held, that the provisions of the Excise Licence Act, 1825, 6 Geo. 4, c. 81, ss. 25, 26-which subject to penalties any dealer in or seller of tobacco who shall not have his name painted on the entrance to his premises, or who shall sell tobacco without taking out a licence-do not avoid a contract for the sale of tobacco, made by a dealer who has not complied with those provisions (c). (r) Cork, &c., Rail. Co., In re (1869), L. R., 4 Ch. 748 (Lloyd's Bonds). (8) Taylor v. Crowland Gas Co. (1854), 10 Ex. 293; Cundell v. Dawson (1847), 4 C. B. 376, 399; Little v. Poole (1829), 9 B. & C. 192; and see Maxwell on Statutes, 3rd ed., at p. 554. (t) Ward v. Hobbs (1878), 4 App. Cas. 13, decided on the expired Contagious Diseases Act, 1869. (u) 1 & 2 Vict. c. ci. (the since expired Coal Duties Act), s. 3. (x) Cundell v. Dawson (1847), 4 C. B. 376; and see Smith v. Wood (1889), 24 Q. B. D. 23, C. A., and the Weights and (y) Armstrong v. Lewis (1834), 2 (z) Melliss v. Shirley Local Board (1885), 16 Q. B. D. 446; and see p. 275, ante. (a) Wight v. Horton (1887), 12 App. Cas. 371. (b) See Bailey v. Harris (1849), 12 Q. B. 905. (c) Smith v. Mawhood (1845), 14 M. & W. 452. CH. XXI. s. 5. Illegal, &c., Contracts (By Statute). Contract will not become illegal by relation. Effect of alteration in the law pend. ing an action. At common law, valid. By Gaming Act, 1845, Nor will a contract, which was not illegal when made, become illegal by relation; although the party making it was bound by law, under a penalty, to do a subsequent act which he has neglected to do (d). Thus, a solicitor may recover for work done during the period allowed him for entering his certificate, although he may have become liable to a penalty for not entering it before the expiration of that period (e). Where the law is altered by statute, pending an action, the rights of the parties will be decided according to the law as it existed at the time the action was commenced, unless the statute shows a clear intention to vary such rights (ƒ). (b) Gaming and Wagering (g). By the common law of England, an action might be maintained on a wager, although the parties had no previous interest in the question on which it was laid, provided it was not against the interest or feelings of third parties, or did not lead to indecent evidence, or was not contrary to public policy (h). But this state of the law was from time to time materially altered s. 18, invalid. by statute; and at length, it was enacted by the Gaming Act, 1845, 8 & 9 Vict. c. 109, s. 18, that "All contracts or agreements, whether by parol or in writing, by way of gaming or wagering, shall be null and void; and no suit shall be brought or maintained in any Court of law or (i) equity, for recovering any sum of money or valuable thing alleged to be won upon any wager, or which shall have been deposited in the hands of any person, to abide the event on which any wager shall have been made: provided always, that this enactment shall not be deemed to apply to any subscription or contribution, or agreement to subscribe or contribute, for or toward any plate, prize, or sum of money to be awarded to the winner or winners of any lawful game, sport, pastime, or exercise." This enactment, it is of great importance to observe, does not make gaming or wagering contracts illegal, but merely void. "A wagering contract within the statute is one," it is said by Hawkins, J., "by which two persons, professing to hold opposite following effect:- "La loi n'accorde aucune action pour une dette de jeu, ou pour le paiement d'un pari. Les jeux propres à exercer au fait des armes, les courses à pied ou à cheval, les courses de chariot, le jeu de paume, et autres jeux de même nature, qui tiennent à l'adresse et à l'exercice du corps, sont exceptées de la disposition précédente, néanmoins le tribunal peut rejeter la demande, quand la somme lui paraît excessive."-Code Civil, bk. 3, tit. 12, c. 1. (i) Sic; in the 2nd edition of the Statutes Revised (1893) misprinted "and." Illegal, &c., (Wagering). Carlill v. Carbolic Co. 66 Definition of wagering contract" by Hawkins, J. views touching the issue of a future uncertain event, mutually CH. XXI. s. 5. agree that, dependent upon the determination of that event, one shall win from the other, and that other shall pay or hand over to him a sum of money or other stake; neither of the contracting parties having any other interest in that contract than the sum or stake he shall so win or lose, there being no other real consideration for the making of such contract by either of the parties. It is essential to a wagering contract that each party may under it either win or lose, whether he will win or lose being dependent on the issue of the event, and therefore remaining uncertain until that issue is known. If either of the parties may win but cannot lose, or may lose but cannot win, it is not a wagering contract. It is also essential that there should be mutuality in the contract. For instance, if the evidence of the contract is such as to make the intentions of the parties material in the consideration of the question whether it is a wagering contract or not, and those intentions are at variance, those of one party being such as if agreed in by the other would make the contract a wagering one, whilst those of the other would prevent it from becoming so, this want of mutuality would destroy the wagering element of the contract and leave it enforceable by law as an ordinary one (j). No better illustration can be given of a wagering contract than a bet on a horse-race. "One other matter ought to be mentioned, namely, that in construing a contract with a view to determining whether it is a wagering one or not, the Court will receive evidence in order to arrive at the substance of it, and will not confine its attention to the mere words in which it is expressed, for a wagering contract may be sometimes concealed under the guise of language which on the face of it, if words were only to be considered, might constitute a legally enforceable contract. Such was the case in Brogden v. Marriott (k), in which under the guise of a contract for the sale by the defendant to the plaintiff of a horse at a price to depend on the event of a trial of its speed and staying power, there was concealed a mere bet of the defendant's horse to 2001. that the horse within a month should trot eighteen miles within an hour. The defendant's horse having failed to accomplish the task set him, the plaintiff claimed the horse at a nominal price of 1s. The nature of this contract was transparent to any person of ordinary intelligence, and the plaintiff in vain argued that it was a bonâ fide conditional bargain. The Court held it to be nothing () See Grizewood v. Blane (1853), 11 C. B. 526; Thacker v. Hardy (1878), 4 Q. B. D. 685, C. A. (k) Brogden v. Marriott (1837), 13 Bing., N. C. 88. CH. XXI.8.5. more nor less than a mere wagering contract prohibited by the Illegal, &c., then unrepealed 9 Ann. c. 14” (Ŋ). Contracts (Wagering). Application of Gaming Act, 1845, s. 18. A deed given by the defendant to the plaintiff, purporting to secure the repayment of money lent by the former to the latter, but which was actually advanced upon an agreement between them that, out of it, the defendant should pay the plaintiff money which he had won from the defendant by betting, was held void under this statute (m); and so was a bonâ fide contract between the plaintiff and the defendant, for the sale and purchase of goods; where the price was to depend on the result of a wager, as to the price at which a former lot of similar goods had been sold by the plaintiff to the defendant (n); and an agreement with a tipster that if a bet on a horse named by him should be made and won he should have part of the winnings (0). The statute avoids an agreement to walk a match for 2007. a side (p), a bet with A. that A.'s horse will not trot eighteen miles within an hour (q), and a bet with A. that A. will not prove the convexity of any canal or river to the satisfaction of referees (r). The statute also applies, as between principals, to Stock Exchange contracts, if neither of the contracting parties really means to sell or buy (s), and even to a case where a speculator, having "differences" in his favour, instructed the other partyan "outside dealer"-to devote such "differences" to buying for him stock for investment (t), but not to the very common case of the employment of a broker to buy stock which the principal does not mean to accept and to sell stock which the principal does not mean to deliver, although the broker knows that only "differences" will be received or paid as the stock may rise or fall by the principal (u), or to the bona fide sale of an undeclared dividend (x). The statute nullifies any right of action against a betting agent by his principal for not making bets for him in accordance with his instructions (y). Securities deposited with a broker as "cover" for the payment of "differences" upon the rise or fall of stocks, &c., on speculative (1) Per Hawkins, J. (now Lord Brampton), in Carlill v. Carbolic Smoke Ball Co., [1892] 2 Q. B., at p. 490. See further as to this case, "Contracts through Advertisement," Ch. XX., s. 5, ante, p. 535. (m) Hill v. Fox (1859), 4 H. & N. 359, Ex. Ch. (n) Rourke v. Short (1856), 5 E. & B.904. (0) Higginson v. Simpson (1877), 2 C. P. D. 76. (p) Diggle v. Higgs (1877), 2 Ex. D. 422, approved in Trimble v. Hill (1880), 5 App. Cas. 342. (9) Batson v. Newman (1876), 1 C. P. D. (s) Grizewood v. Blane (1853), 11 C. B. 538. (1) Cronmire, In re, Waud, Ex parte, [1898] 2 Q. B. 383. (u) Thacker v. Hardy (1878), 4 Q. B. D. 685, C. A.; Universal Stock Exchange v. Stevens (1892), 66 L. T. 612, per Romer, J. (x) Marten v. Gibbon (1876), 33 L. T. 561, C. A. (y) Cohen v. Kittell (1889), 22 Q. B. D. 680. |