Illegal, &c., (Generally). illegality. The test as to whether a demand connected with an illegal CH. XXI. s. 1. transaction be capable of being enforced is, whether the plaintiff requires to set up and rely on such transaction, in order to establish his case (d). Where, therefore, to an action on a covenant Test of to pay money, the defendant pleaded that there had been an illegal agreement that, for a price to be paid to the plaintiff, land should be sold and conveyed to the defendant for an illegal object; that the land was conveyed to the defendant for that object; and that afterwards—a part of the purchase-money remaining unpaid -the defendant, to secure payment thereof to the plaintiff, made the covenant in the declaration mentioned: it was held that— although the plea did not allege that the covenant was given in pursuance of the illegal agreement-still, as the law would not enforce the original illegal contract, so neither would it allow the parties to enforce the covenant for payment of the purchasemoney, because, by the original bargain, it was tainted with illegality (e). Action must be founded on illegal But it is not sufficient, in order to bring the plaintiff within this rule, that he should merely be obliged to give evidence of an illegal contract as part of his case; for the rule applies only contract. where the action is founded upon the illegal contract, and is brought to enforce it (f). Thus, either party to an illegal contract may rescind it whilst it remains executory, and may recover from the other any money which he may have paid to him thereunder, although, to enable him to do so, he must prove as part of his case that he had entered into an illegal contract (g). And so, where A. procured B. to grant him a lease of premises, by a false representation as to the purpose for which they were to be used; and A. took possession, and converted them into a brothel; whereupon B. forcibly expelled him; it was held that A. might maintain ejectment against B., because the term had vested in A., and therefore he was not calling on the Court, in that action, to aid him in enforcing an illegal agreement (h). ance. If there be in the same deed certain covenants which are Part avoidagainst law, and others which are not, the deed, although void as to the former, is good as to the rest. And the law is the same as to bonds, where the condition is, in part, against law. But (d) See Fivaz v. Nicholls (1846), 2 C. B. 501, 512, 513; Taylor v. Chester (1869), L. R., 4 Q. B. 309; Simpson v. Bloss (1816), 7 Taunt. 246; Begbie v. Sewage Phosphate Co. (1875), L. R., 10 Q. B. 491. (e) Fisher v. Bridges (1854), 3 E. & B. 642, Ex. Ch. ; and see Geere v. Mare (1863), 2 H. & C. 339; Clay v. Ray (1864), 17 C. B., N. S. 188. (f) Per Cur., Taylor v. Bowers (1876), 1 Q. B. D. 291, 295; per Mellish, L.J. (S. C., in C. A.), id. 300. (g) Per Bramwell, B., Bone v. Eckless (1860), 29 L. J., Ex. 438, 440; and see ante, p. 67. (h) Feret v. Hill (1854), 15 Q. B. 207. Illegal Con tracts in General. CH. XXI. s. 1. where the illegal cannot be severed from the legal part of a covenant, the whole is void (i); and if a contract be made on several considerations, one of which is illegal, the whole contract is void, whether the illegality be at common law or by statute (k). But where the consideration is tainted by no illegality, and some of the promises only are illegal, the illegality of these does not communicate itself to, or taint the others, except when, owing to some peculiarity in the contract, its parts are inseparable (1). Mala prohibita. Illegality may be established by parol evidence. Illegality may be taken advantage of by either party. Taylor v. An old distinction between mala prohibita and mala in se has been long exploded (m). Although, in general, parol evidence is not admissible, as between the parties to a written instrument, to contradict or add to its provisions, yet facts may be pleaded and evidence given, in order to show that the instrument is void on the ground of fraud or illegality, however regular such instrument itself may appear to be, and whether it be by parol or under seal (n). And as the benefit of the public, and not the advantage of the defendant, is the principle upon which a contract is allowed to be impeached on account of illegality; so this objection may be taken by either of the parties to such contract. "The objection," said Lord Mansfield (0), "that a contract is immoral or illegal as between plaintiff and defendant, sounds at all times very ill in the mouth of the defendant. It is not for his sake, however, that the objection is ever allowed; but it is founded in general principles of policy, which the defendant has the advantage of contrary to the real justice as between him and the plaintiff; . . . not for the sake of the defendant, but because the Court will not lend their aid to such a plaintiff. So, if the plaintiff and defendant were to change sides, and the defendant were to bring his action against the plaintiff, the latter would then have the advantage of it: for where both are equally in fault, potior est conditio defendentis." Thus in Taylor v. Chester (p), the plaintiff failed to recover the half of a 501. banknote deposited with the defendant to secure a debt due from the ... (i) See Baker v. Hedgecock (1888), 39 Ch. D. 520, per Chitty, J., and the cases there cited; Byrne, Ex parte, Burdett, in re (1888), 20 Q. B. D. 314, C. A. (k) Waite v. Jones (1835), 1 Scott, 730; Shackell v. Rosier (1836), 3 Scott, 59; Featherstone v. Hutchinson (1590), Cro. El. 199; Lound v. Grimwade (1888), 39 Ch. D. 605. (1) See Price v. Green (1847), 16 M. & W. 346, Ex. Ch. ; M'Allen v. Churchill (1826), 11 Moore, 483. (m) Bensley v. Bignold (1822), 5 B. & A. 341, per Best, J. (n) Collins v. Blantern (1767), 2 Wils. 341, 347; Wright v. Crookes (1840), 1 Scott, N. R. 685, 698; Abbott v. Hendricks (1840), 1 M. & G. 791; Gaslight Co. v. Turner (1839), 7 Scott, 779, 794. (0) Holman v. Johnson (1775), Cowp. 341, 343. (p) Taylor v. Chester (1869), L. R., 4 Q. B. 309; and see Ex parte Caldecott (1876), 4 Ch. D. 150, C. A.; Harse v. Pearl Life Insurance Co., [1904] 1 K. B. 558, C. A. plaintiff to the defendant for wine and suppers supplied to the plaintiff by the defendant in a brothel kept by her. And as a general rule the trustee of a bankrupt in no better position than the bankrupt, except where there is an offence against the bankruptcy laws, or the money is paid away in fraud on the creditors, where the trustee can recover back money so paid, although the bankrupt could not, because he was in pari delicto (q). CH. XXI. s. 1. Illegal Con tracts in General. So where parties to a contract against public policy, or illegal, Relief in are not in pari delicto; but public policy is considered as advanced parties not in by allowing either, or at least the more excusable of the two, to pari delicto. sue for relief against the transaction-a Court of Equity will grant such relief (r). But equitable terms may be imposed on a plaintiff who seeks to set aside an illegal contract, as the price of the relief he asks (s). The presumption of law is in favour of the legality of a contract; and therefore, if it be reasonably susceptible of two meanings one legal, and the other not-that interpretation is to be put upon it which will support and give it operation (t); and it lies upon the party-even a defendant-attempting to set aside a transaction for illegality to prove it (u). Therefore, where a plaintiff declared that the defendant, who had chartered a ship, put on board a dangerous commodity, by which a loss happened, without due notice to the captain or other person employed in the navigation; it was held that it lay upon him to prove this averment: for it was not to be presumed that the defendant had been guilty of an omission which would amount to a criminal neglect of duty (x). So, in an action against a carrier for the loss of goods, delivered to him at Dublin to be conveyed to Liverpool, it was objected for the defendant, that unless the goods were proved to have been duly entered at the custom-house, the importation would be illegal, and the contract with the carrier void; but it was held that the defendant could not raise this objection, without proving the non-entry of the goods (y). And where a contract which can be performed legally, is sought to be avoided on the ground that the parties intended to perform (g) Ex parte Wolverhampton Banking Co. (1884), 14 Q. B. D. 32; distinguishing Ex parte Caldecott (1876), 4 Ch. D. 150, C. A. (r) Per Bruce, L.J., Reynell v. Sprye (1852), 21 L. J., Ch. 633, 651, App. (s) Per Giffard, L.J., Re Cork and Youghal Rail. Co. (1869), L. R., 4 Ch. 748, 762. (t) Mittelholzer v. Fullarton (1842), 6 Q. B. 989, Ex. Ch. ; per Lord Abinger, C.B., Lewis v. Davison (1839), 4 M. & W. 654, 657; per Lord Ellenborough, C.J., (u) Per Bowen, L.J., in Hire-Purchase (x) Williams v. East India Co. (1802), 3 East, 192; 6 R. R. 589. (y) Sissons v. Dixon (1826), 5 B. & C. 758. Presumption of law is in favour of the legality of a contract. CH. XXI. s. 1. it in an illegal manner; it is necessary to show that they knew what the law was, and intended to break it (z). Illegal Contracts in General. Expectant heirs. Aylesford Repeal of Usury Acts. of Reversions Act. SECT. 2.-Unconscionable Bargains. (a) Generally. It has long been a rule of equity that hard bargains with expectant heirs, e.g., where the heir being in distress for money sells his reversion at an undervalue, or borrows money at exorbitant interest, may be set aside as "unconscionable." The leading case is Earl of Chesterfield v. Jansen (a); the most authoritative Earl of Aylesford v. Morris (b), and the latest, Nevill v. Snelling (c), and Fry v. Lane (d), in both of which latter all the previous cases are fully reviewed. In the Earl of Aylesford's case, the plaintiff, when twenty-two years of age, and entitled to large property in event of his surviving his father, borrowed money at about sixty per cent. on bills, and the Court restrained an action upon the bills, and decreed that they should be delivered up on payment of the sums actually advanced and interest at five per cent. The repeal of the usury laws in 1854, by 17 & 18 Vict. c. 90, has not affected the rules of equity on this subject; nor has the Effect of Sale Sale of Reversions Act, 1867, 31 & 32 Vict. c. 4, by which no purchase of a reversionary interest may be set aside, merely on the ground of undervalue, for that Act is carefully limited to purchases made bonâ fide and without fraud or unfair dealing (e). The age of the borrower or seller does not appear to be material, except as rendering it more likely that he should have been imposed upon his poverty and ignorance appear to afford sufficient grounds for relief (f), and the state of distress is considered to continue till the reversion falls into possession (g). Age of borrower not material. Result of cases as to The only result of the cases seems to be that the Court looks bargains with at the reasonableness of a bargain with a reversioner, and if it is a reversioner. (z) Waugh v. Morris (1873), L. R., 8 Q. B. 202. (a) Earl of Chesterfield v. Jansen (1750), 1 W. & T., L. C. (b) Earl of Aylesford v. Morris (1873), L. R., 8 Ch. 484; recognised as law by the House of Lords in O'Rorke v. Bolingbroke (1877), 2 App. Cas. 814, though on the particular facts relief was refused. (c) Nevill v. Snelling (1880), 15 Ch. D. 679, per Denman, J. (d) Fry v. Lane (1888), 40 Ch. D. 312, per Kay, J. See also James v. Kerr (1889), 40 Ch. D. 449, per Kay, J. (e) Earl of Aylesford v. Morris (1873), L. R., 8 Ch. at p. 490. As to the law before this Act, see St. Albyn v. Harding (1859), 27 Beav. 11. (f) Fry v. Lane, supra. (g) Beynon v. Cook (1875), L. R., 10 Ch. 389. CH. XXI. s. 2. Contracts able Bargains). what is called a hard bargain, sets it aside (h), with allowance to Beynon v. The interference of the Court is not confined to sales of rever- Sales of prosions by expectants: it applies also to sales of property in pert possession by poor and illiterate persons (m). (b) The Money-Lenders Act, 1900. 66 possession. able transac If the interest charged by a "money-lender" on a loan is Re-opening by Court of excessive, or the charges for expenses, inquiries, &c., in respect harsh and of it are excessive, and if in either case the transaction is harsh unconscion-and unconscionable, or is otherwise such that a Court of Equity tion. would give relief," then, where proceedings are taken in any Court by the "money-lender" for the recovery of the loan, the Court may re-open the transaction and relieve the person sued from payment of any sum in excess of the sum adjudged by the Court to be fairly due in respect of such principal, interest, and charges as the Court, having regard to the risk and all the circumstances, may adjudge to be reasonable. Similarly, a borrower may himself proceed against a "money-lender," and obtain similar redress, and similar redress may be given by a Court of Bankruptcy "on any application relating to the admission or amount of proof by a money-lender." These provisions, which do not affect the rights of any bonâ fide assignee or holder for value without notice, apply to any money-lending in whatever form by a "money-lender." Every "money-lender" must Registration be registered in London (at Somerset House), Edinburgh, or Dublin, according as they carry on business in England, Scotland, or Ireland, must carry on and do business in his registered name, and "shall, on reasonable request, and on tender of a reasonable sum for expenses, furnish the borrower with a copy Copy of of any document relating to the loan or any security therefor." document for Such are the main enactments of the Money-Lenders Act, 1900, 63 & 64 Vict. c. 51 (n). Sect. 6 of that Act defines money (h) Per Jessel, M.R., in Beynon v. Cook (1875), L. R., 10 Ch. at p. 391, n. In King v. Hamlet (1835), 3 Cl. & F. 218; Webster v. Cook (1867), L. R., 2 Ch. 542; and O'Rorke v. Bolingbroke (1877), 2 App. Cas. 814. (k) In Webster v. Cook, supra. 66 (1) In King v. Hamlet and O'Rorke v. Bolingbroke, supra. (m) Wood v. Abrey (1818), 3 Madd. 417; 18 R. R. 264; and see Fry v. Lane (1888), 40 Ch. D. 312. (n) For annotations of the Act, and for Inland Revenue Office and Board of of "MoneyLenders." borrower. |