McDonald v. Lund

• Decision Date: 09 January 1896
• Citation: 43 P. 348,13 Wash. 412
• Parties: MCDONALD v. LUND.
• Court: Washington Supreme Court

43 P. 348

13 Wash. 412

MCDONALD v. LUND.

Supreme Court of Washington

January 9, 1896

Appeal from superior court, Yakima county; Carroll B. Graves, Judge.

Action by Finley McDonald against Thomas Lund to recover money had and received by defendant to plaintiff's use. From a judgment in favor of defendant, plaintiff appeals. Reversed.

Frank H. Rudkin, for appellant.

H. J Snively and Fred Miller, for respondent.

DUNBAR, J.

This was an action brought by the plaintiff against the defendant to recover the sum of $452.25, alleged to be the balance due for money had and received by the defendant to the plaintiff's use. The answer denied the main allegations in the complaint, and alleged, affirmatively, that the plaintiff and defendant were engaged together in running certain games of chance, and that all moneys received by the defendant were so received, for the purpose of using the same as the capital in running the games of chance so carried on by plaintiff and defendant, and that the defendant did not otherwise receive any money in which the plaintiff had an interest. The plaintiff replied, denying the affirmative portions of the answer, and the case was submitted to the court upon the following agreed statement of facts, viz.: (1) That at the time mentioned in the complaint the plaintiff and defendant and one French were engaged in conducting and carrying on certain faro and crap games in the city of North Yakima, as partners,-plaintiff having a one-half interest in the moneys invested in said games, and sharing one-half the profits and losses of said games; the two other partners having a one-fourth interest each. (2) That from time to time moneys were drawn from said games, and the sums so drawn were divided between the plaintiff and defendant and the said French in the proportions above mentioned,-plaintiff's portion thereof being deposited and left with defendant, in whose place of business said games were conducted; the plaintiff never receiving the same. (3) That when the said plaintiff and defendant and the said French ceased to conduct and carry on said games, the moneys then on hand belonging to said partners were divided in like manner in the proportions above mentioned,-the plaintiff's portion thereof being deposited and left with the defendant; the plaintiff never receiving the same. (4) That the plaintiff's portion of the money, after division, was never actually segregated from the defendant's, but that they agreed upon the portions thereof to which each was respectively entitled. (5) That the defendant was the banker for said games in said partnership; that all of the moneys belonging to said games were kept by said defendant, both capital and winnings; that at the close of the games, from time to time, it was agreed between the said partners what the interest of each was in the moneys in the hands of said defendant, but the moneys continued in the defendant's possession without any change in said possession. (6) That when plaintiff and defendant and said French ceased to operate together as such partners, it was understood and agreed by all of said partners that the plaintiff was entitled to the sum of $431.25, out of the moneys belonging to said partnership in said games then in defendant's possession. It was further agreed that judgment should be entered on the foregoing facts as the law might require. The court below was of opinion that the case fell within the maxim, "Ex turpi causa non oritur actio," and dismissed the action.

It is conceded by the appellant that courts will decline to lend their aid to the enforcement of an executory contract which has for its object the performance of some act or the accomplishment of some end which is contrary to law or a sound public policy, and this whether the act or end contemplated by the contract is a felony or misdemeanor at law. It is conceded that the business in which these parties were engaged was an illegal one, by express statutory provision. It is insisted, however, by the appellant, that this case does not fall within the rule above conceded, but within one of the limitations of such rule that the obligation of the respondent in this case was a collateral obligation, in a manner connected with or growing out of the illegal transaction, but that it is not an attempt to enforce the illegal contract; that the illegal contract had been fully executed; and that there is a new independent, and implied contract which the plaintiff will not be precluded from enforcing. The first case cited by appellant in support of his theory is Sharp v. Taylor, 2 Phil. Ch. 801, where the court drew a distinction between enforcing illegal contracts and asserting title to money which has arisen from them. There it was held that the courts would not refuse to administer justice between joint importers of articles of commerce merely upon proof that such importation was illegal and a violation of the laws of the country, and that one of two partners who had possessed himself of the property of the firm would not be allowed to retain it by showing such illegality. In the course of its opinion the court says: "Can one of two partners, in any import trade, defeat the other, by showing that there was some irregularity in passing the goods through the custom house? The answer to this *** will be that the transaction alleged to be illegal is completed and closed and will not be in any manner affected by what the court is asked to do, as between the parties. Do the authorities negative this view of the case? The difference between enforcing illegal contracts and asserting title to money which has arisen from them is distinctly taken in Tenant v. Elliott, 1 Bos. & P. 3, and Farmer v. Russell, Id. 296, and recognized and approved by Sir William Grant in Thomson v. Thomson, 7 Ves. 473." It would seem that this case is identical with the one at bar. The transaction that is alleged to be illegal here-that is, the carrying on of games of chance-is completed and closed, and cannot in any manner be affected by what the court is asked to do between the parties to this action.

Again this is not a case to enforce any illegal contract, but it is to assert title to money which was accumulated under such illegal contract. If the plaintiff here had brought an action against the defendant for not complying with his contract in running these games, of course it would fall within the rule claimed by the respondent; but here the real contract on which he sues, it seems to us, is a contract of deposit. Under the stipulated facts the illegal transaction which these parties had agreed to pursue had ended. The partnership for that purpose was no longer in existence. The business was no longer being carried on. A determination of the amount of money due from the defendant to the plaintiff had been reached. It was agreed that the defendant owed the plaintiff the sum of money sued for, and that he was entitled to that amount, and the plaintiff's portion was simply left with the defendant on deposit. It is true that it was not segregated from the money belonging to the defendant and the other partner, but that would have been a purely physical transaction, which could not have affected the result in any way, and it would have made no difference in the right or wrong of the case whether the money had been actually counted out to the plaintiff and then deposited with the defendant, or, when the amount that was due the plaintiff was agreed upon, he had deposited it without such physical segregation. This doctrine was announced and this distinction made nearly 100 years ago in the case of Tenant v. Elliott, 1 Bos. & P. 3, where, A. having received money to the use of B. on an illegal contract between B. and C., it was held that he should not be allowed to set up the illegality of the contract as a defense in an action brought by B. for money had and received. Buller, J., in deciding the case, said: "Is the man who has paid over money to another's use to dispute the legality of the original consideration? Having once waived the legality, the money shall never come back into his hands again. Can the defendant, in conscience, keep the money so paid? For what purpose should he retain it? To whom is he to pay it over? Who is entitled to it but the plaintiff?" And Eyre, C.J., said: "The question is whether he who has received money to another's use on an illegal contract can be allowed to retain it, and that not even at the desire of those who paid it to him. I think he cannot." And in Farmer v. Russell, 1 Bos. & P. 296, it was held that if A. received money of B. to the use of C., it could be recovered by C. in an action for money had and received, though the consideration on which B. paid it was illegal. In that case the case of Tenant v. Elliott, supra, was reviewed, and it was held that the obligation arose out of the fact of the money having been received to the use of ...