Pfeifer & Co. v. Israel

• Decision Date: 12 March 1913
• Citation: 77 S.E. 421,161 N.C. 409
• Parties: PFEIFER & CO. v. ISRAEL.
• Court: North Carolina Supreme Court

77 S.E. 421

161 N.C. 409

PFEIFER & CO. v. ISRAEL.

Supreme Court of North Carolina

March 12, 1913

Appeal from Superior Court, Henderson County; Justice, Judge.

Action by Pfeifer & Co. against J. P. Israel. From a judgment for defendant, plaintiff appeals. No error.

Notes given in this state for whisky unlawfully sold in this state by the agent of a nonresident seller, and shipped into the state to the buyer, being given in execution of an illegal contract, are not enforceable.

Michael Schenck, of Hendersonville, and Murray Allen, of Raleigh, for appellant.

H. G Ewart, of Hendersonville, for appellee.

CLARK C.J.

This was an action begun before a justice of the peace upon two notes for less than $200 each, and, on appeal, consolidated by consent into one action. The notes were executed by the defendant to the plaintiff for whisky bought from the plaintiff's agent. The order for the whisky was given in Hendersonville, N. C., to the salesman of the plaintiff company, and the whisky was shipped by the latter from Cincinnati, Ohio, to Hendersonville, N. C., and delivered to defendant at the latter place, and the notes were executed there. This was the entire evidence. The issue was: "Is the defendant indebted to the plaintiff, and, if so, in what sum?" His honor instructed the jury, if they believed the evidence, to answer the issue, "No." The jury responded accordingly. The plaintiff excepted to the instruction and to the judgment, and appealed.

The point before us was expressly decided in Vinegar Co. v Hawn, 149 N.C. 355, 63 S.E. 78, upon an identical state of facts. The court held that: "The contract, being made in Hickory to deliver there, was illegal, and the courts of this state will not lend their aid to collect an account based on such contract. If the liquor was shipped in from another state, that was simply the method the plaintiff took to secure it for his purposes. The delivery to defendant was agreed to be made in Hickory, and was so made. The plaintiff cannot violate the law by an illegal contract, and then ask the courts to help it to enforce such contract. When, as here, the parties are in pari delicto, the courts will help neither. If the money has been paid, it cannot be recovered unless the statute so provides (as in regard to usury Revisal 1905,§ 1951), and, if not paid, the courts will not aid in the collection. It will leave the parties to their own devices"--citing King v. Winants, 71 N.C. 469, 17 Am. Rep.

11; Griffin v. Hasty, 94 N.C. 438; Basket v. Moss, 115 N.C. 448, 20 S.E. 733, 48 L R. A. 842, 44 Am. St. Rep. 463; McNeill v. Railroad, 135 N.C. 733, 47 S.E. 765, 67 L. R. A. 227; Oscanyan v. Arms Co., 103 U.S. 261, 26 L.Ed. 539 (which holds that it is not even necessary to plead the invalidity, it being sufficient if it appear on the evidence); Ewell v. Daggs, 108 U.S. 146, 2 S.Ct. 408, 27 L.Ed. 682. The court further cited with approval the following from Kelly v. Courter, 1 Okl. 277, 30 P. 372: "The principle to be extracted from all the cases is that the law will not lend its support to a claim founded upon its violation." To same purport, Walker J. Edgerton v. Edgerton, 153 N.C. 167, 69 S.E. 53. Not only is the contract for the sale of liquor invalid, but the agent was indictable for soliciting the sale. Laws 1908, c. 118, now Pell's Rev. 3527a. It was in regard to such a statute as this that United States Supreme Court held in Delamater v. South Dakota, 205 U.S. 93, 27 S.Ct. 447, 51 L.Ed. 724, 10 Ann. Cas. 733, that a state "may forbid the carrying on within its borders the business of soliciting orders for liquor, although such orders may only contemplate a contract, resulting from final acceptance in another state." In that case Mr. Justice White said, referring by name to Robbins v. Shelby Taxing District, 120 U.S. 489, 7 S.Ct. 592, 30 L.Ed. 694, Caldwell v. North Carolina, 187 U.S. 622, 23 S.Ct. 229, 47 L.Ed. 336, and Railroad v. Sims, 191 U.S. 441, 24 S.Ct. 151, 48 L.Ed. 254, that the court put out of view those cases "because they concerned the power of a state to deal with articles of interstate commerce other than intoxicating liquors, or which, if concerning intoxicating liquors, related to controversies originating before the enactment of the Wilson Law. The general power of the state to control and regulate the business of dealing in or soliciting proposals within their borders for the purpose of intoxicating liquors is beyond question." The court further said: "The business of soliciting proposals in South Dakota was one which that state had a right to regulate, wholly irrespective of when or where it was contemplated the proposals would be accepted, or whence the liquor which they embraced was to be shipped."

It is recognized, therefore, by both the state and federal courts that the contract by which this liquor was ordered was an illegal contract, and that the fact that it was to be shipped here from Ohio did not make the contract valid. It follows that the courts will not enforce the payment of a note given in execution of an illegal contract. The proposition is so fully discussed by Judge Field in Oscanyan v. Arms Co., 103 U.S. 261, 26 L.Ed. 539, and cases there cited, that further debate is unnecessary. Where a person in this state at the request of another agreed to buy cotton futures for him in New York, a contract also made illegal by our statutes, it was held that the person sending the order to New York for the purchase of the futures could not recover his losses. Garseed v. Sternberger, 135 N.C. 501, 47 S.E. 603. There the whole transaction was in New York, but the contract to do the act was made in North Carolina. This has been cited and reaffirmed in Burns v. Tomlinson, 147 N.C. 647, 61 S.E. 615, which held a subsequent promise to pay invalid. The court said: "Certainly the courts could not aid the plaintiff to a recovery, when our statute makes it a misdemeanor to aid directly or indirectly in making such contracts" --citing, also, to the same effect with approval, State v. Clayton, 138 N.C. 732, 50 S.E. 866. In the latter case the court held that it is "competent for the Legislature to provide that gambling contracts participated in by the defendant in this state either originating or being ratified here shall be indictable in our courts and such contracts are not protected by the interstate commerce clause of the federal Constitution." State v. Clayton was also cited as authority in Rankin v. Mitchem, 141 N.C. 284, 53 S.E. 854. Where a note was given in consideration of a bet on a horse race in another state, it is not enforceable here. Gooch v. Faucett, 122 N.C. 270, 29 S.E. 362, 39 L. R. A. 835. Here the notes were given in this state upon an illegal contract also made in this state.

No error.

ALLEN, J. (concurring).

It does not appear from the record that the order given by the defendant for the whisky was forwarded to the plaintiff at Cincinnati, and accepted there. On the contrary, the uncontradicted evidence is that the salesman of the plaintiff went to Hendersonville, and there accepted the unconditional order for the whisky, which was shipped subsequently from Cincinnati on the order, and the notes sued on were executed in Hendersonville. The term "salesman" implies that the agent of the plaintiff had authority to make a contract of sale, and the subsequent delivery was but in performance of the contract. If so, the action is to recover on a contract for the sale of intoxicating liquors made in this state, which cannot be enforced.

Page on Contracts, § 2592, says: "If the contract is made through an agent, and the principal is in another jurisdiction, the question where the contract is made depends upon the authority of the agent and the manner in which he attempts to bind his principal. If he has authority to bind his principal, and he does so as a finality, the place where he enters into the contract is the place where the contract is made." In Backman v. Mussey, 31 Vt. 550, the contract of sale of intoxicating liquors was made in Vermont, and the liquors were shipped by a New York dealer from New York, and the court says as to this item: "The contract for the first bill of liquors charged in the plaintiff's account was so far made in this state, though consummated by a delivery without the state, as to be invalid here." Also, in Starace v. Rossi, 69 Vt. 304, 37 A. 1110, the order was taken in Vermont by an agent of the plaintiff, and sent to the plaintiff at New York and accepted there, and the court said: "But it is claimed that the contract for this liquor was made in New York, and that, therefore, recovery can be had. The answer to this is that the contract was in part, at least, made in this state, and that prevents recovery as effectually as though it had been wholly made here." The courts of Iowa sustain the same principle. Tegler v. Shipman, 33 Iowa, 200, 11 Am. Rep. 118; Taylor v. Pickett, 52 Iowa, 468, 3 N.W. 514. The case of Westheimer v. Weisman, 60 Kan. 753, 57 P. 969, is not in conflict with these views, because, under the facts presented, no contract was made in Kansas, it being expressly stated that the order taken by the agent was subject "to the approval of the plaintiffs at their place of business in Missouri"; and the court says upon this point: "The agent did no more than make an offer of sale, subject to the approval of his house. The final acceptance of the order and the consummation of the sale occurred in Missouri, where such sales were lawful."

WALKER J. (dissenting).

This action was brought to recover the amount of two notes, one for $143.65, dated June 17, 1910, and the other for $150 dated December 5, 1910, both made at Hendersonville, N. C., the first payable generally, and the second at Hendersonville,...