Armstrong v. Toler

ERROR to the Circuit Court of Pennsylvania.

This was an action of assumpsit, brought by the defendant in error, Toler, against the plaintiff in error, Armstrong, to recover a sum of money paid by Toler, on account of goods, the property of Armstrong and others, consigned to Toler, which had been seized and libelled in the District Court of Maine in the year 1814, as having been imported contrary to law. The goods were shipped during the late war with Great Britain, at St. Johns, in the province of New-Brunswick, for Armstrong and other citizens and residents of the United States, and consigned to Toler, also a domiciled citizen of the United States. The goods were delivered to the agent of the claimants on stipulation to abide the event of the suit, Toler becoming liable for the appraised value; and Armstrong's part of the goods were afterwards delivered to him, on his promise to pay Toler his proportion of any sum for which Toler might be liable, should the goods be condemned. The goods having been condemned, Toler paid their appraised value, and brought this action to recover back from Armstrong his proportion of the amount. At the trial of the cause, the defendant below resisted the demand, on the principle that the contract was void, as having been made on an illegal consideration. When the testimony on the part of the plaintiff below was concluded, the counsel for the defendant insisted, on his behalf, to the Court, that the several matters propounded and given in evidence on the part of the plaintiff were not sufficient, and ought not to be allowed, as decisive evidence to entitle the plaintiff to maintain the issue, and to recover against the defendant. The judge thereupon delivered the following charge to the jury, which is spread at large upon the record.

'The rule of law under which the defendant seeks to shelter himself against a compliance with his contract, to indemnity the plaintiff for all sums which he might have to pay on account of the goods shipped from New-Brunswick for the defendant, and consigned to the plaintiff, is a salutary one, founded in morality and good policy, and which recommends itself to the good sense of every man as soon as it is stated. The principle of the rule is, that no man ought to be heard in a Court of justice, who seeks to enforce a contract founded in or arising out of moral or political turpitude. The rule itself has sometimes been carried to inconvenient lengths; the difficulty being, not in any unsoundness in the rule itself, but in its fitness to the particular cases to which it has been applied. Does the taint in the original transaction infect and vitiate every contract growing out of it, however remotely connected with it? This would be to extend the rule beyond the policy which produced it, and would lead to the most inconvenient consequences; carried out to such an extent, it would deserve to be entitled a rule to encourage and protect fraud. So far as the rule operates to discourage the perpetration of an immoral or illegal act, it is founded in the strongest reason, but it cannot safely be pushed farther. If, for example, the man who imports goods for another, by means of a violation of the laws of his country, is disqualified from founding any action upon such illegal transaction, for the value or freight of the goods, or other advances made on them, he is justly punished for the immorality of the act, and a powerful discouragement from the perpetration of it is provided by the rule. But after the act is accomplished, no new contract ought to be affected by it; it ought not to vitiate the contract of the retail merchant, who buys these goods from the importer, that of the tailor, who purchases from the merchant, or of the customers of the former, amongst whom the goods are distributed in clothing, although the illegality of the original act was known to each of the above persons, at the time he contracted.

'I understand the rule, as now clearly settled, to be, that where the contract grows immediately out of, and is connected with, an illegal or immoral act, a Court of justice will not lend its aid to enforce it. And if the contract be in part only connected with the illegal transaction, and growing immediately out of it, though it be, in fact, a new contract, it is equally tainted by it. The case before supposed, of an action for the value of goods illegally imported for another, or freight and expenses attending, founded upon a promise express or implied, exemplifies a part of the above rule; the latter part of it may be explained by the following case: As if the importation was the result of a scheme to consign the goods to the friend of the owner, with the privity of the former, that he might protect and defend them for the owner in case they should be brought into jeopardy, I should consider a bond or promise afterwards given by the owner to his friend, to indemnify him for his advances on account of any proceedings against the property or otherwise, to constitute a part of the res gesta, or of the original transaction, though it purports to be a new contract. For, it would clearly be a promise growing immediately out of, and connected with, the illegal transaction. It would be, in fact, all one transaction; and the party to whom the promise was made would, by such a contrivance, contribute, in effect, to the success of the illegal measure.

'But, if the promise be unconnected with the illegal act, and is founded on a new consideration, it is not tainted by the act, although it was known to the party to whom the promise was made, and although he was the contriver and conductor of the illegal act. Thus, if A. should, during war, contrive a plan for importing goods from the country of the enemy, on his own account, by means of smuggling, or of a collusive capture, and in the same vessel should be sent goods for B.; and A. should, upon the request of B., become surety for payment of the duties, or should undertake to become answerable for expenses on account of a prosecution for the illegal importation, or should advance money to B. to enable him to pay those expenses; these acts constituting no part of the original scheme, here would be a new contract upon a valid and legal consideration, unconnected with the original act, although remotely caused by it; and such contract would not be so contaminated by the turpitude of the offensive act, as to turn A. out of Court when seeking to enforce it, although the illegal introduction of the goods into the country was the consequence of the scheme projected by A. in relation to his own goods.

'Whether the plaintiff has any interest in the goods imported by the defendant from New-Brunswick, or was the contriver of, or concerned in, a scheme to introduce these goods, or even his own, if he had any, into the United States, by means of a collusive capture or otherwise, or consented to become the consignee of the defendant's goods, with a view to their introduction, are questions which must depend upon the evidence, of which you must judge. It ought, however, to be remembered, that it would seem, from the letters of introduction of the defendant to the plaintiff, some time after this importation had taken place, that these gentlemen were, at that time, strangers to each other.'

And the jurors having submitted to the Court an inquiry, in the words following, viz. 'The jury beg leave to ask the Judge, whether Toler must have an interest in Armstrong's goods to constitute him a participator in the voyage? If simply having goods on board will constitute him such?' The Court gave their opinion upon the same as follows: 'The plaintiff simply having goods on board would not constitute him a participator, or affect the contract with the defendant. Being interested in the goods would.'

This charge was excepted to by the defendant, and a verdict having been found for the plaintiff, on which a judgment was rendered in his favour, the cause was brought, by writ of error, to this Court. Feb. 24th.

Mr. Webster and Mr. Wheaton, for the plaintiff in error, stated, that this case arose out of an illegal importation of goods from the enemy's country during the late war, upon the false and fraudulent pretext of a capture jure belli, which was finally pronounced by this Court to be collusive, and the property condemned to the government. They argued, that although the abstract principles, laid down in the charge of the Court below, might be considered as correct in point of law, no one of the hypothetical cases put by the learned Judge, fully stated the facts as proved in the cause. The whole case being submitted, and the Court being asked to give a general instruction, the charge ought to have been applicable to the case in evidence, which, it was contended, it was not. Admitting, therefore, the opinions in the charge to be correct, it was still liable to exception, because there was a material part of the case which it did not embrace. The charge did not state what the law would be, if Toler knew, previous to the consignment, that Armstrong was engaged in this unlawful trade. The general principle, that no action could be maintained upon a contract growing out of an immoral or illegal transaction, was insisted on as applicable to this case, where the transaction was not subsequent or collateral, but directly connected with the unlawful act. The authorities cited would show, that this principle has been constantly recognised in the Courts of justice both in England and this country, and it might, indeed, be said to form a rule of universal law which had been incorporated into the civil code of every nation.

Mr. C. J. Ingersoll, contra, insisted, that the law on this subject was accurately laid down in the Judge's charge, and although there was some apparent discrepancy in the cases, they would all be found to be reconciled by the clear and intelligible principles of the charge. The distinction was, that where the contract was disconnected with the original unlawful act, and was founded on a new and distinct consideration, an action might be maintained upon it, although it could not be maintained upon a contract directly arising out of the illegal act. The questions of fact, whether Toler had any interest in Armstrong's goods, or was the contriver of, or concerned in, a scheme to introduce them into this country by any unlawful means, or consented to become the consignee of the goods with a view to their introduction, were fairly left to the jury, and are found by them in favour of the plaintiff. So that the whole question arose upon the abstract correctness of the charge, and the propositions of law laid down to the jury. Unless these could be shown to be erroneous, the judgment must be affirmed. It was also urged, that if the taint of the original illegality of transactions was suffered to infect new contracts with third parties, upon different considerations, it would put a most inconvenient restraint upon trade, and the whole business of life. March 6th.

Mr. Chief Justice MARSHALL delivered the opinion of the Court, and, after stating the case, proceeded as follows: